ResMed Inc (RMD) Q2 2026 Earnings Call Transcript

ResMed Inc (NYSE: RMD) Q2 2026 Earnings Call dated Jan. 29, 2026

Corporate Participants:

Sallilyn Schwartz — Chief Investor Relations Officer

Michael Farrell — Chief Executive Officer and Chairman

Brett A. Sandercock — Chief Financial Officer

Analysts:

Unidentified Participant

John Block — Analyst

Dan Hearn — Analyst

Lyanne Harrison — Analyst

Matt Taylor — Analyst

David Bailey — Analyst

Brandon Vazquez — Analyst

Nathan Trebek — Analyst

Presentation:

operator

Sa. Ram. Greetings and welcome to the ResMed second quarter fiscal year 2026 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing Star1 on your telephone keypad and we ask that you please ask one question one follow up, then return to the queue. If anyone should require operator assistance, please press Star zero As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to Sally Schwartz, Chief Investor Relations Officer.

Please go ahead.

Sallilyn Schwartz — Chief Investor Relations Officer

Thanks Kevin I want to welcome our listeners to ResMed’s second 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.

Michael Farrell — Chief Executive Officer and Chairman

Thank you Sally and good morning, good afternoon and good evening to all of our shareholders and welcome to all to ResMed’s second quarter fiscal year 2026 earnings call. We delivered another strong quarter with 11% headline revenue growth or 9% growth on a constant currency basis. We drove operating leverage leading to margin expansion sequentially and year on year and we achieved GAAP eps growth of 16% strong double digit bottom line growth. I’m very proud of our global team of 10,000 plus resmedians who continue to innovate and evolve the Digital Sleep Health pathway to expand access to our life changing technology across over 140 countries worldwide.

Our team drove high single digit growth in global devices revenue and double digit growth in global masks, accessories and other revenue. Last quarter I expressed confidence that we would re accelerate our Europe, Asia and rest of world masks, accessories and other category to high single digit growth in the second quarter. The team from EMEA and APAC has delivered and we achieved 8% growth on a constant currency basis across Europe, Asia and rest of the world driven by continued strategic expansion of our MASK portfolio including our new fabric masks, a focus on improved mask resupply through education, awareness and execution as well as targeted initiatives and focus in some of our direct to consumer markets around the world.

And I’ll spend a little time on that later. So well done to our EMEA and APAC teams. Last quarter I also talked about our portfolio management work that we’re doing in ResMed’s residential care software or RCS business. We are making strong progress with that work and I remain confident that we will be back to sustainable high single digit growth and double digit operating profit growth in fiscal year 2027. For this March and the June quarters, we expect to continue our portfolio management process and maintain mid single digit growth across our RCS business as we go through that portfolio management this software business, this RCS business remains a key synergistic enabler of our sleep health and breathing health business, particularly through Brightree in the Americas and through Mediflox Dan in Germany and it remains a core part of our long term growth strategy.

During the quarter we also continued to drive operating leverage. Our global supply chain team delivered 310 basis points of year over year gross margin expansion. Incredible result. These results along with our disciplined approach to business investments in both R and D and SGA translated to another quarter of strong mid teens earnings per share growth. A huge thank you to the entire ResMed Global team for their ongoing commitment to serving patients across 140 countries worldwide. ResMed continues to build the world’s leading digital health ecosystem encompassing sleep health, breathing health and healthcare technology that’s delivered in the home.

Over the recent quarters, I’ve been highlighting three key themes. 1. That ResMed is an operating excellence machine and an innovation machine 2 that ResMed is a compelling investment opportunity, especially amidst global macro uncertainty and three that ResMed has an excellent free cash flow and a very strong balance sheet and they both position us well to invest in the business as well as to return capital to our shareholders. So let me cover these three themes briefly in these prep remarks on the topic of operational excellence. I’ve shared with you ResMed’s pipeline of margin improvement drivers. These efforts help deliver 310 basis points of year over year gross margin expansion in the second quarter and 30 basis points of sequential gross margin expansion.

We will continue to execute on these opportunities over the remainder of fiscal year and 2026 and beyond. As I shared at a recent Healthcare Conference earlier this month. I have challenged our supply chain team to deliver double digit basis points improvement in gross margin every year through 2030. I’ve also highlighted the evolution of our global manufacturing footprint. We’re making very good progress on our newest US Distribution center in Indiana. We recently signed lease and started construction in that state and we are on track to be up and running during calendar year 2027. Once this facility comes online, ResMed will be able to ship to around 90% of our US customers in less than two business days.

This is in addition to our recently announced expansion of our Calabasas, California plant which doubles our US manufacturing capacity. Ultimately, ResMed will be able to deliver the only made in America CPAP, APAP, bilevel and MAS systems. ResMed remains an innovation machine Our R and D investments in the next generation of market leading masks, cloud connected medical devices and digital healthcare software position us to keep delivering the world’s smallest, quietest, most comfortable, most connected and most intelligent therapy solutions for sleep apnea and expansions into insomnia, respiratory insufficiency and beyond. We recently launched the F30i Comfort as well as the F30i Clear range of masks.

These are the first compact full face fabric masks available from ResMed and they’re in select key markets now. We’ll continue to roll them out around the world as we get regulatory approvals. Patient and provider feedback on these new fabric masks has been incredibly positive. It’s still early days into the launch, but we expect strong adoption of these masks over time. These Latest variants expand ResMed’s AirTouch portfolio of fabric based mask offerings which not only deliver advanced comfort, mobility and interchangeability for patients, but they also change the basis of competition for masks and for ResMed. Artificial intelligence is another vector for our product innovation.

