What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-04-26 compared with 2024-01-25 · 243 added, 206 removed, 1007 unchanged (31% of the section changed)

6 unchanged sentences

Cash and cash equivalents $ 237,910 $ 227,891

Accounts receivable, net of allowances of $ 21,822 and $ 23,603 at December 31, 2023 and June 30, 2023, respectively

Accounts receivable, net of allowances of $ 19,810 and $ 23,603 at March 31, 2024 and June 30, 2023, respectively

779,265 704,909

33 unchanged sentences

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

189,259,220 issued and 147,087,512 outstanding at December 31, 2023 and 188,900,583 issued and 147,064,349 outstanding at June 30, 2023

189,319,079 issued and 146,886,657 outstanding at March 31, 2024 and 188,900,583 issued and 147,064,349 outstanding at June 30, 2023

Additional paid-in capital 1,847,938 1,772,083

Retained earnings 4,769,963 4,253,016

Treasury stock, at cost, 42,171,708 shares at December 31, 2023 and 41,836,234 shares at June 30, 2023

Treasury stock, at cost, 42,432,422 shares at March 31, 2024 and 41,836,234 shares at June 30, 2023

( 1,723,263 ) ( 1,623,256 )

8 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

20 unchanged sentences

Gain (loss) attributable to equity method investments (note 5) 440 ( 183 ) ( 2,716 ) ( 5,037 )

Gain (loss) on equity investments (note 5) ( 1,888 ) 8,368 ( 2,491 ) 5,088

Gain on equity investments (note 5) 13,919 6,418 11,429 11,506

Other, net ( 2,496 ) ( 2,564 ) ( 537 ) ( 5,773 )

14 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

1 unchanged sentence

Other comprehensive income, net of taxes:

Unrealized losses on designated hedging instruments ( 19,891 ) ( 20,203 ) ( 36,984 ) ( 20,203 )

Foreign currency translation gain adjustments 131,687 156,163 101,160 62,782

Unrealized gains (losses) on designated hedging instruments 77,503 ( 12,496 ) 40,519 ( 32,699 )

Foreign currency translation gain (loss) adjustments ( 134,457 ) 20,787 ( 33,297 ) 83,569

Comprehensive income $ 243,538 $ 240,791 $ 735,937 $ 718,762

32 unchanged sentences

189,259 $ 588 $ 1,822,918 ( 42,172 ) $ ( 1,673,263 ) $ 4,539,963 $ ( 208,352 ) $ 4,481,854

Common stock issued on exercise of options 54 — 4,679 — — — — 4,679

Common stock issued on vesting of restricted stock units, net of shares withheld for tax 6 — ( 314 ) — — — — ( 314 )

Stock-based compensation costs — — 20,442 — — — — 20,442

Common stock issued on employee stock purchase plan — — 213 — — — — 213

Treasury stock purchases — — — ( 260 ) ( 50,000 ) — — ( 50,000 )

Other comprehensive loss — — — — — ( 56,954 ) ( 56,954 )

Net income — — — — — 300,492 — 300,492

Dividends declared ($ 0.48 per common share)

— — — — — ( 70,492 ) — ( 70,492 )

Balance, March 31, 2024 189,319 $ 588 $ 1,847,938 ( 42,432 ) $ ( 1,723,263 ) $ 4,769,963 $ ( 265,306 ) $ 4,629,920

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

24 unchanged sentences

Stock-based compensation costs — — 16,464 — — — — 16,464

Other comprehensive income (loss) — — — — — — 135,960 135,960

Other comprehensive income — — — — — — 135,960 135,960

Net income — — — — — 224,914 — 224,914

3 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.

3 unchanged sentences

(In US$ and in thousands)

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

5 unchanged sentences

Loss attributable to equity method investments (note 5) 2,716 5,037

(Gain) loss on equity investments (note 5) 2,491 ( 5,088 )

Gain on equity investments (note 5) ( 11,429 ) ( 11,506 )

Non-cash restructuring expenses (note 11) 33,239 —

16 unchanged sentences

Proceeds from issuance of common stock, net 25,399 25,649

Purchases of treasury stock ( 50,007 ) —

Taxes paid related to net share settlement of equity awards ( 8,336 ) ( 30,297 )

Purchases of treasury stock ( 100,007 ) —

Payments of business combination contingent consideration ( 1,293 ) ( 316 )

5 unchanged sentences

Effect of exchange rate changes on cash ( 1,848 ) 178

Net decrease in cash and cash equivalents ( 17,644 ) ( 20,511 )

Net increase (decrease) in cash and cash equivalents

10,019 ( 45,816 )

Cash and cash equivalents at beginning of period 227,891 273,710

30 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, 2024.

The condensed consolidated financial statements for the three and six months ended December 31, 2023 and December 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, 2023.

The condensed consolidated financial statements for the three and nine months ended March 31, 2024 and March 31, 2023 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, 2023.

Revenue Recognition

10 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

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 $ 23.1 million and $ 45.7 million for the three and six months ended December 31, 2023 and $ 20.4 million and $ 44.1 million for the three and six months ended December 31, 2022.

Operating lease revenue was $ 24.1 million and $ 69.8 million for the three and nine months ended March 31, 2024 and $ 22.1 million and $ 66.2 million for the three and nine months ended March 31, 2023.

Provision for Warranty

24 unchanged sentences

(2) Segment Information

We have quantitatively and qualitatively determined that we operate in two operating segments, which are the Sleep and Respiratory Care segment and the SaaS segment.

In November 2023, we announced a new operating model including changes to our executive leadership team and reporting structure.

We have quantitatively and qualitatively determined that we continue to operate in two operating segments, which are the Sleep and Respiratory Care segment and the SaaS segment, following these changes.

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

4 unchanged sentences

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

Additionally, effective in the third quarter of fiscal year 2024, we updated the method of attribution of certain costs that are principally managed at the segment level as part of our evaluation of segment operating performance.

As a result, certain costs relating to quality and regulatory assurance, commercial legal, operations, sales and marketing, customer service, information technology, and other administrative costs, which were previously included in Corporate costs within our reconciliation of segment operating profit to income before income taxes, are now reported in segment operating results.

The financial information presented herein reflects the impact of the preceding reporting change for all periods presented.

