What changed in this filing

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Item 1. Financial Statements

2023-04-28 compared with 2023-01-27 · 223 added, 189 removed, 1010 unchanged (29% of the section changed)

6 unchanged sentences

Cash and cash equivalents $ 227,894 $ 273,710

Accounts receivable, net of allowances of $ 27,118 and $ 23,259 at December 31, 2022 and June 30, 2022, respectively

Accounts receivable, net of allowances of $ 24,852 and $ 23,259 at March 31, 2023 and June 30, 2022, respectively

686,264 575,950

33 unchanged sentences

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

188,737,368 issued and 146,901,134 outstanding at December 31, 2022 and 188,246,955 issued and 146,410,721 outstanding at June 30, 2022

188,760,643 issued and 146,924,409 outstanding at March 31, 2023 and 188,246,955 issued and 146,410,721 outstanding at June 30, 2022

Additional paid-in capital 1,728,997 1,682,432

Retained earnings 4,088,057 3,613,736

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

Treasury stock, at cost, 41,836,234 shares at March 31, 2023 and June 30, 2022

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

8 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

36 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

20 unchanged sentences

Stock-based compensation costs — — 16,919 — — — — 16,919

Other comprehensive income (loss) — — — — — — ( 93,381 ) ( 93,381 )

Other comprehensive income — — — — — — ( 93,381 ) ( 93,381 )

Net income — — — — — 210,478 — 210,478

13 unchanged sentences

188,737 $ 588 $ 1,710,766 ( 41,836 ) $ ( 1,623,256 ) $ 3,920,197 $ ( 270,168 ) $ 3,738,127

Common stock issued on exercise of options 18 — 983 — — — — 983

Common stock issued on vesting of restricted stock units, net of shares withheld for tax 6 — ( 584 ) — — — — ( 584 )

Stock-based compensation costs — — 17,832 — — — — 17,832

Other comprehensive income — — — — — — 8,291 8,291

Net income — — — — — 232,500 — 232,500

Dividends declared ($ 0.44 per common share)

— — — — — ( 64,640 ) — ( 64,640 )

Balance, March 31, 2023 188,761 $ 588 $ 1,728,997 ( 41,836 ) $ ( 1,623,256 ) $ 4,088,057 $ ( 261,877 ) $ 3,932,509

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

24 unchanged sentences

Stock-based compensation costs — — 16,101 — — — — 16,101

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

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

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

3 unchanged sentences

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 (loss) — — — — — — ( 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.

3 unchanged sentences

(In US$ and in thousands)

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

18 unchanged sentences

Purchases of investments (note 5) ( 29,729 ) ( 16,614 )

Proceeds from exits of investments (note 5) 3,937 6,802

(Payments) / proceeds on maturity of foreign currency contracts 18,961 ( 5,309 )

3 unchanged sentences

Taxes paid related to net share settlement of equity awards ( 30,297 ) ( 52,278 )

Payments of business combination contingent consideration ( 316 ) —

Proceeds from borrowings, net of borrowing costs 1,070,000 160,000

37 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, 2023.

The condensed consolidated financial statements for the three and six months ended December 31, 2022 and December 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, 2022.

The condensed consolidated financial statements for the three and nine months ended March 31, 2023 and March 31, 2022 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, 2022.

Revenue Recognition

10 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

68 unchanged sentences

When lease contracts also include the sale of masks and accessories, we allocate contract consideration to those items on a relative standalone price basis and recognize revenue when control transfers to the customer.

Operating lease revenue was $ 20.4 million and $ 44.1 million for the three and six months ended December 31, 2022 and $ 24.4 million and $ 49.6 million for the three and six months ended December 31, 2021.

Operating lease revenue was $ 22.1 million and $ 66.2 million for the three and nine months ended March 31, 2023 and $ 19.8 million and $ 69.4 million for the three and nine months ended March 31, 2022.

Provision for Warranty

10 unchanged sentences

We evaluate the performance of our segments based on net revenues and income from operations.

The accounting policies of the segments are the same as those described in note 2 of our consolidated financial statements included in our Form 10-K for the year ended June 30, 2022.

The accounting policies of the segments are the same as those described in note 2 of our consolidated financial statements included in our Form 10-K for the fiscal year ended June 30, 2022.

Segment net revenues and segment income from operations do not include inter-segment profits and revenue is allocated to a geographic area based on where the products are shipped to or where the services are performed.

7 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

16 unchanged sentences

Acquisition related expenses

8,412 — 9,157 —

Interest expense (income), net 14,964 5,462 32,436 16,770

8 unchanged sentences

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

Inventories December 31,

Inventories March 31,

2023 June 30,

3 unchanged sentences

Total inventories $ 1,011,269 $ 743,910

Prepaid expenses and other current assets December 31,

Prepaid expenses and other current assets March 31,

2023 June 30,

3 unchanged sentences

Total prepaid expenses and other current assets $ 412,388 $ 337,908

Property, Plant and Equipment December 31,

Property, Plant and Equipment March 31,

2023 June 30,

2 unchanged sentences

Property, plant and equipment, net $ 528,778 $ 498,181

Other Intangible Assets December 31,

Other Intangible Assets March 31,

2023 June 30,

12 unchanged sentences

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

Six Months Ended December 31, 2022

Nine Months Ended March 31, 2023

Respiratory Care SaaS Total

18 unchanged sentences

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

Measurement category December 31,

Measurement category March 31,

2023 June 30,

4 unchanged sentences

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

Six Months Ended December 31, 2022

Nine Months Ended March 31, 2023

Non-marketable securities Marketable securities Equity method investments Total

4 unchanged sentences

Unrealized losses on marketable equity securities — ( 2,043 ) — ( 2,043 )

Realized gains on marketable and non-marketable equity securities 3,937 — — 3,937

Proceeds from exits of investments ( 3,937 ) — — ( 3,937 )

Impairment of investments ( 3,000 ) — — ( 3,000 )

Loss attributable to equity method investments — — ( 5,037 ) ( 5,037 )

1 unchanged sentence

Carrying value at the end of the period $ 70,640 $ 12,115 $ 67,697 $ 150,452

(1) Includes equity method investment acquired and measured at fair value via our acquisition of MEDIFOX DAN.

(1) Includes additions from purchases and an equity method investment acquired and measured at fair value via our acquisition of MEDIFOX DAN.

Refer to Note 12 herein.

2 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

Six Months Ended December 31, 2021

Nine Months Ended March 31, 2022

Non-marketable securities Marketable securities Equity method investments Total

11 unchanged sentences

Carrying value at the end of the period $ 38,180 $ 17,842 $ 12,477 $ 68,499

(2) 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.

Net unrealized gains recognized for equity investments in non-marketable and marketable securities held as of December 31, 2022 for the three and six months ended December 31, 2022 were $ 8.4 million and $ 5.1 million.

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.

(2) 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.

