ResMed Inc.

Hello and welcome to the Q1 fiscal year 2026 ResMed earnings conference call. My name is Kevin. I'll be your operator for today's call. At this time, all participants are in listen-only mode. Also, please note this conference call is being recorded. Later, we'll conduct a question and answer session. Let me hand the call over to Sally Schwartz, ResMed's Chief Investor Relations Officer.

Thanks, Kevin. I want to welcome our listeners to ResMed's first quarter fiscal year 2026 earnings call. We are live webcasting this call, and the replay will be available on the investor relations section of our corporate website later today. Our earnings press release and presentation are both available online now. During today's call, we will discuss several non-GAAP measures that we believe provide useful information for investors. This information is not intended to be considered in isolation or as a substitute for GAAP financial information. We encourage you to review the supporting schedules in today's earnings press release to reconcile these non-GAAP measures with the GAAP-reported numbers. In addition, our discussion today will include forward-looking statements including, but not limited to, expectations about our future financial and operating performance. We make these statements based on reasonable assumptions. However, our actual results could differ. Please review our SEC filings for a complete discussion of the risk factors that could cause our actual results to differ materially from any forward-looking statements made today. I'll now turn the call over to Mick.

Thank you, Sally, and good morning, good afternoon, and good evening to everyone on the various time zones, and welcome to ResMed's first quarter fiscal year 2026 earnings call. I'm very proud of our global team of 10,000 plus ResMedians who have delivered a strong quarter with 9% reported revenue growth or 8% on a constant currency basis with multiple areas of high performance. Across US, Canada and Latin America, our team drove high single digit growth in devices at 8%. And the same team also delivered double-digit growth in the masks and other category with 12% growth. For Europe, Asia, and rest of world devices, the team achieved high single-digit growth at 7% on a constant currency basis. These businesses collectively comprise more than 75% of our quarterly revenue. For Europe, Asia and the rest of the world in the masks and other category, we had mid-single-digit growth at 4% on a constant currency basis, following a strong comp from Q1 last year where we grew at 11% in constant currency in this category and region. I'm confident that we will accelerate to high single-digit growth in this category starting in the current quarter. We are focused on continued strategic expansion of our mask portfolio with new product innovation, which I'll talk about in a couple of minutes. And we're also focused on driving mask resupply through education, awareness and execution. Increased mask resupply benefits patients, home care providers, as well as payers and health care systems. And yes, it also benefits ResMed. This increase focused on mask and accessory resupply is fully aligned with our ongoing investments to accelerate growth in our direct-to-consumer markets around the world, including China, India, Korea, Australia, and New Zealand. As I noted above, I'm confident these efforts will accelerate our Europe, Asia, and rest of the world masks and other category with solidly and sustainably back to high single-digit growth. ResMed's residential care software, or RCS business, delivered mid-single-digit growth with 6% reported and 5% constant currency growth. We saw strong performance from our Medifox platform, our core Rytree platforms, with good growth in the MatrixCare home health business, yet a challenging growth environment for the skilled nursing facility segment. Now that we have integrated our RCS business into our global revenue team, we will drive portfolio management with increased investment in the high growth, high margin parts of that RCS portfolio while reducing exposure to the lower growth, lower margin areas such as the services businesses. We're confident that we will execute successfully on our portfolio management work and re-accelerate growth in our RCS platforms, moving from mid-single-digit growth here at the start of fiscal year 2026, accelerating to mid to high single-digit growth in the back half of fiscal year 2026, and achieving sustainable high single-digit growth with double-digit operating profit growth in 12 months from now. RCS is a key synergistic enabler of our core sleep and breathing health business through demand generation and especially through resupply programs. In this way, our RCS business forms a core part of our long-term growth strategy. During the quarter, we also continue to execute well on our ongoing work driving operating leverage. Our global supply chain team delivered 280 basis points of year-over-year gross margin expansion. These results, along with our disciplined approach to business investments in both R&D and SG&A, translated to another quarter of strong double-digit earnings per share growth. I'd like to take this opportunity to thank not just our supply chain team, but the entire ResMed global team for their ongoing commitment in serving patients in more than 140 countries worldwide. ResMed continues to build the world's largest digital health ecosystem. encompassing sleep health, breathing health, and healthcare technology delivered right in the home. Over the recent quarters, I've highlighted three key themes for these earnings calls. One, that ResMed is committed to operating