First Quarter of Fiscal Year 2027
Filed Oct 29, 2026Q1 revenue increased by 6% to $1.4 billion; GAAP diluted earnings per share up 23% to $2.92; non-GAAP diluted EPS up 14% to $2.91
Revenue, gross-margin productivity and earnings growth were strong, with core constant currency revenue up 7% and non-GAAP diluted EPS up 14%. Operating and free cash flow declined year over year, while reported Residential Care Software revenue declined following the MatrixCare divestiture.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $1.42B | – | 6% |
| Revenue growth on a core constant currency basisnon-GAAP | 7% | – | – |
| Gross profitGAAP | $871M | – | – |
| Gross marginGAAP | 61.5% | – | 30 bps |
| Non-GAAP gross profitnon-GAAP | $884M | – | – |
| Non-GAAP gross marginnon-GAAP | 62.5% | – | 50 bps |
| Research and development expensesGAAP | $103M | – | 15% |
| Non-GAAP research and development expensesnon-GAAP | $102M | – | 16% |
| Selling, general, and administrative expensesGAAP | $315M | – | 12% |
| Non-GAAP selling, general, and administrative expensesnon-GAAP | $276M | – | 6% |
| Total operating expensesGAAP | $417.6M | – | – |
| Income from operationsGAAP | $453M | – | 1% |
| Operating marginGAAP | 32.0% | – | (140) bps |
| Non-GAAP income from operationsnon-GAAP | $506M | – | 5% |
| Non-GAAP operating marginnon-GAAP | 35.8% | – | (30) bps |
| Income before income taxesGAAP | $539.2M | – | – |
| Income taxesGAAP | $120.7M | – | – |
| Net incomeGAAP | $418M | – | 20% |
| Non-GAAP net incomenon-GAAP | $418M | – | 12% |
| Basic earnings per shareGAAP | $2.93 | – | – |
| Diluted earnings per shareGAAP | $2.92 | – | 23% |
| Non-GAAP diluted earnings per sharenon-GAAP | $2.91 | – | 14% |
| Basic shares outstandingGAAP | 142,989 | – | – |
| Diluted shares outstandingGAAP | 143,411 | – | – |
| Operating cash flowGAAP | $422M | – | (8%) |
| Free cash flowother | $374M | – | (10%) |
| Purchases of property, plant, and equipmentGAAP | −$48.74M | – | – |
| Proceeds from divestment of subsidiaries, net of cash divestedGAAP | $450.8M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Americas Sleep DevicesCore constant currency growth was 6%. | $436M | – | 8% |
| Americas Masks and otherCore constant currency growth was 10%. | $397M | – | 10% |
| Total Americas SleepCore constant currency growth was 8%. | $833M | – | 9% |
| Americas Life Support DevicesCore constant currency growth was (94%). | $0 million | – | (94%) |
| Total Americas Sleep and Breathing HealthCore constant currency growth was 7%. | $833M | – | 8% |
| Rest of World Sleep DevicesCore constant currency growth was 13%. | $280M | – | 12% |
| Rest of World Masks and otherCore constant currency growth was 11%. | $143M | – | 12% |
| Total Rest of World SleepCore constant currency growth was 12%. | $423M | – | 12% |
| Rest of World Life Support DevicesCore constant currency growth was (79%). | $3M | – | (79%) |
| Total Rest of World Sleep and Breathing HealthCore constant currency growth was 8%. | $426M | – | 8% |
| Total Sleep DevicesCore constant currency growth was 9%. | $716M | – | 9% |
| Total Masks and otherCore constant currency growth was 10%. | $540M | – | 10% |
| Total SleepCore constant currency growth was 9%. | $1.26B | – | 10% |
| Total Life Support DevicesCore constant currency growth was (84%). | $4M | – | (84%) |
| Total Sleep and Breathing HealthCore constant currency growth was 7%. | $1.26B | – | 8% |
| Residential Care SoftwareCore constant currency growth was 5%. Removing the MatrixCare business that was divested, Brightree and MEDIFOX DAN increased by 8%. | $155M | – | (7%) |
FY 2027 Guidance as of October 29, 2026 outlook
- RevenueReported: $5.75 - $5.85 Billion
- NoteRevenue Core Constant Currency: 5 - 7% growth
- NoteNon-GAAP Diluted EPS $12.00 - $12.25
Capital returns
- Returned more than $1.0 billion to shareholders through share repurchases and dividends during Q1.
- Purchases of treasury stock were $(936,378) thousand, compared with $(150,010) thousand.
- Dividends paid were $(94,954) thousand, compared with $(87,750) thousand.
- The board declared a quarterly cash dividend of $0.66 per share, with a record date of November 12, 2026, payable on December 17, 2026.
What drove it
- Revenue growth was primarily driven by strong demand across sleep devices and masks and accessories.
- Non-GAAP gross-margin expansion was predominantly from productivity pipeline execution.
- Non-GAAP diluted EPS growth was predominantly attributable to strong revenue growth and gross-margin improvement.
- The company closed the previously announced divestiture of the MatrixCare business.
- The company announced the U.S. launch of the AirTouch F40 fabric CPAP mask.
