Intrinsic Value ResMed Inc. (0KW4.L)

• Previous Close: £252.40
• Intrinsic Value: £140.36
• Upside potential: -44%

Stock Valuation Context

Business Model And Market Position

ResMed Inc. is a global leader in the medical technology sector, specializing in sleep and respiratory care solutions. The company operates through two primary segments: Sleep and Respiratory Care, which includes devices like ventilators and mask systems, and Software as a Service (SaaS), offering cloud-based platforms such as AirView and Brightree for patient monitoring and business management. ResMed serves a diverse clientele, including sleep clinics, home healthcare providers, and hospitals, across approximately 140 countries. Its integrated approach combines hardware with digital health solutions, positioning it as a pioneer in connected care for chronic respiratory conditions. The company’s strong R&D focus and extensive distribution network reinforce its competitive edge in a rapidly evolving healthcare landscape. ResMed’s market leadership is further solidified by its ability to deliver end-to-end solutions that improve patient outcomes while streamlining operational efficiencies for healthcare providers.

Revenue Profitability And Efficiency

ResMed reported revenue of $4.69 billion for FY 2024, with net income reaching $1.02 billion, reflecting a robust profit margin. The company’s diluted EPS stood at $6.92, demonstrating strong earnings power. Operating cash flow was $1.40 billion, supported by efficient working capital management, while capital expenditures were modest at $99.5 million, indicating disciplined investment in growth initiatives.

Earnings Power And Capital Efficiency

ResMed’s earnings power is underscored by its high-margin SaaS segment, which complements its device business. The company’s capital efficiency is evident in its ability to generate significant operating cash flow relative to its capital expenditures. This balance allows for sustained reinvestment in innovation while maintaining profitability.

Balance Sheet And Financial Health

ResMed maintains a solid balance sheet with $238.4 million in cash and equivalents and total debt of $873.9 million. The manageable debt level, coupled with strong cash flow generation, ensures financial flexibility. The company’s liquidity position supports ongoing operations and strategic investments without undue leverage risk.

Growth Trends And Dividend Policy

ResMed has demonstrated consistent growth, driven by increasing demand for sleep apnea and respiratory care solutions. The company pays a dividend of $2.12 per share, reflecting a commitment to returning value to shareholders. Its growth trajectory is supported by expanding digital health adoption and global market penetration.

Valuation And Market Expectations

With a market capitalization of $35.66 billion and a beta of 0.78, ResMed is viewed as a stable investment in the healthcare sector. The company’s valuation reflects its leadership position and growth potential in both medical devices and digital health solutions.

Strategic Advantages And Outlook

ResMed’s strategic advantages include its integrated product portfolio, strong brand recognition, and global distribution network. The outlook remains positive, with tailwinds from aging populations and rising prevalence of chronic respiratory conditions. Continued innovation and SaaS adoption are expected to drive long-term growth.

Sources

Company filings, market data