What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-08-13 compared with 2025-08-08 · 142 added, 109 removed, 265 unchanged (49% of the section changed)

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Management’s discussion and analysis of financial condition and results of operations, or the MD&A, is intended to help the reader understand our results of operations and financial condition.

It is provided as a supplement to, and should be read in conjunction with, the selected financial data and 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, or SDB, chronic obstructive pulmonary disease, neuromuscular disease and other chronic diseases.

SDB includes obstructive sleep apnea and other respiratory disorders that occur during sleep.

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 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.

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

We are a global leader in digital health and cloud-connected medical devices.

We design innovative technology with the intention to empower people to live happier, healthier lives.

Our artificial intelligence, or AI, powered digital health solutions, cloud-connected devices and intelligent software are designed to make home healthcare more personalized, accessible and effective.

By enabling better care, our products seek to improve quality of life, reduce the impact of chronic disease, and lower costs for consumers and healthcare systems.

Since the development of continuous positive airway pressure therapy, we have expanded our business by developing or acquiring a number of innovative products and solutions for a broad range of sleep and related breathing health disorders including technologies to be applied in medical and consumer products, life support and ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, and dental devices.

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

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

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

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Our operations include residential care 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.

These platforms, together with our cloud-based remote monitoring and therapy management system and robust product pipeline, should continue to provide a strong foundation 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, or Sleep and Breathing Health, and the supply of business management software as a service to residential healthcare providers, or Residential Care Software.

During fiscal year 2025, 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.

Net revenue in fiscal year 2025 increased to $5,146.3 million, an increase of 10% compared to fiscal year 2024.

Gross profit increased for the year ended June 30, 2025 to $3,055.0 million, from $2,655.3 million for the year ended June 30, 2024, an increase of $399.7 million or 15%.

Our net income for the year ended June 30, 2025 was $1,400.7 million or $9.51 per diluted share compared to net income of $1,021.0 million or $6.92 per diluted share for the year ended June 30, 2024.

Total operating cash flow for fiscal year 2025 was $1,751.6 million and at June 30, 2025, our cash and cash equivalents totaled $1,209.5 million.

At June 30, 2025, our total assets were $8.2 billion and our stockholders’ equity was $6.0 billion.

We paid a quarterly dividend of $0.53 per share during fiscal 2025 with a total amount of $310.9 million paid to stockholders.

In June 2026, we acquired Noctrix Health, LLC, or Noctrix, a company with an FDA De Novo classified medical device that treats restless legs syndrome.

The acquisition expands our clinical sleep health portfolio into an adjacent area of unmet need.

Noctrix will operate as a wholly owned subsidiary of Resmed.

On June 30, 2026, we entered into a definitive agreement to sell our MatrixCare business for $490 million in an all-cash transaction, subject to certain closing adjustments.

The transaction includes MatrixCare and related software offerings historically sold under the MatrixCare brand, including Healthcare First, Citus, and home health and hospice solutions, collectively defined as the "MatrixCare business”.

The transaction is expected to close in the first quarter of fiscal year 2027.

During fiscal year 2026, the MatrixCare business represented approximately $220 million of revenue and approximately $28 million of operating profit, which included approximately $28 million of amortization from acquired intangibles.

As of June 30, 2026, we determined that the MatrixCare business meets the criteria to be classified as held for sale.

The results of operations of the MatrixCare business are included in continuing operations for all periods presented, as the disposition does not represent a strategic shift that will have a major effect on our operations or financial results and therefore does not meet the criteria to be classified as discontinued operations.

Additional information regarding the sale of the MatrixCare business and the acquisition of Noctrix is included in Note 18 – Business Combinations and Divestitures of the Notes to Consolidated Financial Statements (Part II, Item 8).

PART II Item 7

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

Net revenue in fiscal year 2026 increased to $5,653 million, from $5,146 million for the year ended June 30, 2025, an increase of $507 million or 10% compared to fiscal year 2025.

Gross profit increased for the year ended June 30, 2026 to $3,452 million, from $3,055 million for the year ended June 30, 2025, an increase of $397 million or 13% compared to fiscal year 2025.

