The rise of GLP-1 obesity drugs like Ozempic and Wegovy has been one of the most covered investment stories of the past two years.
For ResMed Inc (ASX: RMD), the debate has centred on a single question: If millions of people lose weight and no longer suffer from sleep apnea, what happens to demand for CPAP machines?
It is a fair question, and for most of 2025, the market answered it by selling ResMed shares aggressively, at one point sending them to a multi-year low as investors priced in an existential threat to the company's core business.
Today, the evidence suggests that fear was significantly overstated, and that GLP-1 drugs may actually be one of the most powerful demand drivers ResMed has encountered in years.
Image source: Getty Images
Why the fear made sense initially
The bear case was not irrational.
Between 70% and 90% of obstructive sleep apnea cases are driven by obesity, meaning a drug that reliably reduces body weight could logically reduce the addressable market for CPAP devices over time.
That concern became more acute when Eli Lilly's GLP-1 drug Zepbound received FDA approval to treat obstructive sleep apnea directly, without requiring a CPAP machine.
This marked the first time a pharmaceutical had been approved as an alternative to device therapy for the condition.
ResMed shares fell sharply on that news, and the stock spent much of 2025 in what analysts described as the penalty box, maintained on watch lists but held back from buy recommendations pending clarity on whether GLP-1 adoption would materially erode device demand.
But the real-world data tells a different story
The most important piece of evidence came from ResMed's own Q3 FY 2026 earnings call, where CEO Mick Farrell presented new data drawn from a cohort of 1.7 million de-identified patients.
The finding was striking.
PAP patients who subsequently start GLP-1 therapy show higher PAP adherence rates than patients on PAP alone, with two-year resupply rates 5.1% higher and three-year resupply rates 6.2% higher.
In other words, patients who take GLP-1 drugs while using CPAP therapy are more likely to keep using their devices, not less. Farrell went further, stating directly on the call:
We believe GLP-1s are truly a megatrend, and a once-in-a-generation demand-gen opportunity for ResMed Inc. Both GLP-1s and wearables alike are driving more patients to talk with their doctors and ultimately, we believe this will lead to more patients coming into the ResMed Inc. ecosystem.
Why GLP-1s are actually driving more patients to ResMed
As GLP-1 drugs become mainstream and patients visit doctors more frequently to manage their weight, they are also being screened for obesity-related conditions they may not have known they had, including sleep apnea.
According to ResMed, approximately one billion people worldwide are affected by sleep apnea, the vast majority of whom remain undiagnosed.
GLP-1 adoption is bringing millions of those undiagnosed patients into the healthcare system for the first time, and a meaningful proportion of them are receiving sleep apnea diagnoses and CPAP prescriptions as a result.
Furthermore, a meta-analysis published in GeroScience showed that individuals with sleep apnea have a 33% higher risk of developing dementia, and that sleep apnea was associated with a 45% increased risk of Alzheimer's disease.
That evidence is motivating payers, health systems, and physicians to screen and treat sleep apnea more aggressively than ever before.
The financial performance backs it up
ResMed's most recent quarterly results leave little doubt about the health of the underlying business.
In Q3 FY 2026, the company delivered revenue of US$1.29 billion, up 11% year on year, with operating income rising 22% and gross margins improving to 58.9%.
The software and services segment, which manages patient data and remote monitoring across more than 23 billion nights of sleep data, grew at a double-digit rate and now generates more than US$200 million per quarter.
ResMed shares remain down in 2026, a hangover from the GLP-1 fear trade that has not yet fully unwound.
Foolish Takeaway
ResMed was sold down on a fear that turned out to be wrong, or at least far less threatening than investors assumed.
The company's own data now shows that GLP-1 adoption is increasing CPAP adherence, bringing more undiagnosed patients into the healthcare system, and creating what management has described as a once-in-a-generation demand opportunity.
For investors who can look past a year of negative sentiment and focus on what the numbers actually say, ResMed looks like one of the more interesting large-cap healthcare opportunities on the ASX today.
