ResMed's Pivot to Portfolio Management: Guidance, Divestitures, and the Astral Cross
Strong Q4 gives way to conservative FY27 guidance as ResMed streamlines its portfolio and navigates a ventilator recall.
RMD · Earnings Call · 2026-08-06
Strong Q4, Cautious Outlook
ResMed capped fiscal 2026 with a solid quarter: 9% headline revenue growth, gross margin up 90 basis points year-over-year, and non-GAAP EPS up 16%. But the real news was the company's first-ever formal revenue and EPS guidance for fiscal 2027. Management set core constant-currency revenue growth at 5% to 7%, with reported revenue of $5.75–5.85 billion and EPS of $12.00–12.25. The guide embeds an estimated 130-basis-point revenue headwind and $0.15 EPS dilution from the MatrixCare business divestiture and the suspended sales of Astral life-support devices due to an ongoing field safety action. As new CFO Aaron Bloomer put it, “we're guiding to five to 7%, and importantly, that includes a pretty material headwind that we're seeing from the action that we're taking to focus on patients with Astral.” — Aaron Bloomer, Chief Financial Officer · 2026-08-06 Excluding that Astral impact, underlying core growth would be "north of six to eight," and core EPS growth would land at 12–14%.
Portfolio Reshaping: MatrixCare Out, Noctrix In
The most consequential strategic shift is active portfolio management. ResMed announced the divestiture of MatrixCare, its long-term care software business, expected to close around September 1, and simultaneously integrated the Noctrix acquisition (a restless-leg-syndrome neurostimulation device). This is a deliberate move to refocus on AirSense 11-led sleep health and breathing health, while shedding a lower-growth asset. The company also introduced new revenue transparency by splitting device sales into sleep versus life-support lines, and it spelled out its M&A playbook: tuck-in deals in the $100–500 million range. CEO Mick Farrell emphasized, “We are intent on capitalizing on that opportunity and will ruthlessly prioritize investments in our highest ROI opportunities.” — Aaron Bloomer, Chief Financial Officer · 2026-08-06 This aligns with a broader push to return over $1.85 billion to shareholders in fiscal 2027, a 75% year-over-year increase.
Astral Field Safety: A Patient-First Pause
The most company-specific event is the Astral ventilator field safety correction. ResMed took a $42 million provision in Q4 and is suspending all new Astral sales for fiscal 2027 to focus components on servicing existing patients. This is a short-term revenue hit but a defensible long-term trust play. Mick crystallized the philosophy: “Patients come first.” — Mick Farrell, Chief Executive Officer · 2026-08-06 The company expects to execute "the best recall in the history of the med tech industry," with a $75 million top-line headwind and $0.15 EPS dilution embedded in guidance. Investors are watching whether the recall expands or resolves, but the conservative approach and explicit quantification reduce uncertainty.
The Growth Story Intact
Beyond the portfolio moves, ResMed's core growth narrative remains intact. The company is leveraging Obstructive Sleep Apnea awareness from wearables and GLP-1s—its Oura partnership has already sent ~13,000 users to ResMed.com, with ~75% previously undiagnosed. Management reiterated that patients on GLP-1s are 11% more likely to start PAP and 6% more likely to resupply at three years. On tariffs, ResMed confirmed its Chapter 98/Nairobi Protocol exemption remains valid, a key protection in a trade-war environment. Meanwhile, Gross margin yoy +2.9pp to 62.2% and operating margin reached 35.1%, even as R&D investment jumped 22% for next-gen devices and AI-driven software. The company is guiding to low-double-digit gross-margin expansion for FY27, with price increases coming through later in the year.
Prior to this quarter, ResMed had not provided annual guidance, but the shift reflects both confidence and discipline. As Mick noted earlier, “We have done a very good job of going from air freight to the very, very vast majority of our work on sea freight.” — David L Bailey, Analyst · 2026-04-30 That operational efficiency is now being paired with a more rigorous capital-allocation framework.
ResMed's stock has been flat over the last 90 days, but the long-term trend is +815% over 16 years, and even with the Astral overhang, the company is executing a clear pivot: sharper focus, higher capital returns, and conservative guidance that should beat if execution holds.