What changed in this filing

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Item 1. Business

2022-08-12 compared with 2021-08-17 · 244 added, 203 removed, 452 unchanged (50% of the section changed)

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Following our formation in 1989, we commercialized a treatment for obstructive sleep apnea, or OSA.

This treatment, nasal continuous positive airway pressure, or CPAP, was the first successful noninvasive treatment for OSA.

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

This treatment, continuous positive airway pressure, or CPAP, was the first successful noninvasive treatment for OSA.

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

Since the development of CPAP, we have expanded our business by developing or acquiring a number of innovative products and solutions for a broad range of respiratory disorders including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, and dental devices.

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

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

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

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

Our web site address is www.resmed.com.

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satisfaction with their therapy.

We also provide management software to agencies providing out-of-hospital care, including but not limited to home medical equipment, or HME, home health and hospice, skilled nursing, life plan community, senior living, and private duty services.

We employ over 8,100 people and sell our products in over 140 countries through a combination of wholly owned subsidiaries and independent distributors.

Our website address is www.resmed.com.

Information contained on our website is not part of or incorporated into this report.

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

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Corporate History

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

For example, in the United States our sleep and respiratory care products are sold by ResMed Corp., and our software is sold principally by our Brightree and MatrixCare subsidiaries.

Segment Information

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rapid eye movement, or REM, sleep and non-rapid eye movement, or non-REM, sleep.

REM sleep, which is about 20-25% of total sleep experienced by adults, is characterized by a high level of brain activity, bursts of rapid eye movement, increased heart and respiration rates, and paralysis of many muscles.

REM sleep, which is about 20-25% of total sleep experienced by adults, is characterized by a high level of brain activity, bursts of rapid eye movement, increased heart and respiration rates, and

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paralysis of many muscles.

Non-REM sleep is subdivided into four stages that generally parallel sleep depth;

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While these awakenings greatly impair the quality of sleep, the individual is not normally aware of these disruptions.

In addition, OSA has been recognized as a cause of hypertension and a significant comorbidity for heart disease, stroke and diabetes.

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In addition, OSA has been recognized as a cause of hypertension and a significant comorbidity for heart disease, stroke and type 2 diabetes.

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

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

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

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

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Studies have shown that sleep apnea is present in approximately 83% of patients with drug-resistant hypertension, approximately 77% of patients with obesity, approximately 76% of patients with chronic heart failure and approximately 72% of patients with type 2 diabetes.

A study presented at the European Respiratory Society (ERS) International Congress in 2021 and later published in CHEST in 2022 found that using PAP therapy as directed can significantly increase sleep apnea patients’ chances of living longer.

The study concluded that people with obstructive sleep apnea who continued PAP therapy were 39% more likely to survive over a three-year period than OSA patients who didn’t.

Researchers found that the survival rate gap remained significant when accounting for patients’ ages, overall health, other pre-existing conditions, and causes of death.

Sleep-Disordered Breathing and Obstructive Sleep Apnea.

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During overnight testing, respiratory parameters and sleep patterns may be monitored, along with other vital signs such as heart rate and blood oxygen levels.

Simpler tests, using devices such as our ApneaLink Air, or our automatic positive airway pressure devices, monitor airflow during sleep, and use computer programs to analyze airflow patterns.

Simpler tests, using devices such as our ApneaLink Air, NightOwl, or our automatic positive airway pressure devices, monitor airflow during sleep, and use computer

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programs to analyze airflow patterns.

These tests allow sleep clinicians to detect any sleep disturbances such as apneas, hypopneas or subconscious awakenings.

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Most are only partially effective, but CPAP is a reliable treatment for all severities of OSA and is considered first-line therapy.

Use of mandibular advancement devices is increasing as a second-line option in patients unable to use CPAP or those with mild OSA.

Use of mandibular advancement devices is increasingly used as a second-line option in patients unable to use CPAP or those with mild OSA.

