Australia | Feb 02 2026
This story features RESMED INC.
For more info SHARE ANALYSIS: RMD
The company is included in ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
It was once feared weight-loss drugs would crush demand for sleep apnoea products. ResMed’s December quarter has shown very much the opposite is true.
- ResMed’s December quarter beats across most metrics
- US mask/device sales the standout
- GLP-1’s support increasing demand, as foreshadowed by management
- Further double-digit earnings growth likely ahead
By Greg Peel
ResMed’s ((RMD)) December quarter result delivered 15% profit growth, representing a 2% beat of consensus. Analysts describe the result as solid across most metrics.
Masks/accessories grew significantly, up 14% year on year (constant currency) in the quarter. Notably, US masks/accessories revenue increased by 16%, including “double-digit” organic growth.
Macquarie notes this is ahead of high-single digit market growth supported by mask launches, new patient starts, re-supply initiatives and market share gains.
Devices saw growth of 7% year on year. US devices grew 8%, with market growth of mid-single digits.
Revenue growth in the residential care software division was only 5% although the company expects a pick-up in that pace to high single-digits by FY27.
ResMed increased the lower end of gross margin guidance to 62-63% for FY26 (up from 61-63%), following a December quarter gross margin of 62.3%, up 310 basis points year on year.
Management is targeting double-digit basis point improvements year on year to FY30. Expansion was driven by manufacturing and logistics efficiencies and component cost improvements.
Currency movements provided a tailwind of some 40 basis points to gross margin, however recent strength in the AUD/USD is expected to affect a neutral impact in the March quarter, and a minor headwind in the June quarter. Management noted this is accounted for in the gross margin guidance.
At the same time, ResMed was able to continue to invest in SG&A (selling, general & administrative expenses) and R&D, which should support ongoing improvements in awareness, demand generation and demand capture, Jarden suggests.
US Strength
A regional split remains, with Americas sales outpacing rest-of-world (11% and 6% respectively) in both masks (16% and 8%) and devices (8% and 5%).
Encouragingly, notes Morgans, rest-of-world mask growth has re-accelerated to market rates despite a tough comparable (11%, following the launch of the A11 in Japan), supported by new fabric-based full face mask launches, re-supply and targeted marketing.
Strong Americas mask growth (16%) appears to Morgans broad-based rather than driven by any unusual one-off, supported via new products, seasonality, promotions, the VirtuOx acquisition, and, notably, healthy re-supply and new patient set-ups, with double-digit growth ex-VirtuOx.
Perhaps Americans are, on average, heavier than rest-of-world?
GLP-1 Tailwind
It is interesting to recall that when GLP-1 weight loss drugs first hit the market, ResMed’s share price tanked on an assumption weight loss would reduce demand for sleep apnea products.
There was, however, a counter-argument from analysts suggesting GLP-1s might actually lead to greater sleep apnoea awareness and thus increased product demand.
They were right.
At the December quarter result, ResMed included three-year, real-world data analysis of obstructive sleep apnea (OSA) patients which highlights that patients on GLP-1 are 11% more likely to initiate positive airway pressure (PAP) therapy, those on GLP-1 and PAP therapy have a higher PAP re-supply rate (up 3.1% at year one, 6.2% at year three).
ResMed points to more motivated patients coming through the GLP-1 channel supporting longer-term adherence to PAP therapy. Morgans believes this supports the structural thesis of expanding diagnosis, higher therapy uptake and growing recurring re-supply revenue.
If there’s a new structural theme to re-rate ResMed in a durable way, Canaccord Genuity believes it has to come from owning and controlling diagnostic and referral infrastructure tailored to tech-generated and GLP-1-associated demand.
Some fundamental components are already in place, but the challenge is integrating them into a proprietary architecture that compresses patient capture without compromising clinical rigour.
The model is still evolving but Canaccord believes it could end up looking like direct-to-customer (DTC) from important angles, while preserving the traditional ties with sleep labs, independent diagnostic test facilities, physicians, heat moisture exchange providers, and payors.
Something new is happening structurally, in Canaccord’s view.
The US FDA’s approval of Novo Nordisk’s first-in-class oral GLP-1 Wegovy tablet for weight management, launched in the US, materially broadens the treated pool.
For ResMed, Canaccord sees a clear second order benefit from this GLP-1 activation, particularly when obesity and sleep-disordered breathing are co-managed and a combined continuous positive airway pressure (CPAP) plus GLP-1 regimen is positioned as the gold standard of care.
Capital Management
Ord Minnett forecasts a compound annual growth rate of 11% for ResMed over the broker’s forecast horizon and a net cash position of US$1bn by the end of the fiscal year (June).
This in turn should support increased dividends and/or further capital management initiatives, noting ResMed announced an increase to its share buyback program to “more than US$600m” for FY26 from US$600m with the December quarter report.
ResMed’s cash generation continues to impress, Jarden suggests. Working capital did slow up a little in the quarter but this is expected to reverse in the second half and augment a seasonally much stronger second half cash flow versus the first half.
Jarden suggests this augurs well for ResMed’s buyback, likely to go well above the “more than US$600m”.
Value on Offer
With shares in ResMed trading at a 20x FY27 PE on Citi’s forecast, this broker suggests the shares look inexpensive compared to both US medical technology peers and the ASX200. Citi thinks a lack of other “clean” stories in large cap A&NZ healthcare will probably benefit ResMed over coming months.
The only stumbling block would be a return to the market of competitor Philips, which has been out of the US market for some time following a major safety recall. Citi has long warned of this, now assuming a return in FY27, while other brokers appear to have stopped trying to predict a return at all.
Morgans views ResMed’s overall fundamentals as sound, with structural tailwinds from GLP-1-driven therapies expanding diagnosis and profitability. Despite this, valuation remains below historical averages, Morgans notes.
Ord Minnett remains “strongly positive” on ResMed. The stock remains Macquarie’s preferred sector exposure.
Morgans adjusts its FY26-28 forecasts modestly and moves to a Buy rating from Accumulate, viewing recent share weakness unjustified given sound fundamentals.
The six brokers monitored daily by FNArena covering ResMed now all have Buy or equivalent ratings. The consensus target has slipped slightly due to the forex headwind (stronger AUD), to $47.23 from $47.95.
Ultimately, ResMed remains a very strong story, says Jarden, delivering double-digit earnings growth and generating strong cash flows. Jarden believes the stock looks cheap, trading on a 22x FY26 PE, while earnings growth is expected to remain in double-digits for at least the next three years.
Jarden retains an Overweight rating, raising its target to $45.20 from $45.10.
Forex has led Canaccord Genuity to cut its target to $46.50 from $50.00. The stock appears capable of reaching that price target without multiple expansion, in Canaccord’s view.
This broker sees plenty of structural opportunities for re-rating ResMed, but all of them have barriers to be removed or overcome. Canaccord’s sense is that residual risks to the competitive/pricing outlook is also holding the market back from pricing in those upside scenarios.
Canaccord retains a Buy rating.
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