What changed in this filing

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Item 1. Business

2021-08-17 compared with 2020-08-13 · 217 added, 129 removed, 438 unchanged (44% of the section changed)

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CPAP systems deliver pressurized air, typically through a nasal mask, to prevent collapse of the upper airway during sleep.

Since the development of CPAP, we have expanded our business by developing or acquiring a number of innovative products and solutions for a broad range of respiratory disorders including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, dental devices, portable oxygen concentrators, or POCs, and cloud-based software informatics solutions to manage patient outcomes and customer and provider business processes.

Today, we offer a comprehensive digital solution suite for patients with COPD, including those using inhalers or supplemental oxygen as well as non-invasive or invasive ventilation.

We also provide management software to agencies providing out-of-hospital care, including home medical equipment, or HME, home health and hospice, skilled nursing, life plan community and senior living, and private duty services.

Our growth has been fueled by geographic expansion, our research and product development efforts, acquisitions and an increasing awareness of sleep apnea and respiratory conditions like COPD as significant health concerns.

We are also a leading provider of cloud-based software health applications and devices designed to provide connected care, improving patient outcomes and efficiencies for healthcare providers.

These tools are designed to enable clinicians to manage more patients efficiently and effectively, as well as enable and encourage patients’ long-term adherence to and satisfaction with their therapy.

We employ approximately 7,800 people and sell our products in approximately 140 countries through a combination of wholly owned subsidiaries and independent distributors.

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We offer a comprehensive digital solution suite for patients with COPD or asthma, including those using inhalers, as well as non-invasive or invasive ventilation.

In addition, we are a leading provider of cloud-based software health applications and devices designed to provide connected care, enabling clinicians to manage more patients efficiently and effectively, as well as enabling and encouraging patients’ long-term adherence to and satisfaction with their therapy.

We employ approximately 8,000 people and sell our products in over 140 countries through a combination of wholly owned subsidiaries and independent distributors.

Our web site address is www.resmed.com.

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The SEC maintains an internet site, www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

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Corporate History

Our Australian subsidiary, ResMed Holdings Limited, was originally organized in 1989 by Dr.

Peter Farrell to acquire from Baxter Center for Medical Research Pty Limited, or Baxter, the rights to certain technology relating to CPAP treatment as well as Baxter’s existing CPAP device business.

Baxter acquired the rights to the technology in 1987 and sold CPAP devices in Australia from 1988 until our acquisition of the business.

ResMed Inc., a Delaware corporation, was formed in March 1994 as the ultimate holding company for our operating subsidiaries.

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Ten CDIs on the ASX represent one share of our common stock on the NYSE.

Our Australian subsidiary, ResMed Holdings Limited, was originally organized in 1989 by Dr.

Baxter acquired the rights to the technology in 1987, and sold CPAP devices in Australia from 1988 until our acquisition of the business.

Since formation we have acquired a number of businesses, including distributors, suppliers, developers of medical equipment and related technologies and software solution providers.

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A long-term epidemiology study published in 2013 estimated that 26% of adults age 30-70 have some form of obstructive sleep apnea.

Another study published in 2019 estimated that mild to severe OSA impacts more than 936 million people worldwide, including 54 million Americans.

Another study published in Lancet Respiratory in 2019 estimated that mild to severe OSA impacts more than 936 million people worldwide, including 54 million Americans.

Of those impacted, it was estimated that more than 424 million would have moderate to severe sleep apnea.

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Sleep-Disordered Breathing and Obstructive Sleep Apnea.

Sleep-disordered breathing encompasses all disease processes that cause abnormal breathing patterns during sleep.

Sleep-disordered breathing, or SDB, encompasses all disease processes that cause abnormal breathing patterns during sleep.

Manifestations include OSA, central sleep apnea, or CSA, and hypoventilation syndromes that occur during sleep.

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CPAP was first used as a treatment for OSA in 1980 by Dr.

Colin Sullivan, the past Chairman of our Medical Advisory Board and was commercialized for treatment of OSA in the United States in the mid-1980s.

Colin Sullivan, the past Chairman of our Medical Advisory Board and was commercialized for treatment of OSA in the United States, or U.S., in the mid-1980s.

During CPAP treatment, a patient sleeps with a nasal interface connected to a small portable air device that delivers room air at a positive pressure.

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We aim to improve their quality of life, slow down disease progression and reduce the costs of patient management.

Our products cover patients ranging from those who only require therapy from CPAP systems at night, to those who are dependent on non-invasive or invasive ventilation for life-support and those who require portable oxygen concentrators, or POCs.

Our products cover patients ranging from those who only require therapy from CPAP systems at night to those who are dependent on non-invasive or invasive ventilation for life-support.

Our devices are predominantly used in the home and, to a lesser extent, in general hospital wards and respiratory wards.

We supply CPAP and bilevel device systems, non-invasive and invasive ventilators, humidifiers and accessories, including masks and tubing.

We also offer stationary and portable battery-powered oxygen concentrators for the administration of long-term oxygen therapy in the home as well as data management systems designed to improve the management of patients.

In March 2020, the World Health Organization declared the outbreak of a novel strain of coronavirus, or COVID-19, as a pandemic.

We have observed increased demand for our ventilator devices and masks, and we are working with governments, health authorities, hospitals, physicians, and patients worldwide to assess their needs, and to deliver the ventilation therapy that is essential to treat the respiratory complications of COVID-19.

Our primary focus is to maximize the availability of ResMed ventilators and other respiratory support devices for the patients that need them most.

We also provide data management systems designed to improve the management of patients.

In March 2020, the World Health Organization declared the outbreak of a novel strain of coronavirus, COVID-19, as a pandemic.

We have observed increased demand for our ventilator devices and masks, and during the first six months of the pandemic worked closely with governments, health authorities, hospitals, and physicians in over 100 countries to assess their needs and deliver the ventilation therapy that is essential to treat the respiratory complications of COVID-19.

Our primary focus with regards to the pandemic remains preservation of life;

our strategy is to maximize the availability of ResMed ventilators and other respiratory support devices for the patients that need them most.

Between January 1 and June 30, 2020, ResMed produced over 150,000 ventilators –3.5 times more than the same period of time one year before.

Chronic Obstructive Pulmonary Disease.

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Overlap Syndrome.

In patients with Overlap Syndrome, CPAP has been shown to provide benefits in relation to reducing mortality, decreasing hospitalizations and improving lung function and gas exchange.

In patients with COPD-OSA Overlap Syndrome, CPAP has been shown to provide benefits in relation to reducing mortality, decreasing hospitalizations and improving lung function and gas exchange.

