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ResMed

rmd · NYSE Healthcare
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Employees 5001-10,000
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FY2020 Annual Report · ResMed
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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 
______________________________________________________________________________________________ 

______________________________________________________________________________________________ 

FORM 10-K 

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the fiscal year ended June 30, 2020 
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 
(IRS Employer Identification No.) 

9001 Spectrum Center Blvd. 
San Diego, CA 92123 
United States of America 
(Address of principal executive offices) 

(858) 836-5000 
(Registrant’s telephone number, including area code) 

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

Title of each class 
Common Stock, par value $0.004 per share 

Trading 
Symbol(s) 
RMD 

  Name of each exchange on which registered 

New York Stock Exchange 

Securities registered pursuant to Section 12(g) of the Act 
None 
______________________________________________________________________________________________ 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes      No    
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.     Yes      No    

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      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      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  
Non-accelerated Filer 
Emerging Growth Company 

Accelerated Filer  
Smaller Reporting 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    

The aggregate market value of the voting and non-voting common equity held by non-affiliates of registrant as of December 31, 2019 (the last business day of the 
registrant’s most recently completed second fiscal quarter), computed by reference to the closing sale price of such stock on the New York Stock Exchange, was 
$22,240,443,784. All directors, executive officers, and 10% stockholders of registrant are considered affiliates. 

At August 7, 2020, registrant had 144,900,654 shares of Common Stock, $0.004 par value, issued and outstanding. This number excludes 41,836,234 shares held by the 
registrant as treasury shares. 

Portions of the registrant’s definitive Proxy Statement to be delivered to stockholders in connection with the registrant’s 2020 Annual Meeting of Stockholders, to be 
filed subsequent to the date hereof, are incorporated by reference into Part III of this report. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents 

TABLE OF CONTENTS 

Cautionary Note Regarding Forward Looking Statements 

Part I 

Part II 

Item 1  Business 
Item 1A  Risk Factors 
Item 1B  Unresolved Staff Comments 
Item 2 
Item 3 
Item 4  Mine Safety Disclosures 
Item 5  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 

Properties 
Legal Proceedings 

Securities 
Selected Financial Data 

Item 6 
Item 7  Management’s Discussion and Analysis of Financial Condition and Results of Operations 
Item 7A  Quantitative and Qualitative Disclosures About Market and Business Risks 
Item 8  Consolidated Financial Statements and Supplementary Data 
Item 9  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
Item 9A  Controls and Procedures 
Item 9B  Other Information 
Item 10  Directors, Executive Officers and Corporate Governance 
Item 11  Executive Compensation 
Item 12  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 
Item 13  Certain Relationships and Related Transactions, and Director Independence 
Item 14  Principal Accounting Fees and Services 
Item 15  Exhibits and Consolidated Financial Statement Schedules  
Item 16  Form 10-K Summary 
Signatures 

Part III 

Part IV 

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35 

37 
38 
48 
50 
82 
82 
86 
87 
87 
87 
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87 
88 
89 
90 

As used in this 10-K, the terms “we”, “us”, “our” and “the Company” refer to ResMed Inc., a Delaware corporation, and its subsidiaries, 
on a consolidated basis, unless otherwise stated. 

 
 
 
  
 
 
 
 
 
 
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
 
 
  
 
Table of Contents 

PART I 

RESMED INC. AND SUBSIDIARIES 

PART I 

Item 1 

Cautionary 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, and tax outlook.  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 Item 1A “Risk Factors” 
and elsewhere in this report.   

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. 

ITEM 1  BUSINESS 

General 

We are a global leader in digital health and cloud-connected medical devices. We design innovative solutions to treat and keep people 
out of the hospital, empowering them to live healthier, higher-quality lives. Our digital health technologies and cloud-connected medical 
devices transform care for people with sleep apnea, chronic obstructive pulmonary disease, or COPD, and other chronic diseases. Our 
comprehensive out-of-hospital software platforms support the professionals and caregivers who help people stay healthy in the home or 
care setting of their choice. By enabling better care, our products improve quality of life, reduce the impact of chronic disease, and lower 
costs for consumers and healthcare systems. 

Following our formation in 1989, we commercialized a treatment for obstructive sleep apnea, or OSA. This treatment, nasal continuous 
positive  airway  pressure,  or  CPAP,  was  the  first  successful  noninvasive  treatment  for  OSA.  CPAP  systems  deliver  pressurized  air, 
typically through a nasal mask, to prevent collapse of the upper airway during sleep. 

Since  the  development  of  CPAP,  we  have  expanded  our  business  by  developing  or  acquiring  a  number  of  innovative  products  and 
solutions for a broad 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, portable 
oxygen concentrators, or POCs, and cloud-based software informatics solutions to manage patient outcomes and customer and provider 
business processes. Today, we offer a comprehensive digital solution suite for patients with COPD, including those using inhalers or 
supplemental oxygen as well as non-invasive or invasive ventilation. We also provide management software to agencies providing out-
of-hospital care, including home medical equipment, or HME, home health and hospice, skilled nursing, life plan community and senior 
living, and private duty services. Our growth has been fueled by geographic expansion, our research and product development efforts, 
acquisitions and an increasing awareness of sleep apnea and respiratory conditions like COPD as significant health concerns. We are 
also a leading provider of cloud-based software health applications and devices designed to provide connected care, improving patient 
outcomes and efficiencies for healthcare providers. These tools are designed to enable clinicians to manage more patients efficiently 
and effectively, as well as enable and encourage patients’ long-term adherence to and satisfaction with their therapy. 

We employ approximately 7,800 people and sell our products in approximately 140 countries through a combination of wholly owned 
subsidiaries and independent distributors. 

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Our web site address is www.resmed.com. Information contained on our website is not part of or incorporated into this report. We make 
our periodic reports, together with any amendments, available on our website, free of charge, as soon as reasonably practicable after we 
electronically file or furnish the reports with the Securities and Exchange Commission, or SEC. The SEC maintains an internet site, 
www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically 
with the SEC.  

Corporate History 

ResMed Inc., a Delaware corporation, was formed in March 1994 as the ultimate holding company for our operating subsidiaries. In 
June 1995, we completed an initial public offering of common stock and our common stock began trading on the NASDAQ National 
Market. In September 1999, we transferred our principal listing to the New York Stock Exchange, or NYSE, trading under the ticker 
symbol “RMD”. In November 1999, we established a secondary listing of our common  stock via Chess Depositary Instruments, or 
CDIs, on the Australian Stock Exchange (now known as the Australian Securities Exchange), or ASX, also under the symbol “RMD”. 
Ten CDIs on the ASX represent one share of our common stock on the NYSE.  

Our Australian subsidiary, ResMed Holdings Limited, was originally organized in 1989 by Dr. Peter Farrell to acquire from Baxter 
Center for Medical Research Pty Limited, or Baxter, the rights to certain technology relating to CPAP treatment as well as Baxter’s 
existing CPAP device business. Baxter acquired the rights to the technology in 1987, and sold CPAP devices in Australia from 1988 
until our acquisition of the business. 

Since formation we have acquired a number of businesses, including distributors, suppliers, developers of medical equipment and related 
technologies and software solution providers. 

Segment Information  

We operate in two segments, which are the Sleep and Respiratory Care segment and the software as a service, or SaaS, segment.  See 
Note  15 –  Segment  Information  of  the  Notes  to  Financial  Statements  (Part  II,  Item 8)  for  financial  information  regarding  segment 
reporting.  Financial information about our revenues from and assets located in foreign countries is also included in the notes to our 
consolidated financial statements. 

The Market 

We are focused on the sleep and related respiratory care markets, both of which we believe are globally underpenetrated markets, and 
where we believe our products can improve patient outcomes, create efficiencies for our customers, help physicians and providers better 
manage chronic disease and reduce overall  healthcare system costs.  Additionally, our  software solutions are  focused  on the out-of-
hospital  care  market,  which  we  believe  is  fragmented  and  underserved  and  where  we  see  significant  opportunity  to  transform  and 
significantly improve out-of-hospital healthcare through a strategy of enabling better patient care, improving clinical decision support, 
and driving interoperability across out-of-hospital care settings. 

Sleep and Respiratory Care 

Sleep 

Sleep  is  a  complex  neurological  process  that  includes  two  distinct  states:  rapid  eye  movement,  or  REM,  sleep  and  non-rapid  eye 
movement, or non-REM, sleep. REM sleep, which is about 20-25% of total sleep experienced by adults, is characterized by a high level 
of brain activity, bursts of rapid eye movement, increased heart and respiration rates, and paralysis of many muscles. Non-REM sleep 
is subdivided into four stages that generally parallel sleep depth; stage 1 is the lightest and stage 4 is the deepest. 

The upper airway has no rigid support and is held open by active contraction of upper airway muscles. Normally, during REM sleep 
and deeper levels of non-REM sleep, upper airway muscles relax and the airway narrows. Individuals with narrow upper airways or 
poor muscle tone are prone to temporary collapses of the upper airway during sleep, called apneas, and to near closures of the upper 
airway called hypopneas. These breathing events result in a lowering of blood oxygen concentration, causing the central nervous system 
to react to the lack of oxygen or increased carbon dioxide and signaling the body to respond. Typically, the individual subconsciously 
arouses from sleep, causing the throat muscles to contract, opening the airway. After a few gasping breaths, blood oxygen levels increase 
and the individual can resume a deeper sleep until the cycle repeats itself. Sufferers of OSA typically experience ten or more such cycles 
per  hour.  While  these  awakenings  greatly  impair  the  quality  of  sleep,  the  individual  is  not  normally  aware  of  these  disruptions.  In 
addition, OSA has been recognized as a cause of hypertension and a significant comorbidity for heart disease, stroke and diabetes. 

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A long-term epidemiology study published in 2013 estimated that 26% of adults age 30-70 have some form of obstructive sleep apnea. 
Another study published in 2019 estimated that mild to severe OSA impacts more than 936 million people worldwide, including 54 
million Americans. Of those impacted, it was estimated that more than 424 million would have moderate to severe sleep apnea. Despite 
the high prevalence of OSA, there is a general lack of awareness of OSA among both the medical community and the general public. It 
is estimated that less than 20% of those with OSA have been diagnosed or treated. Many healthcare professionals are often unable to 
diagnose OSA because they are unaware that such non-specific symptoms as excessive daytime sleepiness, snoring, hypertension and 
irritability are characteristic of OSA. 

While sleep apnea has been diagnosed in a broad cross-section of the population, until recently, it has typically been diagnosed among 
middle-aged men who are obese. However, we believe the importance of sleep apnea in women is increasingly being recognized, with 
nearly  40%  of  new  PAP  patients  being  female.  A  strong  association  has  been  discovered  between  sleep  apnea  and  a  number  of 
cardiovascular and metabolic diseases. Studies have shown that sleep apnea  is present in approximately 83% of patients with drug-
resistant  hypertension,  approximately  77%  of  patients  with  obesity,  approximately  76%  of  patients  with  chronic  heart  failure  and 
approximately 72% of patients with type 2 diabetes.  

Sleep-Disordered  Breathing  and  Obstructive  Sleep  Apnea.    Sleep-disordered  breathing  encompasses  all  disease  processes  that 
cause  abnormal  breathing  patterns  during  sleep.  Manifestations  include  OSA,  central  sleep  apnea,  or  CSA,  and  hypoventilation 
syndromes that occur during sleep. Hypoventilation syndromes are generally associated with obesity, chronic obstructive lung disease 
and neuromuscular disease. OSA is the most common form of SDB. 

Sleep fragmentation and the loss of the deeper levels of sleep caused by OSA can lead to excessive daytime sleepiness, reduced cognitive 
function, including memory loss and lack of concentration, depression and irritability. OSA sufferers also experience an increase in 
heart rate and an elevation of blood pressure during the cycle of apneas. Several studies indicate that the oxygen desaturation, increased 
heart rate and elevated blood pressure caused by OSA may be associated with increased risk of cardiovascular morbidity and mortality 
due  to  angina,  stroke  and  heart  attack.  Patients  with  OSA  have  been  shown  to  have  impaired  daytime  performance  in  a  variety  of 
cognitive functions including problem solving, response speed and visual motor coordination, and studies have linked OSA to increased 
occurrences of traffic and workplace accidents. 

Generally, an individual seeking treatment for the symptoms of OSA is referred by a general practitioner to a sleep specialist for further 
evaluation. The diagnosis of OSA typically requires monitoring the patient during sleep at either a sleep clinic or the patient’s home. 
During overnight testing, respiratory parameters and sleep patterns may be monitored, along with other vital signs such as heart rate and 
blood oxygen levels. Simpler tests, using devices such as our ApneaLink Air, or our automatic positive airway pressure devices, monitor 
airflow  during  sleep,  and  use  computer  programs  to  analyze  airflow  patterns.  These  tests  allow  sleep  clinicians  to  detect  any  sleep 
disturbances such as apneas, hypopneas or subconscious awakenings.  

Before  1981,  the  primary  treatment  for  OSA  was  a  tracheotomy,  a  surgical  procedure  to  create  a  hole  in  the  patient’s  windpipe. 
Alternative surgical treatments have involved either uvulopalatopharyngoplasty, or UPPP, in which surgery is performed on the upper 
airway to remove excess tissue and to streamline the shape of the airway or implanting a device to add support to the soft palate. UPPP 
alone has a poor success rate; however, when performed in conjunction with multi-stage upper airway surgical procedures, a greater 
success  rate  has  been  claimed.  These  combined  procedures,  performed  by  highly  specialized  surgeons,  are  expensive  and  involve 
prolonged and often painful recovery periods.  Surgical treatments are not considered first line therapy  for OSA.  Other alternative 
treatments available today include nasal surgery, mandibular advancement surgery, dental appliances, palatal implants, somnoplasty, 
nasal devices and electrical stimulation of the nerves or muscles.  Alternative pharmaceutical therapy treatments are reported to be under 
development. 

A variety of devices are marketed for the treatment of OSA. Most are only partially effective, but CPAP is a reliable treatment for all 
severities of OSA and is considered first-line therapy. Use of mandibular advancement devices is increasing as a second-line option in 
patients unable to use CPAP or those with mild OSA. These devices cause the mandible and tongue to be pulled forward and improve 
the dimensions of the upper airway. CPAP is a non-invasive means of treating OSA. CPAP was first used as a treatment for OSA in 
1980 by Dr. Colin Sullivan, the past Chairman of our Medical Advisory Board and was commercialized for treatment of OSA in the 
United States in the mid-1980s. During CPAP treatment, a patient sleeps with a nasal interface connected to a small portable air device 
that delivers room air at a positive pressure. The patient breathes in air from the device and breathes out through an exhaust port in the 
interface. Continuous air pressure applied in this manner acts as a pneumatic splint to keep the upper airway open and unobstructed. 
Interfaces include nasal masks and nasal pillows. Sometimes, when a patient leaks air through their mouth, a full-face mask may need 
to be used, rather than a nasal interface. 

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CPAP is not a cure and, therefore, must be used on a nightly basis as long as treatment is required. Patient compliance has been a major 
factor in the efficacy of CPAP treatment. Early generations of CPAP units provided limited patient comfort and convenience. Patients 
experienced soreness  from the repeated use of nasal  masks and had difficulty  falling asleep  with the CPAP device operating at the 
prescribed pressure. In more recent years, product innovations to improve patient comfort and compliance have been developed. These 
include more comfortable patient interface systems; delay timers that gradually raise air pressure allowing the patient to fall asleep more 
easily; bilevel air devices, including our AirCurve 10 Series and Lumis devices, which provide different air pressures for inhalation and 
exhalation; heated humidification systems to make the airflow more comfortable; and autotitration devices that modulate the average 
pressure delivered during the night. 

Respiratory Care 

Our aim is to provide respiratory care solutions to patients with COPD, asthma, and other chronic respiratory diseases, such as overlap 
syndrome, obesity hypoventilation syndrome, or OHS, and neuromuscular disease, including amyotrophic lateral sclerosis, or ALS.  We 
aim to improve their quality of life, slow down disease progression and reduce the costs of patient management. 

Our products cover patients ranging from those who only require therapy from CPAP systems at night, to those who are dependent on 
non-invasive or invasive ventilation for life-support and those who require portable oxygen concentrators, or POCs. Our devices are 
predominantly used in the home and, to a lesser extent, in general hospital wards and respiratory wards. We supply CPAP and bilevel 
device systems, non-invasive and invasive ventilators, humidifiers and accessories, including masks and tubing. We also offer stationary 
and portable battery-powered oxygen concentrators  for the administration of long-term  oxygen therapy in the home as  well as data 
management systems designed to improve the management of patients. 

In March 2020, the World Health Organization declared the outbreak of a novel strain of coronavirus, or COVID-19, as a pandemic. 
We have observed increased demand for our ventilator devices and masks, and we are working with governments, health authorities, 
hospitals, physicians, and patients worldwide to assess their needs, and to deliver the ventilation therapy that is essential to treat the 
respiratory complications of COVID-19. Our primary focus is to maximize the availability of ResMed ventilators and other respiratory 
support devices for the patients that need them most. 

Chronic Obstructive Pulmonary Disease.    COPD encompasses a group of lung diseases defined by persistent airflow limitation, 
prolongation  of  exhalation  and  loss  of  elasticity  in  the  lungs.  It  is  a  progressive  and  debilitating  disease  and  is  associated  with  an 
increased inflammatory response in the airways.  Symptoms encountered  with  COPD include shortness of breath as  well as chronic 
cough and increased sputum production. COPD includes diseases such as emphysema and chronic bronchitis. A recent study based on 
recent epidemiology data estimates that there are over 380 million people worldwide who suffer from COPD, the world’s third leading 
cause of death. 

Patients  with  COPD  can  have  different  clinical  presentations.  Patients  with  chronic  bronchitis  present  with  low  level  of  oxygen 
(hypoxemia)  and  elevated  levels  of  carbon  dioxide  (hypercapnia),  a  chronic  productive  cough,  cor  pulmonale  and  are  commonly 
overweight. Patients with emphysema have more normal blood gases, are usually thin and hyperinflated and have a decreased diffusion 
capacity. During sleep, chronic bronchitic patients display more severe hypoxemia. In general, the more hypoxic a COPD patient is 
during the day the more severe the hypoxemia experienced during sleep. Hypercapnia as a consequence of hypoventilation also occurs 
in COPD patients and is more pronounced in REM sleep. Some COPD patients may also suffer from comorbid OSA, a condition known 
as Overlap Syndrome. 

Home  non-invasive  ventilation  has  the  potential  to  reduce healthcare  costs  associated  with  the  management  of  patients  with  severe 
COPD by significantly increasing the time between hospital readmissions. 

Overlap Syndrome.    In patients with Overlap Syndrome, CPAP has been shown to provide benefits in relation to reducing mortality, 
decreasing hospitalizations and improving lung function and gas exchange. Non-invasive ventilation, or NIV, has been demonstrated to 
improve outcomes in patients with acute exacerbations of COPD through its ability to improve respiratory acidosis and decrease dyspnea 
and work of breathing. It may also increase survival rates and reduce length of hospital stays, as well as reducing complicating factors 
such as ventilator-associated pneumonia. In patients with stable COPD, the advantages of home NIV are less clear, but clinical studies 
have shown improvements in dyspnea scores and health-related quality-of-life measures and reductions in hospital readmissions and 
intensive care stays. 

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Long-term oxygen therapy, or LTOT, is indicated in chronic respiratory failure patients. The administration of LTOT has been shown 
to increase survival rates in patients with severe resting hypoxemia. In hypoxemic COPD patients, LTOT is associated with a lower 
mortality compared to nocturnal oxygen therapy alone and also associated with improved health-related quality of life measures. In 
long-term  COPD  survivors  with  a  history  of  congestive  heart  failure,  LTOT  is  associated  with  a  slowing  of  respiratory  failure 
progression. 

Obesity Hypoventilation Syndrome.    OHS is characterized by the combination of obesity, chronic alveolar hypoventilation leading 
to daytime hypercapnia and hypoxia and sleep apnea after the exclusion of other causes of alveolar hypoventilation. An estimated 90% 
of patients with OHS also have OSA. In patients with OHS, positive airway therapy, both CPAP and NIV, has been shown to effectively 
treat upper airway obstruction and reverse daytime respiratory failure as well as reduce the work of breathing and improve respiratory 
drive.  

Neuromuscular Disease.    Neuromuscular disease is a broad term that encompasses many diseases that either directly (via intrinsic 
muscle  pathology)  or  indirectly  (via  nerve  pathology)  impair  the  functioning  of  muscles.  Symptoms  of  neuromuscular  disease  and 
respiratory failure include increasing generalized weakness and fatigue, dysphagia, dyspnoea on exertion and at rest, sleepiness, morning 
headache, difficulties with concentration and mood changes. Most neuromuscular diseases are characterized by progressive muscular 
impairment  leading  to  loss  of  ambulation,  being  wheelchair-bound,  swallowing  difficulties,  respiratory  muscle  weakness  and, 
eventually, death from respiratory failure. Neuromuscular disorders can progress rapidly or slowly.  Rapidly progressive conditions, 
such as ALS and Duchenne muscular dystrophy in teenagers, are characterized by muscle impairment which worsens over months and 
can result in death within a few years. Variable or slowly progressive conditions, such as myotonic muscular dystrophy, are characterized 
by muscle impairment that worsens over years and may mildly reduce life expectancy.  

NIV treatment to patients with neuromuscular disease may lead to improvements in respiratory failure symptoms and daytime arterial 
blood  gases.  In  ALS  patients,  NIV  treatment  has  been  associated  with  an  improvement  in  quality  of  life  measures,  sleep-related 
symptoms and survival.  Studies have demonstrated that patients  with Duchenne  muscular dystrophy  may improve in  quality of life 
measures and may increase chance of survival with NIV treatment. 

Software as a Service 

Due to multiple acquisitions, including Brightree in April 2016, HEALTHCAREfirst in July 2018 and MatrixCare in November 2018, 
our operations now include platforms that comprise our SaaS business. Our SaaS strategy is to develop a portfolio that assists durable 
medical equipment, or DME, HME, and other long-term care providers operate more effectively and efficiently across various out-of-
hospital  care  settings.  Our  SaaS  portfolio  provides  services  across  the  HME,  home  health  and  hospice,  skilled  nursing,  life  plan 
community and senior living, and private duty services. Our offerings can help providers perform analytics, manage documentation and 
implement new reimbursement requirements as well as more effectively transfer data as patients move between different care settings.  

Business Strategy 

We believe that the sleep apnea and respiratory care markets will continue to grow in the future due to a number of factors, including 
increasing awareness of OSA, CSA and COPD, improved understanding of the role of sleep apnea treatment in the management of 
cardiac, neurologic, metabolic and related disorders, improved understanding of the role of non-invasive ventilation in the management 
of COPD, and an increase in the use of digital and product technology to improve patient outcomes and create efficiencies for customers 
and  providers.  Additionally,  the  continued  impact  of  COVID-19  or  a  resurgence  of  COVID-19  may  create  more  demand  for  our 
ventilator products. Our strategy for expanding our business operations and capitalizing on the growth of the sleep apnea and respiratory 
care markets, as well as growth in out-of-hospital care settings, consists of the following key elements: 

•  Continue Product Development and Innovation in Sleep Apnea Products.    We are committed to ongoing innovation in 
developing products for the diagnosis and treatment of sleep apnea. We have been a leading innovator of products designed to 
treat sleep apnea more effectively, increase patient comfort and encourage compliance with prescribed therapy. In recent years 
we have introduced a full suite of masks in our AirTouch and AirFit ranges, advanced and expanded the integrations of our 
therapy-based  software  solutions,  including  AirView,  to  promote  greater  patient  adherence  and  during  the  COVID-19 
pandemic,  we released ResMed MaskSelector in the United States, an easy-to-use digital tool to  make  mask  selection and 
sizing  easier  and  more  effective,  both  remotely  and  during  in-person  clinical  setups.  We  believe  that  the  combination  of 
continued product development, product and technology acquisitions and innovation are key factors to our ongoing success. 
Our  recent  acquisitions  have  included  a  portfolio  of  sleep  apnea  products  through  our  acquisition  of  Curative  Medical. 
Approximately 16% of our employees are devoted to research and development activities.  

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•  Continue Product Development and Innovation in Respiratory Care Products.    We are committed to ongoing innovation 
of our respiratory care products that serve the needs of patients with COPD and neuromuscular diseases.  With the addition of 
Inova Labs POCs and our non-invasive ventilator devices with masks and accessories, we intend to continue to expand and 
enhance our product offerings in this area. In recent years, we launched Mobi, which is our first ResMed-branded portable 
oxygen  concentrator  as  well  as  advanced  and  expanded  the  integrations  of  our  therapy-based  software  solutions  including 
AirView for Respiratory Care, enabling clinicians to remotely monitor patients on some ventilation devices and bilevel devices. 
Additionally, we acquired a digital health platform for inhalers through our acquisition of Propeller Health in 2019, rounding 
out our portfolio to treat COPD patients through their therapy journey across different stages of their disease. 

•  Expand SaaS Solutions in Out-of-Hospital Care Settings.    Our vision is to transform and significantly improve out-of-
hospital (OOH) healthcare through a strategy of enabling better patient care, improving clinical decision support, and driving 
interoperability  across  out-of-hospital  healthcare  settings.  Since  acquiring  Brightree  in  2016,  plus  MatrixCare  and 
HEALTHCAREfirst in 2018, we offer software solutions across multiple out-of-hospital healthcare settings including HME, 
home health and hospice, skilled nursing, life plan communities, senior living and private duty. We are connecting capabilities 
across the platforms in these out-of-hospital care settings to help our customers be more efficient, better serve people, keep 
them  out-of-hospital,  and  in  lower-cost,  higher-quality  care  settings.  Today,  our  SaaS  solutions  serve  OOH  customers 
combining over 90 million individual accounts. 

•  Expand Geographic Presence.    We market our products in more than 140 countries to sleep clinics, home healthcare dealers, 
patients and third-party payors. We intend to increase our sales and marketing efforts in our principal markets, as well as expand 
the depth of our presence in other high-growth geographic regions. In 2016, we acquired Curative Medical to invest in the 
China market and expand our growth potential in sleep apnea, COPD and respiratory care in China. In 2019, we acquired HB 
Healthcare, a privately owned HME that serves both reimbursed and cash-pay customers of sleep and respiratory care devices 
in South Korea. 

• 

Increase Public and Clinical Awareness.    We continue to expand our existing promotional activities to increase awareness 
of sleep apnea, COPD and other clinical conditions that can be treated with our industry-leading solutions. These promotional 
activities target both the population predisposed to sleep apnea and medical specialists, such as pulmonologists, sleep medicine 
specialists, primary care physicians, cardiologists, neurologists and other medical subspecialists who treat these conditions and 
their associated comorbidities. We target special interest groups, including the National Stroke Association, the American Heart 
Association, COPD Foundation and the National Sleep Foundation, to further increase awareness of the relationship between 
OSA,  COPD,  neuromuscular  disease  and  comorbidities  such  as  cardiac  disease,  diabetes,  hypertension  and  obesity.    The 
programs also support our efforts to inform the community of the dangers of sleep apnea with regard to occupational health 
and safety, especially in the transport industry. We have helped establish a center for clinical care and medical research at the 
University of California, San Diego in the fields of sleep apnea and COPD.   

•  Expand into New Clinical Applications.    We continually seek to identify new applications of our technology for significant 
unmet medical needs. Studies have established a clinical association between OSA and both stroke and congestive heart failure, 
and have recognized sleep apnea as a cause of hypertension or high blood pressure. Research also indicates that sleep apnea is 
independently  associated  with  glucose  intolerance  and  insulin  resistance.  Additionally,  research  supported  by  ResMed  has 
demonstrated that the addition of non-invasive ventilation to patients with severe COPD who are receiving oxygen therapy, 
provides meaningful clinical benefits to the patient, and the broader healthcare system. We maintain close working relationships 
with a number of prominent physicians to explore new medical applications for our products and technology. 

•  Leverage the Experience of our Management Team.    Our senior management team has extensive experience in the medical 
device industry in general, and in the fields of sleep apnea, respiratory care and healthcare informatics in particular. We intend 
to continue to leverage the experience and expertise of these individuals to maintain our innovative approach to the development 
of products and solutions, and to increase awareness of the serious medical problems caused by sleep apnea and the use of 
oxygen, non-invasive ventilation, and in-home life support ventilation to treat COPD. 

Products 

Our portfolio of products includes devices, diagnostic products, mask systems, headgear and other accessories, dental devices, POCs 
and cloud-based software informatics solutions. For purposes of the following discussion, we refer to our air flow generators, ventilators 
and oxygen concentrators collectively as devices. 

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Devices 

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Item 1 

We produce cloud-connected CPAP, APAP, bilevel, and ASV devices that deliver positive airway pressure through a patient interface, 
either a mask or cannula.  Our APAP devices, known as AutoSet, are based on a proprietary technology to monitor breathing and can 
also be used in the diagnosis, treatment and management of OSA. During fiscal year 2017, we launched AirMini, a small portable CPAP 
combining  the  same  proven  therapy  modes  used  in  the  AirSense  10  with  effective  waterless  humidification  enabling  portable 
convenience. We also acquired a line of  Chinese-developed and  manufactured sleep and ventilation devices  with the acquisition of 
Curative Medical in fiscal year 2016. Devices in total accounted for approximately 51%, 52% and 56% of our net revenues in fiscal 
years 2020, 2019 and 2018, respectively. 

The tables below provide a selection of products, as known by our trademarks. 

CPAP 
PRODUCTS 
AirSense 10 Elite 

DESCRIPTION 
An advanced fixed-pressure therapy device with an integrated humidifier and built-in wireless connectivity. It is designed to be intuitive 
and easy-to-use.  

AirSense 10 CPAP 

The AirSense 10 CPAP is a fixed-pressure therapy device and built-in wireless connectivity. It also provides compliance, AHI and leak 
data reporting. 

AUTOSET 
PRODUCTS 
AirSense 10 Auto 

DESCRIPTION 
A premium auto-adjusting therapy device featuring AutoRamp™ with sleep onset detection, expiratory pressure relief (EPR™) and Easy-
Breathe technology.  The device also features built-in wireless connectivity. 

AirMini 

A small portable CPAP device featuring the same auto-adjusting therapy modes used in the AirSense™ 10 Auto. The device also features 
built-in Bluetooth connectivity and effective waterless humidification enabled by HumidX technology. 

BILEVEL 
PRODUCTS 
AirCurve 10 S 

DESCRIPTION 
A bilevel device for patients who need extra pressure support or find it difficult to adjust to therapy on a fixed pressure continuous positive 
airway pressure device. The device features built-in wireless connectivity and works with our AirView™ patient monitoring software. 

AirCurve 10 V Auto 

An auto-adjusting bilevel device for patients who need greater pressure support to treat their obstructive sleep apnea. The device features 
built-in wireless connectivity and works with our AirView™ patient monitoring software. 

AirCurve 10 ST 

A  bilevel  device  with  backup  rate  that  provides  exceptional  patient-ventilator  synchrony,  reducing  the  work  of  breathing  so  patients 
remain  comfortable  and  well  ventilated.  The  device  features  built-in  wireless  connectivity  and  works  with  our  AirView™  patient 
monitoring software. 

AirCurve 10 ASV and CS  Adaptive servo-ventilators specifically designed to treat patients exhibiting central sleep apnea (CSA), mixed sleep apnea and periodic 
breathing, with or without obstructive sleep apnea. These devices also feature built-in wireless connectivity and works with our AirView™ 
patient monitoring software. 

VENTILATION 
PRODUCTS 
Stellar 100 and 150 

DESCRIPTION 
Pressure support and volume non-invasive ventilators with invasive capabilities designed to suit a range of environments and for various 
respiratory patient types.  

Astral 100 and 150 

Pressure support and volume ventilators for invasive and non-invasive purposes so it can be used from the hospital to the home.  

Lumis 100 and 150 

Pressure  support  non-invasive  ventilators  that  support  a  variety  of  therapy  modes  with  built-in  wireless  connectivity  and  integrated 
humidification. 

Lumis ST-A 

A  Pressure  support  non-invasive  ventilator  that  supports  a  variety  of  therapy  modes  with  built-in  wireless  connectivity,  integrated 
humidification and a range of fixed and adjustable alarms. 

Mobi 

A portable oxygen concentrator system with a lightweight design and extended battery life to promote greater mobility for patients on 
oxygen therapy. 

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PART I 

Mask Systems, Diagnostic Products, Accessories and Other Products  

RESMED INC. AND SUBSIDIARIES 

Item 1 

Masks, diagnostic products and accessories together accounted for approximately 37%, 37% and 38% of our net revenues in fiscal years 
2020, 2019 and 2018, respectively.  

Mask Systems 

Mask systems are one of the most important elements of sleep apnea treatment systems. Masks are a primary determinant of patient 
comfort and as such may drive or impede patient compliance with therapy. We have been a consistent innovator in small nasal, nasal 
pillows and full-face masks, by improving patient comfort while minimizing size and weight. 

The table below provides an of overview of our mask systems by category. 

