ResMed Inc. (ASX: RMD) shares are back in form — up more than 75% since bottoming out in October 2023.

You might be wondering, what happened in October 2023? Well back then, ResMed shares were down 46% from their all time high following significant market concerns that Ozempic, Wegovy and other GLP-1 drugs could make ResMed products obsolete in the sleep apnea market.

Those concerns seem to have been overdone, and for investors who held through the slump, it's been a well-earned sigh of relief.

For everyone else? The question now is: is it still worth buying ResMed shares? Or has the easy money already been made?

Let's take a look.

Back on the up

ResMed's share price rebound has been powered by two things: strong earnings and receding fears/changes in investor sentiment.

In terms of earnings, ResMed is doing well. Gross margins have expanded, costs are under control, and device sales (especially in the US) continue to grow steadily.

Most analysts expect earnings per share to increase by over 20% this year and at least 7% the year after, with consistent earnings growth forecast over the next five years.

On the sentiment front, investor fears about weight-loss drugs like Ozempic eating into ResMed's addressable market appear overdone. GLP-1 drugs might help with obesity, but concerns about them significantly disrupting the sleep apnea market have eased. ResMed maintains that weight loss drugs complement but do not replace CPAP therapy as the gold standard in treatment for sleep apnea patients.

So does that mean all is clear on the competitive front? Not quite.

Competition is heating up

Apnimed's AD109 has entered the chat. It's a once-daily pill designed to treat obstructive sleep apnea (OSA). In other words, it's a direct threat to ResMed.

AD109's latest phase 3 trial results were positive, showing a 55.6% reduction in AHI (the key OSA severity metric) and full disease control in 22% of patients.

Sounds scary for ResMed, right?

Not quite.

The results showed that most of the benefit was concentrated in mild OSA patients, not the moderate-to-severe group that typically uses ResMed's CPAP devices. Analysts at Morgan Stanley, Macquarie, and UBS have all pointed out that the pill is likely to have limited overlap with ResMed's core customer base, at least initially.

Still, the competitive landscape is changing. Apnimed, GLP-1s, neuromodulation implants (and who knows what else those smart folks are working on) are all gunning for a piece of the OSA pie.

Foolish bottom line

ResMed has survived part 1 of a major threat from GLP-1s. This is a testament to the quality of its products and this business. I think ResMed shares make a good addition to a well-diversified and long-term-focused portfolio.

Does that mean it will be an easy ride from here on? Certainly not. If anything, I expect more twists and turns along the way, and if you can handle the volatility, those too might be good buying opportunities.