Net unrealized gains recognized for equity investments in non-marketable and marketable securities held as of March 31, 2023 for the three and nine months ended March 31, 2023 were $ 2.5 million and $ 7.6 million.

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.

(6) Income Taxes

6 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

Nine Months Ended

Balance at the beginning of the period $ 25,889 $ 22,032

17 unchanged sentences

On June 29, 2022, we entered into a second amended and restated credit agreement (the “Revolving Credit Agreement”), as borrower, with lenders MUFG Union Bank, N.A., as administrative agent, joint lead arranger, sole book runner, swing line lender and letter of credit issuer, Westpac Banking Corporation, as syndication agent and joint lead arranger, HSBC Bank USA, National Association, as syndication agent and joint lead arranger, and Wells Fargo Bank, National Association, as documentation agent.

The Revolving Credit Agreement, among other things, provided a senior unsecured revolving credit facility of $ 1,500.0 million, with an uncommitted option to increase the revolving credit facility by an additional amount equal to the greater of $ 1,000.0 million and 1.00 times the EBITDA (as defined in the Revolving Credit Agreement) for the trailing twelve-month measurement period.

The Revolving Credit Agreement, among other things, provided a senior unsecured revolving credit facility of $ 1,500.0 million, with an uncommitted option to increase the revolving credit facility by an additional amount equal to the greater of $ 1,000.0 million or 1.0 times the EBITDA (as defined in the Revolving Credit Agreement) for the trailing twelve-month measurement period.

The Revolving Credit Agreement amends and restates that certain Amended and Restated Credit Agreement, dated as of April 17, 2018, among ResMed, MUFG Union Bank, N.A., Westpac Banking Corporation and the lenders party thereto.

Additionally, on June 29, 2022, ResMed Pty Limited entered into a Second Amendment to the Syndicated Facility Agreement and First Amendment to Unconditional Guaranty Agreement (the “Term Credit Agreement”), as borrower, with lenders MUFG Union Bank, N.A., as administrative agent, joint lead arranger and joint book runner, and Westpac Banking Corporation, as syndication agent, joint lead arranger and joint book runner, which amends that certain Syndicated Facility Agreement dated as of April 17, 2018.

The Term Credit Agreement, among other things, provides ResMed Pty a senior unsecured term credit facility of $ 195.0 million.

The Term Credit Agreement, among other things, provides ResMed Pty Limited a senior unsecured term credit facility of $ 200.0 million.

Our obligations under the Revolving Credit Agreement are guaranteed by certain of our direct and indirect U.S.

7 unchanged sentences

The outstanding principal amounts will bear interest at a rate equal to the Adjusted Term SOFR (as defined in the Revolving Credit Facility) 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, 2022, the interest rate that was being charged on the outstanding principal amounts was 5.2 %.

At March 31, 2023, the interest rate that was being charged on the outstanding principal amounts was 5.8 %.

An applicable commitment fee of 0.075 % to 0.150 % (depending on the then-applicable leverage ratio) applies on the unused portion of the revolving credit facility.

As of December 31, 2022, we had $ 390.0 million available for draw down under the revolving credit facility.

As of March 31, 2023, we had $ 605.0 million available for draw down under the revolving credit facility.

PART I – FINANCIAL INFORMATION Item 1

2 unchanged sentences

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 Adjusted Term SOFR plus the spreads described above, its carrying amount is equivalent to its fair value as at December 31, 2022 and June 30, 2022, which was $ 1,305.0 million and $ 280.0 million, respectively.

As the Revolving Credit and Term Credit Agreements’ interest rate is calculated as Adjusted Term SOFR plus the spreads described above, its carrying amount is equivalent to its fair value as at March 31, 2023 and June 30, 2022, which was $ 1,090.0 million and $ 280.0 million, respectively.

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 (collectively referred to as the “Senior Notes”).

6 unchanged sentences

As of December 31, 2022 and June 30, 2022, the Senior Notes had a carrying amount of $ 500.0 million, excluding deferred borrowing costs, and an estimated fair value of $ 460.9 million and $ 477.7 million, respectively.

As of March 31, 2023 and June 30, 2022, the Senior Notes had a carrying amount of $ 500.0 million, excluding deferred borrowing costs, and an estimated fair value of $ 471.5 million and $ 477.7 million, respectively.

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

At December 31, 2022, we were in compliance with our debt covenants and there was $ 1,805.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

At March 31, 2023, we were in compliance with our debt covenants and there was $ 1,590.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

(9) Earnings Per Share

1 unchanged sentence

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 293,796 and 49,762 for the three months ended December 31, 2022 and 2021, respectively, and 270,100 and 25,470 for the six months ended December 31, 2022 and 2021, respectively, as the effect would have been anti-dilutive.

The weighted average number of outstanding stock options and restricted stock units not included in the computation of diluted earnings per share were 403,736 and 307,368 for the three months ended March 31, 2023 and 2022, respectively, and 290,639 and 52,599 for the nine months ended March 31, 2023 and 2022, respectively, as the effect would have been anti-dilutive.

PART I – FINANCIAL INFORMATION Item 1

3 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

18 unchanged sentences

We have also requested that the court dismiss the case based on NYU’s license of the patents to Fisher & Paykel and Fisher & Paykel’s prior settlement with us;

The matter is proceeding to discovery while the court considers our request.

that request is pending.

In December 2022, the Patent Trial and Appeals Board (“PTAB”) of the Patent and Trademark Office granted our request to review the validity of the claims in the patents asserted by NYU against us, determining that there is a reasonable likelihood that we will prevail.

The PTAB’s final written decisions on the validity of the asserted claims is expected by December 2023.

On April 10, 2023, the district court granted our request to stay the case pending the PTAB’s decision on the validity of the patents asserted by NYU.

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

20 unchanged sentences

court for further proceedings.

We are not a party to the ITC investigation or the district court cases, but we sell products that incorporate some of the communications modules at issue in the district court case.

We were not a party to the ITC investigation, and we are not a party to the district court cases, but we sell products that incorporate some of the communications modules at issue in the district court case.

On June 16, 2022, Cleveland Medical Devices Inc.

7 unchanged sentences

10,076,269, as well as indirect and willful infringement allegations as to the remaining patents asserted against ResMed;

that motion is pending.

On March 23, 2023, we filed a petition with the Patent Trial and Appeals Board (“PTAB”) of the Patent and Trademark Office seeking review of the validity of Cleveland Medical U.S.

Patent 10,076,269.

The PTAB will decide whether to review the validity of the ‘269 patent by September 2023.

The parties are engaged in discovery in the Delaware action.

The case is set for trial in August 2024.

On March 23, 2023, ResMed Corp.

filed suit in the Southern District of California, case no.

23-cv-00500-TWR-JLB, seeking a declaration that it does not infringe U.S.

patent number 11,602,284 recently issued to Cleveland Medical.

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.