At ResMed, we view AI as a resource that will amplify and personalize care. Last quarter I talked about our limited beta launch of Comfort Match, an AI enabled comfort setting recommender within the MyAir software platform. This is ResMed’s first FDA cleared AI enabled medical device. Comfort Match is intended to help people become more confident and more comfortable with cpap, APAP and BI level therapy. What I expect to see is having an AI algorithm that is effectively a sleep coach to help you start therapy. That can really help you improve not just short term adherence but also long term adherence as you get used to therapy.

There are a bunch of comfort settings on these devices and many people do not adjust them with help from AI. We think this technology will unlock decades worth of comfort features that have been underutilized by consumers and patients alike. Moving on to ResMed’s SGA initiatives and investments, we remain focused on demand generation, demand capture and demand curation as critical components to our long term growth. We continue to drive selected targeted direct to consumer campaigns to build sleep apnea awareness as well as to drive ResMed brand awareness globally and to drive patients into the funnel. This past quarter we supported various holiday related campaigns.

We focused on 1111 or singles day in China and we also had some promotions around Christmas holidays and Black Friday within the US Markets. I can tell you we’ve successfully encouraged consumers to give the gift of great sleep and we highlighted our portable Travel Air mini device which is lightweight and compact size as perfect for travel and we had good success in the December quarter. We also are driving awareness in the clinical community. Earlier this year we expanded our offering of Continuing Medical Education or CME programs that review sleep medicine guidelines including the benefits of gold standard cpap, APAP and BI level Therapy therapy.

It’s the frontline treatment for any patient diagnosed with sleep apnea and we’re educating PCPs around the US on this fact. To date, the CME programs have been completed nearly 60,000 times. That’s a 50% increase from our first quarter 2026 earnings call numbers that we shared with more than 35,000 unique clinicians completing the CME training. That demonstrates that actually many of these healthcare providers have taken multiple courses. So not just Sleep 101 but Sleep 201 Sleep 301. Surveys at the end of these courses now show 77% of these providers intend to change their clinical practices related to sleep apnea and sleep health and breathing health based on what they learned.

On the clinical research front, we continue to stay abreast of important studies that highlight evidence of sleep health and how it impacts the body and the brain and and overall health. One important area of analysis is the link between sleep apnea and sleep health and brain health. A recent study published in JAMA Neurology looks at a cohort of more than 11 million U.S. veterans where researchers found that obstructive sleep apnea, or OSA, was associated with a higher incidence of Parkinson’s disease over time. The authors of the study also found that early treatment of OSA with CPAP may reduce the risk of developing Parkinson’s disease in the first place.

The study’s findings align with prior evidence linking OSA with cognitive disease, gait instability and fall risk. Growing evidence also now shows that OSA may meaningfully alter dementia risk adherence to CPAP appears to counteract several of the biological pathways that link disrupted sleep to neurodegeneration. A large cohort studies have shown that untreated moderate to severe OSA increases the likelihood of developing dementia by 30 to 45%, while patients who remain adherent to positive airway pressure therapy experience substantially lower risks and rates of Alzheimer’s disease and cognitive decline over time. Mechanistic studies reinforce this signal. CPAP use has been shown to partially restore glymphatic clearance as well as the brain’s oversight waste removal system that becomes impaired during OSA and this reduces a key Alzheimer biomarker.

Even short term CPAP adherence around five hours a night can improve memory, attention and executive function in older adults with mild cognitive impairment, suggesting that consistent early intervention with CPAP may help stabilize some cognitive trajectories. Watch this space for more on this front between sleep health and brain health, it’s increasingly clear that treating osa, getting on, staying on cpap, APAP and bilevel has implications to brain health as well as cardiovascular health, diabetes health and beyond. In fact, it is literally a matter of life and death. Research published last year in the Lancet Respiratory Medicine Journal found that CPAP therapy significantly reduces the risk of overall death for people with obstructive sleep apnea.

More specifically, this study showed that CPAP therapy lowers the overall chance of dying by 37% and the chance of heart related or cardiovascular related death is reduced by 55%. The study, which analysed data from more than 1 million sleep apnea patients worldwide, underscores the importance of consistent CPAP therapy for improving survival outcomes in OSA patients. So this therapy saves lives but also improves quality of life. We’re also excited to announce that our Medical affairs team has launched the RESMED Science of Sleep Apnea Advisory Group, bringing together leading external physicians in various specialties from around the world to provide strategic clinical and scientific guidance to our innovation efforts.

Watch this space for results of their work. Before I move on, I’d like to spend a minute on our latest real world evidence that we shared during a recent Healthcare conference. As you know, we’ve been tracking claims data now reflecting more than 1.95 million patients. What we’ve consistently seen is patients who have scripts for both a latest generation GLP1 or GLP1 and CPAP prescriptions are 10 to 11% more likely to start their CPAP therapy than patients who only have a script for cpap. These patients that have a combined script, they are also 3% more likely to have a resupply event at one year, meaning they’re buying a new mask, a new accessory of some type, a hose filter beyond.

But that doubles and we see more than 6% likelihood to have a resupply event at three years. This is the first time we had three year data to share and we shared that. It’s encouraging to see that the motivation of these patients lasts and even accelerates over time. Ultimately, what we’re finding is patients on a GLP1 get on CPAP more and stay on CPAP therapy longer. Even as we’ve continued our investments in both R and D&SGA, ResMed again delivered strong operating profit growth in the first quarter. Indeed, ResMed remains a compelling investment opportunity amidst global macro uncertainty.

