ResMed : Announces Results for the Second Quarter of FY2022

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Amy Wakeham	Jayme Rubenstein
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ResMed Inc. Announces Results for the Second Quarter of Fiscal Year 2022

• Year-over-yearrevenue grows 12%, operating profit up 12%, non-GAAP operating profit up 5%

Note: A webcast of ResMed's conference call will be available at 4:30 p.m. ET today at http://investor.resmed.com

SAN DIEGO, January 27, 2022 - ResMed Inc. (NYSE: RMD, ASX: RMD) today announced results for its quarter ended December 31, 2021.

Second Quarter 2022 Highlights

All comparisons are to the prior year period

• Revenue increased by 12% to $894.9 million; up 13% on a constant currency basis
• Gross margin of 56.4%; non-GAAP gross margin contracted 230 bps to 57.6%
• Income from operations increased 12%; non-GAAP operating profit up 5%
• Diluted earnings per share of $1.37; non-GAAP diluted earnings per share of $1.47

"Our second-quarter results reflect continued strong performance across our business resulting in double-digit top- line revenue growth, driven by ongoing high demand for our sleep and respiratory care products, and solid growth in our software-as-a-service business," said Mick Farrell, ResMed CEO. "Our global ResMed team continues to find ways to deliver products and solutions to our customers, even amid ongoing supply chain challenges that have limited additional access to critical electronic components. We are working every day to meet the extraordinary demand generated by our competitor's ongoing device recall. We continue to ensure priority for the highest-need patients first, and we are working with physicians, providers, and healthcare systems to maintain delivery of medical devices and digital health solutions for the patients who need care.

"Despite constantly evolving market dynamics, we remain focused on our goal to improve 250 million lives in the year 2025; supporting patients with the sleep apnea therapy, respiratory care therapy, and digital health solutions they need as we deliver value for all of our customers. We are investing in medical device research and development, as well as digital health innovation that will unlock value across the healthcare system. I am incredibly proud of our global ResMed team, working around the clock with providers and physicians across 140 countries to get products directly into the hands of patients who most need our help."

RMD Second Quarter 2022 Earnings Press Release - January 27, 2022

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Financial Results and Operating Metrics

Unaudited; $ in millions, except for per share amounts

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					Three Months Ended
	December 31,		December 31,			Constant
		2021			2020		% Change	Currency (A)
Revenue	$	894.9	$	800.0	12 %	13 %
Gross margin (B)		56.4 %			57.8 %	(2)
Non-GAAP gross margin (B)		57.6 %			59.9 %	(4)
Selling, general, and administrative expenses		185.4			169.5	9	10
Research and development expenses		62.5			54.9	14	14
Income from operations		248.7			221.7	12
Non-GAAP income from operations (B)		267.7			254.5	5
Net income		201.8			179.5	12
Non-GAAP net income (B)		216.2			206.4	5
Diluted earnings per share	$	1.37	$	1.23	11
Non-GAAP diluted earnings per share (B)	$	1.47	$	1.41	4
					Six Months Ended
	December 31,		December 31,			Constant
		2021			2020		% Change	Currency (A)
Revenue	$	1,798.9	$	1,552.0	16 %	16 %
Gross margin (B)		56.2 %			58.1 %	(3)
Non-GAAP gross margin (B)		57.4 %			59.9 %	(4)
Selling, general, and administrative expenses		362.1			328.5	10	10
Research and development expenses		122.5			109.5	12	11
Income from operations		510.6			438.6	16
Non-GAAP income from operations (B)		548.4			491.6	12
Net income		405.4			357.9	13
Non-GAAP net income (B)		438.3			391.8	12
Diluted earnings per share	$	2.76	$	2.45	13
Non-GAAP diluted earnings per share (B)	$	2.98	$	2.68	11

1. 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.
2. 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 grew by 13 percent on a constant currency basis, driven by increased demand for our sleep and respiratory care devices and increased demand following a recent product recall by one of our competitors.
  o Revenue in the U.S., Canada, and Latin America, excluding Software as a Service, grew by 14 percent, primarily due to the factors discussed above and recovery of core sleep patient flow that was previously impacted by COVID-19.
  o Revenue in Europe, Asia, and other markets grew by 12 percent on a constant currency basis, primarily due to the factors discussed above.
  o Software as a Service revenue increased by 8 percent, due to continued growth in our Durable Medical Equipment category and stabilizing patient flow in out-of-hospital care settings.