Non-invasive ventilation, or NIV, has been demonstrated to improve outcomes in patients with acute exacerbations of COPD through its ability to improve respiratory acidosis and decrease dyspnea and work of breathing.

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In hypoxemic COPD patients, LTOT is associated with a lower mortality compared to nocturnal oxygen therapy alone and also associated with improved health-related quality of life measures.

In long-term COPD survivors with a history of congestive heart failure, LTOT is associated with a slowing of respiratory failure progression.

In long-term COPD survivors with a history of chronic heart failure, LTOT is associated with a slowing of respiratory failure progression.

Obesity Hypoventilation Syndrome.

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Due to multiple acquisitions, including Brightree in April 2016, HEALTHCARE first in July 2018 and MatrixCare in November 2018, our operations now include platforms that comprise our SaaS business.

Our SaaS strategy is to develop a portfolio that assists durable medical equipment, or DME, HME, and other long-term care providers operate more effectively and efficiently across various out-of-hospital care settings.

Our SaaS strategy is to develop a portfolio that assists durable or home medical equipment (DME/HME) providers, and other long-term care providers operate more effectively and efficiently across various out-of-hospital care settings.

Our SaaS portfolio provides services across the HME, home health and hospice, skilled nursing, life plan community and senior living, and private duty services.

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We believe that the sleep apnea and respiratory care markets will continue to grow in the future due to a number of factors, including increasing awareness of OSA, CSA and COPD, improved understanding of the role of sleep apnea treatment in the management of cardiac, neurologic, metabolic and related disorders, improved understanding of the role of non-invasive ventilation in the management of COPD, and an increase in the use of digital and product technology to improve patient outcomes and create efficiencies for customers and providers.

Additionally, the continued impact of COVID-19 or a resurgence of COVID-19 may create more demand for our ventilator products.

Our strategy for expanding our business operations and capitalizing on the growth of the sleep apnea and respiratory care markets, as well as growth in out-of-hospital care settings, consists of the following key elements:

 Continue Product Development and Innovation in Sleep Apnea Products.

 Continue Product Development and Innovation in Sleep Apnea and Respiratory Care Products.

We are committed to ongoing innovation in developing products for the diagnosis and treatment of sleep apnea.

We have been a leading innovator of products designed to treat sleep apnea more effectively, increase patient comfort and encourage compliance with prescribed therapy.

In recent years we have introduced a full suite of masks in our AirTouch and AirFit ranges, advanced and expanded the integrations of our therapy-based software solutions, including AirView, to promote greater patient adherence and during the COVID-19 pandemic, we released ResMed MaskSelector in the United States, an easy-to- use digital tool to make mask selection and sizing easier and more effective, both remotely and during in-person clinical setups .

We believe that the combination of continued product development, product and technology acquisitions and innovation are key factors to our ongoing success.

In recent years we have introduced a full suite of masks in our AirTouch and AirFit ranges as well as advanced and expanded the integrations of our therapy-based software solutions, including AirView, to promote greater patient adherence.

Our recent acquisitions have included a portfolio of sleep apnea products through our acquisition of Curative Medical .

Approximately 16% of our employees are devoted to research and development activities.

Likewise, we are committed to ongoing innovation of our respiratory care products that serve the needs of patients with COPD and neuromuscular diseases, providing advanced and expanded the integrations of our therapy-based software solutions including AirView for Respiratory Care, enabling clinicians to remotely monitor patients on some ventilation devices and bilevel devices.

We acquired a digital health platform for inhalers through our acquisition of Propeller Health in 2019, rounding out our portfolio to treat COPD patients through their therapy journey across different stages of their disease.

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 Continue Product Development and Innovation in Respiratory Care Products.

We are committed to ongoing innovation of our respiratory care products that serve the needs of patients with COPD and neuromuscular diseases.

With the addition of Inova Labs POCs and our non-invasive ventilator devices with masks and accessories, we intend to continue to expand and enhance our product offerings in this area.

In recent years, we launched Mobi, which is our first ResMed - branded portable oxygen concentrator as well as advanced and expanded the integrations of our therapy-based software solutions including AirView for Respiratory Care, enabling clinicians to remotely monitor patients on some ventilation devices and bilevel devices.

Additionally, we acquired a digital health platform for inhalers through our acquisition of Propeller Health in 2019, rounding out our portfolio to treat COPD patients through their therapy journey across different stages of their disease.

 Broaden our digital health technology foundation.

Digital enablement is central to our strategy.

Our cloud-based digital health applications, along with our devices, are designed to provide connected care to improve patient outcomes and efficiencies for our customers, allowing fewer professionals to manage more patients and empower patients to track their own health outcomes.

We are expanding our cloud-based patient management and engagement platforms, such as AirView, enabling remote monitoring, over-the-air trouble shooting and changing of device settings, U-Sleep enabling automated patient coaching through a text, email or interactive voice phone call and myAir, a patient engagement application that provides sleep data and a daily score based on their previous night’s data.

In the United States we have released ResMed MaskSelector, an easy-to- use digital tool to make mask selection and sizing easier and more effective, and HelloSleep, an application to help patients prepare for their fitting and first nights of therapy.

We believe that the combination of continued product development, product and technology acquisitions and innovation are key factors to our ongoing success.

Approximately 16% of our employees are devoted to research and development activities.

 Expand SaaS Solutions in Out- of-Hospital Care Settings.

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In 2019, we acquired HB Healthcare, a privately owned HME that serves both reimbursed and cash-pay customers of sleep and respiratory care devices in South Korea.

In 2021, we acquired Tong-il, another leading sleep and respiratory care HME provider in South Korea, reinforcing both our commitment and capability to serve millions of South Korean patients living with sleep apnea, COPD, and other chronic respiratory diseases.

 Increase Public and Clinical Awareness.

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We continually seek to identify new applications of our technology for significant unmet medical needs.

Studies have established a clinical association between OSA and both stroke and congestive heart failure, and have recognized sleep apnea as a cause of hypertension or high blood pressure.

Studies have established a clinical association between OSA and both stroke and chronic heart failure, and have recognized sleep apnea as a cause of hypertension or high blood pressure.

Research also indicates that sleep apnea is independently associated with glucose intolerance and insulin resistance.

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Our senior management team has extensive experience in the medical device industry in general, and in the fields of sleep apnea, respiratory care and healthcare informatics in particular.

We intend to continue to leverage the experience and expertise of these individuals to maintain our innovative approach to the development of products and solutions, and to increase awareness of the serious medical problems caused by sleep apnea and the use of oxygen, non-invasive ventilation, and in-home life support ventilation to treat COPD.

