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    RMD
    Earnings call· Dec 2025(Q2 FY26)

    RESMED INC RMD

    Jan 29, 2026 Source

    Executive summary

    ResMed Q2 FY26 — Strong Revenue Growth, Margin Expansion, and Increased Share Repurchases

    ResMed delivered a strong Q2 FY26, marked by robust device and mask sales, significant gross margin expansion, and double-digit EPS growth. The company is actively managing its Residential Care Software portfolio and increasing capital returns to shareholders, while also benefiting from heightened sleep apnea awareness driven by GLP-1 medications and consumer wearables. Strategic investments in manufacturing, R&D, and demand generation are positioning ResMed for continued long-term growth.

    Highlights

    5

    • Headline revenue grew 11% (9% constant currency) in Q2 FY26.

    • GAAP EPS increased by 16% year-over-year.

    • Gross margin expanded by 310 basis points year-over-year and 30 basis points sequentially.

    • Europe, Asia, and Rest of World masks, accessories, and other revenue grew 8% constant currency.

    • Increased share repurchases to more than $600 million for FY26, with $175 million executed in Q2.

    Concerns

    3

    • Residential Care Software (RCS) business is expected to maintain mid-single-digit growth for the March and June quarters due to ongoing portfolio management.

    • SG&A expenses increased 15% on a headline basis (12% constant currency), outpacing revenue growth, partly due to the VirtuOx acquisition and marketing investments.

    • The effective tax rate increased to 21.1% from 18% in the prior year quarter, primarily due to global minimum tax legislation.

    Guidance & targets

    8
    CategoryTargetConfidence
    Residential Care Software (RCS) business growth
    mid-single-digit growth
    medium materiality
    High
    Residential Care Software (RCS) business growth
    sustainable high single-digit growth and double-digit operating profit growth
    medium materiality
    High
    Gross margin
    62% to 63%
    high materiality
    High
    Gross margin improvement
    double-digit basis points improvement
    high materiality
    High
    SG&A expenses as percentage of revenue
    19% to 20%
    medium materiality
    High
    R&D expenses as percentage of revenue
    6% to 7%
    medium materiality
    High
    Effective tax rate
    21% to 23%
    medium materiality
    High
    Share repurchases
    more than $600M
    high materiality
    High

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Global
    Strong financial performance with positive contributions across device and mask portfolio and software business.
    Foreign currency impact: +$25M on revenueConstant currency revenue growth: 9%
    		$1.42B11% headline——
    U.S., Canada, Latin America (excluding RCS)
    Solid growth in the region.
    		—11% constant currency——
    Europe, Asia, other regions (excluding RCS)
    Solid growth in these regions.
    		—6% constant currency——
    Global Devices
    High single-digit growth in global devices revenue.
    		—11% constant currency——
    Global Masks, Accessories and Other
    Double-digit growth in global masks, accessories and other revenue.
    		—14% constant currency——
    U.S., Canada, Latin America Masks and Other
    Very strong performance, with double-digit growth even excluding VirtuOx.
    Includes incremental revenue from VirtuOx acquisitionReflecting continued growth in resupply and new patient setups
    		—16% constant currency——
    Europe, Asia, Rest of World Masks, Accessories and Other
    Reaccelerated to high single-digit growth as expected.
    Driven by continued strategic expansion of mask portfolio (including new fabric masks)Focus on improved mask resupply through education, awareness, and executionTargeted initiatives in direct-to-consumer markets
    		—8% constant currency——
    Residential Care Software (RCS)
    Progress being made with portfolio management.
    Underpinned by robust performance from MEDIFOX DAN software verticalPartially offset by ongoing challenges in senior living and long-term care vertical
    		—5% constant currency——

    Operational metrics

    26
    Gross margin
    32.3%+110 bps YoY
    Q2 FY26

    Supply chain team continues to work on productivity initiatives for sustained long-term improvements.

    Operating profit growth
    19%
    Q2 FY26

    Underpinned by revenue growth and gross margin expansion.

