ResMed beats on earnings and ups dividend, yet shares plummet

ResMed's (RMD) FY26 result is a case study in how much forward guidance matters this reporting season. The sleep device manufacturer delivered a solid set of FY26 numbers: revenue in line with forecasts, a slight earnings beat and a 10% dividend increase. 

But analysts had made clear ahead of the result that the headline wasn't the point: they were far more focused on US device sales, mask growth, gross margins and any commentary on new patient flow. Above all, they wanted the FY27 outlook – which they flagged as the likely driver of the share price reaction, to show whether ResMed could keep growing through threats now crowding its horizon.

Clearly, on this last item, RMD has failed to deliver. Shares sank 5.9% in after-hours trade on the NYSE, with the CDIs down 7.5% on the ASX. 

FY26 at a glance

Here are the key numbers for FY26 compared to analysts expectations: 

• Q4 revenue up 9% year-on-year to $1.46bn, in line with estimates

• Q4 EPS ex-items up 16% year-on-year to $0.295 vs $0.29 ests (2% beat)

• Q4 operating income ex-items up 8% year-on-year $515m vs $525.3m ests (2% miss) 

• Q4 non-GAAP gross margin of 62.3% vs 62.6% ests (30bp miss) 

• Quarterly dividend up 10% to $0.66 from $0.60

• FY26 revenue up 10% to $5.7bn vs Morgans ests of $5.64bn (1% beat) 

• FY26 EPS up 17% to $11.17 vs Morgans' $10.98 ests (2% beat)

Ahead of the result, local stockbroking and wealth management firm Morgans singled out US device sales as the number to watch above the headline earnings. On that measure, ResMed only met expectations — US, Canada and Latin America device revenue of $459m came in just shy of the $462.3m consensus, even as strength in Europe and Asia carried the total device line to a beat.

FY27 guidance

ResMed has a few moving parts heading into FY27 that are worth understanding before digging into their guidance:

• MatrixCare divestment: ResMed has agreed to sell MatrixCare, its residential care software business, with the deal expected to close around 1 September 2026. The sale narrows ResMed to its core sleep and breathing business, and funds a $450m accelerated share buyback.

• Noctrix acquisition: ResMed has completed its purchase of Noctrix Health, a medical device company that makes FDA-cleared wearable therapy for Restless Legs Syndrome. It expands ResMed's reach into adjacent sleep disorders, though it's earnings-dilutive in the near term.

• Astral field safety action: ResMed has halted new sales of its Astral ventilator following a field safety notification. A $42m charge in the fourth quarter covers the recall costs, and the lost sales carry a $75m revenue headwind and a $0.15 hit to earnings per share into FY27 guidance.

• GLP-1 drugs: GLP-1s are the class of weight-loss and diabetes drugs such as Ozempic and Mounjaro. Because obesity is a major driver of obstructive sleep apnea, the concern is that widespread weight loss could shrink ResMed's long-term patient pool. The company continues to argue the opposite, that the drugs actually bring more patients into the funnel by raising engagement with health.

• Philips re-entry: Rival Philips exited the US sleep device market after a major product recall in 2021, handing ResMed years of near-uncontested share. Philips is expected to return to the US market in 2027, and the concern is that renewed competition weighs on ResMed's pricing and market share.

Against that backdrop, brokers wanted to know whether ResMed could keep margins expanding through cost inflation, fund its capital return while absorbing Noctrix dilution, and show that underlying demand was intact.

ResMed guided to underlying revenue growth of 5–7% and earnings growth of 12–14% for FY27 (once currency swings and its recent buying and selling of businesses are set aside). In its preview, Morgans’ stated that any share price reaction would likely hinge on whether profit margins could keep expanding, and here management was upbeat, guiding to solid margin growth despite rising freight and component costs.

The specific worries were largely put to bed by today’s FY27 guidance. The cost of the Astral recall was spelled out and already built into the numbers, the weight-loss drugs were reaffirmed as a net positive for new patients, and ResMed lifted its planned shareholder returns to more than $1.85bn for FY27, up over 75%. However, the company made no mention of Philips re-entry to the market in 2027.

The bottom line

So on most counts, RMD’s guidance delivered what brokers had asked for: margins growing, demand holding up, the Astral hit contained, and a bigger capital return. What it couldn't settle were the longer-term questions about the return of rival Philips to the US market in 2027 and the lingering threat from weight-loss drugs.

With the stock down around 7% at the time of writing, it appears that these worries are enough to overshadow an outlook that, on its own terms, largely landed. 

For all the key reporting season dates, as well as consensus estimates for net profit after tax (NPAT), earnings per share (EPS) and dividends per share (DPS), be sure to check out our ASX Reporting Season Calendar for August 2026. Covering more than 250 ASX stocks, it should prove an invaluable investing tool this reporting season.