ResMed
(NYSE: RMD)
stock is down today, even though the maker of CPAPs and other respiratory treatment devices had Street-beating Q2 results.
The results, out after market close yesterday evening, came more than a month after the FDA approved Eli Lilly’s GLP-1 drug Zepbound (tirzepatide) as the first and only prescription drug to treat sleep apnea. CMS soon confirmed that Medicare would cover Zepbound for sleep apnea.
During ResMed’s earnings call with analysts yesterday evening, GLP-1 drugs came up continually. CEO Mick Farrell argued that Zepbound — along with new sleep apnea monitoring features on smartwatches — will prove to be a gateway to people using CPAPs to treat their chronic obstructive pulmonary disease.
“One thing is clear, the real-world evidence shows that the combination of a GLP-1 prescription and a PAP prescription is powerful for patients with obstructive sleep apnea,” Farrell said.
However, he also said that Zepbound had yet to have a significant affect on ResMed’s sales since pharmaceutical companies usually take at least six months to educate health providers before starting direct-to-consumer advertising. The sales benefits of the drug becoming a combo therapy with CPAPs would take time.
“It’s not a one-and-done, it’s not a single-step change, it’s a gradual improvement in that patient flow. So I think we’re in the very early innings of the flow of extra patients from GLP-1s and from consumer tech, Farrell said.
RMD shares were down more than 6% to $240.05 apiece by midday trading today. Needham & Co. analysts kept their rating of the company’s shares at Hold, citing GLP-1s.
A Street-beating Q2 for ResMed
San Diego–based ResMed earned nearly $345 million, or $2.34 per share, off of $1.282 billion in revenue for the second quarter ended Dec. 31, 2024. The bottom and top lines were up 65% and 10%, respectively.
Adjusted to exclude one-time items, ResMed’s EPS was $2.43, 11¢ ahead of the Wall Street analyst consensus of $2.32 EPS and $1.267 billion in sales.
“Our second quarter fiscal year 2025 top-line growth, margin expansion, and double-digit EPS growth were the result of increased demand for our sleep health and breathing health products and digital health solutions that people love, as well as our laser-focus on operational excellence,” Farrell said in a news release.