Concerns
- Operating cash flow decreased (8%) and free cash flow decreased (10%) from the prior-year quarter.
- GAAP operating margin declined (140) bps and non-GAAP operating margin declined (30) bps.
- Residential Care Software revenue decreased (7%), reflecting the impact of the MatrixCare divestiture.
- Total Life Support Devices revenue decreased (84%).
- Inventories increased to $1,021,358 thousand from $945,805 thousand.
What to watch
- Execution against FY 2027 reported revenue guidance of $5.75 - $5.85 Billion and core constant currency growth guidance of 5 - 7%.
- Execution against FY 2027 non-GAAP diluted EPS guidance of $12.00 - $12.25.
- Demand trends in Sleep Devices and Masks and other across the Americas and Rest of World.
- The performance of Brightree and MEDIFOX DAN following the MatrixCare divestiture.
- Further productivity pipeline execution and its effect on gross margin.
Balance sheet and cash flow
- Cash and cash equivalents were $1,010,742 thousand at September 30, 2026, compared with $1,469,234 thousand at June 30, 2026.
- Inventories were $1,021,358 thousand at September 30, 2026, compared with $945,805 thousand at June 30, 2026.
- Short-term debt was $159,975 thousand at September 30, 2026, compared with $259,950 thousand at June 30, 2026.
- Long-term debt was $249,629 thousand at September 30, 2026, compared with $399,415 thousand at June 30, 2026.
- Net cash provided by operating activities was $422,422 thousand, compared with $457,321 thousand.
- Net cash provided by investing activities was $392,055 thousand, compared with $(52,578) thousand.
- Net cash used in financing activities was $(1,278,003) thousand, compared with $(230,274) thousand.
- Repayment of borrowings was $(250,000) thousand.
- Net decrease in cash and cash equivalents was $(458,492) thousand, compared with a net increase of $174,398 thousand.
Analysis
Resmed opened fiscal year 2027 with revenue of $1,415 million, up 6%, while revenue growth on a core constant currency basis was 7%. The release attributes the growth primarily to strong demand across sleep devices and masks and accessories. Sleep and Breathing Health revenue was $1,260 million, up 8%, led by Total Sleep Devices growth of 9% and Total Masks and other growth of 10%.
Regional demand was broad in constant currency terms. Total Americas Sleep and Breathing Health revenue increased 7% on a core constant currency basis, while Total Rest of World Sleep and Breathing Health increased 8%. Residential Care Software reported revenue of $155 million, down 7%, but increased 5% on a core constant currency basis. The company said Brightree and MEDIFOX DAN, excluding the now-divested MatrixCare business, increased by 8%.
Profitability benefited from productivity pipeline execution. GAAP gross margin was 61.5%, up 30 bps, and non-GAAP gross margin was 62.5%, up 50 bps. GAAP operating income increased 1% to $453 million, while GAAP operating margin declined (140) bps to 32.0%. Non-GAAP operating income rose 5% to $506 million, although non-GAAP operating margin decreased (30) bps to 35.8%. GAAP diluted EPS rose 23% to $2.92 and non-GAAP diluted EPS rose 14% to $2.91.
Cash generation remained substantial but declined from the prior-year period. Operating cash flow was $422 million and free cash flow was $374 million, down (8%) and (10%), respectively. The company received $450,820 thousand of proceeds from divestment of subsidiaries and used $(936,378) thousand for treasury-stock purchases, $(94,954) thousand for dividends, and $(250,000) thousand for repayment of borrowings. Cash and cash equivalents ended at $1,010,742 thousand, while short-term and long-term debt were $159,975 thousand and $249,629 thousand, respectively.
The FY 2027 outlook was unchanged from the guidance shown as of August 6, 2026. Resmed continues to guide for reported revenue of $5.75 - $5.85 Billion, core constant currency revenue growth of 5 - 7%, and non-GAAP diluted EPS of $12.00 - $12.25. The key reported areas to monitor are sustained growth in devices and masks, the post-divestiture trajectory of Residential Care Software, gross-margin productivity, inventory levels, and cash conversion.
Management, verbatim
We began fiscal year 2027 with a strong first quarter, driven by continued global demand for our sleep and breathing health solutions and ongoing execution across our business.
Mick Farrell, Chairman and CEO
Year over year, we grew core constant currency revenue 7%, expanded non-GAAP gross margin by 50 basis points, and increased non-GAAP earnings per share by 14%.
Mick Farrell, Chairman and CEO
Our strong free cash flow and the proceeds from our divestiture of MatrixCare enabled us to both invest in innovation and return more than $1 billion to shareholders during the quarter.
Mick Farrell, Chairman and CEO
Not in the filing
stated, not guessed- GAAP diluted EPS guidance for FY 2027 was not provided.
- FY 2027 gross-margin guidance was not provided.
- FY 2027 operating-expense guidance was not provided.
- FY 2027 tax-rate guidance was not provided.
- Sequential revenue, margin, earnings per share, operating cash flow, and free-cash-flow changes were not provided.
- No previous earnings release outlook was provided for a formal reported-results-versus-prior-guidance comparison.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.