Our portfolio of products includes devices, diagnostic products, mask systems, headgear and other accessories, dental devices, POCs and cloud-based software informatics solutions.

For purposes of the following discussion, we refer to our air flow generators, ventilators and oxygen concentrators collectively as devices.

We intend to continue to leverage the experience and expertise of these individuals to maintain our innovative approach to the development of products and solutions, and to increase awareness of the serious medical problems caused by sleep apnea and the use of non-invasive ventilation, and in-home life support ventilation to treat COPD and other chronic respiratory diseases.

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Our portfolio of products includes devices, diagnostic products, mask systems, headgear and other accessories, dental devices and cloud-based software informatics solutions.

For purposes of the following discussion, we refer to our air flow generators and ventilators collectively as devices.

We produce cloud-connected CPAP, APAP, bilevel, and ASV devices that deliver positive airway pressure through a patient interface, either a mask or cannula.

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During fiscal year 2017, we launched AirMini, a small portable CPAP combining the same proven therapy modes used in the AirSense 10 with effective waterless humidification enabling portable convenience.

We commenced a controlled product launch of AirSense 11 in fiscal year 2021, which will be followed by a broader launch throughout fiscal year 2022.

AirSense 11 will introduce new features such as a touch screen, algorithms for patients new to therapy and digital enhancements, such as over-the-air update capabilities.

We also acquired a line of Chinese-developed and manufactured sleep and ventilation devices with the acquisition of Curative Medical in fiscal year 2016.

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The device also features built-in wireless connectivity.

AirSense 10 AutoSet

The first complete sleep therapy solution tailored for women.

The AirSense 10 AutoSet for Her is based on ResMed’s AutoSet algorithm.

It responds to female-specific characteristics of sleep apnea and is tailored to meet the special sleep needs of women.

A small portable CPAP device featuring the same auto-adjusting therapy modes used in the AirSense™ 10 Auto.

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The device features built-in wireless connectivity and works with our AirView™ patient monitoring software.

AirCurve 10 ST-A

A bilevel device that provides effective non-invasive ventilation for patients with respiratory insufficiency from conditions including neuromuscular disease, restrictive lung disorders, COPD and hypoventilation syndromes.

AirCurve 10 ASV and CS

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These devices also feature built-in wireless connectivity and works with our AirView™ patient monitoring software.

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Stellar 100 and 150

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A Pressure support non-invasive ventilator that supports a variety of therapy modes with built-in wireless connectivity, integrated humidification and a range of fixed and adjustable alarms.

A portable oxygen concentrator system with a lightweight design and extended battery life to promote greater mobility for patients on oxygen therapy.

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Mask Systems, Diagnostic Products, Accessories and Other Products

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AirFit N30i, AirFit P30i, and AirFit F30i freedom masks, which feature top-of-head tubing design allowing flexibility to easily switch sleep positions.

The AirTouch F20 mask features a soft and breathable AirTouch cushion designed to enhance CPAP mask comfort.

The AirTouch F20 and AirTouch N20 masks feature a soft and breathable AirTouch cushion designed to enhance CPAP mask comfort.

Universal Fit

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Works with AirView Diagnostics to provide comprehensive diagnostic solution to clinicians.

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Connected Solutions and Other Products

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AirView also makes it easier to simplify workflows and collaborate more efficiently across the patient’s care network.

A personalized therapy management application for patients with sleep-disordered breathing providing support, education and troubleshooting tools for increased patient engagement and improved compliance.

A personalized therapy management application for patients with sleep apnea providing support, education and troubleshooting tools for increased patient engagement and improved compliance.

A compliance monitoring solution that enables HMEs to streamline their sleep programs to achieve better business and patient outcomes.

Connectivity Module

A module providing cellular connection between our compatible ventilation devices (i.e.

Astral Stellar) and our AirView™ system.

Propeller's inhaler sensors track medication usage and pair with a companion smartphone application, giving people with asthma or COPD a better understanding of their disease and while promoting increased adherence to treatment.

A module providing cellular connection between our compatible ventilation devices (e.g., Astral, Stellar) and our AirView™ system.

The Propeller Provider Portal gives clinicians the timely and accurate information they need to make better treatment decisions.

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SaaS Products

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As an industry-leading cloud-based healthcare IT company, Brightree provides solutions and services for thousands of organizations in home medical equipment and pharmacy, orthotic and prosthetic, and home infusion.

MatrixCare solutions

MatrixCare’s EHR software as a service solutions are used by skilled nursing and senior living providers, life plan communities (CCRCs), and home health and hospice organizations to improve efficiencies and promote a better quality of life for the people they serve.

HEALTHCARE first

HEALTHCARE first offers electronic health record, or EHR, software, billing and coding services, and advanced analytics that enable home health and hospice agencies to optimize their clinical, financial and administrative processes.

MatrixCare solutions

Product Development and Clinical Trials

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Sleep apnea is associated with a number of symptoms beyond excessive daytime sleepiness and irritability.

Studies have established a clinical association between untreated sleep apnea and systemic hypertension, diabetes, coronary artery disease, stroke, atrial fibrillation, congestive heart failure, and mortality.

Across the sleep and respiratory care platforms, we support clinical trials in many countries including the United States, Germany, Netherlands, France, Japan, the United Kingdom, Switzerland, China, Spain, Canada, Singapore and Australia to develop new clinical applications for our technology.

We have also begun presenting and publishing research findings based on the industry-leading connectivity platform and data assets that are unique to us.

We continue to support some of the largest sleep apnea studies in history by performing advanced statistical analyses on millions of clinical data points using real-world data.

We also continue to support some of the largest sleep apnea studies in history by performing advanced statistical analyses on millions of real world clinical data points collected through our cloud-connected devices and patient engagement tools.

These studies, which we have begun to publish, provide clinical insights around patient management, device settings and predictors of patient adherence that inform our product development efforts.

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We consult with physicians at major medical centers throughout the world to identify clinical and technological trends in the treatment of sleep apnea, COPD and the other conditions associated with these diseases.

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The decision to purchase our products, as opposed to those of our competitors, is made or influenced by one or more of the following individuals or organizations:

the prescribing physician and his or her staff;

the prescribing physician and their staff;

the home healthcare dealer;

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The home healthcare dealer, in consultation with the referring physician, will assist the patient in selecting the equipment, fit the patient with the appropriate mask and set the device pressure to the prescribed level.

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Our SaaS solutions are sold to providers of healthcare in various out-of-hospital settings.

