ResMed, the medical device maker known for its sleep apnea machines, saw its shares drop about 6% on Friday after the company issued a fiscal 2027 revenue outlook that came in weaker than Wall Street had expected. The forecast includes a $75 million hit from a sales suspension tied to a recall of its Astral ventilators.
The company now expects revenue of $5.75 billion to $5.85 billion for fiscal 2027. That range reflects the ongoing fallout from the Astral recall, which forced ResMed to halt sales of the devices while it works with U.S. regulators.
What is the Astral recall?
The Astral is a line of ventilators used in hospitals and home care settings to support patients who need help breathing. In late 2024, the U.S. Food and Drug Administration (FDA) classified a recall of certain Astral devices as Class I, the most serious type. The recall was tied to a potential issue that could cause the device to stop working or deliver incorrect therapy, posing a risk to patients.
As part of the recall, ResMed suspended sales of the affected devices. That suspension is what is now hitting the company's revenue projections. The $75 million charge is an estimate of the direct financial impact from the lost sales and related costs.
Recalls are not uncommon in the medical device industry, but they can be costly. Companies often have to set aside money for replacements, repairs, and legal expenses, and they may lose market share to competitors while the issue is being resolved.
Why the market reacted
Investors were likely disappointed not just by the size of the hit, but by the fact that the company felt the need to factor it into a multi-year outlook. A recall of this nature can create uncertainty about how long the sales suspension will last and whether the company will be able to win back customers once it returns to the market.
The 6% drop suggests that some investors had hoped the impact would be smaller or that ResMed would be able to offset it with strength in other parts of its business. The company's core sleep apnea franchise, which includes its popular CPAP machines, remains a major revenue driver, but the ventilator segment is an important growth area.
ResMed's outlook also comes at a time when the broader medical device sector is facing its own headwinds. Companies in this space are dealing with supply chain pressures, regulatory scrutiny, and shifting demand patterns. For context, other device makers have also had to adjust their forecasts recently, as seen with Siemens Healthineers, whose stock jumped on a price target hike despite a mixed outlook.
What it means for investors
For everyday investors, this news is a reminder that even well-established medical device companies can face sudden regulatory setbacks. A recall can dent revenue and profit for years, not just for a single quarter.
It's also worth noting that ResMed's guidance is just a forecast. The company could revise it upward if the recall is resolved faster than expected, or if other parts of the business perform better. But it could also cut it further if the suspension drags on or if the FDA requires additional corrective actions.
Investors should watch for updates from ResMed on the recall's progress, as well as any signs that competitors are gaining ground in the ventilator market. The company's ability to manage this situation will be a key factor in whether it can meet its fiscal 2027 targets.
In the broader picture, this episode highlights the importance of regulatory risk in healthcare investing. While ResMed has a strong franchise, events like this can create volatility. For those holding the stock, it's a good time to review your own risk tolerance and ensure your portfolio is diversified across sectors.
ResMed is not the only company dealing with a product recall or a cautious outlook. Other firms, such as Under Armour, have also cut their sales forecasts due to demand issues. And in the tech space, Take-Two trimmed its outlook even after beating quarterly sales. These examples show that guidance changes are common, and they don't always spell doom for a company's long-term prospects.
For now, ResMed's focus will be on getting the Astral ventilators back on the market and reassuring both regulators and customers. Until then, the $75 million hit will remain a drag on its financials, and investors will be watching closely to see if the company can manage the fallout effectively.
