Executive Summary
Business Description and Strategic Position
ResMed develops medical devices and digital health solutions primarily for sleep apnea, chronic obstructive pulmonary disease (COPD), and other respiratory conditions. Its main products include CPAP (continuous positive airway pressure) machines, masks, and cloud-based software platforms that enable remote monitoring of patients. Over time, the company has expanded into software as a service through its digital health ecosystem, creating revenue streams that complement device sales.
Strategically, ResMed works at the intersection of healthcare devices, software, and data analytics. Its cloud platforms enable providers to monitor medical adherence and outcomes, improve patient retention and reduce switching costs. This integrated model differentiates the company from its hardware-only competitors.
The industry’s tailwinds are many. Sleep apnea remains largely undiagnosed worldwide, while an aging population and rising obesity rates are increasing the prevalence. Additionally, improved consumer health awareness through wearable devices and lifestyles have driven more patients to diagnosis and treatment, expanding ResMed’s addressable market.
Industry & Competitive Dynamics
The sleep therapy market is characterized by high barriers to entry due to regulatory requirements, clinical validation, and distribution networks that include healthcare providers and insurers. ResMed competes primarily with Philips and other manufacturers of ventilators, although Philips’ product recall in recent years has temporarily shifted market share to ResMed.
However, the competitive landscape is improving. Pharmaceutical companies are developing weight-loss drugs that may reduce the severity of sleep apnea, potentially undermining the long-term market for CPAP therapy. Analysts estimate that such drugs could reduce the CPAP market by up to 15% in the late 2020s if they become widely accepted. This introduces uncertainty into long-term growth projections but is likely to affect near-term demand given differences in treatment efficacy and adherence challenges.
Despite this risk, ResMed’s integrated software and installed base provide stability. Patients already using CPAP therapy tend to continue treatment even when other treatments are available.
Latest Financial Results
The most recently reported results for ResMed Q2 Fiscal Year 2026 (quarter ended December 31, 2025) show strong operating performance and significant margin expansion.
Net worth: About $1.4 billion, up about 11% year over year (9% constant currency).
Gross margin: 61.8%, up nearly 320 points year-on-year.
Operating income: It has increased by about 18%, which shows strong performance.
Diluted EPS: $2.68 GAAP and $2.81 non-GAAP, with adjusted EPS up ~15.6% YoY.
Financial Performance: About $340 million per quarter.
Net income for the quarter reached approximately $393 million, highlighting strong profitability related to revenue growth.
Balance Sheet Strength: The company holds approximately $1.42 billion in cash and maintains significant liquidity, with approximately $753 million in cash and approximately $1.5 billion in unused borrowing capacity.
Analytical translation
The key takeaway from these results is that ResMed’s growth is increasingly margin-driven rather than volume-driven.
Revenue growth of ~11% translated into higher profit growth due to:
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Manufacturing efficiency and low component costswhich raised gross margins.
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Lovely product mixwith high-quality masks, accessories, and software that greatly contribute to sales.
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Performance measurementsince fixed costs grow more slowly than revenues.
This indicates a shift to a higher quality income profile. The company doesn’t just sell more devices; make more profit per dollar of revenue.
Historical Performance Context
ResMed has shown consistent growth over the years. Fiscal 2025 revenue totaled approximately $5.15 billion, with revenue estimated at $1.4 billion, reflecting strong profitability and margin expansion trends.
Over the years, revenue has grown by more than 60% while revenue has nearly tripled, reflecting the robustness of its business model and the impact of the emergence of digital revenue sources.
This trend suggests that the company is transitioning from a device manufacturer to a health technology platform with strong financials.
Effective Drivers and Engines of Growth
1. Device and Mask Ecosystem
Demand for CPAP devices and masks remains strong, especially as diagnosis rates increase. Sales of masks and accessories tend to grow faster than device sales, providing recurring revenue similar to consumables.
2. Software & Digital Life
Remote monitoring cloud platforms create higher revenue streams and deepen customer relationships. The software also enables data-driven care, improves clinical outcomes and strengthens payer support.
3. Demographic tailwinds
Aging demographics, obesity, and lifestyle factors continue to increase the potential market for apnea treatment.
4. Product Design
AI-enabled tools and digital health solutions are being integrated to improve treatment adherence and patient engagement.
Main Risks
Medication Disorders
GLP-1 weight loss drugs can reduce the severity of sleep apnea in some patients, potentially reducing the need for CPAP devices over time. However, adherence problems and clinical variability suggest that CPAP therapy will remain necessary for many patients.
The Restoration of Competitiveness
Competitors gaining market share can suppress growth. Historically, the product remembers the demand that has changed towards ResMed, which may be normal.
Health Care Policy and Reimbursement
Changes in insurance reimbursement structures can affect rates and coverage rates.
Investment thesis
ResMed represents a growing high-quality healthcare company with features more like a software platform than a traditional device manufacturer. Its investment appeal is:
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Revenue from equipment and software
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High gross margins over 60%
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Strong free cash flow generation
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Structural demand drivers are independent of economic cycles
The company’s ability to turn modest revenue growth into significant profit growth is a defining feature of its current trajectory.
The conclusion
ResMed’s latest results confirm that the company is entering a phase of margin-led growth supported by the efficiency and monetization of the digital ecosystem. While emerging pharmaceutical treatments present long-term uncertainty, the near- and medium-term outlook remains strong due to underdiagnosed patient populations and ongoing revenue streams. ResMed is increasingly better understood not just as a medical device manufacturer, but as a data-driven healthcare platform with long-lasting competitive advantages.
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