5 unchanged sentences

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

During the six months ended December 31, 2022 and December 31, 2021, receivables sold with limited recourse were $ 84.3 million and $ 94.2 million, respectively.

As of December 31, 2022, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $ 24.1 million and $ 1.0 million, respectively.

During the nine months ended March 31, 2023 and March 31, 2022, receivables sold with limited recourse were $ 131.8 million and $ 126.2 million, respectively.

As of March 31, 2023, the maximum exposure on outstanding receivables sold with recourse and the associated contingent provision were $ 29.7 million and $ 1.0 million, respectively.

As of June 30, 2022, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $ 24.2 million and $ 2.1 million, respectively.

12 unchanged sentences

Any difference between the change in the fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive income.

The purpose of the cross-currency swaps for the net investment hedge is to mitigate foreign currency risk associated with changes in spot rates on the net asset balances of our foreign functional subsidiaries.

For net investment hedges that qualify and are designated for hedge accounting, the change in fair value of the derivative is recorded in cumulative translation adjustment within other comprehensive loss and reclassified into earnings when the hedged net investment is either sold or

PART I – FINANCIAL INFORMATION Item 1

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements

substantially liquidated.

The initial fair value of components excluded from the assessment of hedge effectiveness will be recognized in interest (expense) income, net.

The notional value of outstanding foreign cross-currency swaps was $ 1,028.8 million at December 31, 2022.

The notional value of outstanding foreign cross-currency swaps was $ 1,042.2 million at March 31, 2023.

These contracts mature at various dates prior to December 31, 2029.

8 unchanged sentences

All movements in the fair value of the foreign currency instruments are recorded within other, net in our condensed consolidated statements of income.

The notional value of the outstanding non-designated hedges was $ 976.2 million and $ 602.0 million at December 31, 2022 and June 30, 2022, respectively.

These contracts mature at various dates prior to June 30, 2024.

The notional value of the outstanding non-designated hedges was $ 1,080.9 million and $ 602.0 million at March 31, 2023 and June 30, 2022, respectively.

These contracts mature at various dates prior to December 15, 2024.

Fair Values of Derivative Instruments

15 unchanged sentences

Total derivative liabilities $ 61,588 $ 1,947

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Fair Value Hedge Gains (Losses)

1 unchanged sentence

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

2 unchanged sentences

Gain (loss) recognized on cross-currency swap in other, net ( 3,920 ) — ( 13,057 ) —

Gain (loss) recognized on long-term debt in other, net 9,137 — 9,137 —

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Gain (loss) recognized on intercompany debt in other, net 3,920 — 13,057 —

Net Investment Hedge Gains (Losses)

1 unchanged sentence

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

4 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

35 unchanged sentences

Pro forma results of operations have not been presented because the effects of this acquisition were not material to our condensed consolidated statements of operations.

During the three and six months ended December 31, 2022, we recorded acquisition related expenses of $ 8.4 million and $ 9.2 million, respectively, related to the MEDIFOX DAN acquisition.

We did no t have material acquisition related expenses during the three and six months ended December 31, 2021.

We did not incur material acquisition related expenses during the three months ended March 31, 2023.

During the nine months ended March 31, 2022, we recorded acquisition related expenses of $ 9.2 million related to the MEDIFOX DAN acquisition.

We did not have material acquisition related expenses during the three and nine months ended March 31, 2022.

PART I – FINANCIAL INFORMATION Item 2

20 unchanged sentences

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, 2022.

The following is an overview of our results of operations for the three and nine months ended March 31, 2023.

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.

7 unchanged sentences

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

During the three months ended December 31, 2022, we invested $69.9 million on research and development activities, which represents 6.8% 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, 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 as well as continued to expand our global offering of devices to include Card-to-Cloud ("C2C") versions of our prior model AirSense 10 and AirCurve 10 products that do not incorporate a communications module.

We introduced these C2C models to address the growing backlog of patients waiting for therapy with our devices due to the global semiconductor supply shortage.

Due to multiple acquisitions, including Brightree in April 2016, HEALTHCAREfirst in July 2018, MatrixCare in November 2018, and MEDIFOX DAN in November 2022, 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.

During the three months ended March 31, 2023, we invested $76.4 million on research and development activities, which represents 6.8% 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, 2023, 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 as well as continued our global offering of devices including Card-to-Cloud ("C2C") versions of our prior model AirSense 10 and AirCurve 10 products that do not incorporate a communications module.

We introduced these C2C models to address the backlog of patients waiting for therapy with our devices due to the global semiconductor supply shortage.

Due to multiple acquisitions, including Brightree in April 2016, HEALTHCAREfirst in July 2018, MatrixCare in November 2018, and MEDIFOX DAN in November 2022, our operations 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.

These platforms comprise our SaaS business.

1 unchanged sentence

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, 2022 was $1,033.7 million, an increase of 16% compared to the three months ended December 31, 2021.

Gross margin was 56.1% for the three months ended December 31, 2022 compared to 56.4% for the three months ended December 31, 2021.

Diluted earnings per share was $1.53 for the three months ended December 31, 2022, compared to diluted earnings per share of $1.37 for the three months ended December 31, 2021.

At December 31, 2022, our cash and cash equivalents totaled $253.2 million, our total assets were $6.7 billion and our stockholders’ equity was $3.7 billion.

Net revenue for the three months ended March 31, 2023 was $1,116.9 million, an increase of 29% compared to the three months ended March 31, 2022.

Gross margin was 55.3% for the three months ended March 31, 2023 compared to 56.8% for the three months ended March 31, 2022.

Diluted earnings per share was $1.58 for the three months ended March 31, 2023, compared to diluted earnings per share of $1.22 for the three months ended March 31, 2022.

At March 31, 2023, our cash and cash equivalents totaled $227.9 million, our total assets were $6.7 billion and our stockholders’ equity was $3.9 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.

In order to calculate our constant currency information, we translate the current

In order to calculate our constant currency information, we translate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable

PART I – FINANCIAL INFORMATION Item 2

1 unchanged sentence

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

period financial information using the foreign currency exchange rates that were in effect during the previous comparable period.

However, constant currency measures should not be considered in isolation or as an alternative to U.S.

1 unchanged sentence

Results of Operations

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

Net revenue for the three months ended December 31, 2022 increased to $1,033.7 million from $894.9 million for the three months ended December 31, 2021, an increase of $138.9 million or 16% (a 20% increase on a constant currency basis).

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Net revenue for the three months ended March 31, 2023 increased to $1,116.9 million from $864.5 million for the three months ended March 31, 2022, an increase of $252.4 million or 29% (a 31% 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, % Change Constant Currency*

March 31, % Change Constant Currency*

U.S., Canada and Latin America

16 unchanged sentences

Sleep and Respiratory Care

Net revenue from our Sleep and Respiratory Care business for the three months ended December 31, 2022 was $917.0 million, an increase of 15% compared to net revenue for the three months ended December 31, 2021.