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We develop, market and sell our MatrixCare care management and related ancillary solutions to providers in the U.S.

and our primary markets are senior living, skilled nursing;

and our primary markets are senior living;

skilled nursing;

life plan communities;

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We market our products in most major countries in combined Europe, Asia and other markets.

We have wholly-owned subsidiaries in Austria, Czech Republic, Denmark, Finland, France, Germany, Ireland, Netherlands, Norway, Poland, Sweden, Switzerland, the United Kingdom, Australia, China, India, Japan, Korea, New Zealand, Taiwan, and Thailand.

We have wholly-owned subsidiaries in Australia, Austria, China, Czech Republic, Denmark, Finland, France, Germany, India, Ireland, Japan, Korea, Netherlands, New Zealand, Norway, Poland, Sweden, Switzerland, Taiwan, Thailand, and the United Kingdom.

We use a combination of our direct sales force and independent distributors to sell our products in combined Europe, Asia and other markets.

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In many countries we sell our products to home healthcare dealers or hospitals who then sell the products to the patients.

In Germany, Australia, New Zealand, and South Korea, we also operate a home healthcare company, in which we provide products and services directly to patients.

In Germany, Australia, New Zealand, and South Korea, we also operate home healthcare business models, in which we provide products and services directly to patients.

We do not sell our SaaS products in combined Europe, Asia, and other markets.

Manufacturing

We operate a globally distributed manufacturing network designed for supply chain resilience, that is intended to control costs and minimize risks.

We operate a globally distributed manufacturing network designed to optimize quality, cost control, time to market for new product introduction and supply chain resilience.

Our manufacturing operations consist of specialist component production as well as assembly and testing of our devices, masks and accessories.

Of the numerous raw materials, parts and components purchased for assembly of our therapeutic and diagnostic sleep disorder products, many are off-the-shelf items available from multiple vendors.

Of the numerous raw materials, parts and components purchased for assembly of our therapeutic and diagnostic sleep disorder products, many are available from multiple vendors.

We also purchase uniquely configured components from various suppliers, including some who are single-source suppliers for us.

Any reduction or halt in supply from one of these single-source suppliers could limit our ability to manufacture our products or devices until a replacement supplier is found and qualified.

Any reduction or halt in supply from one of these suppliers could limit our ability to manufacture our products or devices until a replacement supplier is found and qualified.

We generally manufacture to our internal sales forecasts and fill orders as received.

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Each manufacturing site and team are responsible for the quality of their product group and decisions are based on performance and quality measures, including customer feedback.

Our quality management system is based upon the requirements of ISO 9001, ISO 13485, FDA Quality System Regulations for Medical Devices, the Medical Device Directive (93/42/EEC) and other applicable regulations for the markets in which we sell.

Our main manufacturing sites are certified to ISO 13485 and audited at regular intervals by a Notified Body.

Additionally, our Sydney, Loyang, San Diego, Atlanta and Moreno Valley sites are certified under the Medical Device Single Audit Program or MDSAP, an audit of medical device manufacturers’ quality management system to satisfy multiple regulatory requirements.

MDSAP audits are conducted by a MDSAP recognized auditing organization and can fulfill the needs of multiple regulatory jurisdictions (i.e.

Australia, Brazil, Canada, Japan, and the United States of America).

Our main manufacturing facilities are located in Loyang, Singapore;

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Our quality management system is based upon the requirements of ISO 9001, ISO 13485, FDA Quality System Regulation for Medical Devices, European Medical Device Regulation (“MDR”), the Medical Device Directive (93/42/EEC) and other applicable regulations for the markets in which we sell.

Our main manufacturing sites are certified to ISO 13485 and are audited at regular intervals by a Notified Body.

Additionally, our Sydney, Tuas, San Diego, Atlanta and Moreno Valley sites are certified under the Medical Device Single Audit Program or MDSAP, an audit of medical device manufacturers’ quality management system to satisfy multiple regulatory requirements.

MDSAP audits are conducted by a MDSAP recognized auditing organization and can fulfill the needs of multiple regulatory jurisdictions (e.g., Australia, Brazil, Canada, Japan, and the United States of America).

Our main manufacturing facilities are located in Tuas, Singapore, which has replaced our former Loyang facility;

Sydney, Australia;

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Atlanta, Georgia and Suzhou, China.

We are establishing a new manufacturing facility in Tuas, Singapore that will eventually replace our Loyang facility.

Refer to Item 2 for additional details on these properties.

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The cost of medical care in many of the countries in which we operate is funded in substantial part by government and private insurance programs.

In Germany and Korea, we receive payments directly from these payors but in other countries, although we do not generally receive payments for our products directly from these payors, our success in major markets depends on the ability of patients to obtain coverage and adequate reimbursement from third-party payors for our products.

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In Germany and Korea, we receive payments directly from these payors.

While we do not generally receive direct payments for our products from payors in other countries, our success depends on the ability of patients to obtain coverage and adequate reimbursement from those payors.

In the United States, our products are purchased primarily by home healthcare dealers, hospitals or sleep clinics, who invoice third-party payors directly for reimbursement.

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Healthcare reform in the United States continues to bring significant changes to the third-party payor landscape.

In 2011, the Centers for Medicare & Medicaid Services, or CMS, implemented the competitive bidding program, which included DME that we manufacture and develop, specifically, oxygen, CPAP and respiratory assist devices (or bilevel devices), and related supplies and accessories.

In 2011, the Centers for Medicare & Medicaid Services, or CMS, implemented the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) competitive bidding program, which included DME that we manufacture and develop, specifically, CPAP and respiratory assist devices (or bilevel devices), and related supplies and accessories.

CMS is required by law to recompete these contracts at least once every three years.

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CMS phased in the new rates beginning January 1, 2016, and the rates became fully effective July 1, 2016.

The implementation of the competitive acquisition program has resulted in reduced Medicare payment for oxygen, CPAP and respiratory assist devices, and related supplies and accessories in both competitive bidding areas and non-competitive bidding areas.

The implementation of the competitive acquisition program has resulted in reduced Medicare payment for CPAP and respiratory assist devices, and related supplies and accessories in both competitive bidding areas and non-competitive bidding areas.

Through an Interim Final Rule issued in May 2018, CMS increased the fee schedule amounts for certain DME in non-bid areas that qualify as rural and non-contiguous, setting payment for these areas for June 1, 2018 to December 31, 2018 at a 50/50 blended reimbursement rate based on the pre-competitive bidding reimbursement rate and the adjusted reimbursement rate set through competitive bidding.

