The ResMed Inc. (ASX: RMD) share price is ending the week with a bang.
In morning trade, the sleep disorder treatment company's shares are up 7% to $38.90.
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Why is the ResMed share price surging?
Investors have been bidding the company's shares higher today after it delivered yet another strong quarterly update.
According to the release, ResMed's revenue increased 11% (9% in constant currency) to US$1.4 billion over the prior corresponding period. This was driven by increased demand for its portfolio of sleep devices, masks, and accessories.
Management advised that revenue in the U.S., Canada, and Latin America, excluding Residential Care Software, grew by 11% over the prior corresponding period. Whereas revenue in Europe, Asia, and other markets, excluding Residential Care Software, grew by 6% in constant currency. Residential Care software revenue increased 5% on a constant currency basis.
Another positive was that ResMed's margins continue to improve. Its gross margin increased by 320 basis points during the quarter. This was primarily driven by manufacturing and logistics efficiencies and component cost improvements.
The company recorded a gross margin of 61.8%, or 62.3% on a non-GAAP basis. The consensus estimate was for a margin of 62.1%.
This ultimately led to ResMed posting an 18% increase in income from operations and a 19% increase in non-GAAP income from operations.
Diluted earnings per share was US$2.68, with non-GAAP diluted earnings per share coming in at US$2.81.
Management commentary
ResMed's chairman and CEO, Mick Farrell, was rightfully pleased with another impressive quarter. He said:
Our second quarter results demonstrate the strength and resilience of our global business as we continue advancing our mission to help people sleep better, breathe better, and live longer and healthier lives in the comfort of their own home.
Year-over-year, we delivered 11% headline revenue growth, 310 basis points of non-GAAP gross margin expansion, and continued operating excellence, resulting in another quarter of mid-teens non-GAAP EPS growth. These results reflect strong ongoing demand for our market-leading sleep and respiratory care devices, as well as the growing impact of our digital health ecosystem that spans more than 140 countries.
The good news is that Farrell appears confident that the second half will be just as successful. He adds:
As we move into the second half of fiscal year 2026, we will continue to invest in innovation to scale our digital health capabilities and expand global access to life-saving care, while delivering sustainable, profitable growth.
