What changed in this filing

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Item 1. Financial Statements

2024-10-25 compared with 2024-04-26 · 264 added, 424 removed, 826 unchanged (45% of the section changed)

3 unchanged sentences

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

September 30,

2024 June 30,

1 unchanged sentence

Cash and cash equivalents $ 426,361 $ 238,361

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

Accounts receivable, net of allowances of $ 23,600 and $ 21,132 at September 30, 2024 and June 30, 2024, respectively

811,198 837,275

26 unchanged sentences

Long-term debt, net (note 6)

Long-term income taxes payable 12,157 37,183

667,578 697,313

Total non-current liabilities 1,123,312 1,097,696

4 unchanged sentences

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

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

189,662,212 issued and 146,776,149 outstanding at September 30, 2024 and 189,565,112 issued and 146,901,045 outstanding at June 30, 2024

Additional paid-in capital 1,924,584 1,896,604

Retained earnings 5,225,111 4,991,647

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

Treasury stock, at cost, 42,886,063 shares at September 30, 2024 and 42,664,067 shares at June 30, 2024

( 1,823,272 ) ( 1,773,267 )

8 unchanged sentences

Three Months Ended

March 31, Nine Months Ended

September 30,

Net revenue - Sleep and Breathing Health products

$ 1,067,737 $ 963,037

Net revenue - Sleep and Respiratory Care products $ 1,049,023 $ 980,116 $ 3,029,915 $ 2,741,541

Net revenue - Software as a Service 147,957 136,782 432,187 359,395

Net revenue - Residential Care Software

156,772 139,284

Net revenue 1,224,509 1,102,321

Cost of sales - Sleep and Respiratory Care products 448,434 443,925 1,353,615 1,214,072

Cost of sales - Software as a Service 47,953 46,899 143,735 126,588

Cost of sales - Sleep and Breathing Health products

451,312 444,460

Cost of sales - Residential Care Software

48,308 48,893

Cost of sales (exclusive of amortization shown separately below) 499,620 493,353

Amortization of acquired intangible assets - Sleep and Respiratory Care products 1,054 1,367 4,294 3,939

Amortization of acquired intangible assets - Software as a Service 6,758 6,955 20,682 18,062

Amortization of acquired intangible assets - Sleep and Breathing Health products

Amortization of acquired intangible assets - Residential Care Software

Amortization of acquired intangible assets 7,670 8,908

4 unchanged sentences

Amortization of acquired intangible assets 11,404 12,479

Restructuring expenses (note 11) — — 64,228 —

Acquisition related expenses — — — 9,157

Total operating expenses 329,907 311,063

3 unchanged sentences

Gain (loss) attributable to equity method investments (note 5) 963 ( 3,895 )

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

Gain (loss) on equity investments (note 5) ( 680 ) ( 602 )

Other, net ( 2,437 ) 2,648

4 unchanged sentences

Basic earnings per share (note 7)

$ 2.12 $ 1.49

Diluted earnings per share (note 7)

$ 2.11 $ 1.49

Dividend declared per share $ 0.53 $ 0.48

7 unchanged sentences

Three Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

September 30,

Net income $ 311,355 $ 219,422

15 unchanged sentences

189,565 $ 588 $ 1,896,604 ( 42,664 ) $ ( 1,773,267 ) $ 4,991,647 $ ( 251,529 ) $ 4,864,043

Common stock issued on exercise of options

17 — 983 — — — — 983

Common stock issued on vesting of restricted stock units, net of shares withheld for tax 3 — ( 225 ) — — — — ( 225 )

Stock-based compensation costs — — 18,510 — — — — 18,510

Other comprehensive loss — — — — — — ( 47,620 ) ( 47,620 )

Net income — — — — — 219,422 — 219,422

Dividends declared ($ 0.48 per common share)

— — — — — ( 70,597 ) — ( 70,597 )

Balance, September 30, 2023

Adjustment to common stock amount

— 170 ( 170 ) — — — — —

Common stock issued on exercise of options

92 — 8,383 — — — — 8,383

Common stock issued on vesting of restricted stock units, net of shares withheld for tax 5 — ( 389 ) — — — — ( 389 )

Common stock issued on employee stock purchase plan 151 1 17,966 — — — — 17,967

Treasury stock purchases — — — ( 222 ) ( 50,005 ) — — ( 50,005 )

1 unchanged sentence

Other comprehensive income

Net income — — — — — 208,800 — 208,800

Dividends declared ($ 0.48 per common share)

— — — — — — 119,374 119,374

Balance, December 31, 2023

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 — — — — — 311,355 — 311,355

1 unchanged sentence

— — — — — ( 77,891 ) — ( 77,891 )

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

Balance, September 30, 2024

189,662 $ 758 $ 1,924,584 ( 42,886 ) $ ( 1,823,272 ) $ 5,225,111 $ ( 132,155 ) $ 5,195,026

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

20 unchanged sentences

188,921 $ 588 $ 1,791,351 ( 41,836 ) $ ( 1,623,256 ) $ 4,401,841 $ ( 320,148 ) $ 4,250,376

Common stock issued on exercise of options 77 — 5,120 — — — — 5,120

Common stock issued on vesting of restricted stock units, net of shares withheld for tax 265 1 ( 29,655 ) — — — — ( 29,654 )

Common stock issued on employee stock purchase plan 100 1 16,935 — — — — 16,936

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

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

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

Dividends declared ($ 0.44 per common share)

— — — — — ( 64,500 ) — ( 64,500 )

Balance, December 31, 2022

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)

Nine Months Ended

Three Months Ended

September 30,

Cash flows from operating activities:

4 unchanged sentences

Stock-based compensation costs 20,156 18,510

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

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

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

(Gain) loss attributable to equity method investments (note 5) ( 963 ) 3,895

(Gain) loss on equity investments (note 5) 680 602

Changes in operating assets and liabilities:

3 unchanged sentences

Accounts payable, accrued expenses, income taxes payable and other ( 25,440 ) ( 1,018 )

Net cash provided by operating activities

Net cash provided by (used in) operating activities

325,538 286,283

6 unchanged sentences

Proceeds (payments) on maturity of foreign currency contracts 18,975 ( 1,501 )

Net cash used in investing activities ( 223,275 ) ( 1,113,322 )

Net cash provided by (used in) investing activities

2,146 ( 148,980 )

Cash flows from financing activities:

6 unchanged sentences

Dividends paid ( 77,891 ) ( 70,597 )

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

( 150,757 ) ( 151,132 )

10 unchanged sentences

Goodwill on acquisition — 74,416

Deferred payments

( 143 ) ( 874 )

Fair value of contingent consideration

4,372 $ ( 2,856 )

Cash paid for acquisitions $ 855 $ 104,476

9 unchanged sentences

Major distribution and sales sites are located in the United States, Germany, France, the United Kingdom, Switzerland, Australia, Japan, China, Finland, Norway and Sweden.

We also operate a Software as a Service (“SaaS”) business in the United States and Germany that includes 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.

We also operate a software as a service (“SaaS”) business in the United States and Germany that includes residential 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 September 30, 2024, we renamed our operating segments from Sleep and Respiratory Care to Sleep and Breathing Health and from Software as a Service to Residential Care Software in alignment with our 2030 strategy.

There have been no changes in the preparation and disclosure of financial information by operating segment.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S.

6 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, 2025.

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.

The condensed consolidated financial statements for the three months ended September 30, 2024 and September 30, 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, 2024.

Revenue Recognition

In accordance with Accounting Standard Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”, we account for a contract with a customer when there is a legally enforceable contract, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable.

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 care providers (“SaaS”).

Our Sleep and Respiratory Care revenue relates primarily to the sale of our products that are therapy-based equipment.

We have determined that we have two operating segments, which are the sleep and respiratory disorders sector of the medical device industry (“Sleep and Breathing Health”) and the supply of business management SaaS to out-of-hospital care providers (“Residential Care Software”).

Our Sleep and Breathing Health revenue relates primarily to the sale of our products that are therapy-based equipment.

Some contracts include additional performance obligations such as the provision of extended warranties and provision of data for patient monitoring.

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

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

PART I – FINANCIAL INFORMATION Item 1

4 unchanged sentences

Three Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

September 30,

U.S., Canada and Latin America

13 unchanged sentences

441,952 398,309

Total Sleep and Respiratory Care $ 1,049,023 $ 980,116 $ 3,029,915 $ 2,741,541

Software as a Service 147,957 136,782 432,187 359,395

Total Sleep and Breathing Health

$ 1,067,737 $ 963,037

Residential Care Software

156,772 139,284

Total $ 1,224,509 $ 1,102,321

2 unchanged sentences

generally, this occurs with the transfer of risk and/or control of our products at a point in time.

For products in our Sleep and Respiratory Care business, we transfer control and recognize a sale when products are shipped to the customer in accordance with the contractual shipping terms.

For our SaaS business, revenue associated with cloud-hosted services are recognized as they are provided.

For products in our Sleep and Breathing Health business, we transfer control and recognize a sale when products are shipped to the customer in accordance with the contractual shipping terms.

For our Residential Care Software business, revenue associated with cloud-hosted services are recognized as they are provided.

We defer the recognition of a portion of the consideration received when performance obligations are not yet satisfied.

Consideration received from customers in advance of revenue recognition is classified as deferred revenue.

Performance obligations resulting in deferred revenue in our Sleep and Respiratory Care business relate primarily to extended warranties on our devices and the provision of data for patient monitoring.

Performance obligations resulting in deferred revenue in our SaaS business relate primarily to the provision of software access with maintenance and support over an agreed term and material rights associated with future discounts upon renewal of some SaaS contracts.

Performance obligations resulting in deferred revenue in our Sleep and Breathing Health business relate primarily to extended warranties on our devices and the provision of data for patient monitoring.

Performance obligations resulting in deferred revenue in our Residential Care Software business relate primarily to the provision of software access with maintenance and support over an agreed term and material rights associated with future discounts upon renewal of some SaaS contracts.

Generally, deferred revenue will be recognized over a period of one year to five years .

1 unchanged sentence

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

September 30,

2024 June 30,

9 unchanged sentences

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

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

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

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

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

PART I – FINANCIAL INFORMATION Item 1

2 unchanged sentences

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

However, returns of products, excluding warranty-related returns, have historically been infrequent and insignificant.

Returns of products, excluding warranty-related returns, have historically been infrequent and insignificant.

We adjust the estimate of revenue at the earlier of when the most likely amount of consideration can be estimated, the amount expected to be received changes, or when the consideration becomes fixed.

We offer our Sleep and Respiratory Care customers cash or product rebates based on volume or sales targets measured over quarterly or annual periods.

We offer our Sleep and Breathing Health customers cash or product rebates based on volume or sales targets measured over quarterly or annual periods.

We estimate rebates based on each customer’s expected achievement of its targets.

2 unchanged sentences

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

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

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

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

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

When Sleep and Respiratory Care or SaaS contracts have multiple performance obligations, we generally use an observable price to determine the stand-alone selling price by reference to pricing and discounting practices for the specific product or service when sold separately to similar customers.

