Revenue increased by 12% to $864.5 million; up 14% on a constant currency basis

Gross margin contracted 140 bps to 56.8%; non-GAAP gross margin contracted 150 bps to 58.1%

Income from operations increased 5%; non-GAAP operating profit up 5%

Diluted earnings per share of $1.22; non-GAAP diluted earnings per share of $1.32

March 31,

2022

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 (loss)

Non-GAAP net income ^(B)

Diluted earnings (loss) per share

Non-GAAP diluted earnings per share ^(B)

Not meaningful

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 14 percent 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.

Revenue in the U.S., Canada, and Latin America, excluding software-as-a-service, grew by 18 percent, primarily due to the factors discussed above and recovery of core sleep patient flow that was previously impacted by COVID-19.

Revenue in Europe, Asia, and other markets grew by 11 percent on a constant currency basis, primarily due to the factors discussed above.

Software-as-a-service revenue increased by 8 percent, due to continued growth in our Durable Medical Equipment category and stabilizing patient flow in out-of-hospital care settings.

Gross margin decreased by 140 basis points and non-GAAP gross margin decreased by 150 basis points, mainly due to higher freight and manufacturing costs, partially offset by favorable product mix changes and increase in average selling prices.

Selling, general, and administrative expenses increased by 17 percent on a constant currency basis. SG&A expenses increased to 21.1 percent of revenue in the quarter, compared with 20.9 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 5 percent and non-GAAP income from operations increased by 5 percent.

Net income for the quarter was $179.0 million and diluted earnings per share was $1.22. Non-GAAP net income grew by 2 percent and non-GAAP diluted earnings per share grew by 2 percent, predominantly attributable to strong sales, partially offset by higher operating expenses.

Operating cash flow for the quarter was $117.4 million, compared to net income in the current quarter of $179.0 million and non-GAAP net income of $193.3 million. During the quarter we paid $61.4 million in dividends.

Announced appointment of Urvashi Tyagi as new Chief Technology Officer and Bobby Ghoshal transitions to be President of ResMed’s software-as-a-service business segment full-time. Tyagi leads ResMed’s digital health technology team, driving innovation and adoption of world-leading cloud-based digital health platforms and investments in emerging technologies.

Published 2022 Global Sleep Surveys as part of National Sleep Awareness Week (March 13-19) and World Sleep Day (March 18). The surveys, conducted in the first quarter of the calendar year, asked nearly 25,000 respondents in 12 countries what’s keeping them up at night; the results aim to build awareness of the critical role good sleep plays in physical and mental health.

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⁾

Restructuring—operating expenses ⁽¹⁾

Total operating expenses

Income from operations

Other income (expenses), net:

Interest income (expense), net

Loss attributable to equity method investments

Gain (loss) on equity investments

Other, net

Total other income (expenses), net

Income before income taxes

Income taxes

Net income (loss)

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.

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

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

Restructuring expenses

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

Business acquisitions, net of cash acquired

Purchases of investments

Proceeds from sale of investment

(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

Payments of business combination contingent consideration

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

Revenue

GAAP Cost of sales

Less: Amortization of acquired intangibles ^(A)

Less: Restructuring—cost of sales ^(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)

Restructuring—cost of sales ^(A)

Restructuring—operating expenses ^(A)

Non-GAAP income from operations

GAAP net income (loss)

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)

Restructuring—cost of sales, net of tax ^(A)

Restructuring—operating expenses, net of tax ^(A)

(Gain) loss on equity investments ^(A)

Non-GAAP net income ^(A)

GAAP diluted shares outstanding

Anti-dilutive shares excluded from GAAP

Non-GAAP diluted shares outstanding

GAAP diluted earnings (loss) 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, restructuring expenses 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.

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

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