Year-over-year revenue grows 11%, operating profit up 34%, non-GAAP operating profit up 27%

Operating cash flow of $326 million

Revenue increased by 11% to $1.2 billion; up 11% on a constant currency basis

Gross margin improved 420 bps to 58.6%; non-GAAP gross margin improved 320 bps to 59.2%

Income from operations increased 34%; non-GAAP income from operations up 27%

Operating cash flow of $326 million

Diluted earnings per share of $2.11; non-GAAP diluted earnings per share of $2.20

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 11 percent on a constant currency basis, driven by increased demand for our sleep devices and masks portfolio, as well as strong growth across our Residential Care Software business.

Revenue in the U.S., Canada, and Latin America, excluding Residential Care Software, grew by 11 percent.

Revenue in Europe, Asia, and other markets, excluding Residential Care Software, grew by 10 percent on a constant currency basis.

Residential Care Software revenue increased by 12 percent on a constant currency basis, reflecting continued organic growth in our Residential Care Software portfolio.

Gross margin increased by 420 basis points mainly due to manufacturing efficiencies and component cost improvements and an increase in average selling prices. Non-GAAP gross margin increased by 320 basis points due to the same factors.

Selling, general, and administrative expenses increased by 7 percent on a constant currency basis. The increase in SG&A expenses was mainly due to increases in employee-related expenses. SG&A expenses improved to 19.5 percent of revenue in the quarter, compared with 20.2 percent in the same period of the prior year.

Income from operations increased by 34 percent, and non-GAAP income from operations increased by 27 percent.

Net income for the quarter was $311 million and diluted earnings per share was $2.11. Non-GAAP net income increased by 35 percent to $325 million, and non-GAAP diluted earnings per share increased by 34 percent to $2.20, predominantly attributable to strong sales growth and gross margin improvement.

Operating cash flow for the quarter was $326 million, compared to net income in the current quarter of $311 million and non-GAAP net income of $325 million.

During the quarter, we paid $78 million in dividends and repurchased 222,000 shares for consideration of $50 million as part of our ongoing capital management.

Celebrated 35 years of innovation and 25 years listed on the New York Stock Exchange (NYSE) by ringing the Opening Bell^® at the NYSE on its listing anniversary.

Held its 2024 Investor Day and unveiled ResMed’s 2030 strategy to drive growth, profitability, and shareholder returns. As part of Investor Day, announced five-year revenue and earnings growth outlook, supported by ResMed’s plans to accelerate product and technology innovation, operational excellence, commercial execution, and financial strength. ResMed’s updated ambition is to help more than 500 million people achieve their full health potential in 2030.

ResMed operates two reporting units, historically named ‘Sleep and Respiratory Care’ and ‘SaaS’. In alignment with the 2030 Strategy announced during Investor Day in September, these reporting units have been renamed to Sleep and Breathing Health (formerly Sleep and Respiratory Care) and Residential Care Software (formerly SaaS). The methodology for attributing financial results to these reporting units remains unchanged. Revenue from prior periods is consistent and comparable to previous reporting.

Announced the upcoming launch of ResMed’s first fabric mask, the AirTouch N30i. With a fabric-wrapped frame featuring a soft, breathable, and moisture wicking design, the AirTouch N30i is designed to create a more natural and comfortable experience for users making it even easier to embrace CPAP therapy. AirTouch N30i will be available in the U.S. beginning next week.

Introduced several new patient-centric products encompassing digital and personalized solutions to enhance the therapy journey for sleep apnea patients. The innovations integrate with digital wearable devices and incorporate generative artificial intelligence to deliver a more personalized sleep health experience.

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 (expense) income, net

Gain (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

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

(Gain) loss attributable to equity method investments, net of dividends received

(Gain) loss on equity investments

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 (used in) 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

Proceeds (payments) on maturity of foreign currency contracts

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock, net

Purchases of treasury stock

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 provided by (used in) 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)

Astral field safety notification expenses ^(A)

Acquisition-related 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)

Astral field safety notification expenses ^(A)

Acquisition-related 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, field safety notification expenses, acquisition related 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.

Devices

Masks and other

Total U.S., Canada and Latin America

Devices

Masks and other

Total Combined Europe, Asia and other markets

Total Devices

Total Masks and other

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.