This ASX Healthcare Shares Down 27% in a Year — Broker Still Sees Upside Potential

Sonal Goyal

12 May 2026 11:50 PM AEST

This ASX Healthcare Shares Down 27% in a Year — Broker Still Sees Upside Potential

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Highlights

ResMed Inc. shares have fallen 27.42% over the past year despite continued Earnings and Revenue growth.
Q3 FY26 results showed 11% revenue growth, Margin expansion, and strong Operating Cash Flow generation.
Macquarie Group Limited Research maintains an Outperform rating with a target price of AUD 46.50.

ResMed Inc. (ASX:RMD) continues to deliver encouraging financial and operational performance, yet investor sentiment toward the stock remains subdued. Shares in the sleep technology and respiratory care company have declined 27.42% over the past year, recently trading around $27.66 despite reporting improved earnings, expanding margins, and strong cash generation in its latest quarterly update.

The disconnect between ResMed’s financial performance and its share price movement highlights broader uncertainty across healthcare technology and medical device sectors, particularly among companies that experienced elevated valuations during previous growth cycles.

While the company continues to benefit from global Demand for sleep apnea and respiratory care devices, investors remain cautious about growth sustainability, competitive dynamics, and healthcare spending trends across key markets.

Although ResMed shares have declined sharply over the past year, broker sentiment remains constructive following the latest earnings update.

Macquarie Research maintains an Outperform rating on ResMed, with a target price of AUD 46.50.

Q3 FY26 Results Highlight Revenue and Earnings Momentum

On 1 May 2026, ResMed released its third-quarter FY26 results, reporting another quarter of solid financial growth across its core operating divisions.

Revenue increased 11% to $1.4 billion, or 8% on a constant currency basis, driven primarily by continued demand for the company’s sleep devices, masks, and accessories portfolio.

The company also reported notable profitability improvements. GAAP gross margin expanded by 290 basis points to 62.2%, while non-GAAP gross margin increased to 62.8%. These gains were attributed to lower component costs, Manufacturing efficiencies, logistics optimisation, and favourable product mix dynamics.

Income from operations rose 17% during the quarter, while non-GAAP Operating Income increased 18%. Net Income reached $399 million, with Diluted Earnings per Share climbing to $2.74. On a non-GAAP basis, diluted earnings per share increased 21% to $2.86.

The results reinforced the company’s ability to convert revenue growth into stronger profitability, supported by improving Supply chain conditions and operational Leverage.

Device Demand Continues to Support Global Growth

ResMed’s latest update showed continued strength across both developed and international markets.

Revenue in the United States, Canada, and Latin America increased 9%, excluding Residential Care Software operations. Europe, Asia, and other international markets recorded 7% constant currency growth, reflecting sustained demand across major healthcare systems and sleep treatment markets.

Residential Care Software revenue also grew 4% on a constant currency basis, indicating steady adoption of digital healthcare management solutions.

The company’s global Diversification continues to provide earnings stability, particularly as healthcare systems increasingly focus on remote monitoring, sleep disorder treatment, and digital patient management technologies.

Demand for sleep apnea devices remains a key structural growth driver, supported by growing diagnosis rates, rising awareness of sleep-related health conditions, and ageing populations across major markets.

Margin Expansion Becomes a Key Investor Focus

One of the most significant aspects of ResMed’s Q3 FY26 result was the continued improvement in gross margins.

The company’s 290 basis point margin expansion reflected easing supply chain pressures compared to previous years, when elevated freight and semiconductor costs affected profitability across the medical device sector.

Management highlighted improvements in component costs and manufacturing efficiency as major contributors to profitability gains. Investors have closely monitored these trends following several years of margin pressure tied to global supply disruptions.

At the same time, ResMed continues to invest heavily in technology, Marketing, and acquisitions. Selling, general, and administrative expenses increased 11% during the quarter, partly reflecting costs associated with the VirtuOx Acquisition and ongoing Investment in scalable healthcare technology platforms.

Cash Flow and Shareholder Returns Remain Strong

ResMed also continued to demonstrate cash generation and shareholder return capacity during the quarter.

Operating cash flow reached $554 million, exceeding reported net income and reinforcing the company’s strong underlying earnings quality.

During the quarter, ResMed returned approximately $262 million to shareholders through dividends and share repurchases. The company repurchased 673,000 shares worth $175 million as part of its ongoing Capital management strategy.

The board also declared a quarterly Dividend of $0.60 per share, payable in June 2026. The dividend program remains an important component of shareholder returns, particularly as investors seek stability amid broader healthcare sector Volatility.

The company’s consistent capital return profile continues to support institutional investor interest despite recent share price weakness.

Conclusion

ResMed enters the final quarter of FY26 with strong operational momentum, improving profitability, and resilient global demand across its sleep treatment and respiratory care portfolio. Despite a 27% decline in share price over the past year, the company continues to report robust revenue growth, expanding margins, and strong cash flow generation.

The latest quarterly results reinforced the strength of ResMed’s Business fundamentals, particularly as supply chain pressures ease and operational efficiencies improve. Broker sentiment remains supportive, with Macquarie Research maintaining an Outperform rating and a AUD 46.50 target price, reflecting confidence in the company’s Long-term Growth profile.

As healthcare technology markets continue to evolve, investor focus is likely to remain centred on ResMed’s ability to sustain earnings growth, expand digital health capabilities, and maintain profitability improvements across global markets.

FAQs

Q: Why has ResMed’s share price fallen despite strong earnings growth?

A: The decline reflects broader weakness across healthcare technology stocks, changing investor sentiment, and concerns around sector valuations despite continued operational growth.

Q: What were ResMed’s key Q3 FY26 financial results?

A: ResMed reported 11% revenue growth, improved gross margins, 17% operating income growth, and diluted earnings per share of

Q: What is driving ResMed’s margin expansion?

A: Margin improvements were mainly driven by lower component costs, manufacturing efficiencies, logistics improvements, and favourable product mix trends.

Q: What is Macquarie Research’s view on ResMed?

A: Macquarie Research maintains an Outperform rating with a target price of AUD 46.50, citing strong long-term growth potential.

Q: Does ResMed continue to return capital to shareholders?

A: Yes. The company paid dividends and repurchased shares during the quarter, returning approximately

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