RMD Stock Down Despite Q4 Earnings Beat, Revenues Rise Y/Y

Fiscal fourth-quarter revenues rose 9% to $1.46 billion and beat the consensus mark by 0.17%.

Full-year revenues were $5.65 billion, a 10.9% improvement on a reported basis from fiscal 2025 (up 8% on a constant currency basis). The metric came in line with the Zacks Consensus Estimate.

Following the announcement yesterday, RMD shares dropped 2.8% in the after-market session.

Resmed’s Q4 Sales: A Closer View

Sleep and Breathing Health

Total revenues improved 9% (up 8% at CER) from the prior-year period’s level to $1.29 billion.

Within this business, Total Devices revenues were $750 million, up 8% (7% at CER). This includes an increase of 6% year over year in the Americas to $459 million and a jump of 12% (9% at CER) in the Rest of World to $291 million.

Total Masks and other revenues were $542 million, up 11% (10% at CER). This includes a rise of 10% year over year in the Americas to $394 million and 16% growth (12% at CER) in the Rest of World to $148 million.

Residential Care Software

Revenues in this segment increased 3% year over year (up 2% at CER) to $172 million. Growth from MEDIFOX DAN and Brightree was partially offset by declines in MatrixCare.

Resmed’s Q4 Margin Performance

In the fiscal fourth quarter, the company’s cost of sales (excluding amortization of acquired intangibles and the Astral field safety notification expenses) totaled $552.2 million, up 6.2% year over year. Adjusted gross margin was 62.3%, reflecting an expansion of 90 basis points (bps), as supply-chain productivity and efficiency gains more than offset inflation.

Selling, general and administrative expenses increased 9.6% year over year to $290.7 million. Research and development expenses jumped 22.3% to $105.7 million, primarily due to investments in next-generation devices and masks and AI-driven patient workflow solutions.

The adjusted operating profit was $515 million in the quarter, up 8% from the year-ago quarter’s level. The adjusted operating margin contracted 10 bps year over year to 35.2%.

RMD’s Financial Updates

Resmed exited the fourth quarter of fiscal 2026 with cash and cash equivalents of $1.47 billion compared with $1.21 billion at the end of fiscal 2025. 

The cumulative net cash provided by operating activities for fiscal 2026 was $1.81 billion compared with $1.75 billion in the year-ago period.

The company paid out $87.1 million in dividends in the fiscal fourth quarter and also repurchased approximately 972,000 shares for consideration of $200 million as part of its ongoing capital management.

RMD Sets Fiscal 2027 Growth Framework

For fiscal 2027, Resmed expects core constant-currency revenue growth of 5% to 7%. The outlook includes an approximately 130 bps, or $75 million, headwind from suspended Astral sales.  Reported revenues are projected between $5.75 billion and $5.85 billion. The Zacks Consensus Estimate for full-year revenues is currently pegged at $6.03 billion.

Adjusted EPS is expected between $12.00 and $12.25, implying reported growth of about 7% to 10%. Excluding roughly 30 cents of dilution from the MatrixCare divestiture and 20 cents from Noctrix, core earnings growth is projected at 12% to 14%. The Zacks Consensus Estimate for full-year earnings currently stands at $12.02 per share.

Our Take

Resmed closed fiscal 2026 on a strong note, with both earnings and revenues beating respective estimates. Performance reflected sustained demand across sleep devices, masks, accessories and software solutions, along with continued productivity gains. The company also benefited from growth in MEDIFOX DAN and Brightree offerings. Resmed continued the global rollout of the AirSense 11 platform and expanded its portfolio of novel fabric-based masks, including the AirTouch N30i and AirTouch F30i. However, weakness in MatrixCare and lower life-support device revenues remained as headwinds.

The company completed the acquisition of Noctrix Health, expanding its clinical sleep health portfolio into an adjacent area of significant unmet need — the treatment of Restless Legs Syndrome. Resmed also partnered with ??URA to expand access to sleep health education and pathways to care.

RMD’s Zacks Rank & Key Picks

Resmed currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Labcorp Holdings LH, Quest Diagnostics DGX and Medpace MEDP.

Labcorp, carrying a Zacks Rank #2 (Buy), reported second-quarter 2026 adjusted EPS of $4.99, which surpassed the Zacks Consensus Estimate by 4.18%. Revenues of $3.73 billion beat the Zacks Consensus Estimate by 0.36%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

LH has an earnings yield of 5.9% compared with the industry’s 4.1% yield. The company's earnings beat estimates in each of the trailing four quarters, the average surprise being 3.09%.

Quest Diagnostics, carrying a Zacks Rank #2 at present, posted second-quarter 2026 adjusted EPS of $3.12, exceeding the Zacks Consensus Estimate by 11%. Revenues of $3.04 billion topped the Zacks Consensus Estimate by 2.1%.

DGX has an earnings yield of 4.7%, almost in line with the industry’s yield. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 5.77%.

Medpace, carrying a Zacks Rank #2 at present, posted second-quarter 2026 adjusted EPS of $4.25, surpassing the Zacks Consensus Estimate by 4.17%. Revenues of $707.3 million outperformed the consensus mark by 1.12%.

MEDP has an historical five-year earnings growth rate of 30.5% compared with the industry’s 5.6% growth. In the trailing four quarters, the company delivered an average earnings beat of 10.16%.

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