Earnings

ResMed's 23% EPS Jump Rests On A $62 Million MatrixCare Gain And $855 Million Of Buybacks

Adjusted EPS rose 14% to $2.91 while cash fell to $1.0 billion and inventory climbed, the company's quarterly report shows.

ResMed's diluted earnings per share rose 23% to $2.92 last quarter, but a $62 million gain on selling its MatrixCare software business and a shrinking share count did part of the work, according to its 10-Q filed Friday. The adjusted figure the company stresses was $2.91, up 14%.

Two earnings figures, two foundations

ResMed, which makes cloud-connected CPAP machines, masks and software for sleep and breathing conditions, reported net revenue of $1,415 million for the quarter ended September 30, 2026, up 6% from $1,336 million. Net income rose 20% to $418 million.

The MatrixCare sale closed September 1, 2026. The company recognized a pre-tax gain of $62 million in other income and says the gain is preliminary, subject to post-closing price adjustments. Net cash proceeds at closing were $470 million, with $8 million held in escrow.

Stripping out that gain, restructuring and business transformation costs and other items, the company's adjusted diluted EPS was $2.91 against $2.55 a year earlier. Operating income rose just 1% to $453 million, and operating margin slipped to 32.0% from 33.4%, as selling and administrative costs grew 12%.

ResMed repurchased 3.6 million shares for $855 million in the quarter, against 0.5 million shares for $150 million a year earlier. Weighted diluted shares fell to 143,411 thousand from 146,899 thousand.

The total includes an accelerated repurchase agreement signed August 31, under which ResMed paid $450 million and received an initial 1.6 million shares. Final settlement is due no later than December 29, 2026, and the maximum number of shares it could require is 72.1 million. Of the $450 million, $360 million went to treasury stock and $90 million sits in equity as a forward contract. The company used part of the MatrixCare proceeds to fund the payment, and 4.3 million shares remain under its repurchase authorization.

The company also repaid its 3.24% senior notes, $250 million, on July 10, 2026.

Cash down, inventory up

Cash and equivalents fell to $1,010,742 thousand from $1,469,234 thousand at June 30, 2026. Inventories rose to $1,021,358 thousand from $945,805 thousand. Operating cash flow slipped to $422 million from $457 million, which the company attributed to higher working capital needs, including inventory tied to its supply chain expansion.

One customer accounted for 11% of net revenue, spread across both segments. No customer reached 10% in the year-earlier quarter. The company said it continues to face inflationary pressure on electronic components through the rest of fiscal 2027.

ResMed also changed its income statement: restructuring costs are now spread across cost of sales, research and development, and selling and administrative lines, and prior periods were reclassified. The company said that did not change previously reported operating income, net income or EPS. MatrixCare's results stay in continuing operations.

Dates ahead

ResMed's board declared a $0.66 per share dividend on October 29, payable December 17 to holders of record November 12. Its revolving credit and term facilities terminate June 29, 2027. It left fiscal 2027 guidance unchanged at $5.75 billion to $5.85 billion of revenue and adjusted EPS of $12.00 to $12.25.

The accelerated repurchase must settle by December 29, 2026, when ResMed will receive the remaining shares it is owed.