Form 10-Q RESMED INC For: Dec 31

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January 28, 2022 6:03 AM EST

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rmd-20211231x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

______________________________________________________________________________________________

FORM 10-Q

______________________________________________________________________________________________

(Mark One)


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2021


¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______to _______

Commission File Number: 001-15317

______________________________________________________________________________________________

ResMed Inc.

(Exact name of registrant as specified in its charter)

______________________________________________________________________________________________

Delaware

(State or other jurisdiction of incorporation or organization)

98-0152841

(I.R.S. Employer Identification No.)

9001 Spectrum Center Blvd.

San Diego, CA 92123

United States of America

(Address of principal executive offices, including zip code)

(858) 836-5000

(Registrant’s telephone number, including area code)

______________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.004 per share

RMD

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:


Large Accelerated Filer	x	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller Reporting Company	¨
Emerging Growth Company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At January 24, 2022 there were 146,234,244 shares of Common Stock ($0.004 par value) outstanding. This number excludes 41,836,234 shares held by the registrant as treasury shares.

Table of Contents

RESMED INC. AND SUBSIDIARIES

Index


Part I	Financial Information	3

Item 1	Financial Statements	3

	Condensed Consolidated Balance Sheets (Unaudited)	3

	Condensed Consolidated Statements of Operations (Unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	5

	Condensed Consolidated Statements of Changes in Equity (Unaudited)	6

	Condensed Consolidated Statements of Cash Flows (Unaudited)	8

	Notes to the Condensed Consolidated Financial Statements (Unaudited)	9

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4	Controls and Procedures	32

Part II	Other Information	33

Item 1	Legal Proceedings	33

Item 1A	Risk Factors	33

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3	Defaults Upon Senior Securities	33

Item 4	Mine Safety Disclosures	33

Item 5	Other Information	33

Item 6	Exhibits	34

	Signatures	35

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

Item 1. Financial Statements

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

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



	December 31, ‎2021		June 30, ‎2021
Assets
Current assets:
Cash and cash equivalents	$	194,476	$	295,278
Accounts receivable, net of allowances of $28,215 and $32,138 ‎ at December 31, 2021 and June 30, 2021, respectively		526,036		614,292
Inventories (note 3)		592,146		457,033
Prepaid taxes		89,229		72,409
Prepaid expenses and other current assets		145,353		135,745
Total current assets		1,547,240		1,574,757
Non-current assets:
Property, plant and equipment, net (note 3)		477,778		463,490
Operating lease right-of-use assets		146,045		128,575
Goodwill (note 4)		1,951,459		1,927,901
Other intangible assets, net (note 3)		372,013		392,582
Deferred income taxes		74,669		79,904
Prepaid taxes and other non-current assets		165,538		160,916
Total non-current assets		3,187,502		3,153,368
Total assets	$	4,734,742	$	4,728,125
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	163,369	$	138,008
Accrued expenses		286,803		320,599
Operating lease liabilities, current		23,912		23,585
Deferred revenue		111,647		109,611
Income taxes payable (note 6)		23,333		307,963
Short-term debt, net (note 8)		12,000		12,000
Total current liabilities		621,064		911,766
Non-current liabilities:
Deferred revenue		94,427		91,496
Deferred income taxes		12,873		11,319
Operating lease liabilities, non-current		132,970		114,779
Other long-term liabilities		6,350		6,802
Long-term debt, net (note 8)		667,979		643,351
Long-term income taxes payable (note 6)		53,244		62,933
Total non-current liabilities		967,843		930,680
Total liabilities		1,588,907		1,842,446
Commitments and contingencies (note 10)
Stockholders’ equity:
Preferred stock, $0.01 par value, 2,000,000 shares authorized; none issued		-		-
Common stock, $0.004 par value, 350,000,000 shares authorized; ‎ 188,048,404 issued and 146,212,170 outstanding at December 31, 2021 and ‎ 187,484,592 issued and 145,648,358 outstanding at June 30, 2021		585		583
Additional paid-in capital		1,629,031		1,622,199
Retained earnings		3,362,570		3,079,640
Treasury stock, at cost, 41,836,234 shares at December 31, 2021 and June 30, 2021		(1,623,256)		(1,623,256)
Accumulated other comprehensive loss		(223,095)		(193,487)
Total stockholders’ equity		3,145,835		2,885,679
Total liabilities and stockholders’ equity	$	4,734,742	$	4,728,125

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

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

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



	Three Months Ended ‎December 31,				Six Months Ended ‎December 31,
	2021		2020		2021		2020
Net revenue - Sleep and Respiratory Care products	$	795,840	$	708,178	$	1,602,339	$	1,367,979
Net revenue - Software as a Service		99,034		91,833		196,551		183,976
Net revenue		894,874		800,011		1,798,890		1,551,955

Cost of sales - Sleep and Respiratory Care products		343,194		293,862		692,876		562,852
Cost of sales - Software as a Service		36,131		32,502		73,117		64,816
Cost of sales (exclusive of amortization shown separately below)		379,325		326,364		765,993		627,668

Amortization of acquired intangible assets - Sleep and Respiratory Care products		1,072		1,140		1,972		3,095
Amortization of acquired intangible assets - Software as a Service		10,159		10,024		20,317		20,048
Amortization of acquired intangible assets		11,231		11,164		22,289		23,143
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 intangible assets		7,738		7,689		15,445		15,932
Restructuring expenses (note 11)		-		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 (loss), net:
Interest (expense) income, net		(5,948)		(5,792)		(11,308)		(12,517)
Loss attributable to equity method investments (note 5)		(1,914)		(2,640)		(3,300)		(4,928)
Gain (loss) on equity investments (note 5)		(4,404)		(3,700)		1,208		4,776
Other, net		841		1,008		(1,150)		503
Total other income (loss), 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 (note 9)	$	1.38	$	1.24	$	2.78	$	2.47
Diluted earnings per share (note 9)	$	1.37	$	1.23	$	2.76	$	2.45
Dividend declared per share	$	0.42	$	0.39	$	0.84	$	0.78
Basic shares outstanding (000's)		145,990		145,246		145,835		145,053
Diluted shares outstanding (000's)		147,040		146,421		147,044		146,350

‎

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

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In US$ and in thousands)


	Three Months Ended ‎December 31,				Six Months Ended ‎December 31,
	2021		2020		2021		2020
Net income	$	201,751	$	179,514	$	405,364	$	357,886
Other comprehensive income (loss):
Foreign currency translation (loss) gain adjustments		(6,092)		77,040		(29,608)		120,831
Comprehensive income	$	195,659	$	256,554	$	375,756	$	478,717

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

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(In US$ and in thousands)



	Common Stock			Additional ‎Paid-in		Treasury Stock			Retained		Accumulated ‎Other ‎ Comprehensive
	Shares	Amount		Capital		Shares	Amount		Earnings		Income (Loss)		Total
Balance, June 30, 2021	187,485	$	583	$	1,622,199	(41,836)	$	(1,623,256)	$	3,079,640	$	(193,487)	$	2,885,679
Common stock issued on exercise of options	61		-		4,354	-		-		-		-		4,354
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	1		-		(195)	-		-		-		-		(195)
Stock-based compensation costs	-		-		17,303	-		-		-		-		17,303
Other comprehensive income	-		-		-	-		-		-		(23,516)		(23,516)
Net income	-		-		-	-		-		203,613		-		203,613
Dividends declared ($0.42 per common share)	-		-		-	-		-		(61,189)		-		(61,189)
Balance, September 30, 2021	187,547	$	583	$	1,643,661	(41,836)	$	(1,623,256)	$	3,222,064	$	(217,003)	$	3,026,049
Common stock issued on exercise of options	39		-		2,378	-		-		-		-		2,378
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	361		2		(49,832)	-		-		-		-		(49,830)
Common stock issued on employee stock purchase plan	101		-		16,723	-		-		-		-		16,723
Stock-based compensation costs	-		-		16,101	-		-		-		-		16,101
Other comprehensive income	-		-		-	-		-		-		(6,092)		(6,092)
Net income	-		-		-	-		-		201,751		-		201,751
Dividends declared ($0.42 per common share)	-		-		-	-		-		(61,245)		-		(61,245)
Balance, December 31, 2021	188,048	$	585	$	1,629,031	(41,836)	$	(1,623,256)	$	3,362,570	$	(223,095)	$	3,145,835

‎

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

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(In US$ and in thousands)


	Common Stock			Additional ‎Paid-in		Treasury Stock			Retained		Accumulated ‎Other ‎ Comprehensive
	Shares	Amount		Capital		Shares	Amount		Earnings		Income (Loss)		Total
Balance, June 30, 2020	186,723	$	580	$	1,570,694	(41,836)	$	(1,623,256)	$	2,832,991	$	(283,982)	$	2,497,027
Common stock issued on exercise of options	18		-		1,026	-		-		-		-		1,026
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	3		-		227	-		-		-		-		227
Stock-based compensation costs	-		-		16,071	-		-		-		-		16,071
Other comprehensive income (loss)	-		-		-	-		-		-		43,791		43,791
Cumulative effect adjustment from adoption of the credit loss standard, net of tax	-		-		-	-		-		(1,143)		-		(1,143)
Net income	-		-		-	-		-		178,372		-		178,372
Dividends declared ($0.39 per common share)	-		-		-	-		-		(56,511)		-		(56,511)
Balance, September 30, 2020	186,744	$	580	$	1,588,018	(41,836)	$	(1,623,256)	$	2,953,709	$	(240,191)	$	2,678,860
Common stock issued on exercise of options	29		-		1,857	-		-		-		-		1,857
Common stock issued on vesting of restricted stock units, net of shares withheld for tax	451		2		(46,734)	-		-		-		-		(46,732)
Common stock issued on employee stock purchase plan	116		-		15,729	-		-		-		-		15,729
Stock-based compensation costs	-		-		15,370	-		-		-		-		15,370
Other comprehensive income	-		-		-	-		-		-		77,040		77,040
Net income	-		-		-	-		-		179,514		-		179,514
Dividends declared ($0.39 per common share)	-		-		-	-		-		(56,654)		-		(56,654)
Balance, December 31, 2020	187,340	$	582	$	1,574,240	(41,836)	$	(1,623,256)	$	3,076,569	$	(163,151)	$	2,864,984

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

Table of Contents


PART I – FINANCIAL INFORMATION	Item 1

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In US$ and in thousands)