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

When Sleep and Breathing Health or Residential Care Software contracts have multiple performance obligations, we generally use an observable price to determine the stand-alone selling price by reference to pricing and discounting practices for the specific product or service when sold separately to similar customers.

Revenue is then allocated proportionately, based on the determined stand-alone selling price, to each performance obligation.

An allocation is not required for many of our Sleep and Respiratory Care contracts that have a single performance obligation, which is the shipment of our therapy-based equipment.

An allocation is not required for many of our Sleep and Breathing Health contracts that have a single performance obligation, which is the shipment of our therapy-based equipment.

Accounting and practical expedient elections

We have elected to account for shipping and handling activities associated with our Sleep and Respiratory Care segment as a fulfillment cost within cost of sales, and record shipping and handling costs collected from customers in net revenue.

We have elected to account for shipping and handling activities associated with our Sleep and Breathing Health segment as a fulfillment cost within cost of sales, and record shipping and handling costs collected from customers in net revenue.

We have also elected for all taxes assessed by government authorities that are imposed on and concurrent with revenue-producing transactions, such as sales and value added taxes, to be excluded from revenue and presented on a net basis.

We have elected two practical expedients including the “right to invoice” practical expedient, which is relevant for some of our SaaS contracts as it allows us to recognize revenue in the amount of the invoice when it corresponds directly with the value of performance completed to date.

We have adopted two practical expedients including the “right to invoice” practical expedient, which is relevant for some of our SaaS contracts as it allows us to recognize revenue in the amount of the invoice when it corresponds directly with the value of performance completed to date.

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

Lease Revenue

We lease Sleep and Respiratory Care medical devices to customers primarily as a means to comply with local health insurer requirements in certain foreign geographies.

We lease Sleep and Breathing Health medical devices to customers primarily as a means to comply with local health insurer requirements in certain foreign geographies.

Device rental contracts are classified as operating leases, and contract terms vary by customer and include options to terminate or extend the contract.

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 $ 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

We provide for the estimated cost of product warranties on our Sleep and Respiratory Care products at the time the related revenue is recognized.

We determine the amount of this provision by using a financial model, which takes into consideration actual historical expenses and potential risks associated with our different products.

We use this financial model to calculate the future probable expenses related to warranty and the required level of the warranty provision.

Although we engage in product improvement programs and processes, our warranty obligation is affected by product failure rates and costs incurred to correct those product failures.

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

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Operating lease revenue was $ 24.5 million for the three months ended September 30, 2024 and $ 22.7 million for the three months ended September 30, 2023.

Recently Issued Accounting Standards Not Yet Adopted

5 unchanged sentences

This ASU is applicable to our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, and subsequent interim periods.

Early adoption is permitted and the amendments must be applied retrospectively to all prior periods presented.

Early adoption is permitted and the amendments

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

must be applied retrospectively to all prior periods presented.

We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and disclosures.

7 unchanged sentences

(2) Segment Information

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 have quantitatively and qualitatively determined that we operate in two operating segments, which are the Sleep and Breathing Health segment and the Residential Care Software segment.

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.

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.

5 unchanged sentences

Three Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

September 30,

Net revenue by segment

Sleep and Respiratory Care

$ 1,049,023 $ 980,116 $ 3,029,915 $ 2,741,541

Software as a Service 147,957 136,782 432,187 359,395

Sleep and Breathing Health $ 1,067,737 $ 963,037

Residential Care Software 156,772 139,284

Total $ 1,224,509 $ 1,102,321

Depreciation and amortization by segment

Sleep and Respiratory Care $ 21,832 $ 21,201 $ 64,307 $ 59,501

Software as a Service 2,358 2,375 7,843 6,385

Sleep and Breathing Health $ 23,019 $ 20,519

Residential Care Software 2,368 2,760

Amortization of acquired intangible assets and corporate assets 19,343 21,655

1 unchanged sentence

Net operating profit by segment

Sleep and Respiratory Care $ 456,182 $ 381,143 $ 1,240,061 $ 1,079,682

Software as a Service (1)

Sleep and Breathing Health

$ 460,975 $ 374,738

Residential Care Software 47,621 31,304

Total $ 508,596 $ 406,042

2 unchanged sentences

Amortization of acquired intangible assets 19,074 21,387

Restructuring expenses — — 64,228 —

Masks with magnets field safety notification expenses (2)

Astral field safety notification expenses (1)

Acquisition related expenses

Interest expense (income), net 1,661 14,957

1 unchanged sentence

( 963 ) 3,895

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

Loss on equity investments

Other, net 2,437 ( 2,648 )

Income before income taxes $ 383,497 $ 272,191

(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.

(1) 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.

1 unchanged sentence

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

Inventories March 31,

Inventories September 30,

2024 June 30,

3 unchanged sentences

Total inventories $ 917,982 $ 822,250

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Prepaid expenses and other current assets March 31,

Prepaid expenses and other current assets September 30,

2024 June 30,

3 unchanged sentences

Total prepaid expenses and other current assets $ 485,584 $ 459,833

Property, Plant and Equipment March 31,

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Property, Plant and Equipment September 30,

2024 June 30,

2 unchanged sentences

Property, plant and equipment, net $ 560,211 $ 548,025

Other Intangible Assets March 31,

Other Intangible Assets September 30,

2024 June 30,

11 unchanged sentences

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

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 nine months ended March 31, 2023.