CATEGORY 
Minimalist 

DESCRIPTION 
AirFit F30, AirFit P10 and AirFit N30 minimalist masks feature our lightest, lowest profile designs. The features of these masks are 
focused on minimizing contact with the patient’s face to reduce red marks and irritation.  

Freedom 

AirFit N30i, AirFit P30i and AirFit F30i freedom masks, which feature top-of-head tubing design allowing flexibility to easily switch 
sleep positions.  

Ultra Soft 

The AirTouch F20 mask features a soft and breathable AirTouch cushion designed to enhance CPAP mask comfort.  

Universal Fit 

AirFit F20 and AirFit N20 masks are designed to fit a wide range of faces due to the InfinitySeal silicone cushion that adapts to unique 
facial contours, which increases comfort, improves the fit and reduces leakage.  

Diagnostic Products 

We market sleep recorders for the diagnosis and titration of sleep apnea in sleep clinics and hospitals. These diagnostic systems record 
relevant respiratory and sleep data, which can be analyzed by a sleep specialist or physician who can then tailor an appropriate OSA 
treatment regimen for the patient.  

PRODUCTS 
ApneaLink Air 

DESCRIPTION 
A portable diagnostic device which measures oximetry, respiratory effort, pulse, nasal flow and snoring. Works with AirView Diagnostics 
to provide comprehensive diagnostic solution to clinicians. 

Connected Solutions and Other Products 

We have a suite of products that are designed to allow fewer professionals to manage more patients and empower patients to track their 
own health outcomes. We are expanding our cloud-based patient management and engagement platforms, such as AirView, enabling 
remote monitoring, over-the-air trouble shooting and changing of device settings, U-Sleep enabling automated patient coaching through 
a text, email or interactive voice phone call and myAir, a patient engagement application that provides sleep data and a daily score based 
on their previous night’s data. 

PRODUCTS 
AirView 

DESCRIPTION 
A cloud-based system enabling remote monitoring and changing of patients’ device settings. AirView also makes it easier to simplify 
workflows and collaborate more efficiently across the patient’s care network. 

myAir 

A  personalized  therapy  management  application  for  patients  with  sleep-disordered  breathing  providing  support,  education  and 
troubleshooting tools for increased patient engagement and improved compliance. 

U-Sleep 

A compliance monitoring solution that enables HMEs to streamline their sleep programs to achieve better business and patient outcomes.  

Connectivity Module 

A module providing cellular connection between our compatible ventilation devices (i.e. Astral Stellar) and our AirView™ system. 

Propeller  
Solutions 

Propeller's inhaler sensors track medication usage and pair with a companion smartphone application, giving people  with asthma or 
COPD a better understanding of their disease and while promoting increased adherence to treatment. The Propeller Provider Portal gives 
clinicians the timely and accurate information they need to make better treatment decisions.  

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SaaS Products  

RESMED INC. AND SUBSIDIARIES 

Item 1 

Following multiple acquisitions, including Brightree in April 2016, HEALTHCAREfirst in July 2018 and MatrixCare in November 
2018, we now supply out-of-hospital software products designed to support the professionals and caregivers helping people stay healthy 
in the home or care setting of their choice. SaaS revenue accounted for approximately 12%, 11% and 7% of our net revenue in fiscal 
years 2020, 2019 and 2018, respectively. 

PRODUCTS 
Brightree solutions 

DESCRIPTION 
Brightree enables out-of-hospital care organizations to improve their business performance and deliver better health outcomes. As an 
industry-leading cloud-based healthcare IT company, Brightree provides solutions and services for thousands of organizations in home 
medical equipment and pharmacy, orthotic and prosthetic, and home infusion.  

HEALTHCAREfirst  
solutions 

HEALTHCAREfirst offers electronic health record, or EHR, software, billing and coding services, and advanced analytics that enable 
home health and hospice agencies to optimize their clinical, financial and administrative processes. 

MatrixCare solutions 

MatrixCare’s  EHR  software  as  a  service  solutions  are  used  by  skilled  nursing  and  senior  living  providers,  life  plan  communities 
(CCRCs), and home health and hospice organizations to prosper in an ever-changing healthcare system.  

Product Development and Clinical Trials  

We have a strong track record of innovation in the sleep and respiratory care markets. In 1989, we introduced our first CPAP device. 
Since  then  we  have  been  committed  to  an  ongoing  program  of  product  advancement  and  development.  Currently,  our  product 
development and clinical trial efforts are focused on not only improving our current product offerings and usability, but also expanding 
into new product applications.  

We continually seek to identify new applications of our technology for significant unmet medical needs. Sleep apnea is associated with 
a number of symptoms beyond excessive daytime sleepiness and irritability. Studies have established a clinical association between 
untreated sleep apnea and systemic hypertension, diabetes, coronary artery disease, stroke, atrial fibrillation, congestive heart failure, 
and mortality.  

Across the sleep and respiratory care platforms,  we  support clinical trials in  many countries including the United States, Germany, 
Netherlands, France, Japan, the United Kingdom, Switzerland, China, Spain, Canada, Singapore and Australia to develop new clinical 
applications  for  our  technology.  We  have  also  begun  presenting  and  publishing  research  findings  based  on  the  industry-leading 
connectivity platform and data assets that are unique to us. We continue to support some of the largest sleep apnea studies in history by 
performing advanced statistical analyses on millions of clinical data points using real-world data. 

We consult with physicians at major medical centers throughout the world to identify clinical and technological trends in the treatment 
of sleep apnea, COPD and the other conditions associated with these diseases. New product ideas are also identified by our marketing 
staff, direct sales force and network of distributors, customers, clinicians and patients.  

Sales and Marketing  

We currently market our products in more than 140 countries through a network of distributors and our direct sales force. We attempt 
to tailor our marketing approach to each national market, based on regional awareness of sleep apnea as a health problem, physician 
referral  patterns,  consumer  preferences  and  local  reimbursement  policies.    See  Note  15 –  Segment  Information  of  the  Notes  to 
Consolidated Financial Statements (Part II, Item 8) for financial information about our geographic areas. 

United States, Canada and Latin America.    Our products are typically purchased by a home healthcare dealer who then sells the 
products to the patient. The decision to purchase our products, as opposed to those of our competitors, is made or influenced by one or 
more of the following individuals or organizations: the prescribing physician and his or her staff; the home healthcare dealer; the insurer 
and the patient. In the United States, Canada and Latin America, our sales and marketing activities are conducted through a field sales 
organization made up of regional territory representatives, program development specialists and regional sales directors. Our field sales 
organization markets and sells products to home healthcare dealer branch locations throughout the United States, Canada and Latin 
America.  

We  also  market  our  products  directly  to  physicians  and  sleep  clinics.  Patients  who  are  diagnosed  with  OSA  or  another  respiratory 
condition and prescribed our products are typically referred by the diagnosing physician or sleep clinic to a home healthcare dealer to 
fill the prescription. The home healthcare dealer, in consultation  with the referring physician,  will assist the patient in selecting the 
equipment, fit the patient with the appropriate mask and set the device pressure to the prescribed level.  

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Item 1 

Our SaaS solutions are sold to providers of healthcare in various out-of-hospital settings. We market and sell our Brightree business 
management  software  and  service  solutions  to  providers  in  the  U.S.  and  our  primary  markets  are  HME,  pharmacy,  home  infusion, 
orthotics and prosthetics. Our sales activities for Brightree products are conducted through a sales organization made up of strategic 
account  managers,  sales  engineers  and  sales  directors.  We  develop,  market  and  sell  our  MatrixCare  care  management  and  related 
ancillary  solutions to providers in the U.S. and our primary  markets are senior living, skilled nursing; life plan communities;  home 
health, home care, and hospice agencies as well as related accountable care organizations. Our MatrixCare management solutions are 
primarily sold through direct sales and ancillary solutions are sold both through direct sales and channel partners. 

Combined Europe, Asia and other markets.    We market our products in most major countries in combined Europe, Asia and other 
markets. We have wholly-owned subsidiaries in Austria, Czech Republic, Denmark, Finland, France, Germany, Ireland, Netherlands, 
Norway, Poland, Sweden, Switzerland, the United Kingdom, Australia, China, India, Japan, Korea, New Zealand, Taiwan, and Thailand. 
We use a combination of our direct sales force and independent distributors to sell our products in combined Europe, Asia and other 
markets. We select independent distributors in each country based on their knowledge of respiratory medicine and a commitment to 
sleep apnea therapy. In countries where we sell our products direct, a local senior manager is responsible for direct national sales. In 
many countries we sell our products to home healthcare dealers or hospitals who then sell the products to the patients. In Germany, 
Australia, New Zealand, and South Korea, we also operate a home healthcare company, in which we provide products and services 
directly to patients.  

We do not sell our SaaS products in combined Europe, Asia and other markets. 

Manufacturing  

We operate a globally distributed  manufacturing  network  designed for supply chain resilience, that is intended to control costs and 
minimize risks. Our manufacturing operations consist of specialist component production as well as assembly and testing of our devices, 
masks and accessories. Of the numerous raw materials, parts and components purchased for assembly of our therapeutic and diagnostic 
sleep  disorder  products,  many  are  off-the-shelf  items  available  from  multiple  vendors.  We  also  purchase  uniquely  configured 
components from various suppliers, including some who are single-source suppliers for us.  Any reduction or halt in supply from one 
of these single-source suppliers could limit our ability to manufacture our products or devices until a replacement supplier is found and 
qualified. We generally manufacture to our internal sales forecasts and fill orders as received. We strive for continuous improvement in 
manufacturing processes to deliver year-on-year improvement in output, cost and product quality. Each manufacturing site and team are 
responsible for the quality of their product group and decisions are based on performance and quality measures, including customer 
feedback.  

Our quality management system is based upon the requirements of ISO 9001, ISO 13485, FDA Quality System Regulations for Medical 
Devices,  the  Medical  Device  Directive  (93/42/EEC)  and  other  applicable  regulations  for  the  markets  in  which  we  sell.   Our  main 
manufacturing sites are certified to ISO 13485 and audited at regular intervals by a Notified Body. Additionally, our Sydney, Loyang, 
San  Diego,  Atlanta  and  Moreno  Valley  sites  are  certified  under  the  Medical  Device  Single  Audit  Program  or  MDSAP,  an  audit  of 
medical device manufacturers’ quality management system to satisfy multiple regulatory requirements. MDSAP audits are conducted 
by  a  MDSAP  recognized  auditing  organization  and  can  fulfill  the  needs  of  multiple  regulatory  jurisdictions  (i.e.  Australia,  Brazil, 
Canada, Japan, and the United States of America). 

Our main manufacturing facilities are located in Loyang, Singapore; Sydney, Australia; Chatsworth, California; Johor Bahru, Malaysia; 
Atlanta, Georgia and Suzhou, China. We are establishing a new manufacturing facility in Tuas, Singapore that will eventually replace 
our Loyang facility. Refer to Item 2 for additional details on these properties.  

Third-Party Coverage and Reimbursement 

The cost of medical care in many of the countries in which we operate is funded in substantial part by government and private insurance 
programs. In Germany and Korea, we receive payments directly from these payors but in other countries, although we do not generally 
receive payments for our products directly from these payors, our success in major markets depends on the ability of patients to obtain 
coverage and adequate reimbursement from third-party payors for our products.  

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RESMED INC. AND SUBSIDIARIES 

In the United States, our products are purchased primarily by home healthcare dealers, hospitals or sleep clinics, who invoice third-party 
payors  directly  for  reimbursement.  Domestic  third-party  payors  include  government  payors  such  as  Medicare  and  Medicaid  and 
commercial health insurance plans. These payors may deny coverage and reimbursement if they determine that a device is not used in 
accordance with certain covered treatment methods, or is experimental, unnecessary or inappropriate. The long-term trend towards cost-
containment, through managed healthcare, or other legislative proposals to reform healthcare, could control or significantly influence 
the purchase of healthcare services and products and could result in lower prices for our products.  In some foreign markets, such as 
France,  Germany,  and  Japan,  government  reimbursement  is  currently  available  for  purchase  or  rental  of  our  products,  subject  to 
constraints such as price controls or unit sales limitations.  In Australia, China, and some other foreign markets, there is currently limited 
or no reimbursement for devices that treat OSA. 

Healthcare reform in the United States continues to bring significant changes to the third-party payor landscape. In 2011, the Centers 
for Medicare & Medicaid Services, or CMS, implemented the competitive bidding program, which included DME that we manufacture 
and develop, specifically, oxygen, CPAP and respiratory assist devices (or bilevel devices), and related supplies and accessories. CMS 
is required by law to recompete these contracts at least once every three years. In addition, the 2010 Patient Protection and Affordable 
Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA, required CMS to roll out the 
competitive bidding process nationally or adjust prices in non-competitive bidding areas, also known as the non-bid or Round 3 areas, 
to match competitive bidding prices by 2016.  CMS phased in the new rates beginning January 1, 2016, and the rates became fully 
effective  July 1,  2016.  The  implementation  of  the  competitive  acquisition  program  has  resulted  in  reduced  Medicare  payment  for 
oxygen, CPAP and respiratory assist devices, and related supplies and accessories in both competitive bidding areas and non-competitive 
bidding areas. Through an Interim Final Rule issued in May 2018, CMS increased the fee schedule amounts for certain DME in non-
bid areas that qualify as rural and non-contiguous, setting payment for these areas for June 1, 2018 to December 31, 2018 at a 50/50 
blended reimbursement rate based on the pre-competitive bidding reimbursement rate and the adjusted reimbursement rate set through 
competitive bidding. 

Due to the lapse of competitive bid contracts as of December 31, 2018, effective January 1, 2019, Medicare beneficiaries may receive 
DME  from  any  Medicare-enrolled  supplier  until  new  contracts  are  in  effect  under  the  next  round  of  competitive  bidding,  which  is 
expected to take effect on January 1, 2021. Pricing in competitive bidding areas and non-rural, contiguous non-bid areas will continue 
to use adjusted fee schedule amounts, subject to annual Consumer Price Index (CPI) adjustments, beginning in 2019, until the next 
bidding round takes place. CMS also extended the blended fee schedule amounts for non-bid rural and non-contiguous areas through 
December 31, 2020. Under the  Coronavirus  Aid, Relief, and Economic Security  Act,  or the  CARES  Act, the blended fee schedule 
amounts for non-bid rural and non-contiguous areas was extended through the end of the COVID-19 public health emergency, should 
it extend beyond December 31, 2020, and a blended fee schedule amount was implemented for all other areas for the same period. 

In  the  next  round  of  Durable  Medical  Equipment,  Prosthetics,  Orthotics  and  Supplies  (DMEPOS)  competitive  bidding  program, 
expected to take effect on January 1, 2021, there have been some revisions to the bidding methodology including the plan to implement 
surety bond requirements, lead item pricing, and setting reimbursement rates at the maximum winning bid rate instead of the median 
winning bid rate.  Although CMS previously expanded the categories of devices subject to competitive bidding to include non-invasive 
ventilators, or NIVs, starting in 2021, in response to the COVID-19 pandemic, CMS removed NIVs from Round 2021 of the DMEPOS 
Competitive Bidding Program. 

The ACA, which was passed both to expand the number of individuals  with healthcare coverage and to develop additional revenue 
sources, also included, among other things, a deductible excise tax equal to 2.3% of the price for which medical devices are sold in the 
United States on any entity that manufactures or imports medical devices, with limited exceptions, beginning in 2013. However, this 
excise tax was subsequently suspended by the U.S. Congress for medical device sales, beginning in 2016 and permanently repealed, 
effective  January 1,  2020.    The  ACA  also  provided  for  a  number  of  Medicare  regulatory  requirements,  including  new  face-to-face 
encounter requirements for DME and home health services. 

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RESMED INC. AND SUBSIDIARIES 

We cannot predict at this time the full impact that the ACA, or any U.S. legislation enacted in the future, will have on our revenues, 
profit margins, profitability, operating cash flows and results of operations. There have been judicial and Congressional challenges to 
certain aspects of the ACA, as well as recent efforts by the Trump administration to repeal or replace certain aspects of the ACA, and 
we expect such challenges and amendments to continue. For example, the Tax Cuts and Jobs Act of 2017 includes a provision repealing, 
effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain 
qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On December 14, 2018, a 
U.S. District Court Judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the 
ACA, and therefore, because it was repealed as part of the U.S. Tax Act, the remaining provisions of the ACA are invalid as well. On 
December 18, 2019, the U.S. Court of  Appeals for the 5th Circuit  upheld the District Court ruling that the individual  mandate  was 
unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid 
as well. On March 2, 2020, the U.S. Supreme Court granted the petitions for writs of certiorari to review this case, although it is unclear 
when or how the Supreme Court will rule. It is also unclear how other efforts to challenge, repeal or replace the ACA will impact the 
law or our business. 

Service and Warranty  

We generally offer either one-year or two-year limited warranties on our devices. In some regions and for certain customers we also 
offer extended warranties on our devices for one to three years in addition to our limited warranty. Warranties on mask systems are for 
90 days. Our distributors either repair our products with parts supplied by us or arrange shipment of products to our facilities for repair 
or replacement. We receive returns of our products from the field for various reasons. We believe that the level of returns experienced 
to date is consistent with levels typically experienced by manufacturers of similar devices. We provide for warranties and returns based 
on historical data.  

Competition 

The markets for our products and services are highly competitive. We believe that the principal competitive factors in all of our markets 
are  product  features,  value-added  solutions,  reliability  and  price.  Customer  support,  reputation  and  efficient  distribution  are  also 
important factors. We compete on a market-by-market basis with various companies, some of which have greater financial, research, 
manufacturing and marketing resources than us. The disparity between our resources and those of our competitors may increase as a 
result of the trend towards consolidation in the healthcare industry. In addition, some of our competitors are affiliates of customers of 
ours, which may make it difficult to compete with them.  

Our primary Sleep and Respiratory Care competitors include Philips BV; Fisher & Paykel Healthcare Corporation Limited; DeVilbiss 
Healthcare; Apex Medical Corporation; BMC Medical Co. Ltd.; and regional manufacturers. Finally, our products compete with surgical 
procedures, nerve stimulation devices and dental appliances designed to treat OSA and other sleep apnea-related respiratory conditions. 
The  development  of  new  or  innovative  procedures  or  devices  by  others  could  result  in  our  products  becoming  obsolete  or 
noncompetitive, which would harm our revenues and financial condition. 

For our SaaS business, the market is highly competitive, rapidly evolving, and subject to changing technology, low barriers to entry, 
shifting customer needs and frequent introductions of new products and services. The development of new or innovative solutions by 
others could result in our solutions becoming obsolete or noncompetitive, which would harm our revenues and financial condition. 

Any product developed by us will have to compete for market acceptance and market share. An important factor in such competition 
may be the timing of market introduction of competitive products and solutions. Accordingly, the speed with which we can develop 
products and solutions, complete clinical testing and regulatory clearance processes and provide commercial supply of products and 
solutions  to  the  market  are  important  competitive  factors.  In  addition,  our  ability  to  compete  will  continue  to  be  dependent  on 
successfully protecting our patents and other intellectual property.  

Patents and Proprietary Rights and Related Litigation  

We  rely  on  a  combination  of  patents,  designs,  trademarks,  trade  secrets,  copyrights,  and  non-disclosure  agreements  to  protect  our 
proprietary technology and rights. Some of these patents, patent applications and designs relate to significant aspects and features of our 
products. We believe the combination of these rights, in aggregate, are of material importance to each of our businesses. Through our 
various subsidiaries, as of the date of this report, we own or have licensed rights to over 6,200 pending, allowed or granted patents and 
designs. Patents and designs have various statutory terms based on the legislation in individual jurisdictions which may be subject to 
change. Of our patents, 570 U.S. patents and 1,452 foreign patents are due to expire in the next five years. We believe that the expiration 
of these patents will not have a material adverse impact on our competitive position. 

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Litigation has been necessary in the past and may be necessary in the future to enforce patents issued to us, to protect our rights, or to 
defend  third-party  claims  of  infringement  by  us  of  the  proprietary  rights  of  others.  The  defense  and  prosecution  of  patent  claims, 
including pending claims, as well as participation in other inter-party proceedings, can be expensive and time-consuming, even in those 
instances in which the outcome is favorable to us. Patent laws regarding the enforceability of patents vary from country to country. 
Therefore, there can be no assurance that patent issues will be uniformly resolved, or that local laws will provide us with consistent 
rights and benefits. 

Government Regulations  

FDA 

Our products are subject to extensive regulation particularly as to safety, efficacy and adherence to FDA Quality System Regulation, 
and related manufacturing standards. Medical device products are subject to rigorous FDA and other governmental agency regulations 
in the United States and similar regulations of foreign agencies abroad. The FDA regulates the design, development, research, preclinical 
and clinical testing, introduction, manufacture, advertising, labeling, packaging, marketing, distribution, import and export, and record 
keeping  for  such  products,  in  order  to  ensure  that  medical  products  distributed  in  the  United  States  are  safe  and  effective  for  their 
intended  use.  In  addition,  the  FDA  is  authorized  to  establish  special  controls  to  provide  reasonable  assurance  of  the  safety  and 
effectiveness  of  most  devices.  Non-compliance  with  applicable  requirements  can  result  in  import  detentions,  fines,  civil  and 
administrative penalties, injunctions, suspensions or losses of regulatory approvals, recall or seizure of products, operating restrictions, 
refusal of the government to approve product export applications or allow us to enter into supply contracts, and criminal prosecution.  

Unless an exemption applies, the FDA requires that a manufacturer introducing a new medical device or a new indication for use of an 
existing  medical  device  obtain  either  a  Section 510(k)  premarket  notification  clearance  or  a  premarket  approval,  or  PMA,  before 
introducing it into the U.S. market. The type of marketing authorization is generally linked to the classification of the device.   The FDA 
classifies medical devices into one of three classes (Class I, II or III) based on the degree of risk the FDA determines to be associated 
with a device and the level of regulatory control deemed necessary to ensure the device’s safety and effectiveness. 

Our products currently marketed in the United States are marketed pursuant to 510(k) pre-marketing clearances and are either Class I or 
Class II devices. The process of obtaining a Section 510(k) clearance generally requires the submission of performance data and often 
clinical data, which in some cases can be extensive, to demonstrate that the device is “substantially equivalent” to a device that was on 
the market before 1976 or to a device that has been found by the FDA to be “substantially equivalent” to such a pre-1976 device, a 
predecessor device is referred to as “predicate device.” As a result, FDA clearance requirements may extend the development process 
for a considerable length of time. In addition, in some cases, the FDA may require additional review by an advisory panel, which can 
further lengthen the process. The PMA process, which is reserved for new devices that are not substantially equivalent to any predicate 
device  and  for  high-risk  devices  or  those  that  are  used  to  support  or  sustain  human  life,  may  take  several  years  and  requires  the 
submission of extensive performance and clinical information.  

Medical devices can be marketed only for the indications for which they are cleared or approved.  After a device has received 510(k) 
clearance for a specific intended use, any change or modification that significantly affects its safety or effectiveness, such as a significant 
change in the design, materials, method of manufacture or intended use, may require a new 510(k) clearance or PMA approval and 
payment of an FDA user fee.  The determination as to whether or not a modification could significantly affect the device’s safety or 
effectiveness is initially left to the manufacturer using available FDA guidance; however, the FDA may review this determination to 
evaluate the regulatory status of the modified product at any time and may require the manufacturer to cease marketing and recall the 
modified device until 510(k) clearance or PMA approval is obtained.  The manufacturer may also be subject to significant regulatory 
fines or penalties.   

Any  devices  we  manufacture  and  distribute  pursuant  to  clearance  or  approval  by  the  FDA  are  subject  to  pervasive  and  continuing 
regulation by the FDA and certain state agencies.  These include product listing and establishment registration requirements, which help 
facilitate FDA inspections and other regulatory actions.  As a medical device manufacturer, all of our manufacturing facilities are subject 
to  inspection  on  a  routine  basis  by  the  FDA.  We  are  required  to  adhere  to  applicable  regulations  setting  forth  detailed  cGMP 
requirements, as set forth in the QSR, which require, manufacturers, including third-party manufacturers, to follow stringent design, 
testing,  control,  documentation  and  other  quality  assurance  procedures  during  all  phases  of  the  design  and  manufacturing  process. 
Noncompliance with these standards can result in, among other things, fines, injunctions, civil penalties, recalls or seizures of products, 
total or partial suspension of production, refusal of the government to grant 510(k) clearance or PMA approval of devices, withdrawal 
of  marketing approvals and criminal prosecutions. We believe that our design,  manufacturing and quality control procedures are in 
compliance with the FDA’s regulatory requirements.  

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We  must  also  comply  with  post-market  surveillance  regulations,  including  medical  device  reporting,  or  MDR,  requirements  which 
require that we review and report to the FDA any incident in which our products may have caused or contributed to a death or serious 
injury. We must also report any incident in which our product has malfunctioned if that malfunction would likely cause or contribute to 
a death or serious injury if it were to recur. 

Labeling and promotional activities are subject to scrutiny by the FDA and, in certain circumstances, by the Federal Trade Commission. 
Medical devices approved or cleared by the FDA may not be promoted for unapproved or uncleared uses, otherwise known as “off-
label” promotion. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, 
and a company that is found to have improperly promoted off-label uses may be subject to significant liability, including substantial 
monetary penalties and criminal prosecution. 

Sales of medical devices outside the United States are subject to regulatory requirements that vary widely from country to country.   

EEA 

In  the  European  Economic  Area,  (which  is  comprised  of  the  27  member  states  of  the  European  Union  plus  Norway,  Iceland  and 
Liechtenstein), or EEA, manufacturers of medical devices need to comply with the Essential Requirements laid out in Annex I to the 
EU Medical Devices Directive (Council Directive 93/42/EEC). Compliance with these requirements is a prerequisite to be able to affix 
the  CE  mark  to  medical  devices,  without  which  they  cannot  be  marketed  or  sold  in  the  EEA.  To demonstrate  compliance  with  the 
Essential  Requirements  and  obtain  the  right  to  affix  the  CE  Mark,  manufacturers  of  medical  devices  must  undergo  a  conformity 
assessment procedure, which varies according to the type of medical device and its classification. Except for low-risk medical devices 
(Class I with no measuring function and which are not sterile), where the manufacturer can issue an EC Declaration of Conformity based 
on a self-assessment of the conformity of its products with the Essential Requirements, a conformity assessment procedure requires the 
intervention of a Notified Body, which is an organization designated by a competent authority of an EEA country to conduct conformity 
assessments. Depending on the relevant conformity assessment procedure, the Notified Body would audit and examine the Technical 
File and the quality system for the manufacture, design and final inspection of the devices. The Notified Body issues a CE Certificate 
of Conformity following successful completion of a conformity assessment procedure conducted in relation to the medical device and 
its manufacturer and their conformity with the Essential Requirements. This Certificate entitles the manufacturer to affix the CE mark 
to its medical devices after having prepared and signed a related EC Declaration of Conformity. 

As a general rule, demonstration of conformity of  medical  devices and their  manufacturers  with the essential requirements  must be 
based,  among  other  things,  on  the  evaluation  of  clinical  data  supporting  the  safety  and  performance  of  the  products  during  normal 
conditions  of  use.  Specifically,  a  manufacturer  must  demonstrate  that  the  device  achieves  its  intended  performance  during  normal 
conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against 
the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by 
suitable evidence.  

All manufacturers placing medical devices into the market in the EEA must comply with the EU Medical Device Vigilance System. 
Under this system, incidents must be reported to the relevant authorities of the member states of the EEA, and manufacturers are required 
to take Field Safety Corrective Actions, or FSCAs, to reduce a risk of death or serious deterioration in the state of health associated with 
the  use  of  a  medical  device  that  is  already  placed  on  the  market.  An  incident  is  defined  as  any  malfunction  or  deterioration  in  the 
characteristics and/or performance of a device, as well as any inadequacy in the labeling or the instructions for use which, directly or 
indirectly, might lead to or might have led to the death of a patient or user or of other persons or to a serious deterioration in their state 
of  health.  An  FSCA  may  include  the  recall,  modification,  exchange,  destruction  or  retrofitting  of  the  device.  FSCAs  must  be 
communicated by the manufacturer or its legal representative to its customers and/or to the end users of the device through Field Safety 
Notices. Where appropriate, our products commercialized in Europe are CE marked and classified as either Class I or Class II.   

On April 5, 2017, the European Parliament passed the Medical Devices Regulation, which repeals and replaces the EU Medical Devices 
Directive. Unlike directives, which must be implemented into the national laws of the EEA member states, the regulations would be 
directly applicable (i.e., without the need for adoption of EEA member State laws implementing them) in all EEA member states and 
are intended to eliminate current differences in the regulation of medical devices among EEA member States. The Medical Devices 
Regulation, among other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory framework across 
the EEA for medical devices and in vitro diagnostic devices and ensure a high level of safety and health while supporting innovation.  

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The Medical Device Regulation was meant to become applicable three years after publication (in May 2020). However, on April 23, 
2020, to allow EEA national authorities, notified bodies, manufacturers and other actors to focus fully on urgent priorities related to the 
COVID-19 pandemic, the European Council and Parliament adopted Regulation 2020/561, postponing the date of application of the 
Medical Device Regulation by one year (to May 2021). Once applicable, the new regulations will among other things: 

• 

• 

• 

• 

• 

strengthen the rules on placing devices on the market and reinforce surveillance once they are available; 

establish  explicit  provisions  on  manufacturers'  responsibilities  for  the  follow-up  of  the  quality,  performance  and  safety  of 
devices placed on the market; 

improve  the  traceability  of  medical  devices  throughout  the  supply  chain  to  the  end-user  or  patient  through  a  unique 
identification number; 

set  up  a  central  database  to  provide  patients,  healthcare  professionals  and  the  public  with  comprehensive  information  on 
products available in the EU; and 

strengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional 
check by experts before they are placed on the market. 

These modifications may have an impact on the way we design and manufacture products and the way we conduct our business in the 
EEA. We are progressing in our plans to meet the new requirements. 

Other regulatory bodies 

Our devices are sold in multiple countries and often need to be registered with local regulatory bodies such as the Therapeutic Goods 
Administration in Australia, Health Canada in Canada and CFDA in China.  

Other Healthcare Laws 

We are subject to a number of laws and regulations that may restrict our business practices, including, without limitation, anti-kickback, 
false claims, physician payment transparency and data privacy and security laws.  The government has interpreted these laws broadly 
to apply to the marketing and sales activities of manufacturers and distributors like us. 

The federal Anti-Kickback Statute prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, 
offering  or  providing  remuneration,  directly  or  indirectly,  in  cash  or  in  kind,  in  exchange  for  or  to  induce  either  the  referral  of  an 
individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service for which payment may be made, 
in whole or in part, under federal healthcare programs such as Medicare and Medicaid. In addition, a person or entity does not need to 
have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. Violations of the federal Anti-
Kickback Statute may result in significant civil monetary penalties for each violation, plus up to three times the remuneration involved. 
Violations  of  the  Federal  Anti-Kickback  Statute  can  also  result  in  criminal  penalties,  including  significant  criminal  fines  and 
imprisonment.  In  addition,  violations  can  result  in  debarment,  suspension  or  exclusion  from  participation  in  government  healthcare 
programs, including Medicare and Medicaid. 

The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be 
presented, a false or fraudulent claim for payment or approval to the federal government or knowingly making, using or causing to be 
made or used a false record or statement material to a false or fraudulent claim to the federal government. A claim includes “any request 
or demand” for money or property presented to the U.S. government. The civil False Claims Act also applies to false submissions that 
cause the government to be paid less than the amount to which it is entitled, such as a rebate. Intent to deceive is not required to establish 
liability under the civil False Claims Act. In addition, a claim including items or services resulting from a violation of the federal Anti-
Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. When an entity is determined 
to have violated the federal civil False Claims Act, the government may impose significant civil fines and penalties for each false claim, 
plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs. Private 
suits filed under the civil False Claims Act, known as qui tam actions, can be brought by individuals on behalf of the government. These 
individuals may share in any amounts paid by the entity to the government in fines or settlement. 

The federal Civil Monetary Penalties Law prohibits, among other things, the offering or transfer of remuneration to a Medicare or state 
healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular 
provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an exception applies. 

Additionally, there has been  a recent trend of increased federal and state regulation of payments and transfers of value provided to 
healthcare professionals or entities.  

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The federal Physician Sunshine Act, which requires certain manufacturers of drugs, biologicals, and medical devices or supplies that 
require premarket approval by or notification to the FDA, and for which payment is available under Medicare, Medicaid or the Children’s 
Health Insurance Program, to report annually to the CMS information related to (i) payments and other transfers of value to teaching 
hospitals, physicians (as defined by statute) and, beginning in 2022, physician assistants, nurse practitioners and other practitioners, and 
(ii)  ownership  and  investment  interests  held  by  such  providers  and  their  immediate  family  members.  Applicable  manufacturers  are 
required to submit annual reports to CMS. Failure to submit required information may result in significant civil monetary penalties for 
each failure and additional penalties for “knowing failures”, for all payments, transfers of value or ownership or investment interests 
that are not timely, accurately, and completely reported in an annual submission, and may result in liability under other federal laws or 
regulations.  Certain  states  also  mandate  implementation  of  commercial  compliance  programs,  impose  restrictions  on  device 
manufacturer marketing practices and/or require the tracking and reporting of gifts, compensation and other remuneration to healthcare 
professionals and entities. 

