Abstract
ResMed will report fiscal third‑quarter 2026 results on April 30, 2026 after the market close (Post Market), with consensus pointing to double‑digit revenue growth and accelerating earnings on resilient device and mask demand alongside continued expansion in software.
Market Forecast
Consensus for ResMed’s fiscal third quarter calls for revenue of 1.42 billion US dollars, up 10.39% year over year; adjusted EBIT of 515.00 million US dollars, up 18.32% year over year; and adjusted EPS of 2.80, up 18.74% year over year. Forecasts do not specify margin guidance; the mix implies that operating leverage continues to support earnings growth faster than sales.
Sleep and Respiratory Care remains the core driver into this print, with forecasts assuming stable device and mask throughput and a revenue base anchored by last quarter’s 1.26 billion US dollars contribution, as the installed base supports replacement cycles and accessory pull‑through. Net Software Services, viewed as the most promising recurring revenue contributor, generated 166.90 million US dollars last quarter and is expected to continue benefiting from a broader connected patient base and workflow digitization; at the company level, revenue grew 10.98% year over year in the previous quarter and is forecast to grow 10.39% year over year in the current quarter.
Last Quarter Review
In fiscal second quarter 2026, ResMed delivered 1.42 billion US dollars in revenue, a 62.31% gross margin, 393.00 million US dollars in GAAP net profit attributable to common shareholders (net profit margin of 27.59%), and adjusted EPS of 2.81, up 15.64% year over year.
Sequentially, profitability improved, with GAAP net profit up 12.64% quarter on quarter, underscoring improving operating leverage alongside steady top‑line expansion.
By business line, Sleep and Respiratory Care contributed 1.26 billion US dollars, while Net Software Services contributed 166.90 million US dollars; overall company revenue grew 10.98% year over year, with the mix skewed toward devices, masks, and accessories supported by recurring replacement demand and connected‑care adoption.
Current Quarter Outlook
Main Business: Sleep and Respiratory Care
The central question for this quarter is the cadence of device and mask orders relative to an elevated installed base exiting fiscal second quarter 2026. The revenue forecast of 1.42 billion US dollars implies sustained volume in core therapy devices and steady replacement cycles for masks and accessories, with the latter historically offering dependable repeat purchases as patients adhere to treatment. Given last quarter’s 62.31% gross margin and a 27.59% net margin, the current setup suggests that mix and operating scale can continue to underpin earnings even if device volume normalizes from prior peaks.
Within Sleep and Respiratory Care, replacement masks and accessories typically support more predictable sales patterns than initial device placements. The consensus EPS estimate of 2.80, up 18.74% year over year, mirrors the notion of healthy operating leverage on a double‑digit revenue base expansion. Investors will watch for any commentary on channel inventory and order linearity across major geographies, because channel stocking or destocking patterns can affect quarterly pacing even when end‑user demand remains intact.
Sequential profit resilience last quarter, highlighted by a 12.64% quarter‑on‑quarter increase in GAAP net profit, provides a constructive lead‑in. Attention will center on price discipline and input cost trends; while model inputs are not explicitly provided in forecasts, the EBIT estimate of 515.00 million US dollars implies solid flow‑through from revenue to operating income. Should the mix tilt toward higher‑margin consumables and services, gross and operating margins can remain supported, sustaining the earnings delta relative to sales.
Most Promising Segment: Digital Health and Software
Net Software Services continues to represent the company’s most compelling structural growth vector, driven by subscription and workflow solutions tied to connected devices and clinical platforms. The segment delivered 166.90 million US dollars in revenue last quarter, and while explicit year‑over‑year growth for the segment is not provided, the business model’s recurring nature tends to compound alongside growth in treated and monitored patients. The key near‑term consideration is whether new patient setups and adherence support tools expand the active user base sufficiently to maintain momentum through fiscal third quarter 2026.
Forecasted company‑level revenue growth of 10.39% year over year, coupled with an 18.32% year‑over‑year increase in EBIT, implies that software and data services remain an accretive contributor to the margin mix. As software scales, it can lift the overall profitability profile by adding high‑gross‑margin streams attached to the therapy lifecycle. This quarter, investors will look for indications of continued adoption of cloud‑based platforms and connectivity features, with particular interest in attach rates to new devices and the depth of engagement from providers managing populations remotely.
Because software typically rides on the installed base and patient adherence, the blend of device placements and recurring mask replacements indirectly catalyzes software usage and subscription renewals. The expected outperformance of earnings growth versus revenue growth suggests that operating leverage persists across the consolidated portfolio, to which software’s margin structure is a significant contributor. Confirmation of expanding workflows, stable churn, and incremental capabilities would strengthen the view that this segment remains a durable growth engine beyond the quarter.