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

Nine Months Ended March 31, 2024

Respiratory Care SaaS Total

Three Months Ended September 30, 2024

Sleep and Breathing Health

Residential Care Software

Balance at the beginning of the period $ 757,529 $ 2,084,526 $ 2,842,055

Business acquisitions 77,712 — 77,712

Adjustment to fair values of preliminary purchase price allocations

( 279 ) — ( 279 )

Foreign currency translation adjustments 11,976 32,265 44,241

3 unchanged sentences

The following discusses our investments in marketable equity securities, non-marketable equity securities, and investments accounted for under the equity method.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

Our marketable equity securities are publicly traded stocks measured at fair value and classified within Level 1 in the fair value hierarchy because we use quoted prices for identical assets in active markets.

5 unchanged sentences

Equity investments whereby we have significant influence, but not control over the investee and are not the primary beneficiary of the investee’s activities, are accounted for under the equity method.

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

Under this method, we record our share

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

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

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

Measurement category March 31,

Measurement category September 30,

2024 June 30,

3 unchanged sentences

Total $ 151,287 $ 151,227

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):

Nine Months Ended March 31, 2024

Three Months Ended September 30, 2024

Non-marketable securities Marketable securities Equity method investments Total

1 unchanged sentence

Additions to investments 1,000 — 350 1,350

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

Proceeds from exits of investments ( 4,128 ) — — ( 4,128 )

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

Realized gains on marketable and non-marketable equity securities 389 — — 389

Impairment of investments ( 5,259 ) — — ( 5,259 )

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

Unrealized gains on marketable equity securities — 4,190 — 4,190

Gain attributable to equity method investments

Foreign currency translation adjustments 43 — 2,512 2,555

Carrying value at the end of the period $ 65,784 $ 16,216 $ 69,287 $ 151,287

Nine Months Ended March 31, 2023

Three Months Ended September 30, 2023

Non-marketable securities Marketable securities Equity method investments Total

2 unchanged sentences

1,180 — 2,500 3,680

Observable price adjustments on non-marketable equity securities

12,612 — — 12,612

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

Proceeds from exits of investments

( 250 ) — — ( 250 )

Impairment of investments

( 3,000 ) — — ( 3,000 )

Unrealized losses on marketable equity securities

4 unchanged sentences

Carrying value at the end of the period $ 69,678 $ 11,821 $ 62,161 $ 143,660

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):

Nine Months Ended

Balance at the beginning of the period $ 27,621 $ 25,889

Warranty accruals for the period 15,927 9,368

Warranty costs incurred for the period ( 11,292 ) ( 9,561 )

Foreign currency translation adjustments ( 315 ) 144

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

Net unrealized losses recognized for equity investments in non-marketable and marketable securities held as of September 30, 2024 for the three months ended September 30, 2024 were $ 1.1 million.

Net unrealized losses recognized for equity investments in non-marketable and marketable securities held as of September 30, 2023 for the three months ended September 30, 2023 were $ 0.6 million.

PART I – FINANCIAL INFORMATION Item 1

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Debt consisted of the following (in thousands):

September 30,

2024 June 30,

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Amounts borrowed under the Term Credit Agreement will also amortize on a semi-annual basis, with a $ 5.0 million principal payment required on each such semi-annual amortization date.

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 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

The outstanding principal amounts will bear interest at a rate equal to the Adjusted Term SOFR (as defined in the Revolving Credit Agreement) 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 September 30, 2024, the interest rate that was being charged on the outstanding principal amounts was 5.5 %.

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

PART I – FINANCIAL INFORMATION Item 1

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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.

applies on the unused portion of the revolving credit facility.

As of September 30, 2024, we had $ 1,500.0 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 March 31, 2024 and June 30, 2023, which was $ 510.0 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 September 30, 2024 and June 30, 2024, which was $ 180.0 million and $ 210.0 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”).

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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.

As of September 30, 2024 and June 30, 2024, the Senior Notes had a carrying amount of $ 500.0 million, excluding deferred borrowing costs, and an estimated fair value of $ 481.0 million and $ 463.0 million, respectively.

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

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.

At September 30, 2024, we were in compliance with our debt covenants and there was $ 680.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

(7) Earnings Per Share

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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 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.

The weighted average number of outstanding stock options and restricted stock units not included in the computation of diluted earnings per share were 159,055 and 417,364 for the three months ended September 30, 2024 and 2023, respectively, as the effect would have been anti-dilutive.

PART I – FINANCIAL INFORMATION Item 1

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Three Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

September 30,

Net income $ 311,355 $ 219,422

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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 August 12, 2024.

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

On August 5, 2024, the court issued an order vacating the trial date.

On August 19, 2024, Philips and the Thales parties filed a joint stipulation dismissing all claims and counterclaims against one another in the District of Delaware case.

On June 16, 2022, Cleveland Medical Devices Inc.

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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.

On September 25, 2023, the PTAB exercised its discretion to deny our petition challenging the validity of the U.S.

10,076,269 in light of the August 2024 trial date in the Delaware District Court case.

That discretionary denial was overturned by the Director of the Patent and Trademark Office, and the panel was ordered to reconsider the discretionary denial.

That decision is pending.

On March 22, 2023, ResMed Corp.

filed a petition with the PTAB seeking review of the validity of U.S.

On May 6, 2024, the PTAB granted the petition and instituted an Inter Partes Review proceeding against the patent.

On June 21, 2024, the District Court of Delaware granted ResMed's motion to stay the case until the PTAB issues its final written decision in the Inter Partes Review proceeding.

The PTAB decision is expected by May 6, 2025.

On March 20, 2023, ResMed Corp.

filed suit in the United States District Court for the Southern District of California, case no.

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and 11,786,680.

has challenged the validity of U.S.

11,602,284 in the PTAB.

It is expected that the PTAB will determine whether to examine the validity of U.S.

11,602,284 patent by June 2024.

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

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

filed a petition with the PTAB for post-grant review of the validity of U.S.