These devices cause the mandible and tongue to be pulled forward and improve the dimensions of the upper airway.

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Sometimes, when a patient leaks air through their mouth, a full-face mask may need to be used, rather than a nasal interface.

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CPAP is not a cure and, therefore, must be used on a nightly basis as long as treatment is required.

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Patients experienced soreness from the repeated use of nasal masks and had difficulty falling asleep with the CPAP device operating at the prescribed pressure.

In more recent years, product innovations to improve patient comfort and compliance have been developed.

In recent years, product innovations to improve patient comfort and compliance have been developed.

These include more comfortable patient interface systems;

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heated humidification systems to make the airflow more comfortable;

and autotitration devices that modulate the average pressure delivered during the night.

and auto-titration devices that modulate the average pressure delivered during the night.

Respiratory Care

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

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.

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

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

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

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Chronic Obstructive Pulmonary Disease.

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In patients with stable COPD, the advantages of home NIV are less clear, but clinical studies have shown improvements in dyspnea scores and health-related quality-of-life measures and reductions in hospital readmissions and intensive care stays.

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Long-term oxygen therapy, or LTOT, is indicated in chronic respiratory failure patients.

The administration of LTOT has been shown to increase survival rates in patients with severe resting hypoxemia.

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

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

Obesity Hypoventilation Syndrome.

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Software as a Service

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

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

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

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

With a comprehensive set of software and services offerings, our SaaS solutions enable providers to streamline workflow and deliver an improved patient experience across our existing vertical markets including HME and home infusion, facility-based organizations including skilled nursing, senior living, and life plan communities, home health and hospice providers, and to adjacent provider

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markets through a growing portfolio of value-added solutions with broad market applicability.

Our offerings can help providers perform analytics, manage documentation and implement new reimbursement requirements as well as more effectively transfer data as patients move between different care settings.

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

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

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

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

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

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• Broaden our digital health technology foundation.

Digital enablement is central to our strategy.

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

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

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Our vision is to transform and significantly improve out-of-hospital (OOH) healthcare through a strategy of enabling better patient care, improving clinical decision support, and driving interoperability across out-of-hospital healthcare settings.

Since acquiring Brightree in 2016, plus MatrixCare and HEALTHCARE first in 2018, we offer software solutions across multiple out-of-hospital healthcare settings including HME, home health and hospice, skilled nursing, life plan communities, senior living and private duty.

Since acquiring Brightree in 2016, plus MatrixCare and HEALTHCAREfirst in 2018, we offer software solutions across multiple out-of-hospital healthcare settings including HME, home health and hospice, skilled nursing, life plan communities, senior living, and private duty.

Our announced acquisition of MEDIFOX DAN in June 2022, pending regulatory clearances, will expand ResMed’s SaaS business outside the U.S.

to Germany, and will add new out-of-hospital care sectors to the business’ ecosystem, including outpatient therapy.

We are connecting capabilities across the platforms in these out-of-hospital care settings to help our customers be more efficient, better serve people, keep them out-of-hospital, and in lower-cost, higher-quality care settings.

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We intend to increase our sales and marketing efforts in our principal markets, as well as expand the depth of our presence in other high-growth geographic regions.

In 2016, we acquired Curative Medical to invest in the China market and expand our growth potential in sleep apnea, COPD and respiratory care in China.

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we acquired Curative Medical to invest in the China market and expand our growth potential in sleep apnea, COPD and respiratory care in China.

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

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

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

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

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

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

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

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

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

Devices in total accounted for approximately 52%, 50% and 51% of our net revenues in fiscal years 2022, 2021 and 2020, respectively.

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The tables below provide a selection of products, as known by our trademarks.

AirSense 10 Elite

An advanced fixed-pressure therapy device with an integrated humidifier and built-in wireless connectivity.

It is designed to be intuitive and easy-to-use.

AirSense 10 CPAP

The AirSense 10 CPAP is a fixed-pressure therapy device and built-in wireless connectivity.