	Six Months Ended ‎December 31,
	2021		2020
Cash flows from operating activities:
Net income	$	405,364	$	357,886
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		79,891		80,046
Amortization of right-of-use assets		17,334		17,911
Stock-based compensation costs		33,404		31,441
Loss attributable to equity method investments (note 5)		3,300		4,928
(Gain) loss on equity investments (note 5)		(1,208)		(4,776)
Restructuring expenses (note 11)		-		8,673
Changes in fair value of business combination contingent consideration		-		500
Changes in operating assets and liabilities:
Accounts receivable		82,469		(19,259)
Inventories		(139,249)		(34,212)
Prepaid expenses, net deferred income taxes and other current assets		(21,389)		(29,875)
Accounts payable, accrued expenses, income taxes payable and other		(305,694)		(99,348)
Net cash provided by operating activities		154,222		313,915
Cash flows from investing activities:
Purchases of property, plant and equipment		(57,747)		(48,443)
Patent registration and acquisition costs		(13,737)		(8,367)
Business acquisitions, net of cash acquired		(35,915)		(437)
Purchases of investments (note 5)		(12,364)		(14,446)
(Payments) / proceeds on maturity of foreign currency contracts		(5,419)		19,922
Net cash used in investing activities		(125,182)		(51,771)
Cash flows from financing activities:
Proceeds from issuance of common stock, net		23,455		18,614
Taxes paid related to net share settlement of equity awards		(50,025)		(46,507)
Proceeds from borrowings, net of borrowing costs		160,000		55,000
Repayment of borrowings		(136,000)		(406,000)
Dividends paid		(122,434)		(113,165)
Net cash used in financing activities		(125,004)		(492,058)
Effect of exchange rate changes on cash		(4,838)		22,623
Net decrease in cash and cash equivalents		(100,802)		(207,291)
Cash and cash equivalents at beginning of period		295,278		463,156
Cash and cash equivalents at end of period	$	194,476	$	255,865
Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds	$	382,903	$	138,247
Interest paid	$	5,948	$	12,766
Fair value of assets acquired, excluding cash	$	8,986	$	-
Liabilities assumed		(2,492)		-
Goodwill on acquisition		33,499		-
Previously held equity interest		(4,078)		-
Cash paid for acquisitions	$	35,915	$	-

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

Table of Contents



PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

(1) Summary of Significant Accounting Policies

Organization and Basis of Presentation

ResMed Inc. (referred to herein as “we”, “us”, “our” or the “Company”) is a Delaware corporation formed in March 1994 as a holding company for the ResMed Group. Through our subsidiaries, we design, manufacture and market equipment for the diagnosis and treatment of sleep-disordered breathing and other respiratory disorders, including obstructive sleep apnea. Our manufacturing operations are located in Australia, Singapore, Malaysia, France, China and the United States. Major distribution and sales sites are located in the United States, Germany, France, the United Kingdom, Switzerland, Australia, Japan, China, Finland, Norway and Sweden. We also operate a Software as a Service (“SaaS”) business in the United States that includes out-of-hospital software platforms designed to support the professionals and caregivers who help people stay healthy in the home or care setting of their choice.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and the rules of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2022.

The condensed consolidated financial statements for the three and six months ended December 31, 2021 and December 31, 2020 are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K (our “Form 10-K”) for the year ended June 30, 2021.

Revenue Recognition

In accordance with Accounting Standard Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”, we account for a contract with a customer when there is a legally enforceable contract, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. We have determined that we have two operating segments, which are the sleep and respiratory disorders sector of the medical device industry (“Sleep and Respiratory Care”) and the supply of business management software as a service to out-of-hospital health providers (“SaaS”). Our Sleep and Respiratory Care revenue relates primarily to the sale of our products that are therapy-based equipment. Some contracts include additional performance obligations such as the provision of extended warranties and provision of data for patient monitoring. Our SaaS revenue relates to the provision of software access with ongoing support and maintenance services as well as professional services such as training and consulting.

Disaggregation of revenue

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


	Three Months Ended ‎December 31,				Six Months Ended ‎December 31,
	2021		2020		2021		2020
U.S., Canada and Latin America
Devices	$	244,775	$	204,997	$	520,707	$	402,390
Masks and other		242,032		221,764		457,139		427,524
Total Sleep and Respiratory Care	$	486,807	$	426,761	$	977,846	$	829,914
Software as a Service		99,034		91,833		196,551		183,976
Total	$	585,841	$	518,594	$	1,174,397	$	1,013,890
Combined Europe, Asia and other markets
Devices	$	207,736	$	187,992	$	425,961	$	364,018
Masks and other		101,297		93,425		198,532		174,047
Total Sleep and Respiratory Care	$	309,033	$	281,417	$	624,493	$	538,065
Global revenue
Devices	$	452,511	$	392,989	$	946,668	$	766,408
Masks and other		343,329		315,189		655,671		601,571
Total Sleep and Respiratory Care	$	795,840	$	708,178	$	1,602,339	$	1,367,979
Software as a Service		99,034		91,833		196,551		183,976
Total	$	894,874	$	800,011	$	1,798,890	$	1,551,955

Table of Contents



PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

Performance obligations and contract balances

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied; generally, this occurs with the transfer of risk and/or control of our products at a point in time. For products in our Sleep and Respiratory Care business, we transfer control and recognize a sale when products are shipped to the customer in accordance with the contractual shipping terms. For our SaaS business, revenue associated with professional services are recognized as they are provided. We defer the recognition of a portion of the consideration received when performance obligations are not yet satisfied. Consideration received from customers in advance of revenue recognition is classified as deferred revenue. Performance obligations resulting in deferred revenue in our Sleep and Respiratory Care business relate primarily to extended warranties on our devices and the provision of data for patient monitoring. Performance obligations resulting in deferred revenue in our SaaS business relate primarily to the provision of software access with maintenance and support over an agreed term and material rights associated with future discounts upon renewal of some SaaS contracts. Generally, deferred revenue will be recognized over a period of one year to five years. Our contracts do not contain significant financing components.

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


	December 31, ‎2021		June 30, ‎2021		Balance sheet caption
Contract assets
Accounts receivable, net	$	526,036	$	614,292	Accounts receivable, net
Unbilled revenue, current		24,683		10,893	Prepaid expenses and other current assets
Unbilled revenue, non-current		7,593		6,214	Prepaid taxes and other non-current assets

Contract liabilities
Deferred revenue, current		(111,647)		(109,611)	Deferred revenue (current liabilities)
Deferred revenue, non-current		(94,427)		(91,496)	Deferred revenue (non-current liabilities)

Transaction price determination

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. In our Sleep and Respiratory Care segment, the amount of consideration received and revenue recognized varies with changes in marketing incentives (e.g. rebates, discounts, free goods) and returns offered to 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 historical experience. However, returns of products, excluding warranty-related returns, are infrequent and insignificant. We adjust the estimate of revenue at the earlier of when the most likely amount of consideration can be estimated, the amount expected to be received changes, or when the consideration becomes fixed.

We offer our Sleep and Respiratory Care customers cash or product rebates based on volume or sales targets measured over quarterly or annual periods. We 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 on a quarterly basis based on actual sales results and updated forecasts for the remaining rebate periods. We also offer discounts to both our Sleep and Respiratory Care as well as our SaaS customers as part of normal business practice and these are deducted from revenue when the sale occurs.

When Sleep and Respiratory Care or SaaS contracts have multiple performance obligations, we generally use an observable price to determine the stand-alone selling price by reference to pricing and discounting practices for the specific product or service when sold separately to similar customers. Revenue is then allocated proportionately, based on the determined stand-alone selling price, to each performance obligation. An allocation is not required for many of our Sleep and Respiratory Care contracts that have a single performance obligation, which is the shipment of our therapy-based equipment.

Accounting and practical expedient elections

We have elected to account for shipping and handling activities associated with our Sleep and Respiratory Care segment as a fulfillment cost within cost of sales, and record shipping and handling costs collected from customers in net revenue. We have also elected for all taxes assessed by government authorities that are imposed on and concurrent with revenue-producing transactions, such as sales and value added taxes, to be excluded from revenue and presented on a net basis. We have elected two practical expedients including the “right to invoice” practical expedient, which is relevant for some of our SaaS contracts as it allows us to recognize revenue in the amount of the invoice when it corresponds directly with the value of performance completed to date. The second practical expedient adopted permits relief from considering a significant financing component when the payment for the good or service is expected to be one year or less.

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PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

Lease Revenue

We lease Sleep and Respiratory Care medical devices to customers primarily as a means to comply with local health insurer requirements in certain foreign geographies. Device rental contracts include sales-type and operating leases, and contract terms vary by customer and include options to terminate or extend the contract. When lease contracts also include the sale of masks and accessories, we allocate contract consideration to those items on a relative standalone price basis and recognize revenue when control transfers to the customer.

The components of lease revenue were as follows (in thousands):


	Three Months Ended ‎December 31,				Six Months Ended ‎December 31,
	2021		2020		2021		2020
Sales-type lease revenue	$	1,565	$	1,863	$	5,652	$	3,823
Operating lease revenue		24,426		25,026		49,583		49,805
Total lease revenue	$	25,991	$	26,889	$	55,235	$	53,628

Provision for Warranty

We provide for the estimated cost of product warranties on our Sleep and Respiratory Care products at the time the related revenue is recognized. We determine the amount of this provision by using a financial model, which takes into consideration actual historical expenses and potential risks associated with our different products. We use this financial model to calculate the future probable expenses related to warranty and the required level of the warranty provision. Although we engage in product improvement programs and processes, our warranty obligation is affected by product failure rates and costs incurred to correct those product failures. Should actual product failure rates or estimated costs to repair those product failures differ from our estimates, we would be required to revise our estimated warranty provision.

(a) Recently adopted accounting pronouncements

ASU No. 2021-08 “Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”

In October 2021, the FASB issued ASU No. 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (Topic 805), which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. The guidance is effective for us beginning in the first quarter of the year ending June 30, 2024 and early adoption is permitted. We elected to early adopt this standard in the second quarter of our fiscal year ending June 30, 2022. We do not expect the adoption of ASU 2021-08 to have a material impact on our consolidated financial statements.

(2) Segment Information

We have quantitatively and qualitatively determined that we operate in two operating segments, which are the Sleep and Respiratory Care segment and the SaaS segment.

We evaluate the performance of our segments based on net revenues and income from operations. The accounting policies of the segments are the same as those described in note 2 of our consolidated financial statements included in our Form 10-K for the year ended June 30, 2021. Segment net revenues and segment income from operations do not include inter-segment profits and revenue is allocated to a geographic area based on where the products are shipped to or where the services are performed.

Certain items are maintained at the corporate level and are not allocated to the segments. The non-allocated items include corporate headquarters costs, stock-based compensation, amortization expense from acquired intangibles, net interest expense (income), loss attributable to equity method investments, gains and losses on equity investments, and other, net. We neither discretely allocate assets to our operating segments, nor does our Chief Operating Decision Maker evaluate the operating segments using discrete asset information.

