Resmed Delivers Strong Third-Quarter Growth as Margins and Demand Support Momentum

About Resmed Inc

Resmed Inc (ASX: RMD) is a global health technology company focused on sleep health, breathing health and home-based care. Its business spans cloud-connected devices, masks, accessories, digital health platforms and residential care software, serving customers across 140 countries. The group’s stated long-term direction is centred on expanding access to care, scaling AI-powered digital health capabilities and improving outcomes for patients receiving treatment in the home.

The quarter was defined by balanced, high-quality growth

Resmed’s third-quarter result was strong across most major operating measures. Revenue rose 11 per cent to $1.431 billion, or 8 per cent on a constant currency basis. That top-line growth translated into improved profitability, with income from operations up 17 per cent to $499.8 million and net income up 9 per cent to $398.7 million. Diluted earnings per share rose to $2.74, while non-GAAP diluted earnings per share increased 21 per cent to $2.86.

What stands out about this quarter is that the growth did not come from just one line item. Demand improved across devices, masks and accessories, while residential care software also advanced. According to the revenue table, global devices revenue rose 9 per cent to $735.7 million, masks and other revenue increased 15 per cent to $524.8 million, and residential care software revenue rose 6 per cent to $170.9 million. That mix suggests Resmed is continuing to benefit both from hardware demand and from broader ecosystem participation.

The company also noted that revenue in the Americas, excluding residential care software, grew 9 per cent, while Europe, Asia and other markets grew 7 per cent on a constant currency basis. That is important because it shows the momentum remains geographically diversified rather than being driven by only one market.

Margin expansion was one of the clearest positives

A key highlight in the result was the sharp improvement in gross margin. GAAP gross margin rose to 62.2 per cent from 59.3 per cent a year earlier, while non-GAAP gross margin increased to 62.8 per cent from 59.9 per cent. Resmed said this improvement was primarily driven by lower component costs, as well as manufacturing and logistics efficiencies. Product mix and currency movements also made a small positive contribution.

That matters because it shows the company is not relying purely on revenue growth to lift earnings. It is also extracting better economics from the way it sources, manufactures and distributes its products. For a global medical device and digital health business, sustained gross margin expansion can be especially meaningful because it creates more flexibility to reinvest in research, technology, distribution and customer engagement while still growing profit.

There was, however, some offsetting cost pressure below gross profit. Selling, general and administrative expenses increased 16 per cent to $285.7 million, while research and development expenses rose 12 per cent to $94.3 million. Resmed said higher SG&A reflected VirtuOx-related costs, employee costs, and marketing and technology investment. It also recorded $5.9 million in acquisition and portfolio review expenses linked to evaluation of strategic transactions. Even with those higher expenses, operating leverage remained positive enough to support solid earnings growth.

Masks, accessories and software continue to deepen the model

One of the more interesting elements in the revenue mix is the continued strength in masks and accessories. That category rose 15 per cent globally, faster than devices. In the Americas, masks and other revenue rose 14 per cent to $371.2 million, while in Europe, Asia and other markets it increased 20 per cent to $153.6 million.

This matters because recurring mask and accessory demand can improve the quality and resilience of the revenue base. It suggests the installed base of device users remains active and engaged, and that Resmed continues to convert device placements into ongoing supply demand. That can support more durable growth than a model driven only by new device sales.

Residential care software also remains an important part of the story. Although it is growing more slowly than the core sleep and breathing portfolio, revenue still increased 6 per cent to $170.9 million in the quarter. This gives Resmed continued exposure to software-led care delivery and supports its broader positioning around connected care in the home.

Cash generation and balance sheet strength remain solid

Resmed’s cash performance was another standout feature. Operating cash flow reached $554 million in the quarter, exceeding both reported net income of $399 million and non-GAAP net income of $417 million. For the nine months to 31 March 2026, operating cash flow totalled $1.351 billion.

The balance sheet also remains strong. Cash and cash equivalents stood at $1.661 billion at 31 March 2026, up from $1.209 billion at 30 June 2025. Total stockholders’ equity increased to $6.492 billion from $5.968 billion over the same period. Short-term debt did rise, but long-term debt fell from $658.4 million to $404.2 million, leaving the overall position looking manageable.

This strong cash generation supported continued capital returns. During the quarter, Resmed paid $87 million in dividends and repurchased 673,000 shares for $175 million, returning a total of $262 million to shareholders. The board also declared a quarterly cash dividend of $0.60 per share.

Operational milestones support longer-term expansion

Beyond the financial results, Resmed also highlighted several operational developments. The company unveiled findings from its sixth annual Global Sleep Survey, drawing on 30,000 people across 13 countries, which reinforces both awareness growth and the broader market opportunity in sleep health. It also announced a new distribution centre in Greenwood, Indiana, scheduled to begin operations in 2027, which will expand U.S. distribution capacity across North America. In addition, Resmed launched the AirTouch F30i Comfort full face mask in the U.S. following earlier introductions in Australia and Canada.

These announcements are important because they show Resmed is still building for future demand rather than simply harvesting current momentum. The distribution investment points to confidence in continued volume growth, while the product launch supports ongoing refresh and expansion in the mask portfolio.

Outlook

Resmed’s third-quarter result points to a business with strong operating momentum, improving profitability and healthy cash generation. Revenue growth remained broad-based, gross margin expanded meaningfully, and earnings benefited from both top-line demand and operating efficiency. At the same time, the company continues to invest in technology, product development and infrastructure to support longer-term growth. With devices, masks, accessories and software all contributing, and with over $1.6 billion in cash on hand, Resmed appears well positioned to continue delivering profitable growth as it pushes further into sleep health, breathing health and care in the home.