ResMed Inc. (RMD)
Salud / Dispositivos médicos y software de salud digital
Global leader in sleep apnea devices and home healthcare software, with a moat of clinical data, patents and regulatory certifications and an exceptional ROIC, but trading ~24% below its high on market fears about GLP-1s while the core devices segment grows +10% year over year and expands margin. At $236 (22× NOPAT), base 5-year value $320 (+7% with dividend): Fairly valued.
- Price
- $236.42
- Intrinsic value (5y, base)
- $320
- Total annual return (5y)
- 7.5%
- Status (nominal)
- Fairly valued
- Margin of safety
- +13%
The essentials
- Leader in sleep apnea devices (CPAP/APAP/bilevel, masks, diagnostics) plus home healthcare software (Brightree, MatrixCare, MEDIFOX DAN); starting FY2026 the company reports its own operating income by segment — Sleep and Breathing Health ~88% of revenue, Residential Care Software ~12% — valued separately.
- High quality: core segment revenue +10% year over year in FY2026, GAAP operating margin 33.4% (32.7% in FY2025) with the devices segment expanding from 41.0% to 44.3% over three fiscal years, ROIC well above the 10% bar, and a net cash position of ~US$810M.
- Trading ~24% below its 52-week high on structural fear about GLP-1 drugs affecting sleep therapy demand — a narrative not yet reflected in the core segment's growth or margin.
- Noctrix acquisition closed (Jun-2026, US$335M) and agreed sale of MatrixCare (US$490M, expected to close 1Q FY2027): refocuses the business on high-growth sleep/breathing and makes ResMed a direct Medicare biller for the first time, with transitory dilution expected in FY2027 earnings per share.
Intrinsic value — two valuation methods
Total return at 5 years: 7.5%/year = 6.2% appreciation + 1.3% dividend. The target price ($319) is ex-dividend; the $17 in dividends collected over 5 years are added separately.
By both methods, the value today (DCF $359 · Multiples $271) exceeds the market price ($236).
Pillars of the analysis
The verdict — today vs 5 years
Today — fairly valued: at $236 trades ~12.8% below its value discounted to today (~$271); the discount is positive but does not reach the margin of safety we require (≥38%).
At 5 years — En valor: the target price ($319) plus dividends yield between the 4% floor and the 10% average return — a reasonable return, though without the margin of a great investment.
The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$170.
Thesis
The business
ResMed is the global leader in sleep apnea devices, with a moat of clinical data, patents and regulatory certifications, and a smaller, narrower-moat complementary software segment. The core business's quality remains high: the devices segment expanded its operating margin from 41.0% to 44.3% over three fiscal years with revenue growing +10% year over year, ROIC well above the 10% bar, and a market that is still largely undiagnosed. The software segment, by contrast, decelerated its growth (+10%→+5%/+4%) with margin essentially flat.
The valuation
Valued by sum of the parts, each segment with its own multiple: devices (Sleep and Breathing Health) by EV/NOPAT within the range for quality medical devices, and software (Residential Care Software) by EV/NOPAT within the software range with a premium for its subscription nature. Starting FY2026, Note 13 of the 10-K reports each segment's operating income directly, with no need to estimate it by revenue share. At $236 the stock trades at 22× NOPAT — a multiple that compresses toward 15× over five years as the business grows, giving a base five-year value of $319/share → +6%/year of price appreciation, +7% total return with the dividend.
The margin of safety
It trades close to intrinsic value, far from the required margin of safety. The current price, ~24% below the 52-week high, reflects market fear of GLP-1 substitution more than any observed deterioration in the core business: revenue and margin in the devices segment keep improving. The verdict is Fairly valued, with a total return of +7%.
What to watch
The central disconfirmer is the trend in new-patient volume and mask replacement: if GLP-1 penetration starts showing up as a real slowdown in the devices segment (beyond quarterly noise), the stable-moat thesis weakens. Also watch the closing of the MatrixCare sale (1Q FY2027) and the new direct exposure to Medicare billing rules that Noctrix brings, the deceleration already visible in the software segment (+10%→+5%/+4%), and Medicare/Medicaid reimbursement pressure in the U.S.
Educational / informational. Does not constitute investment advice.