RESMED INC 10-K

ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview 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 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. During fiscal year 2026, we invested $378 million on research and development activities, which represents 6.7% 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. 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, 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. 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). -56- Table of Contents PART II Item 7 RESMED INC. AND SUBSIDIARIES 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. 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. However, constant currency measures should not be considered in isolation or as an alternative to United States, or U.S., dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with accounting principles generally accepted in the United States, or GAAP. For discussion related to the results of operations and changes in financial condition for the fiscal year ended June 30, 2025 compared to fiscal year June 30, 2024, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the Year Ended June 30, 2025, which was filed with the U.S. Securities and Exchange Commission, or SEC, on August 8, 2025. Fiscal Year Ended June 30, 2026 Compared to Fiscal Year Ended June 30, 2025 Net Revenues 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): Year Ended June 30, 2026 2025 % Change Constant Currency (A) Americas (B) Devices $ 1,767,741 $ 1,654,413 7 % Masks and other 1,513,283 1,343,101 13 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 Rest of World (B) $ 1,696,606 $ 1,507,376 13 7 Global revenue Devices $ 2,892,228 $ 2,665,173 9 % 7 % Masks and other 2,085,402 1,839,717 13 12 Total Sleep and Breathing Health $ 4,977,630 $ 4,504,890 10 9 Residential Care Software 675,813 641,437 5 4 Total $ 5,653,443 $ 5,146,327 10 8 (A) Constant currency numbers exclude the impact of movements in international currencies. -57- Table of Contents PART II Item 7 RESMED INC. AND SUBSIDIARIES 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 Net revenue from our Sleep and Breathing Health business for the year ended June 30, 2026 increased to $4,978 million from $4,505 million for the year ended June 30, 2025, an increase of $473 million or 10%. Movements in international currencies against the U.S. dollar positively impacted net revenues by approximately $83 million for the year ended June 30, 2026. 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 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%. 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 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, 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. Residential Care Software 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%. 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 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%. 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, 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. -58- Table of Contents PART II Item 7 RESMED INC. AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations Operating Expenses The following table summarizes our operating expenses (in thousands): Year Ended June 30, Change % Change Constant Currency 2026 2025 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) % 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 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. dollars. 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. As a percentage of net revenue, research and development expenses were 6.7% for the year ended June 30, 2026 compared to 6.4% for the year ended June 30, 2025. 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 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. -59- Table of Contents PART II Item 7 RESMED INC. AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations Total Other Income (Loss), Net The following table summarizes our other income (loss) (in thousands): Year Ended June 30, 2026 2025 Change Interest income (expense), net $ 49,914 $ 4,114 $ 45,800 Gain (loss) attributable to equity method investments 6,955 3,644 3,311 Gain (loss) on equity investments (15,014) (10,299) (4,715) Other, net (9,154) (5,256) (3,898) Total other income (loss), net $ 32,701 $ (7,797) $ 40,498 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. Income Taxes 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. historical earnings as taxable during the year ended June 30, 2018. Therefore, future repatriation of cash held by our non-U.S. subsidiaries will generally not be subject to U.S. 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, 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. 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. Net Income and Earnings per Share As a result of the factors discussed above, our net income for the year ended June 30, 2026 was $1,523 million compared to net income of $1,401 million for the year ended June 30, 2025. 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%. -60- Table of Contents PART II Item 7 RESMED INC. AND SUBSIDIARIES 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 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. For these reasons, we use non-GAAP information internally in planning, forecasting, and evaluating the results of operations in the current period and in comparing it to past periods. These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for, GAAP financial measures. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Non-GAAP financial measures as presented herein may not be comparable to similarly titled measures used by other companies. 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. 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 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. These non-GAAP measures are reconciled to their most directly comparable GAAP financial measures below (in thousands, except percentages): Year Ended June 30, 2026 2025 GAAP Net revenue $ 5,653,443 $ 5,146,327 GAAP Cost of sales $ 2,201,704 $ 2,091,357 Less: Amortization of acquired intangibles (31,779) (32,116) Less : Masks with magnets field safety notification expenses — 1,512 Less : Astral field safety notification expenses (41,885) — Non-GAAP cost of sales $ 2,128,040 $ 2,060,753 GAAP gross profit $ 3,451,739 $ 3,054,970 GAAP gross margin 61.1 % 59.4 % Non-GAAP gross profit $ 3,525,403 $ 3,085,574 Non-GAAP gross margin 62.4 % 60.0 % -61- Table of Contents PART II Item 7 RESMED INC. AND SUBSIDIARIES 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, 2026 2025 GAAP net revenue $ 5,653,443 $ 5,146,327 GAAP selling, general, and administrative expenses $ 1,119,528 $ 993,050 Less: 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 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 and portfolio review related expenses. 