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RMD Stock Up on Q1 Earnings and Revenue Beat, Gross Margin Climbs
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Key Takeaways
ResMed's Q1 FY27 adjusted EPS rose 14% to $2.91, surpassing the Zacks Consensus Estimate by 8.99%.
RMD's revenues rose 6% to $1.41 billion, led by sustained demand for sleep devices, masks and accessories.
RMD's adjusted gross margin expanded 50 bps to 62.5%, from productivity gains and favorable product mix.
ResMed Inc. (RMD - Free Report) reported first-quarter fiscal 2027 adjusted earnings per share (EPS) of $2.91, reflecting a 14% increase year over year and surpassing the Zacks Consensus Estimate by 8.99%.
Revenues increased 6% year over year to $1.41 billion, exceeding the Zacks Consensus Estimate by 1.66%. Core constant-currency revenues grew 7%, supported by sustained demand for sleep devices, masks and accessories.
Following yesterday’s announcement, RMD shares rose nearly 2% in after-hours trading.
RMD's Q1 Sales: A Closer View
Sleep and Breathing Health
Total revenues increased approximately 8% year over year to $1.26 billion (up 7% at core constant exchange rates), supported by sustained demand for sleep devices, masks and accessories.
Within this business, Americas sleep devices revenues increased 8% year over year to $436 million (up 6% at core constant exchange rates). Rest of World sleep devices revenues rose 12% to $280 million (up 13% at core constant exchange rates).
Life-support devices revenues declined significantly due to the discontinuation of Astral sales. Americas revenues plunged 94% year over year to less than $1 million, while Rest of World revenues declined 79% to $3 million. The declines were identical on a core constant-currency basis.
Total masks and other revenues were $540 million, increasing 10% year over year. This included a 10% rise in the Americas to $397 million and a 12% increase in the Rest of World to $143 million (up 11% on a core constant-currency basis).
Residential Care Software
Revenues in this segment declined approximately 7% year over year to $155 million on a reported basis, reflecting the divestiture of the MatrixCare business, completed on Sept. 1, 2026.
On a core constant-currency basis, revenues increased 5%. The remaining Residential Care Software businesses, Brightree and MEDIFOX DAN, recorded 8% growth on a core constant-currency basis, reflecting continued momentum in the company's core software offerings.
ResMed’s Q1 Margin Performance
In the fiscal first quarter, the company's adjusted gross profit totaled $884 million, up 6.6% year over year. Adjusted gross margin was 62.5%, reflecting an expansion of 50 basis points (bps), as procurement, manufacturing and distribution productivity gains, along with favorable product mix, more than offset foreign exchange headwinds.
Adjusted selling, general and administrative expenses increased 6% year over year to $276 million. Adjusted research and development expenses jumped 16% to $102 million, primarily due to investments in next-generation devices and masks and AI-enabled solutions aimed at improving patient engagement and therapy adherence.
Adjusted operating profit was $506 million in the quarter, up 5% from the year-ago quarter’s level. The adjusted operating margin contracted 30 bps year over year to 35.8%.
RMD’s Financial Updates
ResMed exited the first quarter of fiscal 2027 with cash and cash equivalents of $1.01 billion compared with $1.47 billion at the end of fiscal 2026.
Net cash provided by operating activities in the fiscal first quarter was $422.4 million compared with $457.3 million in the year-ago period.
The company paid out approximately $95 million in dividends during the fiscal first quarter and also repurchased shares for approximately $936.4 million, returning more than $1 billion to shareholders as part of its ongoing capital management initiatives.
RMD Reiterates Fiscal 2027 Outlook
ResMed maintained its fiscal 2027 core constant-currency revenue growth guidance of 5% to 7%, including an approximately 130-bps headwind, or $75 million, from discontinued Astral sales. Reported revenues are projected between $5.75 billion and $5.85 billion. The Zacks Consensus Estimate for fiscal 2027 revenues is pegged at $5.81 billion.
Adjusted EPS is expected between $12.00 and $12.25, implying reported growth of approximately 7% to 10%. Excluding the effects of the MatrixCare divestiture and Nidra acquisition, core earnings growth is projected at 12% to 14%. The Zacks Consensus Estimate for EPS currently stands at $12.11.
Management continues to anticipate low double-digit basis-point gross margin expansion and a slight improvement in operating margin for fiscal 2027. Capital expenditures are projected between $160 million and $180 million, supporting manufacturing expansion and automation initiatives.