Due to the lapse of competitive bid contracts as of December 31, 2018, effective January 1, 2019, Medicare beneficiaries may receive DME from any Medicare-enrolled supplier until new contracts are in effect under the next round of competitive bidding, which is expected to take effect on January 1, 2021.

Pricing in competitive bidding areas and non-rural, contiguous non-bid areas will continue to use adjusted fee schedule amounts, subject to annual Consumer Price Index (CPI) adjustments, beginning in 2019, until the next bidding round takes place.

CMS also extended the blended fee schedule amounts for non-bid rural and non-contiguous areas through December 31, 2020.

Under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, the blended fee schedule amounts for non-bid rural and non-contiguous areas was extended through the end of the COVID-19 public health emergency, should it extend beyond December 31, 2020, and a blended fee schedule amount was implemented for all other areas for the same period.

In the next round of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) competitive bidding program, expected to take effect on January 1, 2021, there have been some revisions to the bidding methodology including the plan to implement surety bond requirements, lead item pricing, and setting reimbursement rates at the maximum winning bid rate instead of the median winning bid rate.

Due to the lapse of competitive bid contracts as of December 31, 2018, effective January 1, 2019, Medicare beneficiaries could receive DME from any Medicare-enrolled supplier during a temporary gap in the competitive bidding program between January 1, 2019 and December 31, 2020.

Pricing in competitive bidding areas and non-rural, contiguous non-bid areas continued to use adjusted fee schedule amounts, subject to annual Consumer Price Index (CPI) adjustments, during this temporary gap period beginning in 2019 through December 31, 2020.

Under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, the blended fee schedule amounts for non-bid rural and non-contiguous areas was extended through the end of the COVID-19 public health emergency, which has been renewed through July 20, 2021, and a blended fee schedule amount was implemented for all other areas for the same period.

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CMS competed 16 product categories in Round 2021 of the DMEPOS competitive bidding program, which took effect on January 1, 2021 and extends through December 31, 2021.

There have been some revisions to the bidding methodology including the plan to implement surety bond requirements, lead item pricing, and setting reimbursement rates at the maximum winning bid rate instead of the median winning bid rate.

Although CMS previously expanded the categories of devices subject to competitive bidding to include non-invasive ventilators, or NIVs, starting in 2021, in response to the COVID-19 pandemic, CMS removed NIVs from Round 2021 of the DMEPOS Competitive Bidding Program.

Of the 15 remaining product categories that were bid for in Round 2021, CMS awarded competitive bidding contracts for only two categories, off-the-shelf (OTS) back braces and OTS knee braces.

Payment for the items where contracts were not awarded will be based on adjusted fee schedule amounts, pending further rulemaking.

The ACA, which was passed both to expand the number of individuals with healthcare coverage and to develop additional revenue sources, also included, among other things, a deductible excise tax equal to 2.3% of the price for which medical devices are sold in the United States on any entity that manufactures or imports medical devices, with limited exceptions, beginning in 2013.

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The ACA also provided for a number of Medicare regulatory requirements, including new face-to-face encounter requirements for DME and home health services.

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We cannot predict at this time the full impact that the ACA, or any U.S.

legislation enacted in the future, will have on our revenues, profit margins, profitability, operating cash flows and results of operations.

There have been judicial and Congressional challenges to certain aspects of the ACA, as well as recent efforts by the Trump administration to repeal or replace certain aspects of the ACA, and we expect such challenges and amendments to continue.

For example, the Tax Cuts and Jobs Act of 2017 includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On December 14, 2018, a U.S.

District Court Judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the U.S.

Tax Act, the remaining provisions of the ACA are invalid as well.

On December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

On March 2, 2020, the U.S.

Supreme Court granted the petitions for writs of certiorari to review this case, although it is unclear when or how the Supreme Court will rule.

It is also unclear how other efforts to challenge, repeal or replace the ACA will impact the law or our business.

Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA .

On June 17, 2021, the U.S.

Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.

Prior to the Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace, which began on February 15, 2021 and remained open through August 15, 2021.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted.

On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, resulted in reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through December 31, 2021, unless additional Congressional action is taken.

In addition, on January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

We expect that the ACA, these new laws and other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for our products and services.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

The implementation of cost containment measures or other healthcare reforms may have a material adverse impact on our revenues, profit margins, profitability, operating cash flows and results of operations .

Service and Warranty

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In addition, some of our competitors are affiliates of customers of ours, which may make it difficult to compete with them.

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Our primary Sleep and Respiratory Care competitors include Philips BV;

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Finally, our products compete with surgical procedures, nerve stimulation devices and dental appliances designed to treat OSA and other sleep apnea-related respiratory conditions.

The development of new or innovative procedures or devices by others could result in our products becoming obsolete or noncompetitive, which would harm our revenues and financial condition.

The development of new or innovative procedures, devices or therapies, such as pharmaceutical, by others could result in our products becoming obsolete or noncompetitive, which would harm our revenues and financial condition.

For our SaaS business, the market is highly competitive, rapidly evolving, and subject to changing technology, low barriers to entry, shifting customer needs and frequent introductions of new products and services.

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We believe the combination of these rights, in aggregate, are of material importance to each of our businesses.

Through our various subsidiaries, as of the date of this report, we own or have licensed rights to over 6,200 pending, allowed or granted patents and designs.

Through our various subsidiaries, as of the date of this report, we own or have licensed rights to approximately 8,300 pending, allowed or granted patents and designs.

Patents and designs have various statutory terms based on the legislation in individual jurisdictions which may be subject to change.

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We believe that the expiration of these patents will not have a material adverse impact on our competitive position.

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Litigation has been necessary in the past and may be necessary in the future to enforce patents issued to us, to protect our rights, or to defend third-party claims of infringement by us of the proprietary rights of others.

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The FDA classifies medical devices into one of three classes (Class I, II or III) based on the degree of risk the FDA determines to be associated with a device and the level of regulatory control deemed necessary to ensure the device’s safety and effectiveness.

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Our products currently marketed in the United States are marketed pursuant to 510(k) pre-marketing clearances and are either Class I or Class II devices.

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We believe that our design, manufacturing and quality control procedures are in compliance with the FDA’s regulatory requirements.

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We must also comply with post-market surveillance regulations, including medical device reporting, or MDR, requirements which require that we review and report to the FDA any incident in which our products may have caused or contributed to a death or serious injury.

We must also comply with post-market surveillance regulations, including medical device reporting requirements which require that we review and report to the FDA any incident in which our products may have caused or contributed to a death or serious injury.

We must also report any incident in which our product has malfunctioned if that malfunction would likely cause or contribute to a death or serious injury if it were to recur.