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PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

The table below presents a reconciliation of net revenues and net operating profit by reportable segments (in thousands):


	Three Months Ended ‎December 31,				Six Months Ended ‎December 31,
	2021		2020		2021		2020
Net revenue by segment
Total Sleep and Respiratory Care	$	795,840	$	708,178	$	1,602,339	$	1,367,979
Software as a Service		99,034		91,833		196,551		183,976
Total	$	894,874	$	800,011	$	1,798,890	$	1,551,955

Depreciation and amortization by segment
Sleep and Respiratory Care	$	19,347	$	13,244	$	37,362	$	26,391
Software as a Service		1,857		1,137		3,558		2,108
Amortization of acquired intangible assets and corporate assets		19,585		26,199		38,971		51,547
Total	$	40,789	$	40,580	$	79,891	$	80,046

Net operating profit by segment
Sleep and Respiratory Care	$	282,556	$	261,660	$	579,781	$	509,841
Software as a Service		22,999		24,291		45,019		47,877
Total	$	305,555	$	285,951	$	624,800	$	557,718

Reconciling items
Corporate costs	$	37,875	$	36,709	$	76,442	$	71,358
Amortization of acquired intangible assets		18,969		18,853		37,734		39,075
Restructuring expenses		-		8,673		-		8,673
Interest expense (income), 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)
Income before income taxes	$	237,286	$	210,592	$	496,074	$	426,446

(3) Supplemental Balance Sheet Information

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


Inventories	December 31, ‎2021		June 30, ‎2021
Raw materials	$	322,599	$	155,419
Work in progress		3,997		4,647
Finished goods		265,550		296,967
Total inventories	$	592,146	$	457,033


Property, Plant and Equipment	December 31, ‎2021		June 30, ‎2021
Property, plant and equipment, at cost	$	1,111,406	$	1,085,629
Accumulated depreciation and amortization		(633,628)		(622,139)
Property, plant and equipment, net	$	477,778	$	463,490


Other Intangible Assets	December 31, ‎2021		June 30, ‎2021
Developed/core product technology	$	360,297	$	383,319
Accumulated amortization		(231,386)		(239,049)
Developed/core product technology, net		128,911		144,270
Customer relationships		262,321		272,703
Accumulated amortization		(91,196)		(90,976)
Customer relationships, net		171,125		181,727
Other intangibles		204,219		197,662
Accumulated amortization		(132,242)		(131,077)
Other intangibles, net		71,977		66,585
Total other intangibles, net	$	372,013	$	392,582

Intangible assets consist of developed/core product technology, trade names, non-compete agreements, customer relationships, and patents, which we amortize over the estimated useful life of the assets, generally between two years to fifteen years. There are no expected residual values related to these intangible assets.

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PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

(4) Goodwill

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


	Six Months Ended December 31, 2021
	2021
	Sleep and ‎Respiratory Care		SaaS		Total
Balance at the beginning of the period	$	633,183	$	1,294,718	$	1,927,901
Business acquisitions		33,499		-		33,499
Foreign currency translation adjustments		(9,941)		-		(9,941)
Balance at the end of the period	$	656,741	$	1,294,718	$	1,951,459

(5) Investments

We have equity investments in privately and publicly held companies that are unconsolidated entities. The following discusses our investments in marketable equity securities, non-marketable equity securities, and investments accounted for under the equity method.

Our marketable equity securities are publicly traded stocks measured at fair value and classified within Level 1 in the fair value hierarchy because we use quoted prices for identical assets in active markets. Marketable equity securities are recorded in prepaid expenses and other current assets on the condensed consolidated balance sheets.

Non-marketable equity securities consist of investments in privately held companies without readily determinable fair values and are recorded in prepaid taxes and other non-current assets on the condensed consolidated balance sheets. Non-marketable equity securities are reported at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. We assess non-marketable equity securities at least quarterly for impairment and consider qualitative and quantitative factors including the investee's financial metrics, product and commercial outlook and cash usage. All gains and losses on marketable and non-marketable equity securities, realized and unrealized, are recognized in gain (loss) on equity investments as a component of other income (loss), net on the condensed consolidated statements of operations.

Equity investments whereby we have significant influence, but not control over the investee and are not the primary beneficiary of the investee’s activities, are accounted for under the equity method. Under this method, we record our share of gains or losses attributable to equity method investments as a component of other income (loss), net on the condensed consolidated statements of operations.

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


Measurement category	December 31, ‎2021		June 30, ‎2021
Fair value	$	19,566	$	29,084
Measurement alternative		35,180		23,002
Equity method		13,854		17,154
Total	$	68,600	$	69,240

The following tables show a reconciliation of the changes in our equity investments (in thousands):


	Six Months Ended December 31, 2021
	Non-marketable securities		Marketable securities		Equity method investments		Total
Balance at the beginning of the period	$	23,002	$	29,084	$	17,154	$	69,240
Net additions (reductions) to investments ⁽¹⁾		4,665		(3,213)		-		1,452
Observable price adjustments on non-marketable equity securities		5,367		-		-		5,367
Unrealized losses on marketable equity securities		-		(7,942)		-		(7,942)
Realized gains on marketable and non-marketable equity securities		2,355		1,637		-		3,992
Impairment of investments		(209)		-		-		(209)
Loss attributable to equity method investments		-		-		(3,300)		(3,300)
Carrying value at the end of the period	$	35,180	$	19,566	$	13,854	$	68,600

(1)Net additions (reductions) to investments includes additions from purchases, reductions due to exits of securities, or reclassifications due to our acquisition of an investee in which we held a prior equity interest.

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PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)


	Six Months Ended December 31, 2020
	Non-marketable securities		Marketable securities		Equity method investments		Total
Balance at the beginning of the period	$	30,033	$	-	$	14,109	$	44,142
Additions to investments		1,946		-		12,500		14,446
Unrealized gains on marketable equity securities		-		4,776		-		4,776
Reclassifications ⁽²⁾		(10,569)		10,569		-		-
Loss attributable to equity method investments		-		-		(4,928)		(4,928)
Carrying value at the end of the period	$	21,410	$	15,345	$	21,681	$	58,436

(2)During the six months ended December 31, 2020, one of our investments, which was previously accounted for under the measurement alternative, completed its initial public offering which resulted in a change of accounting methodology to fair value.

Net unrealized losses recognized for equity investments in non-marketable and marketable securities held as of December 31, 2021 for the three and six months ended December 31, 2021 were $6.9 million and $2.8 million, respectively. Net unrealized gains and losses recognized for equity investments in non-marketable and marketable securities held as of December 31, 2020 were a loss of $3.7 million for three months ended December 31, 2020 and a gain of $4.8 million for six months ended December 31, 2020.

(6) Income Taxes

In accordance with ASC 740 Income Taxes, each interim reporting period is considered integral to the annual period, and tax expense is measured using an estimated annual effective tax rate. An entity is required to record income tax expense each quarter based on its annual effective tax rate estimated for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, adjusted for discrete taxable events that occur during the interim period.

On September 19, 2021, we concluded the settlement agreement with the Australian Taxation Office (“ATO”) in relation to the previously disclosed transfer pricing dispute for the tax years 2009 through 2018 (“ATO settlement”). The ATO settlement fully resolved the dispute for all prior years, with no admission of liability and provides clarity in relation to certain future taxation principles.

The final net impact of the ATO settlement was $238.7 million, which represents a gross amount of $381.7 million, including interest and penalties of $48.1 million, and adjustments for credits and deductions of $143.0 million. As a result of the ATO settlement and due to movements in foreign currencies, we recorded a benefit of $14.1 million within other comprehensive income, and a $4.1 million reduction of tax credits, which was recorded to income tax expense. As a result of the ATO settlement, we reversed our previously recorded uncertain tax position.

On September 28, 2021, we remitted final payment to the ATO of $284.8 million, consisting of the agreed settlement amount of $381.7 million less prior remittances made to the ATO of $96.9 million.

(7) Product Warranties

Changes in the liability for warranty costs, which is included in accrued expenses in our condensed consolidated balance sheets, are as follows (in thousands):



	Six Months Ended ‎December 31,
	2021		2020
Balance at the beginning of the period	$	22,032	$	21,132
Warranty accruals for the period		9,751		8,309
Warranty costs incurred for the period		(6,932)		(7,075)
Foreign currency translation adjustments		(371)		1,903
Balance at the end of the period	$	24,480	$	24,269

(8) Debt

Debt consisted of the following (in thousands):


	December 31, ‎2021		June 30, ‎2021
Short-term debt	$	12,000	$	12,000
		-
Long-term debt	$	670,000	$	646,000
Deferred borrowing costs		(2,021)		(2,649)
Long-term debt, net	$	667,979	$	643,351
Total debt	$	679,979	$	655,351

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PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

Credit Facility

On April 17, 2018, we entered into an amended and restated credit agreement (the “Revolving Credit Agreement”), as borrower, with lenders MUFG Union Bank, N.A., as administrative agent, joint lead arranger, joint book runner, swing line lender and letter of credit issuer, and Westpac Banking Corporation, as syndication agent, joint lead arranger and joint book runner. The Revolving Credit Agreement, among other things, provided a senior unsecured revolving credit facility of $800.0 million, with an uncommitted option to increase the revolving credit facility by an additional $300.0 million.

Additionally, on April 17, 2018, ResMed Limited entered into a Syndicated Facility Agreement (the “Term Credit Agreement”), as borrower, with lenders MUFG Union Bank, N.A., as administrative agent, joint lead arranger and joint book runner, and Westpac Banking Corporation, as syndication agent, joint lead arranger and joint book runner. The Term Credit Agreement, among other things, provides ResMed Limited a senior unsecured term credit facility of $200.0 million.

On November 5, 2018, we entered into a first amendment to the Revolving Credit Agreement to, among other things, increase the size of our senior unsecured revolving credit facility from $800.0 million to $1.6 billion, with an uncommitted option to increase the revolving credit facility by an additional $300.0 million.

Our obligations under the Revolving Credit Agreement are guaranteed by certain of our direct and indirect U.S. subsidiaries, and ResMed Limited’s obligations under the Term Credit Agreement are guaranteed by us and certain of our direct and indirect U.S. subsidiaries. The Revolving Credit Agreement and Term Credit Agreement contain customary covenants, including, in each case, a financial covenant that requires that we maintain a maximum leverage ratio of funded debt to EBITDA (as defined in the Revolving Credit Agreement and Term Credit Agreement, as applicable). The entire principal amounts of the revolving credit facility and term credit facility, and, in each case, any accrued but unpaid interest may be declared immediately due and payable if an event of default occurs, as defined in the Revolving Credit Agreement and the Term Credit Agreement, as applicable. Events of default under the Revolving Credit Agreement and the Term Credit Agreement include, in each case, failure to make payments when due, the occurrence of a default in the performance of any covenants in the respective agreements or related documents, or certain changes of control of us, or the respective guarantors of the obligations borrowed under the Revolving Credit Agreement and Term Credit Agreement.

