ResMed Inc. reported robust financial results for Q2 FY2026, driven by strong demand in its Sleep and Breathing Health and Residential Care Software segments. The company also navigates ongoing patent litigation while maintaining solid liquidity and shareholder returns.
- 11% revenue growth driven by increased device and mask sales
- Gross margin improved to 61.8% due to manufacturing efficiencies
- Restructuring expenses recorded for workforce planning
- Strong liquidity with $1.4 billion cash and $1.5 billion credit facility available
- Ongoing patent litigation with recent favourable rulings and pending appeals
Financial Performance Highlights
ResMed Inc. has delivered a solid performance for the quarter and six months ended December 31, 2025, reporting an 11% increase in net revenue to $1.42 billion for the quarter and $2.76 billion for the half-year. This growth was underpinned by strong demand and unit sales across its Sleep and Breathing Health segment, which includes devices and masks, as well as its Residential Care Software business.
The company’s gross margin improved notably to 61.8% for the quarter, up from 58.6% in the prior year period, reflecting manufacturing and logistics efficiencies alongside component cost improvements. These margin gains highlight ResMed’s operational discipline amid a complex global supply chain environment.
Segment Growth and Geographic Expansion
Within the Sleep and Breathing Health segment, net revenue rose 12% to $1.26 billion, with device sales growing 9% and masks and other products increasing 16%. The U.S., Canada, and Latin America region contributed an 11% revenue increase, while combined Europe, Asia, and other markets saw a 12% rise, including a 6% constant currency growth. Residential Care Software revenue grew 7% to $167 million, driven by strong uptake in MEDIFOX DAN and Home and Hospice verticals, partially offset by softness in Senior Living and Long-Term Care.
Operational and Financial Discipline
Operating expenses rose in line with growth, with selling, general, and administrative costs increasing 15% to $278 million, reflecting investments in employee costs, marketing, technology, and integration expenses from the VirtuOx acquisition. Research and development spending also increased 12% to $91 million, underscoring ResMed’s commitment to innovation, including enhancements to its flagship AirSense 11 device and cloud-based care platforms.
The company recorded $5.9 million in restructuring charges related to workforce planning, marking a strategic effort to optimise its cost base. Despite these investments, ResMed reported a 14% increase in net income to $393 million for the quarter, with diluted earnings per share rising to $2.68.
Liquidity and Capital Management
ResMed maintains a strong liquidity position, ending the quarter with $1.4 billion in cash and cash equivalents and $1.5 billion available under its revolving credit facility. The company repurchased 1.2 million shares for $325 million during the half-year, reflecting ongoing shareholder return initiatives. A quarterly dividend of $0.60 per share was declared, consistent with prior periods.
Legal Landscape and Patent Litigation
On the legal front, ResMed continues to navigate several patent infringement cases, including disputes with New York University, Cleveland Medical Devices, and Fractus, S.A. Recent rulings have been favourable, such as the invalidation of NYU’s asserted patents and dismissal of related litigation. However, appeals and ongoing proceedings, particularly with Cleveland Medical, remain active and could influence future risk profiles.
The company also disclosed a whistleblower complaint alleging overcharging in sales to the U.S. Veterans Administration, though no material impact is currently anticipated. ResMed’s management remains vigilant on these fronts, balancing innovation protection with prudent risk management.
Looking Ahead
ResMed’s results reflect a company well-positioned in the growing respiratory health market, leveraging product innovation and geographic expansion. While the patent litigation landscape introduces some uncertainty, the company’s robust cash flow, disciplined cost management, and strategic investments in software and device technologies provide a strong foundation for continued growth.
Bottom Line?
ResMed’s solid financial footing and innovation pipeline set the stage for sustained growth, but ongoing patent disputes warrant close investor attention.
Questions in the middle?
- How will ongoing patent litigation outcomes affect ResMed’s competitive positioning and costs?
- What impact will new global tax regulations have on ResMed’s effective tax rate and profitability?
- How will ResMed balance continued R&D investment with shareholder returns amid evolving market conditions?