ResMed (RMD) 8-K ResMed Inc. Announces Results for the Second Quarter of Fiscal Year 2020

Exhibit 99.1

 

For investors	For media
Amy Wakeham	Jayme Rubenstein
+1858-836-5000	+1858-836-6798
investorrelations@resmed.com	news@resmed.com

ResMed Inc. Announces Results for the Second Quarter of Fiscal Year 2020

• Year-over-year revenue grows 13%,non-GAAP operating profit up 21%

• Balanced growth across product portfolio, software solutions, and global markets

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

SAN DIEGO, January 30, 2020 – ResMed Inc. (NYSE: RMD, ASX: RMD), a world-leading digital health company, today announced results for its quarter ended December 31, 2019.

Second Quarter 2020 Highlights

• Revenue increased 13% to $736.2 million; up 14% on a constant currency basis

• GAAP gross margin of 58.0%;non-GAAP gross margin expanded 60 bps to 59.7%

• Net operating profit increased 26%;non-GAAP operating profit up 21%

• GAAP diluted earnings per share of $1.10;non-GAAP diluted earnings per share of $1.21

“We had a strong December quarter with double-digittop-line growth and further gross margin expansion, as well as continued fiscal discipline that resulted in improvements in operating leverage and double-digit growth at the bottom line,” said Mick Farrell, ResMed’s CEO. “We are seeing continued strong customer demand for our new products, particularly in masks and accessories with another quarter of high-teens growth in that category. ResMed is continuing to lead in digital health as we transform lives inout-of-hospital healthcare, leading the innovation of medical devices and software that improve health outcomes, create efficiencies, and reduce overall healthcare system costs. With over 100 million lives improved in 2019, and strong growth ahead, we’re well on our way to improving 250 million lives inout-of-hospital healthcare in 2025.”

RMD Second Quarter 2020 Earnings Press Release – January 30, 2020 Page 2 of10

Financial Results and Operating Metrics

Unaudited; $ in millions, except for per share amounts

	Three Months Ended
	December 31, 2019			December 31, 2018			% Change			Constant Currency (A)
Revenue	$	736.2		$	651.1			13	%		14	%
Gross margin(B)		58.0	%		57.5	%		1
Non-GAAP gross margin(B)		59.7	%		59.1	%		1
Selling, general and administrative expenses		171.4			161.6			6			8
Research and development expenses		49.9			43.1			16			18
Income from operations		197.8			157.1			26
Non-GAAP income from operations(B)		218.5			181.1			21
Net income		160.6			124.6			29
Non-GAAP net income(B)		176.3			144.5			22
Diluted earnings per share	$	1.10		$	0.86			28
Non-GAAP diluted earnings per share(B)	$	1.21		$	1.00			21
	Six Months Ended
	December 31, 2019			December 31, 2018			% Change			Constant Currency (A)
Revenue	$	1,417.2		$	1,239.4			14	%		15	%
Gross margin(B)		57.8	%		57.3	%		1
Non-GAAP gross margin(B)		59.6	%		58.7	%		2
Selling, general and administrative expenses		338.9			308.9			10			12
Research and development expenses		98.0			81.9			20			22
Income from operations		368.9			301.2			22
Non-GAAP income from operations(B)		409.5			338.1			21
Net income		280.7			230.4			22
Non-GAAP net income(B)		311.7			260.7			20
Diluted earnings per share	$	1.93		$	1.60			21
Non-GAAP diluted earnings per share(B)	$	2.14		$	1.81			18

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

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

Discussion of Second Quarter Results

• Revenue in the U.S., Canada, and Latin America, excluding Software as a Service, grew by 14 percent compared to the prior year period, driven by strong sales across our mask and device product portfolios.

• Revenue in combined Europe, Asia, and other markets grew by 8 percent on a constant currency basis compared to the same period of the prior year, primarily driven by strong mask sales.

• Software as a Service revenue increased by 37 percent, compared to the prior year period, due to continued growth in Brightree service offerings and incremental contribution from the acquisition of MatrixCare, which closed in the second quarter of fiscal year 2019.

