ResMed (ASX: RMD) shares suffered a sharp sell-off on Friday despite the sleep apnea specialist reporting another year of solid revenue, earnings and margin growth.
ResMed shares closed 8.29% lower at A$28.87 on 7 August, making RMD one of the ASX 200’s biggest losers for the session.
At first glance, the fall may look surprising. ResMed’s FY26 results were strong across several important measures. The problem was not what the company had just delivered. Investors were more concerned about what comes next.
ResMed’s FY26 Results Were Strong
For the full 2026 financial year, ResMed reported revenue of US$5.65 billion, up 10% from FY25 and 8% higher on a constant-currency basis.
Non-GAAP earnings per share increased 17% to US$11.17, while free cash flow reached US$1.65 billion.
The fourth quarter also showed continued growth. Revenue increased 9% to US$1.464 billion, while non-GAAP earnings per share rose 16% to US$2.95.
Revenue was broadly in line with market expectations, while adjusted earnings came in ahead of consensus estimates.
Profitability also improved. ResMed’s Q4 non-GAAP gross margin increased 90 basis points to 62.3%.
So why did investors send the shares sharply lower?
FY27 Outlook Disappointed Investors
The biggest issue was ResMed’s outlook for the new financial year.
Management guided to 5% to 7% core revenue growth for FY27. The outlook points to a slower growth profile, with ResMed having delivered 8% constant-currency revenue growth in FY26.
For a company that investors have traditionally valued for reliable growth, even a moderate slowdown can put pressure on the share price.
Another concern is ResMed’s Astral ventilator range.
The company recorded about US$42 million in expenses linked to an Astral field-safety notification during the fourth quarter. Management also expects the issue to create an approximately US$75 million revenue headwind during FY27.
ResMed is also reshaping parts of its business. It has agreed to sell MatrixCare and recently completed its acquisition of Noctrix Health. These changes could create additional near-term pressure on reported earnings while the company adjusts its portfolio.
Margins Remain a Positive
The result was not all about slower growth.
Full-year non-GAAP gross margin improved by 240 basis points to 62.4%, while non-GAAP operating margin increased to 36.1%.
ResMed also increased its quarterly dividend by 10% to US$0.66 per share.
The company plans to return more than US$1.85 billion to shareholders through dividends and share buybacks during FY27.
Following Friday’s decline, ResMed was trading on a trailing price-to-earnings ratio of around 19.7 times.
The lower valuation may attract attention, but investors will want evidence that ResMed can keep growing earnings even if revenue growth slows.
What Should ResMed Investors Watch Next?
The main areas to watch are device and mask sales, gross margins, the Astral issue, the MatrixCare sale, and the integration of Noctrix Health.
Investors will also be watching whether ResMed can outperform its 5% to 7% FY27 core revenue growth guidance.
Conclusion
ResMed’s 8.29% share-price fall was not caused by a poor FY26 result. Revenue, earnings, cash flow and margins all improved.
Instead, the market focused on slower FY27 growth expectations, the Astral disruption and other near-term pressures.
For ResMed, the next few quarters will be important. If revenue growth remains healthy, margins stay strong, and the Astral headwind proves temporary, investor confidence could recover. For now, however, the market has made it clear that strong past results are not enough. Investors want confidence that ResMed can keep delivering growth in FY27.