The  federal  Health  Insurance  Portability  and  Accountability  Act  of  1996,  or  HIPAA,  created  federal  criminal  statutes  that  prohibit 
among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, 
including  private  third-party  payors,  knowingly  and  willfully  embezzling  or  stealing  from  a  healthcare  benefit  program,  willfully 
obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material 
fact  or  making  any  materially  false,  fictitious  or  fraudulent  statement  in  connection  with  the  delivery  of  or  payment  for  healthcare 
benefits, items or services. Like the Anti-Kickback Statute, a person or entity does not need to have actual knowledge of these statutes 
or specific intent to violate them in order to have committed a violation. 

Also, many U.S. states and countries outside the U.S. have similar fraud and abuse statutes or regulations that may be broader in scope 
and may apply regardless of payor, in addition to items and services reimbursed under government programs. 

Under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, which 
we collectively refer to as HIPAA, the Department of Health and Human Services, or HHS, has issued regulations, including the HIPAA 
Privacy, Security and Breach Notification Rules, to protect the privacy and security of protected health information, or PHI, used or 
disclosed by covered entities including health care providers and their business associates. HIPAA also regulates standardization of data 
content, codes and formats used in health care transactions and standardization of identifiers for health plans and providers. Penalties 
for violations of HIPAA regulations include significant civil and criminal penalties for each violation. In addition to federal privacy and 
security regulations, there are a number of state laws governing confidentiality and security of personally identifiable information that 
are applicable to our business. For example, the California Consumer Privacy Act, or the CCPA, became effective on January 1, 2020. 
The  CCPA  gives  California  residents  expanded  rights  to  access  and  delete  their  personal  information,  opt  out  of  certain  personal 
information sharing and receive detailed information about how their personal information is used by requiring covered companies to 
provide new disclosures to California consumers (as that term is broadly defined) and provide such consumers new ways to opt-out of 
certain sales of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data 
breaches that is expected to increase data breach litigation. Although the law includes limited exceptions, including for “protected health 
information” maintained by a covered entity or business associate, it may regulate or impact our processing of personal information 
depending on the context. CCPA’s implementation standards and enforcement practices are likely to remain uncertain for the foreseeable 
future, and the CCPA may increase our compliance costs and potential liability. Similar privacy laws have been proposed at the federal 
level and in other states. 

In some of our operations, such as those involving our cloud-based software digital health applications, we are a business associate 
under HIPAA and therefore required to comply with the HIPAA Security Rule, Breach Notification Rule and certain provisions of the 
HIPAA Privacy Rule, as well as the terms of our business associate agreements that we enter into with our covered entity customers, 
and are subject to significant civil and criminal penalties for failure to do so. 

In  addition,  the  General  Data  Protection  Regulation,  or  GDPR,  went  into  effect  in  May  2018.  The  GDPR  imposes  stringent  data 
protection  requirements  for  the  processing  of  personal  data  in  the  European  Economic  Area,  or  EEA.  The  GDPR  imposes  several 
stringent requirements  for controllers and processors of personal data, and  has increased our obligations,  for example, by imposing 
higher standards for obtaining consent from individuals to process their personal data, requiring more robust disclosures to individuals, 
strengthening individual data rights, shortening timelines for data breach notifications, limiting retention periods and secondary use of 
information (including for research purposes), increasing requirements pertaining to health data and pseudonymised (i.e., key-coded) 
data and imposing additional obligations when we contract with third party processors in connection with the processing of the personal 
data. The GDPR also imposes strict rules on the transfer of personal data out of the EEA, including to the United States; recent legal 
developments in Europe have created complexity and uncertainty regarding such transfers of personal data from the EEA to the United 
States. For example, on July 16, 2020, the Court of Justice of the European Union, or CJEU, invalidated the EU-US Privacy Shield 
Framework, or Privacy Shield, under which personal data could be transferred from the EEA to United States entities that had self-

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certified under the Privacy Shield scheme. While the CJEU upheld the adequacy of the standard contractual clauses (a standard form of 
contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy 
Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances. Use of the standard contractual 
clauses  must  now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in 
particular applicable surveillance laws and rights of individuals and additional measures and/or contractual provisions may need to be 
put in place, however, the nature of these additional measures is currently uncertain. European data protection law provides that EEA 
member states may make their own further laws and regulations limiting the processing of genetic, biometric or health data, which could 
limit our ability to use and share personal data or could cause our costs could increase, and harm our business and financial condition. 
The GDPR and other similar regulations impose additional conditions in order to satisfy such consent for electronic marketing, such as 
a prohibition on pre-checked tick boxes and bundled consents, thereby requiring customers to affirmatively consent for a given purpose 
through separate tick boxes or other affirmative action. Failure to comply with the requirements of GDPR and the applicable national 
data protection and marketing laws of the EEA member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide 
annual turnover of the preceding financial year, whichever is higher, and other administrative penalties as well as individual claims for 
compensation.  

Further, following the United Kingdom’s departure from the EU and EEA on January 31, 2020 and the end of the transition period on 
December 31, 2020, we will have to comply with the GDPR and the GDPR as incorporated into the United Kingdom domestic law, the 
Data  Protection  Act  2018,  the  latter  regime  having  the  ability  to  separately  fine  up  to  the  greater  of  £17.5  million  or  4% of  global 
turnover. Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive 
process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules. If we 
fail to comply with any such laws or regulations, we may face significant fines and penalties that could adversely affect our business, 
financial condition and results of operations. 

Numerous  other  state,  federal  and  foreign  laws,  including  consumer  protection  laws  and  regulations,  govern  the  collection, 
dissemination,  use,  access  to,  confidentiality  and  security  of  patient  health  information.  In  addition,  Congress  and  some  states  are 
considering new laws and regulations that further protect the privacy and security of medical records or medical information. With the 
recent increase in publicity regarding data breaches resulting in improper dissemination of consumer information, all 50 states have 
passed  laws  regulating  the  actions  that  a  business  must  take  if  it  experiences  a  data  breach,  such  as  prompt  disclosure  to  affected 
customers. Generally, these laws are limited to electronic data and make some exemptions for smaller breaches. Congress has also been 
considering similar federal legislation relating to data breaches. The Federal Trade Commission, or FTC, and states’ Attorneys General 
have also brought enforcement actions and prosecuted some data breach cases as unfair and/or deceptive acts or practices under the FTC 
Act. In addition to data breach notification laws, some states have enacted statutes and rules requiring businesses to reasonably protect 
certain types of personal information they hold or to otherwise comply with certain specified data security requirements for personal 
information. These laws may apply directly to our business or indirectly by contract when we provide services to other companies. We 
intend to continue to comprehensively protect all personal information and to comply with all applicable laws regarding the protection 
of such information. 

The shifting commercial compliance environment and the need to build and maintain robust systems to comply with different compliance 
or reporting requirements in multiple jurisdictions increase the possibility that a healthcare company may fail to comply fully with one 
or more of these requirements.  If our operations are found to be in violation of any of the health regulatory laws described above or any 
other  laws  that  apply  to  us,  we  may  be  subject  to  penalties,  including  potentially  significant  criminal  and  civil  and  administrative 
penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, contractual 
damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our 
operations, any of which could adversely affect our ability to operate our business and our results of operations.  

Employees  

As of June 30, 2020, we had approximately 7,770 employees or full-time consultants, of which approximately 3,490 were employed in 
cost of sales activities including areas such as warehousing and manufacturing, 1,280 in research and development and 3,000 in sales, 
marketing and administration. Of our employees and consultants, approximately 3,030 were located in the United States, Canada and 
Latin America, 1,560 in Australia, 1,260 in Europe and 1,920 in Asia. We believe that the success of our business will depend, in part, 
on our ability to attract and retain qualified personnel.  

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Item 1A 

Before deciding to purchase, hold or sell our common stock, you should carefully consider the risks described below in addition to the 
other cautionary statements and risks described elsewhere, and the other information contained, in this Report and in our other filings 
with the SEC, including our subsequent reports on Forms 10-Q and 8-K. The risks and uncertainties described below 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. 

Our inability to compete successfully in our markets may harm our business.    The markets for our products, which encompass 
Sleep and Respiratory Care products and SaaS offerings, are highly competitive and are characterized by frequent product improvements 
and  evolving  technology.  Our  ability  to  compete  successfully  depends,  in  part,  on  our  ability  to  develop,  manufacture  and  market 
innovative new products. For our Sleep and Respiratory Care business, the development of innovative new products by our competitors 
or  the  discovery  of  alternative  treatments  or  potential  cures  for  the  conditions  that  our  products  treat  could  make  our  products 
noncompetitive or obsolete. Current competitors, new entrants, academics, and others are trying to develop new devices, alternative 
treatments or cures, and pharmaceutical solutions to the conditions our products treat. For SaaS, the market for business management 
software is highly competitive, rapidly evolving, subject to changing technology, with low barriers to entry, shifting customer needs and 
frequent introductions of new products and services. Many prospective customers  have invested substantial personnel  and financial 
resources to implement and integrate their current business management software into their operations and, therefore, may be reluctant 
or unwilling to change from their current solution or provider to one of our platforms or products. 

Additionally, some of our competitors have greater financial, research and development, manufacturing and marketing resources than 
we do. The past several years have seen a trend towards consolidation in the healthcare industry and in the markets for our products. 
Industry consolidation could result in greater competition if our competitors combine their resources, if our competitors are acquired by 
other companies with greater resources than ours, or if our competitors become affiliated with customers of ours. This competition could 
increase  pressure  on  us  to  reduce  the  selling  prices  of  our  products  or  could  cause  us  to  increase  our  spending  on  research  and 
development and sales and marketing. If we are unable to develop innovative new products, maintain competitive pricing, and offer 
products that consumers perceive to be as good as those of our competitors, our sales or gross margins could decrease which would 
harm our business.  

Our business depends on our ability to market effectively to dealers of home healthcare products and sleep clinics.    We market 
our products primarily to home healthcare dealers and to sleep clinics that diagnose OSA and other sleep disorders, as well as to non-
sleep  specialist  physician  practices  that  diagnose  and  treat  sleep  disorders.  We  believe  that  these  groups  play  a  significant  role  in 
determining which brand of product a patient will use. The success of our business depends on our ability to market effectively to these 
groups to ensure that our products are properly marketed and sold by these third-parties.  

We have limited resources to market to the sleep clinics, home healthcare dealer branch locations and to the non-sleep specialists, most 
of whom use, sell or recommend several brands of products. In addition, home healthcare dealers have experienced price pressures as 
government and third-party reimbursement has declined for home healthcare products, and home healthcare dealers are requiring price 
discounts and longer periods of time to pay for products purchased from us. We cannot assure  you that physicians  will continue to 
prescribe our products, or that home healthcare dealers or patients will not substitute competing products when a prescription specifying 
our products has been written.  

We have expanded our marketing activities in some markets to target the population with a predisposition to sleep-disordered breathing 
as well as primary care physicians and various medical specialists. We cannot assure you that these marketing efforts will be successful 
in increasing awareness or sales of our products.  

Consolidation in the health care industry could have an adverse effect on our revenues and results of operations.    Many home 
health care dealers and out-of-hospital health providers are consolidating, which may result in greater concentration of market power. 
As the health care industry consolidates, competition to provide goods and services to industry participants may become more intense. 
These industry participants  may try  to use  their  market power to  negotiate price concessions or reductions  for  medical devices and 
components produced by us. If we are forced to reduce our prices because of consolidation in the health care industry, our revenues may 
decrease and our consolidated earnings, financial condition, and/or cash flows may suffer. 

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If we are unable to support our continued growth, our business could suffer.    As we continue to grow, the complexity of our 
operations increases, placing greater demands on our management. Our ability to manage our growth effectively depends on our ability 
to implement and improve our financial and  management information systems on a  timely basis and to effect other changes in our 
business  including,  the  ability  to  monitor  and  improve  manufacturing  systems,  information  technology,  and  quality  and  regulatory 
compliance systems, among others. Unexpected difficulties during expansion, the failure to attract and retain qualified employees, the 
failure to successfully replace or upgrade our management information systems, the failure to manage costs or our inability to respond 
effectively  to growth or plan  for future expansion could cause our growth to stop. If  we fail  to  manage our  growth effectively and 
efficiently, our costs could increase faster than our revenues and our business results could suffer. 

Our business, financial condition and results of operations could be harmed by the effects of the COVID-19 pandemic.    We are 
subject to risks related to the global pandemic associated with COVID-19, which may have an adverse impact on certain aspects of our 
business. Specifically, diagnostic pathways for sleep apnea treatment, including physician practices, HME suppliers and sleep clinics, 
have been impacted and, in some instances, been required, or in the future may be 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 and may continue to result in a decrease in demand 
for our products designed to treat sleep apnea.  

While we have experienced increased demand for our respiratory care products due to the nature of COVID-19, we cannot guarantee 
that demand will continue or that we will be able to identify and obtain adequate raw materials or otherwise maintain operations, supply 
chains and distribution systems to satisfy demand for our products in a cost-effective manner or at all. Additionally, if the increase in 
demand currently being experienced for our respiratory care products declines more abruptly than expected this could adversely impact 
our inventory levels and may result in excess inventory, which we may be unable to sell. Furthermore, due to governments’ varying 
restrictions on international and domestic travel, access to labor for our manufacturing facilities could be adversely impacted. 

Our SaaS business may also be 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, therefore, have been impacted, or may be 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 are implementing significant measures to safeguard their facilities against a potential 
COVID-19 outbreak. Given these challenging business conditions and the uncertain economic environment, we expect businesses will 
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.  

Additionally, the types of restrictions enacted to control the spread of COVID-19 have resulted in most of our employees working from 
home, and have resulted or may result in the employees of our key suppliers and customers working from home or, as noted above, not 
working at all.  Neither we nor our suppliers have significant experience operating with the majority of our work forces working from 
home and this may disrupt our standard operations or significantly hamper our products from moving through our supply chain. If we 
are unable to move products efficiently through the supply chain we may be unable to satisfy customer demand, which could negatively 
impact our results of operations. 

Health regulatory agencies globally may also experience disruptions in their operations as a result of the COVID-19 pandemic. Any 
delay or de-prioritization of our product development activities or delay  in regulatory review resulting  from  such disruptions could 
materially affect our results of operations. 

In addition to existing travel restrictions, countries may continue to close borders, impose prolonged quarantines, and further restrict 
travel, which may also disrupt our ability to move our product by air and sea. The continued spread of COVID-19 has also led to extreme 
disruption and volatility in the global capital markets, which increases the cost of, and adversely impacts access to, capital and increases 
economic uncertainty. While we expect COVID-19 to negatively impact certain aspects of our business, given the rapid and evolving 
nature of the virus and the uncertainty about its impact on society and the global economy, we cannot predict the extent to which it will 
affect our global operations, particularly if these impacts persist or worsen over an extended period of time. 

We are subject to various risks relating to international activities that could affect our overall profitability.    We manufacture 
substantially all of our products outside the United States and sell a significant portion of our products in non-U.S. markets. Sales in 
combined Europe, Asia and other markets accounted for approximately 38% and 39% of our net revenues in the years ended June 30, 
2020 and June 30, 2019 respectively. We expect that sales within these areas will account for approximately 35-40% of our net revenues 
in the foreseeable future. Our sales and operations outside of the U.S. are subject to several difficulties and risks that are separate and 
distinct from those we face in the U.S., including:  

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fluctuations in currency exchange rates; 

tariffs and other trade barriers;  

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compliance with foreign medical device manufacturing regulations;  

difficulty in enforcing agreements and collecting receivables through foreign legal systems; 

reduction in third-party payor reimbursement for our products;  

inability to obtain import licenses;  

the impact of public health epidemics/pandemics on the global economy, such as COVID-19 that has spread globally; 

changes in trade policies and in U.S. and foreign tax policies;  

possible changes in export or import restrictions; and  

the modification or introduction of other governmental policies with potentially adverse effects.  

Any of the above factors may have a material adverse effect on our ability to increase or maintain our non-U.S. sales. 

If we fail to effectively integrate and capitalize on our acquisitions, combining them with our other SaaS operations, our SaaS 
businesses could suffer.    Part of our growth strategy includes acquiring businesses consistent with our commitment to innovation in 
developing products for the diagnosis and treatment of sleep apnea and respiratory care as well as our SaaS business. For example, we 
acquired MatrixCare in November 2018 and Propeller Health in January 2019. The success of our acquisitions will depend, in part, on 
our ability to successfully integrate the business and operations of the acquired companies.  Additionally, our management may have 
their attention diverted while trying to integrate these businesses. If we are not able to successfully integrate the operations, we may not 
realize the anticipated benefits of the acquisitions fully or at all, or may take longer to realize than expected. 

We have made certain assumptions relating to our recent acquisitions that may prove to be materially inaccurate.    We have 
made certain assumptions relating to our recent acquisitions, including MatrixCare, such as: 

• 

• 

• 

• 

projections of each acquired company’s future revenue; 

the amount of goodwill and intangibles that will result from our acquisitions; 

acquisition costs, including transaction, contingent consideration and integration costs; and 

other financial and strategic rationales and risks of the acquisitions. 

While management has made such assumptions in good faith and believes them to be reasonable, the assumptions may turn out to be 
materially  inaccurate,  including  for  reasons  beyond  our  control.  If  these  assumptions  are  incorrect  we  may  change  or  modify  our 
assumptions, and such change or modification could have a material adverse effect on our financial condition or results of operations. 

Our SaaS business depends substantially on customers entering into, renewing, upgrading and expanding their agreements for 
cloud services, term licenses, and maintenance and support agreements with us. Any decline in our customer renewals, upgrades 
or expansions could adversely affect our future operating results.    We typically enter into term-based agreements for our licensed 
on-premises offerings, cloud services, and maintenance and support services, which customers have discretion to renew or terminate at 
the end of the initial term. In order for us to improve our operating results, it is important that new customers enter into renewable 
agreements, and our existing customers renew, upgrade and expand their term-based agreements when the initial contract term expires. 
Our customers have no obligation to renew, upgrade or expand their agreements with us after the terms have expired. Our customers’ 
renewal,  upgrade  and  expansion  rates  may  decline  or  fluctuate  as  a  result  of  a  number  of  factors,  including  their  satisfaction  or 
dissatisfaction  with  our  offerings,  our  pricing,  the  effects  of  general  economic  conditions,  competitive  offerings  or  alterations  or 
reductions in our customers’ spending levels. If our customers do not renew, upgrade or expand their agreements with us or renew on 
terms less favorable to us, our revenues may decline. 

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Government and private insurance plans may not adequately reimburse our customers for our products, which could result in 
reductions in sales or selling prices for our products.    Our ability to sell our products depends in large part on the extent to which 
coverage and adequate reimbursement  for our products  will be available from government health administration authorities, private 
health insurers and other organizations. These third-party payers are increasingly challenging the prices charged for medical products 
and services and can, without notice, deny coverage for our products or treatments that may include the use of our products. Therefore, 
even if a product is approved for marketing,  we cannot  make assurances that coverage and reimbursement  will be available for the 
product,  that  the  reimbursement  amount  will  be  adequate  or  that  the  reimbursement  amount,  even  if  initially  adequate,  will  not  be 
subsequently reduced. For example, in some markets, such as Spain, France and Germany, government coverage and reimbursement 
are  currently  available  for  the  purchase  or  rental  of  our  products  but  are  subject  to  constraints  such  as  price  controls  or  unit  sales 
limitations.  In  other  markets,  such  as  Australia,  there  is  currently  limited  or  no  reimbursement  for  devices  that  treat  sleep  apnea 
conditions. As we continue to develop new products, those products will generally not qualify for coverage and reimbursement until 
they are approved for marketing, if at all.  

In the United States, we sell our products primarily to home healthcare dealers, hospitals and sleep clinics. Reductions in reimbursement 
to our customers by third-party payers, if they occur, may have a material impact on our customers and, therefore, may indirectly affect 
our  pricing  and  sales  to,  or  the  collectability  of  receivables  we  have  from,  those  customers.  A  development  negatively  affecting 
reimbursement stems from the Medicare competitive bidding program mandated by the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA).  Under the program, our customers who provide HME must compete to offer products in designated 
competitive bidding areas, or CBAs. In addition, under the ACA, in 2016, CMS adjusted the prices in non-competitive bidding areas to 
match competitive bidding prices. CMS phased in the new rates beginning January 1, 2016, and were fully effective July 1, 2016. This 
program has significantly reduced the Medicare reimbursement to our customers compared with reimbursement in 2011, at the beginning 
of the program. The 21st Century Cures Act retroactively adjusted rates in non-bid areas to allow for the higher phase-in rates to be paid 
for items furnished between July 1, 2016 and December 31, 2016, rather than the lower fully-adjusted rates. Rules issued by CMS in 
2018 resumed the higher phase-in rates in rural and non-contiguous non-competitive bidding areas for items furnished between June 1, 
2018 and December 31, 2020. Pursuant to the CARES Act, these higher phase-in rates were extended through December 31, 2020, or 
through the end of the COVID-19 public health emergency, and were implemented in areas other than rural areas and noncontiguous 
areas for the same period. On March 7, 2019, CMS announced it would initiate a new round of competitive bidding, named Round 2021, 
with contracts expected to become effective on January 1, 2021, and extend through December 31, 2023. In addition to adopting new 
bidding processes, CMS expanded the product categories included in competitive bidding to include non-invasive ventilators, in addition 
to oxygen. However, due to the COVID-19 pandemic, CMS removed NIVs from Round 2021 of the DMEPOS Competitive Bidding 
Program.  CPAP,  and  respiratory  assist  devices,  and  related  supplies  and  accessories,  which  had  been  included  in  prior  rounds  of 
competitive bidding, remain included in Round 2021. 

We cannot predict at this time the full impact the competitive bidding program and the developments in the competitive bidding program 
will have on our business and financial condition. If changes are  made to this program in the  future, it could affect  amounts being 
recovered by our customers. 

Healthcare reform may have a material adverse effect on our industry and our results of operations.    In March 2010, the ACA 
was signed into law in the United States. The ACA made changes that significantly impacted the healthcare industry, including medical 
device manufacturers. One of the principal purposes of the ACA was to expand health insurance coverage to millions of Americans who 
were  uninsured.  The  ACA  required  adults  not  covered  by  an  employer  or  government-sponsored  insurance  plan  to  maintain  health 
insurance coverage or pay a penalty, a provision commonly referred to as the individual mandate.  

The ACA also contained a number of provisions designed to generate the revenues necessary to fund the coverage expansions. This 
included new fees or taxes on certain health-related industries, including medical device manufacturers. Beginning in 2013, entities that 
manufacture, produce or import medical devices were required to pay an excise tax in an amount equal to 2.3% of the price for which 
such devices are sold in the United States. This excise tax was applicable to our products that are primarily used in hospitals and sleep 
labs,  which  includes  the  ApneaLink,  VPAP  Tx,  certain  Respiratory  Care  and  dental  sleep  products.  Through  a  series  of  legislative 
amendments,  the  tax  was  suspended  beginning  in  2016,  and  permanently  repealed  effective  January  1,  2020.  In  addition  to  the 
competitive bidding changes discussed above, the ACA also included, among other things, demonstrations to develop organizations that 
are paid under a new payment methodology for voluntary coordination of care by groups of providers, such as physicians and hospitals, 
and the establishment of a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative 
clinical effectiveness research. The increased funding and focus on comparative clinical effectiveness research, which compares and 
evaluates the risks and benefits, clinical outcomes, effectiveness and appropriateness of products, may result in lower reimbursements 
by payors for our products and decreased profits to us.  

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Other federal legislative changes have been proposed and adopted since the ACA was enacted. These changes included an aggregate 
reduction in Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013. The CARES Act, which 
was signed into law in March 2020, suspended the payment reductions from May 1, 2020 through December 31, 2020, and extended 
the sequester by one additional year, through 2030.  In addition, on January 2, 2013, the American Taxpayer Relief Act of 2012, was 
signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, and increased 
the statute of limitations period for the government to recover overpayments to providers from three to five years. 

The full impact on our business of the ACA and other new laws is uncertain. Nor is it clear whether other legislative changes will be 
adopted,  if  any,  or  how  such  changes  would  affect  the  demand  for  our  products.  Future  actions  by  the  administration  and  the  U.S. 
Congress  including,  but  not  limited  to,  repeal  or  replacement  of  the  ACA  could  have  a  material  adverse  impact  on  our  results  of 
operations or financial condition. Additionally, all or a portion of the ACA and related subsequent legislation may be modified, repealed 
or  otherwise  invalidated  through  other  judicial  challenge.  For  example,  on  December  14,  2018,  a  U.S.  District  Court  Judge  in  the 
Northern District of Texas, ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it 
was repealed as part of the U.S. Tax Act, the remaining provisions of the ACA are invalid as well. On December 18, 2019, the U.S. 
Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the 
case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well. On March 2, 2020, the 
United States Supreme Court granted the petitions for writs of certiorari to review this case, although it remains unclear when or how 
the Supreme Court will rule. It is also unclear how other efforts to challenge, repeal or replace the ACA will impact the ACA or our 
business. 

Various healthcare reform proposals have also emerged at the state level within the United States. The ACA as well as other federal 
and/or state healthcare reform measures that may be adopted in the future, singularly or in the aggregate, could have a material adverse 
effect on our business, financial condition and results of operations.  

Failure to comply with anti-kickback and fraud regulations could result in substantial penalties and changes in our business 
operations.    Although in the United States we do not provide healthcare services, submit claims for third-party reimbursement, or 
receive payments directly from Medicare, Medicaid or other third-party payors for our products, we are subject to healthcare fraud and 
abuse regulation and enforcement by federal, state and foreign governments, which could significantly impact our business. We also are 
subject to foreign fraud and abuse laws, which vary by country. 

In the United States, the laws that may affect our ability to operate include, but are not limited to: 

• 

• 

the  federal Anti-Kickback  Statute,  which prohibits, among  other things, persons and entities from knowingly and  willfully 
soliciting, receiving, offering, or paying remuneration, directly or indirectly, in cash or in kind, in exchange for or to induce 
either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service 
for  which  payment  may  be  made,  in  whole  or  in  part,  under  federal  healthcare  programs  such  as  Medicare  and  Medicaid.  
A person or entity does not need to have actual knowledge of this statute or specific intent to violate the Anti-Kickback Statute 
itself to have committed a violation. The U.S. government has interpreted this law broadly to apply to the marketing and sales 
activities of manufacturers and distributors like us. Violations of the federal Anti-Kickback Statute may result in significant 
civil monetary penalties for each violation, plus up to three times the remuneration involved. Violations of the Federal Anti-
Kickback Statute can also result in significant criminal penalties and imprisonment; 

federal  civil  and  criminal  false  claims  laws  and  civil  monetary  penalty  laws,  that  prohibit,  among  other  things,  knowingly 
presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, 
knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government 
or  knowingly  concealing  or  knowingly  and  improperly  avoiding  or  decreasing  an  obligation  to  pay  or  transmit  money  or 
property  to  the  federal  government.  These  laws  may  apply  to  manufacturers  and  distributors  who  provide  information  on 
coverage, coding, and reimbursement of their products to persons who do bill third-party payors. In addition, the government 
may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a 
false or fraudulent claim for purposes of the federal civil False Claims Act. Violations can result in debarment, suspension or 
exclusion  from  participation  in  government  healthcare  programs,  including  Medicare  and  Medicaid.  When  an  entity  is 
determined to have violated the federal civil False Claims Act, the government may impose significant civil fines and penalties 
for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal 
healthcare programs. 

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•  HIPAA, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or 
making false statements relating to healthcare matters. A person or entity does not need to have actual knowledge of these 
statutes or specific intent to violate them to have committed a violation. Further, failure to comply with the HIPAA privacy 
and security standards can result in significant civil monetary penalties per violation and, in certain circumstances, significant 
criminal penalties and/or imprisonment;  

• 

• 

• 

the  federal  Physician  Sunshine  Act  requirements  under  the  ACA,  which  impose  reporting  and  disclosure  requirements  on 
device and drug  manufacturers for any  “transfer of  value”  made or distributed by certain  manufacturers of drugs, devices, 
biologics, and medical supplies to physicians (including doctors, dentists, optometrists, podiatrists and chiropractors), teaching 
hospitals, and ownership and investment interests held by physicians and their immediate family members. Beginning in 2022, 
applicable manufacturers also will be required to report such information regarding payments and transfers of value provided, 
as well as ownership and investment interests held, during the previous year to physician assistants, nurse practitioners, clinical 
nurse specialists, certified nurse anesthetists and certified nurse midwives; 

federal  consumer  protection  and  unfair  competition  laws,  which  broadly  regulate  marketplace  activities  and  activities  that 
potentially harm customers; and 

state and foreign law equivalents of each of the above federal laws, such as state anti-kickback and false claims laws that may 
apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require device 
companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated 
by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral 
sources; state laws that require device manufacturers to report information related to payments and other transfers of value to 
physicians and other healthcare providers or marketing expenditures. 

The scope and enforcement of these laws are uncertain and subject to rapid change in the current environment of healthcare reform, 
especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their 
scrutiny  of  interactions  between  healthcare  companies  and  healthcare  providers,  which  has  led  to  a  number  of  investigations, 
prosecutions, convictions and settlements in the healthcare industry.  Responding to investigations can be time-and resource-consuming 
and can divert management’s attention from the business. Additionally, as a result of these types of investigations, healthcare providers 
and entities may face litigation or have to agree to settlements that can include monetary penalties and onerous compliance and reporting 
requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs 
or otherwise have an adverse effect on our business.   

If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us 
now or in the future, we may be subject to penalties, including civil and criminal penalties, damages, fines, disgorgement, exclusion 
from  governmental  health  care  programs,  additional  compliance  and  reporting  obligations,  imprisonment  and  the  curtailment  or 
restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results.  

In December 2019, we entered into a settlement agreement with the U.S. Department of Justice and the U.S. Attorneys’ Offices for the 
District Court of South Carolina, the Southern District of California, the Northern District of Iowa and the Eastern District of New York.  
The agreement resolves five lawsuits originally brought by whistleblowers under the qui tam provisions of the False Claims Act and 
allegations that we: (a) provided DME companies with free telephone call center services and other free patient outreach services that 
enabled these companies to order resupplies for their patients with sleep apnea, (b) provided sleep labs with free and below-cost positive 
airway pressure masks and diagnostic machines, as well as free installation of these machines, (c) arranged for, and fully guaranteed the 
payments  due  on,  interest-free  loans  that  DME  supplies  acquired  from  third-party  financial  institutions  for  the  purchase  of  our 
equipment, and (d) provided non-sleep specialist physicians free home sleep testing devices referred to as “ApneaLink.”  We agreed 
with the government to civilly resolve these matters for a payment of $39.5 million ($37.5 million to the federal government and $2 
million  to  the  various  states)  and  we  incurred  additional  fees  and  administrative  costs  that  typically  accompany  such  a  resolution 
amounting to $1.1 million. The total final costs relating to these matters was $40.6 million. 

Contemporaneous  with  the  civil  settlement,  we  also  entered  into  a  Corporate Integrity  Agreement,  or  CIA,  with  the  Department  of 
Health and Human Services Office of Inspector General.  The CIA requires, among other things, that we implement additional controls 
around our product pricing and sales and that we conduct internal and external monitoring of our arrangements with referrals sources.  
The settlement agreement with the government and the CIA could result in reputational harm, the curtailment or restructuring of our 
operations and an increase in our compliance costs, any of which could materially adversely affect our financial results and our ability 
to operate our business. 

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Our use and disclosure of individually identifiable information, including health information, is subject to federal, state and 
foreign  privacy  and  security  regulations,  and  our  failure  to  comply  with  those  regulations  or  to  adequately  secure  the 
information we hold could result in significant liability or reputational harm.    The privacy and security of personally identifiable 
information stored, maintained, received or transmitted electronically is a major issue in the United States and abroad. While we strive 
to comply with all applicable privacy and security laws and regulations, as well as our own posted privacy policies, legal standards for 
privacy, including but  not limited to  “unfairness” and “deception,” as enforced by the  FTC and state attorneys  general, continue to 
evolve and any failure or perceived failure to comply may result in proceedings or actions against us by government entities or others, 
or could cause us to lose audience and customers, which could have a material adverse effect on our business. Recently, there has been 
an increase in public awareness of privacy issues in the wake of revelations about the activities of various government agencies and in 
the number of private privacy-related lawsuits filed against companies. Concerns about our practices with regard to the collection, use, 
disclosure, or security of personally identifiable information or other privacy-related matters, even if unfounded and even if we are in 
compliance with applicable laws, could damage our reputation and harm our business. 

