Thematic Exposure -- 8/10
ResMed sits at the intersection of several powerful, durable secular themes: a massive undiagnosed
sleep apnea population (~936M-1B globally, ~80% untreated), a near-duopoly competitive structure with
Philips effectively sidelined since 2021, an emerging GLP-1 tailwind that is proving to be additive
rather than cannibalistic, and a connected-device/SaaS platform that creates ecosystem lock-in. The
only reason this is not a 9 or 10 is that SaaS growth has moderated, the competitive moat could narrow
if/when Philips re-enters the U.S. device market, and GLP-1 drugs carry residual long-term uncertainty
around mild/moderate OSA demand.
Weight: 25%
Oligopoly Hard Gate: PASS (Near-Duopoly, ~48% Global CPAP Share, Philips Sidelined)
ResMed Dominates Global CPAP With ~48% Share -- Philips Out of U.S. Devices Since June 2021 Recall
ResMed holds ~48% of the global sleep apnea device market, making it the dominant
#1 player in a near-duopoly structure where the primary competitor has been effectively sidelined.
Competitive landscape: Philips Respironics has been out of U.S. CPAP device sales since the June 2021 recall. Despite remediating 99% of sleep therapy device registrations globally, Philips has NOT returned to U.S. device sales and suffered a second recall (DreamStation programming error) in June 2025. CEO and CFO have publicly stated they "do not know" when U.S. device re-entry will occur. In ex-U.S. markets, Philips has dropped to #3 or #4 in many regions despite being back 12-24+ months. Fisher and Paykel Healthcare holds ~12% global share as a solid #2 but is not a threat to ResMed dominance. Inspire Medical (hypoglossal nerve stimulation) is a niche alternative therapy, not a direct CPAP competitor.
Pricing power is evident: CEO Farrell stated he "welcomes competition" and noted that even in markets where Philips has been back 12-24+ months, ResMed is "holding share and competing well" with 5% CC device growth in Europe/Asia/ROW against a 9% prior year comp. The AirView/myAir/Brightree digital ecosystem creates switching costs that competitors "really cannot compete across the board on."
Oligopoly gate: PASS. Near-duopoly with the primary competitor sidelined. Clear pricing power and digital ecosystem moat.
Competitive landscape: Philips Respironics has been out of U.S. CPAP device sales since the June 2021 recall. Despite remediating 99% of sleep therapy device registrations globally, Philips has NOT returned to U.S. device sales and suffered a second recall (DreamStation programming error) in June 2025. CEO and CFO have publicly stated they "do not know" when U.S. device re-entry will occur. In ex-U.S. markets, Philips has dropped to #3 or #4 in many regions despite being back 12-24+ months. Fisher and Paykel Healthcare holds ~12% global share as a solid #2 but is not a threat to ResMed dominance. Inspire Medical (hypoglossal nerve stimulation) is a niche alternative therapy, not a direct CPAP competitor.
Pricing power is evident: CEO Farrell stated he "welcomes competition" and noted that even in markets where Philips has been back 12-24+ months, ResMed is "holding share and competing well" with 5% CC device growth in Europe/Asia/ROW against a 9% prior year comp. The AirView/myAir/Brightree digital ecosystem creates switching costs that competitors "really cannot compete across the board on."
Oligopoly gate: PASS. Near-duopoly with the primary competitor sidelined. Clear pricing power and digital ecosystem moat.
Global CPAP Market Share
~48%
Dominant #1, near-duopoly
Global OSA Population
~936M-1B
~80% undiagnosed/untreated
CQ4 2025 Total Revenue
$1,423M
+11% vs. CQ4 2024
Connected Devices
6M+
11M myAir users
Segment Revenue (Quarterly Trend, Daloopa)
| Metric | CQ1 2024 | CQ2 2024 | CQ3 2024 | CQ4 2024 | CQ1 2025 | CQ2 2025 | CQ3 2025 | CQ4 2025 |
|---|---|---|---|---|---|---|---|---|
| Sleep and Respiratory Care | $1,049M | $1,071M | $1,068M | $1,126M | $1,131M | $1,181M | $1,169M | $1,256M |
| SaaS (Residential Care Software) | $148M | $152M | $157M | $156M | $161M | $167M | $166M | $167M |
| Total Revenue | $1,197M | $1,223M | $1,225M | $1,282M | $1,292M | $1,348M | $1,336M | $1,423M |
Data sourced from Daloopa. Sleep and Respiratory Care grew +20% over 8 quarters. SaaS plateaued ~$165-167M as management works through portfolio management in senior living/LTC.
