Business Wire | Jan 28, 2021 04:05PM EST

ResMed Inc. Announces Results for the Second Quarter of Fiscal Year 2021

Jan. 28, 2021

SAN DIEGO--(BUSINESS WIRE)--Jan. 28, 2021--ResMed Inc. (NYSE: RMD, ASX: RMD), a world-leading digital health company, today announced results for its quarter ended December 31, 2020.

Second Quarter 2021 Highlights

All comparisons are to the prior year period

* Revenue increased 9% to $800.0 million; up 7% on a constant currency basis * GAAP gross margin of 57.8%; non-GAAP gross margin expanded 20 bps to 59.9% * Net operating profit increased 12%; non-GAAP operating profit up 16% * GAAP diluted earnings per share of $1.23; non-GAAP diluted earnings per share of $1.41

"Our second-quarter results reflect continued solid performance and positive trends across our business resulting in top-line growth as well as double-digit improvement in operating income and earnings per share," said Mick Farrell, ResMed CEO. "In our core markets of sleep apnea, COPD, and asthma, we are seeing continued sequential improvement in new patient volume and ongoing adoption of our mask and accessories resupply programs. Our global teams have managed SG&A investments judiciously as we navigate through the global pandemic. We have seen great adoption of digital health and an increase in the importance of out-of-hospital healthcare these last 12 months, and that will only expand throughout 2021 as vaccines become more widely available, and our communities open up worldwide. We have continued to invest in focused R&D programs in digital health and core medtech innovation, to help accelerate our ResMed growth strategy: improving 250 million lives in out-of-hospital healthcare in 2025."

Financial Results andOperating Metrics

Unaudited; $ in millions,except for per share amounts



Three Months Ended



December December % Constant 31, 31, Change Currency^ 2020 2019 (A)

Revenue $ 800.0 $ 736.2 9 % 7 %

Gross margin ^(B) 57.8 % 58.0 % (0 )

Non-GAAP gross margin ^(B) 59.9 % 59.7 % 0

Selling, general, and 169.5 171.4 (1 ) (3 ) administrative expenses

Research and development 54.9 49.9 10 7 expenses

Income from operations 221.7 197.8 12

Non-GAAP income from 254.5 218.5 16 operations ^(B)

Net income 179.5 160.6 12

Non-GAAP net income^ (B) 206.4 176.3 17

Diluted earnings per share $ 1.23 $ 1.10 12

Non-GAAP diluted earnings per $ 1.41 $ 1.21 17 share ^(B)





Six Months Ended



December December % Constant 31, 31, Change Currency^ 2020 2019 (A)

Revenue $ 1,552.0 $ 1,417.2 10 % 8 %

Gross margin ^(B) 58.1 % 57.8 % 1

Non-GAAP gross margin ^(B) 59.9 % 59.6 % 1

Selling, general, and 328.5 338.9 (3 ) (5 ) administrative expenses

Research and development 109.5 98.0 12 9 expenses

Income from operations 438.6 368.9 19

Non-GAAP income from 491.6 409.5 20 operations ^(B)

Net income 357.9 280.7 27

Non-GAAP net income^ (B) 391.8 311.7 26

Diluted earnings per share $ 2.45 $ 1.93 27

Non-GAAP diluted earnings per $ 2.68 $ 2.14 25 share ^(B)

(A)

In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we provide certain financial information on a "constant currency" basis, which is in addition to the actual financial information presented. In order to calculate our constant currency information, we translate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period. However, constant currency measures should not be considered in isolation or as an alternative to U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP.

(B)

See the reconciliation of non-GAAP financial measures in the table at the end of the press release.