That’s my second key message. I’ll spend a couple of minutes on and then get to Brett and we’ll get to the Q. And we continue to closely monitor the global trade environment and the evolving regulatory landscape. As you saw in December, CPAP, APAP and bilevel products are not included in CMS’s upcoming competitive bidding program. That’s the first time in 15 years that’s happened and we’re very happy that that result, we think will be great for not just US citizens and Medicare recipients, but also for our HME partners and the overall sleep health and breathing health industry.

Also, because ResMed’s products are used to treat patients with chronic respiratory disabilities such as obstructive sleep apnea and respiratory insufficiency, they’ve been subject to global tariff relief for decades. This relief has continued in the context of prior section 232 investigations and we expect it to remain true no matter what the result of those types of investigations are for medical supplies announced in the late September investigation that’s currently underway. So the so called noirobi protocol we see in play. We are fortunate to be able to remain fully focused therefore on executing on our 2030 strategy, including the delivering value to all of our constituents.

ResMed remains a very strong free cash flow generation machine. We have an incredibly robust balance sheet and that provides us with significant flexibility to both invest in our business and and return capital to shareholders. This is my third and final key message here. We’ll continue to selectively invest in our digital sleep health concierge capabilities, including screening tools, clinical tools, seamless workflows and cloud connected pathways. We’ll be looking to expand and speed up the diagnostic funnel to keep up with new patient flow and even accelerate it over time from our own ResMed demand generation efforts. The greater awareness of sleep apnea generated by Big Pharma medications as well as the consumer wearables from Big Tech are capable of driving growth of patients into our funnel if ResMed does the work of curating and helping those patients find a pathway.

As I said at JP Morgan earlier this month, I’m predicting that at least one, two or three of these wearable companies will follow Apple Watch and Samsung Galaxy Watch to develop and launch sleep apnea detection capabilities that have passed through the FDA workflow. So watch this space on that. So with both Big Tech and Big Pharma bringing people into the funnel and primary care education from ResMed driving like never before, we need to be prepared to address this ongoing and growing awareness of sleep apnea as well as other sleep health and breathing health disorders. I spoke a few minutes ago about our CME courses.

I also talked about some of our ongoing product innovations such as our newer fabric masks. You’ve seen our prior acquisition of companies like Virtuox and the Night Owl product from a company called Ectosense, as well as Somnaware, which is the software for pulmonary and sleep medicine physicians. Ultimately, through this MA and organic developments, we’re expanding the ecosystem to help people quickly and swiftly move from sleep apnea awareness through testing, all the way to being diagnosed and treated and adherent to on our therapy for life. With Investing, going back into our business is our absolute first priority for capital allocation.

We invest over 6 to 7% of our revenues in R&D and 19 to 20% in SGA. But we’re also returning capital to shareholders through dividends, and we’ve been increasing those. And we’ve added an increase to our share repurchases. During the second quarter, we returned another $263 million to our shareholders through our quarterly dividend and our $175 million in share repurchases. I noted at JP Morgan earlier this month that we are increasing our share repurchases to more than $600 million for fiscal year 2026. We picked up the pace of our share repurchases in the second quarter and will continue to deploy meaningful capital through our share repurchase program quarter after quarter.

ResMed has and will continue to demonstrate an ability to consistently deliver both financially and operationally. We’ve established a leading market position globally in underpenetrated markets, and we still have a very long Runway of growth ahead. We’re in mile one of the marathon. This underpins our confidence in our ability to deliver for consumers, for patients, for physicians, for providers for payers and for our communities that we serve. And of course to all of you listening here, our shareholders. With that, Brett, I’ll hand over to you to go into a deeper dive on our financials and then we’ll open up the floor for your questions.

Brett, over to you. I dropped off the call Brett. Well why don’t you speak through teams and then we can get you live here. Just speak through teams there Brett Brett Sandicock, I’m in the ResMed call. I’m about to speak. Could you get me on please?

operator

One moment please.

Michael Farrell — Chief Executive Officer and Chairman

Brett Sandercock.

operator

Resmit yeah, pre conference speaker. Thank you.

Brett A. Sandercock — Chief Financial Officer

Rejoining Brett hi Kevin, how are you? Sorry about call dropped out, but I’m back now. I’m ready to go. Mick hi Gab, right. Great. Thank you Mick in my remarks today, I’ll provide an overview of our Results for the second quarter of fiscal year 2026. Unless noted, all comparisons are the prior year quarter and in constant currency terms where applicable. We had strong financial performance in Q2 Group. Revenue for the December quarter was 1.42 billion, an 11% headline increase and 9% in constant currency terms. Revenue growth reflected positive contributions across our device and MAST portfolio and our software business. Year over year movements in foreign currencies positively impacted revenue by approximately 25 million during the December quarter.

Looking at our geographic revenue distribution and excluding revenue from our residential care software business, sales in US, Canada and Latin America increased by 11%. The regions increased by 6% on a constant currency basis. Globally, on a constant currency basis, device sales increased by 7%, glass and other sales increased by 14%. Breaking it down by regional areas, Canada and Latin America increased by 8%. Masks and other sales increased by 16%, reflecting continued growth in both resupply and new patient setups as well as incremental revenue from our Virtuox acquisition which we acquired in Q4FY25. In Europe, Asia and other regions, device sales increased by 5% on a constant currency basis and masks and other sales increased by 8% on a constant currency basis.

