ResMed NYSE: RMD reported third-quarter fiscal 2026 results highlighted by revenue growth, gross margin expansion, and higher non-GAAP earnings per share, while also announcing a CFO transition and a planned tuck-in acquisition to expand beyond its core sleep apnea business.
Leadership updates: CFO retirement and successor named
CEO and Chairman Mick Farrell opened the call by noting the company’s announcement that CFO Brett Sandercock will retire, with Aaron Bloomer appointed as ResMed’s next CFO. Farrell credited Sandercock with helping build “a financial foundation that has allowed us to deliver strong growth, robust free cash flow, and best-in-class operating margins,” and said Sandercock leaves the company “in a position of strength.”
Farrell said Bloomer brings more than 17 years of global financial leadership, most recently as CFO of Exact Sciences, with prior roles at 3M and Baxter.
Quarterly financial performance: revenue up 11%, non-GAAP EPS up 21%
Sandercock said group revenue for the March quarter was $1.43 billion, up 11% on a headline basis and 8% on a constant-currency basis. Foreign exchange positively impacted revenue by approximately $39 million.
On a constant-currency basis, Sandercock said:
- Device sales increased 6% globally.
- Masks and other sales increased 12% globally.
- Residential care software revenue increased 4%, driven by Medifox DAN and partially offset by challenges in senior living and long-term care.
By geography (excluding residential care software revenue), sales in the U.S., Canada, and Latin America rose 9%, while sales in Europe, Asia, and other regions increased 7% on a constant-currency basis.
Sandercock said gross margin was 62.8%, up 290 basis points year-over-year and 50 basis points sequentially, driven primarily by “component cost improvements in manufacturing and logistics efficiencies,” plus a small positive impact from mix and currency. He reiterated the company’s expectation for fiscal 2026 gross margin of 62% to 63%, subject to currency movements.
On operating expenses, Sandercock said SG&A increased 14% on a headline basis and 9% in constant currency, reflecting VirtuOx-related expenses, employee costs, and “marketing and technology investments.” SG&A as a percentage of revenue rose to 19.5%, and the company maintained its fiscal 2026 expectation of 19% to 20%.
R&D increased 12% headline and 8% in constant currency, with R&D at 6.6% of revenue; Sandercock reiterated an expected fiscal 2026 R&D range of 6% to 7%.
Operating profit increased 18%, and non-GAAP operating margin improved to 36.7% from 34.4%. Sandercock also noted $6 million in acquisition and portfolio review-related expenses treated as a non-GAAP adjustment.
Net interest income was $12 million, which included income associated with a 10-year Singapore dollar to U.S. dollar net investment hedge executed in February 2026. Sandercock said the hedge is expected to generate about $9 million in net interest income per quarter going forward, and he expects net interest income in Q4 fiscal 2026 to be approximately $15 million.
During the quarter, ResMed recognized $10 million in unrealized losses from write-downs in its minority investment portfolio, which Sandercock said reduced Q3 fiscal 2026 EPS by $0.07. The effective tax rate was 20.9%, with Sandercock attributing the increase versus last year to global minimum tax legislation effective July 1, 2025, and reiterating a fiscal 2026 tax rate expectation of 21% to 23%.
Sandercock said net income increased 20% and non-GAAP diluted EPS increased 21%, with foreign exchange adding about $0.05 to EPS.
Cash flow from operations was $554 million, capital expenditures were $34 million, and the company ended the quarter with $1.7 billion in cash. ResMed reported $664 million in gross debt and $996 million in net cash at March 31.
Products and market commentary: fabric masks, AirSense 11 expansion, and supply chain
Farrell emphasized gross margin progress and said the company’s supply chain optimization efforts and experience navigating disruptions position it to manage current geopolitical uncertainty. In response to an analyst question, Farrell said ResMed’s sea freight routes “through the Panama Canal to East Coast” were not seeing impacts from Middle East geopolitical uncertainty, while acknowledging potential fuel impacts and noting the company has shifted largely from air freight to sea freight. Sandercock added that component cost inflation may emerge, but said ResMed expects to offset pressures through a productivity pipeline including “platform standardization, scale benefits, vendor management,” and logistics efficiencies.
