ResMed Inc. (RMD): what the price assumes

In the published model solve dated 2026-Q2, anchored at $240.33, ResMed Inc. (RMD) is priced for +11.3% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/RMD

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 11: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• ResMed is the leader in sleep-apnea care, selling flow-generator devices and, more importantly, the masks and accessories patients replace on a recurring basis, with a growing Residential Care Software arm layered on top.
• The recurring-revenue model is the moat: masks and accessories grew 12 percent globally last quarter and the consumables base resets demand every year, which is why the price implies only modest operating growth of about 4 percent a year rather than a heroic assumption.
• Watch gross margin and the durability of device demand: non-GAAP gross margin reached 62.8 percent, up 290 basis points, but the open question that has hung over the stock is whether GLP-1 weight-loss drugs shrink the future sleep-apnea population.

Bull Case

The balance sheet tells you how confident ResMed is in its own cash generation: it carries close to $1 billion in net cash and roughly $1.66 billion in total liquidity, with a share count that is essentially flat and a quarterly dividend it just affirmed at $0.60. A company that holds net cash, pays a dividend, and does not need to dilute is one that funds its growth and its returns entirely from operations. ResMed generated $554.1 million of operating cash flow in a single quarter; this is a self-financing compounder, not a business reaching for capital.

The engine is the razor-and-blade structure of sleep care. ResMed sells the device once, then the patient replaces masks and accessories on a recurring schedule for years, which turns each new patient into an annuity. The most recent quarter showed that model working: net revenue rose 11 percent to $1.43 billion, 8 percent in constant currency, with masks and accessories up 12 percent globally. The filing attributes the device-and-mask growth to "increased demand and unit sales," the cleanest kind of growth, more patients using more product, not price increases papering over volume. On top of the hardware sits a Residential Care Software business the 10-K reports at $641.4 million in FY2025, up 10 percent, adding a higher-multiple recurring stream.

The profitability is widening even as the company grows. Non-GAAP gross margin reached 62.8 percent, up 290 basis points year over year, on manufacturing efficiencies and lower component costs, and non-GAAP earnings per share climbed to $2.86 from $2.37. ResMed competes in a market where the 10-K names rivals such as Philips and Fisher & Paykel, but its scale in masks and its installed base give it the recurring-revenue advantage those competitors chase. At a multiple that asks for only about 4 percent annual operating growth, a business compounding revenue at double digits with expanding margins and a fortress balance sheet is being priced as though its growth is about to stop, which is the gap the bull case points to.

Bear Case

The structural truth a ResMed holder has to weigh is that the company's entire franchise rests on the size of the diagnosed sleep-apnea population, and a new class of drugs is, for the first time, plausibly able to shrink it. GLP-1 weight-loss medications reduce the obesity that drives a large share of obstructive sleep apnea, and the market's recurring worry is that fewer obese patients eventually means fewer CPAP patients. ResMed's revenue is built on a long tail of mask and accessory replacement, so the threat is not to this year's numbers but to the multi-year patient inflow the recurring model depends on. The price implies only modest growth precisely because the market is unsure whether the long-run demand curve still slopes the way it always has.

Competition and reimbursement are the more immediate pressures. The 10-K lists a deep competitive set, naming "Philips BV; Fisher & Paykel Healthcare Corporation Limited; DeVilbiss Healthcare" among others, and a Philips re-entry or aggressive pricing from any of them would pressure both share and margin in a market ResMed has dominated. Reimbursement is the other lever the company does not control: the filing notes ResMed sells primarily to home-medical-equipment providers, health systems, and sleep clinics, and that reductions in third-party-payor reimbursement to those customers could weigh on demand. A device-and-consumables business is only as healthy as the reimbursement that pays for it.

The valuation methods read ResMed as supported but not cheap, and the asset-based lens is the dissent. The relative-multiple and forward-growth methods reach the price, but the book-value-and-profitability methods land above the price, meaning a buyer is paying more than the demonstrated-asset value would warrant on the strength of the growth continuing. Earnings-power value, on normalized margins, sits well below the price. The stock is not priced for disaster, but at a multiple that already credits steady growth, the GLP-1 question is the kind of slow-developing structural risk that does not show up in a quarter and then suddenly does. The bear case is that the recurring annuity is more exposed to a one-time change in the patient population than its smooth historical growth suggests.