Residential care software revenue increased by 5% on a constant currency basis in the December quarter, underpinned by robust performance from our Medifox Darn software vertical, partially offset by ongoing challenges in our senior living and long term care vertical. During the rest of my commentary today, I will be referring to non GAAP numbers. We have provided a full reconciliation of the non GAAP to GAAP numbers in our second quarter earnings press release. Gross margin will see 2.3% in the December quarter and increased by 110 basis points year over year and by 30 basis points sequentially. The year over year increase was primarily driven by component cost improvements and manufacturing and logistics efficiencies as well as a modest positive impact from foreign currency movements.

Our supply chain team continues to work and make progress on our pipeline of gross margin productivity initiatives and we remain focused on making sustained long term gross margin improvements. Looking forward and subject to currency movements, we now expect gross margin will be in the range of 62 to 63% for fiscal year 2026. Moving on to operating expenses, SGA expenses for the second quarter increased by 15% on a headline basis and by 12% on a constant currency basis. The increase was primarily attributable to growth in employee related expenses and marketing and technology investments as well as additional expenses associated with our Virtuox acquisition.

SGA expenses as a percentage of revenue increased to 19.6% compared to 18.8% in the prior year period. Looking forward and subject to currency movements, we still expect SG&A expenses as a percentage of revenue to be in the range of 19 to 20% for fiscal year 2026. R&D expenses for the quarter increased by 12% on a headline basis and 10% on a constant currency basis. The increase primarily reflects increases in employee related expenses. R and D expenses as a percentage of revenue increased to 6.4% compared to 6.3% in the prior year period. Looking forward and subject to currency movements, we still expect R and D expenses as a percentage of revenue to be in the range of 6% to 7% for fiscal year 2026.

During the quarter we recorded a restructuring related charge of 6 million reflecting the finalisation of our global workforce planning activities which we initiated in the first quarter of fiscal year 2026. Restructuring charges were comprised of employee severance and other one time termination benefits. The restructuring charge has been treated as a non GAAP Item in our second quarter financial results. Operating profit for the quarter increased 19% underpinned by revenue growth and gross margin expansion. Our operating margin improved to 36.3% of revenue compared to 34% in the prior year period. Our net interest interest income for the quarter was 8 million.

Our effective tax rate for the December quarter was 21.1% compared to 18% in the prior year quarter. As we previously noted in our Q1 earnings call, the increase in our effective tax rate was primarily due to the impact of global minimum tax legislation introduced in certain jurisdictions that became effective from July 1, 2025. We still estimate our Effective tax rate for fiscal year 2026 will be in the range of 21 to 23%. Our net income for the December quarter increased by 15% and diluted earnings per share increased by 16%. Movements in foreign exchange rates had a positive impact on earnings per share of approximately $0.04 in Q2 FY26.

Cash flow from operations for the quarter was 340 million, reflecting strong operating results, partially offset by increases in working capital. Capital expenditure for the quarter was 29 million, and depreciation and amortisation for the quarter totalled 50 million. We ended the second quarter with a cash balance of 1.4 billion, and at December 31 we had $664 million in gross debt and $753 million in net cash. We have approximately $1.5 billion available for drawdown under our revolver facility. We continue to maintain a solid liquidity position, strong balance sheet and generate robust operating cash flows. Today, our board of directors declared a quarterly dividend of $0.60 per share.

During the quarter, we purchased approximately 704,000 shares under our previously authorised share buyback program for consideration of 175 million. We plan to continue to repurchase shares to the total value of more than 600 million for fiscal year 2026. In addition to returning capital to shareholders through a dividend and share buyback program, we will continue to invest in growth through R and D and tuck in acquisitions. And with that, I will hand the call back to our operator, Kevin for qa.

Questions and Answers:

operator

Thank you. We’ll now be conducting a question and answer session. If you’d like to be placed in the question queue, please press star1 on your telephone keypad. And as a reminder, we ask you to please ask one question and one follow up, then return to the queue. If you’d like to remove yourself from the queue, please press star 2. Our first question today is coming from John Block from Steeple. Your line is now live.

John Block

Great. Thanks, guys. Appreciate it. Really strong US mass number. I think it was 16%. Maybe if you could just help us out a little bit, was that we’re Talking roughly a 400 basis point benefit from Virtuox, when you think about that. And then Mic or Brett, any movement or stocking, if you would, from F30, relatively new, good reception. So should we calibrate any sort of benefit or stocking from that dynamic and then I could ask a follow up.

Michael Farrell

Yeah, I’ll go first, John, and then hand to Brett to go through the with and without Virtuox. As you said, the masks Accessories and other does include some contributions from, from the Virtuox part. And so even taking that out though, we had very solid growth, I’m going to say double digit growth in our masks and accessories in the US Even taking out Virtuox and so really, really solid look. Yeah, I think when we launch a new mask it can have some good cycles. Our channel doesn’t tend to really stock ahead of demand. They tend to buy when a new product comes and they start to see demand buy more.

I can tell you that the new F30i clear and particularly for me, the F30i comfort, which has fabric not just at the nasal interface but also around the headgear that goes around the head. I think this is changing the basis of competition and I think we’re going to see some really good adoption of these masks over time. Obviously we also have the high deductible health plans and health savings accounts which are a factor in the US market as they clear at the end of the December quarter there as well. So we will have some seasonality associated with that, I’d say.

But Brett, anything to add there specifically to the numbers that John mentioned on with and without Virtuox?

Brett A. Sandercock

No, I think you covered it pretty well, Mick. Even without Virtuox, still double digit growth, so still really strong. And we had a, you know, Virtuox had a really good quarter as well. So across the board and there’s probably, I think we’d see some seasonality impact from that. I think you’re right, Mick. And the early dates of the mask launches. But off to a good start. That’s kind of not as big an impact necessarily, but it’s certainly there. It’s incremental I think really on the new fabric masks.

operator

Thank you. Our next question is coming from Anthony Petrone from Missouri Group. Your line is now live.