Numerous  foreign,  federal  and  state  laws  and  regulations  govern  collection,  dissemination,  use  and  confidentiality  of  personally 
identifiable  health  information,  including  (i)  state  privacy  and  confidentiality  laws  (including  state  laws  requiring  disclosure  of 
breaches); (ii) HIPAA; and (iii) European and other foreign data protection laws, including the GDPR. 

HIPAA establishes a set of national privacy and security standards for the protection of individually identifiable health information, or 
protected  health  information,  by  health  plans,  healthcare  clearinghouses  and  healthcare  providers  that  submit  certain  covered 
transactions electronically, or covered entities, and their “business associates,” which are persons or entities that perform certain services 
for, or on behalf of, a covered entity that involve creating, receiving, maintaining or transmitting protected health information. Certain 
portions of our business, such as the cloud-based software digital health applications, are subject to HIPAA as a business associate of 
our covered entity clients.  To provide our covered entity clients with services that involve access to PHI, HIPAA requires us to enter 
into business associate agreements that require us to safeguard PHI in accordance with HIPAA. As a business associate, we are also 
directly liable for compliance with HIPAA. Penalties for violations of HIPAA regulations include civil and criminal penalties. 

HIPAA authorizes state attorneys’ general to file suit under HIPAA on behalf of state residents. Courts can award damages, costs and 
attorneys’ fees related to violations of HIPAA in such cases. While HIPAA does not create a private right of action allowing individuals 
to sue us in civil court for HIPAA violations, its standards have been used as the basis for a duty of care claim in state civil suits such 
as those for negligence or recklessness in the misuse or breach of PHI. 

HIPAA further requires business associates like us to notify our covered entity clients “without unreasonable delay and in no case later 
than 60 calendar days after discovery of the breach.” Covered entities must notify affected individuals “without unreasonable delay and 
in no case later than 60 calendar days after discovery of the breach” if their unsecured PHI is subject to an unauthorized access, use or 
disclosure. If a breach affects 500 patients or more, covered entities must report it to HHS and local media without unreasonable delay, 
and HHS will post the name of the breaching entity on its public website. If a breach affects fewer than 500 individuals, the covered 
entity must log it and notify HHS at least annually. 

If we are unable to properly protect the privacy and security of health information entrusted to us, our solutions may be perceived as not 
secure, we may incur significant liabilities and customers may curtail their use of or stop using our solutions. In addition, if we fail to 
comply with the terms of our business associate agreements with our clients, we are liable not only contractually but also directly under 
HIPAA. 

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In addition, the California Consumer Privacy Act of 2018 or CCPA became effective on January 1, 2020. The CCPA gives California 
residents expanded rights to access and delete their personal information, opt out of certain personal information sharing and receive 
detailed  information  about  how  their  personal  information  is  used  by  requiring  covered  companies  to  provide  new  disclosures  to 
California consumers (as that term is broadly defined) and provide such consumers new ways to opt-out of certain sales of personal 
information. The CCPA includes civil penalties for violations, as well as a private right of action for data breaches that is expected to 
increase data breach litigation. Although the law includes limited exceptions, including for “protected health information” maintained 
by a covered entity or business associate, it may regulate or impact our processing of personal information depending on the context. 
CCPA’s implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and the CCPA 
may increase our compliance costs and potential liability. Any failure or perceived failure by us to comply with privacy or security laws, 
policies, legal obligations or industry standards or any security incident that results in the unauthorized release or transfer of personally 
identifiable information may also result in governmental enforcement actions and investigations, fines and penalties, litigation and/or 
adverse publicity, including by consumer advocacy groups, and could cause our customers to lose trust in us,  which could have an 
adverse  effect  on  our  reputation  and  business.  Such  failures  could  have  a  material  adverse  effect  on  our  financial  condition  and 
operations. If the third parties we work with violate applicable laws, contractual obligations or suffer a security breach, such violations 
may also put us in breach of our obligations under privacy laws and regulations and/or could in turn have a material adverse effect on 
our business. 

We are also subject to laws and regulations in non-U.S. countries covering data privacy and the protection of health-related and other 
personal information. For example, EU member states and other jurisdictions have adopted data protection laws and regulations, which 
impose significant compliance obligations.  Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, 
disclosure  and  security  of  personal  information  that  identifies  or  may  be  used  to  identify  an  individual,  such  as  names,  contact 
information, and sensitive personal data such as health data. These laws and regulations are subject to frequent revisions and differing 
interpretations, and have generally become more stringent over time.  

In addition, the GDPR went into effect in May 2018. The GDPR imposes stringent data protection requirements for the processing of 
personal data in the European Economic Area, or EEA. The GDPR imposes several stringent requirements for controllers and processors 
of personal data, and increased our obligations, for example, by imposing higher standards for obtaining consent from individuals to 
process their personal data, requiring more robust disclosures to individuals, strengthening individual data rights, shortening timelines 
for data breach notifications, limiting retention periods and secondary use of information (including for research purposes), increasing 
requirements pertaining to health data and pseudonymised (i.e., key-coded) data and imposing additional obligations when we contract 
with third party processors in connection with the processing of the personal data. The GDPR also imposes strict rules on the transfer 
of personal data out of the EEA, including to the United States, and recent legal developments in Europe have created complexity and 
uncertainty regarding such transfers of personal data from the EEA to the United States. For example, on July 16, 2020, the Court of 
Justice of the European Union, or CJEU, invalidated the EU-US Privacy Shield Framework, or Privacy Shield, under which personal 
data could be transferred from the EEA to United States entities that had self-certified under the Privacy Shield scheme. While the CJEU 
upheld  the  adequacy  of  the  standard  contractual  clauses  (a  standard  form  of  contract  approved  by  the  European  Commission  as  an 
adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone 
may not necessarily be sufficient in all circumstances. Use of the standard contractual clauses must now be assessed on a case-by-case 
basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of 
individuals and additional measures and/or contractual provisions may need to be put in place, however, the nature of these additional 
measures is currently uncertain. European data protection law provides that EEA member states may make their own further laws and 
regulations limiting the processing of genetic, biometric or health data, which could limit our ability to use and share personal data or 
could cause our costs could increase, and harm our business and financial condition. The GDPR and other similar regulations impose 
additional conditions in order to satisfy such consent for electronic  marketing, such as a prohibition on pre-checked tick boxes and 
bundled  consents,  thereby  requiring  customers  to  affirmatively  consent  for  a  given  purpose  through  separate  tick  boxes  or  other 
affirmative action. Failure to comply with the requirements of GDPR and the applicable national data protection and marketing laws of 
the EEA member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding 
financial year, whichever is higher, and other administrative penalties as well as individual claims for compensation.  

In addition, following the United Kingdom’s departure from the EU and the EEA on January 31, 2020 and the end of the transition 
period on December 31, 2020, we will have to comply with the GDPR and the GDPR as incorporated into the United Kingdom domestic 
law, the Data Protection Act 2018, the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of 
global turnover. Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-
intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection 
rules. If we fail to comply with any such laws or regulations, we may face significant fines and penalties that could adversely affect our 
business, financial condition and results of operations. 

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Our business activities are subject to extensive regulation, and any failure to comply could have a material adverse effect on our 
business,  financial  condition,  or  results  of  operations.    We  are  subject  to  extensive  U.S.  federal,  state,  local  and  international 
regulations regarding our business activities. Failure to comply with these regulations could result in, among other things, recalls of our 
products, substantial  fines and criminal charges against  us or against our employees. Furthermore, certain of our products could be 
subject to recall if the Food and Drug Administration, or the FDA, other regulators or we determine, for any reason, that those products 
are not safe or effective. Any recall or other regulatory action could increase our costs, damage our reputation, affect our ability to 
supply customers with the quantity of products they require and materially affect our operating results.   

Actual or attempted breaches of security, unauthorized disclosure of information, denial of service attacks or the perception 
that personal and/or other sensitive or confidential information in our possession is not secure, could result in a material loss of 
business, substantial legal liability or significant harm to our reputation.    We receive, collect, process, use and store a large amount 
of  information  from  clients  and  our  own  employees,  including  personally  identifiable,  protected  health  and  other  sensitive  and 
confidential  information.  This  data  is  often  accessed  by  us  through  transmissions  over  public  and  private  networks,  including  the 
Internet. The secure transmission of such information over the Internet and other mechanisms is essential to maintain confidence in our 
information technology systems. We have implemented security measures, technical controls and contractual precautions designed to 
identify, detect and prevent unauthorized access, alteration, use or disclosure of our clients’, patients’ and employees’ data. However, 
the techniques used in these attacks change frequently and may be difficult to detect for periods of time and we may face difficulties in 
anticipating  and  implementing  adequate  preventative  measures.  As  a  result  of  the  COVID-19  pandemic,  we  may  face  increased 
cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may 
create additional opportunities for cybercriminals to exploit vulnerabilities. Beyond external criminal activity, systems that access or 
control access to our services and databases may be compromised as a result of human error, fraud or malice on the part of employees 
or third parties, or may result from accidental technological failure. Because the techniques used to circumvent security systems can be 
highly sophisticated and change frequently, often are not recognized until launched against a target and may originate from less regulated 
and remote areas around the world, we may be unable to proactively address all possible techniques or implement adequate preventive 
measures for all situations.  

If someone is able to circumvent or breach our security systems, they could steal any information located therein or cause serious and 
potentially long lasting disruption to our operations. Security breaches or attempts thereof could also damage our reputation and expose 
us to a risk of monetary loss and/or litigation, fines and sanctions. We also face risks associated with security breaches affecting third 
parties that conduct business with us or our clients and others  who interact  with our data. While we  maintain insurance that covers 
certain security and privacy breaches, we may not carry appropriate insurance or maintain sufficient coverage to compensate for all 
potential liability.  

We are subject to diverse laws and regulations relating to data privacy and security, including HIPAA and European data privacy laws. 
Complying with these numerous and complex regulations is expensive and difficult, and failure to comply with these regulations could 
result in regulatory scrutiny, fines and civil liability. In addition, any security breach or attempt thereof could result in liability for stolen 
assets  or  information,  additional  costs  associated  with  repairing  any  system  damage,  incentives  offered  to  clients  or  other  business 
partners  to  maintain  business  relationships  after  a  breach,  and  implementation  of  measures  to  prevent  future  breaches,  including 
organizational changes, deployment of additional personnel and protection technologies, employee training and engagement of third-
party experts and consultants. Additionally, the costs incurred to remediate any data security or privacy incident could be substantial. 

We  cannot  assure  you  that  any  of  our  third-party  service  providers  with  access  to  our  or  our  clients  and/or  employees’  personally 
identifiable and other sensitive or confidential information will maintain appropriate policies and practices regarding data privacy and 
security in compliance with all applicable laws or that they will not experience data security breaches or attempts thereof, which could 
have a corresponding effect on our business. 

If  there  are  interruptions  or  performance  problems  associated  with  our  technology  or  infrastructure,  our  existing  SaaS 
customers  may  experience  service  outages,  and  our  new  customers  may  experience  delays  in  the  deployment  of  our 
platform.    We depend on services from various third parties as well as our own technical operations infrastructure to distribute our 
SaaS products via the Internet. If a service provider fails to provide sufficient capacity to support our platform or otherwise experiences 
service outages, such failure could interrupt our customers’ access to our service, which could adversely affect their perception of our 
platform's reliability and our revenues. Any disruptions in these services, including as a result of actions outside of our control, would 
significantly  impact  the  continued  performance  of  our  SaaS  products.  In  the  future,  these  services  may  not  be  available  to  us  on 
commercially reasonable terms, or at all. Any loss of the right to use any of these services could result in decreased functionality of our 
SaaS products until equivalent technology is either developed by us or, if available from another provider, is identified, obtained and 
integrated into our infrastructure.  

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To meet our business needs, we must maintain sufficient excess capacity in our operations infrastructure to ensure that our SaaS products 
are accessible. Design and mechanical errors, spikes in usage volume and failure to follow system protocols and procedures could cause 
our systems to fail, resulting in interruptions in our SaaS products. Any interruptions or delays in our service, whether or not caused by 
our products, or as a result of third-party error, our own error, natural disasters or security breaches, whether accidental or willful, could 
harm our relationships with customers and cause our revenue to decrease and/or our expenses to increase.  

Any of the above circumstances or events may harm our reputation, cause customers to terminate their agreements with us, impair our 
ability to obtain contract renewals from existing customers, impair our ability to grow our customer base, result in the expenditure of 
significant  financial,  technical  and  engineering  resources,  subject  us  to  financial  penalties  and  liabilities  under  our  service  level 
agreements, and otherwise harm our business, results of operations and financial condition. 

Product  sales,  introductions  or  modifications  may  be  delayed  or  canceled  as  a  result  of  FDA  regulations  or  similar  foreign 
regulations, which could cause our sales and profits to decline.    Unless a product is exempt, before we can market or sell a new 
medical device in the United States, we must obtain FDA clearance or approval, which can be a lengthy and time-consuming process.  
We generally receive clearance from the FDA to market our products in the United States under Section 510(k) of the Federal Food, 
Drug, and Cosmetic Act or our products are exempt from the Section 510(k) clearance process. The 510(k) clearance process can be 
expensive,  time-consuming  and  uncertain.  In  the  510(k)  clearance  process,  the  FDA  must  determine  that  a  proposed  device  is 
“substantially equivalent” to a device legally on the market, known as a “predicate” device, with respect to intended use, technology 
and safety and effectiveness, in order to clear the proposed device for marketing. The FDA has a high degree of latitude when evaluating 
submissions and may determine that a proposed device submitted for 510(k) clearance is not substantially equivalent to a predicate 
device.  After a device receives 510(k) premarket notification clearance from the FDA, any modification that could significantly affect 
its safety or effectiveness, or that would constitute a major change in the intended use of the device, technology, materials, packaging, 
and certain manufacturing processes may require a new 510(k) clearance or premarket approval.  We have modified some of our Section 
510(k) approved products without submitting new Section 510(k) notices, which we do not believe were required. However, if the FDA 
disagrees with us and requires us to submit new Section 510(k) notifications for modifications to our existing products, we may be 
required to stop marketing the products while the FDA reviews the Section 510(k) notification. 

Any  new  product  introduction  or  existing  product  modification  could  be  subjected  to  a  lengthier,  more  rigorous  FDA  examination 
process. For example, in certain cases we may need to conduct clinical trials of a new product before submitting a 510(k) notice. We 
may also be required to obtain premarket approvals for certain of our products. Indeed, recent trends in the FDA’s review of premarket 
notification submissions suggest that the FDA is often requiring manufacturers to provide new, more expansive, or different information 
regarding a particular device than what the manufacturer anticipated upon 510(k) submission.  This has resulted in increasing uncertainty 
and delay in the premarket notification review process. For example, in November 2018, FDA officials announced forthcoming steps 
that the FDA intends to take to modernize the 510(k) premarket notification pathway. Among other things, the FDA announced that it 
plans to develop proposals to drive manufacturers utilizing the 510(k) pathway toward the use of newer predicates. These proposals 
include  plans  to  potentially  sunset  certain  older  devices  that  were  used  as  predicates  under  the  510(k)  clearance  pathway,  and  to 
potentially publish a list of devices that have been cleared on the basis of demonstrated substantial equivalence to predicate devices that 
are more than 10 years old. In September 2019, the FDA also issued revised final guidance establishing a “Safety and Performance 
Based Pathway” for “manufacturers of certain well-understood device types” allowing manufacturers to rely on objective safety and 
performance criteria recognized by the FDA to demonstrate substantial equivalence, obviating the need for manufacturers to compare 
the safety and performance of their medical devices to specific predicate devices in the clearance process. The FDA intends to develop 
and maintain a list of device types appropriate for the “safety and performance based” pathway and will continue to develop product-
specific guidance documents that identify the performance criteria and recommended testing methodologies for each such device type, 
where feasible.  Some of these proposals have not yet been finalized or adopted, and the FDA announced that it would seek public 
feedback prior to publication of any such proposals, and may work with Congress to implement such proposals through legislation.  
Accordingly, it is unclear the extent to which any proposals, if adopted, could impose additional regulatory requirements on  us that 
could delay our ability to obtain new 510(k) clearances, increase the costs of compliance, or restrict our ability to maintain our current 
clearances, or otherwise create competition that may negatively affect our business. 

The FDA’s ongoing review of the 510(k) program may make it more difficult for us to make modifications to our previously cleared 
products, either by imposing stricter requirements on when a manufacturer must submit a new 510(k) for a modification to a previously 
cleared product, or by applying more onerous review criteria to such submissions.  FDA continues to review its 510(k) clearance process 
which could result in additional changes to regulatory requirements or guidance documents which could increase the costs of compliance, 
or  restrict  our  ability  to  maintain  current  clearances.    The  requirements  of  the  more  rigorous  premarket  approval  process  and/or 
significant  changes  to  the  510(k)  clearance  process  could  delay  product  introductions  and  increase  the  costs  associated  with  FDA 
compliance.  Marketing and sale of our products outside the United States are also subject to regulatory clearances and approvals, and 
if we fail to obtain these regulatory approvals, our sales could suffer.  We cannot assure you that any new products we develop will 
receive required regulatory approvals from U.S. or foreign regulatory agencies.  

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We are subject to substantial regulation related to quality standards applicable to our manufacturing and quality processes. 
Our  failure  to  comply  with  these  standards  could  have  an  adverse  effect  on  our  business,  financial  condition,  or  results  of 
operations.    The FDA regulates the approval, manufacturing, and sales and marketing of many of our products in the United States. 
Significant government regulation also exists in Canada, Japan, Europe, and other countries in which we conduct business. As a device 
manufacturer, we are required to register with the FDA and are subject to periodic inspection by the FDA for compliance with the FDA’s 
Quality System Regulation requirements, which require manufacturers of medical devices to adhere to certain regulations, including 
testing,  quality  control  and  documentation  procedures.  In  addition,  the  federal  Medical  Device  Reporting  regulations  require  us  to 
provide information to the FDA whenever there is evidence that reasonably suggests that a device may have caused or contributed to a 
death  or  serious  injury  or,  if  a  malfunction  were  to  occur,  could  cause  or  contribute  to  a  death  or  serious  injury.  Compliance  with 
applicable regulatory requirements is subject to continual review and is rigorously monitored through periodic inspections by the FDA. 
In  the  European  Community,  we  are  required  to  maintain  certain  ISO  certifications  in  order  to  sell our  products  and must  undergo 
periodic  inspections  by  notified  bodies  to  obtain  and  maintain  these  certifications.  Failure  to  comply  with  current  governmental 
regulations and quality assurance guidelines could lead to temporary manufacturing shutdowns, product recalls or related field actions, 
product  shortages  or  delays  in  product  manufacturing.  Efficacy  or  safety  concerns,  an  increase  in  trends  of  adverse  events  in  the 
marketplace,  and/or  manufacturing  quality  issues  with  respect  to our  products  could  lead  to  product  recalls  or  related  field  actions, 
withdrawals, and/or declining sales. 

Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder 
their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from 
being  developed,  cleared  or  approved  or  commercialized  in  a  timely  manner  or  at  all,  which  could  negatively  impact  our 
business.    The  ability  of  the  FDA  to  review  and  clear  or  approve  new  products  can  be  affected  by  a  variety  of  factors,  including 
government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and 
accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions. Average 
review times at the FDA have fluctuated in recent years as a result. In addition, government funding of other government agencies that 
fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at 
the FDA and other agencies may also slow the time necessary for medical devices or modifications to cleared or approved medical 
devices to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.  For example, 
over the last several years, including for 35 days beginning on December 22, 2018, the U.S. government has shut down several times 
and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.  

Separately, in response to the COVID-19 pandemic, on March 10, 2020, the FDA announced its intention to postpone most foreign 
inspections  of  manufacturing  facilities,  and  subsequently,  on  March  18,  2020,  the  FDA  temporarily  postponed  routine  surveillance 
inspections of domestic manufacturing facilities. Regulatory authorities outside the United States may adopt similar restrictions or other 
policy measures in response to the COVID-19 pandemic. Subsequently, on July 10, 2020, the FDA announced its intention to resume 
certain on-site inspections of domestic manufacturing facilities subject to a risk-based prioritization system. The FDA intends to use this 
risk-based assessment system to identify the categories of regulatory activity that can occur within a given geographic area, ranging 
from mission critical inspections to resumption of all regulatory activities. If a prolonged government shutdown occurs, or if global 
health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other 
regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our 
regulatory submissions, which could have a material adverse effect on our business. 

Laws regulating consumer contacts could adversely affect our business operations or create liabilities.    Our business activities 
include contacts with consumers in different parts of the world. Certain laws, such as the U.S. Telephone Consumer Protection Act, 
regulate telemarketing practices and certain automated outbound contacts with consumers, such as phone calls, texts or emails. Our use 
of outbound contacts may be restricted by existing laws, or by laws, regulations, or regulatory decisions that may be adopted in the 
future. Similarly, the new California Consumer Privacy Act of 2018 requires disclosure of our privacy practices to consumers. If we are 
found to have violated these laws or regulations, we may be subjected to substantial fines, penalties, or liabilities to consumers. 

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Our products are the subject of clinical trials conducted by us, our competitors, or other third parties, the results of which may 
be unfavorable, or perceived as unfavorable, and could have a material adverse effect on our business, financial condition, and 
results of operations.    As a part of the regulatory process to obtain marketing clearance for new products and new indications for 
existing products, or for other reasons, we conduct and participate in numerous clinical trials with a variety of study designs, patient 
populations, and trial endpoints. We, our competitors, or other third parties may also conduct clinical trials involving our commercially 
marketed products.  The results of clinical trials may be unfavorable or inconsistent with previous findings, or could identify safety 
signals associated with our products. Current or future clinical trials may not meet primary endpoints, may reveal disadvantages of our 
products and solutions for various markets we address, or could generate unfavorable or inconsistent clinical data. Clinical data, or the 
market’s or regulatory bodies’ perception of the clinical data, may adversely impact our ability to obtain product clearances or approvals, 
and our position in, and share of, the markets in which we participate.  Moreover, if these clinical trials identify serious safety issues 
associated  with  our  marketed  products,  potentially  adverse  consequences  could  result,  including  that  regulatory  authorities  could 
withdraw clearances or approvals of our products, we could be required to halt the marketing and sales of our products or recall our 
products, we could be required to update our product labeling with additional warnings, we could be sued and held liable for harm 
caused to patients, and our reputation may suffer.  Any of these could have a material adverse impact on our business, financial condition, 
and results of operations.   

Off-label marketing of our products could result in substantial penalties.    The FDA strictly regulates the promotional claims that 
may be made about FDA-cleared products.  In particular, clearance under Section 510(k) only permits us to market our products for the 
uses indicated on the labeling cleared by the FDA. We may request additional label indications for our current products, and the FDA 
may deny those requests outright, require additional expensive clinical data to support any additional indications or impose limitations 
on the intended use of any cleared products as a condition of clearance. If the FDA determines that we have marketed our products for 
off-label use, we could be subject to fines, injunctions or other penalties.  It is also possible that other federal, state or foreign enforcement 
authorities might take action if they consider our business activities to constitute promotion of an off-label use, which could result in 
significant penalties, including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion 
from participation in government healthcare programs, and the curtailment of our operations. Any of these events could significantly 
harm our business and results of operations and cause our stock price to decline. 

Disruptions in the supply of components from our suppliers could result in a significant reduction in sales and profitability.    We 
purchase  configured  components  for  our  devices  from  various  suppliers,  including  some  who  are  single-source  suppliers  for  us. 
Disruptions to our suppliers, including disruptions in connection with the novel strain of coronavirus (COVID-19), may limit our ability 
to manufacture our devices in a timely or cost-effective manner, which could result in a significant reduction in sales and profitability. 
We cannot assure you that a replacement supplier would be able to configure its components for our devices on a timely basis or, in the 
alternative, that we would be able to reconfigure our devices to integrate the replacement part. A reduction or halt in supply while a 
replacement supplier reconfigures its components, or while we reconfigure our devices for the replacement part, would limit our ability 
to manufacture our devices in a timely or cost-effective manner, which could result in a significant reduction in sales and profitability. 
We cannot assure you that our inventories would be adequate to meet our production needs during any prolonged interruption of supply. 

If we fail to attract develop and retain key employees our business may suffer.    Our ability to compete effectively depends on our 
ability to attract and retain key employees, including people in senior management, sales, marketing, technology and R&D positions. 
Competition for top talent in the healthcare industry can be intense. Our ability to recruit and retain such talent will depend on a number 
of factors, including hiring practices of our competitors, compensation and benefits,  work location,  work environment and industry 
economic conditions. If we cannot effectively recruit, develop and retain qualified employees to drive our strategic goals, our business 
could suffer. 

We are subject to potential product liability claims that may exceed the scope and amount of our insurance coverage, which 
would expose  us to liability for uninsured claims.    We are subject to potential product liability claims as a result  of the design, 
manufacture and marketing of medical devices.  Any product liability claim brought against us, with or without merit, could result in 
the increase of our product liability insurance rates. In addition, we would have to pay any amount awarded by a court in excess of our 
policy limits. Our insurance policies have various exclusions, and thus we may be subject to a product liability claim for which we have 
no insurance coverage, in which case, we may have to pay the entire amount of any award. We cannot assure you that our insurance 
coverage will be adequate or that all claims brought against us will be covered by our insurance and we cannot assure you that we will 
be able to obtain insurance in the future on terms acceptable to us or at all. A successful product liability claim brought against us in 
excess of our insurance coverage, if any, may require us to pay substantial amounts, which could harm our business.  

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If our SaaS products fail to perform properly and if we fail to develop enhancements, we could lose customers, become subject 
to service performance or warranty claims and our market share could decline.    Our SaaS operations are dependent upon our 
ability  to  prevent  system  interruptions  and,  as  we  continue  to  grow,  we  will  need  to  devote  additional  resources  to  improving  our 
infrastructure in order to maintain the performance of our products and solutions. The applications underlying our SaaS products are 
inherently  complex  and  may  contain  material  defects  or  errors,  which  may  cause  disruptions  in  availability  or  other  performance 
problems. We have from time to time found defects in our products and may discover additional defects in the future that could result 
in data unavailability, unauthorized access to, loss, corruption or other harm to our customers’ data. While we implement bug fixes and 
upgrades  as  part  of  our  regularly  scheduled  system  maintenance,  we  may  not  be  able  to  detect  and  correct defects  or  errors  before 
implementing our products and solutions. Consequently, we or our customers may discover defects or errors after our products and 
solutions have been deployed. If we fail to perform timely maintenance or if customers are otherwise dissatisfied with the frequency 
and/or duration of our maintenance services and related system outages, our existing customers could elect not to renew their contracts, 
delay or withhold payment, or potential customers may not adopt our products and solutions and our brand and reputation could be 
harmed.  In  addition,  the  occurrence  of  any  material  defects,  errors,  disruptions  in  service  or  other  performance  problems  with  our 
software could result in warranty or other legal claims against us and diversion of our resources. The costs incurred in addressing and 
correcting any material defects or errors in our software and expanding our infrastructure and architecture in order to accommodate 
increased demand for our products and solutions may be substantial and could adversely affect our operating results. 

Our intellectual property may not protect our products, and/or our products may infringe on the intellectual property rights of 
third-parties.    We rely on a combination of patents, trade secrets and non-disclosure agreements to protect our intellectual property. 
Our success depends, in part, on our ability to obtain and maintain United States and foreign patent protection for our products, their 
uses and our processes to preserve our trade secrets and to operate without infringing on the proprietary rights of third-parties. We have 
a number of pending patent applications, and we do not know whether any patents will issue from any of these applications. We do not 
know whether any of the claims in our issued patents or pending applications will provide us with any significant protection against 
competitive products or otherwise be commercially valuable. Legal standards regarding the validity of patents and the proper scope of 
their claims are still evolving, and there is no consistent law or policy regarding the valid breadth of claims. Additionally, there may be 
third-party patents, patent applications and other intellectual property relevant to our products and technology which are not known to 
us and that block or compete with our products. We face the risks that:  

• 

• 

third-parties will infringe our intellectual property rights;  

our non-disclosure agreements will be breached;  

•  we will not have adequate remedies for infringement;  

• 

• 

our trade secrets will become known to or independently developed by our competitors; or  

third-parties will be issued patents that may prevent the sale of our products or require us to license and pay fees or royalties in 
order for us to be able to market some of our products.  

Litigation may be necessary to enforce patents issued to us, to protect our proprietary rights, or to defend third-party claims that we have 
infringed on proprietary rights of others. If the outcome of any litigation or proceeding brought against us were adverse, we could be 
subject to significant liabilities to third-parties, could be required to obtain licenses from third-parties, could be forced to design around 
the patents at issue or could be required to cease sales of the affected products. A license may not be available at all or on commercially 
viable terms, and we may not be able to redesign our products to avoid infringement. Additionally, the laws regarding the enforceability 
of patents vary from country to country, and we cannot assure you that any patent issues we face will be uniformly resolved, or that 
local laws will provide us with consistent rights and benefits. 

Tax  laws,  regulations,  and  enforcement  practices  are  evolving  and  may  have  a  material  adverse  effect  on  our  results  of 
operations,  cash  flows  and  financial  position.    Tax  laws,  regulations,  and  administrative  practices  in  various  jurisdictions  are 
evolving and may be subject to significant changes due to economic, political, and other conditions. There are many transactions that 
occur during the ordinary course of business for which the ultimate tax determination is uncertain, and significant judgment is required 
in  evaluating  and  estimating  our  provision  and  accruals  for  taxes.  Governments  are  increasingly  focused  on  ways  to  increase  tax 
revenues, particularly from multinational corporations, which may lead to an increase in audit activity and aggressive positions taken 
by tax authorities.  

Changes  or  clarifications  to  U.S.  tax  laws  could  materially  affect  the  tax  treatment  of  our  domestic  and  foreign  earnings.  The 
Organisation for Economic Co-operation and Development, an international association of 34 countries, including the United States, 
released the final reports from its Base Erosion and Profit Shifting, or BEPS, Action Plans, which aim to standardize and modernize 
global tax policies. The BEPS Action Plans propose revisions to numerous tax rules, including country-by-country reporting, permanent 
establishment, hybrid entities and instruments, transfer pricing, and tax treaties. The BEPS Action Plans have been or are being enacted 
by countries where we have operations.  

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Table of Contents 

PART I 

RESMED INC. AND SUBSIDIARIES 

Item 1A 

Developments in relevant tax laws, regulations, administrative practices and enforcement practices could have a material adverse effect 
on our operating results, financial position and cash flows, including the need to obtain additional financing. 

We are subject to tax audits by various tax authorities in many jurisdictions.    Our income tax returns are based on calculations 
and assumptions that require significant judgment, and are subject to audit by various tax authorities. In addition, the calculation of our 
tax liabilities involves dealing with uncertainties in the application of complex tax laws.  We regularly assess the potential outcomes of 
examinations by tax authorities in determining the adequacy of our provision for income taxes.   

In connection with the audit by the Australian Taxation Office, or ATO, for the tax years 2009 to 2013, we received Notices of Amended 
Assessments in March 2018. Based on these assessments, the ATO asserted that we owe $151.7 million in additional income tax and 
$38.4 million in accrued interest. We agreed to a payment arrangement with the ATO, whereby an amount of $75.9 million was paid by 
us in April 2018, with the remaining amounts due only if we are unsuccessful in defending our position. In June 2018, we received a 
notice from the ATO claiming penalties of 50% of the additional income tax that was assessed or $75.9 million. In accordance with the 
payment arrangement, all remaining tax, interest and penalty amounts outstanding are due only if we are unsuccessful in defending our 
position. We do not agree with the ATO’s assessments and intend to pursue administrative and legal steps to defend our position. We 
continue to believe we are more likely than not to be successful in defending our position. However, if we are not successful, there may 
be material changes to our past or future taxable income, tax payable or deferred tax assets, we will not receive a refund of the $75.9 
million we paid in April 2018, and we will be required to pay penalties and interest that could materially adversely affect our financial 
results. The ATO is currently auditing tax years 2014 to 2018 and may advance the position that additional taxes are owed for those 
years as well.  

Our quarterly operating results are subject to fluctuation for a variety of reasons.    Our operating results have, from time to time, 
fluctuated on a quarterly basis and may be subject to similar fluctuations in the future. These fluctuations may result from a number of 
factors, including:  

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

the introduction of new products by us or our competitors;  

the geographic mix of product sales;  

the success and costs of our marketing efforts in new regions;  

changes in third-party payor reimbursement;  

timing of regulatory clearances and approvals;  

costs associated with acquiring and integrating new businesses, technologies and product offerings; 

timing of orders by distributors;  

expenditures incurred for research and development;  

competitive pricing in different regions;  

the effect of foreign currency transaction gains or losses; and  

other activities of our competitors.  

Fluctuations in our quarterly operating results may cause the market price of our common stock to fluctuate. 

