Stock Spotlight: ResMed Inc. (ASX:RMD)
This week's Stock Spotlight is ASX-listed ResMed Inc.
About ResMed Inc.
ResMed Inc. develops, manufactures, distributes, and markets medical devices and cloud-based software applications for the healthcare markets. It operates in two segments, Sleep and Respiratory Care, and Software as a Service. It offers various products and solutions for a range of respiratory disorders, including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, dental devices, and cloud-based software informatics solutions to manage patient outcomes, as well as provides customer and business processes. The company also provides AirView, a cloud-based system that enables remote monitoring and changing of patients' device settings; myAir, a personalized therapy management application for patients with sleep apnea that provides support, education, and troubleshooting tools for increased patient engagement and improved compliance; U-Sleep, a compliance monitoring solution that enables home medical equipment (HME) to streamline their sleep programs; connectivity module and propeller solutions; and Propeller portal. It offers out-of-hospital software solution, such as Brightree business management software and service solutions to providers of HME, pharmacy, home infusion, orthotics, and prosthetics services; MatrixCare care management and related ancillary solutions to senior living, skilled nursing, life plan communities, home health, home care, and hospice organizations, as well as related accountable care organizations; HEALTHCAREfirst that offers electronic health record, software, billing and coding services, and analytics for home health and hospice agencies; and MEDIFOX DAN's software solutions. The company markets its products to sleep clinics, home healthcare dealers, and hospitals through a network of distributors and direct sales force. The company was founded in 1989 and is headquartered in San Diego, California.

Source: Yahoo Finance
Key Stats
Key Stats
Source: Yahoo Finance, ASX. Data as of 09/08/24.
Price Performance
Growth Potential
- Global leader in a significantly under-penetrated sleep apnea market.
- High barriers to entry in establishing global distribution channels.
- Strong R&D program ensuring RMD remains ahead of competitors.
- New product launches (momentum in new mask releases).
- RMD’s presented data which suggests patients with an OSA diagnosis and prescribed a GLP-1 drug are 10.7% more likely to initiate PAP therapy – i.e. weight loss drugs are likely to expand the total addressable market.
- Bolt-on acquisitions to supplement organic growth.
- Leveraged to a falling Australian dollar.
- Recently gained market share from competitor Philips is permanent.
Key Risks
- Disruptive technology leads to better patient compliance or introduction of alternative therapies (GLP-1 weight loss drugs).
- Philips re-enters the flow generator market with an aggressive strategy (heavy discounting?) post its product recalls in Jun-21.
- Product recall leading to reputational damage.
- Competitive threats lead to market share loss – e.g. pharmaceutical threats to the CPAP market.
- Disappointing growth (company and industry specific).
- Adverse currency movements (AUD, EUR, USD).
- RMD needs to grow to maintain its high PE trading multiple. Therefore, any impact on growth may put pressure on RMD’s valuation.
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Disclaimer: This article does not constitute financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