Discussion of Second Quarter Results

All comparisons are to the prior year period unless otherwise noted

* Revenue in the U.S., Canada, and Latin America, excluding Software as a Service, grew by 5 percent, driven by strong sales across our mask product portfolio. * Revenue in Europe, Asia, and other markets grew by 10 percent on a constant currency basis, primarily driven by sales across our device and mask product portfolio. * Software as a Service revenue increased by 6 percent, due to continued growth in resupply service offerings and stabilizing patient flow in out-of-hospital care settings. * Gross margin contracted by 20 basis points mainly due to restructuring expenses associated with the cessation of our portable oxygen concentrator business. Non-GAAP gross margin expanded by 20 basis points, mainly due to benefits from manufacturing efficiencies, product mix changes, and foreign exchange rates, partially offset by declines in average selling prices. * Selling, general, and administrative expenses decreased by 3 percent on a constant currency basis. SG&A expenses improved to 21.2 percent of revenue in the quarter, compared with 23.3 percent in the same period of the prior year. These changes in SG&A expenses were mainly due to savings in travel and other cost management as a result of the COVID-19 pandemic. * Income from operations increased by 12 percent and non-GAAP income from operations increased by 16 percent. * Net income grew by 12 percent and diluted earnings per share grew by 12 percent. Non-GAAP net income grew by 17 percent and non-GAAP diluted earnings per share grew by 17 percent, predominantly attributable to strong sales and controlled operating costs. * Cash flow from operations for the quarter was $169.9 million, compared to net income in the current quarter of $179.5 million. During the quarter we paid $56.7 million in dividends.

Dividend program

The ResMed board of directors today declared a quarterly cash dividend of $0.39 per share. The dividend will have a record date of February 11, 2021, payable on March 18, 2021. The dividend will be paid in U.S. currency to holders of ResMed's common stock trading on the New York Stock Exchange. Holders of CHESS Depositary Interests ("CDIs") trading on the Australian Securities Exchange will receive an equivalent amount in Australian currency, based on the exchange rate on the record date, and reflecting the 10:1 ratio between CDIs and NYSE shares. The ex-dividend date will be February 10, 2021, for common stockholders and for CDI holders. ResMed has received a waiver from the ASX's settlement operating rules, which will allow ResMed to defer processing conversions between its common stock and CDI registers from February 10, 2021, through February 11, 2021, inclusive.

Webcast details

ResMed will discuss its second quarter fiscal year 2021 results on its webcast at 1:30 p.m. U.S. Pacific Time today. The live webcast of the call can be accessed on ResMed's Investor Relations website at investor.resmed.com. Please go to this section of the website and click on the icon for the "Q2 2021 Earnings Webcast" to register and listen to the live webcast. A replay of the earnings webcast will be accessible on the website and available approximately two hours after the live webcast. In addition, a telephone replay of the conference call will be available approximately two hours after the webcast by dialing +1 800-585-8367 (U.S.) or +1 416-621-4642 (outside U.S.) and entering the passcode 4291663. The telephone replay will be available until February 11, 2021.

About ResMed

At ResMed (NYSE: RMD, ASX: RMD) we pioneer innovative solutions that treat and keep people out of the hospital, empowering them to live healthier, higher-quality lives. Our digital health technologies and cloud-connected medical devices transform care for people with sleep apnea, COPD, and other chronic diseases. Our comprehensive out-of-hospital software platforms support the professionals and caregivers who help people stay healthy in the home or care setting of their choice. By enabling better care, we improve quality of life, reduce the impact of chronic disease, and lower costs for consumers and healthcare systems in more than 140 countries. To learn more, visit ResMed.com and follow @ResMed.

Safe harbor statement

Statements contained in this release that are not historical facts are "forward-looking" statements as contemplated by the Private Securities Litigation Reform Act of 1995. These forward-looking statements - including statements regarding ResMed's projections of future revenue or earnings, expenses, new product development, new product launches, new markets for its products, the integration of acquisitions, litigation, and tax outlook - are subject to risks and uncertainties, which could cause actual results to materially differ from those projected or implied in the forward-looking statements. Additional risks and uncertainties are discussed in ResMed's periodic reports on file with the U.S. Securities & Exchange Commission. ResMed does not undertake to update its forward-looking statements.

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(A) presented. In order to calculate our constant currency information, we translate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period. However, constant currency measures should not be considered in isolation or as an alternative to U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP.



(B) See the reconciliation of non-GAAP financial measures in the table at the end of the press release.