PART I – FINANCIAL INFORMATION Item 1

3 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

12 unchanged sentences

Software as a Service (1)

38,754 32,201 111,846 85,908

Total $ 494,936 $ 413,344 $ 1,351,907 $ 1,165,590

4 unchanged sentences

Masks with magnets field safety notification expenses (2)

6,351 — 6,351 —

Astral field safety notification expenses (3)

Acquisition related expenses

— 8,412 — 9,157

Interest expense (income), net 11,026 14,964 39,787 32,436

4 unchanged sentences

Income before income taxes $ 375,421 $ 289,378 $ 907,066 $ 824,862

(1) During the three and nine months ended March 31, 2024, we recorded $ 2.0 million of operating lease right-of-use asset impairments within our SaaS segment.

The impairments related to leases for office space and were recorded within net operating profit.

(2) The masks with magnets field safety notification expenses relate to estimated costs to provide alternative masks to patients in response to updated contraindications for use of masks that incorporate magnets.

2 unchanged sentences

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

Inventories December 31,

Inventories March 31,

2024 June 30,

6 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

Prepaid expenses and other current assets December 31,

Prepaid expenses and other current assets March 31,

2024 June 30,

3 unchanged sentences

Total prepaid expenses and other current assets $ 504,663 $ 437,018

Property, Plant and Equipment December 31,

Property, Plant and Equipment March 31,

2024 June 30,

2 unchanged sentences

Property, plant and equipment, net $ 539,743 $ 537,856

Other Intangible Assets December 31,

Other Intangible Assets March 31,

2024 June 30,

11 unchanged sentences

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

During the three months ended December 31, 2023, we impaired $ 18.6 million of developed/core product technology intangible assets, $ 14.5 million of customer relationship intangible assets, and $ 0.1 million of other intangibles associated with restructuring activities.

During the nine months ended March 31, 2024, we impaired $ 18.6 million of developed/core product technology intangible assets, $ 14.5 million of customer relationship intangible assets, and $ 0.1 million of other intangibles associated with restructuring activities.

These non-cash charges were recorded within restructuring expenses in the condensed consolidated statements of operations.

Refer to Note 11, Restructuring Expenses, for the facts and circumstances leading to the impairments.

We did not record any intangible asset impairments during the three and six months ended December 31, 2022.

We did not record any intangible asset impairments during the three and nine months ended March 31, 2023.

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

Six Months Ended December 31, 2023

Nine Months Ended March 31, 2024

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,

2024 June 30,

3 unchanged sentences

Total $ 164,032 $ 146,537

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

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

Six Months Ended December 31, 2023

Nine Months Ended March 31, 2024

Non-marketable securities Marketable securities Equity method investments Total

2 unchanged sentences

Observable price adjustments on non-marketable equity securities 2,315 — — 2,315

Unrealized (gains) losses on marketable equity securities — ( 4,806 ) — ( 4,806 )

Proceeds from exits of investments ( 250 ) — — ( 250 )

Unrealized gains on marketable equity securities — 9,114 — 9,114

Realized gains on marketable and non-marketable equity securities — — — —

Impairment of investments — — — —

Loss attributable to equity method investments — — ( 2,716 ) ( 2,716 )

1 unchanged sentence

Carrying value at the end of the period $ 77,380 $ 21,537 $ 65,115 $ 164,032

Six Months Ended December 31, 2022

Nine Months Ended March 31, 2023

Non-marketable securities Marketable securities Equity method investments Total

4 unchanged sentences

12,612 — — 12,612

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 )

Unrealized losses on marketable equity securities

4 unchanged sentences

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

Net unrealized losses recognized for equity investments in non-marketable and marketable securities held as of December 31, 2023 for the three and six months ended December 31, 2023 were $ 1.9 million and $ 2.5 million.

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.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Net unrealized gains recognized for equity investments in non-marketable and marketable securities held as of March 31, 2024 for the three and nine months ended March 31, 2024 were $ 13.9 million and $ 11.4 million.

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.

(6) Product Warranties

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 $ 27,621 $ 25,889

3 unchanged sentences

Balance at the end of the period $ 31,941 $ 25,840

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Debt consisted of the following (in thousands):

18 unchanged sentences

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

Events of default under the Revolving Credit Agreement and the Term

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

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

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

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.

1 unchanged sentence

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, 2023, the interest rate that was being charged on the outstanding principal amounts was 6.3 %.

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, 2023, we had $ 955.0 million available for draw down under the revolving credit facility.

At March 31, 2024, the interest rate that was being charged on the outstanding principal amounts was 6.3 %.

An applicable commitment fee of 0.075 % to 0.150 % (depending on the then-applicable leverage ratio) applies

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

on the unused portion of the revolving credit facility.

As of March 31, 2024, we had $ 1,175.0 million available for draw down under the revolving credit facility.

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

As the Revolving Credit and Term Credit Agreements’ interest rate is calculated as Adjusted Term SOFR plus the spreads described above, its carrying amount is equivalent to its fair value as at December 31, 2023 and June 30, 2023, which was $ 730.0 million and $ 945.0 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, 2024 and June 30, 2023, which was $ 510.0 million and $ 945.0 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, 2023 and June 30, 2023, the Senior Notes had a carrying amount of $ 500.0 million, excluding deferred borrowing costs, and an estimated fair value of $ 466.8 million and $ 462.2 million, respectively.

As of March 31, 2024 and June 30, 2023, the Senior Notes had a carrying amount of $ 500.0 million, excluding deferred borrowing costs, and an estimated fair value of $ 468.9 million and $ 462.2 million, respectively.

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

At December 31, 2023, we were in compliance with our debt covenants and there was $ 1,230.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

At March 31, 2024, we were in compliance with our debt covenants and there was $ 1,010.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

(8) 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 663,485 and 293,796 for the three months ended December 31, 2023 and 2022,

The weighted average number of outstanding stock options and restricted stock units not included in the computation of diluted earnings per share were 578,065 and 403,736 for the three months ended March 31, 2024 and 2023, respectively, and 618,664 and 290,639 for the nine months ended March 31, 2024 and 2023, respectively, as the effect would have been anti-dilutive.

PART I – FINANCIAL INFORMATION Item 1

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements

respectively, and 643,466 and 270,100 for the six months ended December 31, 2023 and 2022, respectively, as the effect would have been anti-dilutive.

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

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

20 unchanged sentences

On December 28, 2023, the District Court entered an order continuing its stay of all proceedings against us pending any appeal by NYU of the invalidation of its patents by the PTAB.

The deadlines for NYU to appeal the PTAB’s rulings are the week of February 5, 2024.

Any appeals are not expected to resolve before March 2025.

On January 31, 2024, NYU appealed the PTAB’s rulings to the Court of Appeals for the Federal Circuit.