It also provides compliance, AHI and leak data reporting.

AirSense 10 Auto

A premium auto-adjusting therapy device featuring AutoRamp™ with sleep onset detection, expiratory pressure relief (EPR™) and Easy-Breathe technology.

The device also features built-in wireless connectivity.

AirSense 10 AutoSet

The first complete sleep therapy solution tailored for women.

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

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

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

The device also features built-in Bluetooth connectivity and effective waterless humidification enabled by HumidX technology.

CPAP, APAP & BILEVEL

PRODUCTS DESCRIPTION

Combining enhanced digital health technology with effective therapy modes, AirSense™ 11 APAP and CPAP machines are designed to make starting sleep apnea therapy, and adhering to it, easier and more convenient than ever before.

Our newest device, AirSense 11 includes new features like Personal Therapy Assistant and Care Check-In designed to provide tailored guidance to PAP users, helping ease them into therapy and comfortable nightly use.

Other features include the availability of remote software updates so users can enjoy the latest version of these tools every night.

– AutoSet for Her

– Card-to-Cloud

AirSense™ 10 is one of the world’s most widely used series of CPAP and APAP machines, each designed to deliver high-quality therapy for a better night’s sleep.

Features include a built-in humidifier, Climate Control Auto setting to provide breathing comfort, AutoRamp™ with sleep onset detection, and expiratory pressure relief (EPR™).

AirCurve 10 Bilevel

– AirCurve 10 S

A bilevel device for patients who need extra pressure support or find it difficult to adjust to therapy on a fixed pressure continuous positive airway pressure device.

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

AirCurve 10 V Auto

An auto-adjusting bilevel device for patients who need greater pressure support to treat their obstructive sleep apnea.

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

AirCurve 10 ST

A bilevel device with backup rate that provides exceptional patient-ventilator synchrony, reducing the work of breathing so patients remain comfortable and well ventilated.

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

AirCurve 10 ST-A

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

AirCurve 10 ASV and CS

Adaptive servo-ventilators specifically designed to treat patients exhibiting central sleep apnea (CSA), mixed sleep apnea and periodic breathing, with or without obstructive sleep apnea.

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

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Stellar 100 and 150

Pressure support and volume non-invasive ventilators with invasive capabilities designed to suit a range of environments and for various respiratory patient types.

Astral 100 and 150

Pressure support and volume ventilators for invasive and non-invasive purposes so it can be used from the hospital to the home.

Lumis 100 and 150

Pressure support non-invasive ventilators that support a variety of therapy modes with built-in wireless connectivity and integrated humidification.

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

– AirCurve 10 VAuto

– AirCurve 10 ASV

– AirCurve 10 VAuto

– Card-to-Cloud

AirCurve™ 10 bilevel machines include two pressure level settings:

a higher pressure when you inhale, and a lower pressure that makes it easier to exhale.

AirCurve 10 S and AirCurve 10 VAuto both treat obstructive sleep apnea, while AirCurve 10 ASV treats central sleep apnea.

All machines include a built-in humidifier and Climate Control Auto setting to provide breathing comfort.

AirMini portable CPAP The smallest portable CPAP on the market today, AirMini features the same auto-adjusting therapy modes used in the AirSense™ 10 Auto.

The device also features built-in Bluetooth connectivity and effective waterless humidification enabled by HumidX technology.

PRODUCTS DESCRIPTION

Stellar 150 ResMed Stellar™ 150 ventilator is suitable for invasive and non-invasive ventilation, either at home or in a healthcare setting.

It is not a life support ventilator.

Stellar 150 also includes iVAPS™ (intelligent Volume-Assured Pressure Support) 1 technology to adjust to your changing respiratory needs.

Astral 100 and 150 ResMed Astral™ 100 and Astral 150 provide personalized care every step of the way.

With both invasive and non-invasive options, they offer a lightweight design, exceptional battery life and adaptive technologies to provide greater mobility and peace of mind.

