ResMed has agreed to sell its MatrixCare aged-care software business to private equity firm Frazier Healthcare Partners for US$490 million in cash, sharpening its strategic focus on high-growth sleep and breathing devices while returning capital to shareholders through an accelerated repurchase programme.
The ResMed share price (ASX: RMD) closed 0.80% lower at A$31.19 following the announcement, a muted response suggesting markets had largely anticipated the divestment. The stock has recovered 20.7% from its June 3rd low close, but remains 20.7% below levels recorded twelve months ago, reflecting lingering concerns over GLP-1 weight-loss drugs and their potential impact on sleep apnoea treatment demand.
Divestment Details
The transaction will see Frazier Healthcare Partners acquire MatrixCare, a business serving over 15,000 care providers across skilled nursing facilities, senior living communities, home health agencies and hospice organisations. MatrixCare is expected to contribute approximately US$220 million in revenue and US$55 million in non-GAAP operating profit during ResMed’s fiscal 2026, implying a sale multiple of roughly 2.2 times sales and approximately nine times operating profit.
The deal is structured to close in the first quarter of ResMed’s fiscal 2027, subject to regulatory approvals and customary closing conditions. ResMed and Frazier Healthcare Partners will enter into transition services agreements designed to ensure operational continuity and offset stranded costs during the first year following completion. Management has committed to fully eliminating any remaining overhead costs over time as the separation is completed.
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Despite the sale, ResMed has reaffirmed its fiscal 2026 guidance for margins, spending ratios and planned share buybacks, signalling confidence that the divestment will not disrupt near-term financial performance. The company expects its remaining Residential Care Software segment to accelerate growth to high single digits in fiscal 2027 with improved operating leverage, even after shedding MatrixCare’s contribution.
Shareholder Returns
Net proceeds from the MatrixCare sale will be deployed into an accelerated share repurchase programme, supplementing an already aggressive capital return strategy. During the third quarter of fiscal 2026 alone, ResMed returned US$262 million to shareholders through dividends and buybacks. In the first half of the fiscal year, the company had already repurchased US$325 million worth of stock, a significant increase from US$125 million in the prior-year period.
The decision to channel MatrixCare proceeds into buybacks reflects management’s view that the shares remain undervalued relative to intrinsic value, particularly given the company’s improving margin profile and sustained double-digit revenue growth. ResMed’s balance sheet remains robust, with strong operating cash flow of US$554 million generated in the third quarter, providing ample capacity to fund both organic growth initiatives and opportunistic M&A alongside shareholder distributions.
Separately, ResMed recently completed its acquisition of Noctrix, a neuromodulation device company focused on restless legs syndrome and related sleep disorders. The deal is expected to add approximately US$30 million in revenue during fiscal 2027 but will dilute non-GAAP earnings per share by around US$0.20 as the company invests in commercialisation and integration.
The Noctrix acquisition is positioned as a strategic hedge, broadening ResMed’s treatment toolkit beyond conventional continuous positive airway pressure devices. By diversifying into adjacent sleep-health technologies, management aims to build a multi-modal therapy platform that addresses a wider range of patient needs and mitigates long-term competitive risks from emerging weight-loss pharmaceuticals.
Business Momentum
ResMed’s underlying business has delivered consistent operational performance through the first nine months of fiscal 2026. Third-quarter revenue rose 11 per cent year-on-year to US$1.43 billion, or 8 per cent on a constant-currency basis. Gross margin expanded approximately 290 basis points to 62.2 per cent on a GAAP basis and 62.8 per cent on a non-GAAP basis, driven by favourable product mix, manufacturing efficiencies and pricing discipline.
Non-GAAP operating income increased 18 per cent, while non-GAAP diluted earnings per share climbed roughly 21 per cent to US$2.86. The margin expansion story has been a key pillar of the bull case over recent quarters, with ResMed consistently demonstrating operating leverage as it scales its cloud-connected care platforms and optimises its supply chain.
Sleep and breathing health devices and masks remain the core growth engines, benefiting from ongoing recovery in diagnosed sleep apnoea cases, improved supply-chain availability and the rollout of next-generation connected devices that enhance patient adherence and clinical outcomes. The company’s digital ecosystem—including AirView for providers and myAir for patients—continues to drive engagement and recurring revenue streams.