The appeals are not expected to be resolved before March 2025.

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.

13 unchanged sentences

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

1:20-cv-01707, 01708, 01709, 01710, 01711, and 01713 (CFC) seeking damages, an injunction, and a declaration from the court on the amount of a fair reasonable and non-

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

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

The parties have returned to the district

PART I – FINANCIAL INFORMATION Item 1

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements

discriminatory license rate for the standard essential patents it is asserting against the communications module defendants.

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

The parties have returned to the district court for further proceedings.

court for further proceedings.

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 communications modules at issue in the district court case.

The first trial in the cases by Philips against the communications module defendants is set for April 1, 2024.

The first trial in the cases by Philips against the communications module defendants is set for August 12, 2024.

On June 16, 2022, Cleveland Medical Devices Inc.

2 unchanged sentences

1:22-cv-00794.

Cleveland Medical asserts that numerous ResMed connected devices, when combined with certain ResMed data platforms and/or software, including AirView and ResScan, infringe one or more of eight Cleveland Medical patents, including U.S.

and 11,234,637.

1 unchanged sentence

On October 2, 2023, the court granted a portion of the motion, dismissing all Cleveland Medical claims for indirect and willful infringement, and denied the rest of the motion.

Both parties filed motions for summary judgment in March 2024.

Briefing is now complete and a decision on the motions is expected before trial.

On March 22, 2023, we filed a petition with the PTAB of the Patent and Trademark Office seeking review of the validity of U.S.

15 unchanged sentences

11,602,284 patent by June 2024.

On April 9, 2024, Cleveland Medical filed a second amended answer and counterclaims accusing ResMed Corp.

of infringing U.S.

11,857,333 and 11,872,029.

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, 2023 and December 31, 2022, receivables sold with limited recourse were $ 97.5 million and $ 84.3 million, respectively.

As of December 31, 2023, the maximum exposure on outstanding receivables sold with recourse and the associated contingent provision were $ 29.2 million and $ 0.8 million, respectively.

During the nine months ended March 31, 2024 and March 31, 2023, receivables sold with limited recourse were $ 148.3 million and $ 131.8 million, respectively.

As of March 31, 2024, the maximum exposure on outstanding receivables sold with recourse and the associated contingent provision were $ 35.0 million and $ 0.8 million, respectively.

As of June 30, 2023, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $ 32.6 million and $ 0.6 million, respectively.

18 unchanged sentences

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 $ 1,059.3 million and $ 1,046.6 million at December 31, 2023 and June 30, 2023, respectively.

The notional value of outstanding foreign cross-currency swaps was $ 1,035.0 million and $ 1,046.6 million at March 31, 2024 and June 30, 2023, respectively.

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 $ 1,158.5 million and $ 954.7 million at December 31, 2023 and June 30, 2023, respectively.

The notional value of the outstanding non-designated hedges was $ 1,409.0 million and $ 954.7 million at March 31, 2024 and June 30, 2023, respectively.

These contracts mature at various dates prior to March 15, 2025.

22 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

6 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

4 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

9 unchanged sentences

(11) Restructuring Expenses

During the three and six months ended December 31, 2023, we recorded $ 64.2 million of restructuring related charges associated with an evaluation of our existing operations to increase operational efficiency, decrease costs and increase profitability.

We did no t record any restructuring expenses during the three months ended March 31, 2024.

During the nine months ended March 31, 2024, we recorded $ 64.2 million of restructuring related charges associated with an evaluation of our existing operations to increase operational efficiency, decrease costs and increase profitability.

Although the costs associated with the restructuring plan have not been allocated to our business segments' results in Note 2 - Segment Information, the restructuring plan impacted both our Sleep and Respiratory Care and SaaS segments.

Restructuring charges for the three and six months ended December 31, 2023 are comprised of $ 28.6 million of employee severance and other one-time termination benefits, $ 33.2 million of intangible asset impairments associated with the wind down of certain business activities, and $ 2.4 million of other miscellaneous asset impairments.

Restructuring charges for the nine months ended March 31, 2024 are comprised of $ 28.6 million of employee severance and other one-time termination benefits, $ 33.2 million of intangible asset impairments associated with the wind down of certain business activities, and $ 2.4 million of other miscellaneous asset impairments.

These costs are separately presented as restructuring expenses within our condensed consolidated statement of operations.

We had $ 7.0 million remaining in our accruals at December 31, 2023.

We expect to complete all actions related to the restructuring by June 30, 2024, and we do not expect the remaining expense to be material.

The restructuring was substantially complete at March 31, 2024.

PART I – FINANCIAL INFORMATION Item 2

10 unchanged sentences

Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, and similar sources.

In addition, important factors to consider in evaluating such forward-looking statements include changes or developments in healthcare reform, social, macroeconomic, market, legal or regulatory circumstances, including the public health crises such as COVID-19 and its variants;

In addition, important factors to consider in evaluating such forward-looking statements include changes or developments in healthcare reform, social, macroeconomic, market, legal or regulatory circumstances, including public health crises such as COVID-19 and its variants;

changes in our business or growth strategy or an inability to execute our strategy due to changes in our industry or the economy generally, the emergence of new or growing competitors, the actions or omissions of third parties, including suppliers, customers, competitors and governmental authorities and various other factors.

8 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, 2023.

The following is an overview of our results of operations for the three and nine months ended March 31, 2024.

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.

11 unchanged sentences

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

During the three months ended December 31, 2023, we invested $73.9 million on research and development activities, which represents 6.4% 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, 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.

During the three months ended March 31, 2024, we invested $77.1 million on research and development activities, which represents 6.4% 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, 2024, we continued the launch of AirSense 11, which introduces new features such as a touch screen, algorithms for patients new to therapy and digital enhancements and over-the-air update capabilities.

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

2 unchanged sentences

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, 2023 was $1.2 billion, an increase of 12% compared to the three months ended December 31, 2022.

Gross margin was 55.6% for the three months ended December 31, 2023 compared to 56.1% for the three months ended December 31, 2022.

Diluted earnings per share was $1.42 for the three months ended December 31, 2023, compared to diluted earnings per share of $1.53 for the three months ended December 31, 2022.

At December 31, 2023, our cash and cash equivalents totaled $210.2 million, our total assets were $6.9 billion and our stockholders’ equity was $4.5 billion.

Net revenue for the three months ended March 31, 2024 was $1.2 billion, an increase of 7% compared to the three months ended March 31, 2023.

