ResMed (ASX:RMD) Crushes the Ozempic Fear Narrative with New Data: Is It Time to Buy?

ResMed data shows GLP-1 users use CPAP more

ResMed (ASX: RMD) delivered another strong quarter, beating analyst expectations on both revenue and earnings. The stock currently trades around A$37.50 on the ASX. But the bigger story for investors is what CEO Mick Farrell said about weight-loss drugs like Ozempic: “The thesis that this could be a headwind is completely gone.” For a stock punished in 2023 over fears that GLP-1 medications would destroy CPAP demand, we believe this data marks a genuine turning point.

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ResMed Flips the GLP-1 Narrative as CPAP Demand Strengthens

The numbers tell a compelling story that runs counter to the bear case. ResMed has been tracking claims data across 1.95 million patients, and the results suggest that GLP-1 medications are actually helping, not hurting, its business. Patients prescribed both a GLP-1 drug and a CPAP device are 10 to 11 per cent more likely to start therapy compared to those without a GLP-1 prescription. In our view, this data effectively kills the Ozempic bear thesis.

What makes this even more encouraging is the stickiness of these patients. After three years, GLP-1 users show more than six per cent higher resupply rates than non-users. The explanation makes intuitive sense: patients motivated enough to take weight-loss medication tend to be more engaged with their overall health, including sleep therapy.

Adding to the positive backdrop, the US Centres for Medicare & Medicaid Services excluded CPAP devices from its next round of competitive bidding. CEO Farrell described this as a “great win for the industry”, removing a key regulatory overhang.

Margin Expansion and Cash Generation Hit New Highs

Beyond the GLP-1 narrative, the underlying business continues to fire on all cylinders. Gross margin expanded by more than 300 basis points, driven by manufacturing efficiencies and lower component costs. Management raised full-year guidance, signalling confidence that these gains are sustainable.

The balance sheet looks equally impressive, with cash up 171 per cent year-over-year. ResMed is putting this to good use, returning significant capital to shareholders through buybacks and dividends while planning even larger repurchases for the rest of fiscal 2026.

On the innovation front, ResMed launched its AI-enabled Comfort Match feature to personalise CPAP settings and improve adherence. The new F30i fabric mask range has received strong early feedback, reinforcing the company’s position as the technology leader in sleep therapy.

The Investor’s Takeaway for ResMed

The investment case for ResMed looks stronger than it has in two years. The GLP-1 fear that hammered the stock in 2023 appears unfounded based on evidence from nearly two million patients. With gross margins expanding, cash generation accelerating, and CPAP exempt from competitive bidding, we believe the fundamentals support a Buy rating for long-term investors.

Analysts agree, maintaining a Buy consensus with price targets suggesting roughly 15 per cent upside from current levels. Insiders have made 21 sales and zero purchases over the past six months, but this appears to reflect routine compensation-related selling rather than a lack of confidence, given the business is clearly firing on all cylinders.

The bottom line: ResMed offers quality healthcare exposure with improving margins, a debunked bear thesis, and reasonable upside. For investors seeking a defensive compounder with growth characteristics, this looks like an attractive entry point.