Theme A: Massive Undiagnosed OSA Population (POSITIVE -- Multi-Decade Secular, 30% Weight)
936M-1B People With OSA Globally, ~80% Undiagnosed -- "Mile 1 of the Marathon"
The landmark Lancet Respiratory Medicine estimate places global OSA prevalence at
936 million to 1 billion people aged 30-69, with only ~20% diagnosed and ~80%
remaining undiagnosed and untreated. CEO framing: "We are in mile 1 of the marathon."
Market size: Sleep apnea devices market valued at ~$6.9-10.3B in 2025, projected to reach $11.6-22.9B by 2032-2034 (CAGR 7.6%+). This is one of the largest organic growth opportunities in medtech.
Funnel expansion initiatives: 60,000 CME training completions with PCPs (up 50% QoQ), with 77% of providers intending to change clinical practices. VirtuOx acquisition (home sleep apnea testing service), NightOwl/Ectosense (home sleep testing device), Somnaware (sleep clinic workflow software), and 11 million myAir users driving patient engagement.
Big tech tailwind: Apple Watch and Samsung Galaxy Watch sleep apnea detection are raising consumer awareness. CEO predicts 1-3 more wearable companies will follow, expanding the top of the diagnostic funnel.
Sub-score: 9/10. The undiagnosed population represents a multi-decade runway. ResMed is actively investing to expand the funnel at every stage.
Market size: Sleep apnea devices market valued at ~$6.9-10.3B in 2025, projected to reach $11.6-22.9B by 2032-2034 (CAGR 7.6%+). This is one of the largest organic growth opportunities in medtech.
Funnel expansion initiatives: 60,000 CME training completions with PCPs (up 50% QoQ), with 77% of providers intending to change clinical practices. VirtuOx acquisition (home sleep apnea testing service), NightOwl/Ectosense (home sleep testing device), Somnaware (sleep clinic workflow software), and 11 million myAir users driving patient engagement.
Big tech tailwind: Apple Watch and Samsung Galaxy Watch sleep apnea detection are raising consumer awareness. CEO predicts 1-3 more wearable companies will follow, expanding the top of the diagnostic funnel.
Sub-score: 9/10. The undiagnosed population represents a multi-decade runway. ResMed is actively investing to expand the funnel at every stage.
Theme B: GLP-1 / Anti-Obesity Medication Impact (POSITIVE -- Confirmed Tailwind, 25% Weight)
GLP-1 + CPAP Patients 10-11% More Likely to Start CPAP -- 6.2% Higher Resupply at 3 Years -- Bear Thesis Flipped
This was the single biggest bear thesis against RMD in 2023-2024. Three years of real-world data
from 1.95M tracked patients have flipped it.
Key data points from ResMed claims analysis:
-- Patients with both GLP-1 and CPAP scripts are 10-11% more likely to start CPAP than CPAP-only patients
-- 3% higher resupply rate at 1 year
-- 6.2% higher resupply rate at 3 years (new data as of Q2 FY2026) -- motivation accelerates over time
Mechanism: GLP-1 patients are more motivated overall health consumers. They enter the healthcare system, get screened, discover sleep apnea, and start CPAP. Even if AHI improves (e.g., from 40 to 20), symptomatic relief from CPAP keeps patients adherent. GLP-1 adherence drops to 30-40% at one year; CPAP adherence remains higher and grows with this cohort.
FDA context: Zepbound (tirzepatide) received FDA approval for moderate-to-severe OSA in adults with obesity (Dec 2024). However, Lilly own SURMOUNT-OSA study showed combination therapy (GLP-1 + CPAP) as the best outcome. CEO: "The thesis that this could be a headwind is completely gone. It is a tailwind."
Sub-score: 8/10. Real-world data is directionally very positive. Residual risk: if oral GLP-1s become ubiquitous they could theoretically reduce mild OSA volumes long-term. But current data strongly supports the tailwind thesis.
Key data points from ResMed claims analysis:
-- Patients with both GLP-1 and CPAP scripts are 10-11% more likely to start CPAP than CPAP-only patients
-- 3% higher resupply rate at 1 year
-- 6.2% higher resupply rate at 3 years (new data as of Q2 FY2026) -- motivation accelerates over time
Mechanism: GLP-1 patients are more motivated overall health consumers. They enter the healthcare system, get screened, discover sleep apnea, and start CPAP. Even if AHI improves (e.g., from 40 to 20), symptomatic relief from CPAP keeps patients adherent. GLP-1 adherence drops to 30-40% at one year; CPAP adherence remains higher and grows with this cohort.