RMD Second Quarter 2020 Earnings Press Release – January 30, 2020 Page 3 of10

• Gross Margin expanded by 50 basis points over the prior year.Non-GAAP gross margin expanded by 60 basis points over the prior year period, primarily due to benefits from product mix changes and manufacturing and procurement efficiencies, partially offset by declines in average selling prices.

• Selling, general, and administrative expenses increased by 6 percent compared to the prior year period, or by 8 percent on a constant currency basis. Excluding the impact of recent acquisitions, selling, general, and administrative expenses increased by 2 percent on a constant currency basis. SG&A expenses improved to 23.3 percent of revenue in the quarter, compared with 24.8 percent in the same period of the prior year.

• Income from operations increased by 26 percent andnon-GAAP income from operations increased by 21 percent compared to the prior year period.

• Net income grew by 29 percent and diluted earnings per share grew by 28 percent compared to the prior year quarter.Non-GAAP net income grew by 22 percent and non-GAAP diluted earnings per share grew by 21 percent compared with the prior year quarter, predominantly attributable to strong sales, particularly in masks, coupled with controlled operating costs.

• Cash flow from operations for the quarter was $69.9 million, compared to net income in the current quarter of $160.6 million. Cash flow from operations included tax payments of $111.0 million and legal settlement payments of $40.6 million. During the quarter we paid $56.1 million in dividends.

Other Business and Operational Highlights

• Announced a collaboration agreement with Cerner Corporation (NASDAQ: CERN), designating ResMed’s Brightree Home Health and Hospice platform as its preferred solution to integrate with its Cerner Millenium^® electronic health record.

• Introduced AirFit N30, the world’s first tube-down nasal cradle CPAP mask with a front-facing tube, a brand new option for sleep apnea treatment. Other key features include an adjustable elastic headgear, a nasal cradle cushion that sits under the nasal bridge to eliminate soreness, and a curved design to provide a secure seal regardless of how the wearer sleeps or moves.

• Announced an upgraded AirView for Respiratory program that provides HMEs and physicians with quicker access to essential respiratory patient data, including more granular clinical data and respiration trends, and management by exception, allowing them to provide better care.

• Agreed in January to acquire SnapWorx, a privately held software company providing patient contact management and workflow optimization for the sleep apnea resupply market. SnapWorx’s software platform automates workflow and document retrieval in ways that complement Brightree’s industry-leading, multi-channel resupply solution. The combination of Brightree ReSupply’s technology and live call services with SnapWorx creates the most comprehensive set of resupply solutions in the industry. The transaction is expected to close shortly. It is expected to be initially neutral tonon-GAAP earnings per share, and accretive tonon-GAAP earnings per share in fiscal year 2021.

Dividend program

The ResMed board of directors today declared a quarterly cash dividend of $0.39 per share. The dividend will have a record date of February 13, 2020, payable on March 19, 2020. The dividend will be paid in U.S. currency to holders of ResMed’s common stock trading on the New York Stock Exchange. Holders of Chess Depositary Instruments trading on the Australian Securities Exchange will receive an equivalent amount in Australian currency, based on the exchange rate on the record date, and reflecting the 10:1 ratio between CDIs and NYSE shares. Theex-dividend date will be February 12, 2020, for common stockholders and for CDI holders. ResMed has received a waiver from the ASX’s settlement operating rules, which will allow ResMed to defer processing conversions between its common stock and CDI registers from February 12, 2020, through February 13, 2020, inclusive.     

RMD Second Quarter 2020 Earnings Press Release – January 30, 2020 Page 4 of10

Webcast details

ResMed will discuss its second quarter fiscal year 2020 results on its webcast at 1:30 p.m. U.S. Pacific Time today. The live webcast of the call can be accessed on ResMed’s Investor Relations website atinvestor.resmed.com. Please go to this section of the website and click on the icon for the “Q2 2020 Earnings Webcast” to register and listen to the live webcast. A replay of the earnings webcast will be accessible on the website and available approximately two hours after the live webcast. In addition, a telephone replay of the conference call will be available approximately two hours after the webcast by dialing +1800-585-8367 (U.S.) or +1416-621-4642 (outside U.S.) and entering the passcode 8829576. The telephone replay will be available until February 13, 2020.

