ResMed (NYSE:RMD) executives highlighted revenue growth, margin expansion and continued investment in product development and demand-generation initiatives during the company’s second quarter fiscal 2026 earnings call. Management also discussed progress in its software portfolio, the company’s view of GLP-1 medications as a demand tailwind, and capital returns that were stepped up through an expanded share repurchase plan.
Quarterly results and growth drivers
CEO Mick Farrell said the company delivered “another strong quarter” with 11% headline revenue growth, or 9% on a constant currency basis. He also pointed to operating leverage and sequential and year-over-year margin expansion, resulting in GAAP EPS growth of 16%.
Excluding revenue from the Residential Care Software (RCS) business, Sandercock said sales in the U.S., Canada and Latin America rose 11% (and 6% on a constant currency basis). Globally, on a constant currency basis, device sales increased 7% while masks and other sales increased 14%.
In Canada and Latin America, constant-currency device sales increased 8% and masks and other sales increased 16%, which management attributed to growth in both resupply and new patient setups, as well as incremental revenue from the VirtuOx acquisition completed in the fourth quarter of fiscal 2025.
In Europe, Asia and other regions, constant-currency device sales increased 5% and masks and other sales increased 8%. Farrell noted the company’s Europe, Asia and Rest of World masks/accessories category returned to high single-digit growth, which he tied to mask portfolio expansion (including new fabric masks), improved resupply execution, and targeted direct-to-consumer initiatives in select markets.
Margins, spending, and fiscal 2026 outlook items
On profitability, management emphasized gross margin improvement led by supply chain execution. Sandercock said gross margin increased 110 basis points year over year and 30 basis points sequentially, citing component cost improvements, manufacturing and logistics efficiencies, and a modest FX benefit. Looking ahead, the company expects fiscal 2026 gross margin of 62% to 63%, subject to currency movements.
Operating expenses rose as the company invested in personnel and commercial programs. SG&A increased 15% on a headline basis (and 12% in constant currency), driven by employee-related expenses, marketing and technology investments, and additional costs tied to VirtuOx. SG&A as a percentage of revenue was 19.6% versus 18.8% a year earlier, while guidance remained 19% to 20% for fiscal 2026.
R&D increased 12% headline (and 10% constant currency), largely from employee-related expenses, with R&D running at 6.4% of revenue. The company reiterated its expectation for R&D to remain 6% to 7% of revenue for fiscal 2026.
Sandercock also disclosed a $6 million restructuring-related charge tied to the finalization of global workforce planning initiated in the first quarter, which the company treated as a non-GAAP item. Operating profit increased 19% and operating margin improved to 36.3% from 34% a year earlier, supported by revenue growth and gross margin expansion.
The effective tax rate was 21.1% compared to 18% last year, which Sandercock said was primarily due to global minimum tax legislation introduced in certain jurisdictions effective July 1, 2025. The fiscal 2026 tax rate outlook remained 21% to 23%.
Product pipeline and demand-generation efforts
Farrell described ResMed as both an “operational excellence machine” and an “innovation machine,” pointing to new mask introductions and software-based tools. He highlighted the F30i Comfort and F30i Clear mask range as the company’s first compact full-face fabric masks and said early patient and provider feedback has been “incredibly positive,” with broader rollouts continuing as regulatory approvals are received.
He also discussed Comfort Match, an AI-enabled comfort setting recommender within the company’s myAir platform, which he called ResMed’s first FDA-cleared AI-enabled medical device. Farrell said the tool is intended to help patients become more confident and comfortable with therapy and could help unlock underused comfort settings that may improve adherence over time.
On commercialization, Farrell said the company is running targeted direct-to-consumer campaigns to build sleep apnea awareness and encourage demand capture, including promotions around Singles’ Day (11/11) in China and holiday-related promotions in the U.S. He also highlighted continuing medical education efforts aimed at primary care providers. Farrell said CME programs have been completed nearly 60,000 times, representing a 50% increase from the figure cited on the company’s first quarter call, with more than 35,000 unique clinicians participating. Surveys at the end of the courses showed 77% of providers intend to change their clinical practices related to sleep health based on what they learned.
GLP-1 medications and the patient funnel
Management spent substantial time addressing investor questions on GLP-1 medications and their relationship to sleep apnea diagnosis and CPAP adoption. Farrell said the company is tracking claims data for more than 1.95 million patients and continues to see that patients with prescriptions for both a GLP-1 and CPAP are 10% to 11% more likely to start CPAP therapy than patients with a CPAP prescription alone. He added that these patients were 3% more likely to have a resupply event at one year, rising to more than 6% at three years, which he described as the first time the company had three-year data to share.
In response to questions about whether GLP-1s could be a headwind, Farrell said the company’s view has shifted firmly to GLP-1s being a tailwind, while acknowledging ResMed is still working to quantify the magnitude. He also said ResMed is asking new patients—through the myAir platform—how they heard about sleep apnea (including whether it was through GLP-1 advertising or wearable devices), but noted the company is not yet prepared to publicly share those details.
Software portfolio, capital returns, and balance sheet
Farrell said ResMed is progressing with “portfolio management” work in its Residential Care Software business and reiterated confidence that the segment can return to sustainable high single-digit growth and double-digit operating profit growth in fiscal 2027. For the March and June quarters, management expects to maintain mid-single-digit growth in RCS while continuing the portfolio management process. Sandercock reported RCS revenue increased 5% in constant currency in the December quarter, led by MEDIFOX DAN and partially offset by challenges in the senior living and long-term care vertical.
On cash flow and capital allocation, Sandercock said cash flow from operations was $340 million, with capital expenditures of $29 million. ResMed ended the quarter with $1.4 billion in cash, $664 million in gross debt, and $753 million in net cash, plus approximately $1.5 billion available under its revolver.
The board declared a quarterly dividend of $0.60 per share. During the quarter, the company repurchased about 704,000 shares for $175 million, and Farrell said the company is increasing planned share repurchases to more than $600 million for fiscal 2026. In total, Farrell said ResMed returned $263 million to shareholders during the quarter through dividends and repurchases.
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.
