Is ResMed (RMD) a Buy for Long-Term Growth Investors?

In the ever-evolving landscape of healthcare technology, few companies have demonstrated the resilience and innovation of ResMed (RMD). As the global demand for sleep and breathing health solutions accelerates, ResMed's financial performance and strategic positioning in an underpenetrated niche market warrant a closer look for long-term growth investors.

Sustainable Earnings and Cash Flow Momentum

ResMed's recent financial results underscore its ability to generate consistent earnings and robust cash flow. For the fourth quarter of fiscal year 2025 (FY2025), the company reported a 10% year-over-year revenue increase to $1.3 billion, with operating income rising 19% to $454.5 million. This momentum carried into Q1 FY2026, where revenue grew 9% to $1.3 billion, and operating income climbed 15% to $446.5 million according to Q1 FY2026 results. Over the full FY2025, ResMed's revenue reached $5.1 billion, with operating cash flow surging to $1.8 billion and net income rising 37% to $1.4 billion as reported in Q4 FY2025 results. These figures highlight a business model that not only scales efficiently but also converts top-line growth into strong bottom-line results.

The company's cash flow generation is particularly compelling. In Q4 FY2025, operating cash flow hit $539 million according to Q4 FY2025 results, while Q1 FY2026 saw $457 million according to Q1 FY2026 results. Such liquidity provides ResMed with flexibility to reinvest in innovation, reduce debt, or return value to shareholders-key attributes for long-term investors seeking sustainable growth.

A Resilient Niche Market with Expanding Horizons

ResMed operates in the sleep apnea device market, a sector poised for significant expansion. While estimates vary, most projections indicate a rapidly growing industry. For instance, the market was valued at $7.11 billion in 2025 and is forecasted to reach $13.18 billion by 2034, reflecting a compound annual growth rate of 7%. Other reports suggest even higher growth, with a CAGR of 7.8% from 2025 to 2034 according to Resmed's Q1 FY2026 results. This expansion is driven by rising awareness of sleep disorders, aging populations, and the increasing adoption of home-based therapies.

ResMed's dominance in this market is well established. In 2024, it held 50-60% of the obstructive sleep apnea (OSA) treatment market, and by 2025, its market share remained around 40% according to Q1 FY2026 results. The company's leadership stems from its early adoption of cloud-connected continuous positive airway pressure (CPAP) devices and digital platforms like AirView and myAir, which enable personalized therapy and remote monitoring. These innovations not only enhance patient outcomes but also create high barriers to entry for competitors.

Strategic Innovations and Barriers to Entry

ResMed's competitive advantages extend beyond market share. Its acquisition of VirtuOx, Inc., a leader in diagnostic testing, has enabled end-to-end solutions for sleep apnea management. This vertical integration strengthens customer retention and reduces reliance on third-party providers. Additionally, the company's focus on artificial intelligence (AI) and data analytics-leveraging its extensive patient data ecosystem- positions it to lead in predictive healthcare.

Macroeconomic headwinds have done little to deter ResMed's growth. Despite inflationary pressures and supply chain challenges, the company's emphasis on connected health technologies and digital platforms has insulated it from broader economic volatility. Its residential care software portfolio further diversifies revenue streams, reducing exposure to any single market segment.

Conclusion: A Convincing Case for Long-Term Investors

For investors seeking companies with durable competitive advantages and growth in resilient niches, ResMed presents a compelling case. Its financial performance demonstrates a mastery of operational efficiency and cash flow generation, while its market leadership in sleep apnea-a sector with structural growth drivers-ensures long-term relevance. Strategic innovations, including AI-driven platforms and vertical integration, further solidify its moat.

While no investment is without risk, ResMed's ability to adapt to macroeconomic challenges and its dominant position in a high-growth industry make it a strong candidate for long-term portfolios. As the global demand for sleep and breathing health solutions accelerates, ResMed is well-positioned to deliver sustained earnings and cash flow growth.