AirCurve 10 ST-A Designed for people with respiratory conditions that affect breathing such as restrictive lung disorders, severe COPD and hypoventilation, AirCurve™ 10 ST-A combines user-friendly controls, an intuitive interface and automatic features to make ventilation therapy effective, comfortable and hassle-free.

Mask Systems, Diagnostic Products, Accessories and Other Products

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The table below provides an of overview of our mask systems by category.

AirFit F30, AirFit P10, and AirFit N30 minimalist masks feature our lightest, lowest profile designs.

CATEGORY DESCRIPTION

Minimalist AirFit F30, AirFit P10, and AirFit N30 minimalist masks feature our lightest, lowest profile designs.

The features of these masks are focused on minimizing contact with the patient’s face to reduce red marks and irritation.

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

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

Universal Fit

AirFit F20 and AirFit N20 masks are designed to fit a wide range of faces due to the InfinitySeal silicone cushion that adapts to unique facial contours, which increases comfort, improves the fit and reduces leakage.

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

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

Universal Fit AirFit F20 and AirFit N20 masks are designed to fit a wide range of faces due to the InfinitySeal silicone cushion that adapts to unique facial contours, which increases comfort, improves the fit and reduces leakage.

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Diagnostic Products

We market sleep recorders for the diagnosis and titration of sleep apnea in sleep clinics and hospitals.

We market sleep recorders for the diagnosis and titration of sleep apnea in sleep clinics, hospitals and at home.

These diagnostic systems record relevant respiratory and sleep data, which can be analyzed by a sleep specialist or physician who can then tailor an appropriate OSA treatment regimen for the patient.

ApneaLink Air

A portable diagnostic device which measures oximetry, respiratory effort, pulse, nasal flow and snoring.

PRODUCTS DESCRIPTION

ApneaLink Air A portable diagnostic device that measures oximetry, respiratory effort, pulse, nasal flow and snoring.

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

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NightOwl A portable, cloud-connected, fully disposable diagnostic device that measures AHI based on peripheral arterial tone (PAT), actigraphy, and oximetry over several nights to capture variability and help avoid misdiagnosis.

Connected Solutions and Other Products

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A cloud-based system enabling remote monitoring and changing of patients’ device settings.

PRODUCTS DESCRIPTION

AirView A cloud-based system enabling remote monitoring and changing of patients’ device settings.

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

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

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

Connectivity Module

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

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

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

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

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

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

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

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SaaS revenue accounted for approximately 11%, 12% and 12% of our net revenue in fiscal years 2022, 2021 and 2020, respectively.

Brightree solutions

Brightree enables out-of-hospital care organizations to improve their business performance and deliver better health outcomes.

PRODUCTS DESCRIPTION

Brightree solutions Brightree enables out-of-hospital care organizations to improve their business performance and deliver better health outcomes.

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

MatrixCare solutions

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

HEALTHCARE first

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

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

HEALTHCAREfirst

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

Product Development and Clinical Trials

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Currently, our product development and clinical trial efforts are focused on not only improving our current product offerings and usability, but also expanding into new product applications.

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

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

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

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

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

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We only sell our SaaS products in the United States;

however we will also have sales in Germany once ResMed’s acquisition of MEDIFOX DAN is complete.

Manufacturing

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

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The COVID-19 pandemic has continued to impact the global supply chain, primarily through constraints on raw materials and electronic components, including semiconductor chips.

These constraints have impacted and may continue to impact our ability to manufacture products in quantities necessary to satisfy customer demand, which could negatively impact our results of operations.

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, as well as increased freight costs.

We are actively working to mitigate the impact of the widespread supply chain and logistics issues.

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

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

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

Our main manufacturing facilities are located in Tuas, Singapore;

Sydney, Australia;

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

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

In 2011, the Centers for Medicare & Medicaid Services, or CMS, implemented the Durable Medical Equipment, Prosthetics,

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Orthotics and Supplies (DMEPOS) competitive bidding program, which included DME that we manufacture and develop, specifically, CPAP and respiratory assist devices (or bilevel devices), and related supplies and accessories.

