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1. Company Snapshot

1.a. Company Description

ResMed Inc.develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets.The company operates in two segments, Sleep and Respiratory Care, and Software as a Service.


It offers various products and solutions for a range of respiratory disorders, including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, dental devices, and cloud-based software informatics solutions to manage patient outcomes, as well as provides customer and business processes.The company also provides AirView, a cloud-based system that enables remote monitoring and changing of patients' device settings; myAir, a personalized therapy management application for patients with sleep apnea that provides support, education, and troubleshooting tools for increased patient engagement and improved compliance; U-Sleep, a compliance monitoring solution that enables home medical equipment (HME)to streamline their sleep programs; connectivity module and propeller solutions; and Propeller portal.It offers out-of-hospital software solution, such as Brightree business management software and service solutions to providers of HME, pharmacy, home infusion, orthotics, and prosthetics services; MatrixCare care management and related ancillary solutions to senior living, skilled nursing, life plan communities, home health, home care, and hospice organizations, as well as related accountable care organizations; and HEALTHCAREfirst that offers electronic health record, software, billing and coding services, and analytics for home health and hospice agencies.


The company markets its products primarily to sleep clinics, home healthcare dealers, and hospitals through a network of distributors and direct sales force in approximately 140 countries.ResMed Inc.was founded in 1989 and is headquartered in San Diego, California.

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1.b. Last Insights on RMD

ResMed Inc.'s recent performance has been driven by strong Q2 earnings, with adjusted EPS of $2.81 beating the consensus of $2.72. Revenue grew 11% to $1.42 billion, with device sales increasing 11% globally. Gross and operating margins expanded sharply across core segments. Several institutional investors have increased their stakes, including Wealth Enhancement Advisory Services LLC, which lifted its position by 492.5%, and AlphaQuest LLC, which raised its position by 1,038.0%. Analysts maintain a bullish outlook, citing strong revenue growth and strategic innovations.

1.c. Company Highlights

2. ResMed Delivers Strong Q2 FY2026 Results with 11% Revenue Growth

ResMed reported a robust second quarter fiscal year 2026 with group revenue reaching $1.42 billion, an 11% increase on a headline basis and 9% in constant currency terms. The company's gross margin expanded by 310 basis points year-over-year, driven by component cost improvements and manufacturing efficiencies, resulting in a gross margin of 32.3%. Earnings per share (EPS) came in at $2.81, beating analyst estimates of $2.75. Operating expenses increased by 15% on a headline basis, with SG&A expenses as a percentage of revenue rising to 19.6% compared to 18.8% in the prior year period.

Publication Date: Feb -03

📋 Highlights
  • Revenue Growth:: Q2 FY2026 revenue reached $1.42B, a 11% headline increase with 9% in constant currency, driven by device (11%) and masks/accessories (14%) growth.
  • Gross Margin Expansion:: Gross margin hit 32.3%, up 310 basis points YoY, from component cost efficiencies and logistics improvements.
  • Operating Profit Surge:: Operating profit rose 19%, supported by revenue gains and margin expansion, with 32.3% net interest income and 21.1% tax rate.
  • GLP-1 Impact:: Patients on GLP-1 and CPAP had 10% higher start rates and 6% higher 3-year resupply rates, boosting adherence and long-term therapy retention.
  • Strategic Investments:: 12% R&D growth and 60,000+ PCP trainings (top downloaded CME program) to enhance digital health pathways and physician partnerships.

Segment Performance

Revenue growth was driven by positive contributions across the device and mask portfolio, as well as the software business. Global device sales rose by 11% and masks and other sales increased by 14% on a constant currency basis. The U.S., Canada, and Latin America region saw an 11% increase in sales, while other regions reported a 6% increase.

Growth Prospects

ResMed is confident in its ability to deliver sustainable high single-digit growth and double-digit operating profit growth in fiscal year 2027. The company is investing in R&D and SG&A, with a focus on demand generation, demand capture, and demand curation. The recent acquisition of VirtuOx is expected to contribute to growth, and the company's digital sleep health concierge capabilities are being expanded.

Valuation

With a P/E Ratio of 25.11 and an EV/EBITDA ratio of 17.74, ResMed's valuation appears reasonable considering its growth prospects. The company's return on equity (ROE) stands at 24.81%, indicating strong profitability. Analysts estimate revenue growth at 7.4% for the next year, which is slightly lower than the company's historical growth rate. The dividend yield of 0.89% and free cash flow yield of 4.81% provide a relatively attractive return for investors.

GLP-1 Impact

The company's management noted that the GLP-1 medication has brought motivated patients into the funnel, with 10% higher start rates. ResMed is tracking changes in compliance for patients on GLP-1 medication and is working to educate primary care physicians on sleep apnea diagnosis and treatment. The combination therapy of weight loss and sleep apnea treatment is seen as a new option for patients, with high adherence rates.