11,602,284, which the PTAB denied on June 24, 2024.

On October 17, 2024, the PTAB denied ResMed Corp.’s request for rehearing of its decision to deny the petition for post-grant review of U.S.

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.

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

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.

During the three months ended September 30, 2024 and September 30, 2023, receivables sold with limited recourse were $ 51.5 million and $ 47.7 million, respectively.

As of September 30, 2024, the maximum exposure on outstanding receivables sold with recourse and the associated contingent provision were $ 26.4 million and $ 0.8 million, respectively.

As of June 30, 2024, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $ 35.8 million and $ 0.8 million, respectively.

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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 $ 1,035.0 million and $ 1,046.6 million at March 31, 2024 and June 30, 2023, respectively.

The notional value of outstanding foreign cross-currency swaps was $ 1,068.2 million and $ 1,026.2 million at September 30, 2024 and June 30, 2024, 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 income.

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.

The notional value of the outstanding non-designated hedges was $ 1,073.9 million and $ 1,340.0 million at September 30, 2024 and June 30, 2024, respectively.

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

Fair Values of Derivative Instruments

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Notes to the Condensed Consolidated Financial Statements

September 30,

2024 June 30,

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Three Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

September 30,

Gain (loss) recognized in other comprehensive income (loss) $ 429 $ 588

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Three Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

September 30,

Gain (loss) recognized in cumulative translation adjustment within other comprehensive income (loss) $ ( 28,736 ) $ 23,436

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Three Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

September 30,

Gain (loss) recognized on foreign currency hedging instruments in other, net $ 42,783 $ ( 15,073 )

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We classified the fair values of all hedging instruments as Level 2 measurements within the fair value hierarchy.

PART I – FINANCIAL INFORMATION Item 1

AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

We are exposed to credit-related losses in the event of non-performance by counter parties to financial instruments.

We minimize counterparty credit risk by entering into derivative transactions with major financial institutions.

(11) Restructuring Expenses

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 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.

The restructuring was substantially complete at March 31, 2024.

PART I – FINANCIAL INFORMATION Item 2

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All statements other than statements regarding historical facts are forward-looking statements.

The words “believe,” “expect,” “intend,” “anticipate,” “will continue,” “will,” “estimate,” “plan,” “future” and other similar expressions, and negative statements of such expressions, generally identify forward-looking statements, including, in particular, statements regarding expectations of future revenue or earnings, expenses, new product development, new product launches, new markets for our products, the integration of acquisitions, our supply chain, domestic and international regulatory developments, litigation, tax outlook, the impact of COVID-19, its variants, and similar epidemics or pandemics and macroeconomic conditions on our business.

The words “believe,” “expect,” “intend,” “anticipate,” “will continue,” “will,” “estimate,” “plan,” “future” and other similar expressions, and negative statements of such expressions, generally identify forward-looking statements, including, in particular, statements regarding expectations of future revenue or earnings, expenses, new product development, new product launches, new markets for our products, the integration of acquisitions, our supply chain, domestic and international regulatory developments, litigation, tax outlook, and the expected impact of macroeconomic conditions on our business.

These forward-looking statements are made in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

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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 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.

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, disruptions and delays in the supply chain, the actions or omissions of third parties, including suppliers, customers, competitors and governmental authorities, geopolitical and economic conditions in foreign jurisdictions impacting our business, and various other factors.

If any one or more of these risks or uncertainties materialize, or underlying estimates or assumptions prove incorrect, actual results may vary significantly from those expressed in our forward-looking statements, and there can be no assurance that the forward-looking statements contained in this report will in fact occur.

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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 nine months ended March 31, 2024.

The following is an overview of our results of operations for the three months ended September 30, 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.

Management’s discussion and analysis is provided as a supplement to, and should be read in conjunction with, the condensed consolidated financial statements and notes included in this report.

It is provided as a supplement to, and should be read in conjunction with, the condensed consolidated financial statements and notes included in this report.

We are a global leader in the development, manufacturing, distribution and marketing of medical devices and cloud-based software applications that diagnose, treat and manage respiratory disorders, including sleep disordered breathing (“SDB”), chronic obstructive pulmonary disease, neuromuscular disease and other chronic diseases.

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Our products and solutions are designed to improve patient quality of life, reduce the impact of chronic disease and lower healthcare costs as global healthcare systems continue to drive a shift in care from hospitals to the home and lower cost settings.

Our cloud-based software digital health applications, along with our devices, are designed to provide connected care to improve patient outcomes and efficiencies for our customers.

Our digital cloud-based health software applications, along with our devices, are designed to provide connected care to improve patient outcomes and efficiencies for our customers.

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

Our growth has been fueled by geographic expansion, our research and product development efforts, acquisitions and an increasing awareness of SDB and respiratory conditions like chronic obstructive pulmonary disease as significant health concerns.

In November 2023, we announced a new operating model to accelerate long-term growth.

During fiscal year 2024, we announced a new operating model to accelerate long-term growth.

The new operating model introduces dedicated leadership in Product, Revenue, and Marketing to the global executive team.

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

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.

These platforms comprise our SaaS business.

These products, our cloud-based remote monitoring and therapy management system, and a robust product pipeline, should continue to provide us with a strong platform for future growth.

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

During the three months ended September 30, 2024, we invested $79.5 million on research and development activities, which represents 6.5% 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.

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

Through our acquisitions of Brightree in 2016, HEALTHCAREfirst and MatrixCare in 2018, and MEDIFOX DAN in 2022, our operations include residential 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 Residential Care Software business and, along with our cloud-based remote monitoring and therapy management system, and a robust product pipeline, these products should continue to provide us with a strong platform for future growth.