excellence and driving operating leverage while simultaneously delivering new products to the market. We are an innovation machine and an operational excellence machine. Two, ResMed is a compelling investment opportunity with huge addressable and growing markets and strong executable growth, especially amidst global macro uncertainty. And three, ResMed's excellent free cash flow and strong balance sheet position position us to both invest in the business and simultaneously return capital to our shareholders. Our first quarter results are another demonstration of these important business elements, and I'll talk briefly about each of these three themes. On the first theme of operating leverage, I shared with you last quarter that ResMed has a pipeline of opportunities. One key area of focus has been optimization of our freight expense. Another area of focus has been our multi-year productivity programs that include improved planning systems and large-scale automation. These efforts, among others, helped deliver the 280 basis points of year-over-year gross margin expansion that we saw in this first quarter. We will continue to execute on these opportunities over the remainder of fiscal year 2026 and beyond. We'll update you here every quarter as we continue to deliver great results. I've also previously highlighted the evolution of our global manufacturing footprint. In addition to our recently announced expansion of our Calabasas, California facility, which doubles our U.S. manufacturing capacity, we are pleased to announce that with our strong ongoing growth in the United States, that we are investing to establish a third facility, a third distribution center. This new facility will be in Indianapolis, Indiana, the heartland of the Midwest, and it will expand our distribution capacity. It will improve product velocity of delivery and enhance our overall network resilience by positioning inventory closer to our customers. We expect the Indianapolis facility to be operational in 2027. Once this facility comes online, ResMed will be able to ship to around 90% of our customers within two days. These efforts will also increase the capacity for our Made in America product to build on what we already do right here in the US. On the topic of ResMed as an innovation machine, our R&D investments in the next generation of market-leading masks, cloud-connected device platforms, and digital health software position us well to keep delivering the world's smallest, quietest, most comfortable, most cloud-connected, and most intelligent therapy solutions for sleep apnea, insomnia, respiratory insufficiency, and beyond. Just this week, we rolled out two world firsts for ResMed. These are the first two full-face fabric masks available on the market. This brand new AirTouch F30i mask platform is so innovative, we are launching two mask variants right out of the gate. First, the F30i Comfort, which is a premium price mask with a fabric-wrapped frame as well as an incredibly comfortable fabric-based oronasal patient interface. This amazing new product was launched earlier this week in Australia and will be launched into additional markets in the near future. Second, just yesterday, here in the U.S. market, we launched the F30i Clear, which is a traditional silicon frame mask, but it still has that innovative, incredibly comfortable fabric oronasal patient interface. This variant will be launched into our B2B channels and our home care provider customers as we continue to launch to additional markets beyond the U.S. These products expand ResMed's AirTouch portfolio of fabric-based mask offerings, delivering advanced comfort, mobility, and interchangeability for patients. They're designed to help more people start, stay, and be on therapy, CPAP therapy, for life. We're also excited to continue executing against our roadmap for incorporating ML, AI, and generative AI technology into our digital health products. Last quarter, I talked about how we integrated our personal sleep health digital assistant that we call Dawn into our MyAir platform in the Australian market. Dawn allows ResMed to provide personalized 24-7 support to our users, giving them an intuitive, empowering way to get help right at the moment they need it, right on their own time. Based on that success, During the first quarter of fiscal year 2026, we launched Dawn on the MyAir platform right here in the U.S. market. Ultimately, Dawn strengthens the role of MyAir as the central hub for therapy support for patients. This connectivity leads to increased long-term adherence, which in turn leads to better patient outcomes, lower total cost of care for payers, and better resupply volumes for providers and for res meds. Watch this space as we build and scale this amazing AI-based technology globally. We also recently launched in a limited beta program in Australia a new feature that we call Comfort Match. Now, Comfort Match is an AI-enabled comfort setting technology that sits on the MyAir platform. Comfort Match is intended to help people become more confident, more comfortable, and more adherent to therapy. By engaging with patient settings such as humidification levels, air temperatures, heated tubing options and beyond, we will help patients to find their optimal sleep health and breathing health environment faster, more easily and more efficiently, right from the start of their therapy journey. During setup, the comfort match technology receives information about a person's profile and through advanced machine learning suggests a personalized combination of comfort settings with the goal of maximizing adherence. We will measure the success of this technology in consumer