@Solvetheriddle if you look at nearly all great companies over a 10-20 year period, there are usually multiple occasions when shareholders have had to ride out a pull back of 30% to 50% or more, and had to wait more than a year to recover lost ground. I think you are right, in that there is unlikely to be a quick recovery in $RMD. Sure, some of the heavy over-sell may recover over coming months, particularly if we get a few quarters of strong sales growth. But I think it will be a long road back to $35+.
Conversely, one future catalyst is when the clinical trial looking at GLP-1 drugs impact on people diagnosed with OSA is reported. There is a risk that a read out on that study could present another leg down. So, we shouldn't be premature and conclude the rout is over. Equally, the result may be favourable and that might give a favourable bounce.
I have recently gone through the transcript of $RMD's presentation at the Bank of America Global Healthcare Conference on Sept 14th. When I get a moment, I might summarise the key points, if I miss any below.
One of the StrawPeople here has observed here a while ago that $RMD is a well-managed company with lots of levers to pull. The presentation and, in particular, the Q&A shows just how much work they are already putting into this, as most of the Q&A focused on GLP-1 impacts.
For example, they have 17,000 GLP-1 patients already using their connected CPAP products, so they are working to understand how GLP-1 is impacting AHI scores. They might even publish the work at some stage.
The presenting Exec. Rob Douglas COO, pointed out that there isn't a clear "linear" relationship between weight and OSA. I'm trying to unscramble the transcript, but I think he even said that GLP-1 and CPAP might be complementary. For example, for severe OSA sufferers with very high AHI's there can be problems with adherence to CPAP (I think this is due to the higher pressure required and air bypassing the mask seal creating discomfort.) If GLP-1s can reduce the AHI from 40 (severe) to 20 (moderate), patient adherence might be improved as the system can work effectively as a lower pressure. This would actually enhance the effectiveness of the CPAP benefit.
He also commented that if more overweight patients present to primary care for GLP-1s, when they are profiled and diagnosed, the physican might recommend a sleep clinic test, because sleep qualtiy is one of the standard questions asked by cardiologists. So a marketing and education push might be needed here to adjust market positioning with physicians.
There is also a scenario that CPAP is prescribed in parallel with GLP-1, so that the patient gets immediate benefit from CPAP, while the weight loss occurs over a year or two. This is in the event that GLP-1 is proven to reduce OSA.
The point being, with OSA greatly under-diagnosed, if the public demand for weight loss medication results in more presentations of over-weight people for diagnosis, there could actually be an uplift in CPAP demand if it results in increased referrals to sleep clinics. Rob said that the main driver for someone to refer themselves today is a seriously complaining partner ("stop snoring or I'll leave"), although he also described the pathways through cardiology and endocrinology. So the GLP-1 phenomenon might significantly increase the rate of diagnosis of OSA.
Clearly Rob was framing arguments that are positive for $RMD, as you'd expect him to do, but my reason for repeating them here, is to underscore that fact that $RMD have a lot of levers to pull and there may well be ways in which they can turn what appears to be a head-wind from GLP-1 into a tailwind, or at least mitigate the risk. What is encouraging for me, is that nothing he said about GLP-1s was negative. He wasn't trying to knock them, in fact he was positive about their potential to improve health, and seemed to have several ideas about how the GLP-1 revolution might be positive for $RMD.
Bottom line, I agree with you, this will likely take years to play out and so the disruption thesis may well sit there unopposed for some time. (Just as well I'm a long-term investor) Personally, I wouldn't buy $RMD as a quick trade, I bought more because - on balance - I think over the long term the company will do well out of all of this! The Conference on the 14th gave me some of the first practical insights into how that might occur.