About ResMed

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

Safe harbor statement

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

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RMD Second Quarter 2020 Earnings Press Release – January 30, 2020 Page 5 of10

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

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

	Three Months Ended						Six Months Ended
	December 31, 2019			December 31, 2018			December 31, 2019			December 31, 2018
Net revenue	$	736,157		$	651,100		$	1,417,213		$	1,239,380
Cost of sales		296,975			267,369			572,976			512,556
Amortization of acquired intangibles(1)		12,052			9,199			25,488			16,154
Total cost of sales	$	309,027		$	276,568		$	598,464		$	528,710
Gross profit	$	427,130		$	374,532		$	818,749		$	710,670
Selling, general and administrative		171,422			161,579			338,862			308,881
Research and development		49,943			43,111			97,976			81,902
Amortization of acquired intangibles(1)		8,556			6,641			13,599			12,553
Litigation settlement expenses(1)		(600	)		—			(600	)		—
Acquisition-related expenses(1)		—			6,123			—			6,123
Total operating expenses	$	229,321		$	217,454		$	449,837		$	409,459
Income from operations		197,809			157,078			368,912			301,211
Other income (expenses), net:
Interest income (expense), net	$	(10,018	)	$	(6,809	)	$	(20,562	)	$	(9,595	)
Loss attributable to equity method investments		(6,924	)		(3,375	)		(13,786	)		(3,375	)
Other, net		(2,115	)		(621	)		(5,225	)		(3,086	)
Total other income (expenses), net		(19,057	)		(10,805	)		(39,573	)		(16,056	)
Income before income taxes	$	178,752		$	146,273		$	329,339		$	285,155
Income taxes		18,198			21,634			48,637			54,778
Net income	$	160,554		$	124,639		$	280,702		$	230,377
Basic earnings per share	$	1.11		$	0.87		$	1.95		$	1.61
Diluted earnings per share	$	1.10		$	0.86		$	1.93		$	1.60
Non-GAAP diluted earnings per share(1)	$	1.21		$	1.00		$	2.14		$	1.81
Basic shares outstanding		144,212			142,923			143,966			142,796
Diluted shares outstanding		145,575			144,349			145,479			144,418

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

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RMD Second Quarter 2020 Earnings Press Release – January 30, 2020 Page 6 of10

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited; $ in thousands)

	December 31, 2019			June 30, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	204,095		$	147,128
Accounts receivable, net		528,039			528,484
Inventories		377,784			349,641
Prepayments and other current assets		190,567			120,113
Total current assets	$	1,300,485		$	1,145,366
Non-current assets:
Property, plant and equipment, net	$	408,364		$	387,460
Operating leaseright-of-use assets		96,745			—
Goodwill and other intangibles, net		2,351,508			2,378,399
Deferred income taxes and othernon-current assets		196,837			196,457
Totalnon-current assets	$	3,053,454		$	2,962,316
Total assets	$	4,353,939		$	4,107,682
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	114,322		$	115,725
Accrued expenses		217,847			266,359
Operating lease liabilities, current		20,038			—
Deferred revenue		92,950			88,667
Income taxes payable		42,904			73,248
Short-term debt		11,984			11,992
Total current liabilities	$	500,045		$	555,991
Non-current liabilities:
Deferred revenue	$	86,140		$	81,143
Deferred income taxes		27,709			11,380
Operating lease liabilities,non-current		79,458			—
Other long term liabilities		2,062			2,058
Long-term debt		1,287,509			1,258,861
Long-term income taxes payable		112,910			126,056
Totalnon-current liabilities	$	1,595,788		$	1,479,498
Total liabilities	$	2,095,833		$	2,035,489
STOCKHOLDERS’ EQUITY:
Common stock	$	578		$	575
Additionalpaid-in capital		1,521,992			1,511,473
Retained earnings		2,604,910			2,436,410
Treasury stock		(1,623,256	)		(1,623,256	)
Accumulated other comprehensive income		(246,118	)		(253,009	)
Total stockholders’ equity	$	2,258,106		$	2,072,193
Total liabilities and stockholders’ equity	$	4,353,939		$	4,107,682