Our net income for the year ended June 30, 2026 was $1,523 million, or $10.43 per diluted share, compared to net income of $1,401 million, or $9.51 per diluted share, for the year ended June 30, 2025.

Total operating cash flow for fiscal year 2026 was $1.8 billion and at June 30, 2026, our cash and cash equivalents totaled $1.5 billion.

At June 30, 2026, our total assets were $9.0 billion and our stockholders’ equity was $6.6 billion.

We paid a quarterly dividend of $0.60 per share during fiscal 2026 with a total amount of $350 million paid to stockholders.

In order to provide a framework for assessing how our underlying businesses performed, excluding the effect of foreign currency fluctuations, we provide certain financial information on a “constant currency basis”, which is in addition to the actual financial information presented.

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Fiscal Year Ended June 30, 2026 Compared to Fiscal Year Ended June 30, 2025

Net revenue for the year ended June 30, 2025 increased to $5,146.3 million from $4,685.3 million for the year ended June 30, 2024, an increase of $461.0 million or 10% (a 10% increase on a constant currency basis).

Net revenue for the year ended June 30, 2026 increased to $5,653 million from $5,146 million for the year ended June 30, 2025, an increase of $507 million or 10% (an 8% increase on a constant currency basis).

The following table summarizes our net revenue disaggregated by segment, product and region for the year ended June 30, 2026 compared to the year ended June 30, 2025 (in thousands):

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2026 2025 % Change Constant

U.S., Canada and Latin America

Devices $ 1,767,741 $ 1,654,413 7 %

Masks and other 1,513,283 1,343,101 13

Total U.S., Canada and Latin America $ 2,997,514 $ 2,722,556 10

Combined Europe, Asia and other markets

Total Americas (B)

$ 3,281,024 $ 2,997,514 9

Rest of World (B)

Devices $ 1,124,487 $ 1,010,760 11 % 6 %

Masks and other 572,119 496,616 15 9

Total Combined Europe, Asia and other markets $ 1,507,376 $ 1,378,616 9 9

Total Rest of World (B)

$ 1,696,606 $ 1,507,376 13 7

Global revenue

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Total $ 5,653,443 $ 5,146,327 10 8

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

(A) Constant currency numbers exclude the impact of movements in international currencies.

PART II Item 7

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

(B) Historically we have presented our geographical split of revenue as “U.S., Canada, and Latin America” and “Combined Europe, Asia, and other markets”.

Effective this quarter, this presentation has been renamed to Americas (formerly U.S., Canada, and Latin America) and Rest of World (formerly Combined Europe, Asia, and other markets).

The methodology for attributing revenue to these geographies remains unchanged.

Revenue from prior periods is consistent and comparable to previous reporting.

Sleep and Breathing Health

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Excluding the impact of currency movements, total net revenue from our Sleep and Breathing Health business for the year ended June 30, 2026 increased by 9% compared to the year ended June 30, 2025.

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 Breathing Health business in the U.S., Canada and Latin America for the year ended June 30, 2025 increased to $2,997.5 million from $2,722.6 million for the year ended June 30, 2024, an increase of $275.0

PART II Item 7

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

million or 10%.

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 Breathing Health business in combined Europe, Asia and other markets increased for the year ended June 30, 2025 to $1,507.4 million from $1,378.6 million for the year ended June 30, 2024, an increase of $128.8 million or 9% (a 9% 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 year ended June 30, 2025 increased to $2,665.2 million from $2,444.0 million for the year ended June 30, 2024, an increase of $221.2 million or 9%, including an increase of 9% 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).

The increase in net revenue associated with our devices and masks was primarily attributable to increased demand and unit sales across our sleep health portfolio, partially offset by lower unit sales of our life support devices.

Net revenue from our Sleep and Breathing Health business in the Americas for the year ended June 30, 2026 increased to $3,281 million from $2,998 million for the year ended June 30, 2025, an increase of $284 million or 9%.