The Revolving Credit Agreement and Term Credit Agreement each terminate on April 17, 2023, when all unpaid principal and interest under the loans must be repaid. Amounts borrowed under the Term Credit Agreement also amortize on a semi-annual basis, with a $6.0 million principal payment required on each such semi-annual amortization date. The outstanding principal amounts bear interest at a rate equal to LIBOR plus 0.75% to 1.50% (depending on the then-applicable leverage ratio) or the Base Rate (as defined in the Revolving Credit Agreement and the Term Credit Agreement, as applicable) plus 0.0% to 0.50% (depending on the then-applicable leverage ratio). At December 31, 2021, the interest rate that was being charged on the outstanding principal amounts was 0.9%. An applicable commitment fee of 0.100% to 0.175% (depending on the then-applicable leverage ratio) applies on the unused portion of the revolving credit facility. As of December 31, 2021, we had $1.6 billion available for draw down under the revolving credit facility.

We are required to disclose the fair value of financial instruments for which it is practicable to estimate the value, even though these instruments are not recognized at fair value in the consolidated balance sheets. As the Revolving Credit and Term Credit Agreements’ interest rate is calculated as LIBOR plus the spreads described above, its carrying amount is equivalent to its fair value as at December 31, 2021 and June 30, 2021, which was $182.0 million and $158.0 million, respectively. Quoted market prices in active markets for similar liabilities based inputs (Level 2) were used to estimate fair value.

Senior Notes

On July 10, 2019, we entered into a Note Purchase Agreement with the purchasers to that agreement, in connection with the issuance and sale of $250.0 million principal amount of our 3.24% senior notes due July 10, 2026, and $250.0 million principal amount of our 3.45% senior notes due July 10, 2029 (collectively referred to as the “Senior Notes”). Our obligations under the Note Purchase Agreement and the Senior Notes are unconditionally and irrevocably guaranteed by certain of our direct and indirect U.S. subsidiaries. The net proceeds from this transaction were used to pay down borrowings on our Revolving Credit Agreement.

Under the terms of the Note Purchase Agreement, we agreed to customary covenants including with respect to our corporate existence, transactions with affiliates, and mergers and other extraordinary transactions. We also agreed that, subject to limited exceptions, we will maintain a ratio of consolidated funded debt to consolidated EBITDA (as defined in the Note Purchase Agreement) of no more than 3.50 to 1.00 as of the last day of any fiscal quarter, and will not at any time permit the amount of all priority secured and unsecured debt of us and our subsidiaries to exceed 10% of our consolidated tangible assets, determined as of the end of our most recently ended fiscal quarter. This ratio is calculated at the end of each reporting period for which the Note Purchase Agreement requires us to deliver financial statements, using the results of the 12 consecutive month period ending with such reporting period.

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PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

We are required to disclose the fair value of financial instruments for which it is practicable to estimate the value, even though these instruments are not recognized at fair value in the consolidated balance sheets. As of December 31, 2021 and June 30, 2021 the Senior Notes had a carrying amount of $500.0 million, excluding deferred borrowing costs, and an estimated fair value of $525.8 million and $530.4 million, respectively. Quoted market prices in active markets for similar liabilities based inputs (Level 2) were used to estimate fair value.

At December 31, 2021, we were in compliance with our debt covenants and there was $682.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes.

(9) Earnings Per Share

Basic earnings per share is computed by dividing the net income available to common stockholders by the weighted average number of shares of common stock outstanding. For purposes of calculating diluted earnings per share, the denominator includes both the weighted average number of shares of common stock outstanding and the number of dilutive common stock equivalents such as stock options and restricted stock units.

The weighted average number of outstanding stock options and restricted stock units not included in the computation of diluted earnings per share were 49,762 and 196,856 for the three months ended December 31, 2021 and 2020, respectively, and 25,470 and 154,888 for the six months ended December 31, 2021 and 2020, respectively, as the effect would have been anti-dilutive.

Basic and diluted earnings per share are calculated as follows (in thousands except per share data):



	Three Months Ended ‎December 31,				Six Months Ended ‎December 31,
	2021		2020		2021		2020
Numerator:
Net income	$	201,751	$	179,514	$	405,364	$	357,886
Denominator:
Basic weighted-average common shares outstanding		145,990		145,246		145,835		145,053
Effect of dilutive securities:
Stock options and restricted stock units		1,050		1,175		1,209		1,297
Diluted weighted average shares		147,040		146,421		147,044		146,350
Basic earnings per share	$	1.38	$	1.24	$	2.78	$	2.47
Diluted earnings per share	$	1.37	$	1.23	$	2.76	$	2.45

(10) Legal Actions and Contingencies

Litigation

In the normal course of business, we are subject to routine litigation incidental to our business. While the results of this litigation cannot be predicted with certainty, we believe that their final outcome will not, individually or in aggregate, have a material adverse effect on our consolidated financial statements taken as a whole.

On June 2, 2021, New York University filed a complaint for patent infringement in the United States District Court, District of Delaware against ResMed Inc., case no. 1:21-cv-00813 (CFC). The complaint alleges that the AutoSet and AutoRamp features of ResMed’s AirSense 10 AutoSet flow generators infringe one or more claims of various patents. According to the complaint, the patents are directed to systems and methods for diagnosing and treating patient sleeping disorders during different sleep states. The complaint seeks money damages and attorneys’ fees. ResMed answered the complaint on September 30, 2021 and filed a motion to dismiss the complaint on the basis that the patents are invalid because the subject matter of the patents is not patentable under the Supreme Court and Federal Circuit precedent. The motion to dismiss is pending.

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PART I – FINANCIAL INFORMATION	Item 1
RESMED INC. AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements (Unaudited)

On January 27, 2021, the International Trade Commission instituted In Re Certain UMTS and LTE Cellular Communications Modules and Products Containing the Same, Investigation No. 337-TA-1240, by complainants Philips RS North America, LLC and Koninklijke Philips N.V. (collectively “Philips”) against Quectel Wireless Solutions Co., Ltd; Thales DIS AIS USA, LLC, Thales DIS AIS Deutschland GmbH; Telit Wireless Solutions, Inc., Telit Communications PLC, CalAmp. Corp., Xirgo Technologies, LLC, and Laird Connectivity, Inc. (collectively “respondents”). In the ITC investigation, Philips seeks an order excluding communications modules, and products that contain them, from importation into the United States based on alleged infringement of 3G and 4G standard essential patents held by Philips. On October 6-14, 2021, the administrative law judge held a hearing on the merits. The administrative law judge is expected to issue his initial determination on March 4, 2022, and the full Commission is expected to issue its final determination on or about July 5, 2022. On December 17, 2020, Philips filed companion cases for patent infringement against the same defendants in the United States District Court for the District of Delaware, case nos. 1:20-cv-01707, 01708, 01709, 01710, 01711, and 01713 (CFC) seeking damages, an injunction, and a declaration from the court on the amount of a fair reasonable and non-discriminatory license rate for the standard essential patents it is asserting against the defendants. The district court cases have been stayed pending the ITC proceedings. ResMed is not a party to the ITC investigation or the district court cases but sells products that incorporate some of the communications modules at issue in the cases.

On October 1, 2021 ResMed acquired Ectosense, manufacturer of the NightOwl device used for home sleep testing. Prior to the acquisition, Ectosense was named as a defendant in a trademark and false advertising complaint filed by Itamar Medical Ltd. in the district court for the Southern District of Florida, case no. 20-cv-60719-WPD, based on Ectosense’s description of the NightOwl’s measurement of peripheral arterial tone and use of the acronym “PAT” in its advertising. Ectosense has filed a counterclaim for cancellation of Itamar’s “PAT” trademark and for false advertising by Itamar. Each party seeks damages and injunctive relief against the other. The parties are engaged in discovery and the matter is set for trial during the two-week court calendar commencing Monday, September 12, 2022.

Based on currently available information, we are unable to make a reasonable estimate of loss or range of losses, if any, arising from these matters.

Contingent Obligations Under Recourse Provisions

We use independent financing institutions to offer some of our customers financing for the purchase of some of our products. Under these arrangements, if the customer qualifies under the financing institutions’ credit criteria and finances the transaction, the customers repay the financing institution on a fixed payment plan. For some of these arrangements, the customer’s receivable balance is with limited recourse whereby we are responsible for repaying the financing company should the customer default. We record a contingent provision, which is estimated based on historical default rates. This is applied to receivables sold with recourse and is recorded in accrued expenses.

During the six months ended December 31, 2021 and December 31, 2020, receivables sold with limited recourse were $94.2 million and $72.6 million, respectively. As of December 31, 2021, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $41.1 million and $6.1 million, respectively. As of June 30, 2021, the maximum exposure on outstanding receivables sold with recourse and contingent provision were $30.2 million and $8.2 million, respectively.

(11) Restructuring Expenses

In November 2020, we closed our Portable Oxygen Concentrator business, which was part of the Sleep and Respiratory Care segment. During the three and six months ended December 31, 2020, we recognized restructuring expenses of $13.9 million primarily related to inventory write-downs of $5.2 million, accelerated amortization of acquired intangible assets of $5.1 million, asset impairments of $2.3 million, employee-related costs of $0.7 million and contract cancellation costs of $0.6 million. Of the total expense recognized during the three and six months ended December 31, 2020, the inventory write-down of $5.2 million is presented within cost of sales and the remaining $8.7 million in restructuring costs is separately disclosed as restructuring expenses on the condensed consolidated statements of income. We did not incur additional material expenses in connection with this activity after December 31, 2020, and the restructure was completed as of June 30, 2021.

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PART I – FINANCIAL INFORMATION	Item 2

RESMED INC. AND SUBSIDIARIES

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

Special Note Regarding Forward-Looking Statements

This report contains or may contain certain forward-looking statements and information that are based on the beliefs of our management as well as estimates and assumptions made by, and information currently available to, our management. All statements other than statements regarding historical facts are forward-looking statements. The words “believe,” “expect,” “intend,” “anticipate,” “will continue,” “will,” “estimate,” “plan,” “future” and other similar expressions, and negative statements of such expressions, generally identify forward-looking statements, including, in particular, statements regarding expectations of future revenue or earnings, expenses, new product development, new product launches, new markets for our products, litigation, tax outlook and the effects of competition and public health crises (including the COVID-19 pandemic) on our business. These forward-looking statements are made in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements reflect the views of our management at the time the statements are made and are subject to a number of risks, uncertainties, estimates and assumptions, including, without limitation, and in addition to those identified in the text surrounding such statements, those identified in our annual report on Form 10-K for the fiscal year ended June 30, 2021 and elsewhere in this report. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, and similar sources.

