ResMed -20% YTD|Beat Every Number, Still Hit a 2-Year Low

The Day the ASX Finally Stopped Falling

Eight straight days of losses. That was the streak the Australian sharemarket finally snapped on Friday, May 1, climbing 0.74% to close at 8,729 points on the S&P/ASX 200. It was not a dramatic reversal — the index finished the week still down 0.65% — but after what Markets at Midday called "eight straight days of declines" that had wiped 3.2% off the benchmark, even a modest green day felt like breathing room.

The recovery had a clear engine: materials. Iron ore, lithium, and rare earths led the charge, with miners surging as oil prices pulled back from intraday four-year highs. Brent crude had briefly spiked to US$126 a barrel on US-Iran tensions before retreating to around US$114. That pullback gave resources stocks room to run. The Evening Wrap noted that 10 of 11 ASX sectors finished higher, with 143 of 200 stocks in the green.

Two company reports shaped the narrative. ANZ delivered a 70% jump in cash profit to $3.8 billion for its first half, beating consensus, though CEO Nuno Matos issued a pointed warning: the Iran war, he said, is "still at the beginning," and households are already absorbing higher transport costs. Coles added another layer of tension, reporting a 3.1% rise in quarterly sales revenue with eCommerce up 24.8%, but simultaneously warning that supplier pressure to raise prices is mounting. As the AFR reported, "price increase requests are rising."

The copper juniors surged. Alvo Minerals rocketed 69% after drilling success at its Brazilian copper-zinc project. Barry FitzGerald's column noted that "copper equities have been treated just as harshly as the rest of the mining market in recent weeks despite prices for the red metal continuing to trade in record territory." At US$5.90 per pound, copper remains 31% above its 2025 average. The Qantas story ran in the background — domestic capacity cuts extended to September, trans-Tasman routes trimmed, all of it driven by jet fuel costs that show no sign of normalising.

It was, by almost every measure, a day where the market found footing. And then there was ResMed.

The Earnings Beat That Nobody Wanted

ResMed opened May at a fresh two-year low of A$28.40. That was after it reported third-quarter results that beat analyst expectations on every line that matters.

Revenue came in at US$1.43 billion, up 11% year-over-year, ahead of consensus. Non-GAAP diluted earnings per share hit US$2.86, versus estimates of US$2.79 to US$2.82 — a clean beat. Gross margins expanded 290 basis points to 62.8%. Operating cash flow was US$554 million for the quarter alone. The company returned US$262 million to shareholders through dividends and buybacks. CEO Mick Farrell described continued strength across all geographies and product lines.

The stock finished the week at A$28.73, down 20.57% year-to-date. Both the ASX-listed CDI and the parallel NYSE shares fell in post-earnings trading. Analysts described it as a "good numbers, bad tape" moment — a phrase that contains something important.

The standard explanation is macro override. When oil is near US$120 and the ANZ CEO is warning that an active war in the Strait of Hormuz is "still at the beginning," investors rotate toward assets with direct commodity exposure. Healthcare, even profitable healthcare, becomes a lower priority. ResMed's revenues are in US dollars, its costs partly global, and its growth story is long-cycle — none of which competes for attention when copper juniors are up 69% in a session and iron ore is rallying.

But macro override only goes so far as an explanation. The deeper issue is the GLP-1 overhang. Since weight-loss drugs like Ozempic and Wegovy emerged as viable treatments for obesity-related sleep apnoea, ResMed's market has faced a persistent question: if the underlying condition can be treated pharmacologically, what happens to device demand over a 5 to 10-year horizon? ResMed's actual device sales have continued to grow — Q3 showed no evidence of GLP-1 cannibalisation in current revenue. But the market has decided that the future risk matters more than the current quarter, and no single earnings beat changes that calculus.

Here is where the tension tightens. The stock has now declined 20.57% from the start of the year while the underlying business has delivered double-digit revenue and earnings growth in each reported quarter. That divergence does not sustain indefinitely. Either the business slows — GLP-1 adoption accelerates faster than ResMed can offset with new products and software — or the market is pricing in a scenario that the financials have not yet confirmed. One of those two is wrong. Both have been wrong before in opposite directions.

There is a precedent worth noting. In 2024, ResMed suffered a sharp de-rating when GLP-1 fears first crystallised, falling roughly 30% in months before recovering as actual device volumes held up. That recovery took the better part of a year and required consistent data showing no cannibalisation. The setup now has echoes: the fear is ahead of the data, and the business continues performing. But the 2024 recovery also required a broader macro environment willing to pay for growth stories. With Brent crude near four-year highs and a war actively distorting energy markets, that environment is not currently on offer.

What Breaks the Pattern

The evidence through May 1 leans toward a temporary dislocation rather than a fundamental repricing. ResMed's operating cash flow of US$554 million in a single quarter — US$262 million returned to shareholders in the same period — is not a company whose economics are deteriorating. The margin expansion, at 290 basis points on gross margin, suggests cost structure is improving, not eroding. If GLP-1 adoption were already denting device volumes, it would show up in revenue growth rates first, then margins. Neither has happened.

What sustains this lean: if oil prices stabilise below US$110 and the Iran conflict does not escalate to full Strait of Hormuz closure, risk appetite returns to quality growth names. ResMed, at a 20% year-to-date discount, becomes a relative value within ASX healthcare. The next quarterly result — expected in late July — will either confirm the trend or provide the first real cannibalisation signal.

What breaks it: if Brent crude holds above US$115 through June, macro headwinds continue to crowd out healthcare sentiment regardless of fundamentals. And if ResMed's Q4 results show any deceleration in device revenue growth — even from 11% to 7% — the market will treat it as GLP-1 confirmation, not a natural slowdown. The sell-off would be disproportionate to the data, as it was on Friday. But that is how markets behave when a narrative is already priced in.

The benchmark to watch is not a ResMed number. It is oil. If Brent retreats below US$105, the macro override that is currently suppressing quality growth stocks weakens. If it holds above US$115 into June, the weight of the narrative stays on the wrong side of ResMed's earnings. Friday's beat was real. Whether real beats matter in this market is the question that May will have to answer.