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Sales of medical devices outside the United States are subject to regulatory requirements that vary widely from country to country.

In the European Economic Area, (which is comprised of the 27 member states of the European Union plus Norway, Iceland and Liechtenstein), or EEA, manufacturers of medical devices need to comply with the Essential Requirements laid out in Annex I to the EU Medical Devices Directive (Council Directive 93/42/EEC).

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Compliance with these requirements is a prerequisite to be able to affix the CE mark to medical devices, without which they cannot be marketed or sold in the EEA.

To demonstrate compliance with the Essential Requirements and obtain the right to affix the CE Mark, manufacturers of medical devices must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.

Except for low-risk medical devices (Class I with no measuring function and which are not sterile), where the manufacturer can issue an EC Declaration of Conformity based on a self-assessment of the conformity of its products with the Essential Requirements, a conformity assessment procedure requires the intervention of a Notified Body, which is an organization designated by a competent authority of an EEA country to conduct conformity assessments.

To demonstrate compliance with the Essential Requirements and the GSPR and obtain the right to affix the CE Mark, manufacturers of medical devices must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.

Except for low-risk medical devices (Class I with no measuring function and which are not sterile), where the manufacturer can issue an EC Declaration of Conformity based on a self-assessment of the conformity of its products with the Essential Requirements and the GSPR, a conformity assessment procedure requires the intervention of a Notified Body, which is an organization designated by a competent authority of an EEA country to conduct conformity assessments.

Depending on the relevant conformity assessment procedure, the Notified Body would audit and examine the Technical File and the quality system for the manufacture, design and final inspection of the devices.

The Notified Body issues a CE Certificate of Conformity following successful completion of a conformity assessment procedure conducted in relation to the medical device and its manufacturer and their conformity with the Essential Requirements.

This Certificate entitles the manufacturer to affix the CE mark to its medical devices after having prepared and signed a related EC Declaration of Conformity.

As a general rule, demonstration of conformity of medical devices and their manufacturers with the essential requirements must be based, among other things, on the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use.

As a general rule, demonstration of conformity of medical devices and their manufacturers with the Essential Requirements and GSPR must be based, among other things, on the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use.

Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence.

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The Medical Devices Regulation, among other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory framework across the EEA for medical devices and in vitro diagnostic devices and ensure a high level of safety and health while supporting innovation.

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The Medical Device Regulation was meant to become applicable three years after publication (in May 2020).

However, on April 23, 2020, to allow EEA national authorities, notified bodies, manufacturers and other actors to focus fully on urgent priorities related to the COVID-19 pandemic, the European Council and Parliament adopted Regulation 2020/561, postponing the date of application of the Medical Device Regulation by one year (to May 2021).

Once applicable, the new regulations will among other things:

 s trengthen the rules on placing devices on the market and reinforce surveillance once they are available;

 e stablish explicit provisions on manufacturers'

The Medical Device Regulation thus became applicable on May 26, 2021.

Devices lawfully placed on the market pursuant to the EU Medical Devices Directive prior to May 26, 2021 may generally continue to be made available on the market or put into service until May 26, 2025.

The Medical Devices Regulation, among other things:

 s trengthens the rules on placing devices on the market and reinforces surveillance once they are available;

 e stablishes explicit provisions on manufacturers'

responsibilities for the follow-up of the quality, performance and safety of devices placed on the market;

 i mprove the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;

 s et up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU;

 s trengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market.

These modifications may have an impact on the way we design and manufacture products and the way we conduct our business in the EEA.

We are progressing in our plans to meet the new requirements.

 i mproves the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;

 s ets up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU;

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 s trengthens rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market.

We have received certification or initiated the Medical Device Regulation certification process at several locations, including Sydney, Australia;

San Diego, California;

and Lyon, France.

We continue to transition our certification profile to meet the new Medical Device Regulation requirements.

Other regulatory bodies

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Other Healthcare Laws

We are subject to a number of laws and regulations that may restrict our business practices, including, without limitation, anti-kickback, false claims, physician payment transparency and data privacy and security laws.

The government has interpreted these laws broadly to apply to the marketing and sales activities of manufacturers and distributors like us.

We are subject to a number of laws and regulations that may restrict our business practices, including, without limitation, anti-kickback, false claims and transparency laws with respect to payments and other transfers of value made to physicians and other healthcare providers.

The government has interpreted these laws broadly to apply to the marketing and sales activities of manufacturers and distributors as well as revenue cycle management companies like us.

The federal Anti-Kickback Statute prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or indirectly, in cash or in kind, in exchange for or to induce either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid.

In addition, a person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation.

Violations of the federal Anti-Kickback Statute may result in significant civil monetary penalties for each violation, plus up to three times the remuneration involved.

Violations of the Federal Anti-Kickback Statute can also result in criminal penalties, including significant criminal fines and imprisonment.

In addition, violations can result in debarment, suspension or exclusion from participation in government healthcare programs, including Medicare and Medicaid.

The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.

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In addition, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

When an entity is determined to have violated the federal civil False Claims Act, the government may impose significant civil fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs.

Private suits filed under the civil False Claims Act, known as qui tam actions, can be brought by individuals on behalf of the government.

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Additionally, there has been a recent trend of increased federal and state regulation of payments and transfers of value provided to healthcare professionals or entities.

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The federal Physician Sunshine Act, which requires certain manufacturers of drugs, biologicals, and medical devices or supplies that require premarket approval by or notification to the FDA, and for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, to report annually to the CMS information related to (i) payments and other transfers of value to teaching hospitals, physicians (as defined by statute) and, beginning in 2022, physician assistants, nurse practitioners and other practitioners, and (ii) ownership and investment interests held by such providers and their immediate family members.

The federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, biologicals, and medical devices or supplies that require premarket approval by or notification to the FDA, and for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, to report annually to CMS information related to (i) payments and other transfers of value to teaching hospitals, physicians (as defined by statute) and, beginning in 2022, physician assistants, nurse practitioners and other practitioners, and (ii) ownership and investment interests held by such providers and their immediate family members.

Applicable manufacturers are required to submit annual reports to CMS.

Failure to submit required information may result in significant civil monetary penalties for each failure and additional penalties for “knowing failures”, for all payments, transfers of value or ownership or investment interests that are not timely, accurately, and completely reported in an annual submission, and may result in liability under other federal laws or regulations.

Certain states also mandate implementation of commercial compliance programs, impose restrictions on device manufacturer marketing practices and/or require the tracking and reporting of gifts, compensation and other remuneration to healthcare professionals and entities.

