ResMed Q1 FY2026: $1.34B Revenue, 12% Net Income Rise, $150M Stock Repurchase
ResMed Inc. reported a robust 9% increase in net revenue for Q1 FY2026, driven by strong demand in its Sleep and Breathing Health and Residential Care Software segments. Despite ongoing patent litigation, the company delivered a 12% rise in net income and boosted shareholder returns with a $150 million share repurchase.
- 9% year-over-year net revenue growth to $1.34 billion
- 12% increase in net income to $348.5 million
- Gross margin improved to 61.5% due to operational efficiencies
- Recorded $15.8 million restructuring expenses related to workforce planning
- Ongoing patent litigation with no expected material adverse impact
Strong Revenue and Profit Growth
ResMed Inc. has kicked off fiscal 2026 with a solid quarter, reporting net revenues of $1.34 billion for the three months ended September 30, 2025. This represents a 9% increase compared to the same period last year, reflecting sustained demand across its core Sleep and Breathing Health segment as well as its Residential Care Software business. The company’s gross margin expanded to 61.5%, up from 58.6% a year earlier, driven by manufacturing efficiencies and improved logistics.
Segment Performance and Innovation
The Sleep and Breathing Health segment, which includes devices and masks, accounted for the bulk of revenue growth with a 10% increase to $1.17 billion. Growth was broad-based geographically, with notable strength in the U.S., Canada, Latin America, and combined Europe and Asia markets. Meanwhile, the Residential Care Software segment grew 6% to $166 million, buoyed by strong performance in the MEDIFOX DAN vertical despite some softness in Senior Living and Long-Term Care.
ResMed continues to invest heavily in research and development, allocating $87.3 million during the quarter (6.5% of net revenues) to advance product innovation. The recent launch of the AirSense 11 device, featuring a touchscreen and over-the-air updates, exemplifies the company’s commitment to enhancing patient outcomes and digital connectivity.
Financial Discipline and Capital Management
Net income rose 12% to $348.5 million, translating to diluted earnings per share of $2.37, up from $2.11 in the prior year. The company recorded $15.8 million in restructuring charges related to workforce planning initiatives, signaling a focus on operational efficiency. Cash and cash equivalents increased to $1.38 billion, supported by strong operating cash flow of $457 million.
ResMed also returned capital to shareholders through a $150 million share repurchase during the quarter, part of an ongoing program authorized in 2014. The company remains in compliance with its debt covenants, with $670 million outstanding under its revolving credit facility, term credit agreement, and senior notes.
Navigating Legal Challenges and Currency Risks
Patent litigation continues to be a notable risk, with ongoing disputes involving New York University, Cleveland Medical Devices, and Fractus, S.A. While some patent claims have been invalidated in ResMed’s favor, appeals and new cases persist. Management does not currently anticipate these legal matters will materially impact financial results but remains vigilant.
On the currency front, ResMed employs a comprehensive hedging strategy using cross-currency swaps and forward contracts to mitigate foreign exchange risks, particularly related to the Euro, Australian, and Singapore dollars. These measures help stabilize earnings amid volatile currency markets.
Outlook and Strategic Focus
ResMed’s leadership underscores confidence in the company’s growth trajectory, supported by ongoing investments in R&D, product innovation, and expanding software offerings. The company’s strong liquidity position and disciplined capital management provide flexibility to pursue organic growth and strategic acquisitions. However, the evolving patent landscape and macroeconomic factors such as inflation and currency fluctuations warrant close monitoring.
Bottom Line?
ResMed’s strong start to FY2026 highlights resilience and innovation, but investors will watch closely for legal developments and execution on growth initiatives.
Questions in the middle?
- How will ongoing patent litigation outcomes affect ResMed’s future product launches and market position?
- What impact will global inflationary pressures have on ResMed’s cost structure and pricing strategy?
- How effectively can ResMed leverage its software segment to diversify revenue streams and enhance margins?