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ResMed CEO: Company Set to 'Explode'

It looks like Washington has done ResMed a favor.

Medicare regulators have allowed coverage for in-home sleep apnea testing. This is huge because only 10% of the estimated 35 million people with the disease are being treated, at least in part because prior to this sleeping overnight at a clinic had been the only way to get tested. Now ResMed , the only pure-play publicly traded company in the business, should see a boost in business.

Home testing “vastly simplifies the process,” ResMed CEO and President Kieran Gallahue told Cramer on Wednesday, and it will “give more patients access to quality care…at a lower cost.”

Sleep apnea is directly linked to diabetes, obesity, blood pressure and heart failure, problems “that are costing healthcare systems billions of dollars,” Gallahue said. ResMed’s products, which both test for and treat the disease, reduce these costs.

ResMed’s reducing some costs of its own, the CEO said. The company’s introducing a new flow of high-margin products, opening manufacturing operations in Asia and integrating what Gallahue called “automotive techniques and technologies” to reduce their purchasing price on components.

Plus, the ResMed is sitting on a nice wad of cash, $320 million worth. The company used $100 million over the past year to buy back its own stock.

Gallahue said that ResMed only has 10% market penetration right now, so there’s plenty of room for growth.

“It’s going to continue to explode,” he said. “We are where you want to be in healthcare today.”

Cramer’s call? “You gotta stay in this one.”





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