ResMed (RSMDF), the global leader in sleep apnea and respiratory care devices, is a company most investors think they understand. But hidden within their latest financial data lies a seismic shift that's poised to redefine their future – and it has nothing to do with CPAP machines.

Wall Street is fixated on ResMed's hardware, laser-focused on quarterly fluctuations in device sales and supply chain hiccups. They're missing the forest for the trees, overlooking the quiet, yet explosive growth of ResMed's Software as a Service (SaaS) division. This isn't just a side hustle for ResMed; it's rapidly becoming the heart of their business.

While analysts pore over the 7.2% year-over-year quarterly revenue growth – respectable, but not earth-shattering – they're ignoring a critical detail: ResMed doesn't break down revenue by segment. We don't know precisely how much of that growth is driven by SaaS, but all signs point to a disproportionate contribution.

Consider the evidence: ResMed's been on an aggressive acquisition spree, snapping up SaaS companies like Brightree, MatrixCare, HEALTHCAREfirst, and MEDIFOX DAN. These aren't small, niche players; they're established leaders in healthcare software, serving home medical equipment providers, senior living facilities, and hospice organizations.

ResMed's ambition is clear: to build a comprehensive, interconnected ecosystem of healthcare software that extends far beyond sleep apnea. They're creating a platform to manage patient care across a vast spectrum of out-of-hospital settings.

This is a strategy with massive upside potential. The global healthcare SaaS market is projected to reach a staggering $72.3 billion by 2028, growing at a compound annual growth rate of over 20%. ResMed, with its established brand, global reach, and rapidly expanding software portfolio, is uniquely positioned to capture a significant chunk of this market.

Here's where the hypothesis gets interesting. Let's assume, conservatively, that ResMed's SaaS revenue is currently contributing around 20% of their total revenue. Given their recent acquisitions and the industry's overall growth trajectory, it's reasonable to expect their SaaS revenue to double within the next three years.

Hypothetical ResMed SaaS Revenue Growth

This chart illustrates the potential growth of ResMed's SaaS revenue based on the assumption of doubling within the next three years, starting from a conservative estimate of 20% of total revenue in 2024. Actual results may vary.

If that happens, ResMed's SaaS segment could be generating over $1.8 billion in annual revenue by 2027. That's a game-changer. Not only would it significantly boost their overall revenue, but it would also transition ResMed into a high-growth, high-margin software company, commanding a significantly higher valuation multiple than a traditional medical device manufacturer.

This software revolution is happening under the radar, masked by the familiarity of their hardware business. But make no mistake, ResMed is no longer just a sleep apnea company. They're building a software empire, one acquisition at a time, and those who recognize this transformation early are poised to reap the rewards.

"Fun Fact: ResMed's founder, Dr. Peter Farrell, holds over 100 patents! Perhaps his innovative spirit is driving this software-focused shift as well."