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

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

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

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On December 28, 2021, CMS released a Final Rule that, among other things, extended the blended fee schedule amounts for non-bid rural and non-contiguous areas through the end of the COVID-19 public health emergency, which has been renewed through October 13, 2022, and a blended fee schedule amount was implemented for all other areas for the same period.

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

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

All other product categories were removed from Round 2021.

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

The Protecting Medicare and American Farmers From Sequester Cuts Act was signed into law Dec 10, 2021.

The law extended the 2% Medicare sequester moratorium through March 31, 2022, and adjusted the sequester to 1% between April 1, 2022, and June 30, 2022 and reinstates the full 2% sequestration cut beginning July 1, 2022.

The payment reduction applicable to healthcare providers applies to the approved Medicare payment amount, after the deductible and coinsurance are applied.

The reduction in payment does not affect the 20% coinsurance owed by the patient.

Further, the law eliminated the potential for an additional 4% Medicare sequester in 2022 due to statutory pay-as-you-go (PAYGO) requirement for one year.

The cuts will take effect in 2023 after adjournment of the first session of the 117th Congress.

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

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

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

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include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

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

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

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Our primary Sleep and Respiratory Care competitors include Philips BV;

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BMC Medical Co.

and regional manufacturers.

and regional and new entrant manufacturers seeking to enter our markets.

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

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In addition, our ability to compete will continue to be dependent on successfully protecting our patents and other intellectual property.

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Patents and Proprietary Rights and Related Litigation

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

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

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The determination as to whether or not a modification could significantly affect the device’s safety or effectiveness is initially left to the manufacturer using available FDA guidance;

however, the FDA may review this determination to evaluate the regulatory status of the modified product at any time and may require the manufacturer to cease marketing and recall the modified device until 510(k) clearance or PMA approval is obtained.

however, the FDA may review this determination to evaluate the regulatory status of the modified

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product at any time and may require the manufacturer to cease marketing and recall the modified device until 510(k) clearance or PMA approval is obtained.

The manufacturer may also be subject to significant regulatory fines or penalties.

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

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In the European Economic Area, (which is comprised of the 27 member states of the European Union plus Norway, Iceland and Liechtenstein), or EEA, manufacturers of medical devices need to comply with the Essential Requirements laid out in Annex I to the EU Medical Devices Directive (Council Directive 93/42/EEC) or with the General Safety and Performance Requirements (GSPR) of the new EU Medical Devices Regulation (EU 2017/745).

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

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

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

In the European Economic Area, (which is comprised of the 27 member states of the European Union plus Norway, Iceland and Liechtenstein), or EEA, medical devices need to comply with specific requirements.

These requirements were previously known as "Essential Requirements" under the former EU Medical Devices Directive (Council Directive 93/42/EEC, or MDD) and are now defined "General Safety and Performance Requirements (GSPR)" under the new EU Medical Devices Regulation (Regulation (EU) 2017/745, or MDR).

While the requirements set forth in the MDR are generally consistent with those laid out in the MDD (with a few exceptions), the GSPR are described more in detail compared to the Essential Requirements.

Compliance with the Essential Requirements (under the MDD) or the GSPR (under the MDR) is a prerequisite to be able to affix the CE marking to medical devices, without which they cannot be marketed or sold in the EEA.

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

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

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

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

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

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

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

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

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

Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and foreseeable risks, and any adverse

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events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence.

All manufacturers placing medical devices into the market in the EEA must comply with the EU Medical Device Vigilance System.

Under this system, incidents must be reported to the relevant authorities of the member states of the EEA, and manufacturers are required to take Field Safety Corrective Actions, or FSCAs, to reduce a risk of death or serious deterioration in the state of health associated with the use of a medical device that is already placed on the market.