Discussion of Second Quarter Results

All comparisons are to the prior year period unless otherwise noted

* Revenue in the U.S., Canada, and Latin America, excluding Software as a Service, grew by 5 percent, driven by strong sales across our mask product portfolio. * Revenue in Europe, Asia, and other markets grew by 10 percent on a constant currency basis, primarily driven by sales across our device and mask product portfolio. * Software as a Service revenue increased by 6 percent, due to continued growth in resupply service offerings and stabilizing patient flow in out-of-hospital care settings. * Gross margin contracted by 20 basis points mainly due to restructuring expenses associated with the cessation of our portable oxygen concentrator business. Non-GAAP gross margin expanded by 20 basis points, mainly due to benefits from manufacturing efficiencies, product mix changes, and foreign exchange rates, partially offset by declines in average selling prices. * Selling, general, and administrative expenses decreased by 3 percent on a constant currency basis. SG&A expenses improved to 21.2 percent of revenue in the quarter, compared with 23.3 percent in the same period of the prior year. These changes in SG&A expenses were mainly due to savings in travel and other cost management as a result of the COVID-19 pandemic. * Income from operations increased by 12 percent and non-GAAP income from operations increased by 16 percent. * Net income grew by 12 percent and diluted earnings per share grew by 12 percent. Non-GAAP net income grew by 17 percent and non-GAAP diluted earnings per share grew by 17 percent, predominantly attributable to strong sales and controlled operating costs. * Cash flow from operations for the quarter was $169.9 million, compared to net income in the current quarter of $179.5 million. During the quarter we paid $56.7 million in dividends.

Dividend program

The ResMed board of directors today declared a quarterly cash dividend of $0.39 per share. The dividend will have a record date of February 11, 2021, payable on March 18, 2021. The dividend will be paid in U.S. currency to holders of ResMed's common stock trading on the New York Stock Exchange. Holders of CHESS Depositary Interests ("CDIs") trading on the Australian Securities Exchange will receive an equivalent amount in Australian currency, based on the exchange rate on the record date, and reflecting the 10:1 ratio between CDIs and NYSE shares. The ex-dividend date will be February 10, 2021, for common stockholders and for CDI holders. ResMed has received a waiver from the ASX's settlement operating rules, which will allow ResMed to defer processing conversions between its common stock and CDI registers from February 10, 2021, through February 11, 2021, inclusive.

Webcast details

ResMed will discuss its second quarter fiscal year 2021 results on its webcast at 1:30 p.m. U.S. Pacific Time today. The live webcast of the call can be accessed on ResMed's Investor Relations website at investor.resmed.com. Please go to this section of the website and click on the icon for the "Q2 2021 Earnings Webcast" to register and listen to the live webcast. A replay of the earnings webcast will be accessible on the website and available approximately two hours after the live webcast. In addition, a telephone replay of the conference call will be available approximately two hours after the webcast by dialing +1 800-585-8367 (U.S.) or +1 416-621-4642 (outside U.S.) and entering the passcode 4291663. The telephone replay will be available until February 11, 2021.

About ResMed

At ResMed (NYSE: RMD, ASX: RMD) we pioneer innovative solutions that treat and keep people out of the hospital, empowering them to live healthier, higher-quality lives. Our digital health technologies and cloud-connected medical devices transform care for people with sleep apnea, COPD, and other chronic diseases. Our comprehensive out-of-hospital software platforms support the professionals and caregivers who help people stay healthy in the home or care setting of their choice. By enabling better care, we improve quality of life, reduce the impact of chronic disease, and lower costs for consumers and healthcare systems in more than 140 countries. To learn more, visit ResMed.com and follow @ResMed.

Safe harbor statement

Statements contained in this release that are not historical facts are "forward-looking" statements as contemplated by the Private Securities Litigation Reform Act of 1995. These forward-looking statements - including statements regarding ResMed's projections of future revenue or earnings, expenses, new product development, new product launches, new markets for its products, the integration of acquisitions, litigation, and tax outlook - are subject to risks and uncertainties, which could cause actual results to materially differ from those projected or implied in the forward-looking statements. Additional risks and uncertainties are discussed in ResMed's periodic reports on file with the U.S. Securities & Exchange Commission. ResMed does not undertake to update its forward-looking statements.