Gross margin was 57.9% for the three months ended March 31, 2024 compared to 55.3% for the three months ended March 31, 2023.

Diluted earnings per share was $2.04 for the three months ended March 31, 2024, compared to diluted earnings per share of $1.58 for the three months ended March 31, 2023.

At March 31, 2024, our cash and cash equivalents totaled $237.9 million, our total assets were $6.8 billion and our stockholders’ equity was $4.6 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

PART I – FINANCIAL INFORMATION Item 2

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

actual financial information presented.

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

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Results of Operations

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

Net revenue for the three months ended December 31, 2023 increased to $1,162.8 million from $1,033.7 million for the three months ended December 31, 2022, an increase of $129.1 million or 12% (a 11% increase on a constant currency basis).

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Net revenue for the three months ended March 31, 2024 increased to $1,197.0 million from $1,116.9 million for the three months ended March 31, 2023, an increase of $80.1 million or 7% (a 7% 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

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Sleep and Respiratory Care

Net revenue from our Sleep and Respiratory Care business for the three months ended December 31, 2023 was $1,017.9 million, an increase of 11% compared to net revenue for the three months ended December 31, 2022.

Net revenue from our Sleep and Respiratory Care business for the three months ended March 31, 2024 was $1,049.0 million, an increase of 7% compared to net revenue for the three months ended March 31, 2023.

Movements in international currencies against the U.S.

dollar positively impacted net revenue by approximately $10.8 million for the three months ended December 31, 2023.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the three months ended December 31, 2023 increased by 10% compared to the three months ended December 31, 2022.

dollar positively impacted net revenue by approximately $0.4 million for the three months ended March 31, 2024.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the three months ended March 31, 2024 increased by 7% compared to the three months ended March 31, 2023.

The increase in net revenue associated with our devices and masks was primarily attributable to increased demand and unit sales.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the three months ended December 31, 2023 increased to $669.3 million from $615.3 million for the three months ended December 31, 2022, an increase of $54.1 million or 9%.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the three months ended March 31, 2024 increased to $687.5 million from $629.1 million for the three months ended March 31, 2023, an increase of $58.3 million or 9%.

The increase in net revenue associated with our devices and masks was primarily attributable to increased demand and unit sales.

Net revenue in combined Europe, Asia and other markets increased for the three months ended December 31, 2023 to $348.5 million from $301.7 million for the three months ended December 31, 2022, an increase of $46.8 million or 16%

Net revenue in combined Europe, Asia and other markets increased for the three months ended March 31, 2024 to $361.6 million from $351.0 million for the three months ended March 31, 2023, an increase of $10.6 million or 3% (a 3% increase on a constant currency basis).

The constant currency increase in device and mask sales in combined Europe, Asia and other was primarily attributable to increased demand and unit sales.

PART I – FINANCIAL INFORMATION Item 2

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

(an 12% increase on a constant currency basis).

The constant currency increase in device and mask sales in combined Europe, Asia and other was primarily attributable to increased demand and unit sales.

Net revenue from devices for the three months ended December 31, 2023 increased to $606.0 million from $542.8 million for the three months ended December 31, 2022, an increase of $63.2 million or 12%, including an increase of 7% in the U.S., Canada and Latin America and an increase of 19% in combined Europe, Asia and other markets (a 16% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the three months ended December 31, 2023 increased by 11%.

Net revenue from masks and other for the three months ended December 31, 2023 increased to $411.9 million from $374.2 million for the three months ended December 31, 2022, an increase of $37.7 million or 10%, including an increase of 10% in the U.S., Canada and Latin America and an increase of 9% in combined Europe, Asia and other markets (a 4% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales for the three months ended December 31, 2023 increased by 9%.

Net revenue from devices for the three months ended March 31, 2024 increased to $638.2 million from $607.9 million for the three months ended March 31, 2023, an increase of $30.3 million or 5%, including an increase of 7% in the U.S., Canada and Latin America and an increase of 1% in combined Europe, Asia and other markets (a 1% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the three months ended March 31, 2024 increased by 5%.

Net revenue from masks and other for the three months ended March 31, 2024 increased to $410.8 million from $372.2 million for the three months ended March 31, 2023, an increase of $38.6 million or 10%, including an increase of 12% in the U.S., Canada and Latin America and an increase of 6% in combined Europe, Asia and other markets (a 6% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales for the three months ended March 31, 2024 increased by 10%.

Software as a Service

Net revenue from our SaaS business for the three months ended December 31, 2023 increased to $144.9 million from $116.8 million for the three months ended December 31, 2022, an increase of $28.2 million or 24%.

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

Excluding the MEDIFOX DAN acquisition, SaaS revenue increased 10% and was driven primarily by continued growth in the HME vertical within our SaaS business.

Six Months Ended December 31, 2023 Compared to the Six Months Ended December 31, 2022

Net revenue for the six months ended December 31, 2023 increased to $2,265.1 million from $1,984.0 million for the six months ended December 31, 2022, an increase of $281.1 million or 14% (a 13% increase on a constant currency basis).

Net revenue from our SaaS business for the three months ended March 31, 2024 increased to $148.0 million from $136.8 million for the three months ended March 31, 2023, an increase of $11.2 million or 8% (an 8% increase on a constant currency basis).

The increase was predominantly due to continued growth in the HME and MEDIFOX DAN verticals within our SaaS business.

Nine Months Ended March 31, 2024 Compared to the Nine Months Ended March 31, 2023

Net revenue for the nine months ended March 31, 2024 increased to $3,462.1 million from $3,100.9 million for the nine months ended March 31, 2023, an increase of $361.2 million or 12% (a 11% 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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Sleep and Respiratory Care

Net revenue from our Sleep and Respiratory Care business for the six months ended December 31, 2023 was $1,980.9 million, an increase of 12% compared to net revenue for the six months ended December 31, 2022.

Net revenue from our Sleep and Respiratory Care business for the nine months ended March 31, 2024 was $3,029.9 million, an increase of 11% compared to net revenue for the nine months ended March 31, 2023.

Movements in international currencies against the U.S.

dollar positively impacted net revenue by approximately $20.5 million for the six months ended December 31, 2023.

Excluding the impact of currency movements, total Sleep and Respiratory Care net

dollar positively impacted net revenue by approximately $19.8 million for the nine months ended March 31, 2024.

Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the nine months ended March 31, 2024 increased by 10% compared to the nine months ended March 31, 2023.

The increase in net revenue associated with our devices and masks was primarily attributable to increased demand and unit sales.