engagement, improve patient perceived comfort, as well as hard clinical outcomes such as patient adherence. Based on early trials, we are very excited that this technology will deliver for patients, for physicians, for providers, and for payers and beyond. At ResMed, we view AI as a technology resource that will amplify and personalize care. By identifying patterns, surfacing insights, and enabling personalized interventions, we are creating AI-based technologies that will help caregivers spend more time focusing on people rather than paperwork. For our patients, our AI technology translates health data into clear guidance. clear support and encouragement, empowering them to take an active role in their own therapy. As a result, we believe that our AI tech investments will provide returns through accelerated access to care, through improved patient outcomes, while also making care more personal, more proactive, and ultimately more effective. Moving on to ResMed's SG&A investments, we remain focused on demand generation, demand capture, and demand curation. as critical components to our long-term growth. Earlier this year, we expanded our offering of continuing medical education or CME programs to educate and to enforce or reinforce with physicians the benefits of CPAP, APAP and bi-level therapy as the clinical gold standard frontline treatment for any patient diagnosed with sleep apnea in accordance with sleep medicine guidelines. We have continued to see incredible uptake from primary care physicians or PCPs. To date, the CME programs have been completed nearly 40,000 times by more than 22,000 unique PCPs, demonstrating that healthcare providers have taken multiple courses. Surveys at the end of these courses have consistently shown that 75% of providers intend to change their clinical practices related to improving sleep and breathing health based on what they learned. We will continue to drive select and targeted direct-to-consumer awareness campaigns to build sleep apnea awareness as well as ResMed brand awareness globally. The ultimate goal is to help undiagnosed patients to find their optimal pathway to treatment. with more than 2.3 billion people worldwide who need our solutions for sleep apnea, insomnia, or respiratory insufficiency, it is our clear obligation to help them know the world's leading brand in the field, which is ResMed. Immediately after that, though, our role is to be what I call a digital sleep health concierge, to help that person find a path to screening, to diagnosis, and ultimately to therapy for life. On the sleep medicine clinical research front, you will see ResMed continue to invest in important studies that highlight new evidence in sleep health. In late August, we announced the publication of a landmark study in the Lancet Respiratory Medicine Journal, projecting a significant rise in obstructive sleep apnea, or OSA, prevalence in the US over the coming three decades due to a variety of factors, including an aging population and increased chronic disease awareness. The study estimates that by 2050, OSA will affect nearly 77 million U.S. adults, representing a relative increase of nearly 35% from 2020, and ultimately impacting nearly half of all adults age 30 to 69. These epidemiology data include all of the estimated impacts of new drug classes, including GLP-1s. The bottom line from this epidemiology research is that the prevalence of sleep apnea will continue to increase. So our work is ongoing to help the many millions here in the US and the billions worldwide who need us. Last month, ResMed announced the launch of the Sleep Institute. a global clinical insights initiative which is partnering with clinicians, researchers, policymakers and health system leaders to deliver objective, non-commercial, evidence-based insights that help inform care innovation, support policy decisions and elevate sleep as a global health priority. The Sleep Institute debuted at the World Sleep Congress in Singapore with an expert-led symposium examining barriers in diagnostic pathways for OSA and new scalable solutions to help improve access and outcomes. Even as we have continued our investments in both R&D and SG&A, ResMed again delivered strong net operating profit growth in the first quarter. Indeed, ResMed remains a compelling investment opportunity amidst global macro uncertainty. We continue to closely monitor the global trade environment and the evolving regulatory landscape. As I noted last quarter, because our products are used to treat patients with chronic respiratory disabilities, they have been subject to global tariff relief for decades, and we have reconfirmed that with US authorities earlier this year. It's important to note that this relief has continued in the context of other Section 232 investigations, and we expect it to remain true for the investigation of medical supplies that was announced in late September. ResMed was one of the many organizations across MedTech that submitted formal public comments regarding this investigation to the U.S. Department of Commerce. There were over 800 official comments made from our industry, which we see as a good show of strength from our colleagues in the field. Our submission at ResMed focused on ResMed's significant and expanding, in fact doubling, of our U.S. manufacturing, our broad domestic hardware and software R&D teams, our global headquarters that's located right here in San Diego, California, as well as our expansion of not just our U.S. manufacturing, but also our many U.S. jobs in research, development, and commercial operations here in the U.S., As the incoming chairman of the industry group called AdvoMed from January 1st, I'll be