ResMed (RMD): SAVE Results A Negative Headline With Delayed Importance - Needham
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Needham & Company analyst, Mike Matson, reiterated his Underperform rating on shares of ResMed (NYSE: RMD) after the SAVE (Sleep Apnea Cardiovascular Endpoints) trial results were presented at the European Society of Cardiology and published in The New England Journal of Medicine this weekend. The SAVE results showed that treatment of obstructive sleep apnea with CPAP did not reduce cardiovascular events.
Clearly this is a negative headline for RMD but the analyst does not expect it to affect the CPAP market in the near-term or to result in insurers ending coverage for CPAP given other benefits of the treatment (including reduced blood pressure, reduced sleepiness, lower accident rates, and improved mood). The industry is likely to focus on CPAP compliance in the trial which was an average of just 3.3 hours per night. However, even when using only the CPAP-adherent (4+ hours per night) subgroup (n=561), most cardiovascular events rates were still not different from the usual care group with the exception of stroke and a composite endpoint of cerebral events. This could cause insurers to increasingly focus on compliance and could drive more insurers to require continuous compliance data for coverage of CPAP products. Additionally, it may lead to less enthusiasm for CPAP treatment among cardiologists which have become an increasing source of CPAP referrals.
On a side note, Tricare is latest insurer to cut reimbursement in wake of Medicare's bidding cuts.
Shares of ResMed closed at $69.03 yesterday.
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