PART I – FINANCIAL INFORMATION Item 2

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

revenue for the six months ended December 31, 2023 increased by 11% compared to the six months ended December 31, 2022.

The increase net revenue associated with our devices and masks was primarily attributable to increased demand and unit sales.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the six months ended December 31, 2023 increased to $1,307.7 million from $1,193.4 million for the six months ended December 31, 2022, an increase of $114.3 million or 10%.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the nine months ended March 31, 2024 increased to $1,995.2 million from $1,822.5 million for the nine months ended March 31, 2023, an increase of $172.7 million or 9%.

The increase in net revenue associated with our devices and masks was primarily attributable to increased demand and unit sales .

Net revenue in combined Europe, Asia and other markets increased for the six months ended December 31, 2023 to $673.2 million from $568.1 million for the six months ended December 31, 2022, an increase of $105.1 million or 19% (a 15% increase on a constant currency basis).

Net revenue in combined Europe, Asia and other markets increased for the nine months ended March 31, 2024 to $1,034.8 million from $919.0 million for the nine months ended March 31, 2023, an increase of $115.7 million or 13% (a 10% increase on a constant currency basis).

The constant currency increase in device and mask sales in combined Europe, Asia and other markets was primarily attributable to increased demand and unit sales.

Net revenue from devices for the six months ended December 31, 2023 increased to $1,170.7 million from $1,060.4 million for the six months ended December 31, 2022, an increase of $110.4 million or 10%, including an increase of 5% in the U.S., Canada and Latin America and an increase of 21% in combined Europe, Asia and other markets (an 18% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the six months ended December 31, 2023 increased by 9%.

Net revenue from masks and other for the six months ended December 31, 2023 increased to $810.2 million from $701.0 million for the six months ended December 31, 2022, an increase of $109.1 million or 16%, including an increase of 16% in the U.S., Canada and Latin America and an increase of 14% 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 14%, compared to the six months ended December 31, 2022.

Net revenue from devices for the nine months ended March 31, 2024 increased to $1,808.9 million from $1,668.3 million for the nine months ended March 31, 2023, an increase of $140.7 million or 8%, including an increase of 6% in the U.S., Canada and Latin America and an increase of 13% in combined Europe, Asia and other markets (an 11% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the nine months ended March 31, 2024 increased by 8%.

Net revenue from masks and other for the nine months ended March 31, 2024 increased to $1,221.0 million from $1,073.3 million for the nine months ended March 31, 2023, an increase of $147.7 million or 14%, including an increase of 15% in the U.S., Canada and Latin America and an increase of 11% in combined Europe, Asia and other markets (an 8% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales increased by 13%, compared to the nine months ended March 31, 2023.

Software as a Service

Net revenue from our SaaS business for the six months ended December 31, 2023 increased to $284.2 million from $222.6 million for the six months ended December 31, 2022, an increase of $61.6 million or 28%.

Net revenue from our SaaS business for the nine months ended March 31, 2024 increased to $432.2 million from $359.4 million for the nine months ended March 31, 2023, an increase of $72.8 million or 20% (a 20% increase on a constant currency basis).

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

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Gross Profit and Gross Margin

Gross profit increased for the three months ended December 31, 2023 to $646.9 million from $579.7 million for the three months ended December 31, 2022, an increase of $67.2 million or 12%.

Gross margin, which is gross profit as a percentage of net revenue, for the three months ended December 31, 2023 was 55.6% compared to 56.1% for the three months ended December 31, 2022.

The decrease in gross margin for the three months ended December 31, 2023 compared to the three months ended December 31, 2022 was due primarily to a $6.4 million provision for expected costs associated with a field safety notification for masks with magnets, in addition to an increase in the amortization of acquired intangible assets, partially offset by a favorable impact from our SaaS business and reduced freight costs.

The field safety expenses relate to estimated costs to provide alternative masks to patients in response to updated contraindications for use of masks that incorporate magnets.

Gross profit increased for the six months ended December 31, 2023 to $1,247.0 million from $1,120.5 million for the six months ended December 31, 2022, an increase of $126.5 million or 11%.

Gross margin for the six months ended December 31, 2023 was 55.1% compared to 56.5% for the six months ended December 31, 2022.

The decrease in gross margin for the six months ended December 31, 2023 compared to the six months ended December 31, 2022 was due primarily to $14.3 million of combined expenses associated with the field safety notifications for masks with magnets and Astral devices, in addition to an increase in the amortization of acquired intangible assets, partially offset by a favorable impact from our SaaS business and reduced freight costs.

Gross profit increased for the three months ended March 31, 2024 to $692.8 million from $617.8 million for the three months ended March 31, 2023, an increase of $75.0 million or 12%.

Gross margin, which is gross profit as a percentage of net revenue, for the three months ended March 31, 2024 was 57.9% compared to 55.3% for the three months ended March 31, 2023.

The increase in gross margin for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was due primarily to reductions in freight, and manufacturing cost improvements.

Gross profit increased for the nine months ended March 31, 2024 to $1,939.8 million from $1,738.3 million for the nine months ended March 31, 2023, an increase of $201.5 million or 12%.

Gross margin for the nine months ended March 31, 2024 was 56.0% compared to 56.1% for the nine months ended March 31, 2023.

The decrease in gross margin for the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023 was due primarily to $14.3 million of combined expenses associated with the field safety notifications for masks with magnets and Astral devices, in addition to an increase in the amortization of acquired intangible assets, partially offset by a favorable impact from our SaaS business and reduced freight, and manufacturing cost improvements.

The masks with magnets field safety notification expenses relate to estimated costs to provide alternative masks to patients in response to updated contraindications for use of masks that incorporate magnets.

The Astral field safety notification expenses relate to estimated costs associated with the replacement of a certain component in some of our Astral ventilation devices that were manufactured between 2013 to 2019.

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Three Months Ended

December 31, Change % Change Constant Currency

March 31, Change % Change Constant Currency

Selling, general, and administrative $ 229,919 $ 228,457 $ 1,462 1 % 1 %

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Amortization of acquired intangible assets 11,204 12,188 (984) (8) % (8) %

Six Months Ended

December 31, Change % Change Constant Currency

Nine Months Ended

March 31, Change % Change Constant Currency

Selling, general, and administrative $ 674,948 $ 633,317 $ 41,631 7 % 6 %

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Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased for the three months ended December 31, 2023 to $222.2 million from $211.7 million for the three months ended December 31, 2022, an increase of $10.5 million or 5%.

