SomnoMed reported a 3% revenue rise to $114.5 million and a 19% EBITDA increase to $10.9 million in FY26, navigating European market headwinds and a CEO transition while launching its Virtus device targeting sleep apnea with bruxism.
- 3% revenue growth to $114.5 million
- EBITDA up 19% to $10.9 million with margin expansion
- CEO Karen Borg assumes full leadership after co-CEO resignation
- Virtus device launched for obstructive sleep apnea with bruxism
- FY27 targets high single-digit growth with stable EBITDA margins
Financial Performance and Market Challenges
SomnoMed Limited (ASX:SOM) posted a modest 3% increase in revenue to $114.5 million for the full year ended 30 June 2026, while driving a more impressive 19% jump in EBITDA to $10.9 million, lifting its margin to 9.6% from 8.2% in FY25. The company’s ability to expand profitability despite only slight top-line growth reflects disciplined cost management and operational efficiency gains, particularly in manufacturing.
However, the company faced notable headwinds in Europe, its largest market by revenue, where second-half sales softened due to structural changes including tightened clinical eligibility, altered public payor reimbursement, and shifts in patient referral pathways. These factors caused a 1% decline in constant currency revenue for Europe in 2H FY26, translating into a 7% reported drop in Australian dollars due to a stronger local currency.
North America Drives Growth Amid Currency Impact
North America remained SomnoMed’s growth engine, delivering $45.8 million in revenue, up 11% on a constant currency basis. The region’s growth was propelled by targeted strategies to stimulate demand across customer segments and a cost-effective internal sales function, alongside a robust Managed Care performance. Yet, the strong Australian dollar in the latter half of the year tempered reported growth to just 1% despite a 12% constant currency increase.
Asia Pacific, the company’s earliest commercial region, saw a 3% revenue decline, primarily due to cost-of-living pressures impacting patient demand in non-reimbursed markets.
Operational Advances and Manufacturing Expansion
Operationally, SomnoMed expanded its manufacturing capacity by over 20% during FY26 and by approximately 40% over the past two years. These investments, including additional milling machines and facility upgrades, have halved production times and eliminated order backlogs, reducing overtime reliance and creating significant headroom for future growth.
Capital expenditure rose to $5.7 million, up from $4.0 million in FY25, focusing on manufacturing facility expansion, Rest Assure® technology development, and essential maintenance.
Leadership Transition and Strategic Focus
July 2026 marked a leadership shift as Karen Borg assumed the sole CEO role following the resignation of Co-CEO Amrita Blickstead, who had co-led since February 2024. The executive team was further reorganised with Greg Knight promoted to Chief Operating Officer, overseeing manufacturing, regulatory affairs, quality assurance, R&D, and strategy. Nathan Minnich joined as Chief Marketing Officer earlier in the year, bringing global commercial expertise.
Borg emphasised the company’s commitment to refining its strategic roadmap, focusing on medium- to long-term growth driven by expanded manufacturing capabilities, a strong balance sheet, an enriched product pipeline, and disciplined commercial execution.
Product Innovation Targets Underserved Patient Segment
SomnoMed launched Virtus, a purpose-built oral appliance designed for the estimated 50% of obstructive sleep apnea patients who also suffer from sleep bruxism, a condition characterised by teeth grinding during sleep. The device aims to address this large, underserved market segment with enhanced durability and comfort to withstand bruxism forces.
Initial clinician feedback has confirmed significant clinical need and commercial opportunity. The company is also advancing the Rest Assure® compliance monitoring system, with an in-market commercial assessment planned for FY27 in the US.
Outlook and Risks Ahead
SomnoMed is targeting high single-digit revenue growth in FY27, maintaining EBITDA margins consistent with FY26. Key assumptions include continued North American growth, European market stabilisation, successful global adoption of Virtus in the second half of FY27, and stable foreign exchange conditions.
Material risks remain, including regulatory approval uncertainties, manufacturing interruptions concentrated at its Philippines facility, competitive pressures, evolving reimbursement landscapes, and financial risks such as currency fluctuations and tariff policies affecting supply chains.
The company’s robust cash position of $17.2 million and reduced debt underpin its capacity to invest in growth initiatives and innovation, but execution will be critical as it navigates a complex global market environment.
Bottom Line?
SomnoMed’s FY26 results show operational resilience and strategic repositioning, but European market headwinds and execution risks on new product adoption will test its FY27 growth ambitions.
Questions in the middle?
- How will SomnoMed navigate ongoing regulatory and reimbursement changes in Europe?
- What early commercial traction is Virtus gaining across key markets, and how will it impact revenue?
- Can the expanded manufacturing capacity sustain anticipated growth without operational bottlenecks?