“ResMed (RMD) delivered strong Q2 fiscal 2026 results with 11% revenue growth to $1.42 billion and adjusted EPS of $2.81, beating expectations amid robust demand for sleep devices and masks. The stock trades around $260, down from its 52-week high near $294, with analysts targeting an average of $299—suggesting 15% upside potential. Key drivers include market expansion in sleep apnea treatment, margin improvements, and a favorable sector environment, though investors should weigh valuation and ongoing sector dynamics.”
Is It Time To Reassess ResMed (RMD) After Recent Medical Devices Sector Interest
ResMed has long dominated the global sleep apnea market, providing continuous positive airway pressure (CPAP) devices, masks, accessories, and digital health solutions that monitor patient compliance and outcomes. The company’s core strength lies in addressing obstructive sleep apnea (OSA), a condition affecting tens of millions in the U.S. alone, often linked to obesity, aging populations, and cardiovascular risks. Untreated OSA drives higher healthcare costs through associations with hypertension, diabetes, and heart disease, creating sustained demand for effective therapies.
In its most recent quarter (Q2 fiscal 2026, ended December 31, 2025), ResMed reported total revenue of $1.42 billion, an 11% increase year-over-year (9% at constant exchange rates). This beat analyst expectations slightly. The Sleep and Breathing Health segment, which forms the bulk of operations, grew 11.6% to $1.26 billion, fueled by high single-digit device sales and double-digit growth in masks and accessories. Strong resupply demand for masks and new patient setups contributed significantly, alongside benefits from recent acquisitions enhancing digital offerings.
Adjusted earnings per share came in at $2.81, surpassing consensus estimates and reflecting 15-16% growth. Gross margins expanded notably—non-GAAP figures showed improvement of over 300 basis points in some metrics—thanks to operational efficiencies, favorable product mix, and cost management. The company also raised its quarterly dividend to $0.60 per share and completed a share buyback program, signaling confidence in capital returns.
ResMed’s market position remains formidable. It holds leading share in CPAP and related therapies, with a growing emphasis on cloud-connected devices and software that provide real-time data to patients, providers, and payers. This digital ecosystem helps improve adherence rates, which historically hover below 50% for many users, and supports value-based care models. The broader sleep apnea market continues expanding due to increased awareness, better diagnostics, and reimbursement support in key regions like the Americas, which generate roughly two-thirds of revenue.
The medical devices sector’s renewed momentum in 2026 adds context to ResMed’s story. Industry outlooks point to 5-7% global CAGR through the decade, with North America maintaining dominance. Key tailwinds include shifts toward outpatient care (with CMS adding hundreds of procedures to ambulatory settings), rising AI and digital health adoption for efficiency gains, and potential M&A uptick in a more favorable regulatory climate. While geopolitical tensions, supply chain risks, and pricing pressures persist, specialized players in high-demand niches like respiratory care benefit from structural growth drivers less exposed to cyclical slowdowns.
Key Financial Metrics (Recent Quarter and Trends)
Revenue : $1.42 billion (Q2 FY2026), +11% YoY
Adjusted EPS : $2.81, +15.6% YoY
Gross Margin Expansion : Notable improvement, supporting mid-teens EPS growth
52-Week Range : $199.92 – $293.81
Current Price Range : Trading near $260 (as of mid-February 2026 levels)
Market Cap : Approximately $38 billion
Dividend Yield : Around 0.9%, with recent increase
Analyst sentiment leans positive, with a consensus “Buy” rating from multiple firms. The average 12-month price target sits around $299, implying about 15% upside from recent levels, though some higher targets reach $345 based on optimistic growth assumptions. Revenue is projected to grow at 7-8% annually over the next few years, with margin expansion driving stronger EPS gains.
Potential risks include competition in masks and accessories, reimbursement changes for sleep therapy, currency fluctuations (given international exposure), and broader sector headwinds like regulatory scrutiny or economic pressures affecting elective procedures. However, ResMed’s track record of consistent execution—evidenced by multi-year double-digit EPS compounding—and its pivot toward digital health differentiation provide resilience.
For investors eyeing the medical devices resurgence, ResMed offers exposure to a defensive yet growing niche within healthcare. Its recent results underscore operational strength, while the sector’s interest could catalyze re-rating if broader momentum sustains. Valuation appears reasonable relative to growth prospects, particularly if sleep health awareness and adoption accelerate further.
Disclaimer : This article is for informational purposes only and does not constitute investment advice, financial recommendations, or solicitation to buy or sell securities. Investors should conduct their own research and consult professionals before making decisions. Past performance is not indicative of future results.