An incident is defined as any malfunction or deterioration in the characteristics and/or performance of a device, as well as any inadequacy in the labeling or the instructions for use which, directly or indirectly, might lead to or might have led to the death of a patient or user or of other persons or to a serious deterioration in their state of health.

Under the MDR, incidents must be reported centrally in the European EUDAMED database (although transitional provisions are in place until EUDAMED is fully functional), and manufacturers are required to take Field Safety Corrective Actions, or FSCAs, to prevent or reduce a risk of death or serious deterioration in the state of health associated with the use of a medical device that is already placed on the market.

An incident is defined as any malfunction or deterioration in the characteristics and/or performance of a device, as well as any inadequacy in the labeling or the instructions for use.

The MDR considers "serious incidents" those incidents which, directly or indirectly, led, might lead to or might have led to the death of a patient or user or of other persons, a serious deterioration in their state of health, or a serious public health threat.

An FSCA may include the recall, modification, exchange, destruction or retrofitting of the device.

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Where appropriate, our products commercialized in Europe are CE marked and classified as either Class I or Class II.

On April 5, 2017, the European Parliament passed the Medical Devices Regulation, which repeals and replaces the EU Medical Devices Directive.

On April 5, 2017, the European Parliament passed the MDR, which repeals and replaces the MDD.

Unlike directives, which must be implemented into the national laws of the EEA member states, the regulations would be directly applicable (i.e., without the need for adoption of EEA member State laws implementing them) in all EEA member states and are intended to eliminate current differences in the regulation of medical devices among EEA member States.

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

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

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

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

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

The Medical Devices Regulation, among other things:

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

 e stablishes explicit provisions on manufacturers'

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

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

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

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

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

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

Regulation (EU) 2017/746 (IVDR), applicable as of May 26, 2022, provides for the regulatory framework applicable to in vitro diagnostic medical devices.

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

The MDR thus became applicable on May 26, 2021.

The MDR transitional provisions allow the placing on the market of devices with a CE Certificate issued in accordance with the MDD until May 26, 2024, under certain conditions.

Moreover, the MDR provides that the following medical devices with a CE Certificate issued in accordance with the MDD may continue to be made available on the market or put into service until May 26, 2025.

• Devices placed on the market in compliance with the MDD prior to May 26, 2021;

• Devices placed on the market after May 26, 2021, benefiting from the described MDR transitional provisions.

The MDR, among other things:

• strengthens the rules on placing devices on the market and reinforces surveillance once they are available;

• establishes explicit provisions on manufacturers' responsibilities for the follow-up of the quality, performance and safety of devices placed on the market;

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

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

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

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

San Diego, California;

and Lyon, France.

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

We continue to transition our certification profile to meet the new MDR requirements.

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Other regulatory bodies

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

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Also, many U.S.

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

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

In addition, in the U.S., certain states also mandate implementation of commercial compliance programs, impose

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restrictions on device manufacturer marketing practices and/or require the tracking and reporting of gifts, compensation and other remuneration to healthcare professionals and entities.

FCPA and Other Anti-Bribery and Anti-Corruption Laws

Foreign Corrupt Practices Act, or FCPA, prohibits U.S.

corporations and their representatives from offering, promising, authorizing or making payments to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad.

The scope of the FCPA would include interactions with certain healthcare professionals in many countries, either directly or through our contracted distributors.

Our present and future business has been and will continue to be subject to various other U.S.

and foreign laws, rules and/or regulations.

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

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Penalties for violations of HIPAA regulations include significant civil and criminal penalties for each violation.

In addition to federal privacy and security regulations, there are a number of state laws governing confidentiality and security of personally identifiable information that are applicable to our business.

In addition to federal privacy and security regulations, there are a number of state laws governing confidentiality and security of personal information that are applicable to our business.

For example, the California Consumer Privacy Act, or the CCPA, became effective on January 1, 2020.

