Revenue increased by 11% to $1.4 billion; up 9% on a constant currency basis

Gross margin up 320 bps to 61.8%; non-GAAP gross margin up 310 bps to 62.3%

Income from operations increased 18%; non-GAAP income from operations up 19%

Diluted earnings per share of $2.68; non-GAAP diluted earnings per share of $2.81

Operating cash flow of $340 million

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)

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 9 percent on a constant currency basis, driven by increased demand for our portfolio of sleep devices, masks and accessories.

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 6 percent on a constant currency basis.

Residential Care Software revenue increased by 5 percent on a constant currency basis.

Gross margin increased by 320 basis points primarily driven by manufacturing and logistics efficiencies and component cost improvements. Non-GAAP gross margin increased by 310 basis points due to the same factors.

Selling, general, and administrative expenses increased by 12 percent on a constant currency basis. The increase in SG&A expenses was mainly due to additional expenses associated with our VirtuOx acquisition, employee costs as well as marketing and technology investments. SG&A expenses were 19.6 percent of revenue in the quarter, compared with 18.8 percent in the same period of the prior year.

We recorded $6 million of restructuring-related charges following the finalization of our company-wide workforce planning activities undertaken in the first quarter of the fiscal year. Restructuring charges were comprised of employee severance and other one-time termination benefits.

Income from operations increased by 18 percent and non-GAAP income from operations increased by 19 percent.

Net income for the quarter was $393 million and diluted earnings per share was $2.68. Non-GAAP net income increased by 15 percent to $411 million, and non-GAAP diluted earnings per share increased by 16 percent to $2.81, predominantly attributable to strong sales growth and gross margin improvement.

Operating cash flow for the quarter was $340 million, compared to net income in the current quarter of $393 million and non-GAAP net income of $411 million.

During the quarter, we paid $88 million in dividends to shareholders and repurchased 704,000 shares for consideration of $175 million as part of our ongoing capital management.

Published new research in SLEEP (N=370,000+) showing in patients with OSA across all comorbidity cohorts each additional hour of PAP use linked to a 4.1-6.2% reduction in healthcare utilization over 12-24 months (p < 0.0001).

Announced it received FDA clearance for an AI-enabled digital medical device, to be marketed as Smart Comfort, designed to personalize CPAP comfort settings and improve patient adherence.

Presented at the J.P. Morgan Healthcare Conference, highlighting its long-term growth opportunities, connected-care ecosystem, and continued leadership in digital sleep and respiratory health.

Net revenue

Cost of sales

Amortization of acquired intangibles ⁽¹⁾

Total cost of sales

Gross profit

Selling, general, and administrative

Research and development

Amortization of acquired intangibles ⁽¹⁾

Restructuring expenses ⁽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

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

Purchases of intangible assets

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

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)

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 ^(A)

Non-GAAP income from operations

GAAP net income

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

Amortization of acquired intangibles—operating expenses ^(A)

Restructuring 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 and restructuring expenses 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 Breathing Health

Residential Care Software

Total

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 Breathing Health

Residential Care Software

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.