RESMED INC. AND SUBSIDIARIES

CondensedConsolidatedStatements ofIncome

(Unaudited; $ inthousands, exceptfor per shareamounts)



Three Months Ended Six Months Ended



December December December 31, December 31, 31, 31, 2020 2019 2020 2019



Net revenue $ 800,011 $ 736,157 $ 1,551,955 $ 1,417,213



Cost of sales 321,132 296,975 622,436 572,976

Amortization ofacquired 11,164 12,052 23,143 25,488 intangibles ^(1)

Restructuring - 5,232 - 5,232 - cost of sales ^(1)

Total cost of sales $ 337,528 $ 309,027 $ 650,811 $ 598,464

Gross profit $ 462,483 $ 427,130 $ 901,144 $ 818,749



Selling, general, 169,470 171,422 328,459 338,862 and administrative

Research and 54,935 49,943 109,468 97,976 development

Amortization ofacquired 7,689 8,556 15,932 13,599 intangibles ^(1)

Restructuring -operating expenses 8,673 - 8,673 - ^(1)

Litigationsettlement expenses - (600 ) - (600 ) ^(1)

Total operating $ 240,767 $ 229,321 $ 462,532 $ 449,837 expenses

Income from 221,716 197,809 438,612 368,912 operations



Other income (expenses), net:

Interest income $ (5,792 ) $ (10,018 ) $ (12,517 ) $ (20,562 ) (expense), net

Loss attributableto equity method (2,640 ) (6,924 ) (4,928 ) (13,786 ) investments

Other, net (2,692 ) (2,115 ) 5,279 (5,225 )

Total other income (11,124 ) (19,057 ) (12,166 ) (39,573 ) (expenses), net

Income before $ 210,592 $ 178,752 $ 426,446 $ 329,339 income taxes

Income taxes 31,078 18,198 68,560 48,637

Net income $ 179,514 $ 160,554 $ 357,886 $ 280,702



Basic earnings per $ 1.24 $ 1.11 $ 2.47 $ 1.95 share

Diluted earnings $ 1.23 $ 1.10 $ 2.45 $ 1.93 per share

Non-GAAP dilutedearnings per share $ 1.41 $ 1.21 $ 2.68 $ 2.14 ^(1)



Basic shares 145,246 144,212 145,053 143,966 outstanding

Diluted shares 146,421 145,575 146,350 145,479 outstanding

(1) See the reconciliation of non-GAAP financial measures in the table at the end of the press release.

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited; $ in thousands)



December 31, June 30, 2020 2020

ASSETS

Current assets:

Cash and cash equivalents $ 255,865 $ 463,156

Accounts receivable, net 509,364 474,643

Inventories 474,821 416,915

Prepayments and other current assets 211,435 168,745

Total current assets $ 1,451,485 $ 1,523,459

Non-current assets:

Property, plant, and equipment, net $ 459,472 $ 417,335

Operating lease right-of-use assets 131,291 118,348

Goodwill and other intangibles, net 2,323,490 2,338,492

Deferred income taxes and other non-current 207,118 189,742 assets

Total non-current assets $ 3,121,371 $ 3,063,917

Total assets $ 4,572,856 $ 4,587,376

LIABILITIES AND STOCKHOLDERS' EQUITY:

Current liabilities:

Accounts payable $ 122,166 $ 135,786

Accrued expenses 280,332 270,353

Operating lease liabilities, current 22,445 21,263

Deferred revenue 105,238 98,617

Income taxes payable 35,166 64,755

Short-term debt 11,988 11,987

Total current liabilities $ 577,335 $ 602,761

Non-current liabilities:

Deferred revenue $ 86,899 $ 87,307

Deferred income taxes 12,733 13,011

Operating lease liabilities, non-current 117,641 101,880

Other long term liabilities 9,481 8,347

Long-term debt 813,732 1,164,133

Long-term income taxes payable 90,051 112,910

Total non-current liabilities $ 1,130,537 $ 1,487,588

Total liabilities $ 1,707,872 $ 2,090,349

STOCKHOLDERS' EQUITY:

Common stock $ 582 $ 580

Additional paid-in capital 1,574,240 1,570,694

Retained earnings 3,076,569 2,832,991

Treasury stock (1,623,256 ) (1,623,256 )

Accumulated other comprehensive income (163,151 ) (283,982 )

Total stockholders' equity $ 2,864,984 $ 2,497,027

Total liabilities and stockholders' equity $ 4,572,856 $ 4,587,376

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited; $ in thousands)

Six Months Ended

December 31, 2020

December 31, 2019

Cash flows from operating activities:

Net income

$

357,886

$

280,702

Adjustment to reconcile net income to cash provided by operating activities:

Depreciation and amortization

80,046

77,077

Amortization of right-of-use assets

17,911

12,323

Stock-based compensation costs

31,441

27,309

Loss attributable to equity method investments

4,928

13,786

(Gain) loss on equity investment

(4,776

)

5,419

Restructuring expenses

8,673

-

Changes in fair value of business combination contingent consideration

500

(7

)

Changes in operating assets and liabilities:

Accounts receivable, net

(19,259

)

(275

)

Inventories, net

(34,212

)

(28,294

)

Prepaid expenses, net deferred income taxes, and other current assets

(29,875

)

(66,818

)

Accounts payable, accrued expenses, and other

(99,348

)

(88,927

)

Net cash provided by operating activities

$

313,915

$

232,295

Cash flows from investing activities:

Purchases of property, plant, and equipment

(48,443

)

(47,771

)

Patent registration costs

(8,367

)

(4,871

)

Business acquisitions, net of cash acquired

(437

)

(3,423

)

Purchases of investments

(14,446

)

(21,841

)

Proceeds / (Payments) on maturity of foreign currency contracts

19,922

1,064

Net cash used in investing activities

$

(51,771

)

$

(76,842

)

Cash flows from financing activities:

Proceeds from issuance of common stock, net

18,614

24,297

Taxes paid related to net share settlement of equity awards

(46,507

)

(41,091

)

Payment of business combination contingent consideration

-

(302

)

Proceeds from borrowings, net of borrowing costs

55,000

730,000

Repayment of borrowings

(406,000

)

(700,012

)

Dividends paid

(113,165

)

(112,202

)

Net cash used in financing activities

$

(492,058

)

$

(99,310

)

Effect of exchange rate changes on cash

$

22,623

$

824

Net increase / (decrease) in cash and cash equivalents

(207,291

)

56,967

Cash and cash equivalents at beginning of period

463,156

147,128

Cash and cash equivalents at end of period

$

255,865

$

204,095

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited; $ in thousands)



Six Months Ended



December 31, December 31, 2020 2019

Cash flows from operating activities:

Net income $ 357,886 $ 280,702

Adjustment to reconcile net income to cash provided by operating activities:

Depreciation and amortization 80,046 77,077

Amortization of right-of-use assets 17,911 12,323

Stock-based compensation costs 31,441 27,309

Loss attributable to equity method investments 4,928 13,786

(Gain) loss on equity investment (4,776 ) 5,419

Restructuring expenses 8,673 -

Changes in fair value of business combination 500 (7 ) contingent consideration

Changes in operating assets and liabilities:

Accounts receivable, net (19,259 ) (275 )

Inventories, net (34,212 ) (28,294 )

Prepaid expenses, net deferred income taxes, and (29,875 ) (66,818 ) other current assets

Accounts payable, accrued expenses, and other (99,348 ) (88,927 )

Net cash provided by operating activities $ 313,915 $ 232,295

Cash flows from investing activities:

Purchases of property, plant, and equipment (48,443 ) (47,771 )

Patent registration costs (8,367 ) (4,871 )

Business acquisitions, net of cash acquired (437 ) (3,423 )

Purchases of investments (14,446 ) (21,841 )

Proceeds / (Payments) on maturity of foreign 19,922 1,064 currency contracts

Net cash used in investing activities $ (51,771 ) $ (76,842 )

Cash flows from financing activities:

Proceeds from issuance of common stock, net 18,614 24,297

Taxes paid related to net share settlement of (46,507 ) (41,091 ) equity awards

Payment of business combination contingent - (302 ) consideration

Proceeds from borrowings, net of borrowing costs 55,000 730,000

Repayment of borrowings (406,000 ) (700,012 )

Dividends paid (113,165 ) (112,202 )

Net cash used in financing activities $ (492,058 ) $ (99,310 )

Effect of exchange rate changes on cash $ 22,623 $ 824

Net increase / (decrease) in cash and cash (207,291 ) 56,967 equivalents

Cash and cash equivalents at beginning of period 463,156 147,128

Cash and cash equivalents at end of period $ 255,865 $ 204,095

RESMED INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Unaudited; $ in thousands, except for per share amounts)

The measures "non-GAAP gross profit" and "non-GAAP gross margin" excludes amortization expense from acquired intangibles related to cost of sales and are reconciled below:

Three Months Ended

Six Months Ended

December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

Revenue

$

800,011

$

736,157

$

1,551,955

$

1,417,213

Add back: Deferred revenue fair value adjustment (A)

-

657

-

2,102

Non-GAAP Revenue

$

800,011

$

736,814

$

1,551,955

$

1,419,315

GAAP Cost of sales

$

337,528

$

309,027

$

650,811

$

598,464

Less: Amortization of acquired intangibles (A)

(11,164

)

(12,052

)

(23,143

)

(25,488

)

Less: Restructuring - cost of sales (A)

(5,232

)

-

(5,232

)

-

Non-GAAP cost of sales

$

321,132

$

296,975

$

622,436

$

572,976

GAAP gross profit

$

462,483

$

427,130

$

901,144

$

818,749

GAAP gross margin

57.8

%

58.0

%

58.1

%

57.8

%

Non-GAAP gross profit

$

478,879

$

439,839

$

929,519

$

846,339

Non-GAAP gross margin

59.9

%

59.7

%

59.9

%

59.6

%

The measure "non-GAAP income from operations" is reconciled with GAAP income from operations below:

RESMED INC. AND SUBSIDIARIES

Reconciliationof Non-GAAPFinancialMeasures

(Unaudited; $in thousands,except for pershare amounts)

The measures "non-GAAP gross profit" and "non-GAAP gross margin" excludesamortization expense from acquired intangibles related to cost of sales and arereconciled below:



Three Months Ended Six Months Ended



December 31, December 31, December 31, December 31, 2020 2019 2020 2019



Revenue $ 800,011 $ 736,157 $ 1,551,955 $ 1,417,213

Add back:Deferredrevenue fair - 657 - 2,102 valueadjustment ^(A)

Non-GAAP $ 800,011 $ 736,814 $ 1,551,955 $ 1,419,315 Revenue



GAAP Cost of $ 337,528 $ 309,027 $ 650,811 $ 598,464 sales

Less:Amortizationof acquired (11,164 ) (12,052 ) (23,143 ) (25,488 ) intangibles ^(A)

Less:Restructuring (5,232 ) - (5,232 ) - - cost ofsales ^(A)

Non-GAAP cost $ 321,132 $ 296,975 $ 622,436 $ 572,976 of sales



GAAP gross $ 462,483 $ 427,130 $ 901,144 $ 818,749 profit

GAAP gross 57.8 % 58.0 % 58.1 % 57.8 %margin

Non-GAAP gross $ 478,879 $ 439,839 $ 929,519 $ 846,339 profit

Non-GAAP gross 59.9 % 59.7 % 59.9 % 59.6 %margin

The measure "non-GAAP income from operations" is reconciled with GAAP income from operations below:



Three Months Ended Six Months Ended



December December 31, December December 31, 2019 31, 31, 2020 2020 2019



GAAP income from $ 221,716 $ 197,809 $ 438,612 $ 368,912 operations

Amortization ofacquired intangibles - 11,164 12,052 23,143 25,488 cost of sales ^(A)

Amortization ofacquired intangibles - 7,689 8,556 15,932 13,599 operating expenses ^(A)

Restructuring - cost of 5,232 - 5,232 - sales ^(A)

Restructuring - 8,673 - 8,673 - operating expenses ^(A)

Deferred revenue fair - 657 - 2,102 value adjustment ^(A)

Litigation settlement - (600 ) - (600 )expenses ^(A)

Non-GAAP income from $ 254,474 $ 218,474 $ 491,592 $ 409,501 operations

RESMED INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Unaudited; $ in thousands, except for per share amounts)

The measures "non-GAAP net income" and "non-GAAP diluted earnings per share" are reconciled with GAAP net income and GAAP diluted earnings per share in the table below:

Three Months Ended

Six Months Ended

December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

GAAP net income

$

179,514

$

160,554

$

357,886

$

280,702

Amortization of acquired intangibles - cost of sales, net of tax(A)

8,566

9,210

17,742

19,478

Amortization of acquired intangibles - operating expenses, net of tax(A)

5,900

6,538

12,214

10,392

Restructuring - cost of sales, net of tax (A)

4,663

-

4,663

-

Restructuring - operating expenses, net of tax (A)

7,730

-

7,730

-

Deferred revenue fair value adjustment, net of tax (A)

