Resmed Revenue Growth Slows as Safety Charge Weighs on Margins
A $41.9 million Astral safety expense widened the gap between reported and adjusted profitability.
Resmed Inc. (RMD), the sleep-health technology company, reported fiscal fourth-quarter revenue of $1.464 billion, up 9% year over year as growth slowed from 11% in each of the preceding two quarters.
The deceleration came as Resmed reshaped its portfolio, agreeing to sell parts of its Residential Care Software business while retaining Brightree and MEDIFOX DAN. The planned divestiture of MatrixCare, Healthcare First, Citus and related offerings is expected to close in fiscal 2027’s first quarter.
Revenue increased about 2% from the fiscal third quarter and rose 8% in constant currency. GAAP diluted earnings increased 2% to $2.64 a share, down from $2.74 in the preceding quarter, while adjusted earnings climbed 16% to $2.95 a share from $2.86.
Masks and other products led the quarter, with global revenue rising 11% to $542 million, compared with an 8% increase in device revenue to $750 million. Rest-of-World masks grew 16%, while devices in that market rose 12%. Rest-of-World Sleep and Breathing Health growth accelerated to 10% in constant currency from 7% in the third quarter, offsetting slower Americas growth of 8% and Residential Care Software growth of 2%.
The Astral field-safety expense reduced GAAP gross margin to 58.8% from 60.8% a year earlier and 62.2% in the third quarter. Adjusted gross margin rose 90 basis points year over year to 62.3%, though it slipped from 62.8% sequentially. GAAP operating income declined 1% to $449 million, while adjusted operating income increased 8% to $515 million.
Research-and-development spending rose 22% to $106 million, outpacing revenue growth and the 12% increases reported in each of the previous two quarters. Resmed also completed its acquisition of Noctrix Health, adding wearable therapeutics for restless leg syndrome, and launched the AirCurve 11 ST and ST-A devices in the U.S..
For fiscal 2026, revenue increased 10% to $5.653 billion and adjusted earnings rose 17% to $11.17 a share. Resmed returned more than $1 billion through dividends and repurchases during the year, including $700 million of stock buybacks, and its fiscal 2027 plan calls for more than $1.85 billion of capital returns. The company also raised its quarterly dividend 10% to $0.66 a share.