ResMed Inc. (ASX: RMD) shares are down 6% to $29.64 in afternoon trade on Friday, despite the sleep disorder treatment specialist reporting another year of solid revenue and earnings growth.
The sharp decline adds to an already difficult period for shareholders. Over the past 12 months, ResMed shares have fallen 31%, making the healthcare company one of the worst-performing ASX stocks over that period. By comparison, the S&P/ASX 200 Index (ASX: XJO) has gained around 2%.
Investors appear to be taking profits after ResMed shares gained 5% in the past five trading days. This was despite a strong financial result that included double-digit earnings growth, a higher dividend, and plans to significantly increase capital returns.
Lifting dividend and buyback
For the fourth quarter, revenue rose 9% year-on-year to US$1.46 billion, or 8% on a constant currency basis. GAAP diluted earnings per share increased 2% to US$2.64, while non-GAAP diluted earnings per share jumped 16% to US$2.95.
For the full year, revenue climbed 10% to US$5.7 billion, while non-GAAP diluted earnings per share increased 17% to US$11.17.
ResMed shares also returned US$1 billion to shareholders through dividends and share buybacks during FY26, up 70% from the previous year, and lifted its quarterly dividend by 10% to US$0.66 per share.
What else did investors learn?
The company continued to deliver broad-based growth across its business, with Sleep and Breathing Health revenue increasing between 8% and 10% on a constant currency basis across major markets. Residential Care Software also posted modest growth.
Profitability remained healthy, with non-GAAP gross margin improving to 62.3%, supported by strong product demand and productivity improvements.
Strategically, ResMed agreed to sell its MatrixCare software business for $490 million, with the transaction expected to complete early in FY27. It also completed the acquisition of Noctrix Health, expanding into wearable therapeutics for Restless Leg Syndrome.
The company continued rolling out new products globally, including AirSense 11 in Taiwan and AirCurve 11 ST/ST-A in the United States, while also announcing a partnership with ŌURA to improve sleep health education.
What did management say?
ResMed Chairman and CEO Mick Farrell said:
We closed fiscal year 2026 with strong fourth quarter results, reflecting continued momentum of our global business, sustained demand for our market-leading products, and disciplined execution of our strategy.
As we enter fiscal year 2027, we will leverage our global scale and enhance our digital capabilities to benefit our patients, providers, and customers. We will use our industry-leading portfolio to improve patient outcomes, reduce healthcare costs, and drive long-term profitable growth for our shareholders.
What's next for ResMed shares?
Looking ahead, ResMed expects to return more than US$1.85 billion to shareholders through dividends and buybacks in FY27.
Friday's weakness of ResMed shares suggests the market was looking for an even stronger result or more upbeat guidance. However, the company remains focused on completing the MatrixCare sale, integrating Noctrix Health, and expanding its portfolio of digital and home-based healthcare solutions to support long-term growth.
The post Why ResMed shares are tumbling 6% today despite strong results appeared first on The Motley Fool Australia.
Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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