3. NewsRoom

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Add These 4 GARP Stocks to Your Portfolio to Receive Handsome Returns

Feb -09

Source: zacks.com

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RMD Stock Up Following Q2 Earnings & Revenue Beat, Margins Expand

Feb -06

Source: zacks.com

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4 Medical Product Stocks to Watch From a Challenging Industry (Revised)

Feb -03

Source: zacks.com

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Sleep device maker ResMed ramps up doctor outreach to tap Ozempic surge

Feb -03

Source: reuters.com

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4 Medical Product Stocks to Watch From a Challenging Industry

Feb -02

Source: zacks.com

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ResMed: Facing A Potentially Dream-Disrupting Dose - Strong Sell

Feb -01

Source: seekingalpha.com

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Analysts Maintain Bull Case On ResMed Despite Competition Concerns

Jan -30

Source: benzinga.com

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AlphaQuest LLC Grows Stock Position in ResMed Inc. $RMD

Jan -30

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.26%)

6. Segments

Sleep and Breathing Health

Expected Growth: 11.4%

ResMed's growth is driven by its digital health solutions, increasing adoption of remote patient monitoring, and rising demand for sleep apnea and chronic obstructive pulmonary disease treatments

Residential Care Software

Expected Growth: 10.3%

None

7. Detailed Products

AirSense 10 CPAP Machine

A continuous positive airway pressure (CPAP) machine designed to treat sleep apnea, providing a comfortable and quiet sleep experience.

AirMini Travel CPAP

A portable and compact CPAP machine designed for travel, providing the same therapy as a traditional CPAP machine in a smaller package.

Bilevel ST-A

A bilevel positive airway pressure (BiPAP) machine designed to treat respiratory insufficiency, providing two different pressure levels for inhalation and exhalation.

N20 Nasal Mask

A nasal mask designed for CPAP therapy, providing a comfortable and secure fit for patients with sleep apnea.

ResMed S+ Sleep Tracker

A non-contact sleep tracking device that monitors sleep patterns, providing insights to improve sleep quality.

ResMed myAir App

A mobile app that tracks sleep data, provides personalized coaching, and offers therapy management for CPAP users.

8. ResMed Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

ResMed Inc. faces moderate threat from substitutes, as patients may opt for alternative treatments or devices for sleep disorders and respiratory care. However, the company's strong brand reputation and patented technology mitigate this threat to some extent.

Bargaining Power Of Customers

ResMed Inc. has a diverse customer base, including healthcare providers, patients, and distributors. While customers have some bargaining power, the company's strong relationships and customized solutions reduce the impact of customer bargaining power.

Bargaining Power Of Suppliers

ResMed Inc. has a diversified supplier base, and the company's scale and global presence reduce its dependence on individual suppliers. This limits the bargaining power of suppliers.

Threat Of New Entrants

The medical device industry has high barriers to entry, including regulatory hurdles and significant R&D investments. This limits the threat of new entrants, and ResMed Inc.'s established brand and technology leadership position further reduce this threat.

Intensity Of Rivalry

The sleep disorder and respiratory care markets are highly competitive, with several established players. ResMed Inc. faces intense competition from companies like Philips Respironics and Fisher & Paykel Healthcare, which drives innovation and pricing pressure.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 27.67%
Debt Cost 3.95%
Equity Weight 72.33%
Equity Cost 7.15%
WACC 6.26%
Leverage 38.26%

11. Quality Control: ResMed Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
ResMed

A-Score: 5.7/10

Value: 2.1

Growth: 8.1

Quality: 8.7

Yield: 1.0

Momentum: 6.0

Volatility: 8.3

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Boston Scientific

A-Score: 5.2/10

Value: 1.2

Growth: 6.6

Quality: 6.8

Yield: 0.0

Momentum: 7.5

Volatility: 9.3

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Becton Dickinson

A-Score: 4.6/10

Value: 3.3

Growth: 4.6

Quality: 5.2

Yield: 4.0

Momentum: 2.5

Volatility: 8.3

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Intuitive Surgical

A-Score: 4.6/10

Value: 0.0

Growth: 6.7

Quality: 7.4

Yield: 0.0

Momentum: 7.0

Volatility: 6.3

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West Pharma

A-Score: 3.7/10

Value: 1.0

Growth: 6.1

Quality: 7.4

Yield: 0.0

Momentum: 3.5

Volatility: 4.0

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OraSure Technologies

A-Score: 3.4/10

Value: 7.5

Growth: 4.2

Quality: 5.0

Yield: 0.0

Momentum: 0.5

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

263.54$

Current Price

263.54$

Potential

-0.00%

Expected Cash-Flows