ResMed Shares Slide Into The Weekend: What Is The Latest?

ResMed shares (ASX: RMD) fell 0.97% on the ASX today despite broader market gains, extending a brutal year-to-date decline of 23.42% as a prominent hedge fund analyst warned that weight-loss drugs pose a structural threat to the company’s core sleep apnea business. The RMD share price had been trading even lower at the open, with a 1.35% bounce through the remainder of what was a generally bullish day for markets that saw the ASX 200 close 1.98% higher.

So why were shares lower on the day?

The bearish analyst call

The sleep therapy device maker traded lower in Sydney even as the broader ASX posted gains, reflecting fresh pressure from Hedgeye Risk Management analyst Tom Tobin, who added ResMed as a formal short idea. Tobin’s thesis targets at least another 30% downside from current levels, on top of the roughly 30% drop the stock has already suffered from its 2025 peak. The dual-listed company trades on both the ASX and NYSE under the ticker RMD, with the American depository receipts mirroring the negative sentiment.

The decline marks a continuation of a challenging period for ResMed, which has seen its valuation compress significantly as markets grapple with the long-term implications of glucagon-like peptide-1 (GLP-1) drugs such as blockbuster obesity medications including Novo Nordisk’s Ozempic and Eli Lilly’s Mounjaro on the sleep apnea treatment landscape.

Tobin’s bearish call centres on three interconnected arguments that challenge ResMed’s growth trajectory. First, he contends that newer, cheaper oral formulations of GLP-1 drugs with multi-condition benefits will progressively shrink the total addressable market for sleep apnea devices. As these medications become more accessible and widely prescribed, a growing share of obese patients may see their obstructive sleep apnea (OSA) improve or resolve entirely through weight loss, reducing the need for continuous positive airway pressure (CPAP) therapy.

Second, the analyst argues that ResMed’s growth algorithm relies heavily on a steady funnel of newly diagnosed OSA patients, particularly from the overweight and obese population. This cohort has historically represented the company’s most significant incremental growth opportunity as rising obesity rates and improved diagnostic awareness expanded the addressable market. However, Tobin asserts this funnel is already narrowing as GLP-1 adoption accelerates.

Third, and perhaps most critically, the bear case highlights that the overweight and obese population, ResMed’s primary incremental market, is precisely the demographic that GLP-1 drugs are designed to treat and shrink. This creates a direct collision between the pharmaceutical industry’s most successful drug class in decades and the patient population that has underpinned ResMed’s long-term growth story.

The timing of Hedgeye’s call coincides with fresh clinical data from Eli Lilly demonstrating that tirzepatide, marketed as Mounjaro for diabetes and Zepbound for obesity, can significantly reduce the severity of obstructive sleep apnea in obese patients. Separate programmes involving next-generation drugs such as Lilly’s triple-agonist retatrutide have shown even more dramatic weight loss alongside improvements in OSA and related metabolic conditions, lending empirical support to concerns about long-term market erosion.

Fundamentals Holding Up So Far

The bearish narrative, however, runs headlong into ResMed’s actual operating performance, which has remained robust through the initial wave of GLP-1 adoption. The company recently reported double-digit revenue growth driven by strong uptake of its AirSense 11 platform and resilient demand for mask resupply, the high-margin consumables that generate recurring revenue.

More provocatively, ResMed has presented real-world data covering 2.1 million patients suggesting that GLP-1 users are approximately 11% more likely to initiate CPAP therapy and demonstrate higher adherence and resupply rates than non-GLP-1 patients. Management has framed GLP-1 drugs not as a competitive threat but as a demand-generation opportunity, arguing that these medications raise physician awareness of obesity-related comorbidities and prompt more comprehensive diagnostic workups that ultimately lead more patients to sleep testing and treatment.

The company has outlined fiscal 2026 gross margin targets of 62% to 63%, citing product mix improvements, manufacturing efficiencies, and the higher engagement levels of patients on GLP-1 therapy. ResMed’s leadership has consistently maintained that while GLP-1 drugs may reduce OSA incidence or severity in some patients, the condition is multifactorial, and driven by craniofacial anatomy, neck structure, and other factors beyond body weight, meaning a substantial patient base will require CPAP therapy regardless of pharmaceutical intervention.

ResMed has also made strategic moves to diversify its revenue base. The company recently announced a 340 million dollar acquisition of Noctrix Health, expected to close around June 1, 2026, adding approximately 24 million dollars in annual revenue from restless legs syndrome treatments. The deal brings higher gross margins than ResMed’s existing business and signals management confidence in adjacent sleep and neurological disorders, though bears may interpret the move as hedging against core OSA market uncertainty.

ResMed’s challenges extend beyond GLP-1 drugs. The company benefited substantially from Philips’ multi-year recall of millions of CPAP and BiPAP devices due to foam degradation concerns, which removed a major competitor from the market and allowed ResMed to capture significant market share. As Philips works through regulatory clearance and returns to full production, ResMed faces the prospect of renewed price competition and potential share loss, particularly if Philips adopts aggressive pricing to regain lost ground.

The company also operates in a healthcare landscape increasingly focused on value-based care and outcomes measurement. ResMed has invested heavily in connected devices, cloud-based monitoring platforms, and data analytics to demonstrate patient adherence and clinical outcomes, positioning itself as a digital health company rather than merely a device manufacturer. These capabilities provide defensibility and support margin expansion, but they also require ongoing investment and face competition from both traditional medical device companies and emerging digital health startups.

For now, ResMed finds itself caught between solid current fundamentals and profound uncertainty about the long-term structure of its core market, a tension reflected in a share price that has fallen sharply even as quarterly results remain strong. Whether the stock represents a compelling value opportunity or a value trap will depend on questions that may take years to answer definitively: how deeply will GLP-1 drugs penetrate the obese population, how durable will weight loss and OSA improvement prove, and how large is the irreducible core of OSA patients who will require CPAP therapy regardless of pharmaceutical advances.