Unidentified Participant

Thank you. And congrats on a nice clean quarter here. Maybe Mick, you gave an update on just the GLP1 landscape here. The claims data obviously holding solid here on the attach rate for cpap post starting GLP1 therapy. We now have orals out there and it’s been almost a year since the initial clearance. Maybe just an update on the impact to the front end of the funnel. More specifically in the latest channel checks that we’re hearing is that, you know, this indeed is actually bringing more patients in and it’s resulting in a high CPAP attach rate.

So maybe walk through that dynamic a bit and how you see that playing out the rest of the year. Thanks.

Michael Farrell

Yeah. Thanks, Anthony. It’s a really good question. And as you noted, yeah, we’re now tracking 1-point million patients in our claims data analysis there and that shows that 10 up to now, 11% higher start rate. So, you know, at the top of funnel, as you mentioned, there’s just a really, I would say a motivated patient group. We don’t fully understand the psychology, we see the correlation, don’t know the causality. But our assumption as we do our channel checks, talk to the doctors, talk to the pulmonary doctors and the primary care physicians who are starting to see the patients brought in by GLP1s and they’re saying these are motivated patients.

And so I think that’s what gets us at the top of funnel, that sort of, you know, inspiration to come back into the healthcare system with this new class of medicines, whether it’s the injectables or the pill, which will go broader market. But then the interesting part and the new data this quarter is the three year data showing a 6% higher, I think a 6.2% higher resupply rate at three years. And so this impact seems to be not only a motivated patient. When I show up to the PCP or the pulmonary doc, but that motivation seems to last long time.

And as Carlos Nunez said, Dr. Carlos Nunez on the stage at the healthcare conference earlier this month, it seems to stay motivation for our therapy even longer than the motivation for the other therapy. So whether or not they stay on the GLP1, where the adherence rate often is only 30 or 40% at one year, they’re more motivated on our therapy over the long term. So we’re watching very closely. We’ve now got three years of data. We’ll continue to watch that. But to your point, it does bring more patients in, they are more motivated. Your channel checks confirm what we’re hearing with our sleep doctors, that this is bringing people in.

And now with the primary care doctors, they’re getting motivated to get trained, 60,000 CME trainings and many of them are saying 77%. I’m going to change what I do on my screening, referral and pathways and so on. And we’ll be there to help them with Virtuox and all these virtual pathways, but also support our pulmonary physicians in our HME industry to scale to the flow that we need to deal with this increased demand. Thank you for the question, Anthony.

operator

Thank you. Going forth, in order to accommodate as many questioners as possible, we ask you limit yourselves to one question. Our next question is coming from Dan Hearn from MST Your line is now live.

Dan Hearn

Good morning, thanks very much. Question for Brett. Could I just ask about that SG&A. The SG&A growth is uncharacteristically ahead of revenue growth. I’m just wondering if there’s any transient expenses in there as you settle these acquisitions or is this a rebasing hire with promotional activities in Salesforce etc.

Brett A. Sandercock

Yeah, I mean there was some impact from the Virtuox acquisition, Dan, so that if you excluded that you’d get we would be at high single digits for SG and a growth so tracking pretty close on revenue growth. But as Mick mentioned in his remarks, we’re also doing some around some marketing programs and we’ve done for example China Single Day and things like that.

So there’s some promotions around during the quarter as well on that. So overall if you look at more underlying, it’s more tracking to kind of revenue growth on that I think.

operator

Thank you. Next question is coming from Laura Sutcliffe with City or Mine is now live.

Unidentified Participant

Hello, thank you for taking my question. Another one on the patient funnel if I can please. Which sort of areas or stages of the patient funnel all the way from an initial Visit to a PCP through to our first night with a ResMed device. Do you think you’ve had the most impact on in the last couple of years and where do you think there’s. Most work left to do?

Michael Farrell

Yeah, thanks Laura. It’s a great question. It’s a complex one because that funnel, obviously we map every single decision process and step along it from consumer sleep, concerned consumer considering diagnostic, then prescription therapy and then therapy for life year one and year X. Right year end. So I would say the most progress we’ve made is probably in the top of the funnel area. I think we are being given some, I would say without having to pay for it, some extra awareness from Big Pharma in bringing patients in to the funnel with their GLP1 medicines. They’re spending a lot of money on direct to consumer advertising with Zepbound and other products to follow.

So that brings patients in and then you know, from big tech, the fact that your Apple Watch or Samsung Galaxy Watch and as I predicted, at least one more of the others, whoop. Garmin, Oura Ring, you know, ultrahuman, someone else is going to add that in, that brings patients in too. So that top of funnel, I think that’s moved a lot. Our challenge at ResMed is to partner with our channel to say can we scale home sleep apnea testing and so that’s why we bought Ectosense and we have the Night Owl product out in the U.S.

that’s why we bought Virtuox, which is a home sleep apnea testing service company to help primary care physicians and pulmonary physicians with a very efficient home sleep apnea testing service. And then you saw us buy somnaware, which is software that can help a pulmonary or sleep clinic be more efficient and more capable. So really focusing on expansion of that top part of the funnel. And then of course we’re partnering with our HME customers to say, how can we help you grow now that we’re not in competitive bidding? Cpap, apap, it’s all out. There’s no distractions.

