Execution is strong, software is the question
- Q3 FY26 revenue rose 11%, while non-GAAP gross margin reached 62.8%.
- Sleep and Breathing Health is the core, with devices and masks driving most sales.
- Residential Care Software grew only 4% in constant currency in Q3, so the portfolio review matters.
- GLP-1 drugs now look more like a demand tailwind than a threat, based on ResMed adherence data.
- Noctrix adds a new RLS therapy, but reimbursement and integration are still open.
Strong core, one weak lane
ResMed is executing well in its main sleep and breathing business. In Q3 FY26, revenue grew 11%, and non-GAAP gross margin expanded 290 basis points year over year to 62.8%. Devices grew 6% in constant currency, while masks and other products grew 12% in constant currency. That mix matters because masks and supplies are repeat purchases, not one-time sales.
The bigger thesis change is that GLP-1 weight loss drugs now look helpful, not harmful. Management said real-world data showed PAP patients who later start GLP-1 therapy had 6.2% higher resupply rates at three years than PAP-only patients. In plain English, patients using both treatments appear more likely to stay with their sleep apnea gear.
ResMed also announced the Noctrix Health acquisition, which brings NIDRA, a non-invasive nerve stimulation device for Restless Legs Syndrome. Management said RLS is the third most common sleep disorder and affects about 7% of adults globally. If ResMed can sell this through its sleep doctor and home medical equipment channels, it adds a real new growth path.
The bear case is not gone. Residential Care Software grew only 4% in constant currency in Q3 FY26, and management is still working through a portfolio review. Margins are high, but freight, components, tariffs, and Philips returning more fully in the U.S. could pressure results. This is a good business, but the stock still needs steady execution to earn investor trust.
Devices start it, masks repeat it
ResMed makes money by selling sleep apnea and breathing devices, masks, accessories, and software. Its CPAP and bilevel machines help keep a patient’s airway open during sleep. The company sells through distributors, home healthcare dealers, and in some places directly to patients.
The model works because a device sale often starts a longer relationship. Patients need masks, cushions, tubes, filters, and support over time. Cloud tools such as AirView for clinicians and myAir for patients help track use, guide care teams, and make the system stickier.
Residential Care Software is different. It sells cloud software to out-of-hospital care providers, including home medical equipment, home health, hospice, long-term care, and senior living businesses. This should be recurring revenue, but recent growth has been modest, and the Senior Living and Long-Term Care vertical is weak.
Recent deals push ResMed deeper into the patient journey. VirtuOx gives it home-based diagnostic testing. Noctrix gives it a new therapy for Restless Legs Syndrome. Both can strengthen the sleep health platform, but they also add billing, reimbursement, regulatory, and integration work.
What ResMed sells
AirSense and AirCurve devices
These connected flow generators treat sleep apnea by pushing air through a mask while the patient sleeps. Devices remain the biggest product line inside Sleep and Breathing Health.
Masks and accessories
Masks, cushions, and related supplies are repeat-use products. In Q3 FY26, masks and other products grew 12% in constant currency, faster than devices.
AirView, myAir, Dawn, and Comfort Match
These digital tools help clinicians monitor patients and help patients stay on therapy. Comfort Match uses AI to improve mask choice, while Dawn is an AI assistant in the U.S. myAir app.
Residential Care Software
Brightree, MatrixCare, MEDIFOX DAN, and related platforms support home medical equipment providers and other care settings. The segment is recurring, but Q3 constant currency growth slowed to 4%.
VirtuOx diagnostics
VirtuOx adds home-based diagnostic testing for sleep, respiratory, cardiac, and other conditions. It can help ResMed reach patients earlier, but it brings more direct healthcare oversight.
NIDRA for Restless Legs Syndrome
NIDRA came through the announced Noctrix Health deal. It is a non-invasive nerve stimulation device for moderate to severe Restless Legs Syndrome, an adjacent sleep market.
Two reported engines
Mix is based on net revenue for the three months ended March 31, 2026. Sleep and Breathing Health produced about 88% of revenue, so ResMed is still mostly a device and mask company.
What could break the thesis
Software review disappoints
Medium impact · Medium oddsResidential Care Software grew 4% in constant currency in Q3 FY26. Management says it can re-accelerate to high single-digit growth in fiscal 2027, but that depends on fixing or exiting weaker areas. Senior Living and Long-Term Care remain the main drag.
Margin gains fade
High impact · Medium oddsResMed’s recent margin gains came from manufacturing, logistics, and component cost improvements. Management also noted emerging component cost pressure and freight uncertainty. If costs rise faster than pricing or efficiency gains, earnings growth could slow even if revenue keeps growing.
Philips and mask competition return harder
Medium impact · Medium oddsPhilips is already competing in many non-U.S. markets, and a fuller U.S. return would add pressure. Fisher & Paykel and other device and mask makers also fight for share. Masks have been a bright spot, so any slowdown there would matter.
Reimbursement or regulation shifts
High impact · Medium oddsSleep apnea care depends on Medicare, private insurers, and other payors covering devices, supplies, diagnostics, and follow-up. Competitive bidding or tighter coverage rules could hurt pricing or volumes. VirtuOx and Noctrix also add more direct healthcare oversight and reimbursement work.
Patient data and cyber risk
High impact · Low oddsResMed handles sensitive health data through connected devices, patient apps, clinician tools, and care software. A major breach could disrupt operations, damage trust, and create legal costs. The risk grows as the company connects more of the patient journey.
In one breath
What does ResMed actually do?
ResMed sells devices, masks, and software used to diagnose, treat, and manage sleep apnea and other breathing problems. Its main products help people breathe during sleep and help care teams track whether therapy is working.
Are GLP-1 weight loss drugs bad for ResMed?
The current company view is that they are more likely a tailwind than a threat. ResMed says PAP patients who later start GLP-1 therapy had 6.2% higher resupply rates at three years than PAP-only patients.
Why is Residential Care Software important?
It is the smaller segment, but it should be a recurring software business. Growth slowed to 4% in constant currency in Q3 FY26, so investors are watching whether management can fix the weak verticals.
What is the Noctrix deal?
ResMed announced a deal to buy Noctrix Health, which makes NIDRA for Restless Legs Syndrome. The opportunity is attractive, but the open questions are integration, reimbursement, and how fast ResMed can scale it through its channel.