Valuation

What the price is betting on ResMed is modest and, on the surface, reasonable. At about 14 times company-wide operating income, the price implies operating profit grows roughly 4 percent a year over five years, a pace well within what the company has recently delivered. For a market leader compounding revenue at double digits with widening margins, a 4 percent priced-in assumption looks conservative, which is the heart of why the static methods see value here.

The methods divide in ResMed's favor. The relative-multiple methods, benchmarking it near a healthcare-sector earnings multiple, and the forward-growth methods both reach the price, because they credit the durable double-digit revenue growth and 62.8 percent gross margin. Only the asset-based methods read the price as expensive, which is expected for a high-return business whose value is in its franchise and recurring base rather than on its balance sheet. The pattern, growth and relative methods supporting the price and only the asset lens dissenting, describes a quality compounder priced for continued steady growth, not a stretched momentum name.

Solvency is a clear strength and shifts the entire question to demand durability. ResMed holds close to $1 billion of net cash and about $1.66 billion of liquidity, generated $554.1 million of operating cash flow in the quarter, and keeps a flat share count while paying a $0.60 dividend. There is no leverage risk and no financing dependence. The price is underwriting that the sleep-apnea franchise keeps growing at a steady clip; the financial strength removes the downside-capital question entirely, leaving the GLP-1 and competitive-demand debate as the only thing that can move the bet, in either direction.

Catalysts

The fiscal third quarter combined double-digit growth with margin expansion. ResMed reported net revenue of $1.43 billion, up 11 percent year over year and 8 percent in constant currency, with GAAP net income of $398.7 million, GAAP diluted EPS of $2.74, and non-GAAP diluted EPS of $2.86, up from $2.37 a year earlier. Masks and accessories grew 12 percent globally, and non-GAAP gross margin improved to 62.8 percent, up 290 basis points, on manufacturing efficiencies and lower component costs.

Capital return and cash generation were both strong, with operating cash flow of $554.1 million, cash of $1.66 billion as of quarter-end, and a declared dividend of $0.60 per share. The dominant forward question remains the long-run effect of GLP-1 weight-loss drugs on the sleep-apnea patient population, the structural debate that has shadowed the stock; the company's continued double-digit device and mask growth is the running counter-evidence. The signals to track are quarterly mask resupply trends, new-patient setup volumes, and any shift in margin trajectory, the three readouts that show whether the recurring-revenue engine keeps compounding through the drug-driven uncertainty.

Peer Cohorts (Per Segment, With Filing Citations)

Sleep and Breathing Health / Residential Care Software (reported)

