RMD · Q1 2026 Earnings

Bullish

ResMed

Reported October 30, 2025

30-second summary

Revenue grew 9% to $1.34B with non-GAAP gross margin reaching 62.0% (+280bps YoY, +60bps QoQ) — already at the midpoint of the FY26 61–63% guide and supporting the "structural, not cyclical" thesis from last quarter. The print also clarifies the RCS reacceleration path (mid-single-digit Q1 → mid-to-high single-digit by H2 FY26) and triples down on US manufacturing with a third facility in Indianapolis. The ~$150M/quarter buyback cadence disclosed last quarter was explicitly reaffirmed and executed in full.

Headline numbers

EPS

Q1 FY2026

$2.55

Revenue

Q1 FY2026

$1.34B

+9.0% YoY

Gross margin

Q1 FY2026

61.5%

Free cash flow

Q1 FY2026

$0.41B

Operating margin

Q1 FY2026

33.4%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$1.34B	+9.0%	$1.35B	-0.9%
EPS	$2.55	—	$2.55	+0.0%
Gross margin	61.5%	—	60.8%	+70bps
Operating margin	33.4%	—	33.7%	-30bps
Free cash flow	$0.41B	—	$0.51B	-18.4%

Guidance

ResMed reaffirmed full-year FY2026 margin and tax guidance; Q1 gross margin and SG&A expenses met expectations, but share repurchase guidance was withdrawn.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Gross margin	Q1 FY2026	61% to 63%	62.0%	in-line	Met
SG&A expenses as percentage of revenue	Q1 FY2026	19% to 20%	19.4%	in-line	Met

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Share Repurchase Program	FY 2026	approximately $150 million per quarter	Withdrawn — no replacement	—	Withdrawn

Reaffirmed unchanged this quarter: Gross margin (61% to 63%), SG&A expenses as percentage of revenue (19% to 20%), R&D expenses as percentage of revenue (6% to 7%), Effective tax rate (21% to 23%)

Segment KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
Sleep and Breathing Health	$1.169B	+10.0%
Residential Care Software	$0.166B	+6.0%
Devices	$0.68B	+9.0%
Masks and other	$0.489B	+11.0%

Other KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
U.S., Canada, and Latin America	$0.775B	+10.0%
Europe, Asia, and other markets	$0.395B	+10.0%
Non-GAAP gross margin	62.0%	—
Non-GAAP income from operations	$482.1 million	—
Operating cash flow	$457.3 million	—
Non-GAAP EPS growth	16%	—
Gross margin expansion (non-GAAP)	280 bps	—
SG&A as % of revenue	19.4%	—

Management tone

Margin recovery (FY24) → Margin reset framed as durable (Q4 FY25) → Margin delivered at guide midpoint (Q1 FY26 in-quarter) → Multi-front growth acceleration (Q1 FY26 forward narrative).

Last quarter, the major reframe was that gross margin expansion was structural rather than cyclical. This quarter, Q1's 62.0% non-GAAP gross margin lands exactly at the midpoint of the FY26 range, which is the operational confirmation that thesis needed. Management did not need to revisit the durability narrative — they let the number do it — and shifted prepared commentary toward growth-acceleration plays across multiple segments. From the press release: "We are an innovation machine and an operational excellence machine." The signal: with margin no longer a debate, the bull case pivots to topline reacceleration.

RCS has traveled the longest distance in tone across the last three quarters. Two quarters ago it was a +6–10% reported growth segment with HME tailwinds. Last quarter it printed +10% reported but management began describing structural mix issues (services dilution). This quarter it printed +6% — and management reframed that deceleration as deliberate portfolio management, with a confident path to mid-to-high single-digits in H2 FY26: "we will execute successfully on our portfolio management work and re-accelerate growth in our RCS platforms, moving from mid-single-digit growth here at the start of fiscal year 2026, accelerating to mid to high single-digit growth in the back half of fiscal year 2026." The deceleration is being sold as a feature, not a bug. Investors should hold this to account — the H2 reacceleration is now an explicit, falsifiable commitment.

AI moved from feature to operating model. Dawn is live on MyAir in the US this quarter, and management also introduced a new limited beta of Comfort Match in Australia — an AI-enabled comfort-setting tool on MyAir. The framing: "our AI technology translates health data into clear guidance, clear support and encouragement." The shift from "we have AI features" to "we operate as an AI-first business" is a posture investors should track because it implies sustained R&D intensity at the upper bound of the 6–7% range.