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RMD Second Quarter 2020 Earnings Press Release – January 30, 2020 Page 7 of10

RESMED INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited; $ in thousands)

	Six Months Ended
	December 31, 2019			December 31, 2018
Cash flows from operating activities:
Net income	$	280,702		$	230,377
Adjustment to reconcile net income to cash provided by operating activities:
Depreciation and amortization		77,077			66,453
Amortization ofright-of-use-assets		12,323			—
Stock-based compensation costs		27,309			25,011
Loss attributable to equity method investments		13,786			3,375
Impairment of equity investments		5,419			2,959
Changes in fair value of business combination contingent consideration		(7	)		(272	)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable, net		(275	)		32,366
Inventories, net		(28,294	)		(30,570	)
Prepaid expenses, net deferred income taxes and other current assets		(66,818	)		(26,922	)
Accounts payable, accrued expenses and other		(88,927	)		(125,190	)
Net cash provided by operating activities	$	232,295		$	177,587
Cash flows from investing activities:
Purchases of property, plant and equipment		(47,771	)		(31,425	)
Patent registration costs		(4,871	)		(4,643	)
Business acquisitions, net of cash acquired		(3,423	)		(739,249	)
Purchases of investments		(21,841	)		(27,967	)
Proceeds / (Payments) on maturity of foreign currency contracts		1,064			(3,127	)
Net cash used in investing activities	$	(76,842	)	$	(806,411	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net		24,297			12,784
Taxes paid related to net share settlement of equity awards		(41,091	)		(27,340	)
Purchases of treasury stock		—			(22,844	)
Payment of business combination contingent consideration		(302	)		(430	)
Proceeds from borrowings, net of borrowing costs		730,000			1,091,230
Repayment of borrowings		(700,012	)		(352,798	)
Dividends paid		(112,202	)		(105,567	)
Net cash (used in) / provided by financing activities	$	(99,310	)	$	595,035
Effect of exchange rate changes on cash	$	824		$	(5,444	)
Net increase / (decrease) in cash and cash equivalents		56,967			(39,233	)
Cash and cash equivalents at beginning of period		147,128			188,701
Cash and cash equivalents at end of period	$	204,095		$	149,468

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RESMED INC. AND SUBSIDIARIES

Reconciliation ofNon-GAAP Financial Measures

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

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

	Three Months Ended						Six Months Ended
	December 31, 2019			December 31, 2018			December 31, 2019			December 31, 2018
Revenue	$	736,157		$	651,100		$	1,417,213		$	1,239,380
Add back:Deferred revenue fair value adjustment(A)		657			2,029			2,102			2,029
Non-GAAP Revenue	$	736,814		$	653,129		$	1,419,315		$	1,241,409
GAAP Cost of sales	$	309,027		$	276,568		$	598,464		$	528,710
Less:Amortization of acquired intangibles(A)		(12,052	)		(9,199	)		(25,488	)		(16,154	)
Non-GAAP cost of sales	$	296,975		$	267,369		$	572,976		$	512,556
GAAP gross profit		427,130			374,532			818,749			710,670
GAAP gross margin		58.0	%		57.5	%		57.8	%		57.3	%
Non-GAAP gross profit		439,839			385,760			846,339			728,853
Non-GAAP gross margin		59.7	%		59.1	%		59.6	%		58.7	%