On product momentum, Farrell highlighted ResMed’s “novel fabric based masks,” naming the AirTouch N30i and newer F30i Comfort and F30i Clear. He cited real-world data indicating the AirTouch N30i drives 6% higher 90-day compliance than its silicone equivalent, and argued adherence is “the single biggest driver of lifetime value” for the ecosystem.
Farrell said ResMed continued the global rollout of the AirSense 11 platform, including Latin America and a launch “just this month” in China. He described China as leveraging a “local digital ecosystem” separated from global platforms, including WeChat integration.
On competitive dynamics, Farrell said ResMed had not seen a recent competitive device launch that created major concern, adding the company is focused on future innovations such as more intelligent therapies and algorithms. He pointed to U.S. device growth of 6% in the quarter and said the company was “not seeing an impact.”
Farrell also addressed HME economics for the fabric masks, saying profitability can vary across reimbursement by payer and state. He said the company prices to reflect both cost and value, and that “for the vast majority, we’re able to get those economics to work within the reimbursed environment,” while acknowledging it will not work for every payer/state combination.
Pipeline and strategy: GLP-1 data, clinician education, and planned Noctrix acquisition
Farrell reviewed ResMed’s clinician education efforts, noting its sleep apnea educational courses have been completed more than 80,000 times by more than 45,000 unique clinicians. He said surveys show 78% of providers intend to change clinical practices, and said early feedback suggests more patients are being assessed and diagnosed, adding, “We see this in our VirtuOx numbers as well.”
Farrell also discussed ResMed’s real-world analyses related to GLP-1 therapies. He said a study of 1.7 million de-identified patient records found PAP patients who subsequently start GLP-1 therapy show higher PAP adherence as measured by resupply, with 5.1% higher two-year resupply rates and 6.2% higher three-year resupply rates versus PAP-only patients. He also cited a claims analysis based on a cohort of 2.1 million de-identified patients, stating those with scripts for both PAP and GLP-1 were approximately 11% more likely to start PAP than those with PAP alone, and were more than 3% more likely to have a resupply event at one year and more than 6% more likely at three years.
Farrell repeatedly framed GLP-1s as a “mega trend” and “once in a generation demand gen opportunity,” and said the company is investing organically and inorganically to capture increased consumer awareness.
On inorganic investment, Farrell announced ResMed signed an agreement to acquire Noctrix, which has an FDA De Novo classified medical device for restless leg syndrome (RLS). He described RLS as “the world’s third most prevalent sleep disorder after sleep apnea and insomnia,” and said it impacts about 7% of adults globally and about 17 million people in the U.S. Farrell said Noctrix’s flagship product, Nidra, is non-invasive, drug-free, and flows through the same HME/DME channel used by ResMed’s sleep products.
Sandercock said the purchase consideration is $340 million and ResMed expects to close “on June 1, 2026.” He said Noctrix’s current annual revenue run rate is approximately $24 million, to be reported within the Americas devices category. For Q4 fiscal 2026, Sandercock expects Noctrix to reduce non-GAAP EPS by approximately $0.02.
Farrell also reiterated that ResMed is working on “disciplined portfolio management” in its residential care software business and said he remains confident the company will “accelerate RCS revenue back to sustainable high single-digit growth with double-digit operating profit growth in fiscal year 2027,” with more updates to come.
On capital returns, Farrell said ResMed returned $262 million to shareholders in the quarter through dividends and repurchases, including $175 million in buybacks. Sandercock said the board declared a quarterly dividend of $0.60 per share, and ResMed plans to repurchase at least $175 million of shares during Q4 fiscal 2026.
Farrell closed by reiterating confidence in ResMed’s five-year outlook for “high single-digit revenue growth and earnings growth higher than revenue growth,” while thanking Sandercock for his tenure and welcoming incoming CFO Bloomer.
About ResMed NYSE: RMD
ResMed NYSE: RMD is a global medical device and cloud-connectivity company focused on improving outcomes for people with sleep-disordered breathing and chronic respiratory conditions. Founded in 1989, the company is headquartered in San Diego, California, and develops, manufactures and distributes a range of devices and software used by patients, clinicians and providers worldwide.
ResMed's product portfolio centers on noninvasive ventilation and sleep therapy equipment, including continuous positive airway pressure (CPAP) and bilevel devices, masks and related accessories for the treatment of obstructive sleep apnea and other respiratory disorders.
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