If a natural or man-made disaster strikes our manufacturing facilities, we will be unable to manufacture our products for a 
substantial amount of time and our sales and profitability will decline.    Our facilities and the manufacturing equipment we use to 
produce  our  products  would  be  costly  to  replace  and  could  require  substantial  lead-time  to  repair  or  replace. The  facilities  may  be 
affected  by  natural  or  man-made  disasters,  including  COVID-19  that  has  spread  globally,  and  in  the  event  they  were  affected  by  a 
disaster, we would be forced to rely on third-party manufacturers. Although we believe we possess adequate insurance for the disruption 
of our business from causalities, such insurance may not be sufficient to cover all of our potential losses and may not continue to be 
available to us on acceptable terms, or at all.  

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Table of Contents 

PART I 

Item 1A 

RESMED INC. AND SUBSIDIARIES 

Delaware law and provisions in our charter and could make it difficult for another company to acquire us.    Provisions of our 
certificate of incorporation may have the effect of delaying or preventing changes in control or management which might be beneficial 
to us or our security holders. In particular, our board of directors has the authority to issue up to 2,000,000 shares of preferred stock and 
to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without further vote or 
action by the stockholders.  The rights of the holders of our common stock will be subject to, and may be adversely affected by, the 
rights of the holders of any preferred stock that may be issued in the future.  The issuance of preferred stock may have the effect of 
delaying, deferring or preventing a change in control, may discourage bids for our common stock at a premium over the market price of 
our common stock and may adversely affect the market price of our common stock and the voting and other rights of the holders of our 
common stock. 

You may not be able to enforce the judgments of U.S. courts against some of our assets or officers and directors.    A substantial 
portion of our assets are located outside the United States.  Additionally, some of our directors and executive officers reside outside the 
United States, along with all or a substantial portion of their assets. As a result, it may not be possible for investors to enforce judgments 
of U.S. courts relating to any liabilities under U.S. securities laws against our assets, those persons or their assets. In addition, investors 
may not be able to pursue claims based on U.S. securities laws against these assets or these persons in non-U.S. courts, where most of 
these assets and persons reside. 

We are increasingly dependent on information technology systems and infrastructure.    Our technology systems are potentially 
vulnerable to breakdown or other interruption by fire, power loss, system malfunction, unauthorized access and other events. Likewise, 
data privacy breaches by employees and others with both permitted and unauthorized access to our systems may pose a risk that sensitive 
data  may  be  exposed  to  unauthorized  persons  or  to  the  public,  or  may  be  permanently  lost.  While  we  have  invested  heavily  in  the 
protection of data and information technology and in related training, there can be no assurance that our efforts will prevent significant 
breakdowns, breaches in our systems or other cyber incidents that could have a material adverse effect upon the reputation, business, 
operations or financial condition of the company. In addition, significant implementation issues may arise as we continue to consolidate 
and outsource certain computer operations and application support activities. 

Our  results  of  operations  may  be  materially  affected  by  global  economic  conditions  generally,  including  conditions  in  the 
financial markets.    Recently, concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, the impact 
of the COVID-19 pandemic, and the ability of sovereign nations to pay their debts have contributed to increased volatility and diminished 
expectations  for  the  economy  and  the  financial  markets  going  forward.  These  factors,  combined  with  volatile  commodity  prices, 
declining business and consumer confidence and increased unemployment, have precipitated an economic slowdown. It is difficult to 
predict how long the current economic conditions will continue and whether the economic conditions will continue to deteriorate.  If 
the economic climate in the United States or outside the United States continues to deteriorate or there is a shift in government spending 
priorities, customers or potential customers could reduce or delay their purchases, which could impact our revenue, our ability to manage 
inventory levels, collect customer receivables, and ultimately decrease our profitability. 

Our leverage and debt service obligations could adversely affect our business.    As of June 30, 2020, our total consolidated debt 
was $1.2 billion.  We may incur additional indebtedness in the future.  Our indebtedness could have adverse consequences, including: 

•  making it more difficult to satisfy our financial obligations; 

• 

• 

• 

• 

increasing our vulnerability to adverse economic, regulatory and industry conditions;  

limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industry in 
which we operate; 

limiting our ability to borrow additional funds for working capital, capital expenditure, acquisitions and general corporate or 
other purposes; and 

exposing us to greater interest rate risk. 

Our debt service obligations will require us to use a portion of our operating cash flow to pay interest and principal in indebtedness, 
which could impede our growth.  Our ability to make payments on, and to refinance, our indebtedness, and to fund capital expenditures 
will  depend  on  our  ability  to  generate  cash  in  the  future.    This  is  subject  to  general  economic,  financial,  competitive,  legislative, 
regulatory, and other factors, many of which are beyond our control. 

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PART I 

Item 1A 

RESMED INC. AND SUBSIDIARIES 

We  may  be  adversely  affected  by  recent  proposals  to  reform  LIBOR.    Certain  of  our  financial  arrangements,  including  credit 
facilities, are made at variable interest rates that use the London Interbank Offered Rate, or LIBOR (or metrics derived from or related 
to LIBOR), as a benchmark for establishing the interest rate.  On July 27, 2017, the United Kingdom’s Financial Conduct Authority 
announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.  These reforms may cause LIBOR 
to cease to exist, new methods of calculating LIBOR to be established, or alternative reference rates to be established. The Alternative 
Reference Rates Committee (ARRC) has proposed that the Secured Overnight Financing Rate (SOFR) is the rate that represents best 
practice as the alternative to LIBOR for use in financial and other derivatives contracts that are currently indexed to United States dollar 
LIBOR. ARRC has proposed a paced market transition plan to SOFR from LIBOR, and organizations are currently working on industry 
wide and company specific transition plans as it relates to financial and other derivative contracts exposed to LIBOR. Uncertainty exists 
as to the transition process and broad acceptance of SOFR as the primary alternative to LIBOR, and the potential consequences to us 
cannot be fully predicted.  Changes in market interest rates may influence our financing costs, returns on financial investments and the 
valuation of derivative contracts and could reduce our earnings and cash flows. 

We may impair intangible assets, such as goodwill.    We have recorded intangible assets, including goodwill in connection with our 
acquisitions.  At least on an annual basis, we will evaluate whether facts and circumstances indicate any impairment of the values of 
these intangible assets.  As circumstances change, we cannot assure you that the value of these intangible assets will be realized by us.  If 
we determine that a significant impairment has occurred, we will be required to write-off the impaired portion of intangible assets, which 
could have a material adverse effect on our results of operations in the period in which the write-off occurs.   

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Table of Contents 

PART I 

ITEM 1B  UNRESOLVED STAFF COMMENTS  

RESMED INC. AND SUBSIDIARIES 

Items 1B – 4 

We have received no written comments regarding our periodic or current reports from the staff of the SEC that were issued 180 days or 
more before the end of our fiscal year 2020 that remain unresolved. 

ITEM 2  PROPERTIES  

We conduct our operations  in both owned and leased properties. Our principal executive offices and U.S. sales  facilities consist of 
approximately 230,000 square feet and are located on Spectrum Center Boulevard in San Diego, California, in a building we own. We 
have  our  primary  research  and  development  facilities,  as  well  as  office  and  manufacturing  facilities  at  our  owned  site  in  Sydney, 
Australia.  Other  facilities  are  leased  in  Atlanta,  Georgia,  and  Moreno  Valley,  California,  U.S.A.;  Loyang  and  Galaxis,  Singapore; 
Munich, Germany; Lyon, France; Suzhou, China; and Johor Bahru, Malaysia. We are establishing a new manufacturing facility in Tuas, 
Singapore that will eventually replace our Loyang facility. 

We believe that our facilities are adequate to meet the needs of our current business operations. At June 30, 2020, our principal owned 
and leased properties were as follows:  

Location 

  San Diego, California 
  Sydney, Australia 
  Suzhou, China 

  Atlanta, Georgia 

  Moreno Valley, California 
  Tuas, Singapore 
  Munich, Germany 
  Loyang, Singapore 
  Minneapolis, United States 
  Chatsworth, California 
  Lyon, France 
  Halifax, Canada 
  Johor Bahru, Malaysia 

Ownership Status 
(Owned / Leased) 
Owned 
Owned 
Owned 

Square 
footage 
 230,000    Corporate headquarters, sales and administration 
 224,000    Manufacturing, engineering, research and development, sales and administration 
 53,000    Manufacturing, engineering, research and development 

Primary Usage 

Leased 

Leased 
Leased 
Leased 
Leased 
Leased 
Leased 
Leased 
Leased 
Leased 

 522,000   

Warehouse and distribution; SaaS sales and administration, engineering, research and 
development 

 244,000    Warehouse and distribution 
 268,000    Future manufacturing facility, currently being established 
 109,000    Sales and distribution 
 95,000    Manufacturing facility, engineering, research and development 
 86,000    SaaS sales and administration, engineering, research and development 
 72,000    Motor manufacturing, engineering, research and development 
 52,000    Sales and distribution  
 47,000    Engineering, research and development 
 46,000    Engineering, research and development 

ITEM 3  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 Statement 
of Financial Accounting Standard No. 5.  See Note 17 – Legal Actions, Contingencies and Commitments of the Notes to Consolidated 
Financial Statements (Part II, Item 8) included in this report. 

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 4  MINE SAFETY DISCLOSURES 

Not Applicable.   

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Table of Contents 

PART II 

RESMED INC. AND SUBSIDIARIES 

PART II 

Item 5 

ITEM 5  MARKET  FOR  REGISTRANT’S  COMMON  EQUITY,  RELATED  STOCKHOLDER  MATTERS  AND  ISSUER 

PURCHASES OF EQUITY SECURITIES  

Our  common  stock  is  traded on  the  NYSE  under  the  symbol  “RMD”.  As  of  July 31,  2020,  there  were  26  holders  of  record  of  our 
common stock, although the actual number of stockholders of our common stock is greater than this number of holders of record and 
many of these holders of record own shares as nominees on behalf of other beneficial owners. 

Securities Authorized for Issuance Under Equity Compensation Plans 

The information included under Item 12 of Part III of this Report, “Security Ownership of Certain Beneficial Owners and Management 
and Related Stockholder Matters,” is hereby incorporated by reference into this Item 5 of Part II of this Report. 

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. 

In fiscal year 2019, we temporarily suspended our share repurchase program due to recent acquisitions. As a result, we did not repurchase 
any shares during the twelve months ended June 30, 2020. 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 June 30, 2020, 12.9 million additional shares can be repurchased 
under the approved share repurchase program. 

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Table of Contents 

PART II 

RESMED INC. AND SUBSIDIARIES 

PERFORMANCE GRAPH 

Item 5 

This performance graph is furnished and shall not be deemed “filed” with the SEC or subject to Section 18 of the Exchange Act, nor 
shall it be deemed incorporated by reference in any of our filings under the Securities Act of 1933, as amended.  

The following graph compares the cumulative total stockholders return on our common stock from June 30, 2015 through June 30, 2020, 
with the comparable cumulative return of the S&P 500 index, the S&P 500 Health Care index, and the Dow Jones U.S. Medical Devices 
index. The graph assumes that $100 was invested in our common stock and each index on June 30, 2015. In addition, the graph assumes 
the reinvestment of all dividends paid. The stock price performance on the following graph is not necessarily indicative of future stock 
price performance.  

The following table shows total indexed return of stock price plus reinvestments of dividends, assuming an initial investment of $100 
at June 30, 2015, for the indicated periods. 

Index 
ResMed Inc. 
S&P 500 
S&P 500 Health Care 
Dow Jones U.S. Medical Devices 

As of June 30, 

2015 
100 
100 
100 
100 

2016 
115 
102 
96 
115 

2017 
144 
117 
106 
142 

2018 
195 
132 
112 
171 

2019 
233 
143 
125 
206 

2020 
370 
150 
136 
227 

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Table of Contents 

PART II 

ITEM 6  SELECTED FINANCIAL DATA  

RESMED INC. AND SUBSIDIARIES 

Item 6 

The following table summarizes certain selected consolidated financial data for, and as of the end of, each of the fiscal years in the five-
year period ended June 30, 2020. The data set forth below should be read together with Item 7 of Part II of this report, “Management’s 
Discussion and Analysis of Financial Condition and Results of Operations” and Item 8 of Part II of this report, “Consolidated Financial 
Statements and Supplementary Data”, and related notes included elsewhere in this report. The consolidated statement of income data 
for the years ended June 30, 2020, 2019 and 2018 and the consolidated balance sheet data as of June 30, 2020 and 2019 are derived 
from our audited consolidated financial statements included elsewhere in this report. The consolidated statement of income data for the 
years ended June 30, 2017 and 2016 and the consolidated balance sheet data as of June 30, 2018, 2017 and 2016 are derived from our 
audited  consolidated  financial  statements  not  included  in  this  report.  Historical  results  do  not  necessarily  indicate  the  results  to  be 
expected in the future, and the results for the years presented should not be considered to indicate our future results of operations. 

Consolidated Statement of Income Data  
(In thousands, except per share data): 
Net revenue 
Cost of sales (exclusive of amortization shown separately below)   
Amortization of acquired intangible assets* 
Total cost of sales 
Gross profit 
Selling, general and administrative expenses 
Research and development expenses 
Amortization of acquired intangible assets* 
Restructuring expenses 
Litigation settlement expenses 
Acquisition related expenses 
Total operating expenses 
Income from operations 
Other income: 
Interest income (expense), net 
Loss attributable to equity method investments 
Other, net 
Total other income (loss), net 
Income before income taxes 
Income taxes 
Net income 
Basic earnings per share 
Diluted earnings per share 
Dividends per share 
Weighted average: 
     Basic shares outstanding 
     Diluted shares outstanding        

  $ 
  $ 
  $ 
  $ 

2020 
 2,957,013   
 1,189,624   
 49,603   
 1,239,227   
 1,717,786   
 676,689   
 201,946   
 30,092   
 -  
 (600)  
 -  
 908,127   
 809,659   

2019 
 2,606,572   
 1,069,987   
 42,514   
 1,112,501   
 1,494,071   
 645,010   
 180,651   
 32,424   
 9,401   
 41,199   
 6,123   
 914,808   
 579,263   

Years Ended June 30, 
2018 
 2,340,196   
 978,032   
 27,266   
 1,005,298   
 1,334,898   
 600,369   
 155,149   
 19,117   
 18,432   
 -  
 -  
 793,067   
 541,831   

2017 
 2,066,737   
 864,992   
 29,477   
 894,469   
 1,172,268   
 553,968   
 144,467   
 17,101   
 12,358   
 8,500   
 10,076   
 746,470   
 425,798   

 (39,356)  
 (25,058)  
 (12,157)  
 (76,571)  
 733,088   
 111,414   
 621,674    $ 
 4.31    $ 
 4.27    $ 
 1.56    $ 

 (33,857)  
 (15,833)  
 (10,726)  
 (60,416)  
 518,847   
 114,255   
 404,592    $ 
 2.83    $ 
 2.80    $ 
 1.48    $ 

 (11,977)  
 -  
 (8,542)  
 (20,519)  
 521,312   
 205,724   
 315,588    $ 
 2.21    $ 
 2.19    $ 
 1.40    $ 

 (11,151)  
 -  
 4,096   
 (7,055)  
 418,743   
 76,459   
 342,284    $ 
 2.42    $ 
 2.40    $ 
 1.32    $ 

 144,338   
 145,652   

 143,111   
 144,484   

 142,764   
 143,987   

 141,360   
 142,453   

2016 
 1,838,713  
 772,216  
 12,906  
 785,122  
 1,053,591  
 488,057  
 118,651  
 11,017  
 6,914  
 - 
 - 
 624,639  
 428,952  

 5,654  
 - 
 4,960  
 10,614  
 439,566  
 87,157  
 352,409  
 2.51  
 2.49  
 1.20  

 140,242  
 141,669  

*  

Within  our consolidated  statements  of  income  for  the years  ended  June  30,  2020, 2019,  2018, 2017  and 2016,  cost  of  sales has  been  adjusted  to  include 
amortization of acquired intangible assets directly applicable to revenue. As a result, gross profit includes amortization of acquired intangible assets relating 
to cost of sales and operating expenses have been reduced by this amount. There was no impact on income from operations, income before taxes or net income, 
as a result of this reclassification.  

Consolidated Balance Sheet Data (In thousands): 
Working capital 
Total assets 
Long-term debt, less current maturities 
Total stockholders’ equity 

  $ 

  $ 

2020 

 920,698    $ 

 4,587,376   
 1,164,133   
 2,497,027    $ 

2019 

As of June 30, 
2018 

 589,375    $ 

 4,107,682   
 1,258,861   
 2,072,193    $ 

 554,468    $ 

 3,063,923   
 269,988   
 2,058,980    $ 

2017 
 1,283,877    $ 
 3,468,487   
 1,078,611   
 1,960,266    $ 

2016 

 781,730  
 3,256,705  
 873,332  
 1,694,831  

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Table of Contents 

PART II 

Item 7 

RESMED INC. AND SUBSIDIARIES 
Management’s Discussion and Analysis of Financial Condition and Results of Operations 

ITEM 7  MANAGEMENT’S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND  RESULTS  OF 

OPERATIONS 

Overview  

Management’s discussion and analysis of financial condition and results of operations is intended to help the reader understand the 
results of operations and financial condition of ResMed Inc. and subsidiaries. It is provided as a supplement to, and should be read 
together with the selected financial data and consolidated financial statements and notes included elsewhere 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  apnea,  COPD,  neuromuscular  disease  and  other 
chronic diseases. Sleep apnea 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 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, headgear and other accessories, dental devices, portable 
oxygen concentrators 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 sleep apnea and other 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 fiscal year 2020, we invested 
$201.9 million on research and development activities, which represents 6.8% 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 fiscal year 2020, we released new 
products including AirFit N30, a nasal cradle mask with a front-facing tube, and AirFit F30i, a top-of-head connected full face mask as 
well as expanded our AirView offering to include certain respiratory care devices. Due to multiple acquisitions, including of 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 in fiscal year 2020 increased to $2,957.0 million, an increase of 13% compared to fiscal year 2019. Gross profit increased 
for the year ended June 30, 2020 to $1,717.8 million, from $1,494.1 million for the year ended June 30, 2019, an increase $223.7 million 
or 15%. Our net income for the year ended June 30, 2020 was $621.7 million or $4.27 per diluted share compared to net income of 
$404.6 million or $2.80 per diluted share for the year ended June 30, 2019.   

Total operating cash flow for fiscal year 2020 was $802.3 million and at June 30, 2020, our cash and cash equivalents totaled $463.2 
million.  At June 30, 2020, our total assets were $4.6 billion and our stockholders’ equity was $2.5 billion. We paid a quarterly dividend 
of $0.39 per share during fiscal 2020 with a total amount of $225.1 million paid to stockholders. 

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

For discussion related to the results of operations and changes in financial condition for the fiscal year ended June 30, 2019 compared 
to fiscal year June 30, 2018, please refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results 
of Operations” in our Annual Report for the Year Ended June 30, 2019, which was filed with the United States Securities and Exchange 
Commission on August 18, 2019. 

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Table of Contents 

PART II 

Item 7 

RESMED INC. AND SUBSIDIARIES 
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.  

We  have  observed  increased  demand  for  our  ventilator  devices  and  masks,  which  can  be  used  to  treat  COVID-19  patients.  Due  to 
governments’ varying restrictions on international and domestic travel, access to labor for our manufacturing facilities was impacted as 
was the availability of raw materials and components, which constrained our manufacturing capacity and restricted our ability to initially 
meet the substantial demand for ventilators. Our primary focus is maximizing the availability of our ventilators and other respiratory 
support devices for the patients that need them the most in the countries facing the greatest challenges. The global increase in our sales 
for these respiratory care products during fiscal year 2020 generally followed infection patterns around the world. We believe the global 
demand for these devices has largely been met, however, this may change depending on the ability for regions to contain and control 
infection rates, which remains highly uncertain. Additionally, as more becomes known about the virus and as governments pursue testing 
and vaccines, we may see an overall reduction in demand, and then face a corresponding risk of oversupply by us and by our competitors. 
While further outbreaks in the future are highly uncertain, we expect lower demand for ventilator products for the fiscal year ending 
June 30, 2021.  

As  anticipated,  we  observed  lower  demand  for  our  sleep  devices  and  masks  during  the  three  months  ended  June  30, 2020,  and  we 
continue to expect COVID-19 will lead to a temporary decrease in demand for these products from new patients for some or all of our 
fiscal year 2021. Specifically, diagnostic pathways for sleep apnea treatment, including HME suppliers and sleep clinics, have been 
impacted and, in some instances, been required, or in the future may be 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 likely resulted in a decrease in demand from new patients for our products 
designed to treat sleep apnea. Given the ongoing uncertainty regarding the duration and extent of the COVID-19 pandemic and measures 
taken to control the spread of COVID-19, we are uncertain as to the duration and extent of decreased demand for our sleep devices. 
However, due to the nature of the installed base of existing patients using our devices, we expect the demand for re-supply of our masks 
to be less impacted compared to devices.  

Our SaaS business may also be 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, therefore, have been impacted, or may be 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 are implementing significant measures to safeguard their facilities against a potential 
COVID-19 outbreak. Given these challenging business conditions and the uncertain economic environment, we expect businesses will 
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  our  offices  around  the  world.  The  pandemic  has  not 
negatively impacted our liquidity position.  

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PART II 

Item 7 

RESMED INC. AND SUBSIDIARIES 
Management’s Discussion and Analysis of Financial Condition and Results of Operations 

Fiscal Year Ended June 30, 2020 Compared to Fiscal Year Ended June 30, 2019 

Net Revenues.    Net revenue for the year ended June 30, 2020 increased to $2,957.0 million from $2,606.6 million for the year ended 
June 30, 2019, an increase of $350.4 million or 13% (a 15% increase on a constant currency basis). The following table summarizes our 
net revenue disaggregated by segment, product and region for the year ended June 30, 2020 compared to the year ended June 30, 2019 
(in thousands): 

U.S., Canada and Latin America 
Devices 
Masks and other 
Total Sleep and Respiratory Care 
Software as a Service 
Total 
Combined Europe, Asia and other markets  
Devices 
Masks and other 
Total Sleep and Respiratory Care 
Global revenue 
Devices 
Masks and other 
Total Sleep and Respiratory Care 
Software as a Service 
Total 
* 

 2020 

 2019 

  % Change 

Constant 
Currency* 

Year Ended June 30, 

  $ 

  $ 

  $ 

  $ 

  $ 

  $ 

  $ 

  $ 

 792,766    $ 
 779,561   
 1,572,327    $ 
 354,632   
 1,926,959    $ 

 715,056    $ 
 314,998   
 1,030,054    $ 

 1,507,822    $ 
 1,094,559   
 2,602,381    $ 
 354,632   
 2,957,013    $ 

 743,066   
 677,430   
 1,420,496   
 275,789   
 1,696,285   

 618,525   
 291,762   
 910,287   

 1,361,591   
 969,192   
 2,330,783   
 275,789   
 2,606,572   

 7   %  
 15  
 11  
 29  
 14  

 16   %  
 8  
 13  

 11   %  
 13  
 12  
 29  
 13  

 19   % 
 11  
 16  

 12   % 
 14  
 13  
 29  
 15  

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 year ended June 30, 2020 increased to $2,602.4 million from $2,330.8 
million for the year ended June 30, 2019, an increase of $271.6 million or 12%.  Movements in international currencies against the U.S. 
dollar negatively impacted net revenues by approximately  $29.9 million for the  year ended June 30, 2020. Excluding the impact of 
currency movements, total net revenue from our Sleep and Respiratory Care business for the year ended June 30, 2020 increased by 
13% compared to the year ended June 30, 2019. The increase in net revenue was primarily attributable to an increase in unit sales of our 
devices and masks, including as a result of increased demand for our ventilators due to COVID-19.   

Net revenue from our Sleep and Respiratory Care business in the United States, Canada and Latin America for the year ended June 30, 
2020 increased to $1,572.3 million from $1,420.5 million for the year ended June 30, 2019, an increase of $151.8 million or 11%. The 
increase  was primarily due to an increase in unit sales of our devices and  masks, including as a  result of increased demand for our 
ventilators due to COVID-19. 

Net revenue from our Sleep and Respiratory Care business in markets in combined Europe, Asia and other markets increased for the 
year ended June 30, 2020 to $1,030.1 million from $910.3 million for the year ended June 30, 2019, an increase of $119.8 million or 
13% (an increase of 16% 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 as a result of increased demand for our 
ventilators due to COVID-19.  

Net revenue from devices for the  year ended June 30, 2020  increased to $1,507.8  million from $1,361.6  million  for the  year ended 
June 30, 2019, an increase of $146.2 million or 11%, including an increase of 7% in the United States, Canada and Latin America and 
an increase of 16% in combined Europe, Asia and other markets (a 19% increase on a constant currency basis). Excluding the impact of 
foreign currency movements, device sales for the year ended June 30, 2020 increased by 12%. 

Net revenue from masks and other for the year ended June 30, 2020 increased to $1,094.6 million from $969.2 million for the year ended 
June 30, 2019, an increase of 13%, including an increase of 15% in the United States, 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 14%, compared to the year ended June 30, 2019.   

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Table of Contents 

PART II 

Item 7 

RESMED INC. AND SUBSIDIARIES 
Management’s Discussion and Analysis of Financial Condition and Results of Operations 

Software as a Service 
Net revenue from our SaaS business for the year ended June 30, 2020 was $354.6 million, compared to $275.8 million for the year ended 
June 30, 2019, an increase of $78.8 million or 29%. The increase was predominantly due to revenue attributable to MatrixCare, which 
was acquired on November 13, 2018, and continued growth in our SaaS product offerings. 

Gross Profit and Gross Margin.    Within our consolidated statements of income for the years ended June 30, 2020, 2019 and 2018, 
cost of sales has been adjusted to include amortization of acquired intangible assets directly applicable to revenue. As a result, gross 
profit now includes amortization of acquired intangible assets relating to cost of sales and operating expenses have been reduced by this 
amount. There was no impact on income from operations, income before taxes or net income, as a result of this reclassification. The 
adjustments to the previously reported amounts are not material. 

The table below presents a reconciliation of amortization of acquired intangible assets by income statement caption summing to total 
amortization of acquired intangible assets as previously reported for the year ended June 30, 2019 (in thousands): 

Amortization of acquired intangible assets related to cost of sales 
Amortization of acquired intangible assets related to operating expenses 
Total as previously reported 

  $ 

  $ 

2019 

 42,514  
 32,424  
 74,938  

The  table  below  presents  a  reconciliation  of  gross  profit  as  previously  reported  for  the  year  ended  June  30,  2019  adjusted  for  the 
amortization of acquired intangible assets now included in cost of sales (in thousands): 

Gross profit as previously reported 
Amortization of acquired intangible assets related to cost of sales 
Gross profit 

  $ 

  $ 

2019 

 1,536,585  
 (42,514) 
 1,494,071  

Gross profit increased for the year ended June 30, 2020 to $1,717.8 million from $1,494.1 million for the year ended June 30, 2019, an 
increase of $223.7 million or 15%. Gross profit as a percentage of net revenue was 58.1% for the year ended June 30, 2020, compared 
with the 57.3% for the year ended June 30, 2019. The increase in gross margin was due primarily to favorable product mix, which was 
partially offset by an increase in manufacturing and logistics costs as a result of the COVID-19 pandemic and an increase in amortization 
of  intangible  assets  associated  with  MatrixCare  and  Propeller  Health,  which  were  acquired  in  November  2018  and  January  2019, 
respectively. 

Selling, General and Administrative Expenses.    Selling, general and administrative expenses increased for the year ended June 30, 
2020 to $676.7 million from $645.0 million for the year ended June 30, 2019, an increase of $31.7 million or 5%. The selling, general 
and administrative expenses, as reported in U.S. dollars, were favorably impacted by the movement of international currencies against 
the U.S. dollar, which decreased our expenses by approximately $15.1 million. Excluding the impact of foreign currency movements, 
selling, general and administrative expenses for the year ended June 30, 2020 increased by 7% compared to the year ended June 30, 
2019. As a percentage of net revenue, selling, general and administrative expenses for the year ended June 30, 2020 improved to 22.9% 
compared to 24.7% for the year ended June 30, 2019.  

The constant currency increase in selling, general and administrative expenses was primarily due to additional personnel to support our 
commercial activities and additional expenses associated with the consolidation of our acquisitions of MatrixCare and Propeller Health, 
partially offset by a decrease in legal costs and travel, marketing and consulting expenses, either as a direct or indirect result of the 
COVID-19 pandemic. 

Research  and  Development  Expenses.    Research  and  development  expenses  increased  for  the  year  ended  June 30,  2020  to 
$201.9 million from $180.7 million for the year ended June 30, 2019, an increase of $21.3 million or 12%. The research and development 
expenses were favorably impacted by the movement of international currencies against the U.S. dollar, which decreased our expenses 
by  approximately  $4.4 million,  as  reported  in  U.S.  dollars.  Excluding  the  impact  of  foreign  currency  movements,  research  and 
development expenses for the year ended June 30, 2020 increased by 14% compared to the year ended June 30, 2019. As a percentage 
of net revenue, research and development expenses were 6.8% for the year ended June 30, 2020 compared to 6.9% for the year ended 
June 30, 2019.  

The constant currency increase in research and development expenses  was primarily due to additional expenses associated with the 
consolidation of our acquisitions of MatrixCare and Propeller Health as well as additional personnel to facilitate development of new 
products and solutions. 

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Table of Contents 

PART II 

Item 7 

RESMED INC. AND SUBSIDIARIES 
Management’s Discussion and Analysis of Financial Condition and Results of Operations 

Amortization of Acquired Intangible Assets.    Amortization of acquired intangible assets for the year ended June 30, 2020 totaled 
$30.1 million compared to $32.4 million for the year ended June 30, 2019. The decrease in amortization expense was attributable to our 
historical intangible assets becoming fully amortized during the fiscal year. 

Restructuring Expenses.    During the year ended June 30, 2020, we did not incur material restructuring expenses. During the year 
ended  June 30,  2019,  we  incurred  restructuring  expenses  of  $9.4 million  associated  with  the  reorganization,  rationalization  and 
relocation of some of our research and development and SaaS operations including the closure of our German research and development 
site.  We  recorded  the  full  amount  of  $9.4  million  during  the  year  ended  June  30,  2019,  within  our  operating  expenses,  which  was 
separately disclosed as restructuring expenses. The restructuring expenses consisted primarily of severance payments to employees and 
contract exit costs associated with several impacted sites. 

Acquisition Related Expenses.     During the year ended June 30, 2020, we did not incur material acquisition related expenses. During 
the year ended June 30, 2019, we recognized acquisition related expenses of $6.1 million associated primarily with our acquisition of 
MatrixCare.  

Litigation  Settlement  Expenses.    During  the  year  ended  June 30,  2020,  we  did  not  incur  material  litigation  settlement  expenses. 
During the year ended June 30, 2019, we recognized litigation settlement expenses of $41.2 million on account of a tentative agreement 
with the Department of Justice to resolve an ongoing investigation by the government into certain of our product offerings. The final 
agreement, entered into in December 2019, included payment by us of $39.5 million, and additional fees and administrative costs raising 
the overall total to $41.2 million. 

Total Other Income (Loss), Net.    Total other income (loss), net for the year ended June 30, 2020 was a loss of $76.6 million, compared 
to a loss of $60.4 million for the year ended June 30, 2019.  The change was due primarily to an increase in losses attributable to equity 
method investments for the year ended June 30, 2020 of $25.1 million, compared to $15.8 million for the year ended June 30, 2019. The 
losses attributable to equity method investments relate to our joint venture with Verily whereby we recognize our share of the joint 
venture’s losses. Additionally, interest expense increased to $40.4 million for the year ended June 30, 2020 compared to interest expense 
of $36.2 million for the year ended June 30, 2019. 

Income Taxes.    Our effective income tax rate decreased to 15.2% for the year ended June 30, 2020 from 22.0% for the year ended 
June 30, 2019. Our effective income tax rate was affected by the geographic mix of our earnings and windfall tax benefits related to the 
vesting or settlement of employee share-based awards.  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. 

Finally, in connection with the audit by the Australian Tax Office (the “ATO”) for the tax years 2009 to 2013, we received Notices of 
Amended Assessments in March 2018. Based on these assessments, the ATO asserted that we owe $151.7 million in additional income 
tax and $38.4 million in accrued interest, of which $75.9 million was paid in April 2018 under a payment arrangement with the ATO. 
As of June 30, 2020, we have recorded a receivable in prepaid taxes and other non-current assets for the amount paid as we ultimately 
expect this will be refunded by the ATO. In June 2018, we received a notice from the ATO claiming penalties of 50% of the additional 
income tax that was assessed or $75.9 million.  The ATO is currently auditing tax years 2014 to 2018.  We do not agree with the ATO’s 
assessments and continue to believe we are more likely than not to be successful in defending our position. 

Net  Income  and  Earnings  per  Share.    As  a  result  of  the  factors  above,  our  net  income  for  the  year  ended  June 30,  2020  was 
$621.7 million compared to net income of $404.6 million for the year ended June 30, 2019. Our earnings per diluted share for the year 
ended June 30, 2020 was $4.27 compared to $2.80 for the year ended June 30, 2019, an increase of 53%. 

