Year-over-year revenue grows 20%, operating profit up 21%, non-GAAP operating profit up 18%

Revenue increased by 20% to $904.0 million; up 19% on a constant currency basis

Gross margin of 56.0%; non-GAAP gross margin contracted 270 bps to 57.2%

Income from operations increased 21%; non-GAAP operating profit up 18%

Diluted earnings per share of $1.39; non-GAAP diluted earnings per share of $1.51

RMD First Quarter 2022 Earnings Press Release – October 28, 2021

Revenue

Gross margin ^(B)

Non-GAAP gross margin ^(B)

Selling, general, and administrative expenses

Research and development expenses

Income from operations

Non-GAAP income from operations ^(B)

Net income

Non-GAAP net income ^(B)

Diluted earnings per share

Non-GAAP diluted earnings per share ^(B)

In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we provide certain financial information on a “constant currency” basis, which is in addition to the actual financial information presented. In order to calculate our constant currency information, we translate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period. However, constant currency measures should not be considered in isolation or as an alternative to U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP.

See the reconciliation of non-GAAP financial measures in the table at the end of the press release.

Revenue grew by 19% on a constant currency basis, driven by increased demand for our sleep and respiratory care devices and increased demand following a recent product recall by one of our competitors, partially offset by decreased COVID-19 related demand for ventilators.

The current quarter did not include material incremental respiratory care revenue from COVID-19 related demand whereas the prior year quarter included incremental revenue of approximately $40.0 million. Excluding the impact of incremental respiratory care revenue associated with COVID-19 in the prior year quarter, revenue increased by 25 percent on a constant currency basis.

Revenue in the U.S., Canada, and Latin America, excluding Software as a Service, grew by 22 percent, primarily due to the factors discussed above and recovery of core sleep patient flow that was previously impacted by COVID-19. Excluding the prior year impact of incremental respiratory care revenue associated with COVID-19, revenue increased by 28 percent.

Revenue in Europe, Asia, and other markets grew by 21 percent on a constant currency basis, primarily due to the factors discussed above and strong sales across our mask product portfolio. Excluding the prior year impact of incremental respiratory care revenue associated with COVID-19, revenue increased by 29 percent on a constant currency basis.

Software as a Service revenue increased by 6 percent, due to continued growth in resupply service offerings and stabilizing patient flow in out-of-hospital care settings.

RMD First Quarter 2022 Earnings Press Release – October 28, 2021

Gross margin decreased by 230 basis points and non-GAAP gross margin decreased by 270 basis points, mainly due to higher manufacturing costs, incremental freight costs, and lower average selling prices.

Selling, general, and administrative expenses increased by 10 percent on a constant currency basis. SG&A expenses improved to 19.5 percent of revenue in the quarter, compared with 21.1 percent in the same period of the prior year. These changes in SG&A expenses were mainly due to increases in employee-related expenses.

Income from operations increased by 21 percent and non-GAAP income from operations increased by 18 percent.

Net income grew by 14 percent and diluted earnings per share grew by 14 percent. Non-GAAP net income grew by 20 percent and non-GAAP diluted earnings per share grew by 19 percent, predominantly attributable to strong sales.

Operating cash flow for the quarter was negative $65.7 million and was impacted by a payment to the Australian Tax Office of $284.8 million, which was the settlement amount of $381.7 million net of prior remittances. After adjusting for this payment, our operating cash flow for the quarter was $219.1 million, compared to net income in the current quarter of $203.6 million and non-GAAP net income of $222.0 million. During the quarter we paid $61.2 million in dividends.

Introduced the AirSense 11 in the U.S., ResMed’s next-generation PAP (positive airway pressure) device designed to help millions of people worldwide with sleep apnea start and stay on therapy to treat and manage obstructive sleep apnea.

Announced the promotion of Bobby Ghoshal to President of ResMed’s SaaS business.

Presented new research at the European Respiratory Society (ERS) International Congress 2021 including the landmark ALASKA study, “CPAP Termination and All-Cause Mortality: a French Nationwide Database Analysis,” that concludes people with obstructive sleep apnea who continue PAP therapy are 39% more likely to survive than OSA patients who don’t.

During the quarter, concluded the settlement agreement with the Australian Taxation Office (“ATO”), which fully resolves the transfer pricing dispute for all prior years since 2009. ResMed previously recognized a tax reserve in fiscal year 2021 in anticipation of the settlement.

The net impact of the settlement was $238.7 million ($381.7 million gross less credits and deductions of $143.0 million). The settlement provides closure for historic Australian tax matters and greater clarity into the future.

As a result of the ATO settlement and due to movements in foreign currencies, recognized a $4.1 million reduction in tax credits during the quarter, which was recorded as an increase in income tax expense.