FDA context: Zepbound (tirzepatide) received FDA approval for moderate-to-severe OSA in adults with obesity (Dec 2024). However, Lilly own SURMOUNT-OSA study showed combination therapy (GLP-1 + CPAP) as the best outcome. CEO: "The thesis that this could be a headwind is completely gone. It is a tailwind."
Sub-score: 8/10. Real-world data is directionally very positive. Residual risk: if oral GLP-1s become ubiquitous they could theoretically reduce mild OSA volumes long-term. But current data strongly supports the tailwind thesis.
GLP-1 + CPAP Initiation Lift
+10-11%
vs. CPAP-only patients
3-Year Resupply Lift
+6.2%
Motivation accelerates over time
Patients Tracked
1.95M
Real-world claims analysis
GLP-1 1-Year Adherence
30-40%
CPAP adherence remains higher
Theme C: Connected Device / SaaS Ecosystem (POSITIVE -- Digital Moat, 25% Weight)
6M+ Connected Devices, 11M myAir Users -- Integrated Platform From Diagnosis Through Resupply
Connected device installed base: 6+ million cloud-connected devices for daily
remote patient monitoring. 11 million myAir users on the patient-facing engagement platform.
AirView (clinician-facing remote monitoring) integrates via API into Epic, Cerner, and Allscripts
with hundreds of calls per second.
SaaS platform: Brightree (HME/DME business management, Americas), MatrixCare (services 13,000 health facilities and 2,500 home care settings), and MEDIFOX DAN (German healthcare IT platform, performing well and driving RCS growth).
SaaS growth: Mid-single digits (~5% CC in Q2 FY2026), below historical levels. Management guiding back to "high single-digit growth" by FY2027 after completing portfolio management in the senior living/LTC vertical. SaaS operating margins improving ($50M op profit in CQ4 2025 vs. $43M in CQ2 2024).
Strategic importance: The digital ecosystem (myAir + AirView + Brightree + VirtuOx + Somnaware) creates a patient funnel from awareness through diagnosis, setup, adherence monitoring, and mask resupply. This is the competitive moat that Philips and Fisher and Paykel cannot replicate.
Sub-score: 7/10. The digital moat is real and widening, but SaaS revenue growth has plateaued near-term. Re-acceleration to high-single digits guided for FY2027.
SaaS platform: Brightree (HME/DME business management, Americas), MatrixCare (services 13,000 health facilities and 2,500 home care settings), and MEDIFOX DAN (German healthcare IT platform, performing well and driving RCS growth).
SaaS growth: Mid-single digits (~5% CC in Q2 FY2026), below historical levels. Management guiding back to "high single-digit growth" by FY2027 after completing portfolio management in the senior living/LTC vertical. SaaS operating margins improving ($50M op profit in CQ4 2025 vs. $43M in CQ2 2024).
Strategic importance: The digital ecosystem (myAir + AirView + Brightree + VirtuOx + Somnaware) creates a patient funnel from awareness through diagnosis, setup, adherence monitoring, and mask resupply. This is the competitive moat that Philips and Fisher and Paykel cannot replicate.
Sub-score: 7/10. The digital moat is real and widening, but SaaS revenue growth has plateaued near-term. Re-acceleration to high-single digits guided for FY2027.
Theme D: Margin Expansion / Profitability Trajectory (POSITIVE -- Structural, 20% Weight)
Sleep and Respiratory Care Op Margins Expanding ~43% to ~46% -- CEO Targeting Double-Digit BPS Improvement Annually Through 2030
Sleep and Respiratory Care operating profit grew from $456M in CQ1 2024 to $572M in
CQ4 2025, with operating margins expanding meaningfully from ~43% to ~46% over the period.
SaaS operating profit also improving ($39M to $50M over the same window).
Supply chain delivering: 310bps of YoY gross margin expansion in Q2 FY2026. CEO has challenged the team to deliver "double-digit basis points improvement in gross margin every year through 2030."
The combination of volume growth (TAM expansion), favorable mix (masks/accessories growing faster than devices), and supply chain optimization creates a durable profitability tailwind. The near- duopoly structure limits pricing pressure.
Sub-score: 8/10. Clear margin trajectory with structural drivers. Oligopoly pricing power supports sustained expansion.
Supply chain delivering: 310bps of YoY gross margin expansion in Q2 FY2026. CEO has challenged the team to deliver "double-digit basis points improvement in gross margin every year through 2030."
The combination of volume growth (TAM expansion), favorable mix (masks/accessories growing faster than devices), and supply chain optimization creates a durable profitability tailwind. The near- duopoly structure limits pricing pressure.