Net revenue from our Sleep and Breathing Health business in Rest of World increased for the year ended June 30, 2026 to $1,697 million from $1,507 million for the year ended June 30, 2025, an increase of $189 million or 13% (a 7% increase on a constant currency basis).

The constant currency increase in device and mask sales in Rest of World was primarily attributable to increased demand and unit sales across our sleep health, partially offset by lower unit sales of our life support devices.

Net revenue from devices for the year ended June 30, 2026 increased to $2,892 million from $2,665 million for the year ended June 30, 2025, an increase of $227 million or 9%, including an increase of 7% in the Americas and an increase of 11% in Rest of World (a 6% increase on a constant currency basis).

Excluding the impact of foreign currency movements, device sales for the year ended June 30, 2026 increased by 7%.

Net revenue from masks and other for the year ended June 30, 2025 increased to $1,839.7 million from $1,657.2 million for the year ended June 30, 2024, an increase of 11%, including an increase of 12% in the U.S., Canada and Latin America and an increase of 9% in combined Europe, Asia and other markets (an 8% increase on a constant currency basis).

Net revenue from masks and other for the year ended June 30, 2026 increased to $2,085 million from $1,840 million for the year ended June 30, 2025, an increase of 13%, including an increase of 13% in the Americas and an increase of 15% in Rest of World (a 9% increase on a constant currency basis).

Excluding the impact of foreign currency movements, masks and other sales increased by 12%, compared to the year ended June 30, 2025.

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Net revenue from our Residential Care Software business for the year ended June 30, 2026 was $676 million, compared to $641 million for the year ended June 30, 2025, an increase of $34 million or 5%.

The increase was driven by continued growth in the Home Medical Equipment, or HME, and MEDIFOX DAN verticals within our Residential Care Software business.

Movements in international currencies against the U.S.

dollar positively impacted net revenue by approximately $10 million for the year ended June 30, 2026.

Excluding the impact of foreign currency movements, net revenue from our Residential Care Software for the year ended June 30, 2026 increased by 4% compared to the year ended June 30, 2025.

The increase was driven by continued growth in the MEDIFOX DAN, Home and Hospice, and Home Medical Equipment, or HME, verticals within our Residential Care Software business, partially offset by weaker performance in our Senior Living and Long-Term Care business vertical.

Gross Profit and Gross Margin

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Gross margin, which is gross profit as a percentage of net revenue, was 61.1% for the year ended June 30, 2026, compared with the 59.4% for the year ended June 30, 2025.

The increase in gross margin was due primarily to procurement, manufacturing and logistics efficiencies, $14.3 million of combined expenses associated with the field safety notifications for masks with magnets and Astral devices recognized during the year ended June 30, 2024, as well as a reduction in the amortization of acquired intangibles during the year ended June 30, 2025.

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.

The increase in gross margin was due primarily to procurement, manufacturing and logistics efficiencies, partially offset by expenses associated with a field safety notification for Astral devices recognized in the year ended June 30, 2026.

The Astral field safety notification expenses relate to estimated costs associated with the replacement of a certain component in some of our Astral devices.

PART II Item 7

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

Operating Expenses

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Year Ended June 30, Change % Change Constant Currency

Selling, general, and administrative $ 991,019 $ 917,136 $ 73,883 8 % 8 %

as a % of net revenue 19.3 % 19.6 %

Research and development $ 378,285 $ 331,284 $ 47,001 14 % 12 %

as a % of net revenue 6.7 % 6.4 %

Selling, general, and administrative $ 1,119,528 $ 993,050 $ 126,478 13 % 10 %

as a % of net revenue 19.8 % 19.3 %

Amortization of acquired intangible assets $ 45,466 $ 45,273 $ 193 — % (3) %

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased for the year ended June 30, 2025 to $991.0 million from $917.1 million for the year ended June 30, 2024, an increase of $73.9 million or 8%.

Selling, general and administrative expenses, as reported in U.S.

dollars, were favorably impacted by the movement of international currencies against the U.S.

dollar, which decreased our expenses by approximately $0.2 million.