Let’s grow our businesses together. And so we’re helping them understand how to scale their setup process to run their business more efficiently with Brightree so that they can cope with the greater flow of patients through the funnel. I’ve said this publicly. I don’t think this is going to be like some crazy doubling of growth rates of devices in the US but you certainly can see in the numbers we reported today that there is some good improvements there. And I think, I think if the market is growing at mid single digits on devices and high single digits on masks, we clearly drove extra market growth and or took share this quarter.

And it’s our goal to do that every quarter. Will we do it every quarter? No. But will we try? Absolutely. And as Brett said, we invested in some of these programs on singles day in China and some D2C work around the holidays in Australia, New Zealand, Korea, Singapore and even in the US we make sure there’s an ROI to every program and if there is, we continue with it. And if there isn’t, we stop and then reevaluate and try another program. And so watch this space. There’s no particular area, Laura, but I would say that top of funnel, middle of funnel is the area we’re laser focused on now because once they’ve got that prescription, we are a machine at getting that 87% adherence with our technology at day 90 and keeping them on therapy for life.

And also the symptom relief that you get from CPAP keeps them there as well. Thanks for the question, Laura.

operator

Thank you. Next question is coming from Leigh Ann Harrison from Bank of America. Your line is now live.

Lyanne Harrison

Good morning, Mick. Presentine. I might come back to Anthony’s questions on GLP1. You know, obviously you’re tracking a lot of patients now and you’ve got three years worth of data but you know, with the GLP1 crisis coming now and then now in pill form, we expect more people to be on GLP1 for longer. Are you seeing any changes in compliance or therapy for those GLP1 OSA patients in the cohort you’re tracking who’ve been with you for three years now, in particular those who have mild or moderate sleep apnea?

Michael Farrell

Yeah, thanks for the question, Leanne. And look, we have those aggregate numbers that we shared and clearly at three years we see more purchases and so these people are motivated and buy more from us. To your specific question of tracking individual patients and where they go through this therapy, what we’re finding is patients who have this therapy, even if they have so called mild to moderate sleep apnea and their AHI might be reduced somewhat. The symptomatic relief that they get from cpap, apap, bilevel, you never really, you don’t cure this disorder by lowering your hr, you can mitigate some of its severity.

But what we’re finding is the symptomatic relief and the care that patients have on therapy is such that they stick on our therapy for life. You know, the side effects of these medicines are, you know, in the early stages, nausea, diarrhea and some aspects you have to get used to GLP1 medicines for CPAP, it’s the opposite. You have symptomatic relief. Your bed partner says, wow, you’ve stopped snoring. We can now sleep in the same room together. The sleep divorce is over. We have aspects of the patient themselves where they wake up refreshed in the morning versus morning headaches, they’re not tired in the afternoons at their jobs or in front of the television movies with friends.

And so that symptomatic relief and change of life is very addictive. So even if patients go from an HI of 40 to 20 or 20 to 10, they are sticking with therapy. And it’s out there in those aggregate numbers. But we’re actually looking and we’ll do case studies around people where the combination therapy, which by the way was shown in Lily’s surmount OSA study to be the best outcome in their own analysis is one that we would encourage weight loss. And treating your sleep apnea has always been part of the care of pulmonary doctors. They now have a new injectable pill to cover with weight loss versus just eat less and exercise more.

So it’s a combination of all the above that’s leading to these numbers. But yeah, we’re looking at our adherence on the short, medium and long term, not seeing any reduction. And Particularly within this cohort of patients, we’re actually seeing patients that are more adherent to therapy, more motivated to start and stick with therapy. So watching very carefully, but the thesis that this could be a headwind is completely gone. It’s a tailwind. And the question is now, how much of a tailwind will it be? How many PCPs can we educate to get those combination prescriptions? And when a patient’s on therapy, how can we meaningfully engage with with them so that they stay adherent for life? And we’re having good success with this new cohort of patients.

Thanks for the question, Leanne.

operator

Thank you. Next question is coming from Matt Taylor, from Jeffries. Your line is now live.

Matt Taylor

Hi. Thanks for taking the question, Mick. You actually sort of led into what I wanted to ask about, which is you’ve given a lot of positive stats about how GLP1s are helping the funnel and your business. I guess I was wondering if you’ve tried to quantify that now with some of the data that you have, could you help us understand how much of a tail end it is now or could be in the future, or if they didn’t exist, how much would you be growing? Would it be a material difference? Thank you.

Michael Farrell

Yeah, Matt, it’s a really good one that we’re wrestling with internally to go from the macro and claims data down to the individual. How many basis points, points to your point, how many basis points of that really good US devices growth in the quarter was 8%. How much of that was driven by big Tech and Apple and Samsung identifying someone that came to a PCP versus Big Pharma, you know, advertising a new injectable or pill that brought someone into pcp, then got the referral to the specialist and prescription. And we’ve got a lot of that macro retro data.

We also, through MyAir, we now have 11 million users of MyAir. And obviously on a voluntary basis, every person who signs up to MyAir can tell us, how did you hear about sleep apnea? Was it your bed partner? Was it snoring? Was it a big pharma? Was it a GLP one or was it big tech? Was it a wearable? And so we’re asking those questions and we’re getting early data. We’re not prepared to publicly talk about it yet, but I can tell you that it is a contributor and it’s one that we are working very carefully to quantify and also to work out how we can continue to scale with, to make sure that our funnel, the primary care physicians, the home Sleep apnea testing capabilities, the prescription capabilities of a sleep doctor.

