38 million untreated patients

Somnomed with a more desirable product than cpap is set to get more than its share. more diagnosis as a result of home testing means more people choosing between cpap and som's MAS product.

the larger segment of sleep apnea market is patients in the mild to moderate category .Som's MAS product is perfectly suited to those patients, after all who wants an air hose for a bed partner , not to mention the noise from the machine waking others.

brokers calling cpap company Resmed oversold and thats a company trading on around 35 times earnings. if they had a look at the growth potential for somnomed and its low valuation of around $22m they would be beside themselves (imo).


http://www.somnomed.com.au/asx-updates/SOM-Presentation-ASX-VS-June%2008.pdf






resmed makes continuous positive airway pressure devices – sleep-apnea machines, in layman’s terms – and the company controls 40% of the market in a duopoly with Respironics.

ResMed stock had dropped, though, after Medicare’s administrators introduced competitive bidding to bring down the price of sleep-apnea machines. But Cramer said he thought Wall Street overreacted, especially since less than half the company’s sales come from the U.S., and only 20% of that is Medicare-related. There’s also the chance that, while the first round of bidding got underway Tuesday, Washington could delay the second round, due in mid-2009.

The growth catalyst for ResMed is the increased awareness, and as a result increased diagnosis, of sleep apnea. The company estimates that 35 million potential patients aren’t being treated. As doctors realize just how pervasive this disease is, ResMed’s business should pick up.

Another thing that should boost sales at ResMed is that Medicare administrators have made home-diagnostics for sleep apnea a reimbursable treatment. This is a big deal because most sleep-apnea patients are directed to sleep labs, but never go because it’s such a hassle. And since ResMed makes both the sleep-apnea machines and the machines that test for the disease, the company’s in great position to profit now that it looks like more people will be getting tested and treated.

Cramer said ResMed could go as high as $50, a 12-point bump from Tuesday’s close. And even though the takeover rumors pushed the stock up 7% today, Cramer said the growth potential here means the stock is still a buy. Of course, it’s probably a good idea to wait for a pullback, though.