ResMed Inc (ASX: RMD) shares are ending the week on a positive note.
At the time of writing, the sleep disorder treatment company's shares are up 2.5% to $39.90.
This follows the release of the company's first quarter update before the market open.
ResMed shares higher on results day
For the three months ended 30 September, ResMed posted a 9% increase in revenue to US$1.3 billion. This was driven by increased demand for its portfolio of sleep devices, masks, and accessories.
Management notes that revenue in the U.S., Canada, and Latin America, excluding Residential Care Software, grew by 10%.
Whereas revenue in Europe, Asia, and other markets, excluding Residential Care Software, grew by 6% on a constant currency basis. ResMed's Residential Care Software revenue increased by 5% on a constant currency basis.
Margin improvements
The company's gross margin continued to improve. It increased by 290 basis points (280 basis points in non-GAAP terms) thanks to manufacturing and logistics efficiencies and component cost improvements.
However, its selling, general, and administrative (SG&A) expenses increased by 7% on a constant currency basis. This was mainly due to additional expenses associated with its VirtuOx acquisition, employee costs as well as marketing and technology investments.
But this couldn't stop ResMed's net income increasing 11% year on year to US$349 million. Diluted earnings per share came in at US$2.37.
ResMed's chair and CEO, Mick Farrell, was pleased with the strong start to the financial year. He said:
Our fiscal year 2026 is off to a strong start, with first-quarter performance reflecting continued progress toward our mission of helping people sleep better, breathe better and live longer and healthier, with care provided in their own home.
We delivered 9% headline revenue growth year-over-year, with a very strong 280 basis points of non-GAAP gross margin expansion, resulting in double-digit bottom-line performance: 16% non-GAAP EPS growth. These results reinforce the success of our strategy to transform healthcare in the home with hardware, software and solutions that people love.
The good news is that Farrell remains positive on the company's outlook for the remainder of FY 2026 and beyond. He adds:
As we advance through fiscal year 2026, we remain committed to ongoing operational excellence and strategic investment in innovation, ultimately delivering strong, sustainable, profitable growth as we provide access to life-changing care for the billions of people worldwide who need our market-leading healthcare solutions delivered right where they live.