Net revenue from our Sleep and Respiratory Care business for the three months ended March 31, 2023 was $980.1 million, an increase of 28% compared to net revenue for the three months ended March 31, 2022.

Movements in international currencies against the U.S.

dollar negatively impacted net revenue by approximately $35.8 million for the three months ended December 31, 2022.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the three months ended December 31, 2022 increased by 20% compared to the three months ended December 31, 2021.

The increase in net revenue was primarily attributable to an increase in unit sales of our devices and masks.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the three months ended December 31, 2022 increased to $615.3 million from $486.8 million for the three months ended December 31, 2021, an increase of $128.5 million or 26%.

The increase was primarily due to an increase in unit sales of our devices, including incremental sales of the C2C devices, and masks.

Net revenue in combined Europe, Asia and other markets decreased for the three months ended December 31, 2022 to $301.7 million from $309.0 million for the three months ended December 31, 2021, a decrease of $7.3 million or 2% (an 8% 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.

dollar negatively impacted net revenue by approximately $19.6 million for the three months ended March 31, 2023.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the three months ended March 31, 2023 increased by 31% compared to the three months ended March 31, 2022.

The increase in net revenue associated with our devices was primarily attributable to increased demand as well as reduced competitive supply.

The increase in masks was primarily due to an increase in unit sales.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the three months ended March 31, 2023 increased to $629.1 million from $475.4 million for the three months ended March 31, 2022, an increase of $153.7 million or 32%.

The increase in devices was primarily attributable to increased demand as well as reduced competitive supply.

The increase in masks was primarily due to an increase in unit sales.

Net revenue in combined Europe, Asia and other markets increased for the three months ended March 31, 2023 to $351.0 million from $287.9 million for the three months ended March 31, 2022, an increase of $63.1 million or 22% (a 28% increase on a constant currency basis).

The constant currency increase in device sales in combined Europe, Asia and other was primarily attributable to increased demand as well as reduced competitive supply.

The increase in masks was primarily due to an increase in unit sales.

PART I – FINANCIAL INFORMATION Item 2

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

Net revenue from devices for the three months ended December 31, 2022 increased to $542.8 million from $452.5 million for the three months ended December 31, 2021, an increase of $90.3 million or 20%, including an increase of 41% in the U.S., Canada and Latin America and a decrease of 5% in combined Europe, Asia and other markets (a 5% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the three months ended December 31, 2022 increased by 25%.

Net revenue from masks and other for the three months ended December 31, 2022 increased to $374.2 million from $343.3 million for the three months ended December 31, 2021, an increase of $30.9 million or 9%, including an increase of 11% in the U.S., Canada and Latin America and an increase of 3% 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 for the three months ended December 31, 2022 increased by 13%.

Net revenue from devices for the three months ended March 31, 2023 increased to $607.9 million from $433.1 million for the three months ended March 31, 2022, an increase of $174.8 million or 40%, including an increase of 48% in the U.S., Canada and Latin America and an increase of 29% in combined Europe, Asia and other markets (a 36% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the three months ended March 31, 2023 increased by 43%.

Net revenue from masks and other for the three months ended March 31, 2023 increased to $372.2 million from $330.3 million for the three months ended March 31, 2022, an increase of $41.9 million or 13%, including an increase of 14% in the U.S., Canada and Latin America and an increase of 9% 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 for the three months ended March 31, 2023 increased by 15%.

Software as a Service

Net revenue from our SaaS business for the three months ended December 31, 2022 increased to $116.8 million from $99.0 million for the three months ended December 31, 2021, an increase of $17.7 million or 18%.

The constant currency increase was predominantly due to our recent acquisition of MEDIFOX DAN, which was acquired on November 21, 2022, in addition to continued growth in the HME vertical within our SaaS business.

Six Months Ended December 31, 2022 Compared to the Six Months Ended December 31, 2021

Net revenue for the six months ended December 31, 2022 increased to $1,984.0 million from $1,798.9 million for the six months ended December 31, 2021, an increase of $185.1 million or 10% (a 14% increase on a constant currency basis).

Net revenue from our SaaS business for the three months ended March 31, 2023 increased to $136.8 million from $101.1 million for the three months ended March 31, 2022, an increase of $35.6 million or 35%.

The increase was predominantly due to our recent acquisition of MEDIFOX DAN, which was acquired on November 21, 2022.

Excluding the MEDIFOX DAN acquisition, SaaS revenue increased 9% and was driven by continued growth in the HME vertical within our SaaS business.

Nine Months Ended March 31, 2023 Compared to the Nine Months Ended March 31, 2022

Net revenue for the nine months ended March 31, 2023 increased to $3,100.9 million from $2,663.4 million for the nine months ended March 31, 2022, an increase of $437.5 million or 16% (a 20% 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, % Change Constant Currency*

Nine Months Ended

March 31, % Change Constant Currency*

U.S., Canada and Latin America

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Combined Europe, Asia and other markets

Devices $ 375,305 $ 425,961 (12) % (2) %

Devices $ 611,123 $ 608,268 Nil% 9 %

Masks and other 307,913 304,151 1 12

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Sleep and Respiratory Care

Net revenue from our Sleep and Respiratory Care business for the six months ended December 31, 2022 was $1,761.4 million, an increase of 10% compared to net revenue for the six months ended December 31, 2021.

Net revenue from our Sleep and Respiratory Care business for the nine months ended March 31, 2023 was $2,741.5 million, an increase of 16% compared to net revenue for the nine months ended March 31, 2022.

Movements in international currencies against the U.S.

dollar negatively impacted net revenue by approximately $72.3 million for the six months ended December 31, 2022.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the six months ended December 31, 2022 increased by 14% compared to the six months ended December 31, 2021.

The increase in net revenue was primarily attributable to an increase in unit sales of our devices and masks.

dollar negatively impacted net revenue by approximately $92.5 million for the nine months ended March 31, 2023.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the nine months ended March 31, 2023 increased by 20% compared to the nine months ended March 31, 2022.

The increase in net revenue associated with our devices was primarily attributable to increased demand, reduced

PART I – FINANCIAL INFORMATION Item 2

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

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the six months ended December 31, 2022 increased to $1,193.4 million from $977.8 million for the six months ended December 31, 2021, an increase of $215.5 million or 22%.

The increase was primarily due to an increase in unit sales of our devices, including incremental sales of the C2C devices, and masks.

Net revenue in combined Europe, Asia and other markets decreased for the six months ended December 31, 2022 to $568.1 million from $624.5 million for the six months ended December 31, 2021, a decrease of $56.4 million or 9% (a 2% 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 masks, partially offset by a decrease in our unit sales of devices.

Net revenue from devices for the six months ended December 31, 2022 increased to $1,060.4 million from $946.7 million for the six months ended December 31, 2021, an increase of $113.7 million or 12%, including an increase of 32% in the U.S., Canada and Latin America and a decrease of 12% in combined Europe, Asia and other markets (a 2% decrease on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the six months ended December 31, 2022 increased by 17%.