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, 2026 2025 GAAP net revenue $ 5,653,443 $ 5,146,327 GAAP income from operations $ 1,886,715 $ 1,685,363 Amortization of acquired intangibles - cost of sales 31,779 32,116 Amortization of acquired intangibles - operating expenses 45,466 45,273 Restructuring expenses 21,745 — Masks with magnets field safety notification expenses — (1,512) Astral field safety notification expenses 41,885 — 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 % -62- Table of Contents PART II Item 7 RESMED INC. 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 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. These non-GAAP measures are reconciled to their most directly comparable GAAP financial measures below (in thousands, except for per share amounts): Year Ended June 30, 2026 2025 GAAP net income $ 1,523,293 $ 1,400,723 Amortization of acquired intangibles - cost of sales 31,779 32,116 Amortization of acquired intangibles - operating expenses 45,466 45,273 Restructuring expenses 21,745 — Masks with magnets field safety notification expenses — (1,512) Astral field safety notification expenses 41,885 — 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) Income tax effect of interest income on tax refunds — (29,976) Income tax effect on non-GAAP adjustments (39,453) (20,448) Non-GAAP net income $ 1,631,848 $ 1,406,777 Diluted shares outstanding 146,054 147,340 GAAP diluted earnings per share $ 10.43 $ 9.51 Non-GAAP diluted earnings per share $ 11.17 $ 9.55 Liquidity and Capital Resources Our principal sources of liquidity are our existing cash and cash equivalents, cash generated from operations and access to our revolving credit facility. Our primary uses of cash have been for research and development activities, selling and marketing activities, capital expenditures, strategic acquisitions and investments, share repurchases, dividend payments and repayment of debt obligations. 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 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. If we are required to access the debt market, we believe that we will be able to secure reasonable borrowing rates. 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 June 30, 2026 and June 30, 2025, we had cash and cash equivalents of $1,469 million and $1,209 million, respectively. Our cash and cash equivalents held within the U.S. at June 30, 2026 and June 30, 2025 were $732 million and $555 million, respectively. Our remaining cash and cash equivalent balances at June 30, 2026 and June 30, 2025, were $737 million and $654 million, respectively. Our cash and cash equivalent balances are held at highly rated financial institutions. As of June 30, 2026, we had up to $1,500 million available for draw down under the revolving credit facility and a combined total of $2,969 million in cash and available liquidity under the revolving credit facility. We repatriated $1,200 million and $1,050 million to the U.S. during the years ended June 30, 2026 and 2025, respectively, from earnings generated in each of those years. 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 2027 will be -63- Table of Contents PART II Item 7 RESMED INC. AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations 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. historical earnings as taxable, which resulted in additional tax expense of $92 million which was payable over the proceeding eight years. Therefore, future repatriation of cash held by our non-U.S. subsidiaries will generally not be subject to U.S. federal tax if repatriated, except as discussed in Note 12 – Income Taxes of the Notes to the Consolidated Financial Statements (Part II, Item 8). We believe that our current sources of liquidity will be sufficient to fund our operations, including expected capital expenditures, for the next 12 months and beyond. Revolving Credit Agreement, Term Credit Agreement and Senior Notes On June 29, 2022, we entered into a second amended and restated credit agreement, or as amended from time to time, the Revolving Credit Agreement. The Revolving Credit Agreement, among other things, provided a senior unsecured revolving credit facility of $1,500 million, with an uncommitted option to increase the revolving credit facility by an additional amount equal to the greater of $1,000 million or 1.0 times the EBITDA for the trailing twelve-month measurement period. Additionally, on June 29, 2022, ResMed Pty Limited entered into a Second Amendment to the Syndicated Facility Agreement, or the Term Credit Agreement. The Term Credit Agreement, among other things, provides ResMed Pty Limited a senior unsecured term credit facility of $200 million. The Revolving Credit Agreement and Term Credit Agreement each terminate on Jun 29, 2027, when all unpaid principal and interest under the loans must be repaid. As of June 30, 2026, we had $1,500 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 million principal amount of our 3.24% senior notes due July 10, 2026, and $250 million principal amount of our 3.45% senior notes due July 10, 2029, or the Senior Notes. 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. Cash Flow Summary The following table summarizes our cash flow activity (in thousands): Year Ended June 30, 2026 2025 Net cash provided by operating activities $ 1,805,829 $ 1,751,588 Net cash used in investing activities (545,199) (200,045) Net cash used in financing activities (1,007,029) (606,253) Effect of exchange rate changes on cash 6,183 25,799 Net increase in cash and cash equivalents $ 259,784 $ 971,089 Operating Activities Cash provided by operating activities was $1,806 million for the year ended June 30, 2026, compared to cash provided of $1,752 million for the year ended June 30, 2025. 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. -64- Table of Contents PART II Item 7 RESMED INC. AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations 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 Cash used in financing activities was $1,007 million for the year ended June 30, 2026, compared to cash used of $606 million for the year ended June 30, 2025. 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 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. Dividends During the year ended June 30, 2026, we paid cash dividends of $2.40 per common share totaling $350 million. 