ResMed came into this earnings print with a strong multi year profit story and a valuation that already looked modest against peers. The stock still dropped about 5% to around US$212 on the first full trading day after the release. That gap between long term belief and short term price tells you investors were looking for more than just another solid quarter.
The headline this time is profitability. Non GAAP EPS reached US$2.95 in Q4 and US$12.00 to US$12.25 is now on the table for FY2027 guidance, underpinned by gross margin expansion into the low 60s.
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FY 2026 Earnings Summary
- Revenue, Q4 FY2026: US$1,463.6m vs. Q4 FY2025 US$1,348.0m (up about 9%)
- Net Income (Excl. Extra Items), Q4 FY2026: US$383.4m vs. Q4 FY2025 US$379.7m (up about 1%)
- Basic EPS, Q4 FY2026: US$2.65 vs. Q4 FY2025 US$2.59 (up about 2%)
- Net Profit Margin, Trailing 12 Months to Q4 FY2026: 26.9% vs. prior year 27.2% (slight margin compression)
Prefer clean visual charts over another wall of earnings tables and margin figures? Get a full view of how the market is valuing ResMed with our at-a-glance valuation profile in company report for ResMed.
ResMed bull case leans on margins and recurring mix
Bulls argue ResMed can use its sleep apnea scale, recurring masks and software to grow profits faster than sales. The latest quarter adds clear proof points. Q4 non GAAP EPS of US$2.95 with full year non GAAP EPS up 17% on 10% revenue growth shows operating leverage is working. Non GAAP gross margin at 62.3% and guidance for low 60s through FY2027 back the margin story rather than just talk. Masks and other sleep related products in the Americas grew 10%, while sleep devices grew 8%. This supports the higher mix of recurring consumables that bulls want to see. Free cash flow of about US$1.6b and plans to return more than US$1.85b in FY2027 through buybacks and dividends also match the claim that cash generation can comfortably fund both growth and capital returns.
ResMed bear case tests ventilators, GLP 1s and execution
Bears focus on three pressure points: ventilator exposure, GLP 1 weight loss drugs and near term execution risk. On ventilators, life support device revenue in Q4 fell sharply, with the Americas down 45% and the rest of world down 38%. FY2027 guidance also bakes in about 130 bps of revenue headwind from suspending Astral sales, which validates concerns that this segment can drag on growth. GLP 1 fears look less supported. Management’s claims analysis on more than 2.5m patients shows people on both GLP 1s and positive airway pressure therapy are more likely to start and stay on treatment. Execution risk still shows up. R&D was up 22% in Q4 and supply chain and ventilator component constraints are flagged into FY2027, which means the margin and growth path is not free of friction.
Compare how ResMed’s margin story and execution risks line up against Street expectations, and whether analysts think the recent 5% share price move is justified with the consensus price target analysis for ResMed.Stay Ahead With Your Next Move
If ResMed's margin story and FY2027 guidance have your attention, register for free with Simply Wall St and add it to a Watchlist to track the share price against fair value and watch for a better entry point. Once you are invested, keep on top of the key signals with the Portfolio Command Center that highlights only the most important updates for your holdings. For a longer term view, tap into the shared experience of other investors through the Community to see how different perspectives line up with your own thesis. By spotting potential catalysts and risks early, you give yourself a better shot at staying ahead of the market.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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