The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created federal criminal statutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

Like the Anti-Kickback Statute, a person or entity does not need to have actual knowledge of these statutes or specific intent to violate them in order to have committed a violation.

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Also, many U.S.

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have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under government programs.

Under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, which we collectively refer to as HIPAA, the Department of Health and Human Services, or HHS, has issued regulations , including the HIPAA Privacy, Security and Breach Notification Rules, to protect the privacy and security of protected health information , or PHI, used or disclosed by covered entities including health care providers and their business associates .

In addition, in the U.S., certain states also mandate implementation of commercial compliance programs, impose restrictions on device manufacturer marketing practices and/or require the tracking and reporting of gifts, compensation and other remuneration to healthcare professionals and entities.

The shifting commercial compliance environment and the need to build and maintain robust systems to comply with different compliance or reporting requirements in multiple jurisdictions increase the possibility that a healthcare company may fail to comply fully with one or more of these requirements.

If our operations are found to be in violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject to penalties, including potentially significant criminal, civil and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, additional integrity oversight and reporting obligations, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Data Privacy and Security Laws

HIPAA also regulates standardization of data content, codes and formats used in health care transactions and standardization of identifiers for health plans and providers.

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CCPA’s implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and the CCPA may increase our compliance costs and potential liability.

Further, the California Privacy Rights Act, or CPRA, recently passed in California and not only revises but expands upon CCPA .

The CPRA will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.

It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement.

The majority of the provisions will go into effect on January 1, 2023, will supersede the CCPA, and additional compliance investment and potential business process changes may be required.

In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.

Similar privacy laws have been proposed at the federal level and in other states.

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In addition, the General Data Protection Regulation, or GDPR, went into effect in May 2018.

The GDPR imposes stringent data protection requirements for the processing of personal data in the European Economic Area, or EEA.

The GDPR imposes several stringent requirements for controllers and processors of personal data, and has increased our obligations, for example, by imposing higher standards for obtaining consent from individuals to process their personal data, requiring more robust disclosures to individuals, strengthening individual data rights, shortening timelines for data breach notifications, limiting retention periods and secondary use of information (including for research purposes) , increasing requirements pertaining to health data and pseudonymised (i.e., key-coded) data and imposing additional obligations when we contract with third party processors in connection with the processing of the personal data.

The GDPR imposes stringent data protection requirements for the processing of personal data of individuals in the European Economic Area, or EEA.

The GDPR has increased our obligations, for example, by imposing higher standards for obtaining consent from individuals to process their personal data, requiring more robust disclosures to individuals, strengthening individual data rights, shortening timelines for data breach notifications, limiting retention periods and secondary use of information (including for research purposes) , increasing requirements pertaining to health data and pseudonymised (i.e., key-coded) data and imposing additional obligations when we contract with third party processors in connection with the processing of the personal data.

The GDPR also imposes strict rules on the transfer of personal data out of the EEA, including to the United States;

recent legal developments in Europe have created complexity and uncertainty regarding such transfers of personal data from the EEA to the United States.

For example, on July 16, 2020, the Court of Justice of the European Union, or CJEU, invalidated the EU-US Privacy Shield Framework, or Privacy Shield, under which personal data could be transferred from the EEA to United States entities that had self-

While the CJEU upheld the

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certified under the Privacy Shield scheme.

While the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances.

Use of the standard contractual clauses must now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals and additional measures and/or contractual provisions may need to be put in place, however, the nature of these additional measures is currently uncertain.

adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), the CJEU ruled that the underlying data transfers must be assessed on a case-by-case basis by the data controller to determine whether the personal data will be adequately protected.

As a result, on June 4, 2021 the European Commission published a decision adopting an updated set of new standard contractual clauses designed to address issues identified by the CJEU.

Existing data transfers that rely on the old standard contractual clauses can continue to be used until December 27, 2022 and the use of the new standard contractual clauses will still need to be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals.

The exact scope and applicability of the new standard contractual clauses is currently unclear, particularly regarding transfers to parties outside the EEA who are already subject to the GDPR.

We are awaiting further clarification from the European Commission and therefore the full scope of application of the standard contractual clauses remains subject to review and change as we get a better understanding from the European Commission and national regulators.

European data protection law provides that EEA member states may make their own further laws and regulations limiting the processing of genetic, biometric or health data, which could limit our ability to use and share personal data or could cause our costs could increase, and harm our business and financial condition.

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Failure to comply with the requirements of GDPR and the applicable national data protection and marketing laws of the EEA member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties as well as individual claims for compensation .

Further, following the United Kingdom’s departure from the EU and EEA on January 31, 2020 and the end of the transition period on December 31, 2020, we will have to comply with the GDPR and the GDPR as incorporated into the United Kingdom domestic law, the Data Protection Act 2018, the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global turnover.

Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules.

If we fail to comply with any such laws or regulations, we may face significant fines and penalties that could adversely affect our business, financial condition and results of operations.

Further, from January 1, 2021, we have had to comply with the GDPR and the United Kingdom GDPR, which, together with the amended United Kingdom Data Protection Act 2018, retains the GDPR in United Kingdom national law .

The United Kingdom data protection regime has the ability to separately fine up to the greater of £17.5 million or 4% of global turnover.

The relationship between the United Kingdom and the EU in relation to certain aspects of data protection law remains unclear, and it is unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term.

On June 28, 2021, the European Commission adopted an adequacy decision in favor of the United Kingdom, enabling data transfers from EU member states to the United Kingdom without additional safeguards.

However, the United Kingdom adequacy decision will automatically expire in June 2025 unless the European Commission renews or extends that decision and remains under review by the Commission during this period.

These changes may lead to additional costs and increase our overall risk exposure.

Numerous other state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality and security of patient health information.

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We intend to continue to comprehensively protect all personal information and to comply with all applicable laws regarding the protection of such information.

If our operations are found to be in violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject to penalties, including potentially significant criminal and civil and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

As of June 30, 2020, we had approximately 7,770 employees or full-time consultants, of which approximately 3,490 were employed in cost of sales activities including areas such as warehousing and manufacturing, 1,280 in research and development and 3,000 in sales, marketing and administration.

Of our employees and consultants, approximately 3,030 were located in the United States, Canada and Latin America, 1,560 in Australia, 1,260 in Europe and 1,920 in Asia.

If we fail to comply with any such laws or regulations, we may face significant fines and penalties that could adversely affect our business, financial condition and results of operations, damage our reputation and customers’ trust.

Human Capital

At ResMed, our mission of transforming patient care in the out-of-hospital setting through innovative solutions and tech-driven integrated care is achieved by our commitment and efforts in fostering an inclusive environment that creates a strong sense of belonging, unlocking the potential, passion and creativity of our people.

Our Code of Business Conduct & Ethics, Diversity and Inclusion programs and other practices and policies on workplace behavior, discrimination and harassment, health and safety, and employee benefits reinforce this environment and facilitate talent attraction, retention, and development.

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As of June 30, 2021, we had approximately 7,970 employees or contingent workers, of which approximately 3,490 were employed in cost of sales activities including areas such as warehousing and manufacturing, 1,370 in research and development and 3,110 in sales, marketing and administration.

Of our employees and contingent workers, approximately 2,960 (37%) were located in the United States, Canada and Latin America, 2,080 (26%) in Asia, 1,550 (19%) in Australia and 1,380 (17%) in Europe.

We believe that the success of our business will depend, in part, on our ability to attract and retain qualified personnel.

Diversity & Inclusion

Our values of belonging, inclusion and diversity for success enables us to unlock the strengths of our people to transform healthcare and improve lives.

Current strategic key initiatives include the management and expansion of Employee Resource Groups (“ERG”) and their leaders and Executive Sponsors, learning and development opportunities around the concepts of leading inclusively, inclusion in the workforce and unconscious bias, talent acquisition efforts around a sourcing and hiring competitive edge strategy, external relationships and partnerships, and internal metrics and measurements.

Employee Resource Groups.

We place high value on inclusion-building initiatives that create opportunities around cultural awareness and social learnings;

this is largely done through engaging employees in our ERG programs supported by employees with diverse backgrounds, experiences or characteristics who share a common interest in professional development, improving corporate culture and delivering sustained business results.

We maintain our ERG chapters worldwide and currently have nine groups:

Black, Asia-American-Pacific Islander, LGBTQIA+, Hispanic and Latin, Veterans, Women, Women in Sales, Parents and Mosaics in Ireland and India that collectively focus on local and culturally appropriate inclusion-building needs.

Learning & Development of D&I Values.

Our leaders across the organization work directly with the Director of Diversity to identify and provide awareness trainings for their teams.

We are launching a day of learning in each region for employees to learn more about diversity and inclusion.

Strategic Inclusive Development .

A Global Council of Ambassadors meets every two months to review and assess developments, observations and impressions related to ongoing diversity and inclusion efforts.

We are in the process of updating our policies and Employee Handbook to formalize certain inclusivity initiatives.

Additionally, we are assessing the language within the source code of our products and platforms to ensure that is inclusive and does not perpetuate racist stereotypes.

Leadership Engagement .

C-Suite Executives alongside the COO and CEO receive quarterly updates on diversity data and inclusion-building efforts.

Additionally, the CEO and senior leaders across the organization have diversity and inclusion objectives embedded in their annual and quarterly goals.

Sourcing & Recruiting .

We train our recruiting workforce in diversity sourcing strategies and partners with external organizations that develop and supply diverse talent.

In addition, we are building a diversity dashboard to better understand its metrics around applicants, candidates and its current workforce.

Campaigns are being designed to collect more internal data and efforts are being made around gathering prospective candidates.

Talent Development and Retention

Building and strengthening our talent pipeline is imperative to our success.

Our approach to talent and performance is designed to ensure employees and managers have regular feedback conversations about performance goals and development, to enable our high-performance culture, and to create an environment where we achieve our strategy

At ResMed, we have specific career and development pathways designed for specific roles in consultation with operational management, human resources, and learning and development specialists.

We provide online courses that are role-specific, with formal tracking of employee completion and performance.

Online and face-to-face courses on operational compliance issues are developed and delivered in-house.

Online compliance courses on ResMed’s Code of Business Conduct and Ethics, diversity and inclusion, US Foreign Corrupt Practices Act, and health and safety are developed by our Learning and Development team with external subject-matter advisers.

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Employee Safety and COVID-19 Related Measures

We believe maintaining a physically safe and mentally healthy working environment is essential in supporting our people deliver their best work.

We employ global standards to provide the framework upon which locally compliant, integrated and effective health and safety management systems are built that enable the capability, autonomy & accountability of the local leaders to manage health and safety through day to day functions.

Our approach is to place health & safety as a positive contributor to innovation, continuous improvement and business sustainability through focusing on making work easier which in turn makes work safer and more efficient .

In response to COVID-19, we maximized the production of ventilators, masks, and other respiratory devices to reach the patients who needed them most.

This required keeping our employees safe and healthy, and keeping our manufacturing and distribution centers safe and operational.

As such, in compliance with government regulations, we invested in creating safe work environments for our employees by implementing the following measures:

 Adding work from home flexibility;

 Adjusting attendance policies to encourage those who are sick to stay home;

 Increasing cleaning protocols across all locations;

 Initiating regular communication regarding impacts of the COVID-19 pandemic, including health and safety protocols and procedures;

 Facilitating access to and encouraging vaccination of our employees

 Implementing temperature screening of employees at our sites;

 Establishing new physical distancing procedures for employees who need to be onsite;

 Providing additional personal protective equipment and cleaning supplies;

 Modifying workspaces

 Implementing protocols to address actual and suspected COVID-19 cases and potential exposure;

 Prohibiting all domestic and international non-essential travel for all employees.

As COVID-19 restrictions abate, we may lift some of these measures in certain locations based on local needs and in accordance with local regulations.

Employee Engagement

We regularly seek employee feedback and sentiment about our workplace through a global engagement surveys that enable our people to comment on matters related to their employment experience.

We openly share the survey results throughout the company and encourage teams to put in place action plans at global and local levels to address priority issues.

Where benchmarks are available, our results are evaluated against comparable peer groups.

Employee Wellbeing

We are committed to improving the quality of life of our customers, our people and their families.

We recognize the benefits of a healthy workforce and promote a holistic and inclusive approach to health and safety.

Our health and wellbeing programs differ by country and may include company-sponsored health insurance, retirement savings plans, sleep apnea screening and treatment, smoking cessation, gym membership discounts, seasonal flu vaccinations, and many other programs to drive healthy behaviors and awareness.

As part of our commitment to addressing the stigma of mental health, leadership continually communicates the importance of self-care, asking for help, and setting work/life boundaries.

We provide a comprehensive, company-funded global Employee Assistance Program (EAP) offering free local, expert mental health services for our people and their household through one-on-one support, monthly webinars, online courses, and crisis intervention services.

Additionally, we implemented a company-wide Wellbeing Day for our people to focus on their mental, social and physical health.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business