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. Contractual Obligations and Commitments Details of contractual obligations at June 30, 2026 are as follows (in thousands): Payments Due by June 30, Total 2027 2028 2029 2030 2031 Thereafter Debt $ 661,123 $ 411,123 $ — $ — $ 250,000 $ — $ — Interest on debt 33,557 16,067 8,625 8,625 240 — — Operating leases 257,782 45,420 35,559 31,980 25,969 23,579 95,275 Purchase obligations 1,172,524 992,418 58,754 49,446 50,611 21,295 — Total $ 2,124,986 $ 1,465,028 $ 102,938 $ 90,051 $ 326,820 $ 44,874 $ 95,275 Details of other commercial commitments at June 30, 2026 are as follows (in thousands): Amount of Commitment Expiration Per Period Total 2027 2028 2029 2030 2031 Thereafter Standby letter of credit $ 7,856 $ 195 $ — $ 314 $ 31 $ 2,220 $ 5,096 Guarantees* 4,610 4,511 24 30 8 2 35 Total $ 12,466 $ 4,706 $ 24 $ 344 $ 39 $ 2,222 $ 5,131 * These guarantees mainly relate to requirements under contractual obligations with insurance companies transacting with our German subsidiaries and guarantees provided under our facility leasing obligations. Refer to Note 15 – Legal Actions, Contingencies and Commitments of the Notes to the Consolidated Financial Statements (Part II, Item 8) for details of our contingent obligations under recourse provisions. Segment Information We have determined that we have two operating segments, which are the Sleep and Breathing Health segment and the Residential Care Software segment. See Note 13 – Segment Information of the Notes to the Consolidated Financial Statements (Part II, Item 8) for financial information regarding segment reporting. 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. -65- Table of Contents PART II Item 7 RESMED INC. AND SUBSIDIARIES 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. We state these accounting policies in the notes to the financial statements and at relevant sections in this discussion and analysis. The estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could vary from those estimates under different assumptions or conditions. We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements: (1) Valuation of Goodwill. We make assumptions in establishing the carrying value and fair value of our goodwill. Our goodwill impairment tests are performed at our reporting unit level, which is one level below our operating segments. The criteria used for these evaluations include management’s estimate of the asset’s continuing ability to generate positive income from operations and positive cash flow in future periods compared to the carrying value of the asset, as well as the strategic significance of the assets in our business objectives. If goodwill is considered to be impaired, we recognize as an impairment the amount by which the carrying value of the goodwill exceeds its fair value, limited to the value of goodwill allocated to the impaired reporting unit, as described in Step 1 below. Factors that would influence the likelihood of a material change in our reported results include significant changes in the asset’s ability to generate positive cash flow, a significant decline in the economic and competitive environment on which the asset depends, significant changes in our strategic business objectives, utilization of the asset, and a significant change in the economic and/or political conditions in certain countries. We conduct an annual review for goodwill impairment at our reporting unit level based on the following steps: Step 0 or Qualitative assessment – Evaluate qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. The factors we consider include, but are not limited to, macroeconomic conditions, industry and market considerations, cost factors, overall financial performance or events-specific to that reporting unit. If or when we determine it is more likely than not that the fair value of a reporting unit is less than the carrying amount, including goodwill, we would move to Step 1 of the quantitative method. Step 1 – Compare the fair value for each reporting unit to its carrying value, including goodwill. Fair value is determined based on estimated discounted cash flows. A goodwill impairment charge is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. If a reporting unit’s fair value exceeds the carrying value, no further work is performed and no impairment charge is necessary. 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 -66- Table of Contents PART II Item 7 RESMED INC. 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. We maintain valuation allowances if it is more likely than not that all or a portion of the deferred tax asset will not be realized. In determining whether a valuation allowance is warranted, we evaluate factors such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. 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. 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. We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While we believe we have appropriate support for the positions taken on our tax returns, we assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes on a quarterly basis. Based on our assessment, we may adjust the income tax provision, deferred taxes and valuation allowances in the period in which the facts that give rise to a revision become known. Tax years 2018 to 2025 remain subject to examination by the major tax jurisdictions in which we are subject to tax. (3) Revenue Recognition. We have determined that we have two operating segments, which are Sleep and Breathing Health and Residential Care Software. 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. 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. Consideration received from customers in advance of revenue recognition is classified as deferred revenue. 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 Residential Care Software contracts. Generally, deferred revenue will be recognized over a period of one to five years. Our contracts do not contain significant financing components. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. 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. When we give customers the right to return eligible products and receive credit, returns are estimated based on an analysis of our historical experience. 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 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. In accounting for these rebate programs, we reduce revenue ratably as sales occur over the rebate period by the expected value of the rebates to be returned to the customer. Rebates measured over a quarterly period are updated based on actual sales results and, therefore, no estimation is required to determine the reduction to revenue. 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. -67- Table of Contents PART II Item 7 RESMED INC. AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition and Results of Operations 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. Off-Balance Sheet Arrangements As of June 30, 2026, we are not involved in any significant off-balance sheet arrangements, as described in Instruction 8 to Item 303(b) of Regulation S-K promulgated by the SEC. -68- Table of Contents PART II Item 7A RESMED INC. AND SUBSIDIARIES Quantitative and Qualitative Disclosures About Market and Business Risks