‍👉 Background: ResMed was founded back in 1989 by scientist Peter Farrell in Sydney after he acquired a small piece of sleep-apnoea tech. And since then, it has grown to develop a whole a range of medical gear, including their famous CPAP machines, which help people with sleep apnoea breathe better at night (and by all reports, saves countless marriages).

‍👉 What happened: Now, ResMed has released some smashing results for FY25 with its net profit jumping 37% to $1.4 billion USD and revenue climbing 10% to $5.1 billion USD. Off the back of these results, ResMed is increasing ir share buyback and lifting its dividend by 13%. It’s fair to say ResMed Investors are snoozing very happily.

‍👉 What else: In late 2023, ResMed's share price copped a hit because there was fear that weight-loss drugs would impact its addressable market size. But ResMed reckons this fear is totally overblown. And for now, the results speak for themselves.

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‍What's the key learning?

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‍💡Sometimes the “threat” to your business can end up becoming a new growth channel. The concern for investors was that weight loss drugs could kill the demand for CPAP machines because 70% of people suffering from obstructive sleep apnoea (OSA) are considered overweight. The logic was: loss of weight would equal less demand for CPAP machines. But the opposite actually happened.

💡Instead of cannibalising demand, the demand for weight-loss drugs is helping identify more patients who need CPAP machines. When patients started visiting their doctors for the weight-loss drugs, they were also being diagnosed with sleep issues. And the doctors were recommending ResMed’s CPAP devices.

💡In fact, research shows that 11% of patients on weight loss drugs also start on treatment for their airways, like ResMed’s CPAP machine. So, it’s a handy reminder that in healthcare, fixing one thing often uncovers another. And for ResMed, the boom in weight-loss drugs might actually be helping them.