Excluding the impact of foreign currency movements, selling, general and administrative expenses for the year ended June 30, 2025 increased by 8% compared to the year ended

PART II Item 7

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

June 30, 2024.

As a percentage of net revenue, selling, general and administrative expenses for the year ended June 30, 2025 improved to 19.3% compared to 19.6% for the year ended June 30, 2024.

The constant currency increase in selling, general and administrative expenses for the year ended June 30, 2025 compared to the year ended June 30, 2024 was primarily due to increases in employee-related costs and marketing expenses.

Research and Development Expenses

Research and development expenses increased for the year ended June 30, 2026 to $378 million from $331 million for the year ended June 30, 2025, an increase of $47 million or 14%.

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

dollar, which decreased our expenses by approximately $1.3 million, as reported in U.S.

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

dollar, which increased our expenses by approximately $8 million, as reported in U.S.

Excluding the impact of foreign currency movements, research and development expenses for the year ended June 30, 2026 increased by 12% compared to the year ended June 30, 2025.

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The constant currency increase in research and development expenses was primarily due to increases in employee-related costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased for the year ended June 30, 2026 to $1,120 million from $993 million for the year ended June 30, 2025, an increase of $126 million or 13%.

Selling, general and administrative expenses, as reported in U.S.

dollars, were unfavorably impacted by the movement of international currencies against the U.S.

dollar, which increased our expenses by approximately $30 million.

Excluding the impact of foreign currency movements, selling, general and administrative expenses for the year ended June 30, 2026 increased by 10% compared to the year ended June 30, 2025.

As a percentage of net revenue, selling, general and administrative expenses for the year ended June 30, 2026 increased to 19.8% compared to 19.3% for the year ended June 30, 2025.

The constant currency increase in selling, general and administrative expenses for the year ended June 30, 2026 compared to the year ended June 30, 2025 was primarily due to increases in employee-related costs, additional expenses associated with our VirtuOx and Noctrix acquisitions, and marketing and technology investments.

Additionally, during the year ended June 30, 2026, we recorded $11 million of acquisition and portfolio review related charges, primarily reflecting costs associated with the sale of the MatrixCare business and the acquisition of Noctrix, in addition to other legal and professional fees for diligence and related consultations associated with strategic initiatives.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets for the year ended June 30, 2025 was $45.3 million compared to $46.5 million for the year ended the year ended June 30, 2024.

The decrease in amortization of acquired intangibles is due to certain acquired intangible assets reaching the end of their useful lives and becoming fully amortized, partially offset by increases from amortization of acquired intangibles associated with new acquisitions.

For both the years ended June 30, 2026 and 2025, amortization of acquired intangible assets was $45 million.

Restructuring Expenses

During the year ended June 30, 2026, we incurred $22 million of restructuring related charges for employee severance and one-time termination benefits associated with workforce planning activities.

We did not incur material restructuring expenses during the year ended June 30, 2025.

During the year ended June 30, 2024, we incurred restructuring expenses of $64.2 million associated with an evaluation of our existing operations to increase operational efficiency, decrease costs and increase profitability.

Restructuring charges for the year ended June 30, 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.

PART II Item 7

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

Total Other Income (Loss), Net

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Total other income (loss), net $ 32,701 $ (7,797) $ 40,498

Total other income (loss), net for the year ended June 30, 2025 was a loss of $7.8 million, compared to a loss of $55.1 million for the year ended June 30, 2024.

We recorded interest income, net, of $4.1 million for the year ended June 30, 2025 compared to interest expense, net of $45.7 million for the year ended June 30, 2024 due to lower debt levels following the repayment of our revolving credit facility and interest earned on cash balances.

Losses associated with our investments in marketable and non-marketable equity securities were $10.3 million for the year ended June 30, 2025 compared to a loss of $4.0 million or the year ended June 30, 2024.

Losses associated with our investments in marketable and non-marketable equity securities were partially offset by a gain attributable to equity method investments for the year ended June 30, 2025 of $3.6 million, compared to a loss of $1.8 million for the year ended June 30, 2024.