Net revenue from masks and other for the six months ended December 31, 2022 increased to $701.0 million from $655.7 million for the six months ended December 31, 2021, an increase of $45.4 million or 7%, including an increase of 11% in the U.S., Canada and Latin America and a decrease of 3% in combined Europe, Asia and other markets (a 9% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales increased by 11%, compared to the six months ended December 31, 2021.

competitive supply, and incremental sales of the C2C devices.

The increase in masks was primarily due to an increase in unit sales .

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the nine months ended March 31, 2023 increased to $1,822.5 million from $1,453.3 million for the nine months ended March 31, 2022, an increase of $369.2 million or 25%.

The increase in net revenue associated with our devices was primarily attributable to increased demand, reduced competitive supply, and incremental sales of the C2C devices.

The increase in masks was primarily due to an increase in unit sales .

Net revenue in combined Europe, Asia and other markets increased for the nine months ended March 31, 2023 to $919.0 million from $912.4 million for the nine months ended March 31, 2022, an increase of $6.6 million or 1% (a 10% increase on a constant currency basis).

The constant currency increase in device sales in combined Europe, Asia and other was primarily attributable to increased demand as well as reduced competitive supply.

The increase in masks was primarily due to an increase in unit sales.

Net revenue from devices for the nine months ended March 31, 2023 increased to $1,668.3 million from $1,379.7 million for the nine months ended March 31, 2022, an increase of $288.5 million or 21%, including an increase of 37% in the U.S., Canada and Latin America and consistent sales in combined Europe, Asia and other markets (a 9% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the nine months ended March 31, 2023 increased by 25%.

Net revenue from masks and other for the nine months ended March 31, 2023 increased to $1,073.3 million from $986.0 million for the nine months ended March 31, 2022, an increase of $87.3 million or 9%, including an increase of 12% in the U.S., Canada and Latin America and an increase of 1% in combined Europe, Asia and other markets (a 12% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales increased by 12%, compared to the nine months ended March 31, 2022.

Software as a Service

Net revenue from our SaaS business for the six months ended December 31, 2022 was increased to $222.6 million from $196.6 million for the six months ended December 31, 2021, an increase of $26.1 million or 13%.

The increase was predominantly due to our recent acquisition of MEDIFOX DAN, which was acquired on November 21, 2022, in addition to continued growth in the HME vertical within our SaaS business.

Net revenue from our SaaS business for the nine months ended March 31, 2023 increased to $359.4 million from $297.7 million for the nine months ended March 31, 2022, an increase of $61.7 million or 21%.

The increase was predominantly due to our recent acquisition of MEDIFOX DAN, which was acquired on November 21, 2022.

Excluding the MEDIFOX DAN acquisition, SaaS revenue increased 8% and was driven by continued growth in the HME vertical within our SaaS business.

Gross Profit and Gross Margin

Gross profit increased for the three months ended December 31, 2022 to $579.7 million from $504.3 million for the three months ended December 31, 2021, an increase of $75.4 million or 15%.

Gross margin, which is gross profit as a percentage of net revenue, for the three months ended December 31, 2022 was 56.1% compared to 56.4% for the three months ended December 31, 2021.

The decrease in gross margin for the three months ended December 31, 2022 compared to the three months ended December 31, 2021 was due primarily to unfavorable product mix, higher distribution and warehouse related costs, and unfavorable foreign currency movements, partially offset by increases in average selling prices and a decrease in the amortization of acquired intangible assets.

Gross profit increased for the six months ended December 31, 2022 to $1,120.5 million from $1,010.6 million for the six months ended December 31, 2021, an increase of $109.9 million or 11%.

Gross margin for the six months ended December 31, 2022 was 56.5% compared to 56.2% for the six months ended December 31, 2021.

The increase in gross margin for the six months ended December 31, 2022 compared to the six months ended December 31, 2021 was due primarily to favorable average selling prices and a decrease in the amortization of acquired intangible assets, partially offset by unfavorable product mix changes and higher distribution and warehouse related costs.

Gross profit increased for the three months ended March 31, 2023 to $617.8 million from $491.2 million for the three months ended March 31, 2022, an increase of $126.6 million or 26%.

Gross margin, which is gross profit as a percentage of net revenue, for the three months ended March 31, 2023 was 55.3% compared to 56.8% for the three months ended March 31, 2022.

The decrease in gross margin for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 was due primarily to unfavorable product mix, higher component costs, and higher warehouse related costs, partially offset by increases in average selling prices and a decrease in the amortization of acquired intangible assets.

Gross profit increased for the nine months ended March 31, 2023 to $1,738.3 million from $1,501.8 million for the nine months ended March 31, 2022, an increase of $236.5 million or 16%.

Gross margin for the nine months ended March 31, 2023 was 56.1% compared to 56.4% for the nine months ended March 31, 2022.

The decrease in gross margin for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022 was due primarily to unfavorable product mix, higher component costs, higher warehouse related costs, and unfavorable foreign currency movements, partially offset by increases in average selling prices and a decrease in the amortization of acquired intangible assets.

PART I – FINANCIAL INFORMATION Item 2

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Three Months Ended

December 31, Change % Change Constant Currency

March 31, Change % Change Constant Currency

Selling, general, and administrative $ 228,457 $ 182,401 $ 46,056 25 % 28 %

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Amortization of acquired intangible assets 12,188 7,730 4,458 58 % 56 %

Six Months Ended

December 31, Change % Change Constant Currency

Nine Months Ended

March 31, Change % Change Constant Currency

Selling, general, and administrative $ 633,317 $ 544,483 $ 88,834 16 % 21 %

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Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased for the three months ended December 31, 2022 to $211.7 million from $185.4 million for the three months ended December 31, 2021, an increase of $26.3 million or 14%.

Selling, general, and administrative expenses increased for the three months ended March 31, 2023 to $228.5 million from $182.4 million for the three months ended March 31, 2022, an increase of $46.1 million or 25%.

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 $5.5 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, 2022 increased by 20% compared to the three months ended December 31, 2021.

As a percentage of net revenue, selling, general, and administrative expenses were 20.5% for the three months ended December 31, 2022, compared to 20.7% for the three months ended December 31, 2021.

The constant currency increase in selling, general, and administrative expenses during the three months ended December 31, 2022 compared to the three months ended December 31, 2021 was primarily due to increases in employee-related costs, increases in travel and entertainment expenses, and additional expenses associated with the consolidation of recent acquisitions.

Selling, general, and administrative expenses increased for the six months ended December 31, 2022 to $404.9 million from $362.1 million for the six months ended December 31, 2021, an increase of $42.8 million or 12%.

Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the three months ended March 31, 2023 increased by 28% compared to the three months ended March 31, 2022.