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

dollar, which increased our expenses by approximately $2.2 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, 2023 increased by 4% compared to the three months ended December 31, 2022.

As a percentage of net revenue, selling, general, and administrative expenses were 19.1% for the three months ended December 31, 2023, compared to 20.5% for the three months ended December 31, 2022.

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

Selling, general, and administrative expenses increased for the six months ended December 31, 2023 to $445.0 million from $404.9 million for the six months ended December 31, 2022, an increase of $40.2 million or 10%.

Selling, general, and administrative expenses increased for the three months ended March 31, 2024 to $229.9 million from $228.5 million for the three months ended March 31, 2023, an increase of $1.5 million or 1%.

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 $0.8 million, as reported in U.S.

Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the three months ended March 31, 2024 increased by 1% compared to the three months ended March 31, 2023.

As a percentage of net revenue, selling, general, and administrative expenses were 19.2% for the three months ended March 31, 2024, compared to 20.5% for the three months ended March 31, 2023.

The constant currency increase in selling, general, and administrative expenses during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 reflects the impact of reduced employee-related costs associated with restructuring initiatives implemented during the three months ended December 31, 2023, partially offset by operating lease right-of-use asset impairments of $2.0 million related to leases for office space during the three months ended March 31, 2023.

Selling, general, and administrative expenses increased for the nine months ended March 31, 2024 to $674.9 million from $633.3 million for the nine months ended March 31, 2023, an increase of $41.6 million or 7%.

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

dollar, which increased our expenses by approximately $3.9 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, 2023 increased by 9% compared to the six months ended December 31, 2022.

As a percentage of net revenue, selling, general, and administrative expenses were 19.6% for the six months ended December 31, 2023, compared to 20.4% for the six months ended December 31, 2022.

The constant currency increase in selling, general, and administrative expenses during the six months ended December 31, 2023 compared to the six months ended December 31, 2022 was primarily due to increases in employee-related costs 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, 2024 increased by 6% compared to the nine months ended March 31, 2023.

As a percentage of net revenue, selling, general, and administrative expenses were 19.5% for the nine months ended March 31, 2024, compared to 20.4% for the nine months ended March 31, 2023.

The constant currency increase in selling, general, and administrative expenses during the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023 was primarily due to increases in employee-related costs 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, 2023 to $73.9 million from $69.9 million for the three months ended December 31, 2022, an increase of $4.0 million, or 6%.

Research and development expenses were not significantly impacted by foreign currency movements for the three months ended December 31, 2023, as reported in U.S.

As a percentage of net revenue, research and development expenses were 6.4% for the three months ended December 31, 2023 compared to 6.8% for the three months ended December 31, 2022.

Research and development expenses increased for the three months ended March 31, 2024 to $77.1 million from $76.4 million for the three months ended March 31, 2023, an increase of $0.6 million, or 1%.

Research and development expenses were not significantly impacted by foreign currency movements for the three months ended March 31, 2024, as

PART I – FINANCIAL INFORMATION Item 2

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

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, 2023 to $149.6 million from $133.1 million for the six months ended December 31, 2022, an increase of $16.5 million, or 12%.

reported in U.S.

As a percentage of net revenue, research and development expenses were 6.4% for the three months ended March 31, 2024 compared to 6.8% for the three months ended March 31, 2023.

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

Research and development expenses increased for the nine months ended March 31, 2024 to $226.7 million from $209.5 million for the nine months ended March 31, 2023, an increase of $17.2 million, or 8%.

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

dollar, which decreased our expenses by approximately $0.5 million for the six months ended December 31, 2023, as reported in U.S.

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

As a percentage of net revenue, research and development expenses were 6.6% for the six months ended December 31, 2023, compared to 6.7% for the six months ended December 31, 2022.

dollar, which decreased our expenses by approximately $1.2 million for the nine months ended March 31, 2024, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses increased by 9% compared to the nine months ended March 31, 2023.

As a percentage of net revenue, research and development expenses were 6.5% for the nine months ended March 31, 2024, compared to 6.8% for the nine months ended March 31, 2023.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets for the three months ended December 31, 2023 totaled $11.6 million compared to $9.6 million for the three months ended December 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, 2023 totaled $24.1 million compared to $17.5 million for the six months ended December 31, 2022.

Amortization of acquired intangible assets for the three months ended March 31, 2024 totaled $11.2 million compared to $12.2 million for the three months ended March 31, 2023.

Amortization of acquired intangible assets for the nine months ended March 31, 2024 totaled $35.3 million compared to $29.7 million for the nine months ended March 31, 2023.

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

Restructuring Expenses

During the three and six months ended December 31, 2023, we recorded $64.2 million of restructuring related charges associated with an evaluation of our existing operations to increase operational efficiency, decrease costs and increase profitability.

Restructuring charges for the three and six months ended December 31, 2023 were comprised of $28.6 million of employee severance and other one-time termination benefits, $33.2 million of intangible asset impairments associated with the wind down of certain business activities, and $2.4 million of other miscellaneous asset impairments.

We expect to complete all actions related to the restructuring by June 30, 2024, and we do not expect the remaining expense associated with this initiative to be material.

We did not record any restructuring expenses during the three months ended March 31, 2024.

During the nine months ended March 31, 2024, we recorded $64.2 million of restructuring related charges associated with an evaluation of our existing operations to increase operational efficiency, decrease costs and increase profitability.

Restructuring charges for the nine months ended March 31, 2024 were comprised of $28.6 million of employee severance and other one-time termination benefits, $33.2 million of intangible asset impairments associated with the wind down of certain business activities, and $2.4 million of other miscellaneous asset impairments.

The restructuring was substantially complete at March 31, 2024.

Total Other Income (Loss), Net

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Gain (loss) attributable to equity method investments 440 (183) 623

Gain (loss) on equity investments (1,888) 8,368 (10,256)

Gain on equity investments 13,919 6,418 7,501

Other, net (2,496) (2,564) 68

Total other income (loss), net $ 837 $ (11,293) $ 12,130

Six Months Ended

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

Nine Months Ended

2024 2023 Change

1 unchanged sentence

Loss attributable to equity method investments (2,716) (5,037) 2,321

Gain (loss) on equity investments (2,491) 5,088 (7,579)

Gain on equity investments 11,429 11,506 (77)

Other, net (537) (5,773) 5,236

Total other income (loss), net $ (31,611) $ (31,740) $ 129

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

Total other income (loss), net for the three months ended December 31, 2023 was a loss of $15.6 million compared to a loss of $6.5 million for the three months ended December 31, 2022.