on the front lines of our medtech industry's response to this 232 investigation, one of 14 industries that has been investigated by the department. And I see our industry as actually quite analogous in potential outcome to that of the aircraft industry. And the aircraft industry saw some very favorable outcomes after their investigation and the details of their commentary. We are confident that ongoing tariff relief should still apply for ResMed and for our many patients with important disabilities that need access to care. Let me also briefly comment on the competitive bidding program that CMS has stated that plans to resume. In late August, ResMed made its comments on the proposed methodology that will apply to our home medical equipment or HME customers. We remain committed to advocating for policies that protect patient access to care and for policies that promote fair and sustainable reimbursement for HMEs. At this point, like everyone else in the industry, we are awaiting further information, including intended timing for the program, product categories that will be included or not included, and bidding methodology details. ResMed will continue to support our HME customers and the millions of U.S. Medicare beneficiaries who rely on us, both for access to market-leading, high-quality sleep and respiratory care at home. We are fortunate to be able to remain fully focused on executing our 2030 strategy, including delivering value to all of our constituents. ResMed's strong free cash flow, our robust balance sheet provide us with significant flexibility to both invest in our business and return capital to shareholders. You will see us continue to selectively invest in our digital sleep health concierge capabilities, including screening protocols, clinical tools, seamless workflows, and cloud-connected care pathways. We'll be looking to expand the diagnostic funnel to keep up with the new patient flow that will come from ResMed's own demand generation efforts, as well as the greater awareness of sleep apnea that has been and will be generated by the promotion of GLP-1 medications that can be used to partially treat, or as I say, half-treat, OSA. and the accelerating momentum in consumer wearables that are capable of not just sleep health monitoring, but also sleep apnea detection. ResMed's ability to integrate with multiple other wearable ecosystems and the growth in patients using ResMed products has driven the number of API calls per second up more than 40% year over year in this quarter. The first quarter of fiscal year 2026 was the first time that we had more than 3 billion total API calls in a single quarter. The bottom line is that interoperability works. Digital health works. People want to combine health data for lower costs, better outcomes, and to bend the curve of chronic disease and to better manage the disorders and diseases that they have and that we treat. ResMed also returns significant capital to shareholders through a combination of dividends and share repurchases. As you're aware, last quarter, ResMed's board of directors authorized another increase in the quarterly dividend for fiscal year 2026. We also increased our targeted share repurchase activity for fiscal year 2026. And during the first quarter, we returned over $238 million to our shareholders. Before I turn the call over to Brett, I would like to take this time to thank the ResMed board director who's just recently announced his retirement, Rich Sulpizio, for his amazing years of contribution to ResMed. We announced that Rich will not stand for re-election at our upcoming annual meeting of shareholders, which will be November 19, 2025, and he will retire after that meeting. Rich has been a longtime mentor to me and to many executives in the technology and healthcare industries including at Qualcomm, CA Technologies, and of course right here at ResMed. Rich had always brought candor, energy, and a people-first mindset to every boardroom conversation. We'll continue to do that in his legacy. I'd also like to formally welcome Nicole Mouad Nassar to ResMed's Board of Directors. Nicole was elected to our board August 15th and has been appointed to the Compensation and Leadership Development Committee. Nicole is president of the global Allergan Aesthetics business, and she's a senior vice president at AbbVie. Nicole brings three decades of pharmaceutical industry experience, a sharp commercial lens, a deep commitment to patient access, and a strong orientation towards digital health, as well as consumer and patient engagement. Nicole's a great addition to the ResMed board. One final note on the board, I'd like to congratulate Chris Delorifus on his recent appointment as Chief Financial Officer of Ulta Beauty in the consumer cosmetics retail industry. We are fortunate to have both Chris and Nicole bring their experience with consumer-driven aesthetics products and retail products to our board discussions. Their insights will be increasingly critical as ResMed builds its brand presence with consumers around the world to augment our amazing B2B businesses. Quarter after quarter, ResMed has demonstrated its ability to consistently deliver both financially and operationally. We've established a leading market position globally in an under-penetrated market that still has a very long runway for growth. This underpins our confidence in our ability to deliver for consumers, for patients, for physicians, for providers, for payers, for our communities, and of course, for you, our shareholders. With that, I'll hand over to Brett to go through a deeper dive into our financials, and then we'll open the floor for questions. Brett, over to you in Sydney.