Resmed’s 320bps Margin Boost and $6M Restructuring Charge: What Investors Should Watch
Resmed Inc. posted robust Q2 FY2026 results, with revenue climbing 11% to $1.4 billion and a 16% rise in non-GAAP earnings per share, underpinned by strong global demand and operational efficiencies.
- 11% revenue increase to $1.4 billion
- Gross margin expands by 320 basis points to 61.8%
- Non-GAAP diluted EPS grows 16% to $2.81
- FDA clearance for AI-enabled Smart Comfort CPAP device
- Declared quarterly dividend of $0.60 per share
Strong Financial Performance Amid Global Demand
Resmed Inc. has delivered a compelling set of results for the second quarter of fiscal year 2026, reporting an 11% increase in revenue to $1.4 billion. This growth was driven by heightened demand for its sleep and respiratory care devices across key markets including the US, Canada, Latin America, Europe, and Asia. On a constant currency basis, revenue rose 9%, reflecting resilience despite currency fluctuations.
Gross margins improved significantly, rising by 320 basis points to 61.8%, a gain attributed to manufacturing efficiencies and better component costs. This margin expansion supported an 18% increase in income from operations, highlighting the company’s operational discipline amid ongoing investments.
Innovation and Digital Health Ecosystem Expansion
Resmed’s CEO Mick Farrell emphasised the company’s commitment to innovation, particularly in digital health. The recent FDA clearance of Smart Comfort, an AI-enabled CPAP device designed to personalise therapy and enhance patient adherence, marks a significant milestone. This product is expected to strengthen Resmed’s leadership in connected care and digital sleep health, spanning over 140 countries.
Additionally, the company’s acquisition of VirtuOx has contributed to increased selling, general, and administrative expenses, reflecting strategic investments in technology and marketing. Despite these costs, non-GAAP diluted earnings per share rose 16% to $2.81, underscoring strong profitability.
Capital Management and Shareholder Returns
Resmed maintained a disciplined capital management approach, repurchasing 704,000 shares for $175 million and paying $88 million in dividends during the quarter. The board declared a quarterly dividend of $0.60 per share, signalling confidence in sustained cash flow generation and shareholder value creation.
Operating cash flow stood at $340 million, supporting ongoing investments and shareholder returns. The company also recorded a modest $6 million restructuring charge related to workforce planning, a one-time expense that should not affect future quarters.
Looking Ahead
As Resmed moves into the second half of fiscal 2026, it plans to continue scaling its digital health capabilities and expanding access to life-saving respiratory care. The combination of strong market demand, operational efficiency, and innovation positions the company well for sustainable growth in a competitive healthcare landscape.
Bottom Line?
Resmed’s blend of robust financials and cutting-edge innovation sets the stage for continued leadership in digital respiratory care.
Questions in the middle?
- How quickly will the AI-enabled Smart Comfort device gain market traction?
- What impact will ongoing investments in digital health have on future margins?
- How will currency fluctuations affect Resmed’s international revenue growth?