US manufacturing expanded from a single Calabasas capacity-doubling story last quarter to a multi-facility strategy this quarter, with Indianapolis announced as a third distribution center. Management quantified the operational endpoint: "Once this facility comes online, ResMed will be able to ship to around 90% of our customers within two days." Indianapolis comes online in 2027. This is being positioned both as a tariff-resilience asset (Section 232 medical supplies investigation pending) and as a competitive moat through delivery speed. The pivot from defensive ("we have US capacity") to offensive ("we're tripling down") is the meaningful tonal change.

Tariff and CMS regulatory tone moved from cautiously engaged to confidently defended. On tariffs, management said relief has been reconfirmed with US authorities and that ResMed's expanding US manufacturing footprint defends that position. On CMS competitive bidding, the posture remains "awaiting further information" — the most evasive topic in Q&A — but unchanged from last quarter's "we will work the process" framing.

Recurring themes management leaned on this quarter:

Operating leverage delivery through supply chain optimization and manufacturing footprint expansionAI and digital health personalization as core therapy adherence and patient engagement driversMask resupply and direct-to-consumer market penetration acceleration across international marketsRCS portfolio reaccelereration through high-growth segment focus and services divestmentCloud-connected interoperability ecosystem expansion (3B+ API calls per quarter milestone)Strong gross margin expansion (280 bps YoY) and disciplined SG&A while maintaining R&D investment

Risks management surfaced:

Global trade environment and evolving regulatory landscape uncertaintySection 232 medical supplies tariff investigation outcomes remain pendingCMS competitive bidding program resumption timing and methodology details unknownForeign currency movements affecting revenue and margin guidanceRCS skilled nursing facility segment weakness persisting despite portfolio management initiatives

Q&A highlights

Davin Delamason · Goldman Sachs

Can you highlight the unique attributes of the new AirTouch F30i mask launched in Australia and US, explain the importance of the full face category, and how it ties into ambitions to accelerate growth in ex-US regions?

The AirTouch F30i is a fabric-based full face mask targeting the 30-40% of people who breathe through both nose and mouth during sleep. Two variants: F30i Comfort (premium, direct-to-consumer markets like China, Australia, India) with fabric throughout; F30i Clear (economical, B2B/home care markets). Management expects strong growth similar to the successful N30i nasal launch, positioning fabrics as a competitive differentiator versus silicone.

AirTouch F30i targets 30-40% of sleep apnea population (oro-nasal breathers)Two variants: F30i Comfort (premium DTC) and F30i Clear (B2B/economical)N30i nasal mask had strong success over last couple of quartersChanging competition basis from liquid silicon rubber/silicone to fabric technology

Leanne Harrison · Bank of America

Can you discuss demand generation initiatives for US devices, how you measure their effectiveness, and explain the 8% growth outperformance versus mid-single-digit market growth? Can we expect high single-digit growth going forward?

Management uses sophisticated targeting combining demographics, geography, and local screening/diagnosis capacity rather than simple customer acquisition cost models. Growth of 8% reflects execution on demand gen, demand capture, and curation. Management is not raising guidance to consistently deliver high single-digit growth but believes they can systematically move 25-100 basis points above market growth through initiatives like CME programs, digital tools (Dawn AI), and partnerships (Virtuox, Night Owl).

Q1 US, Canada, Latin America devices grew 8% on reasonable compUS market growth baseline is mid-single-digit22,000 PCPs trained to prescribe CPAP as front-line therapyUS, Canada, Latin America masks grew 12% in resupply

David Bailey · Morgan Stanley

What is the current penetration rate of CPAP in the US market, and how do you see REPAP opportunities going forward given rising PCP awareness and OSA prevalence?

US market penetration is 15-20%, Europe is 10-15%, and Asia Pacific/rest of world is sub-5%. Management expects rising prevalence (77 million by 2050) to continue driving patient identification through aging population, chronic disease awareness, and wearables detecting sleep apnea. Focus on PCP education targeting high-volume GLP-1 providers with home sleep apnea testing access.

US CPAP penetration: 15-20%Europe penetration: 10-15%Asia Pacific/rest of world: sub-5%Projected 77 million OSA cases by 2050

Saul Duffin · Barron Joe

Can you detail plans for expanding US manufacturing beyond motors and masks to include full device production (CPAPs)? How does Made in America strategy evolve?