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

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

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

Further, the California Privacy Rights Act, or CPRA, effective January 1, 2023, and replacing the CCPA, will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.

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

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

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

In addition to California, several U.S.

states, including Colorado, Virginia, and Utah have adopted their own comprehensive data protection laws, with varying implementation dates starting January 1, 2023.

The application of the laws and the requirements contained therein is not uniform.

We may be required to undertake additional compliance investment and potentially change our business processes to evaluate the application of these laws to our business and to implement compliance measures.

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

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

In addition to these comprehensive data protection laws, to date, at least three states have adopted laws specifically regulating the collection, use, storage, and disclosure of biometrics, and additional states may seek to regulate—and/or restrict the use of—biometrics in the future.

Certain of our products use, or permit the use of, information that could be classified as a biometric under these or other laws.

If we are subject to or affected by these or other laws, we may be

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required to modify the way in which we make available our product or certain features of our product.

We also may be required to implement additional practices or processes or otherwise invest our resources to comply with these and other regulations.

In some of our operations, such as those involving our cloud-based software digital health applications, we are a business associate under HIPAA and therefore required to comply with the HIPAA Security Rule, Breach Notification Rule and certain provisions of the HIPAA Privacy Rule, as well as the terms of our business associate agreements that we enter into with our covered entity customers, and are subject to significant civil and criminal penalties for failure to do so.

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

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

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

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

The GDPR has increased our obligations, for example, by requiring more robust disclosures to individuals, strengthening individual data rights, instituting procedures for mandatory and data breach notifications to regulators within a short timeframe, limiting retention periods and secondary use of information (including for research purposes), increasing requirements pertaining to health data and pseudonymized (i.e., key-coded) data and imposing additional obligations when we contract with third party processors in connection with the processing of the personal data.

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

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

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

While the CJEU upheld the

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

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

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

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

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

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

The GDPR and other similar regulations impose additional conditions in order to satisfy such consent for electronic marketing, such as a prohibition on pre-checked tick boxes and bundled consents, thereby requiring customers to affirmatively consent for a given purpose through separate tick boxes or other affirmative action.

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

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

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

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

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

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

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

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

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

For example, the European Commission and the United Kingdom have adopted new standard contractual clauses under which entities may transfer personal data from the European Union and the United Kingdom, which we may be required to implement.

We must evaluate such data transfers on a case-by-case basis to ensure continued permissibility under current law and consistent with new standard contractual clauses.

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

EEA member states may modify or impose additional conditions to be able to transmit electronic marketing communications.

Failure to comply with the requirements of GDPR and the applicable national data protection and marketing laws of the EEA member states may result in fines of up to €20.0 million or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties as well as individual claims for compensation.

Further, the United Kingdom has adopted the UK General Data Protection Regulation ("UK GDPR"), which also has the potential to impose significant data protection fines up to the greater of £17.5 million or 4% of global turnover.

In addition, Congress and some states are considering new laws and regulations that further protect the privacy and security of medical records or medical information.

With the recent increase in publicity regarding data breaches resulting in improper dissemination of consumer information, all 50 states have passed laws regulating the actions that a business must take if it experiences a data breach, such as prompt disclosure to affected customers.

Generally, these laws are limited to electronic data and make some exemptions for smaller breaches.

Congress has also been considering similar federal legislation relating to data breaches.

All 50 states have passed laws regulating the actions that a business must take if it experiences a data breach, such as prompt disclosure to affected customers.

The Federal Trade Commission, or FTC, and states’ Attorneys General have also brought enforcement actions and prosecuted some data breach cases as unfair and/or deceptive acts or practices under the FTC Act.

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These laws may apply directly to our business or indirectly by contract when we provide services to other companies.

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

The FTC also has focused on the use of artificial intelligence (AI) and the potential bias in AI as one of its enforcement and policy priorities, including the use of AI in the healthcare space.

Our services and products may use AI now or in the future.