Liquidity and Capital Resources  

As of June 30, 2020 and June 30, 2019, we had cash and cash equivalents of $463.2 million and $147.1 million, respectively. Working 
capital was $920.7 million and $589.4 million, at June 30, 2020 and June 30, 2019, respectively. As of June 30, 2020 we had $1.2 billion 
of borrowings under our revolving credit facility, term credit facility and senior notes as compared to $1.3 billion at June 30, 2019. In 
response to the uncertainty associated with the COVID-19 pandemic, we increased our cash and cash equivalents position during the 
year by drawing down from our revolving credit facility. As of June 30, 2020, we had $1.1 billion available for draw down under the 
revolving credit facility and a combined total of $1.5 billion in cash and available liquidity under the revolving credit facility. 

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Table of Contents 

PART II 

Item 7 

RESMED INC. AND SUBSIDIARIES 
Management’s Discussion and Analysis of Financial Condition and Results of Operations 

As of June 30, 2020 and June 30, 2019, our cash and cash equivalent balances held within the United States amounted to $158.8 million 
and $33.6 million, respectively. Our remaining cash and cash equivalent balances at June 30, 2020 and June 30, 2019, of $304.4 million 
and $113.5 million, respectively, were held by our non-U.S. subsidiaries. Our cash and cash equivalent balances are held at highly rated 
financial institutions.  

We repatriated $400.0 million and $360.0 million to the United States during both the years ended June 30, 2020 and 2019, respectively, 
from earnings generated in each of those years. The amount of the current year foreign earnings that we have repatriated to the United 
States in the past has been determined, and the amount that we expect to repatriate during fiscal year 2021 will be determined, based on 
a variety of factors, including current year earnings of our foreign subsidiaries, foreign investment needs and the cash flow needs we 
have in the United States, such as for the repayment of debt, dividend distributions, and other domestic obligations. 

During the  year ended June 30, 2018, 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. On June 14, 2019, the U.S. 
Treasury Department issued final and temporary regulations relating to the repatriation of non-U.S. earnings.  As a result, in the event 
our non-U.S. earnings had not been permanently reinvested, deferred taxes of approximately $194.4 million in U.S. federal deferred tax 
and $5.2 million in U.S. state deferred taxes would have been recognized in the consolidated financial statements. 

Inventories at June 30, 2020 were $416.9 million, an increase of $67.3 or 19% over the balance at June 30, 2019 of $349.6 million. The 
increase in inventories was required primarily to support our revenue growth, including increased demand for our ventilators due to 
COVID-19. 

Accounts receivable, net of allowance for doubtful accounts, at June 30, 2020 were $474.6 million, a decrease of $53.9 million or 10% 
over the June 30, 2019 accounts receivable balance of $528.5 million. Accounts receivable days’ sales outstanding of 65 days at June 30, 
2020 decreased by 2 days compared to 67 days at June 30, 2019. Our allowance for doubtful accounts as a percentage of total accounts 
receivable at June 30, 2020 and 2019 was 5.7% and 4.5%, respectively. 

Effective July 1, 2019, we adopted the Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (Topic 842). As of June 30, 2020, 
and in accordance with the new guidance, we have recognized a right-of-use asset (“ROU”) of $118.3 million and a lease liability of 
$123.1 million on the balance sheet for all operating leases, other than those that meet the definition of a short-term lease.  

During the year ended June 30, 2020, we generated cash of $802.3 million from operations compared to $459.1 million for the year 
ended June 30, 2019. The increase in cash generated from operations during the year ended June 30, 2020 was primarily due to the 
increase  in  operating  profit  and  improvement  in  working  capital,  partially  offset  by  higher  inventory  levels.  Movements  in  foreign 
currency exchange rates during the year ended June 30, 2020 had the effect of increasing our cash and cash equivalents by $10.9 million, 
as reported in U.S. dollars.   

During the year ended June 30, 2020, we paid $27.9 million associated with business acquisitions, net of cash acquired, compared to 
$951.4 million during the year ended June 30, 2019.  

We  have  temporarily  suspended  our  share  repurchase  program  and,  accordingly,  did  not  repurchase  any  shares  during  year  ended 
June 30, 2020. During the year ended June 30, 2019, we repurchased 200,000 shares at a cost of $22.8 million under our share repurchase 
program.  During fiscal years 2020 and 2019, we also paid dividends totaling $225.1 million and $211.7 million, respectively. 

Details of contractual obligations at June 30, 2020 are as follows (in thousands):  

Debt 
Interest on debt 
Operating leases 
Purchase obligations 
Total  

Total 
 1,180,000   $ 
 155,129    
 131,382    
 462,996    
 1,929,507   $ 

  $ 

  $ 

2021 

2022 

Payments Due by June 30, 
2024 

2023 

 12,000    $ 
 26,435    
 25,963    
 458,623    
 523,021   $ 

 12,000   $ 
 26,435    
 19,038    
 3,678    
 61,151   $ 

 12,000    $ 
 24,816    
 15,906    
 518    
 53,240   $ 

 644,000   $ 
 16,725    
 13,407    
 111    
 674,243   $ 

2025 

  Thereafter 

 -   $ 
 16,725    
 10,684    
 66    
 27,475   $ 

 500,000 
 43,994 
 46,384 
 - 
 590,378 

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Table of Contents 

PART II 

Item 7 

RESMED INC. AND SUBSIDIARIES 
Management’s Discussion and Analysis of Financial Condition and Results of Operations 

Details of other commercial commitments at June 30, 2020 are as follows (in thousands):  

Standby letter of credit 
Guarantees* 
Total  
* 

Total   

2021 

2022 

2023 

2024 

2025 

  Thereafter 

  $ 

  $ 

 16,318   $ 
 3,302   
 19,620   $ 

 3,638   $ 
 185   
 3,823   $ 

 33   $ 
 24   
 57   $ 

 536   $ 
 38   
 574   $ 

 -   $ 
 49   
 49   $ 

 -   $ 
 18   
 18   $ 

 12,111 
 2,988 
 15,099 

Amount of Commitment Expiration Per Period 

These guarantees mainly relate to requirements under contractual obligations with insurance companies transacting with our German subsidiaries and 
guarantees provided under our facility leasing obligations. 

Refer to Note 17 -  Legal  Actions, Contingencies and  Commitments of the Notes to the  Consolidated Financial Statements (Part II, 
Item 8) for details of our contingent obligations under recourse provisions. 

Segment Information  

We have determined that we have two operating segments, which are the Sleep and Respiratory Care segment and the SaaS segment. 
See Note 15 – Segment Information of the Notes to the Consolidated Financial Statements (Part II, Item 8) for financial information 
regarding segment reporting.  Financial information about our revenues from and assets located in foreign countries is also included in 
the notes to the consolidated financial statements included in this report. 

Credit Facility 

On April 17, 2018, we entered into an amended and restated credit agreement, or 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,  or  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 will 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  will  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 June 30, 2020, the interest rate that was being charged on the outstanding principal amounts was 1.2%.  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. At June 30, 2020, we were in compliance with our debt covenants and there was $680.0 million outstanding under the 
Revolving Credit Agreement and Term Credit Agreement.  

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Table of Contents 

PART II 

Senior Notes 

RESMED INC. AND SUBSIDIARIES 
Management’s Discussion and Analysis of Financial Condition and Results of Operations 

Item 7 

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.  Our  obligations  under  the  Note  Purchase  Agreement  and  the  Notes  are  unconditionally  and 
irrevocably guaranteed by certain of our direct and indirect U.S. subsidiaries, including ResMed Corp., ResMed Motor Technologies 
Inc., Birdie Inc., Inova Labs, Inc., Brightree LLC, Brightree Home Health & Hospice LLC, Brightree Patient Collections LLC, ResMed 
Operations  Inc.,  HEALTHCAREfirst  Holding  Company,  HCF  Holdco  Company,  HEALTHCAREfirst,  Inc.,  CareFacts  Information 
Systems,  LLC  and  Lewis  Computer  Services,  LLC,  MatrixCare  Holdings  Inc.,  MatrixCare,  Inc.,  Reciprocal  Labs  Corporation  and 
ResMed SaaS Inc., under a Subsidiary Guaranty Agreement dated as of July 10, 2019. 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 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 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. 

On June 30, 2020, we  were in compliance  with our debt covenants and there  was a total of $1,180.0  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 undrawn debt facilities. 

Critical Accounting Principles and Estimates  

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect our 
reported  amounts  of  assets  and  liabilities,  revenues  and  expenses  and  related  disclosures  of  contingent  assets  and  liabilities.  On  an 
ongoing  basis  we  evaluate  our  estimates,  including  those  related  to  allowance  for  doubtful  accounts,  inventory  reserves,  warranty 
obligations, goodwill, potentially impaired assets, intangible assets, income taxes and contingencies. 

We state these accounting policies in the notes to the financial statements and at relevant sections in this discussion and analysis. The 
estimates are based on the information that is currently available to us and on various other assumptions that we believe to be reasonable 
under the circumstances. Actual results could vary from those estimates under different assumptions or conditions. 

We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of 
our consolidated financial statements:  

(1)  Valuation of Goodwill, Intangible and Other Long-Lived Assets.    We make assumptions in establishing the carrying value, fair 
value and estimated lives of our goodwill, intangibles and other long-lived assets. Our goodwill impairment tests are performed at our 
reporting unit level, which is one level below our operating segments. The criteria used for these evaluations include management’s 
estimate of the asset’s continuing ability to generate positive income from operations and positive cash flow in future periods compared 
to the carrying value of the asset, as well as the strategic significance of any identifiable intangible asset in our business objectives. If 
assets are considered to be impaired, we recognize as impairment the amount by which the carrying value of the assets exceeds their fair 
value, and for goodwill is limited to the value of goodwill allocated to the impaired reporting unit, as described in Step 1 below. We 
base useful lives and related amortization or depreciation expense on our estimate of the period that the assets will generate revenues or 
otherwise be used by us. Factors that would influence the likelihood of a material change in our reported results include significant 
changes in the asset’s ability to generate positive cash flow, loss of legal ownership or title to the asset, a significant decline in the 
economic and competitive environment on which the asset depends, significant changes in our strategic business objectives, utilization 
of the asset, and a significant change in the economic and/or political conditions in certain countries.  

We conduct an annual review for goodwill impairment at our reporting unit level based on the following steps:  

Step 0 or Qualitative assessment – Evaluate qualitative factors to determine whether it is more likely than not that the fair value 
of a reporting unit is less than its carrying amount, including goodwill. The factors we consider include, but are not limited to, 
macroeconomic conditions, industry and market considerations, cost factors, overall financial performance or events-specific 
to that reporting unit. If or when we determine it is more likely than not that the fair value of a reporting unit is less than the 
carrying amount, including goodwill, we would move to Step 1 of the quantitative method. 

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Table of Contents 

PART II 

Item 7 

RESMED INC. AND SUBSIDIARIES 
Management’s Discussion and Analysis of Financial Condition and Results of Operations 

Step 1 – Compare the fair value for each reporting unit to its carrying value, including goodwill. Fair value is determined based 
on estimated discounted cash flows. A goodwill impairment charge is recognized for the amount that the carrying amount of a 
reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. 
If a reporting unit’s fair value exceeds the carrying value, no further work is performed and no impairment charge is necessary. 

(2)  Income Tax.    We assess our income tax positions and record tax benefits for all years subject to audit based upon management’s 
evaluation of the facts, circumstances and information available at the reporting date.  If we determine that it is not more likely than not 
that we would be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets would be 
charged to income tax expense in the period such determination is made. Alternatively, if we determine that it is more likely than not 
that  the  net  deferred  tax  assets  would  be  realized,  any  previously  provided  valuation  allowance  is  reversed.  These  changes  to  the 
valuation allowance and resulting increases or decreases in income tax expense may have a material effect on our operating results. 

Our income tax returns are based on calculations and assumptions subject to audit by various tax authorities. In addition, the calculation 
of  our  tax  liabilities  involves  dealing  with  uncertainties  in  the  application  of  complex  tax  laws.  Although  currently  immaterial,  we 
recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition 
by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, 
including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount 
that is more than 50% likely of being realized upon settlement. While we believe we have appropriate support for the positions taken on 
our  tax  returns,  we  regularly  assess  the  potential  outcomes  of  examinations  by  tax  authorities  in  determining  the  adequacy  of  our 
provision for income taxes.  Based on our regular assessment, we may adjust the income tax provision and deferred taxes in the period 
in which the facts that give rise to a revision become known. 

In connection with the audit by the ATO for the tax years 2009 to 2013, we received Notices of Amended Assessments in March 2018. 
Based on these assessments, the ATO asserted that we owe $151.7 million in additional income tax and $38.4 million in accrued interest, 
of which $75.9 million was paid in April 2018 under a payment arrangement with the ATO. In June 2018, we received a notice from 
the ATO claiming penalties of 50% of the additional income tax that was assessed or $75.9 million.  At June 30, 2020, we recorded a 
receivable in prepaid taxes and other non-current assets for the amount paid as we ultimately expect this will be refunded by the ATO. 
The ATO is currently auditing tax years 2014 to 2018.  We do not agree with the ATO’s assessments and continue to believe we are 
more likely than not to be successful in defending our position. 

(3)  Revenue Recognition.    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”). 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 to five years. Our contracts do not contain significant financing components. 

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. In 
our Sleep and Respiratory Care business, 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. 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.  We  also 
recognize discount on products as a reduction to revenue when control is transferred. We adjust the estimate of revenue for the impact 
of returned items 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. However, returns of products, excluding warranty-related returns, are infrequent and 
insignificant. 

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. 

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Table of Contents 

PART II 

Item 7 

RESMED INC. AND SUBSIDIARIES 
Management’s Discussion and Analysis of Financial Condition and Results of Operations 

Recently Issued Accounting Pronouncements  

See Note 3 – New Accounting Pronouncements of the Notes to Consolidated Financial Statements (Part II, Item 8) 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.  

Off-Balance Sheet Arrangements  

As of June 30, 2020, 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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Table of Contents 

PART II 

Item 7A 

RESMED INC. AND SUBSIDIARIES 
Quantitative and Qualitative Disclosures About Market and Business Risks 

ITEM 7A 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET AND BUSINESS RISKS 

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 dollar. We have significant foreign currency exposure through both our Australian and Singapore manufacturing activities 
and 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  consolidated 
balance sheets at fair value and included in Other assets current, Other assets non-current, Accrued expenses and Other liabilities non-
current. All movements in the fair value of the foreign currency derivatives are recorded within Other income, net, on our consolidated 
statements of income. 

The table below provides information (in U.S. dollars) on our significant foreign-currency-denominated financial assets by legal entity 
functional currency as of June 30, 2020 (in thousands):  

AUD Functional: 
Assets 
Liability 
Foreign Currency Hedges 
Net Total 
USD Functional: 
Assets 
Liability 
Foreign Currency Hedges 
Net Total 
SGD Functional: 
Assets 
Liability 
Foreign Currency Hedges 
Net Total 

U.S. 
Dollar 
(USD) 

Euro 
(EUR) 

  Great Britain   
Pound  
(GBP) 

Canadian 
Dollar 
(CAD) 

Chinese 
Yuan 
(CNY) 

 412,883   
 (414,802)  
 -  
 (1,919)  

 139,175   
 (120,745)  
 (16,852)  
 1,578   

 -  
 -  
 -  
 -  

 -  
 -  
 -  
 -  

 539,940   
 (238,584)  
 (295,000)  
 6,356   

 145,999   
 (67,624)  
 (73,025)  
 5,350   

 -  
 (309)  
 -  
 (309)  

 -  
 (134)  
 -  
 (134)  

 -  
 -  
 -  
 -  

 -  
 -  
 -  
 -  

 18,949  
 (564) 
 (22,647) 
 (4,262) 

 19,472   
 (5,606)  
 (14,687)  
 (821)  

 -  
 -  
 -  
 -  

 - 
 - 
 - 
 - 

 12  
 - 
 - 
 12  

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Table of Contents 

PART II 

Item 7A 

RESMED INC. AND SUBSIDIARIES 
Quantitative and Qualitative Disclosures About Market and Business Risks 

The table below provides information about our 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  June 30,  2020.  The  table  presents  the  notional 
amounts and weighted average exchange rates by contractual maturity dates for our foreign currency derivative financial instruments. 
These notional amounts generally are used to calculate payments to be exchanged under the options contracts (in thousands, except 
exchange rates):  

Foreign Exchange Contracts 
AUD/USD 
Contract amount 
Ave. contractual exchange rate 
AUD/Euro 
Contract amount 

Ave. contractual exchange rate 

SGD/Euro 
Contract amount 

Ave. contractual exchange rate 

SGD/USD 
Contract amount 

Ave. contractual exchange rate 

AUD/CNY 
Contract amount 

Ave. contractual exchange rate 

USD/CAD 
Contract amount 

Ave. contractual exchange rate 

Interest Rate Risk 

Year 1 

Year 2 

 - 

 - 

Total 

 - 

 61,791 
AUD 1 =  
Euro 0.6293 

 84,260 
SGD 1 = 
Euro 0.6345 

 295,000 
SGD 1 = 
USD 0.7176 

 22,647 
AUD 1 = 
CNY 4.9450 

 14,687 
USD 1 = 
CAD 1.3695 

 11,235 
AUD 1 = 
Euro 0.58 

 5,617 
SGD 1 = 
Euro 0.6120 

 - 

 - 

 - 

 73,026 
AUD 1 = 
Euro 0.6211 

 89,877 
SGD 1 = 
Euro 0.6331 

 295,000 
SGD 1 = 
USD 0.7176 

 22,647 
AUD 1 = 
CNY 4.9450 

 14,687 
USD 1 = 
CAD 1.3695 

Fair Value Assets / (Liabilities) 

June 30, 
2020 

June 30, 
2019 

 - 

 202 

 886 

 (124) 

 126 

 (183) 

 40 

 71 

 (161) 

 (15) 

 (83) 

 (66) 

We are exposed to risk associated  with changes in  interest rates affecting  the return on  our cash and cash equivalents and debt. At 
June 30, 2020, we held cash and cash equivalents of $463.2 million principally comprising of bank term deposits and at-call accounts 
and are invested at both short-term fixed interest rates and variable interest rates. At June 30, 2020, there was $680.0 million outstanding 
under the revolving credit and term loan facilities, which were subject to variable interest rates.  A hypothetical 10% change in interest 
rates during the year ended June 30, 2020, would not have had a material impact on pretax income. We have no interest rate hedging 
agreements. On July 10, 2019, we entered into the 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. The interest rate on these notes is fixed and not subject to fluctuation. Proceeds 
from the issuance and sale of the notes were used to repay borrowings under the revolving credit facility. 

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Table of Contents 

PART II 

Item 8 

ITEM 8  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  

RESMED INC. AND SUBSIDIARIES 

The information required by this Item is incorporated by reference to the financial statements set forth in Item 15 of Part IV of this 
report, “Exhibits and Consolidated Financial Statement Schedules.” 

(a)  Index to Consolidated Financial Statements  

Report of Independent Registered Public Accounting Firm 
Consolidated Balance Sheets as of June 30, 2020 and 2019 
Consolidated Statements of Income for the years ended June 30, 2020, 2019 and 2018 
Consolidated Statements of Comprehensive Income for the years ended June 30, 2020, 2019 and 2018 
Consolidated Statements of Stockholders’ Equity for the years ended June 30, 2020, 2019 and 2018 
Consolidated Statements of Cash Flows for the years ended June 30, 2020, 2019 and 2018 
Notes to Consolidated Financial Statements 
Schedule II – Valuation and Qualifying Accounts and Reserves 

51 
53 
54 
55 
56 
57 
58 
81 

(b)  Supplementary Data  

Quarterly Financial Information (unaudited)—The quarterly results for the years ended June 30, 2020 and 2019 are summarized below 
(in thousands, except per share amounts):  

2020 
Net revenue 
Gross profit* 
Net income 
Basic earnings per share 
Diluted earnings per share 

2019 
Net revenue 
Gross profit* 
Net income 
Basic earnings per share 
Diluted earnings per share 

  $ 

  $ 

First 
Quarter 

Second 
Quarter 

Third 
Quarter 

Fourth 
Quarter 

 $ 

 $ 

 681,056 
 391,619 
 120,148 
 0.84 
 0.83 

First 
Quarter 

 588,279 
 336,138 
 105,737 
 0.74 
 0.73 

 $ 

 $ 

 736,157 
 427,130 
 160,554 
 1.11 
 1.10 

Second 
Quarter 

 651,100 
 374,532 
 124,639 
 0.87 
 0.86 

 $ 

 $ 

 769,455 
 449,662 
 163,137 
 1.13 
 1.12 

Third 
Quarter 

 662,228 
 380,970 
 105,416 
 0.74 
 0.73 

 $ 

 $ 

 770,343 
 449,372 
 177,835 
 1.23 
 1.22 

Fourth 
Quarter 

 704,964 
 402,432 
 68,797 
 0.48 
 0.48 

Fiscal 
Year 

 2,957,013 
 1,717,786 
 621,674 
 4.31 
 4.27 

Fiscal 
Year 

 2,606,572 
 1,494,071 
 404,592 
 2.83 
 2.80 

*  Within our consolidated statements of income for the years ended June 30, 2020 and 2019, cost of sales has been adjusted to include amortization of acquired 
intangible assets directly applicable to revenue. As a result, gross profit includes amortization of acquired intangible assets relating to cost of sales and operating 
expenses have been reduced by this amount. There was no impact on income from operations, income before taxes or net income, as a result of this reclassification 

Note: the amounts for each quarter are computed independently and, due to the computation formula, the sum of the four quarters may not equal the year.    

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Table of Contents 

PART II 

RESMED INC. AND SUBSIDIARIES 

Report of Independent Registered Public Accounting Firm 

Item 8 

To the Stockholders and Board of Directors 
ResMed Inc.: 

Opinion on the Consolidated Financial Statements 

We have audited the accompanying consolidated balance sheets of ResMed Inc. and subsidiaries (the Company) as of 
June 30, 2020 and 2019, the related consolidated statements of income, comprehensive income, stockholders’ equity, 
and cash flows for each of the years in the three year period ended June 30, 2020, and the related notes and financial 
statement schedule II (collectively, the consolidated financial statements). In our opinion, the consolidated financial 
statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020 and 2019, 
and the results of its operations and its cash flows for each of the years in the three year period ended June 30, 2020, in 
conformity with U.S. generally accepted accounting principles. 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United 
States) (PCAOB), the Company’s internal control over financial reporting as of June 30, 2020, based on criteria 
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of 
the Treadway Commission, and our report dated August 12, 2020 expressed an unqualified opinion on the effectiveness 
of the Company’s internal control over financial reporting. 

Change in Accounting Principle 

As discussed in Note 3 to the consolidated financial statements, the Company changed its method of accounting for 
leases beginning July 1, 2019 due to the adoption of the FASB’s Accounting Standards Codification Topic 842, Leases. 

Basis for Opinion 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to 
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm 
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. 
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the 
PCAOB. 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material 
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material 
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that 
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and 
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used 
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated 
financial statements. We believe that our audits provide a reasonable basis for our opinion. 

Critical Audit Matters 

The critical audit matters communicated below are matters arising from the current period audit of the consolidated 
financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate 
to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially 
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our 
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit 
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they 
relate. 

Evaluation of goodwill triggering events 

As discussed in Notes 1(i) and 5 to the consolidated financial statements, the carrying amount of goodwill as of 
June 30, 2020 was $1,890 million. The Company performs goodwill impairment testing on an annual basis and 
whenever events or changes in circumstances indicate that the carrying value of a reporting unit, including 
goodwill, might exceed the fair value of the reporting unit. In the current year, the Company performed qualitative, 

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Table of Contents 

PART II 

Item 8 

RESMED INC. AND SUBSIDIARIES 

or Step 0, assessments to determine whether there was a greater than 50 percent likelihood that the fair value of 
each reporting unit was less than its carrying value. 

We identified the evaluation of goodwill triggering events as a critical audit matter because such events indicate 
possible impairment of goodwill, which required the application of greater auditor judgment. Potential triggering 
events, such as macroeconomic conditions, industry and market considerations, cost factors, overall financial 
performance, market capitalization and events specific to the entity and reporting units, required a higher degree 
of auditor judgment to evaluate. These possible triggering events could have a significant effect on the 
Company’s Step 0 assessment and the determination of whether further quantitative analysis of goodwill 
impairment was required.  

The following are the primary procedures we performed to address this critical audit matter. We evaluated the 
design and tested the operating effectiveness of internal controls related to the critical audit matter. This included 
a control related to the Company’s assessment of possible goodwill triggering events. We evaluated the 
Company’s Step 0 assessment for its reporting units by: 

•  Considering macroeconomic indicators such as gross domestic product and inflation by key regions around 

the world; 

•  Evaluating information from analyst reports in the enterprise software and sleep and respiratory care 
industries, which are compared to industry and market considerations used by the Company; and  

•  Analyzing information including changes in the costs of raw materials and labor, the financial performance of 

the reporting units, the Company’s market capitalization, and other entity and reporting-unit specific events. 

Evaluation of uncertain tax positions related to Australian Tax Office audits 

As discussed in Note 14 to the consolidated financial statements, the Company’s tax filings in Australia for the 
years 2009 through 2017 are under audit by the Australian Tax Office (ATO). The Company has been assessed 
$266 million of additional income tax, penalties, and interest for tax years 2009 through 2013 in connection with 
this tax audit. Certain of these amounts have been paid by the Company to the ATO. However, the Company has 
not recorded any expense relating to the ongoing audit, or these assessments, as the Company believes it is 
more likely than not (more than a 50% likelihood) that its tax positions will be upheld.  

We identified the evaluation of uncertain tax positions related to Australian Tax Office audits as a critical audit 
matter. This critical audit matter required challenging auditor judgment due to the nature and the subjectivity of the 
applicable tax rules and regulations. 

The following are the primary procedures we performed to address this critical audit matter. We evaluated the 
design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This 
included controls over the Australian tax calculation and assessment of uncertain tax positions. We involved tax 
professionals with specialized skills and knowledge of Australian tax laws, who assisted in: 

•  Reading formal notices and assessments, and other correspondence received by the Company from the 

ATO in connection with the audit, as well as responses and information the Company submitted to the ATO 
in response to its requests for information; 

•  Evaluating the Company’s analysis and conclusions regarding its assertion, which included an assessment of 
the Company’s analysis of Australian tax laws and regulations related to the specific audit findings, and an 
evaluation of the facts, assumptions, and representations made; and  

•  Reading legal opinions obtained by the Company from third parties, and inquiring of third-party legal counsel 

about the likelihood of the Company’s tax position being ultimately upheld. 

We have served as the Company’s auditor since 1994. 

San Diego, California 
August 12, 2020 

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Table of Contents 

PART II 

Item 8 

RESMED INC. AND SUBSIDIARIES 
Consolidated Balance Sheets 
June 30, 2020 and 2019 
(In thousands, except share and per share data) 

Assets 

Current assets: 
Cash and cash equivalents 
Accounts receivable, net of allowance for doubtful accounts of $28,508 and $25,171  
  at June 30, 2020 and June 30, 2019, respectively 
Inventories (note 4) 
Prepaid expenses and other current assets 

Total current assets 
Non-current assets: 

Property, plant and equipment, net (note 4) 
Operating lease right-of-use assets (note 10) 
Goodwill (note 5) 
Other intangible assets, net (note 5) 
Deferred income taxes (note 14) 
Prepaid taxes and other non-current assets 

Total non-current assets 
Total assets 
Liabilities and Stockholders’ Equity 
Current liabilities: 

Accounts payable 
Accrued expenses (note 7) 
Operating lease liabilities, current (note 10) 
Deferred revenue 
Income taxes payable (note 14) 
Short-term debt, net (note 9) 

Total current liabilities 
Non-current liabilities: 
Deferred revenue 
Deferred income taxes (note 14) 
Operating lease liabilities, non-current (note 10) 
Other long-term liabilities 
Long-term debt, net (note 9) 
Long-term income taxes payable (note 14) 

Total non-current liabilities 
Total liabilities 

Commitments and contingencies (note 17) 

Stockholders’ equity: (note 11) 

Preferred stock, $0.01 par value, 2,000,000 shares authorized; none issued 
Common stock, $0.004 par value, 350,000,000 shares authorized;  
  186,723,407 issued and 144,887,175 outstanding at June 30, 2020 and 
  185,491,064 issued and 143,654,830 outstanding at June 30, 2019 
Additional paid-in capital 
Retained earnings 
Treasury stock, at cost, 41,836,234 shares at June 30, 2020 and June 30, 2019 
Accumulated other comprehensive loss 

Total stockholders’ equity 
Total liabilities and stockholders’ equity 

See accompanying notes to consolidated financial statements. 

June 30, 
2020 

June 30, 
2019 

$ 

 463,156  

 $ 

$ 

$ 

 $ 

 $ 

 474,643  

 416,915  
 168,745  
 1,523,459  

 417,335  
 118,348  
 1,890,324  
 448,168  
 41,065  
 148,677  
 3,063,917  
 4,587,376  

 135,786  
 270,353  
 21,263  
 98,617  
 64,755  
 11,987  
 602,761  

 87,307  
 13,011  
 101,880  
 8,347  
 1,164,133  
 112,910  
 1,487,588  
 2,090,349  

 - 

 580  

 1,570,694  
 2,832,991  
 (1,623,256) 
 (283,982) 
 2,497,027  
 4,587,376  

 $ 

$ 

 147,128  

 528,484  

 349,641  
 120,113  
 1,145,366  

 387,460  
 - 
 1,856,449  
 521,950  
 45,478  
 150,979  
 2,962,316  
 4,107,682  

 115,725  
 266,359  
 - 
 88,667  
 73,248  
 11,992  
 555,991  

 81,143  
 11,380  
 - 
 2,058  
 1,258,861  
 126,056  
 1,479,498  
 2,035,489  

 - 

 575  

 1,511,473  
 2,436,410  
 (1,623,256) 
 (253,009) 
 2,072,193  
 4,107,682  

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Table of Contents 

PART II 

Item 8 

RESMED INC. AND SUBSIDIARIES 
Consolidated Statements of Income 
Years Ended June 30, 2020, 2019 and 2018 
(In thousands, except per share data) 

Net revenue - Sleep and Respiratory Care products 
Net revenue - Software as a Service 

Net revenue 

Cost of sales - Sleep and Respiratory Care products 
Cost of sales - Software as a Service 

Cost of sales 

Amortization of acquired intangible assets - Sleep and Respiratory Care products 
Amortization of acquired intangible assets - Software as a Service 

Amortization of acquired intangible assets 
Total cost of sales 
Gross profit 

Selling, general and administrative 
Research and development  
Amortization of acquired intangible assets 
Restructuring expenses (note 19) 
Litigation settlement expenses (note 20) 
Acquisition related expenses (note 18) 

Total operating expenses 
Income from operations 
Other income (loss), net: 

Interest income 
Interest expense 
Loss attributable to equity method investments (note 6) 
Other, net (note 13) 

Total other income (loss), net 
Income before income taxes 
Income taxes 
Net income 

Basic earnings per share (note 12) 
Diluted earnings per share (note 12) 
Dividend declared per share 
Basic shares outstanding (000's) 
Diluted shares outstanding (000's) 

June 30, 2020 

June 30, 2019 

June 30, 2018 

  $ 

 2,602,381    $ 
 354,632   
 2,957,013   

 2,330,783    $ 
 275,789   
 2,606,572   

 1,067,967   
 121,657   
 1,189,624   

 8,584   
 41,019   
 49,603   
 1,239,227   
 1,717,786   

 676,689   
 201,946   
 30,092   
 -  
 (600)  
 -  
 908,127   
 809,659   

 1,021   
 (40,377)  
 (25,058)  
 (12,157)  
 (76,571)  
 733,088   
 111,414   
 621,674    $ 

 4.31    $ 
 4.27    $ 
 1.56    $ 

 144,338   
 145,652   

 977,223   
 92,764   
 1,069,987   

 8,591   
 33,923   
 42,514   
 1,112,501   
 1,494,071   

 645,010   
 180,651   
 32,424   
 9,401   
 41,199   
 6,123   
 914,808   
 579,263   

 2,299   
 (36,156)  
 (15,833)  
 (10,726)  
 (60,416)  
 518,847   
 114,255   
 404,592    $ 

 2.83    $ 
 2.80    $ 
 1.48    $ 

 143,111   
 144,484   

  $ 

  $ 
  $ 
  $ 

 2,183,193  
 157,003  
 2,340,196  

 929,350  
 48,682  
 978,032  

 7,217  
 20,049  
 27,266  
 1,005,298  
 1,334,898  

 600,369  
 155,149  
 19,117  
 18,432  
 - 
 - 
 793,067  
 541,831  

 16,378  
 (28,355) 
 - 
 (8,542) 
 (20,519) 
 521,312  
 205,724  
 315,588  

 2.21  
 2.19  
 1.40  
 142,764  
 143,987  

See accompanying notes to consolidated financial statements. 