In addition, important factors to consider in evaluating such forward-looking statements include changes or developments in healthcare reform, social, economic, market, legal or regulatory circumstances, including the impact of public health crises such as the novel strain of coronavirus (COVID-19) that has spread globally, changes in our business or growth strategy or an inability to execute our strategy due to changes in our industry or the economy generally, the emergence of new or growing competitors, the actions or omissions of third parties, including suppliers, customers, competitors and governmental authorities and various other factors. If any one or more of these risks or uncertainties materialize, or underlying estimates or assumptions prove incorrect, actual results may vary significantly from those expressed in our forward-looking statements, and there can be no assurance that the forward-looking statements contained in this report will in fact occur.

Before deciding to purchase, hold or sell our common stock, you should carefully consider the risks described in our annual report on Form 10-K for the fiscal year ended June 30, 2021, in addition to the other cautionary statements and risks described elsewhere in this report and in our other filings with the Securities and Exchange Commission (“SEC”), including our subsequent reports on Forms 10-Q and 8-K. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business. If any of these known or unknown risks or uncertainties actually occurs with material adverse effects on us, our business, financial condition and results of operations could be seriously harmed. In that event, the market price for our common stock will likely decline and you may lose all or part of your investment.

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RESMED INC. AND SUBSIDIARIES

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

Overview

The following is an overview of our results of operations for the three and six months ended December 31, 2021. Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. Management’s discussion and analysis is provided as a supplement to, and should be read in conjunction with, the condensed consolidated financial statements and notes included in this report.

We are a global leader in the development, manufacturing, distribution and marketing of medical devices and cloud-based software applications that diagnose, treat and manage respiratory disorders, including sleep disordered breathing (“SDB”), chronic obstructive pulmonary disease, neuromuscular disease and other chronic diseases. SDB includes obstructive sleep apnea and other respiratory disorders that occur during sleep. Our products and solutions are designed to improve patient quality of life, reduce the impact of chronic disease and lower healthcare costs as global healthcare systems continue to drive a shift in care from hospitals to the home and lower cost settings. Our cloud-based software digital health applications, along with our devices, are designed to provide connected care to improve patient outcomes and efficiencies for our customers.

Since the development of continuous positive airway pressure therapy, we have expanded our business by developing or acquiring a number of products and solutions for a broader range of respiratory disorders including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, dental devices, and cloud-based software informatics solutions to manage patient outcomes and customer and provider business processes. Our growth has been fueled by geographic expansion, our research and product development efforts, acquisitions and an increasing awareness of SDB and respiratory conditions like chronic obstructive pulmonary disease as significant health concerns.

We are committed to ongoing investment in research and development and product enhancements. During the three months ended December 31, 2021, we invested $62.5 million on research and development activities, which represents 7.0% of net revenues, with a continued focus on the development and commercialization of new, innovative products and solutions that improve patient outcomes, create efficiencies for our customers and help physicians and providers better manage chronic disease and lower healthcare costs. During the three months ended December 31, 2021 we continued the launch of AirSense 11, which introduces new features such as a touch screen, algorithms for patients new to therapy and digital enhancements and over-the-air update capabilities. Due to multiple acquisitions, including Brightree in April 2016, HEALTHCAREfirst in July 2018 and MatrixCare in November 2018, our operations now include out-of-hospital software platforms designed to support the professionals and caregivers who help people stay healthy in the home or care setting of their choice. These platforms comprise our SaaS business. These products, our cloud-based remote monitoring and therapy management system, and a robust product pipeline, should continue to provide us with a strong platform for future growth.

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

Net revenue for the three months ended December 31, 2021 was $894.9 million, an increase of 12% compared to the three months ended December 31, 2020. Gross margin was 56.4% for the three months ended December 31, 2021 compared to 57.8% for the three months ended December 31, 2020. Diluted earnings per share was $1.37 for the three months ended December 31, 2021, compared to diluted earnings per share of $1.23 for the three months ended December 31, 2020.

At December 31, 2021, our cash and cash equivalents totaled $194.5 million, our total assets were $4.7 billion and our stockholders’ equity was $3.1 billion.

In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we provide certain financial information on a “constant currency” basis, which is in addition to the 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 accounting principles generally accepted in the United States (“GAAP”).

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

Impact of COVID-19

In March 2020, the World Health Organization declared the outbreak of a novel strain of coronavirus (“COVID-19”) as a pandemic. Our primary goal during the COVID-19 pandemic is the preservation of life. We have prioritized protecting the health and safety of our employees and continuing to use our employees’ talents and our resources to help society meet and overcome the challenges the pandemic poses.

The COVID-19 pandemic has continued to impact the global supply chain, primarily through a lack of availability of raw materials and electronic components, which has constrained and restricted our ability to initially meet the demand for our sleep products following a recent product recall by one of our competitors. The lack of raw materials and electronic components is also impacting companies outside of our direct industry, which is resulting in a competitive supply environment causing higher costs, requiring us to commit to minimum purchase obligations as well as make upfront payments to our suppliers. Additionally, we have observed a reduction in both inbound and outbound transportation capacity as a result of the pandemic, which is causing longer lead times in receiving raw materials into and distributing finished goods out of our manufacturing facilities in addition to increased freight costs. These highly competitive and constrained supply chain conditions are increasing our cost of sales, which has and may continue to decrease our gross margin. Given the ongoing uncertainty regarding the duration and extent of the COVID-19 pandemic, we are uncertain as to the duration and extent of constraint on our supply chain.

During the three months ended December 31, 2021, we did not observe material incremental demand for our ventilator devices and masks associated with the COVID-19 pandemic. Although there is still substantial uncertainty, we believe the global demand for ventilators and other respiratory support devices used to treat COVID-19 patients has largely been met. As such, we do not expect material COVID-19-generated demand for our ventilator products for the remainder of the fiscal year ending June 30, 2022.

Diagnostic pathways for sleep apnea treatment, including physician practices, home medical equipment, or HME, suppliers and sleep clinics, have been impacted and, in some instances, been required, to temporarily close due to governments’ “shelter-in-place” orders, quarantines or similar orders or restrictions enacted to control the spread of COVID-19. In some countries, new patients are prescribed sleep apnea treatment through hospitals that are directing their resources to critical care, including COVID-19 treatment. The impact on these diagnostic and prescription pathways has resulted in a decrease in demand from new patients for our products designed to treat sleep apnea. Although many governments have reduced or removed COVID-19 restrictions and implemented vaccination programs to varying degrees, we are uncertain as to the duration and extent of the impact on demand for our sleep devices. However, due to the nature of the installed base of existing patients using our devices, we have not seen any significant adverse impact on demand for re-supply of our masks.

Our SaaS business has also been affected by COVID-19 and measures taken to control the spread of COVID-19. Some of our existing and potential SaaS customers are HME distributors and have been impacted by the same temporary business closures noted above. We also have existing and potential SaaS customers that operate care facilities and are either receiving and treating patients infected with COVID-19 or have implemented significant measures to safeguard their facilities against a potential COVID-19 outbreak. Given these challenging business conditions, businesses may be deterred from adopting new or changing SaaS platforms, which may adversely impact our ability to engage new customers for our SaaS businesses, or expand the services used by existing customers.

Our ability to continue to operate without any significant negative impacts will in part depend on our ability to protect our employees. We have endeavored and continue to follow recommended actions of government and health authorities to protect our employees worldwide, but since COVID-19 was declared a pandemic in March 2020, we were able to broadly maintain our operations, and we are beginning the slow and careful process of progressively returning to work in some of our offices around the world. The pandemic has not negatively impacted our liquidity position.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Three Months Ended December 31, 2021 Compared to the Three Months Ended December 31, 2020

Net Revenue

Net revenue for the three months ended December 31, 2021 increased to $894.9 million from $800.0 million for the three months ended December 31, 2020, an increase of $94.9 million or 12% (a 13% increase on a constant currency basis). The following table summarizes our net revenue disaggregated by segment, product and region (in thousands):


	Three Months Ended ‎December 31,
	2021		2020		% Change		Constant Currency*
U.S., Canada and Latin America
Devices	$	244,775	$	204,997	19	%
Masks and other		242,032		221,764	9
Total Sleep and Respiratory Care	$	486,807	$	426,761	14
Software as a Service		99,034		91,833	8
Total	$	585,841	$	518,594	13
Combined Europe, Asia and other markets
Devices	$	207,736	$	187,992	11	%	13	%
Masks and other		101,297		93,425	8		11
Total Sleep and Respiratory Care	$	309,033	$	281,417	10		12
Global revenue
Devices	$	452,511	$	392,989	15	%	16	%
Masks and other		343,329		315,189	9		10
Total Sleep and Respiratory Care	$	795,840	$	708,178	12		13
Software as a Service		99,034		91,833	8		8
Total	$	894,874	$	800,011	12		13

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

Sleep and Respiratory Care

Net revenue from our Sleep and Respiratory Care business for the three months ended December 31, 2021 was $795.8 million, an increase of 12% compared to net revenue for the three months ended December 31, 2020. Movements in international currencies against the U.S. dollar negatively impacted net revenue by approximately $5.8 million for the three months ended December 31, 2021. Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the three months ended December 31, 2021 increased by 13% compared to the three months ended December 31, 2020. The increase in net revenue was primarily attributable to an increase in unit sales of our devices and masks, including increased demand following a recent product recall by one of our competitors.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the three months ended December 31, 2021 increased to $486.8 million from $426.8 million for the three months ended December 31, 2020, an increase of $60.0 million or 14%. The increase was primarily due to an increase in unit sales of our devices and masks, including increased demand following a recent product recall by one of our competitors.

Net revenue in combined Europe, Asia and other markets increased for the three months ended December 31, 2021 to $309.0 million from $281.4 million for the three months ended December 31, 2020, an increase of $27.6 million or 10% (a 12% increase on a constant currency basis). The constant currency increase in sales in combined Europe, Asia and other markets predominantly reflects an increase in unit sales of our devices and masks, including increased demand following a recent product recall by one of our competitors.

Net revenue from devices for the three months ended December 31, 2021 increased to $452.5 million from $393.0 million for the three months ended December 31, 2020, an increase of $59.5 million or 15%, including an increase of 19% in the U.S., Canada and Latin America and an increase of 11% in combined Europe, Asia and other markets (a 13% increase on a constant currency basis). Excluding the impact of foreign currency movements, device sales for the three months ended December 31, 2021 increased by 16%.

