I have a 10 year explicit period, and a growth in FCF of 5% in the continuing value period, with commensurate ongoing growth in R&D and invested capital.

This is a high value to hold in a CV period.

My justification is that $RMD isn't just about CPAP machines - that's a 10-20 year story. Its about sleep and the ability to innovate products and services that support health by using sleep data and enhancing sleep quality. It's unrivalled dataset will help it make smart investments, whatever they may be.

Overblown in my estimation @Friendship7

But maybe GLP-1 is a bigger deal than I am giving it credit for. Any medicos out there with a more informed view?

@Friendship7 ditto @Strawman's response. I also am not medically-qualified, although I try to be well-informed. It appears to me that the benefits of GLP-1 drugs will be vey significant indeed.

However, the problems that $RMD's products support are both under-diagnosed and undertreated and the market is vast. Even if the economics of GLP-1 allowed for a rapid global rollout (and the economics are a real-world barrier, and will likely be for many years) resulting in material weight loss, improved heart health, reduced risks of kidney disease and protection of natural insulin production, while this would likely contribute to a reduction on OSA demand over time, there are other drivers of OSA beyond weight and there is a large untapped potential. Furthermore, other respiratory conditions like COPD would continue to benefit form CPAP support, and as far as I know, GLP-1 can't help these. (Not stricly true, as there is a study that indicates that GLP-1 can improve FEV1, FVC and DLCO measures in COPD patients, however, this isn't a registered indication ... probably because of the economics.)

Clearly, part of the shareholding of $RMD has taken flight at the risk. I admit to being surprised at the depth of the response. However, a small outflow drives out-sized SP response. It is always so. While I accept there is a risk to the long-term for $RMD's ultimate market potential, this hasn't yet moved the dial on my expected value of the shares. The SP drop is so overdone in my view, that I have confidently increased my holding. That a personal risk-reward decsion - not advice. And I am happy not to look at the SP again for another 12 months.

When would I sell (because, after all, I could be wrong)? As in @wtsimis 's valuation narrative, if I see two half-year periods of struggling revenue growth, than I would reduce and potentially exit. Why?

Well, with 1) supply chains healed, 2) new products hitting the market, 3) diagnosis centres fully re-opened (with a diagnosis backlog), 4) Phillips yet to return (although imminent), and 5) competitors behaving rationally to restore their own %GMs, there is no excuse for not achieving strong demand and profits. Underperformance mihgt be a flag that something is amiss irrespective fo the "story", and I would be prepared to admit I was wrong and cut my losses (actually, not losses at all) early.

For me, personally, this is a decision that has to play out over time. But my expectation is that $RMD is worth significantly more than its current SP.

As Jerome Powell says, my decisions will be driven by the data (and not the SP).

Disc: Held in RL (one of my top 4 holdings)

@Friendship7 i am watching the rebate story on these, they are very expensive so a rebate could help adoption. depends on the pressure on US insurers etc. re RMD we are not too sure how much of the user base is just overweight people, dont know if rmd even know for sure. widespread adoption will have some impact. so watch RMD rev line but will take time.

RMD ceo pointed out, compliance (keep taking them), cost and side effects as negatives. in the US various stocks have been hit like Stryker, knee replacements! so it is a thing now.

i have bought RMD on this pullback, as risk went from not priced to priced in v quickly, imo. my base case is a modest impact from weight drugs over a longer duration.

could be wrong as always

I think it's probably one of those instances were people overestimate the impact over a year and underestimate the impact over ten years. The causal relationship between obesity and OSA is well documented. GLP-1 drugs will potentially "cure" (manage it to the point it is no longer present) OSA, RMD's products treat the symptoms. That seems like kind of a big deal to me.

From what I understand GLP-1 has side-effects too (which may be ironed out) but for one it burns fat AND muscle. This creates issues for older people.

I think there's a lot of unknowns which will only be seen with the fullness of time but think RMD will still have a market - guess the question is how big a market.

If the market is a much smaller you may even see compeitors such as Phillips bow out (Especially as it is a small part of their business). All speculation longer term of course.

If GLP-1 cures obesity - that is there will be nobody suffering from obesity in the developed world - then Resmed will likely lose circa 58% of its customer base (source: https://www.racgp.org.au/afp/2017/july/obstructive-sleep-apnoea-and-obesity). The share price is already down -25% since the start of GLP-1 threat reaching the mainstream, so we just have -33% to go.

Jokes aside. It'll be interesting to see how it all plays out. A lot of water will need to go under the bridge before a silver bullet for obesity is found.

There's also a lot of other trends in this world that swirling about. Obstructive sleep apnea is highly under-diagnosed - some sources say this can be as high as 80-90%. It's not hard to imagine why. Most sufferers will only get it checked out after persistent complaints from a bed partner.

Sleep studies are getting much easier (see ASX:CMP, sunrisesleep.com.au, etc) and you can imagine a time soon where a sleep study can be prescribed directly from a GP. Wearables like the Apple Watch already report on heart rate, blood oxygen level, room noise, and respiration rate during sleep. It's getting very close to notifying people that they should get checked out for OSA (like they do for Atrial Fibrillation).

GLP-1 will be colliding with these other less talked about trends very soon. It'll be very interesting to observe what happens next.

@UlladullaDave has probably found the balance here - that's a good way to think about it. No reason to run for the hills on RMD just yet, and like many here, I added to my holdings for the first time in over half a decade.

The bros from Forager spoke about GLP-1 and its impacts on companies, in particular Resmed in the latest podcast episode. Worth a listen as it’s right on topic. https://overcast.fm/+2OinJu45o