Our Take
ResMed started fiscal 2027 on a strong note, with earnings and revenues beating respective estimates. Performance reflected sustained demand for sleep devices, masks and accessories, along with continued productivity gains and gross margin expansion. The company also benefited from growth in its Brightree and MEDIFOX DAN software offerings. ResMed expanded its portfolio with the U.S. launch of the AirTouch F40 fabric mask and AirCurve 11 ST/ST-A bilevel devices, while enhancing its AI-powered digital health solutions. However, declining life-support device revenues due to the discontinuation of Astral sales, along with inflationary pressures and higher operating expenses, remained headwinds.
The company completed the divestiture of its MatrixCare business, sharpening its focus on higher-growth software offerings. ResMed also advanced the integration and commercial expansion of Nidra, its non-invasive treatment for Restless Legs Syndrome acquired through Noctrix Health. Additionally, its partnerships with Eight Sleep and OURA aim to improve sleep health awareness and expand access to diagnosis and treatment.
Intuitive Surgical, carrying a Zacks Rank #2 (Buy) at present, posted third-quarter 2026 adjusted EPS of $3.00, exceeding the Zacks Consensus Estimate by 14.94%. Revenues of $3.05 billion topped the Zacks Consensus Estimate by 5.84%.
ISRG has an earnings yield of 2.5% against the industry’s negative 2.1% yield. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 15.12%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Medpace, carrying a Zacks Rank #2, reported third-quarter 2026 adjusted EPS of $4.84, which surpassed the Zacks Consensus Estimate by 8.76%. Revenues of $716 million beat the Zacks Consensus Estimate by 1.02%.
MEDP has an estimated long-term earnings growth rate of 14.3% compared with the industry’s 13.2% growth. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 9.77%.
Thermo Fisher, carrying a Zacks Rank #2 at present, posted third-quarter 2026 adjusted EPS of $6.68, exceeding the Zacks Consensus Estimate by 4.38%. Revenues of $12.14 billion outperformed the Zacks Consensus Estimate by 1.81%.
TMO has an earnings yield of 3.9% against the industry’s negative 2.1% yield. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 4.20%.
View the Zacks #1 Rank List
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RMD Stock Up on Q1 Earnings and Revenue Beat, Gross Margin Climbs
Key Takeaways
ResMed Inc. (RMD - Free Report) reported first-quarter fiscal 2027 adjusted earnings per share (EPS) of $2.91, reflecting a 14% increase year over year and surpassing the Zacks Consensus Estimate by 8.99%.
Revenues increased 6% year over year to $1.41 billion, exceeding the Zacks Consensus Estimate by 1.66%. Core constant-currency revenues grew 7%, supported by sustained demand for sleep devices, masks and accessories.
Following yesterday’s announcement, RMD shares rose nearly 2% in after-hours trading.
RMD's Q1 Sales: A Closer View
Sleep and Breathing Health
Total revenues increased approximately 8% year over year to $1.26 billion (up 7% at core constant exchange rates), supported by sustained demand for sleep devices, masks and accessories.
Within this business, Americas sleep devices revenues increased 8% year over year to $436 million (up 6% at core constant exchange rates). Rest of World sleep devices revenues rose 12% to $280 million (up 13% at core constant exchange rates).
ResMed Inc. Price, Consensus and EPS Surprise
ResMed Inc. price-consensus-eps-surprise-chart | ResMed Inc. Quote
Life-support devices revenues declined significantly due to the discontinuation of Astral sales. Americas revenues plunged 94% year over year to less than $1 million, while Rest of World revenues declined 79% to $3 million. The declines were identical on a core constant-currency basis.
Total masks and other revenues were $540 million, increasing 10% year over year. This included a 10% rise in the Americas to $397 million and a 12% increase in the Rest of World to $143 million (up 11% on a core constant-currency basis).
Residential Care Software
Revenues in this segment declined approximately 7% year over year to $155 million on a reported basis, reflecting the divestiture of the MatrixCare business, completed on Sept. 1, 2026.
On a core constant-currency basis, revenues increased 5%. The remaining Residential Care Software businesses, Brightree and MEDIFOX DAN, recorded 8% growth on a core constant-currency basis, reflecting continued momentum in the company's core software offerings.