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Table of Contents 

PART II 

Item 8 

RESMED INC. AND SUBSIDIARIES 
Consolidated Statements of Comprehensive Income 
Years Ended June 30, 2020, 2019 and 2018 
(In US$ thousands) 

Net income 
Other comprehensive (loss) income: 
     Foreign currency translation (loss) gain adjustments 
Comprehensive income  

2020 

Years Ended June 30, 
2019 

  $ 

 621,674      

 404,592   

2018 

 315,588  

  $ 

 (30,973)     
 590,701     $ 

 (28,681)  
 375,911    $ 

 (35,269) 
 280,319  

See accompanying notes to consolidated financial statements. 

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Table of Contents 

PART II 

RESMED INC. AND SUBSIDIARIES 
Consolidated Statements of Stockholders’ Equity 
Years ended June 30, 2020, 2019 and 2018 
(In thousands) 

Common Stock 

Amount 

Additional 
Paid-in 
Capital 
 1,379,130    (41,086) $   (1,546,611) $ 

Treasury Stock 

Amount 

Shares 

 569  $ 

Balance, June 30, 2017 

Common stock issued on exercise of options  
(note 11)  
Common stock issued on vesting of restricted stock 
units, net of shares withheld for tax  (note 11)  
Common stock issued on employee stock purchase 
plan  (note 11)  
Treasury stock purchases 
Stock-based compensation costs 
Other comprehensive income (loss) 
Net income 
Dividends declared 
Balance, June 30, 2018 

Common stock issued on exercise of options  
(note 11)  
Common stock issued on vesting of restricted stock 
units, net of shares withheld for tax  (note 11)  
Common stock issued on employee stock purchase 
plan  (note 11)  
Treasury stock purchases 
Stock-based compensation costs 
Other comprehensive income (loss) 
Net income 
Cumulative effect of change in accounting 
standards 
Dividends declared 
Balance, June 30, 2019 

Common stock issued on exercise of options  
(note 11)  
Common stock issued on vesting of restricted stock 
units, net of shares withheld for tax  (note 11)  
Common stock issued on employee stock purchase 
plan  (note 11)  
Treasury stock purchases 
Stock-based compensation costs 
Other comprehensive income (loss) 
Net income 
Dividends declared 
Balance, June 30, 2020 

Shares 
 183,261  $ 

 539   

 214   

 302   

 -  
 -  
 -  
 -  
 -  

 184,316  $ 

 252   

 638   

 285   

 -  
 -  
 -  
 -  

 -  

 -  

 185,491  $ 

 350   

 617   

 265   

 -  
 -  
 -  
 -  
 -  

 186,723  $ 

 2   

 1   

 1   

 (2)  
 -  
 -  
 -  
 -  
 571  $ 

 1   

 3   

 1   

 (1)  
 -  
 -  
 -  

 -  

 -  
 575  $ 

 1   

 3   

 1   

 -  
 -  
 -  
 -  
 -  
 580  $ 

 18,759  

 (15,385) 

 19,955  

 - 
 48,362  
 - 
 - 
 - 

 -  

 -  

 -  

 (550)  
 -  
 -  
 -  
 -  

 -  

 -  

 -  

 (53,801)  
 -  
 -  
 -  
 -  

 1,450,821    (41,636) $   (1,600,412) $ 

 12,329  

 (28,104) 

 24,364  

 - 
 52,063  
 - 
 - 

 - 

 - 

 -  

 -  

 -  

 (200)  
 -  
 -  
 -  

 -  

 -  

 -  

 -  

 -  

 (22,844)  
 -  
 -  
 -  

 -  

 -  

 1,511,473    (41,836) $   (1,623,256) $ 

 19,986  

 (46,061) 

 28,196  

 - 
 57,100  
 - 
 - 
 - 

 -  

 -  

 -  

 -  
 -  
 -  
 -  
 -  

 -  

 -  

 -  

 -  
 -  
 -  
 -  
 -  

 1,570,694    (41,836) $   (1,623,256) $ 

Item 8 

Accumulated 
Other 

Retained 
Earnings 

Comprehensive  
Income (Loss) 

 2,316,237  $ 

 (189,059) $ 

 -  

 -  

 -  

 -  

 -  

 -  

 -  
 -  
 -  
 315,588   
 (199,497)  
 2,432,328  $ 

 -  
 -  
 (35,269)  
 -  
 -  

 (224,328) $ 

 -  

 -  

 -  

 -  

 -  

 -  

 -  
 -  
 -  
 404,592   

 (188,798)  

 (211,712)  
 2,436,410  $ 

 -  
 -  
 (28,681)  
 -  

 -  

 -  

 (253,009) $ 

 -  

 -  

 -  

 -  

 -  

 -  

 -  
 -  
 -  
 621,674   
 (225,093)  
 2,832,991  $ 

 -  
 -  
 (30,973)  
 -  
 -  

 (283,982) $ 

Total 
 1,960,266  

 18,761  

 (15,384) 

 19,956  

 (53,803) 
 48,362  
 (35,269) 
 315,588  
 (199,497) 
 2,058,980  

 12,330  

 (28,101) 

 24,365  

 (22,845) 
 52,063  
 (28,681) 
 404,592  

 (188,798) 

 (211,712) 
 2,072,193  

 19,987  

 (46,058) 

 28,197  

 - 
 57,100  
 (30,973) 
 621,674  
 (225,093) 
 2,497,027  

See accompanying notes to consolidated financial statements. 

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Table of Contents 

PART II 

Item 8 

RESMED INC. AND SUBSIDIARIES 
Consolidated Statements of Cash Flows 
Years ended June 30, 2020, 2019 and 2018 
(In thousands) 

Cash flows from operating activities: 
Net income  

Adjustment to reconcile net income to net cash provided by operating activities: 
Depreciation and amortization 
Amortization of right-of-use-assets 
Stock-based compensation costs 
Loss attributable to equity method investments (note 6) 
Impairment of equity investments (note 6) 
Gain on previously held equity interest (note 18) 
Changes in fair value of business combination contingent consideration 
Changes in operating assets and liabilities, net of effect of acquisitions: 
Accounts receivable 
Inventories 
Prepaid expenses, net deferred income taxes and other current assets 
Accounts payable, accrued expenses and other 

Net cash provided by operating activities 
Cash flows from investing activities: 

Purchases of property, plant and equipment 
Patent registration costs 
Business acquisitions, net of cash acquired 
Purchases of investments (note 6) 
Payments on maturity of foreign currency contracts 

Net cash used in investing activities 
Cash flows from financing activities: 

Proceeds from issuance of common stock, net 
Taxes paid related to net share settlement of equity awards 
Purchases of treasury stock 
Payments of business combination contingent consideration 
Proceeds from borrowings, net of borrowing costs 
Repayment of borrowings 
Dividends paid 

Net cash provided by (used in) financing activities 
Effect of exchange rate changes on cash 
Net increase (decrease) in cash and cash equivalents 
Cash and cash equivalents at beginning of period 
Cash and cash equivalents at end of period 
Supplemental disclosure of cash flow information: 
Income taxes paid, net of refunds 
Interest paid 
Fair value of assets acquired, excluding cash 
Liabilities assumed 
Goodwill on acquisition 
Deferred payments 
Fair value of contingent consideration 
Cash paid for acquisitions 

June 30, 2020 

  June 30, 2019   

June 30, 2018 

  $ 

 621,674    $ 

 404,592    $ 

 315,588  

 154,850   
 26,523   
 57,559   
 25,058   
 14,519   
 -  
 (7)  

 54,383   
 (69,881)  
 (58,999)  
 (23,424)  
 802,255   

 (95,330)  
 (10,608)  
 (27,910)  
 (31,616)  
 (14,397)  
 (179,861)  

 150,795   
 -  
 52,073   
 15,833   
 15,007   
 (1,909)  
 (286)  

 (18,013)  
 (84,188)  
 (47,575)  
 (27,278)  
 459,051   

 (68,710)  
 (8,632)  
 (951,383)  
 (46,717)  
 (264)  
 (1,075,706)  

 48,182   
 (46,061)  
 -  
 (302)  
 1,190,000   
 (1,284,012)  
 (225,093)  
 (317,286)  
 10,920   
 316,028   
 147,128   
 463,156    $ 

 180,359    $ 
 40,377    $ 
 14,919    $ 
 (4,292)  
 20,375   
 408   
 (3,500)  
 27,910    $ 

 36,727   
 (28,104)  
 (22,844)  
 (909)  
 1,519,230   
 (711,745)  
 (211,712)  
 580,643   
 (5,561)  
 (41,573)  
 188,701   
 147,128    $ 

 242,860    $ 
 36,156    $ 
 429,522    $ 
 (265,217)  
 794,320   
 (7,242)  
 -  

 951,383    $ 

  $ 

  $ 
  $ 
  $ 

  $ 

 119,960  
 - 
 48,412  
 - 
 11,593  
 - 
 411  

 (32,356) 
 1,494  
 (160,726) 
 200,650  
 505,026  

 (62,581) 
 (8,876) 
 (902) 
 (14,495) 
 (14,970) 
 (101,824) 

 38,717  
 (15,385) 
 (53,801) 
 (486) 
 350,000  
 (1,146,242) 
 (199,497) 
 (1,026,694) 
 (9,742) 
 (633,234) 
 821,935  
 188,701  

 170,653  
 28,355  
 290  
 - 
 247  
 365  
 - 
 902  

See accompanying notes to consolidated financial statements. 

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Table of Contents 

PART II 

(1)  Organization and Basis of Presentation  

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

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. 

(2)  Summary of Significant Accounting Policies  

(a)  Basis of Consolidation  

The consolidated financial statements include the accounts of the Company and its  wholly-owned subsidiaries. All significant inter-
company transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with 
U.S. generally accounting principles requires management estimates and assumptions that affect amounts reported in the consolidated 
financial statements and accompanying notes.  Actual results could differ from management’s estimates. 

(b)  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 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 

See note 15 – Segment Information for our net revenue disaggregated by segment, product and region for the years ended June 30, 2020, 
2019 and 2018. 

Effective in the fourth quarter of the fiscal  year ended June 30, 2020, our consolidated statements of income separately present the 
revenues  and  related  costs  of  the  Sleep  and  Respiratory  Care  and  SaaS  segments.  Net  revenues  and  cost  of  sales  were  previously 
presented on an aggregate basis. This change separately states net sales of products and revenues from services, which materially aligns 
with net revenues associated with our Sleep and Respiratory Care and SaaS segments, respectively. While this change has been applied 
retrospectively to the consolidated statements of income for the years ended June 30, 2019 and 2018, there was no impact on net revenue, 
cost of sales, income from operations, income before taxes or net income as a result of this change.   

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 are provided 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.  

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Table of Contents 

PART II 

Item 8 

The following table summarizes our contract balances as of June 30, 2020 and 2019 (in thousands): 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Contract assets 
Accounts receivable, net 
Unbilled revenue, current 
Unbilled revenue, non-current 

Contract liabilities 
Deferred revenue, current 
Deferred revenue, non-current 

Transaction price determination 

2020 

2019 

Balance sheet caption 

  $ 

 474,643    $ 
 9,452   
 6,957   

 528,484    Accounts receivable, net 

 9,834    Prepaid expenses and other current assets 
 4,592    Prepaid taxes and other non-current assets 

 (98,617)  
 (87,307)  

 (88,667)   Deferred revenue (current liabilities) 
 (81,143)   Deferred revenue (non-current liabilities) 

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 adopted two practical expedients including the 
“right to invoice” practical expedient, which allows us to recognize revenue in the amount of the invoice when it corresponds directly 
with the value of performance completed to date and which is relevant for some of our SaaS contracts. 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. 

(c)  Concentration of Credit Risk and Significant Customers 

Financial  instruments  that  are  potentially  subject  to  concentrations  of  credit  risk  consist  primarily  of  cash  and  cash  equivalents, 
marketable securities, derivatives and trade receivables. Our cash and cash equivalents are generally held with large, diverse financial 
institutions to reduce the amount of exposure to any single financial institution. Our derivative contracts are transacted with various 
financial  institutions  with  high  credit  standings  and  any  exposure  to  counterparty  credit-related  losses  in  these  contracts  is  largely 
mitigated  with  collateralization  and  master-netting  agreements.  The  risk  with  respect  to  trade  receivables  is  mitigated  by  credit 
evaluations we perform on our customers, the short duration of our payment terms for the significant majority of our customer contracts 
and by the diversification of our customer base. No single customer accounted for 10% or more of our total revenues for any of the 
periods presented. 

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Table of Contents 

PART II 

(d)  Fair Value of Financial Instruments 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

The fair value of financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly 
transaction between market participants at the measurement date. We measure our financial instruments at fair value at each reporting 
period using a fair value hierarchy that requires that we maximize the use of observable inputs and minimize the use of unobservable 
inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level 
of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value: 

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. 

Level 2 - Other inputs that are directly or indirectly observable in the marketplace. 

Level 3 - Unobservable inputs that are supported by little or no market activity. 

The carrying value of cash equivalents, accounts receivable and accounts payable, approximate their fair value because of their short-
term nature. The carrying value of long-term debt related to our Revolving Credit and Term Credit Agreements approximates its fair 
value as the principal amounts outstanding are subject to variable interest rates that are based on market rates which are regularly reset. 
The carrying value of long-term debt related to our Senior Notes can differ to its fair value as the principal amounts outstanding are 
subject to fixed interest rates as outlined in note 9 - Debt. Foreign currency hedging instruments are marked to market and therefore 
reflect their fair value. We do not hold or issue financial instruments for trading purposes.  

(e)  Cash and Cash Equivalents  

Cash  equivalents  include  certificates  of  deposit  and  other highly  liquid  investments  and  we  state  them  at  cost,  which  approximates 
market. We consider investments with original maturities of 90 days or less to be cash equivalents for purposes of the consolidated 
statements of cash flows. 

(f)  Inventories  

We state inventories at the lower of cost (determined principally by the first-in, first-out method) or net realizable value.  We include 
material, labor and manufacturing overhead costs in finished goods and work-in-process inventories.  We review and provide for any 
product  obsolescence  in  our  manufacturing  and  distribution  operations  by  assessing  throughout  the  year  individual  products  and 
components (based on estimated future usage and sales). 

(g)  Property, Plant and Equipment  

We record property, plant and equipment, including rental and demonstration equipment at cost.  We compute depreciation expense 
using the straight-line method over the estimated useful lives of the assets. Useful lives are generally two years to ten years except for 
buildings which are depreciated over an estimated useful life of 40 years and leasehold improvements, which we amortize over the lease 
term. We charge maintenance and repairs to expense as we incur them. 

Depreciation expense for property, plant, and equipment was $65.6 million, $65.9 million, and $64.7 million for the years ended June 30, 
2020, 2019 and 2018, respectively. 

(h)  Intangible Assets  

We capitalize the registration costs for new patents and amortize the costs over the estimated useful life of the patent, which is generally 
ten years. If a patent is superseded or a product is retired, any unamortized costs are written off immediately. 

We amortize all of our other intangible assets on a straight-line basis over their estimated useful lives, which range from two years to 
fifteen years. We take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment 
exists and, at least annually, evaluate the recoverability of intangible assets. We have not identified any impairment of intangible assets 
during any of the periods presented.  

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PART II 

(i)  Goodwill  

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

We conducted our annual review for goodwill impairment during the final quarter of 2020. Our goodwill impairment review is performed 
at our reporting unit level, which is one level below our operating segments and involves the following steps:  

Step 0 or Qualitative assessment – Evaluate qualitative factors to determine whether it is more likely than not that the fair value 
of a reporting unit is less than its carrying amount, including goodwill. The factors we consider include, but are not limited to, 
macroeconomic conditions, industry and market considerations, cost factors, overall financial performance or events-specific 
to that reporting unit. If or when we determine it is more likely than not that the fair value of a reporting unit is less than the 
carrying amount, including goodwill, we would move to Step 1 of the quantitative method. 

Step 1 – Compare the fair value for each reporting unit to its carrying value, including goodwill. Fair value is determined based 
on estimated discounted cash flows. A goodwill impairment charge is recognized for the amount that the carrying amount of a 
reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit.  
If a reporting unit’s fair value exceeds the carrying value, no further work is performed and no impairment charge is necessary. 

During the annual review, we completed a Step 0 or Qualitative assessment and determined it was more likely than not that the fair 
value of our reporting units exceeded their carrying amounts, including goodwill and, therefore, goodwill was not impaired. 

(j)  Equity investments  

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. 

Non-marketable equity securities consist of investments in privately held companies without readily determinable fair values, and 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 estimate the fair value of our equity investments using Level 3 inputs to assess 
whether impairment losses shall be recorded. 

(k)  Research and Development  

We record all research and development expenses in the period we incur them. 

(l)  Foreign Currency  

The  consolidated  financial  statements  of  our  non-U.S.  subsidiaries,  whose  functional  currencies  are  other  than  the  U.S.  dollar,  are 
translated into U.S. dollars for financial reporting purposes.  We translate assets and liabilities of non-U.S. subsidiaries whose functional 
currencies are other than the U.S. dollar at period end exchange rates, but translate revenue and expense transactions at average exchange 
rates for the period.  We recognize cumulative translation adjustments as part of comprehensive income, as detailed in the consolidated 
statements of comprehensive income, and include those adjustments in accumulated other comprehensive income in the consolidated 
balance sheets until such time the relevant subsidiary is sold or substantially or completely liquidated. We reflect gains and losses on 
transactions denominated in other than the functional currency of an entity in our results of operations. 

(m)  Foreign Exchange Risk Management  

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 both our Australian and Singaporean manufacturing activities, 
and 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 terms of such 
foreign currency hedging contracts generally do not exceed three years.  The goal of this hedging program is to economically manage 
the financial impact of foreign currency exposures denominated mainly in Euros, Australian 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.  

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PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

We do not designate these foreign currency contracts as hedges.  We have determined our hedge program to be a non-effective hedge 
as  defined  under  the  FASB  issued  authoritative  guidance.  All  movements  in  the  fair  value  of  the  foreign  currency  instruments  are 
recorded within other income, net in our consolidated statements of income and through changes in our operating assets and liabilities 
within our consolidated statements of cash flows. We classify purchases of foreign currency derivatives and proceeds received from the 
exercise of foreign currency derivatives as an investing activity within our consolidated statements of cash flows.  We do not enter into 
financial instruments for trading or speculative purposes. 

We held foreign currency instruments with notional amounts totaling $495.2 million and $496.9 million at June 30, 2020 and June 30, 
2019, respectively, to hedge foreign currency fluctuations.  These contracts mature at various dates prior to June, 2021.   

(n)  Income Taxes  

We account for income taxes under the asset and liability method. We recognize deferred tax assets and liabilities for the future tax 
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their 
respective tax bases. We measure deferred tax assets and liabilities using the enacted tax rates we expect to apply to taxable income in 
the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities 
of a change in tax rates is recognized in income in the period that includes the enactment date.  

We recognize the impact of a tax position in the consolidated financial statements only if that position is more likely than not of being 
sustained upon examination by taxing authorities, based on the technical merits of the position. Any interest and penalties related to 
uncertain tax positions are reflected in income tax expense. 

(o)  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. 

(p)  Allowance for Doubtful Accounts 

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required 
payments,  which  results  in  bad  debt  expense.  We  determine  the  adequacy  of  this  allowance  by  periodically  evaluating  individual 
customer  receivables,  considering  a  customer’s  financial  condition,  credit  history  and  current  economic  conditions.  Customer 
receivables are charged against the allowance when they are deemed uncollectible. We are also contingently liable, within certain limits, 
in the event of a customer default, to independent financing companies in connection with customer financing programs. We monitor 
the collection  status of these  installment receivables and provide for estimated losses separately  under accrued expenses  within our 
consolidated balance sheets based upon our historical collection experience with such receivables and a current assessment of our credit 
exposure. 

(q)  Impairment of Long-Lived Assets  

We periodically evaluate the carrying value of long-lived assets to be held and used, including certain identifiable intangible assets, 
when events and circumstances indicate that the carrying amount of an asset may not be recovered. Recoverability of assets to be held 
and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. 
If assets are considered to be impaired, we recognize as the impairment the amount by which the carrying amount of the assets exceeds 
the fair value of the assets. We report assets to be disposed of at the lower of the carrying amount or fair value less costs to sell. We did 
not recognize impairment charges in relation to long-lived assets during the fiscal years ended June 30, 2020, 2019 and 2018. 

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PART II 

(r)  Contingencies 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

We record a liability in the consolidated financial statements for loss contingencies when a loss is known or considered probable and 
the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the 
range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or 
probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. When determining the estimated loss or range 
of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded.  

(3)  New Accounting Pronouncements  

(a)  Recently issued accounting standards not yet adopted 

ASU No. 2016-13 “Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments” 
In  June  2016,  the  Financial  Accounting  Standards  Board  (“FASB”)  issued  Accounting  Standards  Update  (“ASU”)  No.  2016-13, 
“Financial  Instruments  -  Credit  Losses:  Measurement  of  Credit  Losses  on  Financial  Instruments”  (Topic  326),  which  amends  the 
impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain 
types of financial instruments, including trade receivables. The guidance is effective for us beginning in the first quarter of the fiscal 
year ending June 30, 2021 and will be adopted using a modified retrospective approach, with a cumulative-effect adjustment recorded 
directly to retained earnings. We do not expect the adoption to have a material impact on our consolidated financial statements. 

ASU No. 2018-15 “Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs 
Incurred in a Cloud Computing Arrangement That Is a Service Contract” 
In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting 
for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (Subtopic 350-40), which aligns the 
requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for 
capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for us beginning in the 
first quarter of the fiscal year ending June 30, 2021 and will be applied prospectively. Under the new ASU, capitalized implementation 
costs  will  be  presented  as  other  non-current  assets  on  our  consolidated  balance  sheets  and  within  operating  cash  flows  on  our 
consolidated statements of cash flows. The adoption of this ASU is not expected to have a material effect on our consolidated financial 
statements. 

ASU No. 2020-04 “Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting” 
In March 2020, the FASB issued ASU No. 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” 
(Topic 848), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other 
transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance 
is effective for us as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact that this guidance, if elected, 
will have on our consolidated financial statements. 

(b)  Recently adopted accounting pronouncements 

ASU No. 2016-02, “Leases” 
In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842). Under the new guidance, lessees are required to recognize 
a right-of-use asset (“ROU”) and a lease liability on the balance sheet for all leases, other than those that meet the definition of a short-
term lease. This update establishes a lease asset and lease liability by lessees for those leases classified as operating under prior GAAP. 
Leases are classified as either operating or finance under the new guidance. Operating leases result in straight-line expense in the income 
statement, similar to prior operating lease treatment, and finance leases result in more expense being recognized in the earlier years of 
the  lease  term,  similar  to  prior  capital  lease  treatment.  For  lessors,  the  update  more  closely  aligns  lease  accounting  to  comparable 
guidance in the new revenue standards described. 

Effective, July 1, 2019, we adopted the new standard on a modified retrospective transition basis for leases existing at, or entered into 
after, the date of adoption. In addition, we elected the package of practical expedients permitted under the transition guidance to not 
reassess (1) whether any expired or existing contracts are, or contain, leases, (2) the lease classification for expired or existing leases, 
and (3) initial direct costs for existing leases. In preparation for and upon adoption of this guidance, we have designed and operated 
internal  controls  over  its  implementation,  which  includes  a  system  solution  for  lease  administration,  accounting  and  disclosures  of 
financial information surrounding our leasing arrangements. 

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PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

The adoption of the guidance on July 1, 2019 resulted in the recognition of ROU assets of $77.6 million and lease liabilities of $81.3 
million, which all related to operating leases. The ROU assets were lower than the lease liabilities due to the de-recognition of deferred 
rent balances of $3.7 million. We did not recognize any adjustment to the comparative period presented in the financial statements in 
accordance with our adoption method. The guidance did not have a material impact on our consolidated statements of income. See note 
10 - Leases for further disclosures related to our leases under the new guidance. 

ASU No. 2017-04 “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment” 
In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment” 
(Topic  350).  ASU  2017-04  eliminates  step  two  of  the  goodwill  impairment  test  and  specifies  that  goodwill  impairment  should  be 
measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to 
each reporting unit with a zero or negative carrying amount of net assets should be disclosed. We adopted this guidance in the fourth 
quarter of fiscal year June 30, 2020. The adoption did not have a material impact on our consolidated financial statements. 

(c)  Adjustment to prior periods 

As noted at note 2b) – Disaggregation of revenue, we now present revenue and cost of sales for our Sleep and Respiratory Care and 
SaaS segments on the consolidated statements of income. Additionally, within our consolidated statements of income for the years ended 
June 30, 2020, 2019 and 2018, cost of sales has been adjusted to include amortization of acquired intangible assets directly applicable 
to  revenue.  As  a  result,  gross  profit  now  includes  amortization  of  acquired  intangible  assets  relating  to  cost  of  sales  and  operating 
expenses have been reduced by this amount. There was no impact on income from operations, income before taxes or net income, as a 
result of this reclassification. The adjustments to the previously reported amounts are not material. 

The table below presents a reconciliation of amortization of acquired intangible assets by income statement caption summing to total 
amortization of acquired intangible assets as previously reported for the years ended June 30, 2019 and June 30, 2018 (in thousands): 

Amortization of acquired intangible assets related to cost of sales 
Amortization of acquired intangible assets related to operating expenses 
Total as previously reported 

2019 

2018 

  $ 

  $ 

 42,514    $ 
 32,424   
 74,938    $ 

 27,266  
 19,117  
 46,383  

The table below presents a reconciliation of gross profit as previously reported for the years ended June 30, 2019 and June 30, 2018 
adjusted for the amortization of acquired intangible assets now included in cost of sales (in thousands): 

Gross profit as previously reported 
Amortization of acquired intangible assets related to cost of sales 
Gross profit 

(4)  Supplemental Balance Sheet Information 

  $ 

  $ 

2019 
 1,536,585    $ 
 (42,514)  
 1,494,071    $ 

2018 
 1,362,164  
 (27,266) 
 1,334,898  

Components of selected captions in the consolidated balance sheets consisted of the following as of June 30, 2020 and June 30, 2019 
(in thousands):  

Inventories 
Raw materials 
Work in progress 
Finished goods 
Total inventories 

Property, Plant and Equipment 
Machinery and equipment 
Computer equipment 
Furniture and fixtures 
Vehicles 
Clinical, demonstration and rental equipment 
Leasehold improvements 
Land 
Buildings 
Property, plant and equipment, at cost 
Accumulated depreciation and amortization 
Property, plant and equipment, net 

  $ 

  $ 

  $ 

  $ 

  $ 

2020 

2019 

 128,096    $ 
 2,807   
 286,012   
 416,915    $ 

 80,861  
 2,256  
 266,524  
 349,641  

2020 

2019 

 285,287    $ 
 188,036   
 54,275   
 5,513   
 95,860   
 60,490   
 51,803   
 227,902   
 969,166    $ 
 (551,831)  
 417,335    $ 

 262,010  
 173,895  
 51,942  
 7,477  
 94,007  
 34,210  
 52,406  
 223,028  
 898,975  
 (511,515) 
 387,460  

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PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

(5)  Goodwill and Other Intangible Assets, net 

Goodwill 

For each of the years ended June 30, 2020 and June 30, 2019, we have not recorded any goodwill impairments. Changes in the carrying 
amount of goodwill is comprised of the following for the year ended June 30, 2020 (in thousands):  

Balance at the beginning of the period 
Business acquisitions 
Adjustment to fair values of preliminary purchase price allocations 
Foreign currency translation adjustments 
Balance at the end of the period 

Other Intangible Assets 

Sleep and  
Respiratory Care   

2020 

SaaS 

  $ 

  $ 

 616,965    $ 
 266   
 526   
 (3,309)  
 614,448    $ 

 1,239,484    $ 
 20,109   
 16,283   
 -  

 1,275,876    $ 

Total 

 1,856,449  
 20,375  
 16,809  
 (3,309) 
 1,890,324  

Other intangibles, net are comprised of the following as of June 30, 2020 and June 30, 2019 (in thousands):  

Developed/core product technology 
Accumulated amortization 
Developed/core product technology, net 
Customer relationships 
Accumulated amortization 
Customer relationships, net 
Other intangibles 
Accumulated amortization 
Other intangibles, net 
Total other intangibles, net 

2020 

2019 

  $ 

  $ 

 382,806    $ 
 (197,670)  
 185,136   
 279,370   
 (80,922)  
 198,448   
 177,091   
 (112,507)  
 64,584   
 448,168    $ 

 401,842  
 (157,651) 
 244,191  
 273,114  
 (68,630) 
 204,484  
 176,351  
 (103,076) 
 73,275  
 521,950  

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

Refer to note 18 of the consolidated financial statements for details of acquisitions. 

Amortization expense related to identified intangible assets for the years ended June 30, 2020 and June 30, 2019 was $79.7 million and 
$74.9  million,  respectively.  Amortization  expense  related  to  patents  for  the  years  ended  June 30, 2020  and  June 30, 2019  was  $8.3 
million and $8.1 million, respectively. Total estimated annual amortization expense for the years ending June 30, 2021 through June 30, 
2025, is shown below (in thousands):  

Estimated amortization expense 

  $ 

 80,636    $ 

 72,219    $ 

 55,015    $ 

 50,628    $ 

 45,298  

2021 

Fiscal Years Ending June 30 
2023 

2022 

2024 

2025 

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PART II 

(6)  Investments 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

We have a number of equity investments in privately held companies that are unconsolidated entities and are recorded in the non-current 
balance  of  other  assets  on  the  consolidated  balance  sheets.  The  following  table  shows  a  reconciliation  of  the  changes  in  all  of  our 
investments during the years ended June 30, 2020 and June 30, 2019 (in thousands): 

Equity method investments 
Balance at the beginning of the period 
Investments 
Loss attributable to equity method investments 
Carrying value of equity method investments 

Non-marketable securities 
Balance at the beginning of the period 
Investments 
Impairment of investments 
Acquisition of controlling interest in previously held investment 
Carrying value of non-marketable securities 
Total investments in unconsolidated entities 

(7)  Accrued Expenses  

Accrued expenses at June 30, 2020 and June 30, 2019 consist of the following (in thousands):  

Product warranties (note 8) 
Consulting and professional fees 
Value added taxes and other taxes due 
Employee related costs 
Hedging instruments 
Liability on receivables sold with recourse (note 17) 
Accrued interest 
Logistics and occupancy costs 
Inventory in transit 
Business acquisition contingent consideration 
Litigation settlement expenses (note 20) 
Restructuring expenses (note 19) 
Other 

(8)  Product Warranties 

2020 

2019 

 21,667    $ 
 17,500   
 (25,058)  
 14,109   

 30,436    $ 
 14,116   
 (14,519)  
 -  
 30,033   
 44,142    $ 

 - 
 37,500  
 (15,833) 
 21,667  

 41,226  
 9,217  
 (15,007) 
 (5,000) 
 30,436  
 52,103  

2020 

2019 

 21,132    $ 
 18,740   
 26,627   
 148,383   
 427   
 6,647   
 8,313   
 6,350   
 21,679   
 3,500   
 -  
 -  
 8,555   
 270,353    $ 

 19,625  
 12,726  
 25,555  
 123,446  
 244  
 1,752  
 1,683  
 8,137  
 15,175  
 - 
 41,199  
 5,432  
 11,385  
 266,359  

  $ 

  $ 

  $ 

  $ 

  $ 

We include the liability for warranty costs in accrued expenses in our consolidated balance sheets. Changes in the liability for product 
warranty for the years ended June 30, 2020 and June 30, 2019 are as follows (in thousands):  

Balance at the beginning of the period 
Warranty accruals for the period 
Warranty costs incurred for the period  
Foreign currency translation adjustments 
Balance at the end of the period 

2020 

2019 

  $ 

  $ 

 19,625    $ 
 14,167   
 (12,229)  
 (431)  
 21,132    $ 

 19,227  
 15,416  
 (14,634) 
 (384) 
 19,625  

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PART II 

 (9)  Debt  

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

Debt at June 30, 2020 and June 30, 2019 consists of the following (in thousands):  

Short-term debt  
Deferred borrowing costs  
Short-term debt, net  

Long-term debt 
Deferred borrowing costs 
Long-term debt, net 
Total debt 

Credit Facility 

2020 

2019 

  $ 

  $ 

  $ 
  $ 

 12,000     $ 
 (13)     
 11,987      
 -     
 1,168,000    $ 
 (3,867)  
 1,164,133    $ 
 1,176,120    $ 

 12,012  
 (20) 
 11,992  

 1,262,000  
 (3,139) 
 1,258,861  
 1,270,853  

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 will 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  will  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 June 30, 2020, the interest rate that was being charged on the outstanding principal amounts was 1.2%.  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 June 30, 2020, we had $1.1 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 June 30, 
2020  and  June 30,  2019,  which  was  $680.0  million  and  $1,274.0  million,  respectively.  Quoted  market  prices  in  active  markets  for 
identical liabilities based inputs (Level 1) were used to estimate fair value. 