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

	Three Months Ended					Six Months Ended
	December 31, 2019			December 31, 2018		December 31, 2019			December 31, 2018
GAAP income from operations	$	197,809		$	157,078	$	368,912		$	301,211
Amortization of acquired intangibles - cost of sales(A)		12,052			9,199		25,488			16,154
Amortization of acquired intangibles - operating expenses(A)		8,556			6,641		13,599			12,553
Deferred revenue fair value adjustment(A)		657			2,029		2,102			2,029
Litigation settlement expenses(A)		(600	)		—		(600	)		—
Acquisition related expenses(A)		—			6,123		—			6,123
Non-GAAP income from operations	$	218,474		$	181,070	$	409,501		$	338,070

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RMD Second Quarter 2020 Earnings Press Release – January 30, 2020 Page 9 of10

RESMED INC. AND SUBSIDIARIES

Reconciliation ofNon-GAAP Financial Measures

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

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

	Three Months Ended					Six Months Ended
	December 31, 2019			December 31, 2018		December 31, 2019			December 31, 2018
GAAP net income	$	160,554		$	124,639	$	280,702		$	230,377
Amortization of acquired intangibles - cost of sales, net of tax (A)		9,210			7,127		19,478			12,525
Amortization of acquired intangibles - operating expenses, net of tax (A)		6,538			5,144		10,392			9,733
Deferred revenue fair value adjustment, net of tax(A)		503			1,554		1,610			1,554
Litigation settlement expenses, net of tax(A)		(528	)		—		(528	)		—
Acquisition-related expenses(A)		—			5,362		—			5,362
U.S. tax reform transition impact(A)		—			644		—			1,178
Non-GAAP net income(A)	$	176,277		$	144,470	$	311,654		$	260,729
Diluted shares outstanding		145,575			144,349		145,479			144,418
GAAP diluted earnings per share	$	1.10		$	0.86	$	1.93		$	1.60
Non-GAAP diluted earnings per share(A)	$	1.21		$	1.00	$	2.14		$	1.81

(A) ResMed adjusts for the impact of the amortization of acquired intangibles, deferred revenue fair value adjustment, litigation settlement expenses, acquisition-related expenses, and the impact of U.S. tax reform on income tax expense from their evaluation of ongoing operations, and believes that investors benefit from adjusting these items to facilitate a more meaningful evaluation of current operating performance.

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

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RMD Second Quarter 2020 Earnings Press Release – January 30, 2020 Page 10 of10

RESMED INC. AND SUBSIDIARIES

Revenue by Product and Region

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

	Three Months Ended
	December 31, 2019		December 31, 2018		% Change			Constant Currency (A)
U.S., Canada and Latin America
Devices	$	203.5	$	186.5		9	%
Masks and other		204.5		172.0		19
Total Sleep and Respiratory Care	$	408.0	$	358.5		14
Software as a Service		86.7		63.2		37
Total	$	494.7	$	421.7		17
Combined Europe, Asia and other markets
Devices	$	162.3	$	156.2		4	%		6	%
Masks and other		79.2		73.2		8			11
Total Sleep and Respiratory Care	$	241.5	$	229.4		5			8
Global revenue
Devices	$	365.8	$	342.7		7	%		8	%
Masks and other		283.7		245.2		16			16
Total Sleep and Respiratory Care	$	649.5	$	587.9		10			11
Software as a Service		86.7		63.2		37			37
Total	$	736.2	$	651.1		13			14
	Six Months Ended
	December 31, 2019		December 31, 2018		% Change			Constant Currency(A)
U.S., Canada and Latin America
Devices	$	390.4	$	358.9		9	%
Masks and other		387.8		326.1		19
Total Sleep and Respiratory Care	$	778.2	$	685.0		14
Software as a Service		173.6		110.7		57
Total	$	951.8	$	795.7		20
Combined Europe, Asia and other markets
Devices	$	314.2	$	307.9		2	%		5	%
Masks and other		151.2		135.8		11			15
Total Sleep and Respiratory Care	$	465.4	$	443.7		5			8
Global revenue
Devices	$	704.6	$	666.8		6	%		7	%
Masks and other		539.0		461.9		17			18
Total Sleep and Respiratory Care	$	1,243.6	$	1,128.7		10			11
Software as a Service		173.6		110.7		57			57
Total	$	1,417.2	$	1,239.4		14			15

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

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