RMD Second Quarter 2022 Earnings Press Release - January 27, 2022

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• Gross margin decreased by 140 basis points and non-GAAP gross margin decreased by 230 basis points, mainly due to higher freight and manufacturing costs, partially offset by favorable product mix changes.
• Selling, general, and administrative expenses increased by 10 percent on a constant currency basis. SG&A expenses improved to 20.7 percent of revenue in the quarter, compared with 21.2 percent in the same period of

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the prior year. These changes in SG&A expenses were mainly due to increases in employee-related expenses.

• Income from operations increased by 12 percent and non-GAAP income from operations increased by 5 percent.
• Net income grew by 12 percent and diluted earnings per share grew by 11 percent. Non-GAAP net income grew by 5 percent and non-GAAP diluted earnings per share grew by 4 percent, predominantly attributable to strong sales.
• Operating cash flow for the quarter was $219.9 million, compared to net income in the current quarter of $201.8 million and non-GAAP net income of $216.2 million. During the quarter we paid $61.2 million in dividends.

Other Business and Operational Highlights

• Elected Desney Tan and John Hernandez, both leaders with digital health experience at world-leading technology companies, to ResMed's board of directors.

Dividend program

The ResMed board of directors today declared a quarterly cash dividend of $0.42 per share. The dividend will have a record date of February 10, 2022, payable on March 17, 2022. 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 9, 2022, 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 9, 2022, through February 10, 2022, inclusive.

Webcast details

ResMed will discuss its second-quarter fiscal year 2022 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 2022 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 [phone] (U.S.) or [phone] (outside U.S.) and entering the passcode 13725581. The telephone replay will be available until February 10, 2022.

RMD Second Quarter 2022 Earnings Press Release - January 27, 2022

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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.comand 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.

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RMD Second Quarter 2022 Earnings Press Release - January 27, 2022

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RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

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

Three Months Ended

Six Months Ended

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	December 31,		December 31,		December 31,		December 31,
		2021			2020			2021			2020
Net revenue	$	894,874	$	800,011	$	1,798,890	$	1,551,955
Cost of sales		379,325			321,132			765,993			622,436
Amortization of acquired intangibles (1)		11,231			11,164			22,289			23,143
Restructuring - cost of sales (1)		-			5,232			-			5,232
Total cost of sales	$	390,556		$	337,528		$	788,282		$	650,811
Gross profit	$	504,318	$	462,483	$	1,010,608	$	901,144
Selling, general, and administrative		185,362			169,470			362,082			328,459
Research and development		62,507			54,935			122,457			109,468
Amortization of acquired intangibles (1)		7,738			7,689			15,445			15,932
Restructuring - operating expenses (1)		-			8,673			-			8,673
Total operating expenses	$	255,607	$	240,767	$	499,984	$	462,532
Income from operations		248,711			221,716			510,624			438,612
Other income (expenses), net:
Interest income (expense), net	$	(5,948)	$	(5,792)	$	(11,308)	$	(12,517)
Loss attributable to equity method investments		(1,914)			(2,640)			(3,300)			(4,928)
Gain (loss) on equity investments		(4,404)			(3,700)			1,208			4,776
Other, net		841			1,008			(1,150)			503
Total other income (expenses), net		(11,425)			(11,124)			(14,550)			(12,166)
Income before income taxes	$	237,286	$	210,592	$	496,074	$	426,446
Income taxes		35,535			31,078			90,710			68,560
Net income	$	201,751		$	179,514		$	405,364		$	357,886
Basic earnings per share	$	1.38	$	1.24	$	2.78	$	2.47
Diluted earnings per share	$	1.37	$	1.23	$	2.76	$	2.45
Non-GAAP diluted earnings per share (1)	$	1.47	$	1.41	$	2.98	$	2.68
Basic shares outstanding		145,990			145,246			145,835			145,053
Diluted shares outstanding		147,040			146,421			147,044			146,350

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