• INSP (Inspire Medical Systems, Inc.)
• FY2025 10-K: …Overview We are a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea ("OSA"). Our proprietary Inspire system is the first FDA, European Union ("EU") Regulation No. 2017/745 ("MDR" or "EU Medical Devices…
• FY2025 10-K: …to sleep using their remote control. Patients turn their Inspire system on when they plan to go to sleep and turn it off when they awaken. The device has a programmed delay, typically 30 minutes, to allow patients to fall asleep naturally before the device activates. It then monitors the patient's breathing and…
• MASI (MASIMO CORP)
• FY2025 10-K: …amended, as soon as reasonably practicable following the effective time of the Merger. Additional information about the Merger Agreement and the Merger will be set forth in the Company's Definitive Proxy Statement on Schedule 14A that will be filed with the SEC. Our Strategy We are an organization that innovates, and…
• FY2025 10-K: …to reflect events or circumstances after the date of such statements for any reason, except as otherwise required by law. 1 Table of Contents PART I ITEM 1. BUSINESS Overview We are a global medical technology company that develops and produces a wide array of industry-leading monitoring technologies, including…
• SYK (STRYKER CORP)
• FY2025 10-K: …better. We offer innovative products and services in MedSurg, Neurotechnology, and Orthopaedics that help improve patient and healthcare outcomes. Alongside our customers around the world, we impact more than 150 million patients annually. Our goal is to achieve sales growth at the high-end of the medical technology…
• FY2025 10-K: …extending Smart Hospital workflows directly into Dollar amounts in millions except per share amounts or as otherwise specified. 2 STRYKER CORPORATION 2025 FORM 10-K daily clinical practice. Medical also completed the acquisition of Advanced Medical Balloons (AMB), an indwelling fecal management system that…
• GEHC (GE HEALTHCARE TECHNOLOGIES INC.)
• FY2025 10-K: AVS, and PDx revenues, as well as favorable foreign currency impacts; • China region revenues were $2,251 million, decreasing 4.6% or $108 million with declines in Imaging, AVS, and PCS revenues partially offset by growth in PDx revenues; and • Rest of World revenues were $3,418 million, growing 4.2% or $138 million…
• FY2025 10-K: …care to assist in critical care for newborns. Our product portfolio includes neonatal incubators, infant warmers, resuscitation devices, phototherapy equipment, maternal and fetal monitors, and digital offerings, such as maternal and fetal heart rate surveillance software. Our products have added innovation in…
• SOLV (SOLVENTUM CORPORATION)
• FY2025 10-K: …2024-12-31 0001964738 us-gaap:FairValueInputsLevel1Member us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember us-gaap:DefinedBenefitPlanCashAndCashEquivalentsMember 2025-12-31 0001964738 us-gaap:FairValueInputsLevel1Member us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember…
• FY2025 10-K: PostretirementBenefitPlansDefinedBenefitMember 2024-12-31 0001964738 us-gaap:FairValueInputsLevel1Member us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember us-gaap:DefinedBenefitPlanEquitySecuritiesMember 2025-12-31 0001964738 us-gaap:FairValueInputsLevel1Member…
• BSX (BOSTON SCIENTIFIC CORP)
• FY2025 10-K: …of patient care. Compensation and Benefits We offer competitive pay and benefits that are flexible and affordable to meet the individual needs of our employees. In addition to cash-based salaries, our rewards portfolio includes cash bonus programs, sales incentives, stock awards, recognition awards, health insurance,…
• FY2025 10-K: …health and safety goals for the global organization and to discuss trends and risks, as well as opportunities for improvement. We recognize that employee well-being, safety, culture, engagement and recognition are all critical to a healthy work environment and productive workforce. We offer programs that acknowledge,…
• ZBH (ZIMMER BIOMET HOLDINGS, INC.)
• FY2025 10-K: …input and to that end, from time to time, we conduct comprehensive employee engagement surveys that ultimately inform our actions towards improving employee engagement. Surveys attempt to assess five drivers of engagement including purpose, culture, leadership, personal growth and belonging. The key results of…
• FY2025 10-K: 10-K 0001136869 false FY http://fasb.org/us-gaap/2025#ProductMember http://fasb.org/us-gaap/2025#ProductMember http://fasb.org/us-gaap/2025#ProductMember http://fasb.org/us-gaap/2025#ProductMember http://fasb.org/us-gaap/2025#ProductMember http://fasb.org/us-gaap/2025#ProductMember P10Y P3Y P3Y…
• MMSI (MERIT MEDICAL SYSTEMS INC)
• FY2025 10-K: …disorders; ● EsophyX® Z+ system for minimally invasive non-pharmacological treatment of gastroesophageal reflux disease; 7 Table of Contents ● Alimaxx-ES™ and EndoMAXX® Fully Covered Esophageal Stents for maintaining esophageal luminal patency in certain esophageal strictures; ● BIG60® and BIG60 ALPHA® Inflation…
• FY2025 10-K: …rhythm management; interventional pulmonology; interventional nephrology; orthopedic spine surgery; interventional oncology; pain management; breast cancer surgery; outpatient access centers; intensive care; imaging; and interventional gastroenterology. According to statistics published by the World Health…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.