ResMed Q1 FY26 Earnings: Strong Growth and Margin Expansion

ResMed, a key player in treating sleep apnea and other respiratory conditions, recently released its financial results for the first quarter of fiscal year 2026. For those tracking the company's performance, the latest 10-Q filing with the SEC provides a detailed look at its financial health. Let's break down the key numbers and what they tell us about the company's trajectory.

Strong Top-Line Growth Across the Board

ResMed kicked off its fiscal year with impressive revenue growth. For the quarter ending September 30, 2025, the company reported total net revenue of $1.34 billion, a solid 9% increase compared to the same period last year.

This growth wasn't isolated to one area. The company's two main business segments both contributed:

• Sleep and Breathing Health: This core segment, which includes their well-known CPAP devices and masks, brought in $1.17 billion, marking a 10% year-over-year increase. Sales of devices grew by 9%, while masks and other accessories—a crucial recurring revenue stream—grew by an even stronger 11%.
• Residential Care Software: The company's Software as a Service (SaaS) business, which serves out-of-hospital care settings, also grew, posting revenue of $166 million, a 6% increase from the prior year.

Geographically, the performance was robust worldwide, with the Americas growing by 10% and the combined Europe, Asia, and other markets segment also growing by 10%.

The flow of revenue through the company's costs and expenses to its net income for the quarter is visualized in the diagram below.

A Closer Look at Profitability

Beyond just growing sales, ResMed demonstrated significant improvement in its profitability. The company’s gross margin—a key indicator of efficiency that shows the percentage of revenue left after accounting for the cost of goods sold—expanded notably to 61.5%, up from 58.6% in the same quarter last year. This suggests the company is benefiting from factors like better pricing, an improved product mix, or more efficient manufacturing.

While operating expenses increased to support growth, the company showed discipline. Selling, general, and administrative (SG&A) expenses grew by 8%, remaining steady as a percentage of revenue. Investment in research and development (R&D) also kept pace with sales, highlighting a continued commitment to innovation.

One new item on the income statement was a $15.8 million restructuring charge. Despite this one-off expense, income from operations still climbed 15% to $447 million. Ultimately, this translated into a healthy bottom line, with net income of $349 million, or $2.37 per diluted share, a 12% increase from the prior year's $2.11 per share.

Healthy Cash Flow and Shareholder Returns

A strong income statement is great, but cash is king. ResMed's cash flow from operations was particularly strong, reaching $457 million for the quarter, a significant jump from $326 million in the prior-year period. This demonstrates the company's ability to efficiently convert its profits into cash.

ResMed used this cash to reward its shareholders, paying out $88 million in dividends and repurchasing $150 million of its own stock during the quarter.

Final Thoughts

ResMed has started its fiscal year on a very strong note. The latest quarterly report paints a picture of a company firing on all cylinders, with broad-based revenue growth, expanding margins, and powerful cash generation. The performance suggests ResMed is effectively capitalizing on the growing global demand for sleep and respiratory care solutions, a market where it holds a leading position, particularly as competitors have faced challenges. The one-time restructuring expense is a point to note, but it doesn't detract from an otherwise stellar quarter of operational and financial execution.