ResMed is expanding manufacturing footprint across Calabasas, Reno Valley, Indianapolis, and Atlanta with world-class capacity achieving 90% of customers within two business days. Management plans to add device manufacturing lines alongside existing motors and masks. Strategy driven by need for geopolitical resilience, proximity to demand, and customer requirements (VA, US government), not in response to specific policies but for long-term 2030-2035 positioning. Over 50-60% of global volume already from US.

Doubling US manufacturing capacityExpanding from motors and masks to potentially CPAPs/devicesOver 50-60% of global volume already from USAchieving 90% of customers within two business days delivery

Brett Fishpin · KeyBank Capital Markets

SaaS growth is mid-single-digit, below typical levels. Can you unpack headwinds in specific markets and clarify assumptions underlying return to mid-to-high single-digit near-term and high-single-digit next year?

Management is executing portfolio management, intentionally de-emphasizing lower-margin services (IT services, implementation) and shifting investment to higher-margin SaaS platforms (Medifox, BrightTree, MatrixCare). This contributed couple hundred basis points slowdown Q4-Q1. Focus now on core platforms for home medical equipment and home health companies. Synergistic growth opportunities with resupply (masks 12% growth helped by BrightTree/SNAP integration). Expects return to high single-digit growth through platform investment and cross-business synergies.

Portfolio shift from services to SaaS platforms (Medifox, BrightTree, MatrixCare)Couple hundred basis points delta Q4-Q1 from services de-emphasisUS masks resupply at 12% aided by BrightTree and SNAP integrationTarget: high single-digit revenue growth and double-digit net operating profit growth

Answers to last quarter's watch list

Q1 FY26 gross margin trajectory inside the 61–63% band. Non-GAAP gross margin came in at 62.0% — exactly at the FY26 guide midpoint, +60bps sequential improvement, and +280bps YoY. The "sustainable improvements" thesis from last quarter is operationally confirmed in Q1.

Resolved positively

Devices vs masks growth spread. Devices held at +9% reported while masks printed +11% reported — the spread compressed rather than widened, indicating new-patient funnel is intact. US/Canada/LatAm masks and other specifically printed +12%, helped by Virtuox contribution and resupply growth.

Resolved positively

First quarter of the ~$150M buyback cadence. Executed and reaffirmed. Q1 repurchases totaled $150M (523,000 shares), and management committed to "approximately $150 million per quarter during the remainder of fiscal year 2026.".

Resolved positively

ROW devices growth on constant-currency basis. ROW devices grew +7% cc (+11% reported), and ROW total grew +6% cc (+10% reported). FX provided meaningful tailwind to ROW headlines this quarter. Status: Resolved

CMS competitive bidding scope and timing disclosure. Management explicitly stated they are "awaiting further information, including intended timing for the program." No incremental CMS disclosure this quarter.

Not resolved

Diagnostics revenue contribution callout. No separate diagnostics revenue line emerged. Virtuox, Night Owl, and Somnoware remain folded into Masks/other and RCS without standalone disclosure.

Not resolved

What to watch into next quarter

RCS growth trajectory toward the H2 FY26 mid-to-high single-digit commitment. Q1 printed +6%; Q2 needs to show progress toward the +7–9% H2 target or the reacceleration thesis loses credibility.

EAOR masks acceleration to "high single-digit growth starting in the current quarter." Management has explicitly committed to this in Q2 FY26 — falsifiable on the next print.

Non-GAAP gross margin tracking in the upper half of 61–63%. Q1's 62.0% is at midpoint; the durability thesis strengthens if Q2 trends toward 62.5%+, weakens if it slips back to 61.x%.

Section 232 medical supplies tariff investigation outcomes and any disclosure on CMS competitive bidding product categories. Both are externally-driven catalysts that management has flagged as live regulatory variables.

Capital return cadence sustained alongside Indianapolis capex. Q1 executed the full $150M buyback; watch whether FY26 trajectory sustains both the quarterly cadence and increased US manufacturing investment.

Sources

ResMed Q1 FY2026 Press Release (Form 8-K Exhibit 99.1), filed October 30, 2025 — https://www.sec.gov/Archives/edgar/data/943819/000119312525258519/d92301dex991.htm
ResMed Q1 FY2026 earnings call commentary (prepared remarks and Q&A)

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