As a percentage of net revenue, selling, general, and administrative expenses were 20.5% for the three months ended March 31, 2023, compared to 21.1% for the three months ended March 31, 2022.

The constant currency increase in selling, general, and administrative expenses during the three months ended March 31, 2023 compared to the three months ended March 31, 2022 was primarily due to increases in employee-related costs, increases in travel and entertainment expenses, and additional expenses associated with the consolidation of recent acquisitions.

Selling, general, and administrative expenses increased for the nine months ended March 31, 2023 to $633.3 million from $544.5 million for the nine months ended March 31, 2022, an increase of $88.8 million or 16%.

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 $25.7 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, 2022 increased by 17% compared to the six months ended December 31, 2021.

As a percentage of net revenue, selling, general, and administrative expenses were 20.4% for the six months ended December 31, 2022, compared to 20.1% for the six months ended December 31, 2021.

The constant currency increase in selling, general, and administrative expenses during the six months ended December 31, 2022 compared to the six months ended December 31, 2021 was primarily due to increases in employee-related costs, increases in travel and entertainment expenses, and additional expenses associated with the consolidation of recent acquisitions.

Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the nine months ended March 31, 2023 increased by 21% compared to the nine months ended March 31, 2022.

As a percentage of net revenue, selling, general, and administrative expenses were 20.4% for the nine months ended March 31, 2023, compared to 20.4% for the nine months ended March 31, 2022.

The constant currency increase in selling, general, and administrative expenses during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022 was primarily due to increases in employee-related costs, increases in travel and entertainment expenses, and additional expenses associated with the consolidation of recent acquisitions.

Research and Development Expenses

Research and development expenses increased for the three months ended December 31, 2022 to $69.9 million from $62.5 million for the three months ended December 31, 2021, an increase of $7.4 million, or 12%.

Research and development expenses increased for the three months ended March 31, 2023 to $76.4 million from $66.8 million for the three months ended March 31, 2022, an increase of $9.6 million, or 14%.

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

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

our expenses by approximately $2.2 million for the three months ended December 31, 2022, as reported in U.S.

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

As a percentage of net revenue, research and development expenses were 6.8% for the three months ended December 31, 2022 compared to 7.0% for the three months ended December 31, 2021.

our expenses by approximately $1.2 million for the three months ended March 31, 2023, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses increased by 16% compared to the three months ended March 31, 2022.

As a percentage of net revenue, research and development expenses were 6.8% for the three months ended March 31, 2023 compared to 7.7% for the three months ended March 31, 2022.

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 as well as additional expenses associated with the consolidation of recent acquisitions.

Research and development expenses increased for the six months ended December 31, 2022 to $133.1 million from $122.5 million for the six months ended December 31, 2021, an increase of $10.6 million, or 9%.

Research and development expenses increased for the nine months ended March 31, 2023 to $209.5 million from $189.3 million for the nine months ended March 31, 2022, an increase of $20.2 million, or 11%.

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

dollar, which decreased our expenses by approximately $4.2 million for the six months ended December 31, 2022, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses increased by 12% compared to the six months ended December 31, 2021.

As a percentage of net revenue, research and development expenses were 6.7% for the six months ended December 31, 2022, compared to 6.8% for the six months ended December 31, 2021.

dollar, which decreased our expenses by approximately $5.0 million for the nine months ended March 31, 2023, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses increased by 13% compared to the nine months ended March 31, 2022.

As a percentage of net revenue, research and development expenses were 6.8% for the nine months ended March 31, 2023, compared to 7.1% for the nine months ended March 31, 2022.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets for the three months ended December 31, 2022 totaled $9.6 million compared to $7.7 million for the three months ended December 31, 2021.

Amortization of acquired intangible assets for the three months ended March 31, 2023 totaled $12.2 million compared to $7.7 million for the three months ended March 31, 2022.

The increase in amortization expense was primarily attributable to our acquisition of MEDIFOX DAN.

Amortization of acquired intangible assets for the six months ended December 31, 2022 totaled $17.5 million compared to $15.4 million for the six months ended December 31, 2021.

Amortization of acquired intangible assets for the nine months ended March 31, 2023 totaled $29.7 million compared to $23.2 million for the nine months ended March 31, 2022.

The increase in amortization expense was primarily attributable to our acquisition of MEDIFOX DAN.

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Total other income (loss), net $ (31,740) $ (22,495) $ (9,245)

Total other income (loss), net for the three months ended December 31, 2022 was a loss of $6.5 million compared to a loss of $11.4 million for the three months ended December 31, 2021.

The decrease in loss was primarily due to gains associated with our investments in marketable and non-marketable equity securities, which were a gain of $8.4 million for the three months ended December 31, 2022 compared to a loss of $4.4 million for the three months ended December 31, 2021.

Total other income (loss), net for the three months ended March 31, 2023 was a loss of $11.3 million compared to a loss of $7.9 million for the three months ended March 31, 2022.

Interest expense, net, increased to $15.0 million for the three months ended March 31, 2023 compared to $5.5 million for the three months ended March 31, 2022 due to higher debt levels associated with the acquisition of MEDIFOX DAN, which was funded by our Revolving Credit Agreement.

PART I – FINANCIAL INFORMATION Item 2

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

gain in investments for the three months ended December 31, 2022 is primarily attributable to observable price adjustments on non-marketable equity securities.

We recorded higher losses attributable to equity method investments for the three months ended December 31, 2022 of $2.8 million compared to $1.9 million for the three months ended December 31, 2021.

Additionally, interest expense, net, increased to $10.3 million for the three months ended December 31, 2022 compared to $5.9 million for the three months ended December 31, 2021 due to higher debt levels associated with the acquisition of MEDIFOX DAN, which was funded by our Revolving Credit Agreement.

Total other income (loss), net for the six months ended December 31, 2022 was a loss of $20.4 million compared to a loss of $14.6 million for the six months ended December 31, 2021.

Interest expense, net, increased to $17.5 million for the six months ended December 31, 2022 compared to $11.3 million for the six months ended December 31, 2021 due to higher debt levels associated with the acquisition of MEDIFOX DAN, which was funded by our Revolving Credit Agreement.

In addition, we recorded higher losses attributable to equity method investments for the six months ended December 31, 2022 of $4.9 million compared to $3.3 million for the six months ended December 31, 2021.

These losses were partially offset by gains associated with our investments in marketable and non-marketable equity securities, which were a gain of $5.1 million for the six months ended December 31, 2022 compared to a gain of $1.2 million for the six months ended December 31, 2021.

Our effective income tax rate for the three and six months ended December 31, 2022 was 17.8% and 18.7% as compared to 15.0% and 18.3% for the three and six months ended December 31, 2021.

Our effective rate of 17.8% for the three months ended December 31, 2022 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 in our effective tax rate for the three and six months ended December 31, 2022 was primarily due to a reduction in the windfall tax benefits related to the vesting or settlement of employee share-based awards.

