Orient Securities has released a research report expressing optimism about the sustained growth in home respiratory therapy demand, the increasing value of consumable reorders, and the industry opportunities driven by international leaders' expansion. The firm recommends focusing on: 1) companies with complete product layouts for devices, masks, and accessories that can leverage device installations to expand consumable reorders from existing patients; 2) self-branded enterprises with overseas registrations, channel coverage, and localized service capabilities that extend product sales to long-term patient management; and 3) manufacturers deeply integrated into international leaders' supply chains, possessing technical, yield, and scaled delivery advantages in high-frequency consumable segments like liquid silicone masks and precision components. Investment targets include BMC Medical (301367.SZ, Buy) and Wellcare Medical (301363.SZ, Buy).
Key Drivers of Growth
In August 2026, ResMed published its fiscal year 2026 results (corresponding to the natural year from June 30, 2025, to June 30, 2026), reporting revenue of $5.65 billion, up 10% year-over-year, and net profit of $1.52 billion, a 9% increase. Demand remains resilient, and concerns about potential impacts from GLP-1 drugs are diminishing. In the first half of fiscal 2026, Eli Lilly's Zepbound achieved sales of $9.09 billion, rising 60% year-over-year, indicating rapid growth in GLP-1 weight-loss drugs. Concurrently, ResMed's device revenue grew 7% at constant currency, driven primarily by demand and volume increases. Orient Securities believes that the simultaneous acceleration of GLP-1 penetration and PAP device sales suggests that earlier market expectations of weight-loss drugs replacing home respiratory device demand were overly pessimistic. Zepbound is currently indicated for patients with obesity-related moderate-to-severe obstructive sleep apnea. Weight reduction improves the condition over time, and some patients still need to continue using PAP devices. Drug promotion may also raise OSA awareness, screening rates, and diagnosis numbers, meaning GLP-1 drugs are more likely to alter treatment combinations for some patients, boosting home respiratory device demand rather than causing a contraction.
Consumable Revenue Outpaces Device Sales Growth
From fiscal 2024 to fiscal 2026, ResMed's device revenue grew by 7%, 9%, and 7% at constant currency, respectively, while mask and other product revenue increased by 13%, 11%, and 12% over the same period, consistently outpacing device growth for three consecutive years. Orient Securities suggests that as the installed base of PAP devices continues to expand, the industry's growth engine is shifting from new device sales to long-term consumable reorders from existing patients. Unlike devices with longer replacement cycles, consumables such as masks, tubing, and filters are characterized by high usage frequency and shorter replacement intervals, offering stronger revenue stability and continuity. Consequently, the focus of industry competition is evolving from simply acquiring new patients to improving treatment adherence, enhancing comfort, and establishing continuous supply systems, increasing the importance of lifetime value per patient.
Leader Expansion Drives Upstream Orders, Benefiting Quality Suppliers
ResMed's capital expenditure on property, plant, and equipment in fiscal 2026 was $160 million, a 74% year-over-year increase. The company's full-year non-GAAP gross margin improved by 2.4 percentage points to 62.4%, primarily driven by productivity enhancement initiatives. Orient Securities notes that the industry leader's continued investment in production and operational infrastructure supports demand for upstream components such as liquid silicone parts and precision components. However, the simultaneous improvement in gross margins implies higher requirements for suppliers in terms of cost reduction, yield rates, and delivery efficiency. As international leaders ramp up capital spending and pursue production efficiency improvements, upstream supplier competition will increasingly focus on cost control, product yields, delivery stability, and collaborative development capabilities. Companies with advantages in automated production and scaled manufacturing are well-positioned to capture more order share.
Risk Factors
Risks include lower-than-expected growth in the diagnosis and treatment penetration of sleep apnea globally; adjustments to overseas medical insurance reimbursement policies and consumable replacement cycles; and intensified industry competition leading to declines in product prices and profitability.