ResMed's Earnings Crossroads: Can Growth Outpace Insider Concerns?

As ResMed Inc. (RMD) prepares to report its Q4 fiscal year 2025 earnings on July 31, investors face a critical question: Can the company's robust growth story withstand scrutiny from notable insider selling, or will it prove sustainable enough to justify the optimism embedded in its $37.67 billion market cap?

The backdrop to this earnings report is a mix of encouraging financial results and puzzling insider activity. Let's dissect the data to assess whether ResMed's future is as bright as its stock price suggests.

The Insider Selling Conundrum

Over the past 18 months, ResMed's executives and directors have sold a staggering $60.6 million worth of shares, with CEO Michael J. Farrell alone accounting for $33.7 million of those sales. Notably, this trend continued into early 2025, with Farrell selling $9.4 million of shares between April and June—a period when the stock traded between $240 and $260 per share.

While such selling could signal confidence in near-term valuations, the scale of these transactions raises questions. For instance:
- Michael J. Rider, the Global General Counsel, filed a Form 144 in July 2025 to sell an additional 66 shares, emphasizing compliance with SEC rules and no material non-public information.
- CFO Brett Sandercoc and Chief Commercial Officer Kaushik Ghoshal also reduced holdings, though their sales were smaller in comparison.

Critically, insider ownership remains minimal at just 0.71% of outstanding shares. This suggests that the sales, while significant in dollar terms, represent a drop in the bucket relative to institutional and retail ownership. Furthermore, many transactions were tied to pre-arranged 10b5-1 plans, which allow executives to sell shares without relying on material non-public information.

Analyst Sentiment: Bullish Despite the Noise

Analysts appear unfazed by the insider activity. As of the June 2025 data cutoff, ResMed's stock carried a "Moderate Buy" average rating, with a median price target of $265—4% above its current price of $256.91. Key highlights include:
- Morgan Stanley upgraded RMD to "Overweight", citing its leadership in sleep therapy and expanding SaaS offerings.
- KeyBanc highlighted strong cash flow and margin expansion, with a $286 price target.
- Even cautious analysts acknowledged ResMed's 10% revenue growth in Q2 FY2025 ($1.3 billion) and a 65% surge in net income to $344.6 million.

The Financials: A Solid Foundation

ResMed's recent performance underscores its resilience:
- Operating cash flow hit $309 million in Q2, a testament to efficient capital management.
- Non-GAAP diluted EPS rose 29% to $2.43, reflecting both top-line growth and cost discipline.
- A $0.53 quarterly dividend, paid in March 2025, signals confidence in sustained profitability.

What to Watch in the Q4 Earnings

Investors should scrutinize three key metrics during the July 31 earnings call:
1. Revenue Growth: Can ResMed maintain its 10%+ growth rate in a slowing global economy? Analysts expect $1.35 billion, but a miss could trigger skepticism.
2. Margin Expansion: The company's gross margin has held steady near 60%, but rising input costs (e.g., healthcare supply chains) could pressure profitability.
3. Guidance for FY2026: Will management reaffirm long-term targets of 8-10% revenue growth and $1.5 billion in annual free cash flow?

The Bottom Line: A Growth Story Worth Monitoring

ResMed's fundamentals remain strong, driven by secular tailwinds in sleep-disorder treatment and its shift to software-as-a-service (SaaS) models. The insider selling, while notable, appears more about individual wealth management than a coordinated exit.

Investment Takeaway:
- Hold or Buy: For long-term investors, ResMed's earnings momentum and analyst support justify a position, provided the July 31 results meet or exceed expectations.
- Avoid Overreacting: The stock's 50-day moving average ($245.93) and 200-day average ($235.41) suggest a bullish trendline, but volatility is likely post-earnings.
- Watch for Catalysts: A positive earnings surprise could push shares toward the $286 price target, while disappointment might test the $230 support level.

In conclusion, ResMed's growth narrative is intact—but its executives' wallets now belong in the rearview mirror. The focus should remain on the company's ability to execute, innovate, and deliver on its healthcare technology promises. The earnings report will be the ultimate test.