Ann: ResMed Announces Results for the First Quarter of FY2024, page-39

Thanks for posting.

I too have a solid holding in the company and I can relate to your post. I listened to Mick Farrell speak at Morgan Stanley's fireside chat. Even though I purchased more shares recently, I was a little bemused by Micks speaking. At times he sounded desperate and kept on referring to the "funnelling" effect this Ozempic drug would create for Resmed. But it's the continued references to Total Addressable Markets (TAM's) that I don't particularly like. The reason for that is that I usually associate businesses that are unprofitable who have "a story" and bang on about TAM's. Resmed are better than that. Read Peter Lynch's book One up on Wall Street and he warns of businesses who continually reference TAM's and calls them out as red flags. That's not my opinion, it's Peter Lynch's opinion. To be fair, I don't think that a company like RMD would fall into that bracket of unprofitable with a story to tell. RMD has been and still is a terrific business.

But you're right to ask yourself the questions that you've posed.

I dislike the non-stop trading of this stock courtesy of it's dual listing. There's been many occasions where the swings have been huge post release of quarterly results. If you go back to previous results, there's been big jumps in share price movement here in Australia, only then to be curtailed by an equally large swing to the downside when trading on the NYSE. I also think that the reporting of quarterly results is overdone.

Also, I think that you're charts need to go further back to obtain a clearer picture of what has transpired since the Philips recall in June 2021. So let's look at these numbers starting from the Quarter 1 - 2022 which is the first full quarter post the Philips recall, to Quarter 1 - 2024


Revenue - An increase of 22% since Philips recall.



Net Income - An increase of 8% since Philips recall



Non-GAAP EPS - An increase of 8.7% since Philips recall

So, when I look at what's happened since the Philips recall, for obvious reasons, Resmed hasn't been able to fully capitalise due to chips shortages, supply chain issues etc etc all thanks to Covid and no fault of Resmed.

But as an investor in this company, I think that you'd be crazy not to ask yourself these three questions in relation to Resmed's future:
1. How much of an impact will the new drugs have on Resmed's sales going forward?
2. How much of an impact will the eventual re-instatement of Philips (if at all) impact future sales?
3. If the TAM is so large, then what's the likelihood of another drug being developed specifically to treat OSA or even new devices by companies who'll want a stake in that TAM?

Yes, I'm aware of Apnimed. I'm also aware that Mick Farrell stated that when Philips return to market, they'll be starting from the bottom.

I've recently purchased more shares and increased my holdings. However, Resmed is a mature business and there's something that's niggling away in the back of my mind suggesting that the market surely can't have it so horribly wrong? The initial cause of the sudden downfall in share price wasn't really because of contracting gross margins. It was due to the fact that the EPS didn't meet expectations and as you can see for yourself, an increase in EPS of 8.7% over 2 years when your major competitor is completely out of action is disappointing, and then came Ozempic...

I'm not saying that the market is right. But I do think that the markets caution is warranted.