PART II Item 7

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

Our effective income tax rate decreased to 16.5% for the year ended June 30, 2025 from 19.3% for the year ended June 30, 2024.

Our effective rate of 16.5% for the year ended June 30, 2025 differs from the statutory rate of 21.0% primarily due to interest and penalties refunded by the IRS in relation to certain amended returns, tax benefits realized from the cessation of certain business activities, along with research credits and foreign operations.

The decrease in our effective tax rate for the year ended June 30, 2025 was primarily due to the IRS refund of interest and penalties and tax benefits realized from the cessation of certain business activities.

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.

Total other income (loss), net for the year ended June 30, 2026 was income of $33 million, compared to a loss of $8 million for the year ended June 30, 2025.

We recorded interest income, net, of $50 million for the year ended June 30, 2026 compared to interest income, net, of $4 million for the year ended June 30, 2025 due to lower debt levels following the repayment of our revolving credit facility, gains recognized on cross-currency swaps associated with our fair value and net investment hedges, and interest earned on cash balances.

We also recognized a gain attributable to equity method investments for the year ended June 30, 2026 of $7 million, compared to a gain of $4 million for the year ended June 30, 2025.

Interest income, net, and gains attributable to equity method investments were partially offset by losses associated with our investments in marketable and non-marketable equity securities of $15 million for the year ended June 30, 2026 compared to a loss of $10 million or the year ended June 30, 2025.

Our effective income tax rate increased to 20.6% for the year ended June 30, 2026 from 16.5% for the year ended June 30, 2025.

Our effective rate of 20.6% for the year ended June 30, 2026 differs from the statutory rate of 21.0% primarily due to the impact of research credits and foreign operations.

The increase in our effective tax rate for the year ended June 30, 2026 was primarily driven by the implementation of the Pillar Two global minimum tax and certain non-recurring tax benefits recognized during the year ended June 30, 2025, including the refund of interest and penalties from the IRS and tax benefits realized from the cessation of certain business activities.

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

As a result of the TCJA, we treated all non-U.S.

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federal tax, if repatriated, except as discussed in Note 12 – Income Taxes of the Notes to the Consolidated Financial Statements (Part II, Item 8).

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.

The Organization of Economic Co-operation and Development, or 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 did not have a material impact on our income tax expense and cash flows for the fiscal year ending June 30, 2025.

On June 28, 2025, the G7 issued a joint statement in which its members agreed that Pillar Two will operate alongside the U.S.

system of tax and proposed that U.S.-parented multinational groups would not be subject to the income inclusion rules and undertaxed profits rules of Pillar Two.

The remaining OECD countries are likely to consider changes to existing and proposed tax laws to align with the recommendations and guidelines proposed by G7.

During the fiscal year ended June 30, 2026, these changes in legislation had a material impact on our income tax expense and cash flows.

On January 1, 2026, the OECD released the Side-by-Side, or SbS, Package, which exempts U.S.-headquartered multinational enterprises from Pillar Two’s income inclusion and undertaxed profit rules for tax years beginning on or after January 1, 2026.

The remaining OECD countries are in the process of implementing the SbS package in local legislation to align with the OECD.

likely to consider changes to existing and proposed tax laws to align with the recommendations and guidelines proposed by G7.

We are continuing to evaluate the potential impacts of the Inclusive Framework for future periods.

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Our earnings per diluted share for the year ended June 30, 2026 was $10.43 compared to $9.51 for the year ended June 30, 2025, an increase of 10%.

PART II Item 7

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

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 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.

In addition to financial information prepared in accordance with GAAP, our management uses certain non-GAAP financial measures, such as non-GAAP cost of sales, non-GAAP selling, general, and administrative expenses, non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP operating margin, 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 Astral field safety notification expenses relate to estimated costs associated with the replacement of a certain component in some of our Astral devices.

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

PART II Item 7

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

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

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Masks with magnets field safety notification expenses

1,512 (6,351)

Astral field safety notification expenses

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Non-GAAP gross margin 62.4 % 60.0 %

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.

