Year-over-year revenue grows 16%, operating profit up 5%, non-GAAP operating profit up 10%

Expects to resume its share repurchase program during upcoming quarter

Revenue increased by 16% to $1.1 billion; up 15% on a constant currency basis

Gross margin contracted 250 bps to 54.4%; non-GAAP gross margin contracted 160 bps to 56.0%

Income from operations increased 5%; non-GAAP operating profit up 10%

Operating cash flow of $286.3 million

Diluted earnings per share of $1.49; non-GAAP diluted earnings per share of $1.64

Revenue

Gross margin

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 15 percent on a constant currency basis, driven by increased demand for our sleep and respiratory care devices.

Revenue in the U.S., Canada, and Latin America, excluding Software-as-a-Service, grew by 10 percent.

Revenue in Europe, Asia, and other markets, excluding Software-as-a-Service, grew by 18 percent on a constant currency basis.

Software-as-a-Service revenue increased by 32 percent, reflecting incremental revenue from our acquisition of MEDIFOX DAN and continued organic growth in our SaaS portfolio.

Gross margin decreased by 250 basis points and non-GAAP gross margin decreased by 160 basis points, mainly due to costs associated with a field safety notification on Astral devices and higher component and manufacturing costs, partially offset by a favorable product mix and favorable foreign currency movements.

Selling, general, and administrative expenses increased by 14 percent on a constant currency basis. SG&A expenses improved to 20.2 percent of revenue in the quarter, compared with 20.4 percent in the same period of the prior year. The increase in SG&A expenses were mainly due to increases in employee-related expenses and incremental expense associated with our acquisition of MEDIFOX DAN.

Income from operations increased by 5 percent and non-GAAP income from operations increased by 10 percent.

Net income for the quarter was $219.4 million and diluted earnings per share was $1.49. Non-GAAP net income increased by 9% to $241.2 million, and non-GAAP diluted earnings per share increased by 9% to $1.64, predominantly attributable to strong sales, partially offset by gross margin contraction.

Operating cash flow for the quarter was $286.3 million, compared to net income in the current quarter of $219.4 million and non-GAAP net income of $241.2 million. During the quarter we paid $70.6 million in dividends.

Presented at the European Respiratory Society (ERS) Congress on topics including improving NIV management, phenotyping, and personalizing OSA therapy, innovative clinical practice in home high-flow therapy, indication of use of ASV therapy, and implementing patient feedback in CPAP therapy management.

Announced and closed the acquisition of privately held Somnoware, a leader in digital sleep and respiratory care diagnostics software for sleep labs and physicians. Somnoware is upstream of and complementary to ResMed’s current post-testing AirView and Brightree offerings and will remain an open platform.

Net revenue

Cost of sales

Amortization of acquired intangibles ⁽¹⁾

Astral field safety notification expenses ⁽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

Gain (loss) on equity investments ⁽¹⁾

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.

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, net of dividends received

(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 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 exits 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

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: Astral field safety notification expenses ^(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)

Acquisition-related expenses ^(A)

Astral field safety notification expenses ^(A)

Non-GAAP income from operations

GAAP net income

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

Amortization of acquired intangibles—operating expenses ^(A)

Acquisition-related expenses ^(A)

Astral field safety notification expenses ^(A)

Income tax effect on non-GAAP adjustments ^(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, acquisition-related expenses, Astral field safety notification expenses, and associated tax effects 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 U.S., Canada and Latin America

Combined Europe, Asia, and other markets

Devices

Masks and other

Total Combined Europe, Asia and other markets

Global revenue

Total Devices

Total 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.