Increases in interest expense, net, were partially offset by gains associated with our investments in marketable and non-marketable equity securities, which were a gain of $6.4 million for the three months ended March 31, 2023 compared to a loss of $1.7 million for the three months ended March 31, 2022.

In addition, we recorded lower losses attributable to equity method investments for the three months ended March 31, 2023 of $0.2 million compared to $2.6 million for the three months ended March 31, 2022.

Total other income (loss), net for the nine months ended March 31, 2023 was a loss of $31.7 million compared to a loss of $22.5 million for the nine months ended March 31, 2022.

Interest expense, net, increased to $32.4 million for the nine months ended March 31, 2023 compared to $16.8 million for the nine months ended March 31, 2022 due to higher debt levels associated with the acquisition of MEDIFOX DAN, which was funded by our Revolving Credit Agreement.

Increases in interest expense, net, were partially offset by gains associated with our investments in marketable and non-marketable equity securities, which were a gain of $11.5 million for the nine months ended March 31, 2023 compared to a loss of $0.5 million for the nine months ended March 31, 2022.

In addition, we recorded lower losses attributable to equity method investments for the nine months ended March 31, 2023 of $5.0 million compared to $5.9 million for the nine months ended March 31, 2022.

Our effective income tax rate for the three and nine months ended March 31, 2023 was 19.7% and 19.0% as compared to 20.9% and 19.1% for the three and nine months ended March 31, 2022.

Our effective rate of 19.7% for the three months ended March 31, 2023 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 rate for the three and nine months ended March 31, 2023 was primarily due to a shift in the geographic mix of earnings.

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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Net Income and Earnings per Share

As a result of the factors above, our net income for the three months ended December 31, 2022 was $224.9 million compared to $201.8 million for the three months ended December 31, 2021, an increase of $23.2 million, or 11%.

Our net income for the six months ended December 31, 2022 was $435.4 million compared to $405.4 million for the six months ended December 31, 2021, an increase of $30.0 million, or 7%.

Our diluted earnings per share for the three months ended December 31, 2022 was $1.53 per diluted share compared to $1.37 for the three months ended December 31, 2021, an increase of 12%.

Our diluted earnings per share for the six months ended December 31, 2022 was $2.95 per diluted share compared to $2.76 for the six months ended December 31, 2021, an increase of 7%.

As a result of the factors above, our net income for the three months ended March 31, 2023 was $232.5 million compared to $179.0 million for the three months ended March 31, 2022, an increase of $53.5 million, or 30%.

Our net income for the nine months ended March 31, 2023 was $667.9 million compared to $584.4 million for the nine months ended March 31, 2022, an increase of $83.5 million, or 14%.

Our diluted earnings per share for the three months ended March 31, 2023 was $1.58 per diluted share compared to $1.22 for the three months ended March 31, 2022, an increase of 30%.

Our diluted earnings per share for the nine months ended March 31, 2023 was $4.53 per diluted share compared to $3.97 for the nine months ended March 31, 2022, an increase of 14%.

Summary of Non-GAAP Financial Measures

In addition to financial information prepared in accordance with GAAP, our management uses certain non-GAAP financial measures, such as non-GAAP revenue, non-GAAP cost of sales, non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP net income, and non-GAAP diluted earnings per share, in evaluating the performance of our business.

We believe that these non-GAAP financial measures, when reviewed in conjunction with

We believe that these non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide investors better insight when evaluating our performance from core operations and can provide more consistent financial reporting across periods.

For these reasons, we use non-GAAP information internally

PART I – FINANCIAL INFORMATION Item 2

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

GAAP financial measures, can provide investors better insight when evaluating our performance from core operations and can provide more consistent financial reporting across periods.

For these reasons, we use non-GAAP information internally in planning, forecasting, and evaluating the results of operations in the current period and in comparing it to past periods.

in planning, forecasting, and evaluating the results of operations in the current period and in comparing it to past periods.

These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for, GAAP financial measures.

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Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

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Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

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Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

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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, 2022 and June 30, 2022, we had cash and cash equivalents of $253.2 million and $273.7 million, respectively.

Our cash and cash equivalents held within the United States at December 31, 2022 and June 30, 2022 were $72.6 million and $70.0 million, respectively.

Our remaining cash and cash equivalent balances at December 31, 2022 and June 30, 2022, were $180.6 million and $203.7 million, respectively.

As of March 31, 2023 and June 30, 2022, we had cash and cash equivalents of $227.9 million and $273.7 million, respectively.

Our cash and cash equivalents held within the United States at March 31, 2023 and June 30, 2022 were $45.2 million and $70.0 million, respectively.

Our remaining cash and cash equivalent balances at March 31, 2023 and June 30, 2022, were $182.7 million and $203.7 million, respectively.

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

As of December 31, 2022, we had $390.0 million available for draw down under the revolver credit facility and a combined total of $643.2 million in cash and available liquidity under the revolving credit facility.

As of March 31, 2023, we had $605.0 million available for draw down under the revolver credit facility and a combined total of $832.9 million in cash and available liquidity under the revolving credit facility.

As a result of the U.S.

Tax Act, we treated all non-U.S.

historical earnings as taxable, which resulted in additional tax expense of $126.9 million which was payable over the proceeding eight years.

historical earnings as taxable during the year ended June 30, 2018, which resulted in additional tax expense of $126.9 million which was payable over the proceeding eight years.

Therefore, future repatriation of cash held by our non-U.S.

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

additional amount equal to the greater of $1,000.0 million and 1.00 times the EBITDA for the trailing twelve-month measurement period.

additional amount equal to the greater of $1,000.0 million or 1.00 times the EBITDA for the trailing twelve-month measurement period.

Additionally, on June 29, 2022, ResMed Pty Limited entered into a Second Amendment to the Syndicated Facility Agreement (the “Term Credit Agreement”).

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The Revolving Credit Agreement and Term Credit Agreement each terminate on June 29, 2027, when all unpaid principal and interest under the loans must be repaid.

As of December 31, 2022, we had $390.0 million available for draw down under the revolving credit facility.

As of March 31, 2023, we had $605.0 million 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, 2022, there was a total of $1,805.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

On March 31, 2023, there was a total of $1,590.0 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

Nine Months Ended

Net cash provided by operating activities $ 455,863 $ 271,661

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Operating Activities

Cash provided by operating activities was $173.3 million for the six months ended December 31, 2022, compared to cash provided of $154.2 million for the six months ended December 31, 2021.

The $19.1 million increase in cash flow from operations was primarily due to the payment of our tax settlement with the ATO of $284.8 million during the six months ended December 31, 2021, partially offset by greater purchases of inventory to secure adequate components for increasing sales demand and other net changes in working capital balances during the six months ended December 31, 2022 compared to the six months ended December 31, 2021.

