| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 153.60 | -39 |
| Intrinsic value (DCF) | 140.36 | -44 |
| Graham-Dodd Method | 27.30 | -89 |
| Graham Formula | 127.30 | -50 |
ResMed Inc. (LSE: 0KW4) is a global leader in medical technology, specializing in sleep and respiratory care solutions. Headquartered in San Diego, California, the company develops, manufactures, and distributes innovative medical devices and cloud-based software applications designed to improve patient outcomes in over 140 countries. ResMed operates through two key segments: Sleep and Respiratory Care, which includes CPAP machines, masks, and ventilation devices, and Software as a Service (SaaS), offering cloud-based platforms like AirView and Brightree for remote patient monitoring and healthcare management. The company serves sleep clinics, home healthcare providers, and hospitals, leveraging a direct sales force and distributor network. ResMed’s integrated ecosystem, combining hardware with digital health solutions, positions it at the forefront of the growing sleep apnea and chronic respiratory disease markets. With a strong focus on innovation and compliance, ResMed continues to expand its footprint in the $36B+ global sleep and respiratory care industry.
ResMed presents a compelling investment case due to its leadership in the high-growth sleep and respiratory care market, supported by recurring SaaS revenue and strong cash flow generation. The company benefits from increasing global awareness of sleep disorders and an aging population, driving demand for its CPAP devices and digital health solutions. However, risks include competitive pressures from rivals like Philips Respironics and potential supply chain disruptions. With a market cap of $35.7B, a beta of 0.78 (indicating lower volatility than the market), and a solid dividend yield, ResMed offers a balanced mix of growth and stability. Investors should monitor regulatory changes and innovation pipelines to assess long-term sustainability.
ResMed’s competitive advantage lies in its vertically integrated ecosystem, combining medical devices with proprietary cloud-based software (e.g., AirView, myAir), which enhances patient compliance and provider efficiency. The company’s strong R&D focus has resulted in high-margin, differentiated products like the AirSense 11 CPAP device. Its SaaS segment, including Brightree and MatrixCare, provides sticky revenue streams and cross-selling opportunities in the home healthcare market. However, Philips Respironics remains a formidable competitor, especially after resolving its recall issues, while smaller players like Fisher & Paykel Healthcare compete on cost in certain regions. ResMed’s direct-to-provider sales model and global distribution network provide scalability, but reliance on recurring mask sales exposes it to pricing pressures. The company’s ability to maintain premium pricing and expand in emerging markets will be critical to sustaining its market leadership.