ResMed (ASX: RMD) has gone from strength to strength in the sleep therapy market, but it appears the company could now also make an impact on the treatment for heart failure.
Based on evidence gathered from small trials, patients with breathing disorders that are associated with heart failure gain some relief and an improved standard of living when using the company's AutoSet CS adaptive servo-ventilation machine while they sleep.
The company began a trial of 1,325 patients across Europe and Australia in an attempt to convince cardiologists of the benefits and relief such a method can provide. ResMed believes that implementing such a method could, in many situations, prevent death or hospital visits and, in doing so, save governments around the world substantial costs related to treating heart failure.
As reported by The Australian Financial Review, up to two-thirds of patients with heart failure are also sufferers of some sort of sleep-disordered breathing. Whilst ResMed's therapy amongst heart failure patients remains low, this could be a significant area of growth for the company in the future based on a successful trial outcome.
The trial will conclude in 2015 and the findings should be published sometime in 2016.
A good opportunity to buy
Despite having last week announced a 5% increase in revenue compared to the previous corresponding period, as well as a 14% rise in net income, investors punished ResMed's shares, sending the stock plunging from its high of $5.90 to where it sits today at $5.43 – an 8% drop.
Whilst investors were clearly displeased with the record results, no damage has been done to the business and the future looks as bright as ever. What's more, CLSA maintains a 12-month price target of $7.20 per share, which represents a 32.6% gain compared to today's valuation.
Although it has already delivered substantial returns over the last couple of years, it's not too late to pick up an interest in this company.
Foolish takeaway
ResMed is part of the rapidly expanding Australian healthcare sector and while it poses as a very attractive company to hold onto for the long-term, others have also made an impact. Cochlear (ASX: COH) is another company that is currently trading at an attractive valuation whilst Sirtex Medical (ASX: SRX) has also shown potential.