Interest expense, net, increased to $13.8 million for the three months ended December 31, 2023 compared to $10.3 million for the three months ended December 31, 2022 due to higher debt levels associated with the acquisition of MEDIFOX DAN, which was funded by our Revolving Credit Agreement.

In addition, we recorded losses associated with our investments in marketable and non-marketable equity securities of $1.9 million for the three months ended December 31, 2023 compared to a gain of $8.4 million for the three months ended December 31, 2022.

Increases in interest expense, net, and losses attributable to investments in marketable and non-marketable equity securities were partially offset by gains attributable to equity method investments for the three months ended December 31, 2023 of $0.7 million compared to losses of $2.8 million for the three months ended December 31, 2022.

Total other income (loss), net for the six months ended December 31, 2023 was a loss of $32.4 million compared to a loss of $20.4 million for the six months ended December 31, 2022.

Interest expense, net, increased to $28.8 million for the six months ended December 31, 2023 compared to $17.5 million for the six months ended December 31, 2022 due to higher debt levels associated with the acquisition of MEDIFOX DAN, which was funded by our Revolving Credit Agreement.

In addition, we recorded losses associated with our investments in marketable and non-marketable equity securities of $2.5 million for the six months ended December 31, 2023 compared to a gain of $5.1 million for the six months ended December 31, 2022.

Increases in interest expense, net, and losses attributable to investments in marketable and non-marketable equity securities were partially offset by foreign exchange net gains for the six months ended December 31, 2023 of $1.8 million compared to foreign exchange net losses of $3.1 million for the six months ended December 31, 2022, which are presented in other, net.

In addition, we recorded lower losses attributable to equity method investments for the six months ended December 31, 2023 of $3.2 million compared to $4.9 million for the six months ended December 31, 2022.

Our effective income tax rate for both the three and six months ended December 31, 2023 was 19.5% as compared to 17.8% and 18.7% for the three and six months ended December 31, 2022, respectively.

Our effective rate of 19.5% for the three months ended December 31, 2023 differs from the statutory rate of 21.0% primarily due to research credits and foreign operations.

The increase in our effective tax rate for the three and six months ended December 31, 2023 was primarily due lower tax deductions in the current period associated with the vesting or settlement of employee share-based awards.

Total other income (loss), net for the three months ended March 31, 2024 was income of $0.8 million compared to a loss of $11.3 million for the three months ended March 31, 2023.

Interest expense, net, decreased to $11.0 million for the three months ended March 31, 2024 compared to $15.0 million for the three months ended March 31, 2023 due to lower debt levels following repayments on our Revolving Credit Facility.

In addition, we recorded gains associated with our investments in marketable and non-marketable equity securities of $13.9 million for the three months ended March 31, 2024 compared to a gain of $6.4 million for the three months ended March 31, 2023.

We also recorded gains attributable to equity method investments for the three months ended March 31, 2024 of $0.4 million compared to losses of $0.2 million for the three months ended March 31, 2023.

Total other income (loss), net for the nine months ended March 31, 2024 was a loss of $31.6 million compared to a loss of $31.7 million for the nine months ended March 31, 2023.

Interest expense, net, increased to $39.8 million for the nine months ended March 31, 2024 compared to $32.4 million for the nine months ended March 31, 2023 due to higher debt levels associated with the acquisition of MEDIFOX DAN, which was funded by our Revolving Credit Facility.

In addition, we recorded a lower gain associated with our investments in marketable and non-marketable equity securities of $11.4 million for the nine months ended March 31, 2024 compared to a gain of $11.5 million for the nine months ended March 31, 2023.

Increases in interest expense, net, and lower gains attributable to investments in marketable and non-marketable equity securities were partially offset by lower foreign exchange net losses for the nine months ended March 31, 2024 of $1.3 million compared to foreign exchange net losses of $6.1 million for the nine months ended March 31, 2023, which are presented in other, net.

In addition, we recorded lower losses attributable to equity method investments for the nine months ended March 31, 2024 of $2.7 million compared to $5.0 million for the nine months ended March 31, 2023.

Our effective income tax rate for the three and nine months ended March 31, 2024 was 20.0% and 19.7%, respectively, as compared to 19.7% and 19.0% for the three and nine months ended March 31, 2023, respectively.

Our effective rate of 20.0% for the three months ended March 31, 2024 differs from the statutory rate of 21.0% primarily due to research credits and foreign operations.

The increase in our effective tax rate for the three and nine months ended March 31, 2024 was primarily due to a shift in our global mix of earnings and lower tax deductions in the current year associated with the vesting or settlement of employee share-based awards.

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, 2023 was $208.8 million compared to $224.9 million for the three months ended December 31, 2022, a decrease of $16.1 million, or 7%.

Our diluted earnings per share for the three months ended December 31, 2023 was $1.42 per diluted share compared to $1.53 for the three months ended December 31, 2022, a decrease of 7%.

As a result of the factors above, our net income for the three months ended March 31, 2024 was $300.5 million compared to $232.5 million for the three months ended March 31, 2023, an increase of $68.0 million, or 29%.

Our diluted earnings per share for the three months ended March 31, 2024 was $2.04 per diluted share compared to $1.58 for the three months ended March 31, 2023, an increase of 29%.

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 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.

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

PART I – FINANCIAL INFORMATION Item 2

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

financial measures.

GAAP income from operations, non-GAAP net income, and non-GAAP diluted earnings per share, in evaluating the performance of our business.

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.

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

We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

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Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

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Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

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Non-GAAP income from operations $ 393,600 $ 321,181 $ 1,077,885 $ 917,461

The measure “non-GAAP net income” is equal to GAAP net income once adjusted for amortization of acquired intangibles, restructuring expenses, field safety notification expenses, acquisition related expenses, and associated tax effects.

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

PART I – FINANCIAL INFORMATION Item 2

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

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

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

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

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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, 2023 and June 30, 2023, we had cash and cash equivalents of $210.2 million and $227.9 million, respectively.

Our cash and cash equivalents held within the United States at December 31, 2023 and June 30, 2023 were $38.2 million and $49.3 million, respectively.

Our remaining cash and cash equivalent balances at December 31, 2023 and June 30, 2023, were $172.0 million and $178.6 million, respectively.

As of March 31, 2024 and June 30, 2023, we had cash and cash equivalents of $237.9 million and $227.9 million, respectively.

Our cash and cash equivalents held within the United States at March 31, 2024 and June 30, 2023 were $55.8 million and $49.3 million, respectively.