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

There have been no changes in the preparation and disclosure of financial information by operating segment.

Net revenue for the three months ended September 30, 2024 was $1.2 billion, an increase of 11% compared to the three months ended September 30, 2023.

Gross margin was 58.6% for the three months ended September 30, 2024 compared to 54.4% for the three months ended September 30, 2023.

Diluted earnings per share was $2.11 for the three months ended September 30, 2024, compared to diluted earnings per share of $1.49 for the three months ended September 30, 2023.

At September 30, 2024, our cash and cash equivalents totaled $426.4 million, our total assets were $7.2 billion and our stockholders’ equity was $5.2 billion.

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 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).

Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023

Net revenue for the three months ended September 30, 2024 increased to $1,224.5 million from $1,102.3 million for the three months ended September 30, 2023, an increase of $122.2 million or 11% (an 11% increase on a constant currency basis).

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

Three Months Ended

March 31, % Change Constant Currency*

September 30, % Change Constant Currency*

U.S., Canada and Latin America

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Total U.S., Canada and Latin America $ 707,306 $ 638,358 11

$ 687,472 $ 629,141 9

Combined Europe, Asia and other markets

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Total Combined Europe, Asia and other markets $ 360,431 $ 324,679 11 10

$ 361,551 $ 350,975 3 3

Global revenue

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Total Masks and other 441,952 398,309 11 11

Total Sleep and Respiratory Care $ 1,049,023 $ 980,116 7 7

Software as a Service 147,957 136,782 8 8

Total $ 1,196,980 $ 1,116,898 7 7

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

Sleep and Respiratory Care

Net revenue from our Sleep and Respiratory Care business for the three months ended 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 $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 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 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

AND SUBSIDIARIES

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

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 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):

Nine Months Ended

March 31, % Change Constant Currency*

U.S., Canada and Latin America

Devices $ 1,116,513 $ 1,057,141 6 %

Masks and other 878,647 765,364 15

Total U.S., Canada and Latin America

Total Sleep and Breathing Health

$ 1,067,737 $ 963,037 11 11

Combined Europe, Asia and other markets

Devices $ 692,411 $ 611,123 13 % 11 %

Masks and other 342,344 307,913 11 8

Total Combined Europe, Asia and other markets

Residential Care Software

156,772 139,284 13 12

Global revenue

Total Devices $ 1,808,924 $ 1,668,264 8 % 8 %

Total Masks and other 1,220,991 1,073,277 14 13

Total Sleep and Respiratory Care $ 3,029,915 $ 2,741,541 11 10

Software as a Service 432,187 359,395 20 20

Total $ 1,224,509 $ 1,102,321 11 11

Sleep and Respiratory Care

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.

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

Sleep and Breathing Health

Net revenue from our Sleep and Breathing Health business for the three months ended September 30, 2024 was $1,067.7 million, an increase of 11% compared to net revenue for the three months ended September 30, 2023.

Movements in international currencies against the U.S.

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.

dollar positively impacted net revenue by approximately $3.9 million for the three months ended September 30, 2024.

Excluding the impact of currency movements, total Sleep and Breathing Health net revenue for the three months ended September 30, 2024 increased by 11% compared to the three months ended September 30, 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

AND SUBSIDIARIES

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 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%.

Net revenue from our Sleep and Breathing Health business in the U.S., Canada and Latin America for the three months ended September 30, 2024 increased to $707.3 million from $638.4 million for the three months ended September 30, 2023, an increase of $68.9 million or 11%.

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 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 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 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.

Excluding the MEDIFOX DAN acquisition, SaaS revenue increased 9% 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 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.

Net revenue in combined Europe, Asia and other markets increased for the three months ended September 30, 2024 to $360.4 million from $324.7 million for the three months ended September 30, 2023, an increase of $35.8 million or 11% (a

PART I – FINANCIAL INFORMATION Item 2

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

10% 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 September 30, 2024 increased to $625.8 million from $564.7 million for the three months ended September 30, 2023, an increase of $61.1 million or 11%, including an increase of 11% in the U.S., Canada and Latin America and an increase of 10% 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 three months ended September 30, 2024 increased by 10%.

Net revenue from masks and other for the three months ended September 30, 2024 increased to $442.0 million from $398.3 million for the three months ended September 30, 2023, an increase of $43.6 million or 11%, including an increase of 10% in the U.S., Canada and Latin America and an increase of 13% in combined Europe, Asia and other markets (a 11% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales for the three months ended September 30, 2024 increased by 11%.

Residential Care Software

Net revenue from our Residential Care Software business for the three months ended September 30, 2024 increased to $156.8 million from $139.3 million for the three months ended September 30, 2023, an increase of $17.5 million or 13% (a 12% increase on a constant currency basis).

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

Gross Profit and Gross Margin

Gross profit increased for the three months ended September 30, 2024 to $717.2 million from $600.1 million for the three months ended September 30, 2023, an increase of $117.2 million or 20%.

Gross margin, which is gross profit as a percentage of net revenue, for the three months ended September 30, 2024 was 58.6% compared to 54.4% for the three months ended September 30, 2023.

The increase in gross margin for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was due primarily to manufacturing efficiencies and component cost improvements, an increase in average selling prices and reduction in amortization of acquired intangibles relating to cost of goods sold as assets have become fully amortized.