Sub-score: 8/10. Clear margin trajectory with structural drivers. Oligopoly pricing power supports sustained expansion.
Sleep and Resp. Op Profit (CQ4 2025)
$572M
Up from $456M in CQ1 2024
SaaS Op Profit (CQ4 2025)
$50M
Up from $39M in CQ1 2024
YoY Gross Margin Expansion
+310bps
Q2 FY2026
CQ4 2025 Product Mix
51/37/12
Devices / Masks / SaaS
Thematic Risks / Offsets
| Risk | Description | Severity |
|---|---|---|
| SaaS growth moderation | Mid-single-digit growth (~5% CC), plateaued around $165-167M; portfolio management in senior living/LTC underway | Medium |
| Philips re-entry risk | Unknown timing for U.S. device return; already back ex-U.S. with limited impact but could narrow moat if fully remediated | Medium |
| GLP-1 long-term uncertainty | Oral GLP-1 formulations could dramatically expand treated obesity population; theoretical long-term risk to mild OSA volumes | Medium |
| Diagnosis funnel execution | Expanding diagnosis rates from ~20% requires sustained investment in PCP education, home testing, and consumer awareness | Low-Medium |
Risks are real but manageable. The near-duopoly structure and digital ecosystem moat provide
significant cushion against competitive threats. GLP-1 data continues to trend favorably.
Score Rationale
| Factor | Assessment | Impact |
|---|---|---|
| Oligopoly position | Near-duopoly with ~48% global share; Philips sidelined since 2021; F and P Healthcare distant #2 at ~12% | ++ |
| TAM / Secular growth | ~1B people with OSA, ~80% undiagnosed; $7-10B market growing 7%+ CAGR; "mile 1 of the marathon" | ++ |
| GLP-1 narrative flip | 3 years of real-world data confirm tailwind: +10-11% CPAP initiation, +6.2% resupply at 3 years | ++ |
| Connected/Digital ecosystem | 6M+ connected devices, 11M myAir users, integrated SaaS platform creates switching costs competitors cannot replicate | + |
| Margin expansion trajectory | Sleep and Resp. op margins ~43% to ~46%; 310bps gross margin expansion; double-digit BPS target through 2030 | + |
| Big tech awareness tailwind | Apple Watch, Samsung Galaxy Watch sleep apnea detection expanding top of diagnostic funnel | + |
| SaaS growth plateau | Mid-single digits, below historical levels; re-acceleration guided for FY2027 | - |
| Philips re-entry risk | Timing unknown; could narrow moat if/when U.S. device sales resume | - |
8/10 — ResMed scores an 8 because it is
positioned on multiple strong, overlapping secular themes with a dominant competitive position and an
expanding digital moat. The ~48% global CPAP market share in a near-duopoly structure provides pricing
power and competitive insulation. The ~936M-1B undiagnosed OSA population represents one of the largest
organic growth opportunities in medtech, and the GLP-1 headwind-to-tailwind narrative flip -- now
supported by 3 years of real-world data tracking 1.95M patients -- removes the single biggest overhang
on the stock.
The deductions from a higher score:
(a) SaaS growth has moderated -- mid-single-digit growth is below historical levels, though management guides re-acceleration to high-single digits by FY2027 after completing portfolio management;
(b) Philips re-entry timing is unknown -- while the competitive impact has been minimal in ex-U.S. markets where Philips has returned, a full U.S. re-entry could narrow the moat over time;
(c) GLP-1 long-term uncertainty persists -- oral formulations could theoretically expand the treated obesity population enough to reduce mild OSA volumes, though current data is directionally positive.
Despite these offsets, the combination of near-duopoly positioning, massive undiagnosed TAM, confirmed GLP-1 tailwind, connected-device ecosystem lock-in, and expanding profitability earns a strong thematic score.
The deductions from a higher score:
(a) SaaS growth has moderated -- mid-single-digit growth is below historical levels, though management guides re-acceleration to high-single digits by FY2027 after completing portfolio management;
(b) Philips re-entry timing is unknown -- while the competitive impact has been minimal in ex-U.S. markets where Philips has returned, a full U.S. re-entry could narrow the moat over time;
(c) GLP-1 long-term uncertainty persists -- oral formulations could theoretically expand the treated obesity population enough to reduce mild OSA volumes, though current data is directionally positive.
Despite these offsets, the combination of near-duopoly positioning, massive undiagnosed TAM, confirmed GLP-1 tailwind, connected-device ecosystem lock-in, and expanding profitability earns a strong thematic score.
Data sourced from Daloopa, ResMed company filings, and Q2 FY2026 earnings call.