Chairman and Chief Executive Mick Farrell framed the MatrixCare sale as a portfolio optimisation move that allows ResMed to concentrate resources on its highest-conviction opportunities.
“By focusing on areas where we see the greatest opportunity for sleep health innovation and impact, we are strengthening our ability to deliver life-changing health technologies, improve patient outcomes, and create value for our stakeholders,” Farrell said in a statement accompanying the announcement.
The remarks underscore management’s intent to pivot away from slower-growth, non-core software assets and double down on sleep, breathing and connected-care markets where ResMed enjoys global leadership and structural tailwinds from an ageing population and rising chronic disease prevalence.
GLP-1 Overhang Persists
While recent operational results have been solid, ResMed’s valuation continues to reflect a material discount related to concerns over glucagon-like peptide-1 receptor agonists. Drugs such as Ozempic, Wegovy, Mounjaro and Zepbound have demonstrated efficacy in reducing weight and, in some patients, improving or resolving obstructive sleep apnoea, raising questions about the long-term addressable market for CPAP devices.
Recent clinical data from conferences including the European Congress on Obesity in 2026 and the American Diabetes Association meeting have reinforced that GLP-1-driven weight loss can ameliorate multiple obesity-related conditions, including sleep apnoea and cardiovascular risk factors. The launch of oral semaglutide formulations in early 2026 has further increased accessibility, potentially broadening the patient base that could benefit from pharmacological intervention.
However, bulls counter that sleep apnoea remains massively under-diagnosed globally, with penetration rates still in the single digits in many markets. Even among patients who achieve significant weight loss, many retain residual sleep apnoea or anatomical factors that necessitate device therapy. Additionally, real-world adherence to GLP-1 medications remains imperfect, with discontinuation rates approaching 50 per cent within the first year in some datasets, limiting the drugs’ long-term impact on device demand.
ResMed’s diversification into neuromodulation via Noctrix, its expanding digital health platform and its focus on non-obesity-driven indications such as chronic obstructive pulmonary disease and central sleep apnoea are viewed as strategic hedges against a future where weight-loss therapies are more pervasive.
What To Watch Next
ResMed is scheduled to report fourth-quarter and full-year fiscal 2026 results on 6 August 2026. Management has indicated it will provide detailed fiscal 2027 guidance during that call, including updated margin and earnings-per-share bridges that account for the loss of MatrixCare’s profit contribution, the dilutive impact of Noctrix, the timing of stranded cost elimination and the accretive effect of the accelerated share buyback.
Markets will be scrutinising commentary on organic volume trends, particularly any signs of GLP-1-related headwinds in new patient setups or device utilisation rates. Payer behaviour and reimbursement dynamics in key markets such as the United States and Europe will also be closely watched, given the evolving competitive landscape between pharmacological and device-based therapies.
From a technical perspective, the stock’s recovery from June lows has been steady but unspectacular, with resistance evident around the A$32–33 range. A break above that level would likely require either a material beat on the August earnings call or incremental positive data points suggesting GLP-1 risks are being overstated. Conversely, any disappointment on volume growth or margin execution could see the shares test support.
Bull Case:
- Gross margin expansion of 290 basis points demonstrates sustainable operating leverage.
- US$490 million buyback boosts EPS accretion with shares 20 per cent below peaks.
- Double-digit revenue growth and strong cash flow support organic and inorganic investments.
- Sleep apnoea remains vastly under-diagnosed; GLP-1 adherence issues limit long-term threat.
- Noctrix and digital platforms diversify revenue streams beyond traditional CPAP devices.
Bear Case:
- GLP-1 drugs increasingly effective at resolving obesity-driven sleep apnoea in patients.
- Selling profitable software asset at nine times profit raises portfolio strategy questions.
- Noctrix acquisition dilutes fiscal 2027 EPS by US$0.20 with uncertain commercialisation path.
- Stranded cost elimination post-MatrixCare carries execution risk and timing uncertainty.
- Valuation discount persists as markets await proof GLP-1 impact remains manageable.