Our remaining cash and cash equivalent balances at March 31, 2024 and June 30, 2023, were $182.1 million and $178.6 million, respectively.

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

As of December 31, 2023, we had $955.0 million available for draw down under the revolving credit facility and a combined total of $1,165.2 million in cash and available liquidity under the revolving credit facility.

As of March 31, 2024, we had $1,175.0 million available for draw down under the revolving credit facility and a combined total of $1,412.9 million in cash and available liquidity under the revolving credit facility.

As a result of the U.S.

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federal tax if repatriated.

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

PART I – FINANCIAL INFORMATION Item 2

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

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

Revolving Credit Agreement, Term Credit Agreement and Senior Notes

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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, 2023, we had $955.0 million available for draw down under the revolving credit facility.

As of March 31, 2024, we had $1,175.0 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, 2023, there was a total of $1,230.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes and we were in compliance with our debt covenants.

On March 31, 2024, there was a total of $1,010.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes and we were in compliance with our debt covenants.

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 $ 961,146 $ 455,863

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Operating Activities

Cash provided by operating activities was $559.1 million for the six months ended December 31, 2023, compared to cash provided of $173.3 million for the six months ended December 31, 2022.

The $385.8 million increase in cash flow from operations was primarily due to lower cash outflows on inventory purchases and greater cash inflows from customer payments during the six months ended December 31, 2023 compared to the six months ended December 31, 2022.

Cash provided by operating activities was $961.1 million for the nine months ended March 31, 2024, compared to cash provided of $455.9 million for the nine months ended March 31, 2023.

The $505.3 million increase in cash flow from operations was primarily due to lower cash outflows on inventory purchases during the nine months ended March 31, 2024 compared to the nine months ended March 31, 2023.

Investing Activities

Cash used in investing activities was $190.1 million for the six months ended December 31, 2023, compared to cash used of $1,085.2 million for the six months ended December 31, 2022.

The $895.1 million decrease in cash flow used in investing activities was primarily due to cash used to acquire MEDIFOX DAN during the six months ended December 31, 2022, partially offset by cash used to acquire Somnow are during the six months ended December 31, 2023 .

Cash used in investing activities was $223.3 million for the nine months ended March 31, 2024, compared to cash used of $1,113.3 million for the nine months ended March 31, 2023.

The $890.0 million decrease in cash flow used in investing activities was primarily due to cash used to acquire MEDIFOX DAN during the nine months ended March 31, 2023, partially offset by cash used to acquire Somnow are during the nine months ended March 31, 2024 .

Financing Activities

Cash used in financing activities was $390.1 million for the six months ended December 31, 2023, compared to cash provided of $891.0 million for the six months ended December 31, 2022.

The $1,281.1 million increase in cash flow used in financing activities was primarily due to borrowing activity under our Revolving Credit Agreement in order to finance our acquisition of MEDIFOX DAN during the six months ended December 31, 2022 and subsequent repayments during the six months ended December 31, 2023.

Cash used in financing activities was $726.0 million for the nine months ended March 31, 2024, compared to cash provided of $611.5 million for the nine months ended March 31, 2023.

The $1,337.5 million increase in cash flow used in financing activities was primarily due to borrowing activity under our Revolving Credit Agreement in order to finance our acquisition of MEDIFOX DAN during the nine months ended March 31, 2023 and subsequent repayments during the nine months ended March 31, 2024.

PART I – FINANCIAL INFORMATION Item 2

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

During the three months ended December 31, 2023, we paid cash dividends of $0.48 per common share totaling $70.7 million.

On January 24, 2024, our board of directors declared a cash dividend of $0.48 per common share, to be paid on March 14, 2024, to shareholders of record as of the close of business on February 8, 2024.

During the three months ended March 31, 2024, we paid cash dividends of $0.48 per common share totaling $70.5 million.

On April 25, 2024, our board of directors declared a cash dividend of $0.48 per common share, to be paid on June 13, 2024, to shareholders of record as of the close of business on May 9, 2024.

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

On February 21, 2014, our board of directors approved our current share repurchase program, authorizing us to acquire up to an aggregate of 20.0 million shares of our common stock.

Since approval of the share repurchase program in 2014 through December 31, 2023, we have repurchased a total of 7.5 million shares under this repurchase program for an aggregate of $462.7 million.

During the six months ended December 31, 2023, we repurchased 335,474 shares at a cost of $50.0 million.

Since approval of the share repurchase program in 2014 through March 31, 2024, we have repurchased a total of 7.7 million shares under this repurchase program for an aggregate of $512.7 million.

During the nine months ended March 31, 2024, we repurchased 596,188 shares at a cost of $100.0 million.

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.

We are authorized to continue repurchasing shares through June 30, 2024, provided that the program may be accelerated, suspended, delayed or discontinued at any time at the discretion of our board of directors.

At December 31, 2023, 12.5 million additional shares remain available for us to repurchase under the approved share repurchase program.

At March 31, 2024, 12.3 million additional shares remain available for us to repurchase under the approved share repurchase program.

Critical Accounting Principles and Estimates

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Other than for purchase obligations, 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 Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

Details of our purchase obligations as of December 31, 2023 were as follows:

Payments Due by December 31,

Details of our purchase obligations as of March 31, 2024 were as follows:

Payments Due by March 31,

Total 2025 2026 2027 2028 2029 Thereafter

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Off-Balance Sheet Arrangements

As of December 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.

As of March 31, 2024, 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 $1,059.3 million and $1,046.6 million at December 31, 2023 and June 30, 2023, respectively.

The notional value of outstanding foreign cross-currency swaps was $1,035.0 million and $1,046.6 million at March 31, 2024 and June 30, 2023, respectively.

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 operations.

The notional value of the outstanding non-designated hedges was $1,158.5 million and $954.7 million at December 31, 2023 and June 30, 2023, respectively.

The notional value of the outstanding non-designated hedges was $1,409.0 million and $954.7 million at March 31, 2024 and June 30, 2023, respectively.

These contracts mature at various dates prior to March 15, 2025.

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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, 2023 (in thousands):

dollars) on our foreign currency denominated operating assets and liabilities and after considering our foreign currency hedging activities as of March 31, 2024 (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, 2023.

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,

2024 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, 2023, we held cash and cash equivalents of $210.2 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, 2023, there was $730.0 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, 2023, would not have had a material impact on pretax income.

At March 31, 2024, we held cash and cash equivalents of $237.9 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, 2024, there was $510.0 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, 2024, 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