ResMed S9 Autoset to Treat Sleep Apnea (Credit: Sleep Right Australia)
ResMed (ASX: RMD) is a medical equipment company that focuses on treatments for sleep apnea, COPD, and other chronic respiratory diseases. Their products aim to serve the unpenetrated sleep and respiratory care market, with the result of keeping people out of the hospital. In the past 12 months, their products have changed 15 million lives and improved 90 million more through their out-of-hospital care network. Despite this success, management is still striving to improve 250 million lives in 2025, which would drive significant revenue growth if realised. ResMed is an $18B company that declared $2.6bn in revenue for FY19.
The company’s product
ResMed has four main businesses across sleep, respiratory care, software as a service (SaaS) solutions, and digital technology products. Since sleep is one of ResMed’s most successful businesses and has the greatest growth prospects, this is the business unit we will focus on. Sleep-disordered breathing is more than 80% undiagnosed and is highly prevalent in conjunction with other chronic conditions. For every 100 U.S. adults, 4 of them are aware of their sleep apnea condition, while 22 suffer from it without realising that their condition can be treated.
ResMed has several masks and devices to aid in curing this ailment. However, this is not enough, since the majority of suffers are not even aware they have the condition. Effective marketing around sleep apnea awareness will be essential in treating the condition. As such, ResMed is currently having a sleep research joint venture with Verily to unlock more holistic insights about sleep apnea and the value of treating it. When people are aware of how sleep disorder impacts their breathing and affects their lives, people will be more willing to purchase ResMed’s solutions. This promises to unlock much larger SAAS revenue streams for ResMed, helping drive significant value creation for shareholders. Since technology improves health outcomes, the company may be able to tap into additional government subsidies to drive growth in key markets.
ResMed concentrates on opportunities in sleep apnea, COPD, other major chronic conditions, whilst caring for patients with SaaS solutions outside hospitals. Their main source of growth is through greater market penetration, the realisation of which will be dependent on effective sales and marketing. By utilising tech-driven integrated care, ResMed can drive superior patient outcomes and experiences.
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