Resmed — Key Risks
GLP-1 Weight-Loss Drugs Could Undercut Demand for ResMed's Core Products
ResMed's business is built around treating obstructive sleep apnea (OSA), which is heavily linked to obesity. Pharmaceutical treatments like GLP-1 drugs (such as Ozempic or Wegovy, approved for diabetes and weight loss) could reduce the severity or prevalence of OSA in some patients, potentially shrinking the pool of people who need CPAP devices. The company openly acknowledges it cannot predict how large this effect might be.
Reimbursement Cuts from Government Programs Could Directly Hit Sales
ResMed's customers — home medical equipment (HME) providers and sleep clinics — depend on Medicare and Medicaid reimbursements to pay for its devices. Recent policy changes include a 2.93% reduction to Medicare physician payment rates in 2025, and the newly signed "One Big Beautiful Bill Act" is projected to reduce Medicaid spending by roughly $1 trillion over 10 years and leave at least 11.8 million more people uninsured by 2034. Fewer insured patients means fewer people seeking OSA treatment.
The VirtuOx Acquisition Adds Significant New Regulatory and Legal Exposure
ResMed acquired VirtuOx in May 2025, a company that directly bills Medicare as an Independent Diagnostic Testing Facility (IDTF). Unlike ResMed's prior role as a background vendor, VirtuOx is a direct Medicare supplier — a status that invites far more intense government scrutiny. Critically, VirtuOx already settled a False Claims Act case in 2022 for $3.2 million and remains under a Corporate Integrity Agreement with federal health authorities through 2027, meaning any compliance slip could result in exclusion from federal healthcare programs.
China's Rare Earth Export Controls Threaten the Supply Chain
China recently introduced license requirements and volume caps on rare earth materials and finished magnets — components that are integral to assemblies used in ResMed's devices. Because some suppliers are single-source providers, any sustained disruption could force ResMed to redesign components, build emergency inventory, or pay sharply higher input costs. The company manufactures substantially all of its products outside the U.S., making it particularly exposed to this kind of geopolitical supply shock.
Returning Competitor Philips Creates Unpredictable Demand Shifts
Philips, historically a major CPAP competitor, has been largely sidelined in the U.S. following a large-scale product recall and a regulatory consent decree. ResMed benefited significantly from this gap. However, Philips' eventual return to full market competition is uncertain in timing but likely, and could quickly erode the market share ResMed captured during Philips' absence.
A Prior Government Settlement Signals Ongoing Legal Sensitivity Around Sales Practices
In 2019, ResMed paid $40.6 million to settle False Claims Act allegations related to providing free services, below-cost products, and interest-free loan guarantees to distributors and sleep labs. The company operated under a Corporate Integrity Agreement until late 2024 as a result. This history means regulators are already familiar with ResMed's sales practices, and any future misstep in how it markets or incentivizes prescribers could attract swift enforcement.
FDA Process Disruptions Could Slow New Product Approvals
ResMed relies on the FDA's 510(k) clearance process to bring new and modified devices to market. Ongoing government staffing reductions, budget pressures, and agency restructuring have increased review times and unpredictability. Any prolonged slowdown could delay product launches, giving competitors time to fill gaps in the market and stalling revenue from new offerings.