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

PART II Item 7

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

The measure “non-GAAP selling, general, and administrative expenses” is equal to GAAP selling, general, and administrative expenses less acquisition and portfolio review related expenses.

Non-GAAP selling, general, and administrative expenses as a percentage of revenue is the ratio of non-GAAP selling, general, and administrative expenses to GAAP net revenue.

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

Year Ended June 30,

GAAP net revenue $ 5,653,443 $ 5,146,327

GAAP selling, general, and administrative expenses $ 1,119,528 $ 993,050

Acquisition and portfolio review related expenses

(11,486) (2,031)

Non-GAAP selling, general, and administrative expenses $ 1,108,042 $ 991,019

As a percentage of GAAP net revenue:

GAAP selling, general, and administrative expenses 19.8 % 19.3 %

Non-GAAP selling, general, and administrative expenses 19.6 % 19.3 %

The measure “non-GAAP operating margin” is the ratio of non-GAAP operating income to GAAP net revenue.

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

Year Ended June 30,

GAAP net revenue $ 5,653,443 $ 5,146,327

GAAP income from operations $ 1,886,715 $ 1,685,363

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Astral field safety notification expenses 41,885 —

Acquisition-related expenses 2,031 483

Acquisition and portfolio review related expenses 11,486 2,031

Non-GAAP income from operations $ 2,039,076 $ 1,763,271

GAAP operating margin 33.4 % 32.7 %

Non-GAAP operating margin 36.1 % 34.3 %

PART II Item 7

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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, in addition to tax benefits from business cessation, and the tax effect of interest and penalties on tax refunds.

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 and portfolio review related expenses, gains on previously held equity investments, and associated tax effects, in addition to tax benefits from business cessation, and the tax effect of interest and penalties on tax refunds.

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

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Astral field safety notification expenses 41,885 —

Acquisition-related expenses 2,031 483

Acquisition and portfolio review related expenses 11,486 2,031

Gain on previously held equity investment (4,353) —

Tax benefit from business cessation — (21,430)

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

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

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

As we assess inorganic growth strategies, we may need to supplement our internally generated cash flow with outside sources.

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The amount of the current year foreign earnings that we have repatriated to the U.S.

in the past has been determined, and the amount that we expect to repatriate during fiscal year 2025 will be determined, based on a variety of factors, including current year earnings of our foreign subsidiaries, foreign

in the past has been determined, and the amount that we expect to repatriate during fiscal year 2027 will be

PART II Item 7

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

investment needs and the cash flow needs we have in the U.S., such as for the repayment of debt, dividend distributions, and other domestic obligations.

determined, based on a variety of factors, including current year earnings of our foreign subsidiaries, foreign investment needs and the cash flow needs we have in the U.S., such as for the repayment of debt, dividend distributions, and other domestic obligations.

As a result of the TCJA, we treated all non-U.S.

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On June 30, 2026, there was a total of $660 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

On July 10, 2026, our 3.24% senior notes with a principal balance of $250 million matured and were repaid in full.

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.

10 unchanged sentences

The $54 million increase in cash flow from operations was primarily due to increased net income, partially offset by higher working capital during the year ended June 30, 2026 compared to the year ended June 30, 2025.

During the year ended June 30, 2025, our operating cash flows included $124.4 million of income tax refunds and associated interest and penalties.

Investing Activities

Cash used in investing activities was $200.0 million for the year ended June 30, 2025, compared to cash used of $269.8 million for the year ended June 30, 2024.

The $69.7 million decrease in cash flow used in investing activities was primarily due to net proceeds from maturity of foreign currency contracts during the year ended June 30, 2025 compared to net

PART II Item 7

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

payments from maturity of foreign currency contracts and decreased purchases of property, plant and equipment during the year ended June 30, 2025.

Investing Activities

Cash used in investing activities was $545 million for the year ended June 30, 2026, compared to cash used of $200 million for the year ended June 30, 2025.

The $345 million increase in cash flow used in investing activities was primarily due to cash used for business acquisitions, including for the acquisition of Noctrix, increased purchases of property, plant and equipment, and lower net proceeds from maturity of foreign currency contracts during the year ended June 30, 2026.