RMD First Quarter 2022 Earnings Press Release – October 28, 2021

RMD First Quarter 2022 Earnings Press Release – October 28, 2021

Net revenue

Cost of sales

Amortization of acquired intangibles ⁽¹⁾

Restructuring - cost of sales ⁽¹⁾

Total cost of sales

Gross profit

Selling, general, and administrative

Research and development

Amortization of acquired intangibles ⁽¹⁾

Total operating expenses

Income from operations

Other income (expenses), net:

Interest income (expense), net

Loss attributable to equity method investments

Other, net

Total other income (expenses), net

Income before income taxes

Income taxes

Net income

Basic earnings per share

Diluted earnings per share

Non-GAAP diluted earnings per share ⁽¹⁾

Basic shares outstanding

Diluted shares outstanding

See the reconciliation of non-GAAP financial measures in the table at the end of the press release.

RMD First Quarter 2022 Earnings Press Release – October 28, 2021

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivable, net

Inventories

Prepayments and other current assets

Total current assets

Non-current assets:

Property, plant and equipment, net

Operating lease right-of-use assets

Goodwill and other intangibles, net

Deferred income taxes and other non-current assets

Total non-current assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Current liabilities:

Accounts payable

Accrued expenses

Operating lease liabilities, current

Deferred revenue

Income taxes payable

Short-term debt

Total current liabilities

Non-current liabilities:

Deferred revenue

Deferred income taxes

Operating lease liabilities, non-current

Other long-term liabilities

Long-term debt

Long-term income taxes payable

Total non-current liabilities

Total liabilities

STOCKHOLDERS’ EQUITY:

Common stock

Additional paid-in capital

Retained earnings

Treasury stock

Accumulated other comprehensive income

Total stockholders’ equity

Total liabilities and stockholders’ equity

RMD First Quarter 2022 Earnings Press Release – October 28, 2021

Cash flows from operating activities:

Net income

Adjustment to reconcile net income to cash provided by operating activities:

Depreciation and amortization

Amortization of right-of-use assets

Stock-based compensation costs

Loss attributable to equity method investments

(Gain) loss on equity investment

Changes in operating assets and liabilities:

Accounts receivable, net

Inventories, net

Prepaid expenses, net deferred income taxes, and other current assets

Accounts payable, accrued expenses, income taxes payable, and other

Net cash (used in) / provided by operating activities

Cash flows from investing activities:

Purchases of property, plant, and equipment

Patent registration and acquisition costs

Purchases of investments

(Payments) / proceeds on maturity of foreign currency contracts

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock, net

Taxes paid related to net share settlement of equity awards

Proceeds from borrowings, net of borrowing costs

Repayment of borrowings

Dividends paid

Net cash (used in) / provided by financing activities

Effect of exchange rate changes on cash

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

RMD First Quarter 2022 Earnings Press Release – October 28, 2021

Revenue

GAAP cost of sales

Less: Amortization of acquired intangibles ^(A)

Non-GAAP cost of sales

GAAP gross profit

GAAP gross margin

Non-GAAP gross profit

Non-GAAP gross margin

GAAP income from operations

Amortization of acquired intangibles - cost of sales ^(A)

Amortization of acquired intangibles - operating expenses ^(A)

Non-GAAP income from operations

RMD First Quarter 2022 Earnings Press Release – October 28, 2021

GAAP net income

Amortization of acquired intangibles - cost of sales, net of tax ^(A)

Amortization of acquired intangibles - operating expenses, net of tax ^(A)

Reserve for disputed tax position ^(A)

(Gain) loss on equity investments ^(A)

Non-GAAP net income ^(A)

GAAP diluted shares outstanding

GAAP diluted earnings per share

Non-GAAP diluted earnings per share ^(A)

ResMed adjusts for the impact of the amortization of acquired intangibles, reserve for disputed tax positions and the (gain) loss on equity investments from their evaluation of ongoing operations and believes that investors benefit from adjusting these items to facilitate a more meaningful evaluation of current operating performance.

RMD First Quarter 2022 Earnings Press Release – October 28, 2021

U.S., Canada, and Latin America

Devices

Masks and other

Total Sleep and Respiratory Care

Software as a Service

Total

Combined Europe, Asia, and other markets

Devices

Masks and other

Total Sleep and Respiratory Care

Global revenue

Devices

Masks and other

Total Sleep and Respiratory Care

Software as a Service

Total

Totals and subtotals may not add due to rounding.

In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we provide certain financial information on a “constant currency basis,” which is in addition to the actual financial information presented. In order to calculate our constant currency information, we translate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period. However, constant currency measures should not be considered in isolation or as an alternative to U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP.