What changed in this filing

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Item 1. Financial Statements

2022-04-29 compared with 2022-01-28 · 391 added, 304 removed, 710 unchanged (49% of the section changed)

3 unchanged sentences

(In US$ and in thousands, except share and per share data)

2022 June 30,

Current assets:

Cash and cash equivalents $ 201,769 $ 295,278

Accounts receivable, net of allowances of $ 28,215 and $ 32,138

‎ at December 31, 2021 and June 30, 2021, respectively

Accounts receivable, net of allowances of $ 24,411 and $ 32,138 at March 31, 2022 and June 30, 2021, respectively

508,580 614,292

Inventories (note 3) 664,943 457,033

10 unchanged sentences

Total non-current assets 3,200,964 3,153,368

Total assets $ 4,905,264 $ 4,728,125

Liabilities and Stockholders’ Equity

20 unchanged sentences

Common stock, $ 0.004 par value, 350,000,000 shares authorized;

‎ 188,048,404 issued and 146,212,170 outstanding at December 31, 2021 and

‎ 187,484,592 issued and 145,648,358 outstanding at June 30, 2021

188,102,293 issued and 146,266,059 outstanding at March 31, 2022 and 187,484,592 issued and 145,648,358 outstanding at June 30, 2021

Additional paid-in capital 1,645,453 1,622,199

Retained earnings 3,480,163 3,079,640

Treasury stock, at cost, 41,836,234 shares at December 31, 2021 and June 30, 2021

( 1,623,256 )

Treasury stock, at cost, 41,836,234 shares at March 31, 2022 and June 30, 2021

( 1,623,256 ) ( 1,623,256 )

3 unchanged sentences

See the accompanying notes to the unaudited condensed consolidated financial statements.

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

2 unchanged sentences

Three Months Ended

‎ December 31,

Six Months Ended

‎ December 31,

March 31, Nine Months Ended

2022 2021 2022 2021

Net revenue - Sleep and Respiratory Care products $ 763,358 $ 674,931 $ 2,365,697 $ 2,042,909

Net revenue - Software as a Service 101,142 93,836 297,693 277,813

Net revenue 864,500 768,767 2,663,390 2,320,722

Cost of sales - Sleep and Respiratory Care products 324,618 270,351 1,017,494 833,203

5 unchanged sentences

Total cost of sales 373,303 321,509 1,161,585 972,319

Gross profit 491,197 447,258 1,501,805 1,348,403

Selling, general, and administrative 182,401 160,446 544,483 488,904

8 unchanged sentences

Gain (loss) on equity investments (note 5) ( 1,735 ) 4,666 ( 527 ) 9,442

Other, net 1,878 705 729 1,205

Total other income (loss), net ( 7,946 ) ( 5,421 ) ( 22,495 ) ( 17,589 )

Income before income taxes 226,319 218,005 722,394 644,451

Basic earnings per share (note 9)

Diluted earnings per share (note 9)

Income taxes 47,307 296,486 138,018 365,046

Net income (loss) $ 179,012 $ ( 78,481 ) $ 584,376 $ 279,405

Basic earnings (loss) per share (note 9) $ 1.22 $ ( 0.54 ) $ 4.00 $ 1.92

Diluted earnings (loss) per share (note 9) $ 1.22 $ ( 0.54 ) $ 3.97 $ 1.91

Dividend declared per share $ 0.42 $ 0.39 $ 1.26 $ 1.17

Basic shares outstanding (000's)

Diluted shares outstanding (000's)

Basic shares outstanding (000's) 146,240 145,513 145,969 145,217

Diluted shares outstanding (000's) 146,962 145,513 147,034 146,394

See the accompanying notes to the unaudited condensed consolidated financial statements.

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In US$ and in thousands)

Three Months Ended

‎ December 31,

Six Months Ended

‎ December 31,

March 31, Nine Months Ended

2022 2021 2022 2021

Net income (loss) $ 179,012 $ ( 78,481 ) $ 584,376 $ 279,405

Other comprehensive income (loss):

Foreign currency translation (loss) gain adjustments ( 1,046 ) ( 32,822 ) ( 30,654 ) 88,009

Comprehensive income

Comprehensive income (loss) $ 177,966 $ ( 111,303 ) $ 553,722 $ 367,414

See the accompanying notes to the unaudited condensed consolidated financial statements.

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

1 unchanged sentence

(In US$ and in thousands)

Treasury Stock

Common Stock Additional

Treasury Stock Retained

Comprehensive

Income (Loss)

Shares Amount Shares Amount

Balance, June 30, 2021

1 unchanged sentence

Common stock issued on exercise of options

61 — 4,354 — — — — 4,354

Common stock issued on vesting of restricted stock units, net of shares withheld for tax 1 — ( 195 ) — — — — ( 195 )

1 unchanged sentence

Other comprehensive income — — — — — — ( 23,516 ) ( 23,516 )

Net income — — — — — 203,613 — 203,613

Dividends declared ($ 0.42 per common share)

Balance, September 30, 2021

— — — — — ( 61,189 ) — ( 61,189 )

Balance, September 30, 2021 187,547 $ 583 $ 1,643,661 ( 41,836 ) $ ( 1,623,256 ) $ 3,222,064 $ ( 217,003 ) $ 3,026,049

Common stock issued on exercise of options 39 — 2,378 — — — — 2,378

3 unchanged sentences

Other comprehensive income — — — — — — ( 6,092 ) ( 6,092 )

Net income — — — — — 201,751 — 201,751

Dividends declared ($ 0.42 per common share)

— — — — — ( 61,245 ) — ( 61,245 )

Balance, December 31, 2021

188,048 $ 585 $ 1,629,031 ( 41,836 ) $ ( 1,623,256 ) $ 3,362,570 $ ( 223,095 ) $ 3,145,835

Common stock issued on exercise of options 49 — 2,814 — — — — 2,814

Common stock issued on vesting of restricted stock units, net of shares withheld for tax 5 — ( 2,253 ) — — — — ( 2,253 )

Stock-based compensation costs — — 15,861 — — — — 15,861

Other comprehensive income — — — — — — ( 1,046 ) ( 1,046 )

Net income — — — — — 179,012 — 179,012

Dividends declared ($ 0.42 per common share)

— — — — — ( 61,419 ) — ( 61,419 )

Balance, March 31, 2022 188,102 $ 585 $ 1,645,453 ( 41,836 ) $ ( 1,623,256 ) $ 3,480,163 $ ( 224,141 ) $ 3,278,804

See the accompanying notes to the unaudited condensed consolidated financial statements.

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

1 unchanged sentence

(In US$ and in thousands)

Treasury Stock

Common Stock Additional

Treasury Stock Retained

Comprehensive

Income (Loss)

Shares Amount Shares Amount

Balance, June 30, 2020

1 unchanged sentence

Common stock issued on exercise of options

18 — 1,026 — — — — 1,026

Common stock issued on vesting of restricted stock units, net of shares withheld for tax 3 — 227 — — — — 227

2 unchanged sentences

Cumulative effect adjustment from adoption of the credit loss standard, net of tax — — — — — ( 1,143 ) — ( 1,143 )

Net income — — — — — 178,372 — 178,372

Dividends declared ($ 0.39 per common share)

Balance, September 30, 2020

— — — — — ( 56,511 ) — ( 56,511 )

Balance, September 30, 2020 186,744 $ 580 $ 1,588,018 ( 41,836 ) $ ( 1,623,256 ) $ 2,953,709 $ ( 240,191 ) $ 2,678,860

Common stock issued on exercise of options 29 — 1,857 — — — — 1,857

3 unchanged sentences

Other comprehensive income — — — — — — 77,040 77,040

Net income — — — — — 179,514 — 179,514

Dividends declared ($ 0.39 per common share)

— — — — — ( 56,654 ) — ( 56,654 )

Balance, December 31, 2020

187,340 $ 582 $ 1,574,240 ( 41,836 ) $ ( 1,623,256 ) $ 3,076,569 $ ( 163,151 ) $ 2,864,984

Common stock issued on exercise of options 1 — 139 — — — — 139

Common stock issued on vesting of restricted stock units, net of shares withheld for tax 12 — ( 3,431 ) — — — — ( 3,431 )

Common stock issued on employee stock purchase plan — — 6 — — — — 6

Stock-based compensation costs — — 15,591 — — — — 15,591

Other comprehensive income — — — — — — ( 32,822 ) ( 32,822 )

Net income (loss) — — — — — ( 78,481 ) — ( 78,481 )

Dividends declared ($ 0.39 per common share)

— — — — — ( 56,752 ) — ( 56,752 )

Balance, March 31, 2021 187,353 $ 582 $ 1,586,545 ( 41,836 ) $ ( 1,623,256 ) $ 2,941,336 $ ( 195,973 ) $ 2,709,234

See the accompanying notes to the unaudited condensed consolidated financial statements.

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

1 unchanged sentence

(In US$ and in thousands)

Six Months Ended

‎ December 31,

Nine Months Ended

Cash flows from operating activities:

Net income $ 584,376 $ 279,405

Adjustment to reconcile net income to net cash provided by operating activities:

5 unchanged sentences

Restructuring expenses (note 11) — 8,673

Changes in fair value of business combination contingent consideration

Changes in operating assets and liabilities:

Accounts receivable 98,158 ( 39,899 )

Inventories ( 209,476 ) ( 48,393 )

Prepaid expenses, net deferred income taxes and other current assets ( 127,977 ) ( 41,036 )

6 unchanged sentences

Purchases of investments (note 5) ( 16,614 ) ( 20,038 )

Proceeds from sale of investment 6,802 —

(Payments) / proceeds on maturity of foreign currency contracts ( 5,309 ) 26,306

3 unchanged sentences

Taxes paid related to net share settlement of equity awards ( 52,278 ) ( 49,938 )

Payments of business combination contingent consideration — ( 3,500 )

Proceeds from borrowings, net of borrowing costs 160,000 90,000

13 unchanged sentences

Previously held equity interest ( 4,078 ) —

Deferred payments

Cash paid for acquisitions $ 35,915 $ 35,204

See the accompanying notes to the unaudited condensed consolidated financial statements.

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

15 unchanged sentences

The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2022.

The condensed consolidated financial statements for the three and six months ended December 31, 2021 and December 31, 2020 are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K (our “Form 10-K”) for the year ended June 30, 2021.

The condensed consolidated financial statements for the three and nine months ended March 31, 2022 and March 31, 2021 are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K (our “Form 10-K”) for the year ended June 30, 2021.

Revenue Recognition

4 unchanged sentences

Our SaaS revenue relates to the provision of software access with ongoing support and maintenance services as well as professional services such as training and consulting.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Disaggregation of revenue

1 unchanged sentence

Three Months Ended

‎ December 31,

Six Months Ended

‎ December 31,

March 31, Nine Months Ended

2022 2021 2022 2021

U.S., Canada and Latin America

Devices $ 250,768 $ 192,897 $ 771,475 $ 595,287

Masks and other 224,665 209,984 681,803 637,507

1 unchanged sentence

Software as a Service 101,142 93,836 297,693 277,813

Total $ 576,575 $ 496,717 $ 1,750,971 $ 1,510,607

Combined Europe, Asia and other markets

Devices $ 182,307 $ 172,838 $ 608,268 $ 536,856

Masks and other 105,618 99,212 304,151 273,259

1 unchanged sentence

Global revenue

Devices $ 433,075 $ 365,735 $ 1,379,743 $ 1,132,143

Masks and other 330,283 309,196 985,954 910,766

1 unchanged sentence

Software as a Service 101,142 93,836 297,693 277,813

PART I – FINANCIAL INFORMATION

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Total $ 864,500 $ 768,767 $ 2,663,390 $ 2,320,722

Performance obligations and contract balances

10 unchanged sentences

The following table summarizes our contract balances (in thousands):

2022 June 30,

2021 Balance sheet caption

Contract assets

Accounts receivable, net

Unbilled revenue, current

Prepaid expenses and other current assets

Unbilled revenue, non-current

Prepaid taxes and other non-current assets

Accounts receivable, net $ 508,580 $ 614,292 Accounts receivable, net

Unbilled revenue, current 25,653 10,893 Prepaid expenses and other current assets

Unbilled revenue, non-current 7,018 6,214 Prepaid taxes and other non-current assets

Contract liabilities

Deferred revenue, current

Deferred revenue (current liabilities)

Deferred revenue, non-current

Deferred revenue (non-current liabilities)

Deferred revenue, current ( 112,449 ) ( 109,611 ) Deferred revenue (current liabilities)

Deferred revenue, non-current ( 94,094 ) ( 91,496 ) Deferred revenue (non-current liabilities)

Transaction price determination

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.

In our Sleep and Respiratory Care segment, the amount of consideration received and revenue recognized varies with changes in marketing incentives (e.g.

rebates, discounts, free goods) and returns offered to customers and their customers.

In our Sleep and Respiratory Care segment, the amount of consideration received and revenue recognized varies

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

with changes in marketing incentives (e.g.

rebates, discounts, free goods) and returns offered to our customers and their customers.

When we give customers the right to return eligible products and receive credit, returns are estimated based on an analysis of historical experience.

6 unchanged sentences

For rebates measured over annual periods, we update our estimates on a quarterly basis based on actual sales results and updated forecasts for the remaining rebate periods.

We participate in programs where we issue credits to our Sleep and Respiratory Care distributors when they are required to sell our products below negotiated list prices if we have preexisting contracts with the distributors' customers.

We reduce revenue for future credits at the time of sale to the distributor, which we estimate based on historical experience using the expected value method.

We also offer discounts to both our Sleep and Respiratory Care as well as our SaaS customers as part of normal business practice and these are deducted from revenue when the sale occurs.

7 unchanged sentences

The second practical expedient adopted permits relief from considering a significant financing component when the payment for the good or service is expected to be one year or less.

PART I – FINANCIAL INFORMATION

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Lease Revenue

4 unchanged sentences

Three Months Ended

‎ December 31,

Six Months Ended

‎ December 31,

March 31, Nine Months Ended

2022 2021 2022 2021

Sales-type lease revenue $ 946 $ 2,031 $ 6,598 $ 5,854

1 unchanged sentence

Total lease revenue $ 20,743 $ 24,777 $ 75,978 $ 78,405

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Provision for Warranty

4 unchanged sentences

Should actual product failure rates or estimated costs to repair those product failures differ from our estimates, we would be required to revise our estimated warranty provision.

(a) Recently adopted accounting pronouncements

Recently adopted accounting pronouncements

2021-08 “Business Combinations:

14 unchanged sentences

We neither discretely allocate assets to our operating segments, nor does our Chief Operating Decision Maker evaluate the operating segments using discrete asset information.

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

2 unchanged sentences

Three Months Ended

‎ December 31,

Six Months Ended

‎ December 31,

March 31, Nine Months Ended

2022 2021 2022 2021

Net revenue by segment

1 unchanged sentence

Software as a Service 101,142 93,836 297,693 277,813

Total $ 864,500 $ 768,767 $ 2,663,390 $ 2,320,722

Depreciation and amortization by segment

2 unchanged sentences

Amortization of acquired intangible assets and corporate assets 19,435 24,908 58,405 76,456

Total $ 42,306 $ 39,988 $ 122,198 $ 120,034

Net operating profit by segment

1 unchanged sentence

Software as a Service 23,649 23,052 68,668 70,929

Total $ 291,457 $ 276,745 $ 916,257 $ 834,463

Reconciling items

5 unchanged sentences

(Gain) loss on equity investments 1,735 ( 4,666 ) 527 ( 9,442 )

Other, net ( 1,878 ) ( 705 ) ( 729 ) ( 1,205 )

Income before income taxes $ 226,319 $ 218,005 $ 722,394 $ 644,451

1 unchanged sentence

Components of selected captions in the condensed consolidated balance sheets consisted of the following (in thousands):

Inventories March 31,

2022 June 30,

Raw materials $ 340,335 $ 155,419

2 unchanged sentences

Total inventories $ 664,943 $ 457,033

Property, Plant and Equipment

Property, Plant and Equipment March 31,

2022 June 30,

Property, plant and equipment, at cost $ 1,165,391 $ 1,085,629

1 unchanged sentence

Property, plant and equipment, net $ 513,250 $ 463,490

Other Intangible Assets

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Other Intangible Assets March 31,

2022 June 30,

Developed/core product technology $ 352,304 $ 383,319

10 unchanged sentences

There are no expected residual values related to these intangible assets.

PART I – FINANCIAL INFORMATION

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

A reconciliation of changes in our goodwill by reportable segment is as follows (in thousands):

Six Months Ended December 31, 2021

‎ Respiratory Care

Nine Months Ended March 31, 2022

Respiratory Care SaaS Total

Balance at the beginning of the period $ 633,183 $ 1,294,718 $ 1,927,901

9 unchanged sentences

Non-marketable equity securities are reported at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.

We assess non-marketable equity securities at least quarterly for impairment and consider qualitative and quantitative factors including the investee's financial metrics, product and commercial outlook and cash usage .

All gains and losses on marketable and non-marketable equity securities, realized and unrealized, are recognized in gain (loss) on equity investments as a component of other income (loss), net on the condensed consolidated statements of operations.

1 unchanged sentence

Under this method, we record our share of gains or losses attributable to equity method investments as a component of other income (loss), net on the condensed consolidated statements of operations.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Equity investments by measurement category were as follows (in thousands):

Measurement category

Measurement category March 31,

2022 June 30,

Fair value $ 17,842 $ 29,084

Measurement alternative 38,180 23,002

Equity method 12,477 17,154

Total $ 68,499 $ 69,240

The following tables show a reconciliation of the changes in our equity investments (in thousands):

Six Months Ended December 31, 2021

Non-marketable securities

Marketable securities

Equity method investments

Nine Months Ended March 31, 2022

Non-marketable securities Marketable securities Equity method investments Total

Balance at the beginning of the period $ 23,002 $ 29,084 $ 17,154 $ 69,240

Net additions (reductions) to investments (1)

7,665 ( 3,202 ) 1,250 5,713

Observable price adjustments on non-marketable equity securities 5,367 — — 5,367

5 unchanged sentences

(1) Net additions (reductions) to investments includes additions from purchases, reductions due to exits of securities, or reclassifications due to our acquisition of an investee in which we held a prior equity interest.

PART I – FINANCIAL INFORMATION

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Six Months Ended December 31, 2020

Non-marketable securities

Marketable securities

Equity method investments

Nine Months Ended March 31, 2021

Non-marketable securities Marketable securities Equity method investments Total

Balance at the beginning of the period $ 30,033 $ — $ 14,109 $ 44,142

Additions to investments 2,538 5,000 12,500 20,038

Observable price adjustments on non-marketable equity securities

1,000 — — 1,000

Unrealized gains on marketable equity securities — 8,442 — 8,442

Reclassifications (2)

( 10,569 ) 10,569 — —

Loss attributable to equity method investments — — ( 9,895 ) ( 9,895 )

Carrying value at the end of the period $ 23,002 $ 24,011 $ 16,714 $ 63,727

(2) During the six months ended December 31, 2020, one of our investments, which was previously accounted for under the measurement alternative, completed its initial public offering which resulted in a change of accounting methodology to fair value.

Net unrealized losses recognized for equity investments in non-marketable and marketable securities held as of December 31, 2021 for the three and six months ended December 31, 2021 were $ 6.9 million and $ 2.8 million, respectively.

Net unrealized gains and losses recognized for equity investments in non-marketable and marketable securities held as of December 31, 2020 were a loss of $ 3.7 million for three months ended December 31, 2020 and a gain of $ 4.8 million for six months ended December 31, 2020.

(2) During the nine months ended March 31, 2021, one of our investments, which was previously accounted for under the measurement alternative, completed its initial public offering which resulted in a change of accounting methodology to fair value.

Net unrealized losses recognized for equity investments in non-marketable and marketable securities held as of March 31, 2022 for the three and nine months ended March 31, 2022 were $ 1.7 million and $ 4.5 million, respectively.

Net unrealized gains recognized for equity investments in non-marketable and marketable securities held as of March 31, 2021 for the three and nine months ended March 31, 2021 were $ 4.7 million and $ 9.4 million, respectively.

(6) Income Taxes

3 unchanged sentences

The ATO settlement fully resolved the dispute for all prior years, with no admission of liability and provides clarity in relation to certain future taxation principles.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

The final net impact of the ATO settlement was $ 238.7 million, which represents a gross amount of $ 381.7 million, including interest and penalties of $ 48.1 million, and adjustments for credits and deductions of $ 143.0 million.

4 unchanged sentences

Changes in the liability for warranty costs, which is included in accrued expenses in our condensed consolidated balance sheets, are as follows (in thousands):

Six Months Ended

‎ December 31,

Nine Months Ended

Balance at the beginning of the period $ 22,032 $ 21,132

4 unchanged sentences

Debt consisted of the following (in thousands):

2022 June 30,

Short-term debt $ 11,967 $ 12,000

2 unchanged sentences

Long-term debt, net $ 668,735 $ 643,351

PART I – FINANCIAL INFORMATION

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Total debt $ 680,702 $ 655,351

Credit Facility

8 unchanged sentences

The Revolving Credit Agreement and Term Credit Agreement contain customary covenants, including, in each case, a financial covenant that requires that we maintain a maximum leverage ratio of funded debt to EBITDA (as defined in the Revolving Credit Agreement and Term Credit Agreement, as applicable).

The entire principal amounts of the revolving credit facility and term credit facility, and, in each case, any accrued but unpaid interest may be declared immediately due and payable if an event of default occurs, as defined in the Revolving Credit Agreement and the Term Credit Agreement, as applicable.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

principal amounts of the revolving credit facility and term credit facility, and, in each case, any accrued but unpaid interest may be declared immediately due and payable if an event of default occurs, as defined in the Revolving Credit Agreement and the Term Credit Agreement, as applicable.

Events of default under the Revolving Credit Agreement and the Term Credit Agreement include, in each case, failure to make payments when due, the occurrence of a default in the performance of any covenants in the respective agreements or related documents, or certain changes of control of us, or the respective guarantors of the obligations borrowed under the Revolving Credit Agreement and Term Credit Agreement.

2 unchanged sentences

The outstanding principal amounts bear interest at a rate equal to LIBOR plus 0.75 % to 1.50 % (depending on the then-applicable leverage ratio) or the Base Rate (as defined in the Revolving Credit Agreement and the Term Credit Agreement, as applicable) plus 0.0 % to 0.50 % (depending on the then-applicable leverage ratio).

At December 31, 2021, the interest rate that was being charged on the outstanding principal amounts was 0.9 %.

At March 31, 2022, the interest rate that was being charged on the outstanding principal amounts was 1.1 %.

An applicable commitment fee of 0.100 % to 0.175 % (depending on the then-applicable leverage ratio) applies on the unused portion of the revolving credit facility.

As of December 31, 2021, we had $ 1.6 billion available for draw down under the revolving credit facility.

As of March 31, 2022, we had $ 1.6 billion available for draw down under the revolving credit facility.

We are required to disclose the fair value of financial instruments for which it is practicable to estimate the value, even though these instruments are not recognized at fair value in the consolidated balance sheets.

As the Revolving Credit and Term Credit Agreements’ interest rate is calculated as LIBOR plus the spreads described above, its carrying amount is equivalent to its fair value as at December 31, 2021 and June 30, 2021, which was $ 182.0 million and $ 158.0 million, respectively.

As the Revolving Credit and Term Credit Agreements’ interest rate is calculated as LIBOR plus the spreads described above, its carrying amount is equivalent to its fair value as at March 31, 2022 and June 30, 2021, which was $ 182.0 million and $ 158.0 million, respectively.

Quoted market prices in active markets for similar liabilities based inputs (Level 2) were used to estimate fair value.

6 unchanged sentences

This ratio is calculated at the end of each reporting period for which the Note Purchase Agreement requires us to deliver financial statements, using the results of the 12 consecutive month period ending with such reporting period.

PART I – FINANCIAL INFORMATION

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

As of December 31, 2021 and June 30, 2021 the Senior Notes had a carrying amount of $ 500.0 million, excluding deferred borrowing costs, and an estimated fair value of $ 525.8 million and $ 530.4 million, respectively.

As of March 31, 2022 and June 30, 2021 the Senior Notes had a carrying amount of $ 500.0 million, excluding deferred borrowing costs, and an estimated fair value of $ 495.9 million and $ 530.4 million, respectively.

Quoted market prices in active markets for similar liabilities based inputs (Level 2) were used to estimate fair value.

At December 31, 2021, we were in compliance with our debt covenants and there was $ 682.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

(9) Earnings Per Share

Basic earnings per share is computed by dividing the net income available to common stockholders by the weighted average number of shares of common stock outstanding.

For purposes of calculating diluted earnings per share, the denominator includes both the weighted average number of shares of common stock outstanding and the number of dilutive common stock equivalents such as stock options and restricted stock units.

The weighted average number of outstanding stock options and restricted stock units not included in the computation of diluted earnings per share were 49,762 and 196,856 for the three months ended December 31, 2021 and 2020 , respectively, and 25,470 and 154,888 for the six months ended December 31, 2021 and 2020, respectively, as the effect would have been anti-dilutive.

At March 31, 2022, we were in compliance with our debt covenants and there was $ 682.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

(9) Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing the net income available to common stockholders by the weighted average number of shares of common stock outstanding.

For purposes of calculating diluted earnings (loss) per share, the denominator includes both the weighted average number of shares of common stock outstanding and the number of dilutive common stock equivalents such as stock options and restricted stock units.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

The calculation of diluted weighted average shares for the three months ended March 31, 2021 excluded 857,799 potentially dilutive common shares because we reported a net loss.

The weighted average number of outstanding stock options and restricted stock units not included in the computation of diluted earnings (loss) per share were 307,368 and 225,580 for the three months ended March 31, 2022 and 2021, respectively, and 52,599 and 200,341 for the nine months ended March 31, 2022 and 2021, respectively, as the effect would have been anti-dilutive.

Basic and diluted earnings per share are calculated as follows (in thousands except per share data):

Three Months Ended

‎ December 31,

Six Months Ended

‎ December 31,

March 31, Nine Months Ended

2022 2021 2022 2021

Net income (loss) $ 179,012 $ ( 78,481 ) $ 584,376 $ 279,405

Basic weighted-average common shares outstanding 146,240 145,513 145,969 145,217

2 unchanged sentences

Diluted weighted average shares 146,962 145,513 147,034 146,394

Basic earnings per share

Diluted earnings per share

Basic earnings (loss) per share $ 1.22 $ ( 0.54 ) $ 4.00 $ 1.92

Diluted earnings (loss) per share $ 1.22 $ ( 0.54 ) $ 3.97 $ 1.91

(10) Legal Actions and Contingencies

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According to the complaint, the patents are directed to systems and methods for diagnosing and treating patient sleeping disorders during different sleep states.

The complaint seeks money damages and attorneys’ fees.

The complaint seeks monetary damages and attorneys’ fees.

ResMed answered the complaint on September 30, 2021 and filed a motion to dismiss the complaint on the basis that the patents are invalid because the subject matter of the patents is not patentable under the Supreme Court and Federal Circuit precedent.

The motion to dismiss is pending.

PART I – FINANCIAL INFORMATION

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

The motion to dismiss was granted in part, and denied in part.

The matter is proceeding to discovery.

On January 27, 2021, the International Trade Commission instituted In Re Certain UMTS and LTE Cellular Communications Modules and Products Containing the Same, Investigation No.

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On October 6-14, 2021, the administrative law judge held a hearing on the merits.

The administrative law judge is expected to issue his initial determination on March 4, 2022, and the full Commission is expected to issue its final determination on or about July 5, 2022.

The administrative law judge issued an initial determination on April 1, 2022, finding no violation of any of the Philips patents asserted in the ITC.

Philips is seeking review by the full International Trade Commission, and the Commission is expected to issue its final determination on or about August 1, 2022.

On December 17, 2020, Philips filed companion cases for patent infringement against the same defendants in the United States District Court for the District of Delaware, case nos.

1:20-cv-01707, 01708, 01709, 01710, 01711, and 01713 (CFC) seeking damages, an injunction, and a declaration from the court on the amount of a fair reasonable and non-discriminatory license rate for the standard essential patents it is asserting against the defendants.

The district court cases have been stayed pending the ITC proceedings.

The district court cases have been stayed pending the resolution of the ITC proceedings.

ResMed is not a party to the ITC investigation or the district court cases but sells products that incorporate some of the communications modules at issue in the cases.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

On October 1, 2021 ResMed acquired Ectosense, manufacturer of the NightOwl device used for home sleep testing.

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20-cv-60719-WPD, based on Ectosense’s description of the NightOwl’s measurement of peripheral arterial tone and use of the acronym “PAT” in its advertising.

Ectosense has filed a counterclaim for cancellation of Itamar’s “PAT” trademark and for false advertising by Itamar.

Ectosense filed a counterclaim for cancellation of Itamar’s “PAT” trademark and for false advertising by Itamar.

Each party seeks damages and injunctive relief against the other.

The parties are engaged in discovery and the matter is set for trial during the two-week court calendar commencing Monday, September 12, 2022.

Based on currently available information, we are unable to make a reasonable estimate of loss or range of losses, if any, arising from these matters.

The matter was resolved on April 5, 2022, in a confidential settlement agreement to the mutual satisfaction of the parties.

Based on currently available information, we are unable to make a reasonable estimate of loss or range of losses, if any, arising from matters that remain open.

Contingent Obligations Under Recourse Provisions

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This is applied to receivables sold with recourse and is recorded in accrued expenses.

During the six months ended December 31, 2021 and December 31, 2020, receivables sold with limited recourse were $ 94.2 million and $ 72.6 million, respectively.

As of December 31, 2021, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $ 41.1 million and $ 6.1 million, respectively.

During the nine months ended March 31, 2022 and March 31, 2021, receivables sold with limited recourse were $ 126.2 million and $ 112.2 million, respectively.

As of March 31, 2022, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $ 47.0 million and $ 3.4 million, respectively.

As of June 30, 2021, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $ 30.2 million and $ 8.2 million, respectively.

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In November 2020, we closed our Portable Oxygen Concentrator business, which was part of the Sleep and Respiratory Care segment.

During the three and six months ended December 31, 2020, we recognized restructuring expenses of $ 13.9 million primarily related to inventory write-downs of $ 5.2 million, accelerated amortization of acquired intangible assets of $ 5.1 million, asset impairments of $ 2.3 million, employee-related costs of $ 0.7 million and contract cancellation costs of $ 0.6 million.

Of the total expense recognized during the three and six months ended December 31, 2020, the inventory write-down of $ 5.2 million is presented within cost of sales and the remaining $ 8.7 million in restructuring costs is separately disclosed as restructuring expenses on the condensed consolidated statements of income.

We did not incur additional material expenses in connection with this activity after December 31, 2020, and the restructure was completed as of June 30, 2021.

PART I – FINANCIAL INFORMATION

During the three and nine months ended March 31, 2021, we recognized restructuring expenses of $ 13.9 million primarily related to inventory write-downs of $ 5.2 million, accelerated amortization of acquired intangible assets of $ 5.1 million, asset impairments of $ 2.3 million, employee-related costs of $ 0.7 million and contract cancellation costs of $ 0.6 million.

Of the total expense recognized during the three and nine months ended March 31, 2021, the inventory write-down of $ 5.2 million is presented within cost of sales and the remaining $ 8.7 million in restructuring costs is separately disclosed as restructuring expenses on the condensed consolidated statements of income.

We did not incur additional material expenses in connection with this activity after March 31, 2021, and the restructure was completed as of June 30, 2021.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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In that event, the market price for our common stock will likely decline and you may lose all or part of your investment.

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is an overview of our results of operations for the three and six months ended December 31, 2021.

The following is an overview of our results of operations for the three and nine months ended March 31, 2022.

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition.

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We are committed to ongoing investment in research and development and product enhancements.

During the three months ended December 31, 2021, we invested $62.5 million on research and development activities, which represents 7.0% of net revenues, with a continued focus on the development and commercialization of new, innovative products and solutions that improve patient outcomes, create efficiencies for our customers and help physicians and providers better manage chronic disease and lower healthcare costs.

During the three months ended December 31, 2021 we continued the launch of AirSense 11, which introduces new features such as a touch screen, algorithms for patients new to therapy and digital enhancements and over-the-air update capabilities.

During the three months ended March 31, 2022, we invested $66.8 million on research and development activities, which represents 7.7% of net revenues, with a continued focus on the development and commercialization of new, innovative products and solutions that improve patient outcomes, create efficiencies for our customers and help physicians and providers better manage chronic disease and lower healthcare costs.

During the three months ended March 31, 2022 we continued the launch of AirSense 11, which introduces new features such as a touch screen, algorithms for patients new to therapy and digital enhancements and over-the-air update capabilities.

Due to multiple acquisitions, including Brightree in April 2016, HEALTHCAREfirst in July 2018 and MatrixCare in November 2018, our operations now include out-of-hospital software platforms designed to support the professionals and caregivers who help people stay healthy in the home or care setting of their choice.

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We have determined that we have two operating segments, which are the sleep and respiratory disorders sector of the medical device industry (“Sleep and Respiratory Care”) and the supply of business management software as a service to out-of-hospital health providers (“SaaS”).

Net revenue for the three months ended December 31, 2021 was $894.9 million, an increase of 12% compared to the three months ended December 31, 2020.

Gross margin was 56.4% for the three months ended December 31, 2021 compared to 57.8% for the three months ended December 31, 2020.

Diluted earnings per share was $1.37 for the three months ended December 31, 2021 , compared to diluted earnings per share of $1.23 for the three months ended December 31, 2020 .

At December 31, 2021, our cash and cash equivalents totaled $194.5 million, our total assets were $4.7 billion and our stockholders’ equity was $3.1 billion.

Net revenue for the three months ended March 31, 2022 was $864.5 million, an increase of 12% compared to the three months ended March 31, 2021.

Gross margin was 56.8% for the three months ended March 31, 2022 compared to 58.2% for the three months ended March 31, 2021.

Diluted earnings per share was $1.22 for the three months ended March 31, 2022, compared to diluted loss per share of $0.54 for the three months ended March 31, 2021.

At March 31, 2022, our cash and cash equivalents totaled $201.8 million, our total assets were $4.9 billion and our stockholders’ equity was $3.3 billion.

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.

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dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”).

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Impact of COVID-19

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

Our primary goal during the COVID-19 pandemic is the preservation of life.

We have prioritized protecting the health and safety of our employees and continuing to use our employees’ talents and our resources to help society meet and overcome the challenges the pandemic poses.

The COVID-19 pandemic has continued to impact the global supply chain, primarily through a lack of availability of raw materials and electronic components, which has constrained and restricted our ability to initially meet the demand for our sleep products following a recent product recall by one of our competitors.

Key Trends and Economic Factors Affecting Our Business

Supply Chain Disruptions

The COVID-19 pandemic has continued to impact the global supply chain, primarily through a lack of availability of raw materials and electronic components.

The lack of raw materials and electronic components is also impacting companies outside of our direct industry, which is resulting in a competitive supply environment causing higher costs, requiring us to commit to minimum purchase obligations as well as make upfront payments to our suppliers.

Additionally, we have observed a reduction in both inbound and outbound transportation capacity as a result of the pandemic, which is causing longer lead times in receiving raw materials into and distributing finished goods out of our manufacturing facilities in addition to increased freight costs.

Additionally, we have observed a reduction in both inbound and outbound transportation capacity as a result of port closures and delays associated with the pandemic, which is causing longer lead times in receiving raw materials into and distributing finished goods out of our manufacturing facilities, in addition to increased freight costs.

These highly competitive and constrained supply chain conditions are increasing our cost of sales, which has and may continue to decrease our gross margin.

Given the ongoing uncertainty regarding the duration and extent of the COVID-19 pandemic, we are uncertain as to the duration and extent of constraint on our supply chain.

During the three months ended December 31, 2021, we did not observe material incremental demand for our ventilator devices and masks associated with the COVID-19 pandemic.

Although there is still substantial uncertainty, we believe the global demand for ventilators and other respiratory support devices used to treat COVID-19 patients has largely been met.

As such, we do not expect material COVID-19-generated demand for our ventilator products for the remainder of the fiscal year ending June 30, 2022.

Diagnostic pathways for sleep apnea treatment, including physician practices, home medical equipment, or HME, suppliers and sleep clinics, have been impacted and, in some instances, been required, to temporarily close due to governments’ “shelter-in-place” orders, quarantines or similar orders or restrictions enacted to control the spread of COVID-19.

In some countries, new patients are prescribed sleep apnea treatment through hospitals that are directing their resources to critical care, including COVID-19 treatment.

The impact on these diagnostic and prescription pathways has resulted in a decrease in demand from new patients for our products designed to treat sleep apnea.

Although many governments have reduced or removed COVID-19 restrictions and implemented vaccination programs to varying degrees, we are uncertain as to the duration and extent of the impact on demand for our sleep devices.

However, due to the nature of the installed base of existing patients using our devices, we have not seen any significant adverse impact on demand for re-supply of our masks.

Our SaaS business has also been affected by COVID-19 and measures taken to control the spread of COVID-19.

Some of our existing and potential SaaS customers are HME distributors and have been impacted by the same temporary business closures noted above.

We also have existing and potential SaaS customers that operate care facilities and are either receiving and treating patients infected with COVID-19 or have implemented significant measures to safeguard their facilities against a potential COVID-19 outbreak.

Given these challenging business conditions, businesses may be deterred from adopting new or changing SaaS platforms, which may adversely impact our ability to engage new customers for our SaaS businesses, or expand the services used by existing customers.

Competitor Recall

An ongoing product recall by one of our competitors, Philips, has resulted in increased demand for our sleep and respiratory care devices.

The supply chain disruptions outlined above have constrained and restricted our ability to meet this increased demand and w e expect these constraints will continue for the remainder of the fiscal year ending June 30, 2022.

Although there is still substantial uncertainty associated with the COVID-19 pandemic, we believe the global demand for ventilators and other respiratory support devices used to treat COVID-19 patients has largely been met.

We did not observe material incremental demand for our ventilator devices and masks associated with the pandemic during the three months ended March 31, 2022 and do not expect material COVID-19-generated demand for our ventilator products for the remainder of the fiscal year ending June 30, 2022.

In most markets, diagnostic pathways for sleep apnea treatment, including physician practices, home medical equipment (“HME”) distributors, and sleep clinics have largely recovered towards pre-pandemic levels as vaccines and boosters roll out globally.

Likewise, we have continued to observe stabilizing patient flow in our out-of-hospital care settings within our SaaS business.

Our ability to continue to operate without any significant negative impacts will in part depend on our ability to protect our employees.

We have endeavored and continue to follow recommended actions of government and health authorities to protect our employees worldwide, but since COVID-19 was declared a pandemic in March 2020, we were able to broadly maintain our operations, and we are beginning the slow and careful process of progressively returning to work in some of our offices around the world.

We have endeavored and continue to follow recommended actions of government and health authorities to protect our employees worldwide as we progressively reopen our offices around the world.

The pandemic has not negatively impacted our liquidity position.

PART I – FINANCIAL INFORMATION

Impact on Our Business

As a result of these trends, we were not able to meet all the demand available in the market during the three months ended March 31, 2022.

We are being allocated components from our suppliers, particularly semiconductor chips, and we are thus being forced to allocate our outbound products to our customers.

We have established an allocation process with clear guiding principles that give priority to the production and delivery of devices to meet the needs of the highest acuity patients first.

In addition to component supply issues, the ongoing freight challenges are impacting our ability to respond as rapidly as we would like to the demand for our products.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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Results of Operations

Three Months Ended December 31, 2021 Compared to the Three Months Ended December 31, 2020

Net revenue for the three months ended December 31, 2021 increased to $894.9 million from $800.0 million for the three months ended December 31, 2020, an increase of $94.9 million or 12% (a 13% increase on a constant currency basis).

Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021

Net revenue for the three months ended March 31, 2022 increased to $864.5 million from $768.8 million for the three months ended March 31, 2021, an increase of $95.7 million or 12% (a 14% increase on a constant currency basis).

The following table summarizes our net revenue disaggregated by segment, product and region (in thousands):

Three Months Ended

‎ December 31,

Constant Currency*

March 31, % Change Constant Currency*

U.S., Canada and Latin America

Devices $ 250,768 $ 192,897 30 %

Masks and other 224,665 209,984 7

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Software as a Service 101,142 93,836 8

Total $ 576,575 $ 496,717 16

Combined Europe, Asia and other markets

Devices $ 182,307 $ 172,838 5 % 10 %

Masks and other 105,618 99,212 6 13

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Global revenue

Devices $ 433,075 $ 365,735 18 % 21 %

Masks and other 330,283 309,196 7 9

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Software as a Service 101,142 93,836 8 8

Total $ 864,500 $ 768,767 12 14

* Constant currency numbers exclude the impact of movements in international currencies.

Sleep and Respiratory Care

Net revenue from our Sleep and Respiratory Care business for the three months ended December 31, 2021 was $795.8 million, an increase of 12% compared to net revenue for the three months ended December 31, 2020.

Net revenue from our Sleep and Respiratory Care business for the three months ended March 31, 2022 was $763.4 million, an increase of 13% compared to net revenue for the three months ended March 31, 2021.

Movements in international currencies against the U.S.

dollar negatively impacted net revenue by approximately $5.8 million for the three months ended December 31, 2021.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the three months ended December 31, 2021 increased by 13% compared to the three months ended December 31, 2020.

dollar negatively impacted net revenue by approximately $14.4 million for the three months ended March 31, 2022.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the three months ended March 31, 2022 increased by 15% compared to the three months ended March 31, 2021.

The increase in net revenue was primarily attributable to an increase in unit sales of our devices and masks, including increased demand following a recent product recall by one of our competitors.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the three months ended December 31, 2021 increased to $486.8 million from $426.8 million for the three months ended December 31, 2020, an increase of $60.0 million or 14%.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the three months ended March 31, 2022 increased to $475.4 million from $402.9 million for the three months ended March 31, 2021, an increase of $72.6 million or 18%.

The increase was primarily due to an increase in unit sales of our devices and masks, including increased demand following a recent product recall by one of our competitors.

Net revenue in combined Europe, Asia and other markets increased for the three months ended December 31, 2021 to $309.0 million from $281.4 million for the three months ended December 31, 2020, an increase of $27.6 million or 10% (a 12% increase on a constant currency basis).

Net revenue in combined Europe, Asia and other markets increased for the three months ended March 31, 2022 to $287.9 million from $272.1 million for the three months ended March 31, 2021, an increase of $15.9 million or 6% (an 11% increase on a constant currency basis).

The constant currency increase in sales in combined Europe, Asia and other markets predominantly reflects an increase in unit sales of our devices and masks, including increased demand following a recent product recall by one of our competitors.

Net revenue from devices for the three months ended December 31, 2021 increased to $452.5 million from $393.0 million for the three months ended December 31, 2020, an increase of $59.5 million or 15%, including an increase of 19% in the U.S., Canada and Latin America and an increase of 11% in combined Europe, Asia and other markets (a 13% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the three months ended December 31, 2021 increased by 16%.

Net revenue from masks and other for the three months ended December 31, 2021 increased to $343.3 million from $315.2 million for the three months ended December 31, 2020, an increase of $28.1 million or 9%, including an increase of 9% in the U.S., Canada and Latin America and an increase of 8% in combined Europe, Asia and other markets (an 11% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales increased by 10%, compared to the three months ended December 31, 2020.

Net revenue from devices for the three months ended March 31, 2022 increased to $433.1 million from $365.7 million for the three months ended March 31, 2021, an increase of $67.3 million or 18%, including an increase of 30% in the U.S., Canada and Latin America and an increase of 5% in combined Europe, Asia and other markets (a 10% increase on a

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

constant currency basis).

Excluding the impact of foreign currency movements, device sales for the three months ended March 31, 2022 increased by 21%.

Net revenue from masks and other for the three months ended March 31, 2022 increased to $330.3 million from $309.2 million for the three months ended March 31, 2021, an increase of $21.1 million or 7%, including an increase of 7% in the U.S., Canada and Latin America and an increase of 6% in combined Europe, Asia and other markets (a 13% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales increased by 9%, compared to the three months ended March 31, 2021.

Software as a Service

Net revenue from our SaaS business for the three months ended December 31, 2021 was $99.0 million, an increase of 8% compared to the three months ended December 31, 2020.

The increase was predominantly due to continued growth in our HME category and stabilizing patient flow in our out-of-hospital care settings.

PART I – FINANCIAL INFORMATION

Net revenue from our SaaS business for the three months ended March 31, 2022 was $101.1 million, an increase of 8% compared to the three months ended March 31, 2021.

The increase was predominantly due to continued growth in our HME and Home Health and Hospice segments, in addition to stabilizing patient flow in our out-of-hospital care settings.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Six Months Ended December 31, 2021 Compared to the Six Months Ended December 31, 2020

Net revenue for the six months ended December 31, 2021 increased to $1,798.9 million from $1,552.0 million for the six months ended December 31, 2020, an increase of $246.9 million or 16% (a 16% increase on a constant currency basis).

Nine Months Ended March 31, 2022 Compared to the Nine Months Ended March 31, 2021

Net revenue for the nine months ended March 31, 2022 increased to $2,663.4 million from $2,320.7 million for the nine months ended March 31, 2021, an increase of $342.7 million or 15% (a 15% increase on a constant currency basis).

The following table summarizes our net revenue disaggregated by segment, product and region (in thousands):

Six Months Ended

‎ December 31,

Constant Currency*

Nine Months Ended

March 31, % Change Constant Currency*

U.S., Canada and Latin America

Devices $ 771,475 $ 595,287 30 %

Masks and other 681,803 637,507 7

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Software as a Service 297,693 277,813 7

Total $ 1,750,971 $ 1,510,607 16

Combined Europe, Asia and other markets

Devices $ 608,268 $ 536,856 13 % 15 %

Masks and other 304,151 273,259 11 14

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Global revenue

Devices $ 1,379,743 $ 1,132,143 22 % 23 %

Masks and other 985,954 910,766 8 9

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Software as a Service 297,693 277,813 7 7

Total $ 2,663,390 $ 2,320,722 15 15

Sleep and Respiratory Care

Net revenue from our Sleep and Respiratory Care business for the six months ended December 31, 2021 was $1,602.3 million, an increase of 17% compared to net revenue for the six months ended December 31, 2020.

Net revenue from our Sleep and Respiratory Care business for the nine months ended March 31, 2022 was $2,365.7 million, an increase of 16% compared to net revenue for the nine months ended March 31, 2021.

Movements in international currencies against the U.S.

dollar positively impacted net revenue by approximately $0.2 million for the six months ended December 31, 2021.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the six months ended December 31, 2021 increased by 17% compared to the six months ended December 31, 2020.

dollar negatively impacted net revenue by approximately $14.3 million for the nine months ended March 31, 2022.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the nine months ended March 31, 2022 increased by 16% compared to the nine months ended March 31, 2021.

The increase in net revenue was primarily attributable to an increase in unit sales of our devices and masks, including recovery of core sleep patient flow that was previously impacted by the pandemic and increased demand following a recent product recall by one of our competitors, partially offset by decreased COVID-19 related demand for our ventilators.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the six months ended December 31, 2021 increased to $977.8 million from $829.9 million for the six months ended December 31, 2020, an increase of $147.9 million or 18%.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the nine months ended March 31, 2022 increased to $1,453.3 million from $1,232.8 million for the nine months ended March 31, 2021, an increase of $220.5 million or 18%.

The increase was primarily due to an increase in unit sales of our devices and masks, including recovery of core sleep patient flow that was previously impacted by the pandemic and increased demand following a recent product recall by one of our competitors, partially offset by decreased COVID-19 related demand for our ventilators.

Net revenue in combined Europe, Asia and other markets increased for the six months ended December 31, 2021 to $624.5 million from $538.1 million for the six months ended December 31, 2020, an increase of $86.4 million or 16% (a 16% increase on a constant currency basis).

Net revenue in combined Europe, Asia and other markets increased for the nine months ended March 31, 2022 to $912.4 million from $810.1 million for the nine months ended March 31, 2021, an increase of $102.3 million or 13% (a 15% increase on a constant currency basis).

The constant currency increase in sales in combined Europe, Asia and other markets predominantly reflects an increase in unit sales of our devices and masks, including recovery of core sleep patient flow that was previously impacted by the pandemic and increased demand following a recent product recall by one of our competitors, partially offset by decreased COVID-19-related demand for our ventilators.

Net revenue from devices for the six months ended December 31, 2021 increased to $946.7 million from $766.4 million for the six months ended December 31, 2020, an increase of $180.3 million or 24%, including an increase of 29% in the U.S., Canada and Latin America and an increase of 17% in combined Europe, Asia and other markets (a 17% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the six months ended December 31, 2021 increased by 23%.

Net revenue from masks and other for the six months ended December 31, 2021 increased to $655.7 million from $601.6 million for the six months ended December 31, 2020, an increase of $54.1 million or 9%, including an increase of 7% in the U.S., Canada and Latin America and an increase of 14% in combined Europe, Asia and other markets (a 15% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales increased by 9%, compared to the six months ended December 31, 2020.

Software as a Service

Net revenue from our SaaS business for the six months ended December 31, 2021 was $196.6 million, an increase of 7% compared to the six months ended December 31, 2020.

The increase was predominantly due to continued growth in our HME category and stabilizing patient flow in our out-of-hospital care settings.

PART I – FINANCIAL INFORMATION

Net revenue from devices for the nine months ended March 31, 2022 increased to $1,379.7 million from $1,132.1 million for the nine months ended March 31, 2021, an increase of $247.6 million or 22%, including an increase of 30% in the U.S.,

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Canada and Latin America and an increase of 13% in combined Europe, Asia and other markets (a 15% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the nine months ended March 31, 2022 increased by 23%.

Net revenue from masks and other for the nine months ended March 31, 2022 increased to $986.0 million from $910.8 million for the nine months ended March 31, 2021, an increase of $75.2 million or 8%, including an increase of 7% in the U.S., Canada and Latin America and an increase of 11% in combined Europe, Asia and other markets (a 14% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales increased by 9%, compared to the nine months ended March 31, 2021.

Software as a Service

Net revenue from our SaaS business for the nine months ended March 31, 2022 was $297.7 million, an increase of 7% compared to the nine months ended March 31, 2021.

The increase was predominantly due to continued growth in our HME and Home Health and Hospice segments, in addition to stabilizing patient flow in our out-of-hospital care settings.

Gross Profit and Gross Margin

Gross profit increased for the three months ended December 31, 2021 to $504.3 million from $462.5 million for the three months ended December 31, 2020, an increase of $41.8 million or 9%.

Gross margin, which is gross profit as a percentage of net revenue, for the three months ended December 31, 2021 was 56.4% compared to 57.8% for the three months ended December 31, 2020.

The decrease in gross margin for the three months ended December 31, 2021 compared to three months ended December 31, 2020 was due primarily to higher logistics and manufacturing costs, partially offset by favorable product mix changes.

Gross profit increased for the six months ended December 31, 2021 to $1,010.6 million from $901.1 million for the six months ended December 31, 2020, an increase of $109.5 million or 12%.

Gross margin, which is gross profit as a percentage of net revenue, for the six months ended December 31, 2021 was 56.2% compared to 58.1% for the six months ended December 31, 2020.

The decrease in gross margin for the six months ended December 31, 2021 compared to six months ended December 31, 2020 was due primarily to higher logistics and manufacturing costs and declines in average selling prices, partially offset by favorable product mix changes.

Gross profit increased for the three months ended March 31, 2022 to $491.2 million from $447.3 million for the three months ended March 31, 2021, an increase of $43.9 million or 10%.

Gross margin, which is gross profit as a percentage of net revenue, for the three months ended March 31, 2022 was 56.8% compared to 58.2% for the three months ended March 31, 2021.

The decrease in gross margin for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was due primarily to higher logistics and manufacturing costs, partially offset by favorable changes in product mix and average selling prices.

Gross profit increased for the nine months ended March 31, 2022 to $1,501.8 million from $1,348.4 million for the nine months ended March 31, 2021, an increase of $153.4 million or 11%.

Gross margin, which is gross profit as a percentage of net revenue, for the nine months ended March 31, 2022 was 56.4% compared to 58.1% for the nine months ended March 31, 2021.

The decrease in gross margin for the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021 was due primarily to higher logistics and manufacturing costs, partially offset by favorable changes in product mix and average selling prices.

Operating Expenses

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Three Months Ended

‎ December 31,

Constant Currency

March 31, Change % Change Constant Currency

Selling, general, and administrative $ 182,401 $ 160,446 $ 21,955 14 % 17 %

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Amortization of acquired intangible assets 7,730 7,445 285 4 % 4 %

Six Months Ended

‎ December 31,

Constant Currency

Nine Months Ended

March 31, Change % Change Constant Currency

Selling, general, and administrative $ 544,483 $ 488,904 $ 55,579 11 % 13 %

3 unchanged sentences

Amortization of acquired intangible assets 23,175 23,377 (202) (1) % (1) %

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased for the three months ended December 31, 2021 to $185.4 million from $169.5 million for the three months ended December 31, 2020, an increase of $15.9 million or 9%.

Selling, general, and administrative expenses increased for the three months ended March 31, 2022 to $182.4 million from $160.4 million for the three months ended March 31, 2021, an increase of $22.0 million or 14%.

Selling, general, and administrative expenses were favorably impacted by the movement of international currencies against the U.S.

dollar, which decreased our expenses by approximately $5.7 million, as reported in U.S.

Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the three months ended December 31, 2021 increased by 10% compared to the three months ended December 31, 2020.

As a percentage of net revenue, selling, general, and administrative expenses were 20.7% for the three months ended December 31, 2021, compared to 21.2% for the three months ended December 31, 2020.

The constant currency increase in selling, general, and administrative expenses was primarily due to increases in employee-related costs during the three months ended December 31, 2021 compared to three months ended December 31, 2020.

Selling, general, and administrative expenses increased for the six months ended December 31, 2021 to $362.1 million from $328.5 million for the six months ended December 31, 2020, an increase of $33.6 million or 10%.

Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the three months ended March 31, 2022 increased by 17% compared to the three months ended March 31, 2021.

As a percentage of net revenue, selling, general, and administrative expenses were 21.1% for the three months ended March 31, 2022, compared to 20.9% for the three months ended March 31, 2021.

The constant currency increase in selling, general, and administrative expenses was primarily due to increases in employee-related costs during the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Selling, general, and administrative expenses increased for the nine months ended March 31, 2022 to $544.5 million from $488.9 million for the nine months ended March 31, 2021, an increase of $55.6 million or 11%.

Selling, general, and administrative expenses were favorably impacted by the movement of international currencies against the U.S.

dollar, which decreased our expenses by approximately $5.7 million, as reported in U.S.

Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the six months ended December 31, 2021 increased by 10% compared to the six months ended December 31, 2020.

As a percentage of net revenue, selling, general, and administrative expenses were 20.1% for the six months ended December 31, 2021, compared to 21.2% for the six months ended December 31, 2020.

PART I – FINANCIAL INFORMATION

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The constant currency increase in selling, general, and administrative expenses was primarily due to increases in employee-related costs during the six months ended December 31, 2021 compared to six months ended December 31, 2020.

Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the nine months ended March 31, 2022 increased by 13% compared to the nine months ended March 31, 2021.

As a percentage of net revenue, selling, general, and administrative expenses were 20.4% for the nine months ended March 31, 2022, compared to 21.1% for the nine months ended March 31, 2021.

The constant currency increase in selling, general, and administrative expenses was primarily due to increases in employee-related costs during the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021.

Research and Development Expenses

Research and development expenses increased for the three months ended December 31, 2021 to $62.5 million from $54.9 million for the three months ended December 31, 2020, an increase of $7.6 million, or 14%.

Research and development expenses increased for the three months ended March 31, 2022 to $66.8 million from $55.9 million for the three months ended March 31, 2021, an increase of $10.9 million, or 19%.

Research and development expenses were favorably impacted by the movement of international currencies against the U.S.

dollar, which decreased our expenses by approximately $0.2 million for the three months ended December 31, 2021, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses increased by 14% compared to the three months ended December 31, 2020.

As a percentage of net revenue, research and development expenses were 7.0% for the three months ended December 31, 2021, compared to 6.9% for the three months ended December 31, 2020.

dollar, which decreased our expenses by approximately $1.5 million for the three months ended March 31, 2022, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses increased by 22% compared to the three months ended March 31, 2021.

As a percentage of net revenue, research and development expenses were 7.7% for the three months ended March 31, 2022, compared to 7.3% for the three months ended March 31, 2021.

The increase in research and development expenses in constant currency terms was primarily due to increased investment in our digital health technologies and SaaS solutions.

Research and development expenses increased for the six months ended December 31, 2021 to $122.5 million from $109.5 million for the six months ended December 31, 2020, an increase of $13.0 million, or 12%.

Research and development expenses were unfavorably impacted by the movement of international currencies against the U.S.

dollar, which increased our expenses by approximately $0.5 million for the six months ended December 31, 2021, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses increased by 11% compared to the six months ended December 31, 2020.

As a percentage of net revenue, research and development expenses were 6.8% for the six months ended December 31, 2021, compared to 7.1% for the six months ended December 31, 2020.

Research and development expenses increased for the nine months ended March 31, 2022 to $189.3 million from $165.4 million for the nine months ended March 31, 2021, an increase of $23.8 million, or 14%.

Research and development expenses were favorably impacted by the movement of international currencies against the U.S.

dollar, which decreased our expenses by approximately $0.9 million for the nine months ended March 31, 2022, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses increased by 15% compared to the nine months ended March 31, 2021.

As a percentage of net revenue, research and development expenses were 7.1% for the nine months ended March 31, 2022, compared to 7.1% for the nine months ended March 31, 2021.

The increase in research and development expenses in constant currency terms was primarily due to increased investment in our digital health technologies and SaaS solutions.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets for the three months ended December 31, 2021 totaled $7.7 million compared to $7.7 million for the three months ended December 31, 2020.

Amortization of acquired intangible assets for the six months ended December 31, 2021 totaled $15.4 million compared to $15.9 million for the six months ended December 31, 2020.

Amortization of acquired intangible assets for the three months ended March 31, 2022 totaled $7.7 million compared to $7.4 million for the three months ended March 31, 2021.

Amortization of acquired intangible assets for the nine months ended March 31, 2022 totaled $23.2 million compared to $23.4 million for the nine months ended March 31, 2021.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Restructuring Expenses

In November 2020, we closed our Portable Oxygen Concentrator business, which was part of the Sleep and Respiratory Care segment.

During the three and six months ended December 31, 2020, we recognized restructuring expenses of $13.9 million primarily related to inventory write-downs of $5.2 million, accelerated amortization of acquired intangible assets of $5.1 million, asset impairments of $2.3 million, employee-related costs of $0.7 million and contract cancellation costs of $0.6 million.

During the three and nine months ended March 31, 2021, we recognized restructuring expenses of $13.9 million primarily related to inventory write-downs of $5.2 million, accelerated amortization of acquired intangible assets of $5.1 million, asset impairments of $2.3 million, employee-related costs of $0.7 million and contract cancellation costs of $0.6 million.

Of the total expense recognized during the three and six months ended December 31, 2020, the inventory write-down of $5.2 million is presented within cost of sales and the remaining $8.7 million in restructuring costs is separately disclosed as restructuring expenses on the condensed consolidated statements of income.

We did not incur additional material expenses in connection with this activity after December 31, 2020 .

We did not incur additional material expenses in connection with this activity after March 31, 2021.

Total Other Income (Loss), Net

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Three Months Ended

‎ December 31,

2022 2021 Change

Interest (expense) income, net $ (5,462) $ (5,823) $ 361

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Gain (loss) on equity investments (1,735) 4,666 (6,401)

Other, net 1,878 705 1,173

Total other income (loss), net $ (7,946) $ (5,421) $ (2,525)

PART I – FINANCIAL INFORMATION

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Six Months Ended

‎ December 31,

Nine Months Ended

2022 2021 Change

Interest (expense) income, net $ (16,770) $ (18,341) $ 1,571

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Gain (loss) on equity investments (527) 9,442 (9,969)

Other, net 729 1,205 (476)

Total other income (loss), net $ (22,495) $ (17,589) $ (4,906)

Total other income (loss), net for the three months ended December 31, 2021 was a loss of $11.4 million compared to a loss of $11.1 million for the three months ended December 31, 2020.

The increase in loss was primarily due to higher losses associated with our investments in marketable and non-marketable equity securities, which were a loss of $4.4 million for the three months ended December 31, 2021 compared to a loss of $3.7 million for the three months ended December 31, 2020.

Additionally, interest expense, net, increased to $5.9 million for the three months ended December 31, 2021 compared to $5.8 million for the three months ended December 31, 2020.

These increases were offset by lower losses attributable to equity method investments for the three months ended December 31, 2021 of $1.9 million compared to $2.6 million for the three months ended December 31, 2020.

Total other income (loss), net for the six months ended December 31, 2021 was a loss of $14.6 million compared to a loss of $12.2 million for the six months ended December 31, 2020.

The increase in loss was primarily due to lower gains associated with our investments in marketable and non-marketable equity securities, which were a gain of $1.2 million for the six months ended December 31, 2021 compared to a gain of $4.8 million for the six months ended December 31, 2020.

This was offset by a decrease in interest expense, net, to $11.3 million for the six months ended December 31, 2021 compared to $12.5 million for the six months ended December 31, 2020.

We also recorded lower losses attributable to equity method investments for the six months ended December 31, 2021 of $3.3 million compared to $4.9 million for the six months ended December 31, 2020.

Our effective income tax rate for the three and six months ended December 31, 2021 was 15.0% and 18.3% as compared to 14.8% and 16.1% for the three and six months ended December 31, 2020.

Our effective rate of 15.0% differs from the statutory rate of 21.0% primarily due to research credits, foreign operations and windfall tax benefits related to the vesting or settlement of employee share-based awards.

The increase to our effective tax rate for the three and six months ended December 31, 2021 was primarily related to changes in the geographic mix of our earnings.

Total other income (loss), net for the three months ended March 31, 2022 was a loss of $7.9 million compared to a loss of $5.4 million for the three months ended March 31, 2021.

The increase in loss was primarily due to losses associated with our investments in marketable and non-marketable equity securities, which were a loss of $1.7 million for the three months ended March 31, 2022 compared to a gain of $4.7 million for the three months ended March 31, 2021.

This was offset by lower losses attributable to equity method investments for the three months ended March 31, 2022 of $2.6 million compared to $5.0 million for the three months ended March 31, 2021.

Additionally, interest expense, net, decreased to $5.5 million for the three months ended March 31, 2022 compared to $5.8 million for the three months ended March 31, 2021.

Total other income (loss), net for the nine months ended March 31, 2022 was a loss of $22.5 million compared to a loss of $17.6 million for the nine months ended March 31, 2021.

The increase in loss was primarily due to losses associated with our investments in marketable and non-marketable equity securities, which were a loss of $0.5 million for the nine months ended March 31, 2022 compared to a gain of $9.4 million for the nine months ended March 31, 2021.

This was offset by lower losses attributable to equity method investments for the nine months ended March 31, 2022 of $5.9 million compared to $9.9 million for the nine months ended March 31, 2021.

Additionally, interest expense, net, decreased to $16.8 million for the nine months ended March 31, 2022 compared to $18.3 million for the nine months ended March 31, 2021.

Our effective income tax rate for the three and nine months ended March 31, 2022 was 20.9% and 19.1% as compared to 136.0% and 56.6% for the three and nine months ended March 31, 2021.

Our effective rate of 19.1% for the nine months ended March 31, 2021 differs from the statutory rate of 21.0% primarily due to research credits, foreign operations and windfall tax benefits related to the vesting or settlement of employee share-based awards.

The decrease in our effective tax

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

rate for the three and nine months ended March 31, 2022 was primarily related to the decrease in unrecognized tax benefits recorded in connection with the Australian Tax Office ("ATO") transfer pricing dispute, outlined below.

Our Singapore operations operate under certain tax holidays and tax incentive programs that will expire in whole or in part at various dates through June 30, 2030.

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federal tax, if repatriated.

On September 19, 2021, we concluded the settlement agreement with the Australian Taxation Office (“ATO”) in relation to the previously disclosed transfer pricing dispute for the tax years 2009 through 2018 (“ATO settlement”).

On September 19, 2021, we concluded the settlement agreement with the ATO in relation to the previously disclosed transfer pricing dispute for the tax years 2009 through 2018 (“ATO settlement”).

The ATO settlement fully resolved the dispute for all prior years, with no admission of liability and provides clarity in relation to certain future taxation principles.

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On September 28, 2021, we remitted final payment to the ATO of $284.8 million, consisting of the agreed settlement amount of $381.7 million less prior remittances made to the ATO of $96.9 million.

PART I – FINANCIAL INFORMATION

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Net Income and Earnings per Share

As a result of the factors above, our net income for the three months ended December 31, 2021 was $201.8 million compared to net income of $179.5 million for the three months ended December 31, 2020, an increase of 12%.

Our net income for the six months ended December 31, 2021 was $405.4 million compared to net income of $357.9 million for the six months ended December 31, 2020, an increase of 13%.

Our diluted earnings per share for the three months ended December 31, 2021 was $1.37 per diluted share compared to diluted earnings per share of $1.23 for the three months ended December 31, 2020, an increase of 11% .

Our diluted earnings per share for the six months ended December 31, 2021 was $2.76 per diluted share compared to diluted earnings per share of $2.45 for the six months ended December 31, 2020 , an increase of 13% .

Net Income (Loss) and Earnings (Loss) per Share

As a result of the factors above, our net income for the three months ended March 31, 2022 was $179.0 million compared to a net loss of $78.5 million for the three months ended March 31, 2021, an increase of $257.5 million.

Our net income for the nine months ended March 31, 2022 was $584.4 million compared to net income of $279.4 million for the nine months ended March 31, 2021, an increase of $305.0 million, or 109%.

Our diluted earnings per share for the three months ended March 31, 2022 was $1.22 per diluted share compared to diluted loss per share of $0.54 for the three months ended March 31, 2021.

Our diluted earnings per share for the nine months ended March 31, 2022 was $3.97 per diluted share compared to diluted earnings per share of $1.91 for the nine months ended March 31, 2021, an increase of 108%.

Summary of Non-GAAP Financial Measures

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The measure “non-GAAP gross profit” is the difference between GAAP net revenue and non-GAAP cost of sales, and “non-GAAP gross margin” is the ratio of non-GAAP gross profit to GAAP net revenue.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

These non-GAAP measures are reconciled to their most directly comparable GAAP financial measures below (in thousands, except percentages):

Three Months Ended

Six Months Ended

March 31, Nine Months Ended

2022 2021 2022 2021

GAAP Net revenue $ 864,500 $ 768,767 $ 2,663,390 $ 2,320,722

1 unchanged sentence

Amortization of acquired intangibles

(10,982) (10,924) (33,271) (34,066)

Restructuring - cost of sales

— — — (5,232)

Non-GAAP cost of sales $ 362,321 $ 310,585 $ 1,128,314 $ 933,021

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Three Months Ended

Six Months Ended

March 31, Nine Months Ended

2022 2021 2022 2021

GAAP income from operations $ 234,265 $ 223,426 $ 744,889 $ 662,040

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Non-GAAP income from operations $ 252,977 $ 241,795 $ 801,335 $ 733,388

PART I – FINANCIAL INFORMATION

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The measure “non-GAAP net income” is equal to GAAP net income once adjusted for amortization of acquired intangibles (net of tax), reserve for disputed tax positions, restructuring expenses (net of tax) and (gain) loss on equity investments.

The measure “non-GAAP diluted earnings per share” is the ratio of non-GAAP net income to diluted shares outstanding.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

These non-GAAP measures are reconciled to their most directly comparable GAAP financial measures below (in thousands, except for per share amounts):

Three Months Ended

Six Months Ended

GAAP net income

March 31, Nine Months Ended

2022 2021 2022 2021

GAAP net income (loss) $ 179,012 $ (78,481) $ 584,376 $ 279,405

Amortization of acquired intangibles - cost of sales, net of tax 8,374 8,395 25,373 26,136

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Non-GAAP net income $ 193,280 $ 190,411 $ 631,533 $ 582,170

Diluted shares outstanding

GAAP diluted earnings per share

GAAP diluted shares outstanding 146,962 145,513 147,034 146,394

Anti-dilutive shares excluded from GAAP — 858 — —

Non-GAAP diluted shares outstanding 146,962 146,371 147,034 146,394

GAAP diluted earnings (loss) per share $ 1.22 $ (0.54) $ 3.97 $ 1.91

Non-GAAP diluted earnings per share $ 1.32 $ 1.30 $ 4.30 $ 3.98

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Our primary uses of cash have been for research and development activities, selling and marketing activities, capital expenditures, strategic acquisitions and investments, dividend payments and repayment of debt obligations.

We expect that cash provided by operating activities may fluctuate in future periods as a result of several factors, including fluctuations in our operating results, which include impacts from the COVID-19 pandemic, working capital requirements and capital deployment decisions.

We expect that cash provided by operating activities may fluctuate in future periods as a result of several factors, including fluctuations in our operating results, which include impacts from the COVID-19 pandemic, supply chain disruptions, working capital requirements and capital deployment decisions.

Our future capital requirements will depend on many factors including our growth rate in net revenue, third-party reimbursement of our products for our customers, the timing and extent of spending to support research development efforts, the expansion of selling, general and administrative activities, the timing of introductions of new products, the expenditures associated with possible future acquisitions, investments or other business combination transactions, and impacts from the COVID-19 pandemic.

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As part of our liquidity strategy, we will continue to monitor our current level of earnings and cash flow generation as well as our ability to access the market considering those earning levels.

As of December 31, 2021 and June 30, 2021, we had cash and cash equivalents of $194.5 million and $295.3 million, respectively.

Our cash and cash equivalents held within the United States at December 31, 2021 and June 30, 2021 were $42.8 million and $106.7 million, respectively.

Our remaining cash and cash equivalent balances at December 31, 2021 and June 30, 2021, were $151.7 million and $188.6 million, respectively.

As of March 31, 2022 and June 30, 2021, we had cash and cash equivalents of $201.8 million and $295.3 million, respectively.

Our cash and cash equivalents held within the United States at March 31, 2022 and June 30, 2021 were $57.2 million and $106.7 million, respectively.

Our remaining cash and cash equivalent balances at March 31, 2022 and June 30, 2021, were $144.6 million and $188.6 million, respectively.

Our cash and cash equivalent balances are held at highly rated financial institutions .

As of December 31, 2021, we had $1.6 billion available for draw down under the revolver credit facility and a combined total of $1.8 billion in cash and available liquidity under the revolving credit facility.

As of March 31, 2022, we had $1.6 billion available for draw down under the revolver credit facility and a combined total of $1.8 billion in cash and available liquidity under the revolving credit facility.

As a result of the U.S.

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We believe that our current sources of liquidity will be sufficient to fund our operations, including expected capital expenditures, for the next 12 months and beyond.

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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The Revolving Credit Agreement and Term Credit Agreement each terminate on April 17, 2023, when all unpaid principal and interest under the loans must be repaid.

As of December 31, 2021, we had $1.6 billion available for draw down under the revolving credit facility.

As of March 31, 2022, we had $1.6 billion available for draw down under the revolving credit facility.

On July 10, 2019, we entered into a Note Purchase Agreement with the purchasers to that agreement, in connection with the issuance and sale of $250.0 million principal amount of our 3.24% senior notes due July 10, 2026, and $250.0 million principal amount of our 3.45% senior notes due July 10, 2029 (“Senior Notes”).

On December 31, 2021, there was a total of $682.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

On March 31, 2022, there was a total of $682.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

We expect to satisfy all of our liquidity and long-term debt requirements through a combination of cash on hand, cash generated from operations and debt facilities.

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The following table summarizes our cash flow activity (in thousands):

Six Months Ended

‎ December 31,

Nine Months Ended

Net cash provided by operating activities $ 271,661 $ 510,193

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Operating Activities

Cash provided by operating activities was $154.2 million for the six months ended December 31, 2021, compared to cash provided of $313.9 million for the six months ended December 31, 2020.

The $159.7 million decrease in cash flow from operations was primarily due to the payment of our tax settlement with the ATO of $284.8 million and greater inventory purchases to secure adequate components for the increasing sales demand, offset by an increase in operating profit and other net changes in working capital balances compared to the six months ended December 31, 2020.

Cash provided by operating activities was $271.7 million for the nine months ended March 31, 2022, compared to cash provided of $510.2 million for the nine months ended March 31, 2021.

The $238.5 million decrease in cash flow from operations was primarily due to the payment of our tax settlement with the ATO of $284.8 million and greater purchases and prepayments of inventory to secure adequate components for the increasing sales demand, partly offset by an increase in operating profit and other net changes in working capital balances compared to the nine months ended March 31, 2021.

Investing Activities

Cash used in investing activities was $125.2 million for the six months ended December 31, 2021, compared to cash used of $51.8 million for the six months ended December 31, 2020.

The $73.4 million decrease in cash flow from investing activities was primarily due to an increase in cash paid for business acquisitions and a net decrease in proceeds on maturity of foreign currency contracts compared to six months ended December 31, 2020.

Cash used in investing activities was $174.7 million for the nine months ended March 31, 2022, compared to cash used of $110.4 million for the nine months ended March 31, 2021.

The $64.3 million decrease in cash flow from investing activities was primarily due to an increase in purchases of property, plant and equipment and an increase in payments on maturity of foreign currency contracts compared to the nine months ended March 31, 2021.

Financing Activities

Cash used in financing activities was $125.0 million for the six months ended December 31, 2021, compared to cash used of $492.1 million for the six months ended December 31, 2020.

Cash used in financing activities was $185.9 million for the nine months ended March 31, 2022, compared to cash used of $650.6 million for the nine months ended March 31, 2021.

The $464.7 million increase in cash flow from financing activities was primarily due to borrowing activity under our Revolving Credit Agreement.

Proceeds from borrowings, net of repayments, for the six months ended December 31, 2021 were $24.0 million compared to net repayments of $351.0 million during the six months ended December 31, 2020.

During the three months ended December 31, 2021, we paid cash dividends of $0.42 per common share totaling $61.2 million.

On January 27, 2021, our board of directors declared a cash dividend of $0.42 per common share, to be paid on March 17, 2022, to shareholders of record as of the close of business on February 10, 2022.

Future dividends are subject to approval by our board of directors.

Since the inception of our share repurchase programs and through December 31, 2021, we have repurchased a total of 41.8 million shares for an aggregate of $1.6 billion.

We have temporarily suspended our share repurchase program due to recent acquisitions, and more recently,

PART I – FINANCIAL INFORMATION

Proceeds from borrowings, net of repayments, for the nine months ended March 31, 2022 were $24.0 million compared to net repayments of $446.0 million during the nine months ended March 31, 2021.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition and Results of Operations

as a response to the COVID-19 pandemic.

Accordingly, we did not repurchase any shares during the three and six months ended December 31, 2021 and 2020.

During the three months ended March 31, 2022, we paid cash dividends of $0.42 per common share totaling $61.4 million.

On April 28, 2022, our board of directors declared a cash dividend of $0.42 per common share, to be paid on June 16, 2022, to shareholders of record as of the close of business on May 12, 2022.

Future dividends are subject to approval by our board of directors.

Since the inception of our share repurchase programs and through March 31, 2022, we have repurchased a total of 41.8 million shares for an aggregate of $1.6 billion.

We have temporarily suspended our share repurchase program due to recent acquisitions, and more recently, as a response to the COVID-19 pandemic.

Accordingly, we did not repurchase any shares during the three and nine months ended March 31, 2022 and 2021.

Shares that are repurchased are classified as treasury stock pending future use and reduce the number of shares of common stock outstanding used in calculating earnings (loss) per share.

There is no expiration date for this program, and the program may be accelerated, suspended, delayed or discontinued at any time at the discretion of our board of directors.

At December 31, 2021, 12.9 million additional shares can be repurchased under the approved share repurchase program.

At March 31, 2022, 12.9 million additional shares can be repurchased under the approved share repurchase program.

Critical Accounting Principles and Estimates

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Contractual Obligations and Commitments

Purchase obligations as of December 31, 2021 were as follows:

Payments Due by December 31,

Purchase obligations as of March 31, 2022 were as follows:

Payments Due by March 31,

Total 2023 2024 2025 2026 2027 Thereafter

Purchase obligations 1,570,247 1,465,590 89,710 13,555 1,392 — —

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Off-Balance Sheet Arrangements

As of December 31, 2021, we are not involved in any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC .

PART I – FINANCIAL INFORMATION

As of March 31, 2022, we are not involved in any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC.

PART I – FINANCIAL INFORMATION Item 3

AND SUBSIDIARIES

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The table below provides information (in U.S.

dollars) on our foreign currency denominated operating assets and liabilities and after considering our foreign currency hedging activities as of December 31, 2021 (in thousands):

dollars) on our foreign currency denominated operating assets and liabilities and after considering our foreign currency hedging activities as of March 31, 2022 (in thousands):

(EUR) Canadian

(CAD) Chinese

AUD Functional:

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Foreign Currency Hedges (60,000) 55,478 — (12,616)

Net Total (10,255) (18,060) — (815)

USD Functional:

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Foreign Currency Hedges — — (20,028) —

Net Total — — 1,013 —

SGD Functional:

1 unchanged sentence

Foreign Currency Hedges (330,000) — — —

PART I – FINANCIAL INFORMATION

Net Total 15,779 (24,829) — 931

PART I – FINANCIAL INFORMATION Item 3

AND SUBSIDIARIES

2 unchanged sentences

dollar equivalents.

The table summarizes information on instruments and transactions that are sensitive to foreign currency exchange rates, including foreign currency call options, collars and forward contracts held at December 31, 2021.

The table presents the notional amounts and weighted average exchange rates by contractual maturity dates for our foreign currency derivative financial instruments, including the forward contracts used to hedge our foreign currency denominated assets and liabilities.

1 unchanged sentence

Fair Value Assets / (Liabilities)

Foreign Exchange Contracts

Foreign Exchange Contracts Year 1 Year 2 Total March 31,

2022 June 30,

Contract amount 60,000 — 60,000 2,533 (652)

contractual exchange rate

contractual exchange rate USD 1 =

AUD 0.7196 USD 1 =

Contract amount 110,956 — 110,956 (128) 1,172

contractual exchange rate

‎ Euro 0.6597

contractual exchange rate AUD 1 =

Euro 0.6864 AUD 1 =

Contract amount 22,191 — 22,191 (18) (88)

contractual exchange rate

‎ Euro 0.6369

contractual exchange rate SGD 1 =

Euro 0.7117 — SGD 1 =

Contract amount 330,000 — 330,000 (641) (177)

contractual exchange rate

contractual exchange rate SGD 1 =

USD 0.7401 SGD 1 =

Contract amount 12,616 — 12,616 (611) (130)

contractual exchange rate

contractual exchange rate AUD 1 =

CNY 5.0312 AUD 1 =

Contract amount — — 169

contractual exchange rate

contractual exchange rate USD 1 =

Contract amount 20,028 — 20,028 83 (44)

contractual exchange rate

contractual exchange rate USD 1 =

CAD 1.2431 USD 1 =

Interest Rate Risk

We are exposed to risk associated with changes in interest rates affecting the return on our cash and cash equivalents and debt.

At December 31, 2021, we held cash and cash equivalents of $194.5 million principally comprised of bank term deposits and at-call accounts and are invested at both short-term fixed interest rates and variable interest rates.

At December 31, 2021, there was $182.0 million outstanding under the Revolving Credit Agreement and Term Credit Agreement, which are subject to variable interest rates.

A hypothetical 10% change in interest rates during the three and six months ended December 31, 2021, would not have had a material impact on pretax income.

At March 31, 2022, we held cash and cash equivalents of $201.8 million principally comprised of bank term deposits and at-call accounts and are invested at both short-term fixed interest rates and variable interest rates.

At March 31, 2022, there was $182.0 million outstanding under the Revolving Credit Agreement and Term Credit Agreement, which are subject to variable interest rates.

A hypothetical 10% change in interest rates during the three and nine months ended March 31, 2022, would not have had a material impact on pretax income.

We have no interest rate hedging agreements.

PART I – FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 4

AND SUBSIDIARIES

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-Q

Item 1. Financial Statements