Operating Expenses

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Three Months Ended

March 31, Change % Change Constant Currency

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

as a % of net revenue 19.2 % 20.5 %

Research and development 77,074 76,436 638 1 % 2 %

as a % of net revenue 6.4 % 6.8 %

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

Nine Months Ended

March 31, Change % Change Constant Currency

September 30, Change % Change Constant Currency

Selling, general, and administrative $ 238,979 $ 222,874 $ 16,105 7 % 7 %

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Selling, General, and Administrative Expenses

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 increased for the three months ended September 30, 2024 to $239.0 million from $222.9 million for the three months ended September 30, 2023, an increase of $16.1 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 $1.4 million, as reported in U.S.

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 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

Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the three months ended September 30, 2024 increased by 7% compared to the three months ended September 30, 2023.

As a percentage of net revenue, selling, general, and administrative expenses were 19.5% for the three months ended September 30, 2024, compared to 20.2% for the three months ended September 30, 2023.

PART I – FINANCIAL INFORMATION Item 2

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

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 $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.

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.

The constant currency increase in selling, general, and administrative expenses during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to increases in employee-related costs.

Research and Development Expenses

Research and development expenses increased for the three months ended September 30, 2024 to $79.5 million from $75.7 million for the three months ended September 30, 2023, an increase of $3.8 million, or 5%.

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

dollar, which increased our expenses by approximately $0.6 million, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses for the three months ended September 30, 2024 increased by 4% compared to the three months ended September 30, 2023.

As a percentage of net revenue, research and development expenses were 6.5% for the three months ended September 30, 2024 compared to 6.9% for the three months ended September 30, 2023.

The constant currency increase in research and development expenses during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to increases in employee-related costs.

Amortization of Acquired Intangible Assets

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

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.

Amortization of acquired intangible assets for the three months ended September 30, 2024 totaled $11.4 million compared to $12.5 million for the three months ended September 30, 2023.

Total Other Income (Loss), Net

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Three Months Ended

September 30,

2024 2023 Change

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Gain (loss) attributable to equity method investments 963 (3,895) 4,858

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

PART I – FINANCIAL INFORMATION Item 2

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

Nine Months Ended

2024 2023 Change

Interest (expense) income, net $ (39,787) $ (32,436) $ (7,351)

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

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

Gain (loss) on equity investments (680) (602) (78)

Other, net (2,437) 2,648 (5,085)

Total other income (loss), net $ (3,815) $ (16,806) $ 12,991

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.

Total other income (loss), net for the three months ended September 30, 2024 was a loss of $3.8 million compared to a loss of $16.8 million for the three months ended September 30, 2023.

Interest expense, net, decreased to $1.7 million for the three months ended September 30, 2024 compared to $15.0 million for the three months ended September 30, 2023 due to lower debt levels following repayments on our revolving credit facility.

In addition, we recorded gains attributable to equity method investments for the three months ended September 30, 2024 of $1.0 million compared to losses of $3.9 million for the three months ended September 30, 2023.

Decreases in interest expense, net, and losses attributable to equity method investments were partially offset by foreign exchange net losses for the three months ended September 30, 2024 of $2.4 million compared to foreign exchange net gains of $2.6 million for the three months ended September 30, 2023.

Our effective income tax rate for the three months ended September 30, 2024 was 18.8%, as compared to 19.4% for the three months ended September 30, 2023.

Our effective rate of 18.8% for the three months ended September 30, 2024 differs from the statutory rate of 21.0% primarily due to research credits and foreign operations.

The decrease in our effective tax rate for the three months ended September 30, 2024 was primarily due to a shift in our global 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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federal tax, if repatriated.

Net Income and Earnings per Share

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

PART I – FINANCIAL INFORMATION Item 2

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

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

The Organization of Economic Co-operation and Development (OECD) and the G20 Inclusive Framework on Base Erosion and Profit Shifting (the Inclusive Framework) has put forth two proposals—Pillar One and Pillar Two—that (i) revise the existing profit allocation and nexus rules and (ii) ensure a minimal level of taxation, respectively.

Effective in our fiscal year beginning July 1, 2024, various jurisdictions in which we operate began implementing the global minimum tax prescribed under Pillar Two.

These changes in legislation are not expected to have a material impact on our income tax expense and cash flows for the fiscal year ending June 30, 2025.

We are continuing to evaluate the potential impacts of the Inclusive Framework for the current fiscal year and future periods.

Net Income and Earnings per Share

As a result of the factors above, our net income for the three months ended September 30, 2024 was $311.4 million compared to $219.4 million for the three months ended September 30, 2023, an increase of $91.9 million, or 42%.

Our diluted earnings per share for the three months ended September 30, 2024 was $2.11 per diluted share compared to $1.49 for the three months ended September 30, 2023, an increase of 42%.

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.

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The measure “non-GAAP cost of sales” is equal to GAAP cost of sales less amortization of acquired intangible assets relating to cost of sales and field safety notification expenses.

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Three Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

September 30,

GAAP Net revenue $ 1,224,509 $ 1,102,321

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(7,670) (8,908)

Masks with magnets field safety notification expenses

— — (6,351) —

Astral field safety notification expenses

— — (7,911) —

Non-GAAP cost of sales $ 499,620 $ 485,442

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Non-GAAP gross margin 59.2 % 56.0 %

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

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

The measure “non-GAAP income from operations” is equal to GAAP income from operations once adjusted for amortization of acquired intangibles, field safety notification expenses, and acquisition-related expenses.

Non-GAAP income from operations is reconciled with GAAP income from operations below (in thousands):

Three Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

September 30,

GAAP income from operations $ 387,312 $ 288,997

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Amortization of acquired intangibles - operating expenses 11,404 12,479

Restructuring expenses — — 64,228 —

Masks with magnets field safety notification expenses — — 6,351 —

Astral field safety notification expenses — 7,911

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Non-GAAP income from operations $ 406,386 $ 318,778

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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

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

The measure “non-GAAP net income” is equal to GAAP net income once adjusted for amortization of acquired intangibles, 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 outstanding.