We intend to continue to comprehensively protect all personal information and to comply with all applicable laws regarding the protection of such information as well as to monitor developments regarding the use of AI that could be relevant to our products and services.

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

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

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Human Capital

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

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As of June 30, 2022, we had approximately 8,160 employees or contingent workers, of which approximately 3,480 were employed in cost of sales activities including areas such as warehousing and manufacturing, 1,350 in research and development and 3,330 in sales, marketing and administration.

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

ResMed’s global turnover rate for fiscal year 2022 was approximately 17%.

Diversity & Inclusion

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

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

Our values of belonging, inclusion and diversity for success (“BIDS”) enable us to unlock the strengths of our people to transform healthcare and improve lives.

We are in our second year of building out a strategic BIDS practice that strives to impact people, patients, and products.

Our objectives include expanding Employee Resource Groups (“ERG”), creating and delivering learning & development opportunities in support of BIDS values, identifying new and different hiring practices & measurements, emphasizing accessibility & disability inclusion, promoting inclusive leadership behaviors & practices, and exploring new community partnerships for sourcing.

Employee Resource Groups.

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

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

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

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

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

this is largely done through engaging employees in our ERG programs supported by employees who share a common interest in community building, professional development, improving corporate culture and delivering sustained business results.

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

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

Learning & Development of D&I Values.

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

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

In 2022, we launched a day of learning in each region for employees to learn more about diversity and inclusion with the theme of Unconscious Bias.

Additionally, we launched a BIDS Certificate program, and the Director of Diversity also delivered multiple trainings globally.

Strategic Inclusive Development.

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

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

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

In 2022, we updated our internal policies and Employee Handbook to formalize certain inclusivity initiatives.

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

Leadership Engagement.

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

Each ERG is supported by an Executive Sponsor.

Sourcing & Recruiting.

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

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

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

Talent Development and Retention

We train our recruiting workforce on the value of hiring diverse teams and diversity sourcing strategies, and we partner with external organizations that develop and supply diverse talent.

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

In 2022, we launched campaigns focused on collecting internal data and gathering diverse prospective candidates.

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Talent Development & Retention

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

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

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

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Employee Safety and COVID-19 Related Measures

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

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

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

Compensation & Benefits

Our compensation philosophy is to reinforce and align with our mission, business strategy, and financial needs as we grow.

We provide market-competitive compensation and benefits based on benchmarking surveys we conduct regularly for all position levels against relevant peer companies.

Our annual and long-term incentive packages are linked directly to business and individual performance, with a balance of short- and long-term financial and strategic objectives.

We have an employee stock purchase plan, in addition to formal service awards internally.

Eligibility for non-salary benefits such as salary continuance, life insurance, health insurance, and similar benefits, follows local regulations and practices.

Equal opportunity and pay equity are integral to our pay philosophy, and we have processes in place to identify and address any potential pay equity issues where appropriate.

Employee Safety & COVID-19 Related Measures

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

We employ global standards to provide the framework for our locally compliant, integrated and effective health and safety management systems which enable the capability, autonomy & accountability of the leaders to manage local sites.

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

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

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

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

 Adding work from home flexibility;

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

 Increasing cleaning protocols across all locations;

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

 Facilitating access to and encouraging vaccination of our employees

 Implementing temperature screening of employees at our sites;

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

 Providing additional personal protective equipment and cleaning supplies;

 Modifying workspaces

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

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

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

Employee Engagement

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

As the COVID-19 pandemic spread, we implemented and maintained significant changes that we determined were in the best interest of our employees.

These included work from home flexibility, adjusted attendance policies and additional safety measures for our on-site workforce.

We have since re-opened our offices, consistent with local public health guidance and protocols, and continue to support flexible working globally.

Employee Engagement & Wellbeing

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

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

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

Employee Wellbeing

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

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

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

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

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

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

We are committed to improving the quality of life of our employees and their families.

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

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

PART I Item 1A

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-K

Item 1. Business