Net revenue from masks and other for the three months ended December 31, 2021 increased to $343.3 million from $315.2 million for the three months ended December 31, 2020, an increase of $28.1 million or 9%, including an increase of 9% in the U.S., Canada and Latin America and an increase of 8% in combined Europe, Asia and other markets (an 11% increase on a constant currency basis). Excluding the impact of foreign currency movements, masks and other sales increased by 10%, compared to the three months ended December 31, 2020.

Software as a Service

Net revenue from our SaaS business for the three months ended December 31, 2021 was $99.0 million, an increase of 8% compared to the three months ended December 31, 2020. The increase was predominantly due to continued growth in our HME category and stabilizing patient flow in our out-of-hospital care settings.

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

Six Months Ended December 31, 2021 Compared to the Six Months Ended December 31, 2020

Net Revenue

Net revenue for the six months ended December 31, 2021 increased to $1,798.9 million from $1,552.0 million for the six months ended December 31, 2020, an increase of $246.9 million or 16% (a 16% increase on a constant currency basis). The following table summarizes our net revenue disaggregated by segment, product and region (in thousands):


	Six Months Ended ‎December 31,
	2021		2020		% Change		Constant Currency*
U.S., Canada and Latin America
Devices	$	520,707	$	402,390	29	%
Masks and other		457,139		427,524	7
Total Sleep and Respiratory Care	$	977,846	$	829,914	18
Software as a Service		196,551		183,976	7
Total	$	1,174,397	$	1,013,890	16
Combined Europe, Asia and other markets
Devices	$	425,961	$	364,018	17	%	17	%
Masks and other		198,532		174,047	14		15
Total Sleep and Respiratory Care	$	624,493	$	538,065	16		16
Global revenue
Devices	$	946,668	$	766,408	24	%	23	%
Masks and other		655,671		601,571	9		9
Total Sleep and Respiratory Care	$	1,602,339	$	1,367,979	17		17
Software as a Service		196,551		183,976	7		7
Total	$	1,798,890	$	1,551,955	16		16

Sleep and Respiratory Care

Net revenue from our Sleep and Respiratory Care business for the six months ended December 31, 2021 was $1,602.3 million, an increase of 17% compared to net revenue for the six months ended December 31, 2020. Movements in international currencies against the U.S. dollar positively impacted net revenue by approximately $0.2 million for the six months ended December 31, 2021. Excluding the impact of currency movements, total Sleep and Respiratory Care net revenue for the six months ended December 31, 2021 increased by 17% compared to the six months ended December 31, 2020. The increase in net revenue was primarily attributable to an increase in unit sales of our devices and masks, including recovery of core sleep patient flow that was previously impacted by the pandemic and increased demand following a recent product recall by one of our competitors, partially offset by decreased COVID-19 related demand for our ventilators.

Net revenue from our Sleep and Respiratory Care business in the U.S., Canada and Latin America for the six months ended December 31, 2021 increased to $977.8 million from $829.9 million for the six months ended December 31, 2020, an increase of $147.9 million or 18%. The increase was primarily due to an increase in unit sales of our devices and masks, including recovery of core sleep patient flow that was previously impacted by the pandemic and increased demand following a recent product recall by one of our competitors, partially offset by decreased COVID-19 related demand for our ventilators.

Net revenue in combined Europe, Asia and other markets increased for the six months ended December 31, 2021 to $624.5 million from $538.1 million for the six months ended December 31, 2020, an increase of $86.4 million or 16% (a 16% increase on a constant currency basis). The constant currency increase in sales in combined Europe, Asia and other markets predominantly reflects an increase in unit sales of our devices and masks, including recovery of core sleep patient flow that was previously impacted by the pandemic and increased demand following a recent product recall by one of our competitors, partially offset by decreased COVID-19-related demand for our ventilators.

Net revenue from devices for the six months ended December 31, 2021 increased to $946.7 million from $766.4 million for the six months ended December 31, 2020, an increase of $180.3 million or 24%, including an increase of 29% in the U.S., Canada and Latin America and an increase of 17% in combined Europe, Asia and other markets (a 17% increase on a constant currency basis). Excluding the impact of foreign currency movements, device sales for the six months ended December 31, 2021 increased by 23%.

Net revenue from masks and other for the six months ended December 31, 2021 increased to $655.7 million from $601.6 million for the six months ended December 31, 2020, an increase of $54.1 million or 9%, including an increase of 7% in the U.S., Canada and Latin America and an increase of 14% in combined Europe, Asia and other markets (a 15% increase on a constant currency basis). Excluding the impact of foreign currency movements, masks and other sales increased by 9%, compared to the six months ended December 31, 2020.

Software as a Service

Net revenue from our SaaS business for the six months ended December 31, 2021 was $196.6 million, an increase of 7% compared to the six months ended December 31, 2020. The increase was predominantly due to continued growth in our HME category and stabilizing patient flow in our out-of-hospital care settings.

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

Gross Profit and Gross Margin

Gross profit increased for the three months ended December 31, 2021 to $504.3 million from $462.5 million for the three months ended December 31, 2020, an increase of $41.8 million or 9%. Gross margin, which is gross profit as a percentage of net revenue, for the three months ended December 31, 2021 was 56.4% compared to 57.8% for the three months ended December 31, 2020.

The decrease in gross margin for the three months ended December 31, 2021 compared to three months ended December 31, 2020 was due primarily to higher logistics and manufacturing costs, partially offset by favorable product mix changes.

Gross profit increased for the six months ended December 31, 2021 to $1,010.6 million from $901.1 million for the six months ended December 31, 2020, an increase of $109.5 million or 12%. Gross margin, which is gross profit as a percentage of net revenue, for the six months ended December 31, 2021 was 56.2% compared to 58.1% for the six months ended December 31, 2020.

The decrease in gross margin for the six months ended December 31, 2021 compared to six months ended December 31, 2020 was due primarily to higher logistics and manufacturing costs and declines in average selling prices, partially offset by favorable product mix changes.

Operating Expenses

The following table summarizes our operating expenses (in thousands):


	Three Months Ended ‎December 31,
	2021			2020			Change		% Change		Constant Currency
Selling, general, and administrative	$	185,362		$	169,470		$	15,892	9	%	10	%
as a % of net revenue		20.7	%		21.2	%
Research and development		62,507			54,935			7,572	14	%	14	%
as a % of net revenue		7.0	%		6.9	%
Amortization of acquired intangible assets		7,738			7,689			49	1	%	1	%


	Six Months Ended ‎December 31,
	2021			2020			Change		% Change		Constant Currency
Selling, general, and administrative	$	362,082		$	328,459		$	33,623	10	%	10	%
as a % of net revenue		20.1	%		21.2	%
Research and development		122,457			109,468			12,989	12	%	11	%
as a % of net revenue		6.8	%		7.1	%
Amortization of acquired intangible assets		15,445			15,932			(487)	(3)	%	(3)	%

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased for the three months ended December 31, 2021 to $185.4 million from $169.5 million for the three months ended December 31, 2020, an increase of $15.9 million or 9%. Selling, general, and administrative expenses were favorably impacted by the movement of international currencies against the U.S. dollar, which decreased our expenses by approximately $1.7 million, as reported in U.S. dollars. Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the three months ended December 31, 2021 increased by 10% compared to the three months ended December 31, 2020. As a percentage of net revenue, selling, general, and administrative expenses were 20.7% for the three months ended December 31, 2021, compared to 21.2% for the three months ended December 31, 2020.

The constant currency increase in selling, general, and administrative expenses was primarily due to increases in employee-related costs during the three months ended December 31, 2021 compared to three months ended December 31, 2020.

Selling, general, and administrative expenses increased for the six months ended December 31, 2021 to $362.1 million from $328.5 million for the six months ended December 31, 2020, an increase of $33.6 million or 10%. Selling, general, and administrative expenses were favorably impacted by the movement of international currencies against the U.S. dollar, which decreased our expenses by approximately $0.2 million, as reported in U.S. dollars. Excluding the impact of foreign currency movements, selling, general, and administrative expenses for the six months ended December 31, 2021 increased by 10% compared to the six months ended December 31, 2020. As a percentage of net revenue, selling, general, and administrative expenses were 20.1% for the six months ended December 31, 2021, compared to 21.2% for the six months ended December 31, 2020.

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

The constant currency increase in selling, general, and administrative expenses was primarily due to increases in employee-related costs during the six months ended December 31, 2021 compared to six months ended December 31, 2020.

Research and Development Expenses

Research and development expenses increased for the three months ended December 31, 2021 to $62.5 million from $54.9 million for the three months ended December 31, 2020, an increase of $7.6 million, or 14%. Research and development expenses were favorably impacted by the movement of international currencies against the U.S. dollar, which decreased our expenses by approximately $0.2 million for the three months ended December 31, 2021, as reported in U.S. dollars. Excluding the impact of foreign currency movements, research and development expenses increased by 14% compared to the three months ended December 31, 2020. As a percentage of net revenue, research and development expenses were 7.0% for the three months ended December 31, 2021, compared to 6.9% for the three months ended December 31, 2020.

The increase in research and development expenses in constant currency terms was primarily due to increased investment in our digital health technologies and SaaS solutions.

Research and development expenses increased for the six months ended December 31, 2021 to $122.5 million from $109.5 million for the six months ended December 31, 2020, an increase of $13.0 million, or 12%. Research and development expenses were unfavorably impacted by the movement of international currencies against the U.S. dollar, which increased our expenses by approximately $0.5 million for the six months ended December 31, 2021, as reported in U.S. dollars. Excluding the impact of foreign currency movements, research and development expenses increased by 11% compared to the six months ended December 31, 2020. As a percentage of net revenue, research and development expenses were 6.8% for the six months ended December 31, 2021, compared to 7.1% for the six months ended December 31, 2020.

The increase in research and development expenses in constant currency terms was primarily due to increased investment in our digital health technologies and SaaS solutions.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets for the three months ended December 31, 2021 totaled $7.7 million compared to $7.7 million for the three months ended December 31, 2020.

Amortization of acquired intangible assets for the six months ended December 31, 2021 totaled $15.4 million compared to $15.9 million for the six months ended December 31, 2020.

