Medical device company ResMed (NYSE: RMD) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 8.6% year on year to $1.46 billion. Its non-GAAP profit of $2.95 per share was 2% above analysts’ consensus estimates.

Is now the time to buy RMD? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

ResMed’s second quarter saw steady revenue growth, but the market responded negatively as the company’s operating margin declined year over year. Management attributed the margin compression primarily to higher R&D and supply chain costs amid inflation, despite continued demand for sleep devices and masks. CEO Mick Farrell pointed to ongoing investments in innovation and supply chain efficiency as both a necessity and a source of margin challenges. Additionally, ResMed took a $42 million charge for a field safety action on its Astral devices, further pressuring margins. The quarter also marked increased marketing efforts to capture new patient demographics and leverage growing awareness of sleep health, particularly as consumer wearables and GLP-1 treatments gain traction.

Looking ahead, ResMed’s outlook centers on expanding its digital health ecosystem and optimizing its product portfolio, while addressing operational headwinds. Management expects modest price increases and productivity initiatives to help offset ongoing inflation in electronic components and freight. CFO Aaron Bloomer noted that future growth will focus on volume increases, particularly through broader adoption of connected devices and enhanced patient engagement tools. The company will also prioritize investments in R&D and marketing to drive innovation and support the launch of new products, such as the Noctrix device for restless legs syndrome. Farrell emphasized, “Our attention is laser focused on continued operational excellence and leveraging free cash flow to reinvest in growth and return capital to shareholders.”

Key Insights from Management’s Remarks

Management identified portfolio optimization, innovation in connected care, and shifting patient demographics as central themes shaping the quarter’s performance and strategic direction.

• Portfolio restructuring underway: ResMed closed its acquisition of Noctrix, expanding into restless legs syndrome, and announced the sale of its MatrixCare business, reflecting a sharper focus on core sleep and respiratory care segments.
• Product innovation and launches: The quarter saw global rollout of the AirSense 11 platform, expansion into China, and introduction of AirCurve 11 bilevel devices in new Asia-Pacific markets, supporting volume-driven growth.
• Demographic shifts and engagement: Management observed a rise in younger and female patients entering the sleep therapy funnel, prompting targeted marketing and evolved product design to address changing patient needs.
• Wearables and GLP-1 tailwinds: Partnerships with consumer wearable firms (such as Oura) and increasing GLP-1 prescriptions have driven earlier diagnostics and higher adherence rates for CPAP therapy, expanding the addressable market.
• Operational and margin headwinds: Elevated R&D and SG&A expenses, plus a $42 million Astral provision for device field action, contributed to lower operating margin. Management highlighted ongoing supply chain productivity efforts and modest price increases as partial offsets to inflation.

Drivers of Future Performance

ResMed’s guidance is shaped by targeted investments in innovation, portfolio realignment, and continued operational discipline to drive volume-led growth.

• Volume over price strategy: Management maintained that future revenue growth will be primarily driven by increased device and mask volumes, with only modest price adjustments expected to offset inflationary pressures. Enhanced patient funnel management and digital engagement tools are central to this approach.
• Portfolio optimization impact: The sale of MatrixCare and acquisition of Noctrix were positioned to streamline operations and boost focus on core businesses. The temporary halt in Astral device sales is expected to reduce revenue but allow for redeployment of resources to higher-growth areas.
• Margin management and R&D focus: Ongoing investments in R&D and supply chain automation are expected to support long-term margin improvement, though short-term gross margins will be pressured by inflation and field safety actions. Management expects gradual benefit from new manufacturing initiatives and strategic pricing through the year.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team is tracking (1) the pace of adoption for newly launched devices and digital health features, (2) execution of the MatrixCare divestiture and its effect on core segment profitability, and (3) margin recovery as supply chain and price initiatives take hold. Additional focus will be on the integration of Noctrix and the impact of shifting patient demographics on product mix and engagement metrics.

ResMed currently trades at $211.00, down from $223.24 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

Our Favorite Stocks Right Now

ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.

Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.

Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.