    Operating margin
    36.3%vs 34% in prior year period
    Q2 FY26

    Improved due to strong operating profit growth.

    Net interest income
    $8M
    Q2 FY26
    Effective tax rate
    21.1%vs 18% in prior year quarter
    Q2 FY26

    Increase primarily due to impact of global minimum tax legislation effective from July 1, 2025.

    Net income growth
    15%
    Q2 FY26
    Diluted EPS FX impact
    $0.04
    Q2 FY26

    Positive impact on earnings per share.

    Capital expenditure
    $29M
    Q2 FY26
    Depreciation and amortization
    $50M
    Q2 FY26
    Cash balance
    $1.4B
    Q2 FY26

    As of December 31.

    Gross debt
    $664M
    Q2 FY26

    As of December 31.

    Net cash
    $753M
    Q2 FY26

    As of December 31.

    Revolver facility availability
    $1.5B
    Q2 FY26

    Available for drawdown.

    Quarterly dividend per share
    $0.60
    Q2 FY26

    Declared by Board of Directors.

    Shares repurchased
    704,000
    Q2 FY26

    Under previously authorized share buyback program.

    U.S. distribution center reach
    90%
    future

    Percentage of U.S. customers reachable in less than 2 business days once new Indiana facility is online.

    U.S. manufacturing capacity
    doubled
    current

    Expansion of Calabasas, California plant.

    CME program completions
    60,000+50% QoQ
    current

    Continuing Medical Education programs for PCPs, up from Q1 FY26 numbers.

    Unique clinicians completing CME
    35,000
    current

    Many of these healthcare providers have taken multiple courses.

    Clinicians intending to change practice post-CME
    77%
    current

    Based on surveys at the end of CME courses related to sleep apnea and sleep health.

    Patients tracked in GLP-1 claims data
    1.95M
    current

    Cohort of patients tracked for GLP-1 and CPAP prescription correlation.

    GLP-1 users more likely to start CPAP
    10-11%
    current

    Compared to patients who only have a script for CPAP.

    GLP-1 users more likely to resupply at 3 years
    6.2%
    3 years

    New data showing increased likelihood of resupply event at 3 years for patients with combined GLP-1 and CPAP scripts.

    R&D as % of revenue
    6.4%vs 6.3% in prior year period
    Q2 FY26

    Reflects increases in employee-related expenses.

    SG&A as % of revenue
    19.6%vs 18.8% in prior year period
    Q2 FY26

    Increase primarily attributable to growth in employee-related expenses, marketing and technology investments, and VirtuOx acquisition expenses.

    Restructuring charge
    $6M
    Q2 FY26

    Reflecting finalization of global workforce planning activities initiated in Q1 FY26, treated as a non-GAAP item.

    Industry KPIs

    3
    MetricValueDetails
    New product launch rampstrong adoption
    FCF conversion leverage guidancemore than $600MUSD
    Segment franchise organic growth11%%

    Product announcements

    2
    ProductTypeDetails
    F30i Comfort and F30i Clear maskslaunch
    Comfort Match (AI-enabled comfort setting recommender)launch

    Deals & partnerships

    3
    VirtuOxHome sleep apnea testing service company

    Acquired in Q4 FY25. Helps primary care physicians and pulmonary physicians with efficient home sleep apnea testing services.

    EctoSenseNidal product (NightOwl) for home sleep apnea testing

    Acquired to scale home sleep apnea testing capabilities.

    SomnawareSoftware for pulmonary and sleep medicine physicians

    Acquired to help pulmonary or sleep clinics be more efficient.

    Risks & headwinds

    2
    Global minimum tax legislationEffective from July 1, 2025 (Q1 FY26).

    Increased effective tax rate to 21.1% from 18% in prior year quarter.

    Challenges in senior living and long-term care verticalQ2 FY26, ongoing.

    Partially offset robust performance from MEDIFOX DAN within the Residential Care Software (RCS) business.