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Three Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

September 30,

GAAP net income $ 311,355 $ 219,422

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Amortization of acquired intangibles - operating expenses 11,404 12,479

Restructuring expenses — — 64,228 —

Masks with magnets field safety notification expenses — — 6,351 —

Astral field safety notification expenses — 7,911

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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 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.

As of September 30, 2024 and June 30, 2024, we had cash and cash equivalents of $426.4 million and $238.4 million, respectively.

Our cash and cash equivalents held within the United States at September 30, 2024 and June 30, 2024 were $136.4 million and $51.2 million, respectively.

Our remaining cash and cash equivalent balances at September 30, 2024

PART I – FINANCIAL INFORMATION Item 2

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

and June 30, 2024, were $290.0 million and $187.2 million, respectively.

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

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 of September 30, 2024, we had $1,500.0 million available for draw down under the revolving credit facility and a combined total of $1,926.4 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.

PART I – FINANCIAL INFORMATION Item 2

AND SUBSIDIARIES

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.

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

As of September 30, 2024, we had $1,500.0 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 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.

On September 30, 2024, there was a total of $680.0 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):

Nine Months Ended

Net cash provided by operating activities $ 961,146 $ 455,863

Net cash used in investing activities (223,275) (1,113,322)

Net cash (used in) provided by financing activities (726,004) 611,465

Three Months Ended

September 30,

Net cash provided by (used in) operating activities

$ 325,538 $ 286,283

Net cash provided by (used in) investing activities

2,146 (148,980)

Net cash provided by (used in) financing activities

(150,757) (151,132)

Effect of exchange rate changes on cash 11,073 (4,962)

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Operating Activities

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.

Cash provided by operating activities was $325.5 million for the three months ended September 30, 2024, compared to cash provided of $286.3 million for the three months ended September 30, 2023.

The $39.3 million increase in cash flow from operations was primarily due to increased net income partially offset by other net changes in working capital during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Investing Activities

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 $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.

Cash provided by investing activities was $2.1 million for the three months ended September 30, 2024, compared to cash used of $149.0 million for the three months ended September 30, 2023.

The $151.1 million increase in cash flow from investing activities was primarily due to cash used to acquire Somnow are during the three months ended September 30,

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 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.

2023 in addition to increased proceeds from maturity of foreign currency contracts during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Financing Activities

Cash used in financing activities was $150.8 million for the three months ended September 30, 2024, compared to cash used of $151.1 million for the three months ended September 30, 2023.

We repurchased $50.0 million of treasury stock during the three months ended September 30, 2024 compared to no purchases during the three months ended September 30, 2023.

Cash outflows for treasury stock repurchases were offset by lower payments on our Revolving Credit Agreement.

During the three months ended September 30, 2024, we paid cash dividends of $0.53 per common share totaling $77.9 million.

On October 24, 2024, our board of directors declared a cash dividend of $0.53 per common share, to be paid on December 12, 2024, to shareholders of record as of the close of business on November 7, 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 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.

Since approval of the share repurchase program in 2014 through September 30, 2024, we have repurchased a total of 8.2 million shares under this repurchase program for an aggregate of $612.7 million.

During the three months ended September 30, 2024, we repurchased 221,996 shares at a cost of $50.0 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 March 31, 2024, 12.3 million additional shares remain available for us to repurchase under the approved share repurchase program.

The share repurchase program may be accelerated, suspended, delayed or discontinued at any time at the discretion of our board of directors.

At September 30, 2024, 11.8 million additional shares remain available for us to repurchase under the approved share repurchase program.

Critical Accounting Principles and Estimates

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Contractual Obligations and Commitments

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 March 31, 2024 were as follows:

Payments Due by March 31,

PART I – FINANCIAL INFORMATION Item 2

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

Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

Details of our purchase obligations as of September 30, 2024 were as follows:

Payments Due by September 30,

Total 2025 2026 2027 2028 2029 Thereafter

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Off-Balance Sheet Arrangements

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.

As of September 30, 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

19 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 $1,035.0 million and $1,046.6 million at March 31, 2024 and June 30, 2023, respectively.

The notional value of outstanding foreign cross-currency swaps was $1,068.2 million and $1,026.2 million at September 30, 2024 and June 30, 2024, 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 operations.

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.

The notional value of the outstanding non-designated hedges was $1,073.9 million and $1,340.0 million at September 30, 2024 and June 30, 2024, respectively.

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

PART I – FINANCIAL INFORMATION Item 3

3 unchanged sentences

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 March 31, 2024 (in thousands):

dollars) on our foreign currency denominated operating assets and liabilities and after considering our foreign currency hedging activities as of September 30, 2024 (in thousands):

(EUR) Canadian

17 unchanged sentences

dollar equivalents.

The table summarizes information on instruments and transactions that are sensitive to foreign currency exchange rates, including foreign currency call options, collars, forward contracts and cross-currency swaps held at March 31, 2024.

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

1 unchanged sentence

Fair Value Assets / (Liabilities)

Total March 31,

Total September 30,

2024 June 30,

4 unchanged sentences

Contract amount 200,572 1,760 825

contractual exchange rate SGD 1 = Euro 0.6862

contractual exchange rate SGD 1 = EUR 0.6884

Contract amount 255,000 11,569 (2,054)

8 unchanged sentences

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

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.

At September 30, 2024, we held cash and cash equivalents of $426.4 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 September 30, 2024, there was $180.0 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 September 30, 2024, would not have had a material impact on pretax income.

We have no interest rate hedging agreements.

4 unchanged sentences

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