-

503

-

1,610

Litigation settlement expenses, net of tax (A)

-

(528

)

-

(528

)

(Gain) loss on equity investments (A)

-

-

(8,476

)

-

Non-GAAP net income (A)

$

206,373

$

176,277

$

391,759

$

311,654

Diluted shares outstanding

146,421

145,575

146,350

145,479

GAAP diluted earnings per share

$

1.23

$

1.10

$

2.45

$

1.93

Non-GAAP diluted earnings per share (A)

$

1.41

$

1.21

$

2.68

$

2.14

RESMED INC. AND SUBSIDIARIES

Reconciliation ofNon-GAAP FinancialMeasures

(Unaudited; $ inthousands, exceptfor per shareamounts)

The measures "non-GAAP net income" and "non-GAAP diluted earnings per share"are reconciled with GAAP net income and GAAP diluted earnings per share in thetable below:



Three Months Ended Six Months Ended



December December 31, December 31, December 31, 31, 2019 2020 2019 2020



GAAP net income $ 179,514 $ 160,554 $ 357,886 $ 280,702

Amortization ofacquiredintangibles - cost 8,566 9,210 17,742 19,478 of sales, net oftax^ (A)

Amortization ofacquiredintangibles - 5,900 6,538 12,214 10,392 operating expenses,net of tax^ (A)

Restructuring -cost of sales, net 4,663 - 4,663 - of tax ^(A)

Restructuring -operating expenses, 7,730 - 7,730 - net of tax ^(A)

Deferred revenuefair value - 503 - 1,610 adjustment, net oftax ^(A)

Litigationsettlement - (528 ) - (528 ) expenses, net oftax ^(A)

(Gain) loss onequity investments - - (8,476 ) - ^(A)

Non-GAAP net income $ 206,373 $ 176,277 $ 391,759 $ 311,654 ^(A)

Diluted shares 146,421 145,575 146,350 145,479 outstanding

GAAP diluted $ 1.23 $ 1.10 $ 2.45 $ 1.93 earnings per share

Non-GAAP dilutedearnings per share $ 1.41 $ 1.21 $ 2.68 $ 2.14 ^(A)

(A)

ResMed adjusts for the impact of the amortization of acquired intangibles, restructuring expenses, deferred revenue fair value adjustment, litigation settlement expenses, and the (gain) loss on equity investments from their evaluation of ongoing operations, and believes that investors benefit from adjusting these items to facilitate a more meaningful evaluation of current operating performance.

ResMed believes that non-GAAP diluted earnings per share is an additional measure of performance that investors can use to compare operating results between reporting periods. ResMed uses non-GAAP information internally in planning, forecasting, and evaluating the results of operations in the current period and in comparing it to past periods. ResMed believes this information provides investors better insight when evaluating ResMed's performance from core operations and provides consistent financial reporting. The use of non-GAAP measures is intended to supplement, and not to replace, the presentation of net income and other GAAP measures. Like all non-GAAP measures, non-GAAP earnings are subject to inherent limitations because they do not include all the expenses that must be included under GAAP.

ResMed adjusts for the impact of the amortization of acquired intangibles,(A) restructuring expenses, deferred revenue fair value adjustment, litigation settlement expenses, and the (gain) loss on equity investments from their evaluation of ongoing operations, and believes that investors benefit from adjusting these items to facilitate a more meaningful evaluation of current operating performance.



ResMed believes that non-GAAP diluted earnings per share is an additional measure of performance that investors can use to compare operating results between reporting periods. ResMed uses non-GAAP information internally in planning, forecasting, and evaluating the results of operations in the current period and in comparing it to past periods. ResMed believes this information provides investors better insight when evaluating ResMed's performance from core operations and provides consistent financial reporting. The use of non-GAAP measures is intended to supplement, and not to replace, the presentation of net income and other GAAP measures. Like all non-GAAP measures, non-GAAP earnings are subject to inherent limitations because they do not include all the expenses that must be included under GAAP.