    Mitigation: Portfolio management process underway for the RCS business.

    What to watch in Q3 FY26

    5

    Residential Care Software (RCS) business growth

    March and June quarters (Q3 and Q4 FY26)
    Current5% constant currency (Q2 FY26)
    Targetmid-single-digit growth

    Why it matters

    Indicates progress on portfolio management and trajectory towards FY27 high single-digit growth target.

    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.

    Q&A highlights

    7

    Asked about the drivers behind the strong 16% U.S. mask growth, specifically the contribution from VirtuOx and any stocking impact from the new F30i masks.

    Management confirmed double-digit mask growth even excluding VirtuOx, highlighting the F30i's positive reception and potential to change market competition. They also noted some seasonality from high-deductible health plans and holiday promotions.

    “Even without VirtuOx, it's still double-digit growth, so still really strong. And we had a -- VirtuOx had a really good quarter as well.”

    asked by Jon Block · answered by Brett Sandercock

    2 min read6 chapters

    Detailed Narrative

    01

    Operational Excellence & Supply Chain Initiatives

    ResMed demonstrated strong operational excellence, achieving 310 basis points of year-over-year and 30 basis points of sequential gross margin expansion in Q2 FY26. These improvements were primarily driven by component cost reductions and enhanced manufacturing and logistics efficiencies. Management has set an ambitious goal for the supply chain team to deliver double-digit basis points improvement in gross margin annually through 2030, underscoring a sustained focus on profitability.

    02

    Expanding U.S. Manufacturing and Distribution Footprint

    The company is making significant progress on its new U.S. distribution center in Indiana, which is on track to be operational by calendar year 2027 and will enable shipping to approximately 90% of U.S. customers within two business days. This initiative, alongside the recently announced doubling of U.S. manufacturing capacity at its Calabasas, California plant, aims to enhance supply chain resilience and support the delivery of 'made in America' CPAP, APAP, bilevel, and mask systems.

    03

    Product Innovation and AI Integration

    ResMed launched the F30i Comfort and F30i Clear fabric masks, which have received positive early patient and provider feedback and are expected to drive strong adoption and redefine market competition. Furthermore, the company introduced Comfort Match, an FDA-cleared AI-enabled medical device within its myAir software platform. This innovation is designed to personalize comfort settings and improve both short-term and long-term CPAP adherence by acting as an AI-powered sleep coach.

    04

    Enhanced Demand Generation and Clinical Education

    Strategic investments in demand generation included targeted direct-to-consumer campaigns, such as promotions around Singles Day in China and holiday sales for the portable AirMini device. ResMed also significantly expanded its Continuing Medical Education (CME) programs for primary care physicians (PCPs), with 60,000 completions to date. These programs have led to 77% of participating clinicians expressing an intent to change their clinical practices related to sleep apnea, indicating strong engagement and potential for increased referrals.

    05

    GLP-1 Medications and Wearables as Growth Tailwinds

    Analysis of claims data from 1.95 million patients revealed that individuals on GLP-1 medications are 10-11% more likely to initiate CPAP therapy and 6% more likely to resupply at three years. This, combined with the anticipated integration of sleep apnea detection capabilities into consumer wearables from 'Big Tech,' is creating a significant tailwind by increasing awareness and driving more patients into the sleep health funnel. ResMed is actively working to scale its virtual pathways and HME partnerships to meet this growing demand.

    06

    Residential Care Software (RCS) Business Outlook

    The Residential Care Software (RCS) business is undergoing portfolio management, which is expected to result in mid-single-digit growth for the upcoming March and June quarters. Despite challenges in the senior living and long-term care vertical, the MEDIFOX DAN software vertical is performing robustly. Management remains confident that the RCS business will achieve sustainable high single-digit growth and double-digit operating profit growth in fiscal year 2027, reinforcing its role as a key synergistic enabler for ResMed's core business.

    AI-generated summary of the company’s earnings call. Not investment advice.