Cash provided by operating activities was $455.9 million for the nine months ended March 31, 2023, compared to cash provided of $271.7 million for the nine months ended March 31, 2022.

The $184.2 million increase in cash flow from operations was primarily due to the payment of our tax settlement with the ATO of $284.8 million during the nine months ended March 31, 2022, partially offset by increased purchases of inventory to secure adequate components for increasing sales demand and other net changes in working capital balances during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022.

Investing Activities

Cash used in investing activities was $1,085.2 million for the six months ended December 31, 2022, compared to cash used of $125.2 million for the six months ended December 31, 2021.

Cash used in investing activities was $1,113.3 million for the nine months ended March 31, 2023, compared to cash used of $174.7 million for the nine months ended March 31, 2022.

The $938.6 million decrease in cash flow from investing activities was primarily due to cash used to acquire MEDIFOX DAN.

Financing Activities

Cash provided by financing activities was $891.0 million for the six months ended December 31, 2022, compared to cash used of $125.0 million for the six months ended December 31, 2021.

Cash provided by financing activities was $611.5 million for the nine months ended March 31, 2023, compared to cash used of $185.9 million for the nine months ended March 31, 2022.

The $797.3 million increase in cash flow from financing activities was primarily due to borrowing activity under our Revolving Credit Agreement in order to finance our acquisition of MEDIFOX DAN.

During the three months ended December 31, 2022, we paid cash dividends of $0.44 per common share totaling $64.5 million.

On January 26, 2023, our board of directors declared a cash dividend of $0.44 per common share, to be paid on March 16, 2023, to shareholders of record as of the close of business on February 9, 2023.

During the three months ended March 31, 2023, we paid cash dividends of $0.44 per common share totaling $64.6 million.

On April 27, 2023, our board of directors declared a cash dividend of $0.44 per common share, to be paid on June 15, 2023, to shareholders of record as of the close of business on May 11, 2023.

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

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

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

Since the inception of our share repurchase programs and through March 31, 2023, 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 as a response to the COVID-19 pandemic.

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

Accordingly, we did not repurchase any shares during the three months ended March 31, 2023 and 2022.

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

At March 31, 2023, 12.9 million additional shares can be repurchased under the approved share repurchase program.

Critical Accounting Principles and Estimates

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Actual results could vary from those estimates under different assumptions or conditions.

For a full discussion of our critical accounting policies, see our Annual Report on Form 10-K for the year ended June 30, 2022.

For a full discussion of our critical accounting policies, see our Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

In addition to the critical accounting policies and estimates previously disclosed in our Form 10-K for the fiscal year ended June 30, 2022, due to recent transactions and events, we also consider the following to be part of our critical accounting policies and estimates due to the high degree of judgment and complexity in its application:

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Acquisition accounting allows up to one year to obtain the information necessary to finalize the fair value of all assets acquired and liabilities assumed on the November 21, 2022 acquisition date.

As of January 26, 2023, we have recorded a preliminary allocation of consideration to net tangible and intangible assets acquired, which is subject to revision as we obtain additional information necessary to complete the fair value studies and acquisition accounting.

As of April 27, 2023, we have recorded a preliminary allocation of consideration to net tangible and intangible assets acquired, which is subject to revision as we obtain additional information necessary to complete the fair value studies and acquisition accounting.

In the event that actual results vary from the estimates or assumptions used in the valuation or allocation process, we may be required to record an impairment charge or an increase in depreciation or amortization in future periods, or both.

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Recently Issued Accounting Pronouncements

See note 1 to the unaudited condensed consolidated financial statements for a description of recently issued accounting pronouncements, including the expected dates of adoption and estimated effects on our results of operations, financial positions and cash flows.

Contractual Obligations and Commitments

Other than for purchase obligations, debt, interest on debt and MEDIFOX DAN acquisition consideration, there have been no material changes outside the ordinary course of business in our outstanding contractual obligations from those disclosed

Other than for purchase obligations, debt, interest on debt, and MEDIFOX DAN acquisition consideration, which was paid in full during the nine months ended March 31, 2023, there have been no material changes outside the ordinary course of business in our outstanding contractual obligations from those disclosed within “Management’s Discussion and Analysis of

PART I – FINANCIAL INFORMATION Item 2

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

within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

Details of our purchase obligations, debt and associated interest as of December 31, 2022 were as follows:

Payments Due by December 31,

Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

Details of our purchase obligations, debt and associated interest as of March 31, 2023 were as follows:

Payments Due by March 31,

Total 2024 2025 2026 2027 2028 Thereafter

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Interest on debt 345,930 79,898 79,289 78,702 72,715 23,826 11,500

MEDIFOX DAN acquisition consideration (1)

— — — — — — —

Total $ 3,368,369 $ 1,176,662 $ 428,768 $ 91,753 $ 334,036 $ 1,073,826 $ 263,324

(1) Refer to Note 12, Business Combinations, to the accompanying condensed consolidated financial statements for additional information about our acquisition of MEDIFOX DAN, which completed on November 21, 2022.

Off-Balance Sheet Arrangements

As of December 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.

As of March 31, 2023, 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

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The initial fair value of components excluded from the assessment of hedge effectiveness will be recognized in interest (expense) income, net.

The notional value of outstanding foreign cross-currency swaps was $1,028.8 million at December 31, 2022.

The notional value of outstanding foreign cross-currency swaps was $1,042.2 million at March 31, 2023.

These contracts mature at various dates prior to December 31, 2029.

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All movements in the fair value of the foreign currency instruments are recorded within other, net in our condensed consolidated statements of income.

The notional value of the outstanding non-designated hedges was $976.2 million and $602.0 million at December 31, 2022 and June 30, 2022, respectively.

These contracts mature at various dates prior to June 30, 2024.

The notional value of the outstanding non-designated hedges was $1,080.9 million and $602.0 million at March 31, 2023 and June 30, 2022, respectively.

These contracts mature at various dates prior to December 15, 2024.

PART I – FINANCIAL INFORMATION Item 3

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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, 2022 (in thousands):

dollars) on our foreign currency denominated operating assets and liabilities and after considering our foreign currency hedging activities as of March 31, 2023 (in thousands):

(EUR) Canadian

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dollar equivalents.

The table summarizes information on instruments and transactions that are sensitive to foreign currency exchange rates, including foreign currency call options, collars, forward contracts and cross-currency swaps held at December 31, 2022.

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.

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Fair Value Assets / (Liabilities)

Total December 31,

Total March 31,

2023 June 30,

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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, 2022, we held cash and cash equivalents of $253.2 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, 2022, there was $1,305.0 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 months ended December 31, 2022, would not have had a material impact on pretax income.

At March 31, 2023, we held cash and cash equivalents of $227.9 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, 2023, there was $1,090.0 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 months ended March 31, 2023, would not have had a material impact on pretax income.

We have no interest rate hedging agreements.

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

What changed 10-Q

Item 1. Financial Statements