Financing Activities

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We repurchased $700 million of treasury stock during the year ended June 30, 2026 compared to repurchases of $300 million during the year ended June 30, 2025.

Cash outflows for treasury stock repurchases were offset by lower net repayments under our Revolving Credit Agreement of $40.0 million for the year ended June 30, 2025 compared to net repayments of $730.0 million for the year ended June 30, 2024.

Cash outflows for treasury stock repurchases were offset by lower repayments under our Revolving Credit Agreement of $10 million for the year ended June 30, 2026 compared to repayments of $40 million for the year ended June 30, 2025.

During the year ended June 30, 2026, we paid cash dividends of $2.40 per common share totaling $350 million.

On July 31, 2025, our board of directors declared a cash dividend of $0.60 per common share, to be paid on September 18, 2025, to shareholders of record as of the close of business on August 14, 2025.

On August 6, 2026, our board of directors declared a cash dividend of $0.66 per common share, to be paid on September 24, 2026, to shareholders of record as of the close of business on August 20, 2026.

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

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Financial information about our revenues from and assets located in foreign countries is also included in the notes to the consolidated financial statements included in this report.

Critical Accounting Principles and Estimates

The preparation of financial statements in conformity with U.S.

GAAP requires us to make estimates and judgments that affect our reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and

PART II Item 7

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

Critical Accounting Principles and Estimates

The preparation of financial statements in conformity with U.S.

GAAP requires us to make estimates and judgments that affect our reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.

On an ongoing basis we evaluate our estimates, including those related to allowance for doubtful accounts, inventory reserves, warranty obligations, goodwill, potentially impaired assets, intangible assets, income taxes and contingencies.

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During the annual reviews for the years ended June 30, 2026, 2025 and 2024, we completed a Step 0 or Qualitative assessment and determined it was more likely than not that the fair value of our reporting units exceeded their carrying amounts, including goodwill, and therefore goodwill was not impaired.

When a portion of a reporting unit is classified as held for sale, goodwill is allocated to the disposal group based on the relative fair values of the disposal group and the portion of the reporting unit that will be retained.

The goodwill allocated to the disposal group is included in the carrying amount of the disposal group for purposes of measuring any gain or loss on sale and is no longer subject to separate annual or interim impairment testing.

See Note 18 – Business Combinations and Divestitures of the Notes to Consolidated Financial Statements (Part II, Item 8) for further information.

(2) Income Tax.

Management judgment is required in determining our income tax provision, deferred tax assets and liabilities, and any valuation allowance recorded against net deferred tax assets in accordance with GAAP.

These estimates and judgments occur in the calculation of tax credits, benefits, and deductions and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes, as well as the interest and penalties related to uncertain tax positions.

PART II Item 7

AND SUBSIDIARIES

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

statement purposes, as well as the interest and penalties related to uncertain tax positions.

Significant changes to these estimates may result in an increase or decrease in our income tax provision in the current period or subsequent periods.

2 unchanged sentences

The realizability assessments made at a given balance sheet date are subject to change in the future, particularly if earnings of a subsidiary are significantly higher or lower than expected, or if we take operational or tax planning actions that could impact the future taxable earnings of a subsidiary.

PART II Item 7

AND SUBSIDIARIES

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

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and our income tax returns are based on calculations and assumptions subject to audit by various tax authorities.

9 unchanged sentences

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

Unbilled receivables arise when revenue is recognized for goods or services transferred but the customer has not yet been invoiced, typically due to billing terms or timing differences.

The timing of revenue recognition may differ from the timing of invoicing to customers.

Unbilled receivables arise when revenue is recognized upon the completion of performance obligations, but in advance of customer billing schedules.

Unbilled receivables primarily reflect products shipped prior to invoicing under the terms of our customer agreements and timing differences related to our software as a service billing cycles.

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

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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 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 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

PART II Item 7

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

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.

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.

Off-Balance Sheet Arrangements

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

What changed 10-K

Item 7. Management’s Discussion and Analysis