ResMed Inc (NYSE:RMD) delivered a solid financial performance in its second quarter of fiscal year 2026, surpassing market expectations on both earnings and sales metrics. The company recorded adjusted earnings per share of $2.81, outpacing the anticipated $2.72 consensus, demonstrating effective operational execution and strong market demand.
Revenue growth also reflected a positive trajectory, with total quarterly sales rising 11% year-over-year to $1.42 billion, above the estimated $1.396 billion forecast. When adjusted for currency fluctuations, sales expanded by 9%, largely fueled by increased demand across ResMed’s diverse portfolio encompassing sleep devices, masks, and associated accessories.
In the segment of Residential Care Software, revenue increased by 5% on a constant currency basis. This segment's growth underscores the expanding demand for digital health solutions within the sleep therapy ecosystem, highlighting a shift toward integrated technological approaches in managing obstructive sleep conditions.
December 2025 marked a significant milestone for ResMed as the U.S. Food and Drug Administration (FDA) granted clearance for its Personalized Therapy Comfort Settings (PTCS), branded as Smart Comfort. This FDA-approved medical device represents a pioneering development — it is the first artificial intelligence-enabled device cleared to offer personalized comfort setting recommendations for patients undergoing continuous positive airway pressure (CPAP) therapy for obstructive sleep apnea (OSA).
The launch strategy for Smart Comfort involves a phased rollout beginning in early 2026, starting with a limited beta release in the United States. This initial phase targets new users of myAir, ResMed’s consumer-facing sleep companion application, in conjunction with the AirSense 11 device. Following this, a broader deployment to additional myAir users across the U.S. is planned later in the year, which is anticipated to drive further adoption and reinforce customer engagement.
Operational efficiencies contributed meaningfully to margin improvements during the quarter. The gross margin climbed by 320 basis points to 61.8%, primarily benefiting from enhanced manufacturing processes, logistical streamlining, and reductions in component costs. On an adjusted basis, gross margin similarly increased by 310 basis points to 62.3%, reflecting the company’s ongoing efforts to optimize cost structures.
Adjusted operating income demonstrated a significant uplift, rising by 19% to $517.2 million, indicative of strong profitability amid growing revenue streams and effective expense management.
Looking ahead, ResMed outlined a five-year global outlook projecting revenue growth at a high single-digit pace. The company anticipates earnings to surpass revenue growth, suggesting continued margin expansion and operational leverage. This guidance aligns with management’s confidence in sustained demand for its products and strategic investments in innovation.
Market analysts responded to the earnings announcement and future guidance with generally favorable assessments. William Blair, in a commentary issued on Friday, affirmed their bullish stance on ResMed’s growth prospects. The firm highlighted that ResMed appears positioned to maintain durable high-single-digit revenue expansion coupled with robust double-digit earnings-per-share (EPS) growth, projecting approximately 15% EPS growth in the current fiscal year.
Despite some lingering concerns related to emerging competition and potential impacts of GLP-1 therapies, analysts like Brandon Vazquez emphasize that these challenges may be more speculative than immediate. Vazquez suggests that ResMed’s consistent execution strengthens investor confidence in its long-term growth trajectory.
From a valuation perspective, ResMed trades at roughly 20 times its calendar 2027 EPS estimate. Reflecting confidence in the company’s fundamentals and outlook, William Blair retains an Outperform rating on the stock.
Additional analyst opinions include Stifel maintaining ResMed with a Hold status but raising their price target from $260 to $265. Wells Fargo also holds an Equal-Weight rating while increasing its price target from $265 to $270. Similarly, Piper Sandler sustains a Neutral rating but lifted the price projection from $270 to $275.
In market action following these reports, ResMed’s shares experienced a decline, dropping approximately 2.33% to $251.62 as of the latest trading close on Friday, according to Benzinga Pro data.
Overall, ResMed’s quarterly report underscores a company with solid financial performance marked by revenue and earnings beat, margin enhancement, and regulatory progress in AI-enabled therapy solutions. While some competitive pressures remain a consideration, the consensus among analysts is that the company’s strategic direction and execution should maintain favorable growth momentum in the medium term.