Restructuring Expenses

Total Other Income (Loss), Net

The following table summarizes our other income (loss) (in thousands):


	Three Months Ended ‎December 31,
	2021		2020		Change
Interest (expense) income, net	$	(5,948)	$	(5,792)	$	(156)
Loss attributable to equity method investments		(1,914)		(2,640)		726
Gain (loss) on equity investments		(4,404)		(3,700)		(704)
Other, net		841		1,008		(167)
Total other income (loss), net	$	(11,425)	$	(11,124)	$	(301)

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	Six Months Ended ‎December 31,
	2021		2020		Change
Interest (expense) income, net	$	(11,308)	$	(12,517)	$	1,209
Loss attributable to equity method investments		(3,300)		(4,928)		1,628
Gain (loss) on equity investments		1,208		4,776		(3,568)
Other, net		(1,150)		503		(1,653)
Total other income (loss), net	$	(14,550)	$	(12,166)	$	(2,384)

Total other income (loss), net for the three months ended December 31, 2021 was a loss of $11.4 million compared to a loss of $11.1 million for the three months ended December 31, 2020. The increase in loss was primarily due to higher losses associated with our investments in marketable and non-marketable equity securities, which were a loss of $4.4 million for the three months ended December 31, 2021 compared to a loss of $3.7 million for the three months ended December 31, 2020. Additionally, interest expense, net, increased to $5.9 million for the three months ended December 31, 2021 compared to $5.8 million for the three months ended December 31, 2020. These increases were offset by lower losses attributable to equity method investments for the three months ended December 31, 2021 of $1.9 million compared to $2.6 million for the three months ended December 31, 2020.

Total other income (loss), net for the six months ended December 31, 2021 was a loss of $14.6 million compared to a loss of $12.2 million for the six months ended December 31, 2020. The increase in loss was primarily due to lower gains associated with our investments in marketable and non-marketable equity securities, which were a gain of $1.2 million for the six months ended December 31, 2021 compared to a gain of $4.8 million for the six months ended December 31, 2020. This was offset by a decrease in interest expense, net, to $11.3 million for the six months ended December 31, 2021 compared to $12.5 million for the six months ended December 31, 2020. We also recorded lower losses attributable to equity method investments for the six months ended December 31, 2021 of $3.3 million compared to $4.9 million for the six months ended December 31, 2020.

Income Taxes

Our effective income tax rate for the three and six months ended December 31, 2021 was 15.0% and 18.3% as compared to 14.8% and 16.1% for the three and six months ended December 31, 2020. Our effective rate of 15.0% differs from the statutory rate of 21.0% primarily due to research credits, foreign operations and windfall tax benefits related to the vesting or settlement of employee share-based awards. The increase to our effective tax rate for the three and six months ended December 31, 2021 was primarily related to changes in the geographic mix of our earnings.

Our Singapore operations operate under certain tax holidays and tax incentive programs that will expire in whole or in part at various dates through June 30, 2030. As a result of the U.S. Tax Act, 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.

On September 28, 2021, we remitted final payment to the ATO of $284.8 million, consisting of the agreed settlement amount of $381.7 million less prior remittances made to the ATO of $96.9 million.

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

Net Income and Earnings per Share

As a result of the factors above, our net income for the three months ended December 31, 2021 was $201.8 million compared to net income of $179.5 million for the three months ended December 31, 2020, an increase of 12%. Our net income for the six months ended December 31, 2021 was $405.4 million compared to net income of $357.9 million for the six months ended December 31, 2020, an increase of 13%.

Our diluted earnings per share for the three months ended December 31, 2021 was $1.37 per diluted share compared to diluted earnings per share of $1.23 for the three months ended December 31, 2020, an increase of 11%. Our diluted earnings per share for the six months ended December 31, 2021 was $2.76 per diluted share compared to diluted earnings per share of $2.45 for the six months ended December 31, 2020, an increase of 13%.

Summary of Non-GAAP Financial Measures

In addition to financial information prepared in accordance with GAAP, our management uses certain non-GAAP financial measures, such as non-GAAP revenue, non-GAAP cost of sales, non-GAAP gross profit, non-GAAP gross margin, non-GAAP income from operations, non-GAAP net income, and non-GAAP diluted earnings per share, in evaluating the performance of our business. We believe that these non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide investors better insight when evaluating our performance from core operations and can provide more consistent financial reporting across periods. 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 restructuring expense associated with inventory write-downs following the closure of the portable oxygen concentrator business. 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):


	Three Months Ended						Six Months Ended
	December 31, ‎2021			December 31, ‎2020			December 31, ‎2021			December 31, ‎2020
GAAP Net revenue	$	894,874		$	800,011		$	1,798,890		$	1,551,955

GAAP Cost of sales	$	390,556		$	337,528		$	788,282		$	650,811
Less: Amortization of acquired intangibles		(11,231)			(11,164)			(22,289)			(23,143)
Less: Restructuring - cost of sales		-			(5,232)			-			(5,232)
Non-GAAP cost of sales	$	379,325		$	321,132		$	765,993		$	622,436

GAAP gross profit	$	504,318		$	462,483		$	1,010,608		$	901,144
GAAP gross margin		56.4	%		57.8	%		56.2	%		58.1	%
Non-GAAP gross profit	$	515,549		$	478,879		$	1,032,897		$	929,519
Non-GAAP gross margin		57.6	%		59.9	%		57.4	%		59.9	%

The measure “non-GAAP income from operations” is equal to GAAP income from operations once adjusted for amortization of acquired intangibles and restructuring expense associated with the closure of the portable oxygen concentrator business. Non-GAAP income from operations is reconciled with GAAP income from operations below (in thousands):


	Three Months Ended				Six Months Ended
	December 31, ‎2021		December 31, ‎2020		December 31, ‎2021		December 31, ‎2020
GAAP income from operations	$	248,711	$	221,716	$	510,624	$	438,612
Amortization of acquired intangibles - cost of sales		11,231		11,164		22,289		23,143
Amortization of acquired intangibles - operating expenses		7,738		7,689		15,445		15,932
Restructuring - cost of sales		-		5,232		-		5,232
Restructuring - operating expenses		-		8,673		-		8,673
Non-GAAP income from operations	$	267,680	$	254,474	$	548,358	$	491,592

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PART I – FINANCIAL INFORMATION	Item 2

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 (net of tax), reserve for disputed tax positions, restructuring expenses (net of tax) and (gain) loss on equity investments. 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):


	Three Months Ended				Six Months Ended
	December 31, ‎2021		December 31, ‎2020		December 31, ‎2021		December 31, ‎2020
GAAP net income	$	201,751	$	179,514	$	405,364	$	357,886
Amortization of acquired intangibles - cost of sales, net of tax		8,564		8,566		16,999		17,742
Amortization of acquired intangibles - operating expenses, net of tax		5,901		5,900		11,780		12,214
Reserve for disputed tax positions		-		-		4,111		-
Restructuring - cost of sales, net of tax		-		4,663		-		4,663
Restructuring - operating expenses, net of tax		-		7,730		-		7,730
(Gain) loss on equity investments		-		-		-		(8,476)
Non-GAAP net income	$	216,216	$	206,373	$	438,254	$	391,759
Diluted shares outstanding		147,040		146,421		147,044		146,350
GAAP diluted earnings per share	$	1.37	$	1.23	$	2.76	$	2.45
Non-GAAP diluted earnings per share	$	1.47	$	1.41	$	2.98	$	2.68

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, 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 impacts from the COVID-19 pandemic, working capital requirements and capital deployment decisions.

Our future capital requirements will depend on many factors including our growth rate in net revenue, third-party reimbursement of our products for our customers, the timing and extent of spending to support research development efforts, the expansion of selling, general and administrative activities, the timing of introductions of new products, the expenditures associated with possible future acquisitions, investments or other business combination transactions, and impacts from the COVID-19 pandemic. 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 December 31, 2021 and June 30, 2021, we had cash and cash equivalents of $194.5 million and $295.3 million, respectively. Our cash and cash equivalents held within the United States at December 31, 2021 and June 30, 2021 were $42.8 million and $106.7 million, respectively. Our remaining cash and cash equivalent balances at December 31, 2021 and June 30, 2021, were $151.7 million and $188.6 million, respectively. Our cash and cash equivalent balances are held at highly rated financial institutions.

As of December 31, 2021, we had $1.6 billion available for draw down under the revolver credit facility and a combined total of $1.8 billion in cash and available liquidity under the revolving credit facility.

As a result of the U.S. Tax Act, we treated all non-U.S. historical earnings as taxable, which resulted in additional tax expense of $126.9 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.

We believe that our current sources of liquidity will be sufficient to fund our operations, including expected capital expenditures, for the next 12 months and beyond.

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PART I – FINANCIAL INFORMATION	Item 2

RESMED INC. AND SUBSIDIARIES

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

Revolving Credit Agreement, Term Credit Agreement and Senior Notes

On April 17, 2018, we entered into an amended and restated credit agreement (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 $800.0 million, with an uncommitted option to increase the revolving credit facility by an additional $300.0 million. Additionally, on April 17, 2018, ResMed Limited entered into a Syndicated Facility Agreement (the “Term Credit Agreement”). The Term Credit Agreement, among other things, provides ResMed Limited a senior unsecured term credit facility of $200.0 million. On November 5, 2018, we entered into a first amendment to the Revolving Credit Agreement to, among other things, increase the size of our senior unsecured revolving credit facility from $800.0 million to $1.6 billion, with an uncommitted option to increase the revolving credit facility by an additional $300.0 million. The Revolving Credit Agreement and Term Credit Agreement each terminate on April 17, 2023, when all unpaid principal and interest under the loans must be repaid. As of December 31, 2021, we had $1.6 billion available for draw down under the revolving credit facility.

On December 31, 2021, there was a total of $682.0 million outstanding under the Revolving Credit Agreement, Term Credit Agreement and Senior Notes. 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):


	Six Months Ended ‎December 31,
	2021		2020
Net cash provided by operating activities	$	154,222	$	313,915
Net cash used in investing activities		(125,182)		(51,771)
Net cash used in financing activities		(125,004)		(492,058)
Effect of exchange rate changes on cash		(4,838)		22,623
Net decrease in cash and cash equivalents	$	(100,802)	$	(207,291)

Operating Activities

Cash provided by operating activities was $154.2 million for the six months ended December 31, 2021, compared to cash provided of $313.9 million for the six months ended December 31, 2020. The $159.7 million decrease in cash flow from operations was primarily due to the payment of our tax settlement with the ATO of $284.8 million and greater inventory purchases to secure adequate components for the increasing sales demand, offset by an increase in operating profit and other net changes in working capital balances compared to the six months ended December 31, 2020.

Investing Activities

Cash used in investing activities was $125.2 million for the six months ended December 31, 2021, compared to cash used of $51.8 million for the six months ended December 31, 2020. The $73.4 million decrease in cash flow from investing activities was primarily due to an increase in cash paid for business acquisitions and a net decrease in proceeds on maturity of foreign currency contracts compared to six months ended December 31, 2020.