Sleep doctors are very busy. They have long waiting lists. How can we help them with somnware and Brightree to better manage their practice and their DME if they have that part and then for our DME customers to really help them scale. We’re seeing a great demand for Brightree and its ability to lower costs and improve outcomes. And although we are completely out of competitive bidding, our HMEs have other products that are in there. So the more costs that we can help an HME take out of their business with Brightree and the more resupply we can help them drive to where a patient wants that new mask or accessory.

That’s what’s going to get us to where we need to be. So yeah, thanks for the question, Matt. We are quantifying it, not yet ready to sort of release that, but we may peer review and publish some evidence on this through a scientific part of our business to really get it out there in the peer review press and then I can start to talk about it publicly. But it is a contributor and we’ll quantify it over time. But really excited to have this moment if you like. Sleep Health is having a very, very good moment in healthcare right now and we’re leveraging that.

operator

Thank you. Next question today is coming from David Bailey from Morgan Stanley. Your line is now live.

David Bailey

Yeah, thanks very much. Morning, Mick. One of the most frequent questions we get is the potential return of Philips back into the US device market. Just thoughts on potential timing of that re entry to the extent you’ve got any thoughts there, the potential impacts and where they have reentered your observations in relation to the competitive dynamics. That would be great, thanks.

Michael Farrell

Yeah, thanks for the question, David. And you know, I’ll just default to what that company’s CEO said at a conference earlier this month and what their CFO said at a conference. I was at the quarter before which is they don’t know. So if they don’t know then I don’t know. But and frankly I don’t really look back to the number two, three or four competitor which that company is in the various markets, 140 markets we compete in. I look forward to say the last five questions. How do we deal with this new flow of patients in.

I can say this though, they’re back in over 100 countries in Europe, Asia, rest of the world and some they’ve been back for 12, 18, 24 plus months. So we’ve lapped it multiple times in these quarterly calls and I don’t know if you looked into the Europe, Asia, rest of world device growth in the quarter, pretty solid. They’re at 5% like right in line with market, maybe a little demand gen that we’re driving, we’re holding share and competing well with that competitor but more importantly frankly in some of those regions other competitors that have taken that number two spot that competitor you mentioned has to fight with to get back to number four, number three and even number two space.

So I welcome competition. I think competition is fantastic. I’m not fearful at all about that player. They’re going to be making products that I think are in Thailand now and shipping them to the US and Europe. I look forward to that. I think we’ve got a better product. It’s smaller, it’s quieter, it’s more comfortable, it’s more connected and it’s more intelligent. And that ecosystem what we developed with MyAir and Air View and Brightree, that ecosystem is very hard to match and none of our competitors really can compete across the board on that. But no have no idea of their US devices entry but they’ve been in the US for masks and accessories these last 20 quarters and we’ve been competing very well against them and meeting and beating their growth and taking share when that’s all they could sell in that market.

I’m very happy to have them back Monday morning or next year and it really won’t affect us in terms of how we grow to the market. They’ll have to fight to get that number three or number two position from another player who took it and we welcome that competition. Thanks for the question David.

operator

Thank you. Next question is coming from David Dillonition from Goldman Sachs. Your line is now live.

Unidentified Participant

Thanks. Thanks Mick and Taine for the presentation to good segue to my question Mick on the question about devices for the ex US markets sort of 5% constant currency growth can you sort of help us understand that growth a little bit better? Clearly it’s a market that is quite lumpy. Was there any sort of pull forward of demand that happened in the previous quarters that sort of weighed on growth this quarter? How do we think about I guess some of the demand generation activities that you are doing?

Michael Farrell

Yeah, no, it’s a really good question. And look I think 5% growth across Europe, Asia, rest of the world is very solid in where we’re at and it’s in line with market. There were some, you know, if you take this quarter a year ago there was some lumpiness from our Japan market where it’s kind of a fleet management market and there was sort of increased purchases of devices in the, the Japan market. But look, you know, the way I look at it is we’ve got 140 countries we sell in across there. Our job, as you know, the portfolio of managing all those is to continue to grow across them.

And I think our teams did very well. There was some good promotional work that we did in China and Korea and Australia, New Zealand markets that you know, can help that market and you know, not just in the, the December quarter but that’s a particularly good one for D2C markets with the holidays and Air Mini particularly. But yeah, there was some lumpiness in the year before. But look, there are no excuses. Markets growing mid single digits. Our team has to grow mid single digits in devices and high single digits in masks. And I’m very proud of our EMEA and APAC teams that they delivered in the December quarter and now they’re on to March and June and we’ll continue to deliver and our goal really is to to across those 140 countries emulate our best approach to help be that digital sleep health and breathing health concierge and drive patients in the funnel and through the funnel for their best path to get to therapy.

Brett, anything to add on that for Europe, Asia, rest of world devices?

Brett A. Sandercock

No, no, we’re pleased with that result and the only thing I’d say is that the prior year comp that you mentioned, Mick, was, was 9% last year. So it was very, very strong, comparable. But overall I think, yeah, pretty solid, pretty happy with it.

operator

Thank you. Next question is coming from Brandon Vasquez. From William Blair, your line is now live.

Brandon Vazquez

Hey everyone, thanks for taking the question. Mick, I wanted to ask. It’s been a little bit over a year now that you started kind of stepping up the investments within the PCP channel. Talk to us a little bit about what are you seeing from that channel, how excited are you about it and what can it mean for growth on the devices side and what kind of metrics should the investors be looking for as maybe like positive ROI on these investments within the PCP channel? Thanks.