RESMED INC. AND SUBSIDIARIES

Revenue by Product and Region

(Unaudited; $ in millions, except for per share amounts)

Three Months Ended

December 31, 2020 (A)

December 31, 2019 (A)

% Change

Constant Currency (B)

U.S., Canada, and Latin America

Devices

$

205.0

$

203.5

1

%

Masks and other

221.8

204.5

8

Total Sleep and Respiratory Care

$

426.8

$

408.0

5

Software as a Service

91.8

86.7

6

Total

$

518.6

$

494.7

5

Combined Europe, Asia, and other markets

Devices

$

188.0

$

162.3

16

%

10

%

Masks and other

93.4

79.2

18

12

Total Sleep and Respiratory Care

$

281.4

$

241.5

17

10

Global revenue

Devices

$

393.0

$

365.8

7

%

5

%

Masks and other

315.2

283.7

11

9

Total Sleep and Respiratory Care

$

708.2

$

649.5

9

7

Software as a Service

91.8

86.7

6

6

Total

$

800.0

$

736.2

9

7

Six Months Ended

December 31, 2020 (A)

December 31, 2019 (A)

% Change

Constant Currency (B)

U.S., Canada, and Latin America

Devices

$

402.4

$

390.4

3

%

Masks and other

427.5

387.8

10

Total Sleep and Respiratory Care

$

829.9

$

778.2

7

Software as a Service

184.0

173.6

6

Total

$

1,013.9

$

951.8

7

Combined Europe, Asia, and other markets

Devices

$

364.0

$

314.2

16

%

11

%

Masks and other

174.0

151.2

15

10

Total Sleep and Respiratory Care

$

538.1

$

465.4

16

10

Global revenue

Devices

$

766.4

$

704.6

9

%

6

%

Masks and other

601.6

539.0

12

10

Total Sleep and Respiratory Care

$

1,368.0

$

1,243.6

10

8

Software as a Service

184.0

173.6

6

6

Total

$

1,552.0

$

1,417.2

10

8

RESMED INC. AND SUBSIDIARIES

Revenue by Product andRegion

(Unaudited; $ inmillions, except for pershare amounts)



Three Months Ended



December December Constant 31, 2020 ^ 31, 2019 ^ % Change Currency ^ (A) (A) (B)

U.S., Canada, and Latin America

Devices $ 205.0 $ 203.5 1 %

Masks and other 221.8 204.5 8

Total Sleep and $ 426.8 $ 408.0 5 Respiratory Care

Software as a Service 91.8 86.7 6

Total $ 518.6 $ 494.7 5



Combined Europe, Asia, and other markets

Devices $ 188.0 $ 162.3 16 % 10 %

Masks and other 93.4 79.2 18 12

Total Sleep and $ 281.4 $ 241.5 17 10 Respiratory Care



Global revenue

Devices $ 393.0 $ 365.8 7 % 5 %

Masks and other 315.2 283.7 11 9

Total Sleep and $ 708.2 $ 649.5 9 7 Respiratory Care

Software as a Service 91.8 86.7 6 6

Total $ 800.0 $ 736.2 9 7





Six Months Ended



December December % Constant 31, 2020 ^ 31, 2019 ^ Change Currency ^ (A) (A) (B)

U.S., Canada, and Latin America

Devices $ 402.4 $ 390.4 3 %

Masks and other 427.5 387.8 10

Total Sleep and $ 829.9 $ 778.2 7 Respiratory Care

Software as a Service 184.0 173.6 6

Total $ 1,013.9 $ 951.8 7



Combined Europe, Asia, and other markets

Devices $ 364.0 $ 314.2 16 % 11 %

Masks and other 174.0 151.2 15 10

Total Sleep and $ 538.1 $ 465.4 16 10 Respiratory Care



Global revenue

Devices $ 766.4 $ 704.6 9 % 6 %

Masks and other 601.6 539.0 12 10

Total Sleep and $ 1,368.0 $ 1,243.6 10 8 Respiratory Care

Software as a Service 184.0 173.6 6 6

Total $ 1,552.0 $ 1,417.2 10 8



(A)

Totals and subtotals may not add due to rounding.

(B)

In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we provide certain financial information on a "constant currency basis," which is in addition to the actual financial information presented. In order to calculate our constant currency information, we translate the current period financial information using the foreign currency exchange rates that were in effect during the previous comparable period. However, constant currency measures should not be considered in isolation or as an alternative to U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210128005352/en/

CONTACT: For investors Amy Wakeham +1 858-836-5000 investorrelations@resmed.com

CONTACT: For media Jayme Rubenstein +1 858-836-6798 news@resmed.com