Sleep health giant Resmed Inc (ASX: RMD) rarely makes headlines, but the numbers it keeps delivering are hard to ignore.
Investors love companies that never seem to be the most exciting in the room, yet year after year they keep getting bigger, more profitable, and more entrenched in their markets.
Resmed is one of those companies.
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A business built on a massive, underserved market
Sleep apnea affects an estimated one billion people worldwide, yet the vast majority remain undiagnosed.
Resmed sits at the centre of the global effort to change that, manufacturing CPAP devices, masks, and cloud-connected software platforms that help patients manage their condition from home.
The company holds a dominant position in a market with extraordinarily high switching costs: once a patient finds a device and mask combination that works, they rarely change.
This generates a reliable and recurring revenue stream for years, providing a significant competitive advantage.
The numbers back up the story
Resmed delivered another strong quarterly update in early 2026, with revenue growing 11% year-on-year to US$1.29 billion. Operating income also increased 22%.
Device sales continue to accelerate as competitor Philips works through ongoing product recall issues.
Resmed will be looking to take advantage of this situation to further entrench its market position.
The company's software and services segment, which includes its cloud-connected patient management platforms, now generates over US$200 million per quarter and continues to grow at a double-digit rate.
Resmed carries a strong balance sheet with modest debt and generates consistent free cash flow, which it returns to shareholders through a growing dividend.
The AI angle the market is underappreciating
One of the most compelling aspects of the Resmed story is the role artificial intelligence now plays across its platform.
The company processes over 23 billion nights of sleep data, giving it a proprietary data moat that competitors cannot replicate.
Resmed uses this data to improve patient adherence, reduce hospital readmissions, and identify patients at risk of deterioration before they reach the emergency department.
This positions Resmed not only as a device manufacturer, but as a healthcare technology platform, and the market has not yet fully priced in that distinction.
Foolish Takeaway
So why are Resmed shares lagging?
The latest earnings came in as softer than expected, reflecting high expectations baked into the share price.
Investors also worry about the acquisition costs related to the VirtuOx acqusition.
But investors may also see Resmed as a business that is growing revenue and earnings at a steady double-digit pace while deepening its competitive moat.
For Fools who value compounding returns over excitement, Resmed deserves serious consideration.