ResMed’s Q1 Margin Performance
In the fiscal first quarter, the company's adjusted gross profit totaled $884 million, up 6.6% year over year. Adjusted gross margin was 62.5%, reflecting an expansion of 50 basis points (bps), as procurement, manufacturing and distribution productivity gains, along with favorable product mix, more than offset foreign exchange headwinds.
Adjusted selling, general and administrative expenses increased 6% year over year to $276 million. Adjusted research and development expenses jumped 16% to $102 million, primarily due to investments in next-generation devices and masks and AI-enabled solutions aimed at improving patient engagement and therapy adherence.
Adjusted operating profit was $506 million in the quarter, up 5% from the year-ago quarter’s level. The adjusted operating margin contracted 30 bps year over year to 35.8%.
RMD’s Financial Updates
ResMed exited the first quarter of fiscal 2027 with cash and cash equivalents of $1.01 billion compared with $1.47 billion at the end of fiscal 2026.
Net cash provided by operating activities in the fiscal first quarter was $422.4 million compared with $457.3 million in the year-ago period.
The company paid out approximately $95 million in dividends during the fiscal first quarter and also repurchased shares for approximately $936.4 million, returning more than $1 billion to shareholders as part of its ongoing capital management initiatives.
RMD Reiterates Fiscal 2027 Outlook
ResMed maintained its fiscal 2027 core constant-currency revenue growth guidance of 5% to 7%, including an approximately 130-bps headwind, or $75 million, from discontinued Astral sales. Reported revenues are projected between $5.75 billion and $5.85 billion. The Zacks Consensus Estimate for fiscal 2027 revenues is pegged at $5.81 billion.
Adjusted EPS is expected between $12.00 and $12.25, implying reported growth of approximately 7% to 10%. Excluding the effects of the MatrixCare divestiture and Nidra acquisition, core earnings growth is projected at 12% to 14%. The Zacks Consensus Estimate for EPS currently stands at $12.11.
Management continues to anticipate low double-digit basis-point gross margin expansion and a slight improvement in operating margin for fiscal 2027. Capital expenditures are projected between $160 million and $180 million, supporting manufacturing expansion and automation initiatives.
Our Take
ResMed started fiscal 2027 on a strong note, with earnings and revenues beating respective estimates. Performance reflected sustained demand for sleep devices, masks and accessories, along with continued productivity gains and gross margin expansion. The company also benefited from growth in its Brightree and MEDIFOX DAN software offerings. ResMed expanded its portfolio with the U.S. launch of the AirTouch F40 fabric mask and AirCurve 11 ST/ST-A bilevel devices, while enhancing its AI-powered digital health solutions. However, declining life-support device revenues due to the discontinuation of Astral sales, along with inflationary pressures and higher operating expenses, remained headwinds.
The company completed the divestiture of its MatrixCare business, sharpening its focus on higher-growth software offerings. ResMed also advanced the integration and commercial expansion of Nidra, its non-invasive treatment for Restless Legs Syndrome acquired through Noctrix Health. Additionally, its partnerships with Eight Sleep and OURA aim to improve sleep health awareness and expand access to diagnosis and treatment.
RMD’s Zacks Rank & Key Picks
ResMed currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Medpace (MEDP - Free Report) and Thermo Fisher (TMO - Free Report) .
Intuitive Surgical, carrying a Zacks Rank #2 (Buy) at present, posted third-quarter 2026 adjusted EPS of $3.00, exceeding the Zacks Consensus Estimate by 14.94%. Revenues of $3.05 billion topped the Zacks Consensus Estimate by 5.84%.
ISRG has an earnings yield of 2.5% against the industry’s negative 2.1% yield. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 15.12%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Medpace, carrying a Zacks Rank #2, reported third-quarter 2026 adjusted EPS of $4.84, which surpassed the Zacks Consensus Estimate by 8.76%. Revenues of $716 million beat the Zacks Consensus Estimate by 1.02%.
MEDP has an estimated long-term earnings growth rate of 14.3% compared with the industry’s 13.2% growth. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 9.77%.
Thermo Fisher, carrying a Zacks Rank #2 at present, posted third-quarter 2026 adjusted EPS of $6.68, exceeding the Zacks Consensus Estimate by 4.38%. Revenues of $12.14 billion outperformed the Zacks Consensus Estimate by 1.81%.
TMO has an earnings yield of 3.9% against the industry’s negative 2.1% yield. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 4.20%.