ResMed’s Profitability Surge Driven by Operational Gains

Resmed US7611521078

ResMed Inc. has reported a robust performance for the second quarter of its 2026 fiscal year, marked by significant earnings growth and enhanced profitability. The medical device company, a leader in sleep apnea and respiratory care solutions, surpassed market expectations as improved operational efficiency boosted its margins. The key question for investors is whether this momentum can be sustained in the face of intensifying competition within the sleep therapy market.

The company's latest quarterly results, covering the period ending in December, revealed several strong data points:

• Revenue: $1.42 billion, an increase of 11%
• Adjusted Earnings Per Share (EPS): $2.81, rising 15.6%
• Non-GAAP Gross Margin: 62.3%
• Quarterly Dividend: Declared at $0.60 per share

Shareholders of record on February 12 will receive the $0.60 per share dividend, with payment scheduled for March 19. Beyond the dividend, ResMed continued its capital return program through share repurchases, buying back 704,000 of its own shares during the quarter at a total cost of $175 million.

Operational Efficiency Fuels Earnings Leap

A closer examination of the earnings reveals the primary driver of growth. While revenue climbed to $1.42 billion (representing a 9% increase on a constant currency basis), the bottom-line improvement was even more pronounced. Adjusted operating profit jumped 19.6% to reach $521.2 million.

This outperformance is attributed to streamlined manufacturing and logistics processes, coupled with lower costs for key components. These factors collectively propelled the company's operating margin upward by 263 basis points to 36.6%. The figures demonstrate ResMed's current ability to convert top-line growth into profit at an accelerating rate.

Segment Performance: Accessories Lead Growth

Breaking down the revenue streams shows particular strength in the core business. Sales from devices and hardware increased by 8.5% to $726.2 million. However, the segment for masks and accessories delivered even more vigorous growth, advancing 16.1% to $529.7 million.

The software-as-a-service division, which supports out-of-hospital care, also contributed positively to the overall result. Its growth of 6.6%, while solid, was somewhat more moderate compared to the hardware and consumables segments.

Management Confidence and Forward Strategy

Looking ahead to the full 2026 fiscal year, company leadership expressed confidence. Management is targeting a gross margin in the range of 62% to 63%. ResMed's strategy focuses on continued product innovation and expansion into new geographic markets, aiming to capitalize on the growing global awareness and diagnosis of sleep-disordered breathing and other chronic respiratory conditions.