Key Stock Price Drivers This Quarter
The first driver is earnings quality relative to consensus, particularly the relationship between revenue growth of 10.39% year over year and the expected 18.74% year‑over‑year increase in EPS. Upside to the 515.00 million US dollars EBIT estimate would likely require stronger‑than‑modeled mix or lower‑than‑anticipated operating expense growth. Conversely, any signs of slower device throughput or less favorable mix could compress leverage and narrow the gap between sales and earnings growth.
The second driver is the market’s interpretation of medium‑term demand sensitivity to evolving obesity and metabolic treatments, which have been a prominent overhang for sleep‑care names in recent quarters. Analysts have argued that risk is currently over‑discounted, and this print offers another data point on new patient starts, adherence, and replacement patterns. If the company’s revenue and EPS trajectories remain on their forecasted double‑digit year‑over‑year growth path, the quarter could support the view that therapy adoption and compliance continue to offset perceived headwinds.
The third driver is competitive dynamics and channel normalization. Investors continue to monitor how competitive supply and remediation narratives shape device flows and timing of orders. This quarter’s commentary around order visibility, backlog normalization, and any shifts in geographic performance will be scrutinized. Stable execution against the 1.42 billion US dollars revenue expectation, accompanied by balanced inventory positions across channels, would favorably impact the stock’s near‑term reaction.
Foreign exchange and cost inputs form additional sensitivities. While the forecasts presented do not provide explicit currency or cost assumptions, any variance from expected price/cost dynamics can move gross margin around last quarter’s 62.31% level. A reiteration or improvement in consolidated margin rates would reinforce the message embedded in the EBIT and EPS growth outlooks that operating leverage remains intact this quarter.
Analyst Opinions
Across research commentary published since January 2026, the skew of views is constructive: bullish views outnumber bearish views by a ratio of 3 to 0, with several neutral stances on price targets but no explicit bearish calls in the period reviewed. The majority view emphasizes attractive valuation relative to growth and contends that market concerns around competitive re‑entry and obesity‑drug adoption are more than reflected in current prices.
William Blair maintains a Buy rating, noting that the stock trades at a depressed valuation as the market overprices risks linked to competitive headlines and potential shifts in long‑term therapy addressability. Their stance maps well to this quarter’s setup: with revenue forecast to grow 10.39% year over year and EPS expected to rise 18.74% year over year, the profile suggests that operating leverage and mix can sustain earnings expansion even if top‑line growth moderates from the prior quarter’s 10.98% year‑over‑year pace. If realized, that gap between earnings and revenue growth provides tangible support for multiple stabilization.
Citigroup also maintains a Buy rating and recently adjusted its price target to 340 US dollars. The bank points to ongoing earnings strength driven by balanced demand in devices and consumables, augmented by efficiency gains. Those points are consistent with the current quarter forecasts: a 515.00 million US dollars EBIT estimate implies healthy conversion of sales into operating profit, which—alongside a 2.80 EPS target—outlines a path for earnings to compound faster than revenue in the near term. Citigroup’s framing effectively anchors on earnings quality as the catalyst for further price discovery, rather than requiring outsized acceleration in headline sales growth.
Morgans Financial upgraded the stock to Buy in early February, citing improving growth characteristics and a supportive trajectory for fiscal 2026. That view aligns with the company’s recent performance base coming into this print, including the previous quarter’s 62.31% gross margin and 27.59% net margin. The upgrade underscores confidence that structural drivers—such as replacement cycles and expanding connected‑care services—can underpin the consolidated P&L, enabling EPS to track ahead of sales growth as indicated by the 18.74% EPS year‑over‑year forecast.
Synthesizing these bullish perspectives, the majority argues that valuation remains reasonable against the backdrop of consistent double‑digit top‑line growth and a steeper earnings curve. The emphasis is less on a need for topline surprise and more on confirmation that margins and operating leverage are holding. Should the company print near or above the 1.42 billion US dollars revenue and 2.80 EPS markers, the case for incremental rerating strengthens, especially if management commentary indicates sustained momentum in masks, accessories, and connected‑care services. The bullish cohort also highlights that even modest upside to EBIT versus the 515.00 million US dollars estimate could reinforce the margin durability narrative.
In sum, the prevailing institutional view anticipates a results set that demonstrates resilient demand across core therapies and continued expansion in software‑enabled services, translating into earnings growth above the pace of revenue. With bullish opinions outweighing bearish ones during the period reviewed, the market will likely key on whether the company delivers on the double‑digit revenue gain and high‑teens EPS increase now embedded in expectations, together with signals on mix, operating efficiency, and the durability of replacement and subscription flows into the back half of fiscal 2026.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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