Financing Activities

Cash used in financing activities was $125.0 million for the six months ended December 31, 2021, compared to cash used of $492.1 million for the six months ended December 31, 2020. The $367.1 million increase in cash flow from financing activities was primarily due to borrowing activity under our Revolving Credit Agreement. Proceeds from borrowings, net of repayments, for the six months ended December 31, 2021 were $24.0 million compared to net repayments of $351.0 million during the six months ended December 31, 2020.

Dividends

During the three months ended December 31, 2021, we paid cash dividends of $0.42 per common share totaling $61.2 million. On January 27, 2021, our board of directors declared a cash dividend of $0.42 per common share, to be paid on March 17, 2022, to shareholders of record as of the close of business on February 10, 2022. Future dividends are subject to approval by our board of directors.

Common Stock

Since the inception of our share repurchase programs and through December 31, 2021, we have repurchased a total of 41.8 million shares for an aggregate of $1.6 billion. We have temporarily suspended our share repurchase program due to recent acquisitions, and more recently,

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PART I – FINANCIAL INFORMATION	Item 2

RESMED INC. AND SUBSIDIARIES

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

as a response to the COVID-19 pandemic. Accordingly, we did not repurchase any shares during the three and six months ended December 31, 2021 and 2020. Shares that are repurchased are classified as treasury stock pending future use and reduce the number of shares of common stock outstanding used in calculating earnings (loss) per share. There is no expiration date for this program, and the program may be accelerated, suspended, delayed or discontinued at any time at the discretion of our board of directors. At December 31, 2021, 12.9 million additional shares can be repurchased under the approved share repurchase program.

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.

For a full discussion of our critical accounting policies, see our Annual Report on Form 10-K for the year ended June 30, 2021.

Recently Issued Accounting Pronouncements

See note 1 to the unaudited condensed consolidated financial statements for a description of recently issued accounting pronouncements, including the expected dates of adoption and estimated effects on our results of operations, financial positions and cash flows.

Contractual Obligations and Commitments

Purchase obligations as of December 31, 2021 were as follows:



			Payments Due by December 31,
	Total		2022		2023		2024		2025		2026		Thereafter
Purchase obligations		1,389,985		1,058,358		286,194		43,773		1,660		-		-

Other than for purchase obligations, there have been no material changes outside the ordinary course of business in our outstanding contractual obligations from those disclosed within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

Off-Balance Sheet Arrangements

As of December 31, 2021, we are not involved in any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC.

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PART I – FINANCIAL INFORMATION	Item 3

RESMED INC. AND SUBSIDIARIES

Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Market Risk

Our reporting currency is the U.S. dollar, although the financial statements of our non-U.S. subsidiaries are maintained in their respective local currencies. We transact business in various foreign currencies, including a number of major European currencies as well as the Australian and Singapore dollars. We have significant foreign currency exposure through our Australian and Singapore manufacturing activities and our international sales operations. We have established a foreign currency hedging program using purchased currency options and forward contracts to hedge foreign-currency-denominated financial assets, liabilities and manufacturing cash flows. The goal of this hedging program is to economically manage the financial impact of foreign currency exposures predominantly denominated in euros, Australian dollars and Singapore dollars. Under this program, increases or decreases in our foreign-currency-denominated financial assets, liabilities, and firm commitments are partially offset by gains and losses on the hedging instruments. We do not enter into financial instruments for trading or speculative purposes. The foreign currency derivatives portfolio is recorded in the condensed consolidated balance sheets at fair value and included in other assets or other liabilities. All movements in the fair value of the foreign currency derivatives are recorded within other income, net, on our condensed consolidated statements of operations.

The table below provides information (in U.S. dollars) on our foreign currency denominated operating assets and liabilities and after considering our foreign currency hedging activities as of December 31, 2021 (in thousands):



	U.S.		Canadian	Chinese
	Dollar	Euro	Dollar	Yuan
	(USD)	(EUR)	(CAD)	(CNY)
AUD Functional:
Net Assets/(Liabilities)	15,135	(44,706)	-	16,502
Foreign Currency Hedges	-	-	-	(12,588)
Net Total	15,135	(44,706)	-	3,914
USD Functional:
Net Assets/(Liabilities)	-	-	22,396	-
Foreign Currency Hedges	-	-	(19,754)	-
Net Total	-	-	2,642	-
SGD Functional:
Net Assets/(Liabilities)	266,900	(7,453)	-	929
Foreign Currency Hedges	(260,000)	-	-	-
Net Total	6,900	(7,453)	-	929

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PART I – FINANCIAL INFORMATION	Item 3

RESMED INC. AND SUBSIDIARIES

Quantitative and Qualitative Disclosures About Market Risk

The table below provides information about our material foreign currency derivative financial instruments and presents the information in U.S. dollar equivalents. The table summarizes information on instruments and transactions that are sensitive to foreign currency exchange rates, including foreign currency call options, collars and forward contracts held at December 31, 2021. The table presents the notional amounts and weighted average exchange rates by contractual maturity dates for our foreign currency derivative financial instruments, including the forward contracts used to hedge our foreign currency denominated assets and liabilities. These notional amounts generally are used to calculate payments to be exchanged under the contracts (in thousands, except exchange rates).



				Fair Value Assets / (Liabilities)
Foreign Exchange Contracts	Year 1	Year 2	Total	December 31, ‎2021	June 30, ‎2021
USD/AUD
Contract amount		-	-	-	(652)
Ave. contractual exchange rate	USD 1 = ‎ AUD		USD 1 = ‎ AUD
AUD/Euro
Contract amount	34,130	-	34,130	170	1,172
Ave. contractual exchange rate	AUD 1 = ‎Euro 0.6597		AUD 1 = ‎Euro 0.6597
SGD/Euro
Contract amount	11,377	-	11,377	295	(88)
Ave. contractual exchange rate	SGD 1 = ‎Euro 0.6369	-	SGD 1 = ‎Euro 0.6369
SGD/USD
Contract amount	260,000	-	260,000	1,686	(177)
Ave. contractual exchange rate	SGD 1 = ‎USD 0.7367		SGD 1 = ‎USD 0.7367
AUD/CNY
Contract amount	12,588	-	12,588	(870)	(130)
Ave. contractual exchange rate	AUD 1 = ‎CNY 5.0312		AUD 1 = ‎CNY 5.0312
USD/EUR
Contract amount		-	-		169
Ave. contractual exchange rate	USD 1 = ‎ EUR		USD 1 = ‎ EUR
USD/CAD
Contract amount	19,754	-	19,754	357	(44)
Ave. contractual exchange rate	USD 1 = ‎CAD 1.2431		USD 1 = ‎CAD 1.2431

Interest Rate Risk

We are exposed to risk associated with changes in interest rates affecting the return on our cash and cash equivalents and debt. At December 31, 2021, we held cash and cash equivalents of $194.5 million principally comprised of bank term deposits and at-call accounts and are invested at both short-term fixed interest rates and variable interest rates. At December 31, 2021, there was $182.0 million outstanding under the Revolving Credit Agreement and Term Credit Agreement, which are subject to variable interest rates. A hypothetical 10% change in interest rates during the three and six months ended December 31, 2021, would not have had a material impact on pretax income. We have no interest rate hedging agreements.

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PART I – FINANCIAL INFORMATION	Item 4

RESMED INC. AND SUBSIDIARIES

Item 4 Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports made pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2021.

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION	Item 1-6

RESMED INC. AND SUBSIDIARIES

PART II. OTHER INFORMATION

Item 1 Legal Proceedings

We are involved in various legal proceedings, claims, investigations and litigation that arise in the ordinary course of our business. We investigate these matters as they arise, and accrue estimates for resolution of legal and other contingencies in accordance with Accounting Standard Codification Topic 450, “Contingencies”. See note 10 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Litigation is inherently uncertain. Accordingly, we cannot predict with certainty the outcome of these matters. But we do not expect the outcome of these matters to have a material adverse effect on our consolidated financial statements when taken as a whole.

Item 1A Risk Factors

The discussion of our business and operations should be read together with the risk factors and contained in our annual report on Form 10-K for the fiscal year ended June 30, 2021, which was filed with the SEC and describe various material risks and uncertainties to which we are or may become subject. As of December 31, 2021, there have been no further material changes to such risk factors.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of equity securities. On February 21, 2014, our board of directors approved our current share repurchase program, authorizing us to acquire up to an aggregate of 20.0 million shares of our common stock. The program allows us to repurchase shares of our common stock from time to time for cash in the open market, or in negotiated or block transactions, as market and business conditions warrant and subject to applicable legal requirements. There is no expiration date for this program, and the program may be accelerated, suspended, delayed or discontinued at any time at the discretion of our board of directors. All share repurchases after February 21, 2014 have been executed under this program.

We temporarily suspended our share repurchase program due to recent acquisitions, and more recently, as a response to the COVID-19 pandemic. As a result, we did not repurchase any shares during the three months ended December 31, 2021. However, there is no expiration date for this program, and we may, at any time, elect to resume the share repurchase program as the circumstances allow. Since the inception of the share buyback programs, we have repurchased 41.8 million shares at a total cost of $1.6 billion. At December 31, 2021, 12.9 million additional shares of common stock can be repurchased under the approved share repurchase program.

Item 3 Defaults Upon Senior Securities

None

Item 4 Mine Safety Disclosures

None

Item 5 Other Information

None

‎

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PART II – OTHER INFORMATION	Item 1-6

RESMED INC. AND SUBSIDIARIES

Item 6 Exhibits

Exhibits (numbered in accordance with Item 601 of Regulation S-K)


	3.1		First Restated Certificate of Incorporation of ResMed Inc., as amended. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Report on Form 10-Q for the quarter ended September 30, 2013)
	3.2		Sixth Amended and Restated Bylaws of ResMed Inc. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 26, 2020)
	10.1		Separation Agreement and General Release of Claims, dated September 29, 2021, by and between Rajwant Sodhi and ResMed Inc., including Consulting Agreement, as Exhibit A, effective as of September 2, 2021.
	31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32*		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	101		The following financial statements from ResMed Inc.’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2021, filed on January 27, 2022, formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, (v) the Notes to the Condensed Consolidated Financial Statements.
	104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibit 32 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

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PART II – OTHER INFORMATION	Signatures

RESMED INC. AND SUBSIDIARIES

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

January 27, 2022

ResMed Inc.


/s/ MICHAEL J. FARRELL
Michael J. Farrell
Chief executive officer
(Principal Executive Officer)


/s/ BRETT A. SANDERCOCK
Brett A. Sandercock
Chief financial officer
(Principal Financial Officer)

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