What ResMed (RMD) Said on Its Q1 Earnings Call

Key Points

• ResMed’s Q1 fiscal 2027 results exceeded growth expectations: Revenue rose 6% year over year to $1.4 billion, while non-GAAP EPS increased 14% to $2.91. Sleep devices, masks and software offset a sharp decline in life-support device sales.
• Gross margins and shareholder returns improved: Non-GAAP gross margin expanded 50 basis points to 62.5%, and ResMed returned more than $1 billion through buybacks and dividends, including approximately $936 million in stock repurchases.
• Management maintained its full-year outlook: ResMed still expects fiscal 2027 core constant-currency revenue growth of 5% to 7% and non-GAAP EPS of $12 to $12.25, despite a roughly $75 million revenue headwind from discontinuing Astral ventilator sales.

ResMed NYSE: RMD reported first-quarter fiscal 2027 revenue of $1.4 billion, up 6% from a year earlier on a reported basis and 7% on a core constant-currency basis, as growth in sleep devices, masks and residential care software offset declines in life-support device sales. Non-GAAP diluted earnings per share rose 14% to $2.91.

Chairman and Chief Executive Officer Mick Farrell said the company began the fiscal year with revenue growth, a 50-basis-point expansion in gross margin and increased shareholder returns. During the quarter, ResMed repurchased approximately $936 million of stock and, including dividends, returned more than $1 billion to shareholders. The repurchases were funded by proceeds from the September divestiture of its MatrixCare business and cash on hand.

Device, mask and software performance

In the Americas, sleep-device revenue increased 6% and masks and other revenue rose 10%, while life-support device revenue declined 94%. In markets outside the Americas, sleep-device revenue grew 13%, masks and other revenue increased 11%, and life-support device revenue fell 79%.

Chief Financial Officer Aaron Bloomer said international sleep-device growth was partly supported by a fleet-refresh cycle in France, where cloud-connected devices are subject to differentiated reimbursement. Farrell said the renewal activity, primarily involving upgrades from AirSense 10 to AirSense 11 devices, is expected to be weighted toward the first half of the fiscal year and create pressure in the second half as it concludes.

Residential care software revenue declined 7% on a reported basis but increased 5% on a constant-currency basis. Excluding MatrixCare, the remaining residential care software operations, Brightree and MEDIFOX DAN, grew 8%.

ResMed launched its AirCurve 11 ST and ST-A bilevel device platforms in the U.S. during the prior quarter. The platforms are designed for patients who need greater pressure support or who have more complex breathing disorders. The company also introduced the AirTouch F40 full-face mask, its third fabric-mask product. Farrell said ResMed data showed its previously launched fabric masks had a 6% increase in therapy adherence compared with silicone-mask equivalents.

Digital tools and patient engagement

Management highlighted updates to the myAir patient app, including revised therapy scores, a nightly timeline of events, controls for comfort settings and an Equipment Care feature intended to help patients manage replacement supplies. The app has been downloaded more than 13 million times, Farrell said.

ResMed’s generative artificial intelligence-powered digital sleep coach, Dawn, has received more than 2.1 million patient inquiries, up more than 40% from the previous quarter, according to Farrell. The company said its SmartComfort tool, which recommends personalized humidity and temperature settings for new AirSense 11 users, has shown a 4.3% increase in 30-day compliance in early real-world data compared with default device settings.

The company also discussed partnerships with sleep technology companies Eight Sleep and ŌURA. As of Sept. 30, approximately 28,000 ŌURA users had visited ResMed’s website through a customized tile in the ŌURA app, more than double the total at the end of July, Farrell said. Of users who completed a ResMed sleep assessment, roughly 72% identified themselves as previously undiagnosed for obstructive sleep apnea.

Management said these initiatives did not make a material contribution to first-quarter revenue. Farrell and Bloomer said the programs are intended to create more durable growth by improving the path from consumer awareness to diagnosis, prescriptions and long-term therapy adherence.

Margins, supply chain and Astral actions

Non-GAAP gross margin increased to 62.5%, driven by productivity gains in procurement, manufacturing and distribution, as well as favorable product mix. Those gains more than offset foreign-exchange headwinds.

Bloomer said first-quarter margin also benefited from the timing of supply-chain expansion investments, particularly costs related to the company’s new Indiana facility that are now expected to affect the second quarter. He said pricing made little contribution during the first quarter but is expected to build gradually through the year as the company implements global price increases.

ResMed has produced its first U.S.-made AirSense 11 device at its Atlanta facility. The company is also expanding its Indiana distribution center and its manufacturing operations in Singapore and Malaysia. Management said its goal is to achieve a similar delivered cost for products made in the U.S. as for imported devices, though startup and underutilization costs are expected during the ramp-up period.

The company is continuing its field safety corrective action for Astral ventilators and said it will no longer sell the device. ResMed is allocating available components to servicing existing Astral patients, with priority based on clinical acuity. The company previously recorded a $42 million reserve related to the action.

Outlook maintained

ResMed reiterated its fiscal 2027 guidance for core constant-currency revenue growth of 5% to 7%. The range includes an estimated 130-basis-point, or roughly $75 million, headwind from the decision to stop selling Astral. Excluding Astral, the company said the growth range would be 6.3% to 8.3%.

The company continues to expect reported fiscal-year revenue of $5.75 billion to $5.85 billion, assuming a roughly 60-basis-point foreign-exchange headwind. It maintained non-GAAP earnings-per-share guidance of $12 to $12.25, representing reported growth of about 7% to 10%. Excluding dilution from the MatrixCare divestiture and the Nidra acquisition, the company said its outlook implies core earnings-per-share growth of 12% to 14%.

For the second quarter, ResMed expects its customary mid-single-digit sequential increase in revenue, excluding two months of MatrixCare revenue included in the first quarter. It anticipates slightly lower sequential gross margin as expansion costs shift into the quarter, largely flat research and development expense, higher selling, general and administrative expense tied to marketing efforts, and roughly $10 million less net other income than in the first quarter.

ResMed also reaffirmed plans to return more than $1.85 billion to shareholders during fiscal 2027 through dividends and repurchases, while forecasting capital expenditures of $160 million to $180 million.

About ResMed (NYSE:RMD)

ResMed Inc is a medical equipment and software company that develops solutions for sleep-disordered breathing, respiratory conditions and other chronic diseases. The company is best known for its positive airway pressure (PAP) devices used to treat obstructive sleep apnea, along with masks, accessories and related patient support services.

ResMed also provides cloud-connected health technology, including remote-monitoring platforms and software used by healthcare providers, medical equipment suppliers and care organizations.

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