ResMed’s second quarter saw steady revenue growth, but the market responded negatively as the company’s operating margin declined year over year. Management attributed the margin compression primarily to higher R&D and supply chain costs amid inflation, despite continued demand for sleep devices and masks. CEO Mick Farrell pointed to ongoing investments in innovation and supply chain efficiency as both a necessity and a source of margin challenges. Additionally, ResMed took a $42 million charge for a field safety action on its Astral devices, further pressuring margins. The quarter also marked increased marketing efforts to capture new patient demographics and leverage growing awareness of sleep health, particularly as consumer wearables and GLP-1 treatments gain traction.

Is now the time to buy RMD? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From ResMed’s Q2 Earnings Call

• Steve Weems (Dougherty): asked about the drivers behind sequential gross margin declines and the impact of modest price increases; CEO Mick Farrell and CFO Aaron Bloomer explained inflation outpaced productivity gains, but highlighted ongoing cost discipline and limited pricing power.
• Davin Thillainathan (Goldman Sachs): sought clarity on what could push revenue growth to the higher end of guidance; Bloomer emphasized volume momentum in core sleep devices and masks, while noting the Astral pause as a headwind.
• Yongle Lee (Jefferies): inquired about acquisition strategy and deal sizing; Farrell explained the focus is on “tuck-in” acquisitions in the $100–$500 million range, especially those aligning with digital health and patient management.
• Lyanne Harrison (Bank of America): questioned the Astral field safety process and related costs; management confirmed the $42 million charge covers expected expenses and that future Astral sales are suspended for now, with related earnings impact embedded in guidance.
• Laura Sutcliffe (Citi): asked about the effects of oral GLP-1s on new patient funnel dynamics; Farrell noted early data shows less adherence than injectables, but overall GLP-1 and wearable-driven awareness continues to serve as a tailwind for CPAP adoption.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team is tracking (1) the pace of adoption for newly launched devices and digital health features, (2) execution of the MatrixCare divestiture and its effect on core segment profitability, and (3) margin recovery as supply chain and price initiatives take hold. Additional focus will be on the integration of Noctrix and the impact of shifting patient demographics on product mix and engagement metrics.

ResMed currently trades at $225.78, up from $223.24 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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