Michael Farrell

Yeah, Brandon, it’s a great question. Yeah. In the prep remarks I Talked about the 60,000 trainings we’ve done on CME with P PCPs or GPs as they’re known here in Australia and Europe. What’s exciting for that for me is that I mean it was the number one downloaded PCP training in the last quarter and it was up 50% just in the quarter. That’s a metric. I’m a very leading indicator, but it’s a metric you can think about, which is, what’s the demand for knowledge about this. A primary care physician, they got a tough job, they’re going to deal with everything from headaches to tinea, head to toe, every complication.

And in general, particularly in the US market, they’ve got very little time. I think it’s on average five to seven minutes with a patient on an annual basis and they’ve got to assess everything. And so the fact that we can get sleep health on their radar, that maybe a pharma company has told them, come in and ask for an injectable that might, might help with your sleep health and your breathing health. And then they come in and talk to the pcp. If they’ve done our education, that PCP knows where to send a patient to a home, sleep apnea testing protocol.

They know what is gold standard cpap, APAP and bilal, the only therapy that can completely eliminate your AHI to zero if used perfectly and as directed. And they know what the backup plan is on dental and the backup to the backup plan, which is a pharma solution. And they’re writing prescriptions. And so it’s happening. As I said earlier, we’re not yet quantifying exactly how much that we are seeing that comes through PCPs or from referrals of big pharma and big tech into PCPs versus that are coming sort of organically through our demand generation that we’re driving or through the general organic demand that we’ve seen over the last decades in our space.

But we are investing in this PCP channel. We’re going to continue investing in education. What I love about doing it at CME education is it’s pure, it’s true. Yes, it has the ResMed brand on the last page. We get a little bit there. But it’s all done according to the American Academy of Sleep Medicine guidelines. So it’s in line with what the doctors are saying on those guidelines. And it just helps the PCP say, okay, here’s the pathway and here’s what I should do. And look, many of you are the cell side here are doing channel checks and talking to everyone.

Even ENT surgeons are saying, no gold standard. Of course, even though they make money from doing the surgery, they’re saying gold standard is this non invasive, completely reversible, incredibly effective, positive airway pressure therapy. So we’re seeing that the PCPs know it and it’s just helping them find a pathway. So Here’s a screening protocol, here’s a home sleep apnea testing service and here’s a referral pathway to a specialist and a DME that’s going to take care and get very high adherence for you. And you’ll get the update of the next physical with this patient through a digital platform into your EPIC or your Cerner or your Allscripts, whatever you use.

Because we have API calls going in and out hundreds of times a second into and out of our Airview system to the Dr. Systems. Thanks for the question, Brandon. And we’ll continue to update you on those leading metrics for PCP education and more as we get more comfortable sharing, sharing across that new channel that we’re developing. Thanks for the question.

operator

Thank you. Next question is coming from Nathan Trebek from Wells Fargo. Your line is now live.

Nathan Trebek

Great. Thanks for taking the question. Congrats on a great quarter. Are you seeing anything that would suggest that US mass strength that you saw in fiscal Q2 will persist at that level into the second half of the year? Thanks.

Michael Farrell

Yes, thanks for the question, Nathan. Yes, I mean US masks, accessories and other growth was 16% in the quarter. An incredible performance from our US and broader Americas team. Look, I mean market growth is in the high single digits so we don’t expect to outperform by whatever if you take 9% as high as you can just buy 700 basis points every quarter. And as Brett said earlier, there was some contribution from Virtuox on that accessory side. So even taking out that and we’ve had double digit growth in virtualox by the way, which is great and does feed the core business in new patient flow.

But even taking out Virtuox, we’re still in the high single, we’re still in the double digits, so still beating high single digit market growth. And so what did we do? Well, we have promotion campaigns, we talk to people about getting a new mask and we engage with people through Brightree, through MyAir and through our DME partners and in other parts of the world, we did this as well. And so we’re having some success with that. You can’t do that every quarter and you can’t drive it every quarter. But I do think we can meet and beat that high single digit growth of masks every quarter as we go meet and or beat.

And the beats like this come where we get the brand roi, we get the demand gen roi and we have good promotional programs that play out there. So it’s a portfolio management, it’s a balance and we’re balancing Our investments I think pretty well 6 to 7% into revenue and 19 to 20% into R&D from revenue and 19 to 20% of revenue into SGA. These sort of sales and marketing programs, I think we’re doing a very efficient job. And I can tell you our marketing team now, one global team is looking at the ROI of every single program down to the return on advertising spend, the ROI of that individual metropolitan statistical area.

What program did we run, how did it go? And if it’s profitable, of course we’ll continue to do it. If it’s not, we stop and then rejoin. And so it’s not perfect and smooth and we won’t outperform every quarter. But I’m really proud of the team and proud to report these numbers and I, I challenge them to outperform every quarter. I just expect them to meet and or beat that high single digit growth and they clearly beat it this quarter. Thanks for the question, Nathan.

operator

Thank you. We reached the end of our question and answer session. I’d like to turn the floor back over to Mick for any further closing comments.

Michael Farrell

Well, thanks Kevin and thank you to everyone for joining us on our earnings call today. On behalf of more than 10,000 ResMedians serving people in 140 countries worldwide, I’m pleased to support we’re able to deliver another strong quarter of performance and continue to build value for all of our shareholders. We’ll talk to you, many of you over the coming days and weeks and we’ll talk to many of you right here in 90 days. And with that, Sally, I’ll hand over to you to close out the call.

Sallilyn Schwartz

Great. Thank you Mick. I’ll echo Mick’s. Thank you to everyone for listening. We really appreciate your time and interest. If you have any additional questions, please don’t hesitate to reach out directly to investor relationship@resmed.com or anyone on the ResMed IR team. Kevin, you may now close out the call.

operator

Thank you. That does conclude today’s teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.