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PART II 

Senior Notes 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

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, 
including ResMed Corp., ResMed Motor Technologies Inc., Birdie Inc., Inova Labs, Inc., Brightree LLC, Brightree Home Health & 
Hospice  LLC,  Brightree  Patient  Collections  LLC,  ResMed  Operations  Inc.,  HEALTHCAREfirst  Holding  Company,  HCF  Holdco 
Company, HEALTHCAREfirst, Inc., CareFacts Information Systems, LLC and Lewis Computer Services, LLC, MatrixCare Holdings 
Inc., MatrixCare, Inc., Reciprocal Labs Corporation and ResMed SaaS Inc., under a Subsidiary Guaranty Agreement dated as of July 10, 
2019. 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 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. 

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 June 30, 2020, the Senior Notes have a carrying 
amount of $500.0 million, excluding deferred borrowing costs, and an estimated fair value of $538.9 million. Quoted market prices in 
active markets for identical liabilities based inputs (Level 1) were used to estimate fair value. 

At June 30, 2020, we were in compliance with our debt covenants and there was $1,180.0 million outstanding under the Revolving 
Credit Agreement, Term Credit Agreement and Senior Notes.  

(10)      Leases 

(a) Leases where ResMed is the Lessee 

We determine whether a contract is, or contains, a lease at inception. ROU assets represent our right to use an underlying asset during 
the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities 
are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. We use 
our incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid 
lease payments. ROU assets also include any lease payments made at or before lease commencement and any initial direct costs incurred, 
and exclude any lease incentives received. 

We determine the lease term as the non-cancellable period of the lease, and may include options to extend or terminate the lease when 
it is reasonably certain that we will exercise that option. Leases with a term of 12 months or less are not recognized on the balance sheet. 
Some of our leases include variable lease payments that are based on costs incurred or actual usage, or adjusted periodically based on 
an index or a rate. Our leases do not contain any residual value guarantees and we do not account for lease and non-lease components 
as a single lease component. Operating leases are included in operating lease right-of-use assets and operating lease liabilities on our 
consolidated balance sheets. We lease certain office space, warehouses and distribution centers, manufacturing facilities, vehicles, and 
equipment with remaining lease terms ranging from less than 1 year to 15 years, some of which include options to extend or terminate 
the leases. 

Operating lease costs for the year ended June 30, 2020 were $26.5 million. Short-term and variable lease costs were not material for the 
year ended June 30, 2020. 

Future minimum lease payments under non-cancellable leases as of June 30, 2020 and for the periods ending June 30 of the years 
indicated below were as follows (in thousands): 

Total   

2021 

2022 

2023 

2024 

2025 

Thereafter 

Minimum lease payments 
Less: imputed interest 
Total lease liabilities 

  $ 

  $ 

 143,774    $ 
 (20,631)    
 123,143     

 24,810    $ 

 18,084    $ 

 14,853    $ 

 12,075    $ 

 10,493    $ 

 63,459  

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PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

As of June 30, 2020, we had additional operating lease commitments of $14.1 million for office space that have not yet commenced. 
These leases will commence during the year ended June 30, 2021 with lease terms of 1 years to 11 years. 

The supplemental information related to operating leases for the year ended June 30, 2020 was as follows (in thousands): 

Weighted-average inputs: 

Weighted-average remaining lease term (years) 
Weighted-average discount rate 

Cash flow information: 

Operating cash flows paid for amounts included in the measurement of lease liabilities 
Right of use assets obtained in exchange for new lease liabilities: 

Disclosures related to periods prior to adopting the new lease guidance 

2020 

 9.1   
 3.2  % 

  $ 
  $ 

 24,104   
 51,663   

We  lease  certain  facilities  and  equipment  under  operating  leases  expiring  at  various  dates  and  most  contain  renewal  options.  Total 
expense for all operating leases was $23.4 million, $21.1 million, and $20.1 million for the years ended June 30, 2019, 2018, and 2017, 
respectively.  Future  minimum  lease  payments  (including  interest)  under  non-cancellable  operating  leases  at  June 30,  2019  were  as 
follows (in thousands): 

Remaining operating lease payments 

  $ 

 98,013    $ 

 23,500    $ 

 17,161    $ 

 12,403    $ 

 9,478    $ 

 7,916    $ 

 27,555  

Total   

2020 

2021 

2022 

2023 

2024 

  Thereafter 

(b) Leases where ResMed is the Lessor 

We lease sleep and respiratory 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 for the year ended June 30, 2020 were as follows (in thousands): 

Sales-type lease revenue 
Operating lease revenue 
Total lease revenue 

  $ 

  $ 

2020 

 13,457  
 87,874  
 101,331  

Our net investment in sales-type leases were classified in the accompanying consolidated balance sheets captions as of June 30, 2020 
as follows (in thousands): 

Accounts receivable, net 
Prepaid taxes and other non-current assets 
Total 

  $ 

  $ 

2020 

 7,697  
 6,957  
 14,654  

Maturities of sales-type leases as of June 30, 2020 were as follows (in thousands): 

Remaining lease payments 
Less: imputed interest 
Present value of remaining lease payments 

  $ 

  $ 

 16,074    $ 
 (1,420)    
 14,654     

 8,034    $ 

 5,759    $ 

 2,281    $ 

 -   $ 

 -   $ 

 - 

Total   

2021 

2022 

2023 

2024 

2025 

  Thereafter 

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Table of Contents 

PART II 

(11)  Stockholders’ Equity  

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

Common Stock.    On February 21, 2014, our board of directors approved a new 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. The 20.0 million shares the new program authorizes us to purchase are in addition to the shares we 
repurchased on or before February 21, 2014 under our previous programs. 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 
since February 21, 2014 have been executed in accordance with this program.  

We have temporarily suspended our repurchase program and, accordingly, did not repurchase any shares during fiscal year 2020. During 
fiscal year 2019, we repurchased 200,000 shares at a cost of $22.8 million shares under our share repurchase program. As of June 30, 
2020, we have repurchased a total of 41.8 million shares at a cost of $1.6 billion. Shares that are repurchased are classified as “treasury 
stock pending future use” and reduce the number of shares outstanding used in calculating earnings per share.  At June 30, 2020, 12.9 
million additional shares can be repurchased under the approved share repurchase program. 

Preferred Stock.    In April 1997, our board of directors authorized 2,000,000 shares of $0.01 par value preferred stock. No such shares 
were issued or outstanding at June 30, 2020.  

Stock  Options  and  Restricted  Stock  Units.    We  have  granted  stock  options,  restricted  stock  units  (“RSUs”)  and  performance 
restricted  stock  units  (“PRSUs”)  to personnel,  including  officers  and  directors,  in  accordance  with  the  ResMed  Inc.  2009  Incentive 
Award Plan (the “2009 Plan”).  Options and restricted stock units vest over one year to four years and the options have expiration dates 
of seven years from the date of grant. We have granted the options with an exercise price equal to the market value as determined at the 
date of grant. We have granted PRSUs that are subject to a market condition, with the ultimate realizable number of PRSUs dependent 
on relative total stockholder return over a period of three years, up to a maximum amount to be issued under the award of 225% of the 
original grant. 

At the annual meeting of our stockholders in November 2017, our stockholders approved an amendment and restatement to the 2009 
Plan to increase the number of shares of common stock that may be issued or transferred pursuant to awards under the 2009 Plan by 7.4 
million.  The  amendment  and  restatement  imposes  a  maximum  award  amount  which  may  be  granted  under  the  2009  Plan  to  non-
employee director in a calendar year, which when taken together with any other cash fees earned for services as a non-employee director 
during the calendar year, has a total value of $0.7 million, or $1.2 million in the case of a non-employee director who is also serving as 
chairman of our board of directors. The amendment and restatement also increased the maximum amount payable pursuant to cash-
denominated  performance  awards  granted  in  any  calendar  year  from  $3.0  million  to  $5.0  million.  In  addition,  the  amendment  and 
restatement extended the existing prohibition on the payment of dividends or dividend equivalents on unvested awards to apply to all 
awards, including time-based restricted stock, deferred stock and stock payment. The term of the 2009 Plan was extended by four years 
so that the plan expires on September 11, 2027. 

The maximum number of shares of our common stock authorized for issuance under the 2009 Plan is 51.1  million.  The number of 
securities remaining available for future issuance under the 2009 Plan at June 30, 2020 is 15.8 million.  The number of shares of our 
common stock available for issuance under the 2009 Plan will be reduced by (i) 2.8 shares for each one share of common stock delivered 
in settlement of any “full-value award,” which is any award other than a stock option, stock appreciation right or other award for which 
the holder pays the intrinsic value and (ii) one share for each share of common stock delivered in settlement of all other awards.  The 
maximum number of shares, which may be subject to awards granted under the 2009 Plan to any individual during any calendar year, 
may not exceed 3 million shares of our common stock (except in a participant’s initial year of hiring up to 4.5 million shares of our 
common stock may be granted).  

In certain regions, shares are withheld on behalf of employees to satisfy statutory tax withholding requirements upon exercise or vesting 
of awards. The number of shares withheld is based upon the closing price of our common stock on the trading day of the applicable 
settlement date. The remaining shares are delivered to the recipient as shares of our common stock. The amount remitted to the tax 
authorities for the employees’ tax obligation is reflected as a financing activity on our consolidated statements of cash flows. Shares 
withheld by us as a result of the net settlement are not considered issued and outstanding and are added to the reserves of the 2009 Plan. 

The total fair value of RSUs and PRSUs that vested during the years ended June 30, 2020, 2019 and 2018, was $56.8 million, $52.3 
million and $34.6 million, respectively. 

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PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

The following table summarizes the activity of RSUs, including PRSUs, during year ended June 30, 2020 (in thousands, except years 
and per share amounts): 

Outstanding at beginning of period 
Granted 
Vested* 
Performance factor adjustment 
Expired / cancelled 
Forfeited  
Outstanding at end of period 

* Includes 312 thousand shares netted for tax. 

Restricted 
Stock 
Units 

Weighted 
Average 
Grant-Date 
Fair Value 

 1,446    $ 
 363   
 (929)  
 294   
 (37)  
 (5)  
 1,132    $ 

 77.21   
 141.00   
 61.13   
 -  
 91.66   
 91.66   
 103.77   

Weighted 
Average 
Remaining 
Contractual 
Term in Years 
1.6 

1.6 

The following table summarizes option activity during the year ended June 30, 2020 (in thousands, except years and per share 
amounts): 

Outstanding at beginning of period 
Granted 
Exercised 
Forfeited 
Outstanding at end of period 
Options exercisable at end of period 
Options vested and expected to vest at end of period 

Weighted 
Average 
Exercise 
Price 

 72.91   
 146.34   
 57.17   
 110.19   
 89.05   
 71.18   
 88.32   

Weighted 
Average 
Remaining 
Contractual 
Term in Years 
4.4 

4.4 
3.7 
4.4 

Options 

 1,260    $ 
 162   
 (350)  
 (4)  
 1,068    $ 
 641    $ 
 1,046    $ 

The aggregate intrinsic value of options exercised during the fiscal years 2020, 2019 and 2018, was $31.2 million, $15.1 million and 
$27.5 million,  respectively.  As  at  June  30,  2020,  the  aggregate  intrinsic  value  of  options  outstanding,  exercisable,  and  vested  and 
expected to vest were $110.0 million, $77.4 million and $108.5 million respectively. 

Employee Stock Purchase Plan (the “ESPP”).    Under the ESPP, we offer participants the right to purchase shares of our common 
stock at a discount during successive offering periods. Each offering period under the ESPP will be for a period of time determined by 
the board of directors’ compensation committee of no less than 3  months and no  more than 27  months. The purchase price for our 
common stock under the ESPP will be the lower of 85% of the fair market value of our common stock on the date of grant or 85% of 
the fair market value of our common stock on the date of purchase. An individual participant cannot subscribe for more than $25,000 in 
common stock during any calendar year.  At June 30, 2020, the number of shares remaining available for future issuance under the ESPP 
is 2.0 million shares. 

During years ended June 30, 2020, 2019 and 2018, we issued 265,000, 285,000 and 302,000 shares to our employees in two offerings 
and we recognized $8.0 million, $6.4 million and $5.2 million, respectively, of stock compensation expense associated with the ESPP. 

Stock–based Employee compensation.    We measure the compensation expense of all stock-based awards at fair value on the grant 
date.  We estimate the fair value of stock options and purchase rights granted under the ESPP using the Black-Scholes valuation model. 
The fair value of restricted stock units is equal to the market value of the underlying shares as determined at the grant date less the fair 
value of dividends that  holders are not entitled to, during the vesting period. The fair value of performance restricted stock units is 
measured using a Monte-Carlo simulation valuation model. We recognize the fair value as compensation expense using the straight-line 
method over the service period for awards expected to vest. 

We estimate the fair value of stock options granted under our stock option plans and purchase rights granted under the ESPP using the 
assumptions in the following tables. The risk-free interest rate is estimated using the U.S. Treasury yield curve and is based on the term 
of the award. The expected term of awards is estimated from the vesting period of the award, as well as historical exercise behavior, and 
represents the period of time the awards granted are expected to be outstanding. Expected volatility is estimated based upon the historical 
volatility of ResMed stock. 

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PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

We estimate the fair value of stock options granted under our stock option plans and purchase rights granted under the ESPP using the 
following assumptions for the years ended June 30, 2020, 2019 and 2018:  

Stock options: 
Weighted average grant date fair value 
Weighted average risk-free interest rate 
Expected life in years 
Dividend yield 
Expected volatility 

ESPP purchase rights: 
Weighted average grant date fair value 
Weighted average risk-free interest rate 
Expected life in years 
Dividend yield 
Expected volatility 

  $ 

2020 

32.14 
1.58% 
4.9 
1.07% 
25% 

2019 

2018 

  $ 

  $ 

21.92 
2.96% 
4.9 
1.34% - 1.46%   
23% 

16.68 
2.08% 
4.9 
1.46% - 1.65% 
23% 

  $ 

  $ 

31.82 
1.6% 
6 months 
0.98% - 1.42%   
23% - 60% 

  $ 

22.12 
2.4% 
6 months 
1.40% - 1.47%   
23% 

17.44 
0.8% 
6 months 
1.47% - 1.92% 
23% 

The following table summarizes the total stock-based compensation costs incurred and the associated tax benefit recognized during the 
years ended June 30, 2020, 2019 and 2018 (in thousands):  

Cost of sales - capitalized as part of inventory 
Selling, general and administrative expenses 
Research and development expenses 
Stock-based compensation costs 
Tax benefit 
Stock-based compensation costs, net of tax benefit 

  $ 

  $ 

2020 

2019 

2018 

 3,703     $ 
 47,265      
 6,591      
 57,559      
 (39,534)     
 18,025     $ 

 3,043     $ 
 42,700      
 6,330      
 52,073      
 (26,658)     
 25,415     $ 

 2,990  
 39,754  
 5,668  
 48,412  
 (17,078) 
 31,334  

At  June 30,  2020,  there  was  $92.6  million  in  unrecognized  compensation  costs  related  to  unvested  stock-based  compensation 
arrangements. This is expected to be recognized over a weighted average period of 2.2 years.   

(12)  Earnings Per Share  

We compute basic earnings per share 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  164,000,  200,000  and  153,000  for  the  years  ended  June 30,  2020,  2019  and  2018, 
respectively, as the effect would have been anti-dilutive.  

Basic and diluted earnings per share for the years ended June 30, 2020, 2019 and 2018 are calculated as follows (in thousands except 
per share data):  

Numerator: 
Net income 
Denominator: 
Basic weighted-average common shares outstanding 
Effect of dilutive securities: 
Stock options and restricted stock units 
Diluted weighted average shares  
Basic earnings per share 
Diluted earnings per share 

(13)  Other, net  

2020 

2019 

2018 

  $ 

 621,674    $ 

 404,592    $ 

 315,588  

 144,338   

 143,111   

 142,764  

 1,314   
 145,652   

 4.31    $ 
 4.27    $ 

 1,373   
 144,484   

 2.83    $ 
 2.80    $ 

 1,223  
 143,987  
 2.21  
 2.19  

  $ 
  $ 

Other, net, in the consolidated statements of income is comprised of the following for the years ended June 30, 2020, 2019 and 2018 (in 
thousands):   

Gain (loss) on foreign currency transactions and hedging, net 
Impairment of equity investments (note 6) 
Other 

  $ 

  $ 

2020 

2019 

2018 

 1,331    $ 

 (14,519)  
 1,031   
 (12,157)   $ 

 1,712    $ 

 (15,007)  
 2,569   
 (10,726)   $ 

 (1,546) 
 (11,593) 
 4,597  
 (8,542) 

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PART II 

(14)  Income Taxes  

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

Income  before  income  taxes  for  the  years  ended  June 30,  2020,  2019  and  2018,  was  taxed  under  the  following  jurisdictions  (in 
thousands):  

U.S. 
Non-U.S. 

The provision for income taxes is presented below (in thousands):  

Current: 

Deferred:  

Federal 
State 
Non-U.S. 

Federal 
State 
Non-U.S. 

Provision for income taxes 

  $ 

  $ 

  $ 

  $ 

2020 

2019 

2018 

 60,548    $ 
 672,540   
 733,088    $ 

 (34,468)   $ 
 553,315   
 518,847    $ 

 42,627  
 478,685  
 521,312  

2020 

2019 

2018 

 9,790    $ 
 6,898   
 124,602   
 141,290   
 (13,000)  
 (3,335)  
 (13,541)  
 (29,876)  
 111,414    $ 

 28,658    $ 
 7,595   
 127,540   
 163,793   
 (30,456)  
 (5,408)  
 (13,674)  
 (49,538)  
 114,255    $ 

 128,971  
 948  
 68,858  
 198,777  
 9,488  
 (350) 
 (2,191) 
 6,947  
 205,724  

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. federal income tax 
rate of 21% for the years ended June 30, 2020 and June 30, 2019 and 28% for the year ended June 30, 2018, to pretax income as a result 
of the following (in thousands):  

Taxes computed at statutory U.S. rate 
Increase (decrease) in income taxes resulting from: 
Transition tax 
State income taxes, net of U.S. tax benefit 
Research and development credit 
Change in statutory tax rates 
Change in valuation allowance 
Effect of non-U.S. tax rates 
Foreign tax credits (1) 
Stock-based compensation expense 
Other 

2020 

2019 

2018 

  $ 

 153,949    $ 

 108,958    $ 

 146,280  

 -  
 3,563   
 (13,595)  
 -  
 7,216   
 (20,935)  
 (4,026)  
 (20,696)  
 5,938   
 111,414    $ 

 6,038   
 2,186   
 (12,953)  
 -  
 (1,118)  
 25,045   
 (7,806)  
 (11,534)  
 5,439   
 114,255    $ 

 126,753  
 2,427  
 (4,089) 
 16,685  
 (2,962) 
 (70,250) 
 (6,473) 
 (7,045) 
 4,398  
 205,724  

  $ 

(1)  

In fiscal year 2018, $75.5 million of the foreign tax credit is included as a reduction in the transition tax. 

The components of our deferred tax assets and liabilities at June 30, 2020 and June 30, 2019, are as follows (in thousands):   

Deferred tax assets: 
Employee liabilities 
Tax credit carry overs 
Inventories 
Provision for warranties 
Provision for doubtful debts 
Net operating loss carryforwards 
Capital loss carryover 
Property, plant and equipment 
Stock-based compensation expense 
Deferred revenue 
Research and development capitalization 
Other 

Less valuation allowance 
Deferred tax assets 
Deferred tax liabilities: 
Goodwill and other intangibles 
Deferred tax liabilities 
Net deferred tax asset 

2020 

2019 

  $ 

 21,272    $ 
 9,295   
 9,129   
 3,585   
 6,594   
 38,035   
 10,864   
 (724)  
 6,035   
 15,343   
 39,195   
 (2,282)  
 156,341   
 (16,891)  
 139,450   

 (111,396)  
 (111,396)  

  $ 

 28,054    $ 

 18,104  
 15,666  
 4,905  
 3,551  
 5,532  
 53,315  
 6,640  
 3,002  
 10,769  
 9,619  
 17,910  
 (332) 
 148,681  
 (11,644) 
 137,037  

 (102,939) 
 (102,939) 
 34,098  

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Table of Contents 

PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

We reported the net deferred tax assets and liabilities in our consolidated balance sheets at June 30, 2020 and June 30, 2019, as follows 
(in thousands):  

Non-current deferred tax asset 
Non-current deferred tax liability 
Net deferred tax asset 

  $ 

  $ 

2020 

2019 

 41,065    $ 
 (13,011)  
 28,054    $ 

 45,478  
 (11,380) 
 34,098  

As of June 30, 2020, we had $30.4 million of U.S. federal and state net operating loss carryforwards and $6.8 million of non-U.S. net 
operating loss carryforwards, which expire in various years beginning in 2020 or carry forward indefinitely.   

The valuation allowance at June 30, 2020 relates to a provision for uncertainty of the utilization of net operating loss carryforwards of 
$1.6 million and capital loss and other items of $15.3 million. We believe that it is more likely than not that the benefits of deferred tax 
assets, net of any valuation allowance, will be realized. 

A substantial portion of our manufacturing operations and administrative functions in Singapore operate under various tax holidays and 
tax incentive programs that will expire in whole or in part at various dates through June 30, 2030.  The end of certain tax holidays may 
be extended if specific conditions are met. The net impact of these tax holidays and tax incentive programs increased our net earnings 
by $43.8 million ($0.30 per diluted share) for the year ended June 30, 2020 and $20.3 million ($0.14 per diluted share) for the year 
ended June 30, 2019. 

As a result of the U.S. Tax Act, we have treated all non-U.S. historical earnings as taxable, which resulted in additional tax expense of 
$126.9 million during the year ended June 30, 2018 and $6.0 million during the year ended June 30, 2019, which was payable over 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. The total amount  of these  undistributed earnings at  June 30, 2020  amounted  to approximately $3.0 billion. On June 14, 
2019, the U.S. Treasury Department issued final and temporary regulations relating to the repatriation of non-U.S. earnings.  As a result, 
in the event our non-U.S. earnings had not been permanently reinvested, deferred taxes of approximately $194.4 million in U.S. federal 
deferred tax and $5.2 million in U.S. state deferred taxes would have been recognized in the consolidated financial statements. 

In accounting for uncertainty in income taxes, we recognize a tax benefit in the financial statements for an uncertain tax position only if 
management’s assessment is that the position is “more likely than not” (that is, a likelihood greater than 50 percent) to be allowed by 
the tax jurisdiction based solely on the technical merits of the position. The term “tax position” refers to a position in a previously filed 
tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and 
liabilities for annual periods. The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax 
expense line in the accompanying consolidated statements of income. Accrued interest and penalties are included within the related tax 
liability line in the consolidated balance sheets. Based on all known facts and circumstances and current tax law, we believe the total 
amount of unrecognized tax benefits on June 30, 2020, is not material to our results of operations, financial condition or cash flows, and 
if recognized, would not have a material impact on our effective tax rate. 

Our income tax returns are based on calculations and assumptions subject to audit by various tax authorities. In addition, the calculation 
of  our  tax  liabilities  involves  dealing  with  uncertainties  in  the  application  of  complex  tax  laws.    We  regularly  assess  the  potential 
outcomes  of  examinations  by  tax  authorities  in  determining  the  adequacy  of  our  provision  for  income  taxes.  Any  final  assessment 
resulting from tax audits may result in material changes to our past or future taxable income, tax payable or deferred tax assets, and may 
require us to pay penalties and interest that could materially adversely affect our financial results.   

In connection with the audit by the Australian Taxation Office (“ATO”) for the tax years 2009 to 2013, we received Notices of Amended 
Assessments in March 2018. Based on these assessments, the ATO asserted that we owe $151.7 million in additional income tax and 
$38.4 million in accrued interest, of which $75.9 million was paid in April 2018 under a payment arrangement with the ATO. In June 
2018, we received a notice from the ATO claiming penalties of 50% of the additional income tax that was assessed or $75.9 million. As 
of June 30, 2020, we recorded a receivable in prepaid taxes and other non-current assets for the amount paid as we ultimately expect 
this will be refunded by the ATO.  The ATO is currently auditing tax years 2014 to 2018. We do not agree with the ATO’s assessments 
and continue to believe we are more likely than not to be successful in defending our position. 

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PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

Our income tax expense, short-term income taxes payable and long-term income taxes payable were impacted by charges associated 
with the U.S. Tax Act enacted on December 22, 2017, which resulted in additional income tax expense of $138.0 million during the 
year ended June 30, 2018. Specifically, the income tax expense includes the transition tax imposed on our accumulated foreign earnings, 
which resulted in additional income tax expense of $126.9 million for the year ended June 30, 2018. Additionally, it resulted in the write 
down in the carrying value of our net deferred tax assets due to the lower corporate tax rate and the reduction in the future value of 
deferred tax assets, which resulted in additional income tax expense of $11.1 million recorded in the year ended June 30, 2018. During 
the year ended June 30, 2019, we recorded additional tax expense of $6.0 million in transition tax imposed on our accumulated foreign 
earnings, which related to final treasury regulations issued and temporary guidance published during the year.  

On December 22, 2017, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the 
Tax Cuts and Jobs Act (“SAB 118”) directing taxpayers to consider the impact of the U.S. Tax Act as “provisional” when it does not 
have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting 
for the change in tax law. Effective December 31, 2018, the accounting relating to the impact of U.S. legislation was no longer considered 
provisional. During the year ended June 30, 2018, we recorded additional tax expense of $138.0 million relating to changes in U.S. tax 
legislation. During the year ended June 30, 2019, we recorded additional tax expense of $6.0 million in additional transition tax, which 
related to final treasury regulations issued and temporary guidance published during the year. However, further adjustments could be 
required as a result of future legislation, amended tax returns, or tax examinations of the years impacted by the calculation.  

(15)  Segment Information  

We have 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 sales and income from operations. The accounting policies of the segments are the same as those described 
in note 2 – significant accounting policies. Segment net sales 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, acquisition related expenses, net interest 
expense 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. 

The table below presents a reconciliation of net revenues, depreciation and amortization and net operating profit by reportable segments 
for the years ended June 30, 2020, 2019 and 2018 (in thousands): 

Revenue by segment 
Total Sleep and Respiratory Care 

Software as a Service 
Deferred revenue fair value adjustment* 
Total Software as a Service 
Total 

Depreciation and amortization by segment 
Sleep and Respiratory Care 
Software as a Service 
Amortization of acquired intangible assets and corporate costs 
Total 

Net operating profit by segment 
Sleep and Respiratory Care 
Software as a Service 
Total 

Reconciling items 
Corporate costs 
Amortization of acquired intangible assets 
Litigation settlement expenses 
Restructuring expenses 
Acquisition related expenses 
Deferred revenue fair value adjustment* 
Interest expense (income), net 
Loss attributable to equity method investments 
Other, net 
Income before income taxes 
*  

2020 

2019 

2018 

  $ 

 2,602,381    $ 

 2,330,783    $ 

 2,183,193  

 356,734   
 (2,102)  
 354,632   
 2,957,013    $ 

 281,137   
 (5,348)  
 275,789   
 2,606,572    $ 

 157,003  
 - 
 157,003  
 2,340,196  

 69,444    $ 

 3,850   
 81,556   
 154,850    $ 

 934,697    $ 
 82,152   
 1,016,849    $ 

 125,993    $ 
 79,695   
 (600)  
 -  
 -  
 2,102   
 39,356   
 25,058   
 12,157   
 733,088    $ 

 70,094    $ 

 3,250   
 77,451   
 150,795    $ 

 766,068    $ 
 74,886   
 840,954    $ 

 124,682    $ 
 74,938   
 41,199   
 9,401   
 6,123   
 5,348   
 33,857   
 15,833   
 10,726   
 518,847    $ 

 70,366  
 809  
 48,785  
 119,960  

 656,311  
 55,224  
 711,535  

 104,889  
 46,383  
 - 
 18,432  
 - 
 - 
 11,977  
 - 
 8,542  
 521,312  

  $ 

  $ 

  $ 

  $ 

  $ 

  $ 

  $ 

The deferred revenue fair value adjustment is a purchase price accounting adjustment related to MatrixCare which was acquired on November 13, 2018. 

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Table of Contents 

PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

The following table summarizes our net revenue disaggregated by segment, product and region for the years ended June 30, 2020, 2019 
and 2018 (in thousands): 

U.S., Canada and Latin America 
Devices 
Masks and other 
Total Sleep and Respiratory Care 
Software as a Service 
Total 

Combined Europe, Asia and other markets  
Devices 
Masks and other 
Total Sleep and Respiratory Care 

Global revenue 
Devices 
Masks and other 
Total Sleep and Respiratory Care 
Software as a Service 
Total 

2020 

2019 

2018 

  $ 

  $ 

  $ 

  $ 

  $ 

  $ 

  $ 

  $ 

 792,766    $ 
 779,561   
 1,572,327    $ 
 354,632   
 1,926,959    $ 

 715,056    $ 
 314,998   
 1,030,054    $ 

 1,507,822    $ 
 1,094,559   
 2,602,381    $ 
 354,632   
 2,957,013    $ 

 743,066    $ 
 677,430   
 1,420,496    $ 
 275,789   
 1,696,285    $ 

 618,525    $ 
 291,762   
 910,287    $ 

 1,361,591    $ 
 969,192   
 2,330,783    $ 
 275,789   
 2,606,572    $ 

 689,603  
 600,480  
 1,290,083  
 157,003  
 1,447,086  

 613,978  
 279,133  
 893,111  

 1,303,581  
 879,613  
 2,183,194  
 157,003  
 2,340,197  

Revenue information by geographic area for the years ended June 30, 2020, 2019 and 2018 is summarized below (in thousands): 

United States 
Rest of the World 
Total 

2020 

2019 

  $ 

  $ 

 1,828,575    $ 
 1,128,438   
 2,957,013    $ 

 1,588,655    $ 
 1,017,917   
 2,606,572    $ 

2018 

 1,345,212  
 994,984  
 2,340,196  

Long-lived assets of geographic areas are those assets used in our operations in each geographical area, and excludes goodwill, other 
intangible assets, and deferred tax assets. Long-lived assets by geographic area as of June 30, 2020, 2019 and 2018, is summarized 
below (in thousands): 

United States 
Australia 
Singapore 
Rest of the World 
Total 

(16)  Employee Retirement Plans  

2020 

2019 

2018 

  $ 

  $ 

 164,155    $ 
 162,490   
 39,977   
 50,713   
 417,335    $ 

 149,706    $ 
 165,425   
 19,465   
 52,864   
 387,460    $ 

 142,337  
 173,394  
 17,657  
 53,162  
 386,550  

We contribute to a number of employee retirement plans for the benefit of our employees. Details of the main plans are as follows:  

Australia    We contribute to defined contribution plans for each employee resident in Australia at the rate of approximately 9.5% of 
salaries.  Employees  may  contribute  additional  funds  to  the  plans.    All  Australian  employees,  after  serving  a  qualifying  period,  are 
entitled to benefits on retirement, disability or death. Our total contributions to the plans for the years ended June 30, 2020, 2019 and 
2018, were $9.5 million, $10.0 million and $10.5 million, respectively.  

United States    We sponsor a defined contribution plan available to substantially all domestic employees. Company contributions to 
this plan are based on a percentage of employee contributions to a maximum of 4.0% of the employee’s salary. Our total contributions 
to the plan were $9.3 million, $6.7 million and $5.0 million in fiscal 2020, 2019 and 2018, respectively.  

Singapore    We sponsor a defined contribution plan available to substantially all domestic employees. Company contributions to this 
plan are based on a percentage of employee contributions to a maximum of 17.0% of the employee’s salary. Our total contributions to 
the plan were $2.9 million, $2.6 million and $2.2 million in fiscal 2020, 2019 and 2018, respectively. 

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Table of Contents 

PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

(17)  Legal Actions, Contingencies and Commitments 

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.  

Taxation Matters 

As described in note 14 – Income Taxes, we received Notices of Amended Assessments from the ATO for the tax years 2009 to 2013. 
Based on these assessments, the ATO asserted that we owe $151.7 million in additional income tax and $38.4 million in accrued interest, 
of which $75.9 million was paid in April 2018 under a payment arrangement with the ATO. In June 2018, we received a notice from 
the ATO claiming penalties of 50% of the additional income tax that was assessed, or $75.9 million. As of June 30, 2020, we recorded 
a receivable in prepaid taxes and other non-current assets for the amount paid as we ultimately expect this will be refunded by the ATO. 
The ATO is currently auditing tax years 2014 to 2018.  We do not agree with the ATO’s assessments and continue to believe we are 
more likely than not to be successful in defending our position.   

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 
recourse, either limited or full, 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. 

The following table summarizes the amount of total receivables sold with recourse during the years ended June 30, 2020 and June 30, 
2019 (in thousands):  

Full recourse 
Limited recourse 
Total 

2020 

2019 

  $ 

  $ 

 -   $ 

 154,529   
 154,529    $ 

 33,954  
 98,123  
 132,077  

The following table summarizes the maximum exposure on outstanding receivables sold with recourse and provision for doubtful 
accounts as at June 30, 2020 and June 30, 2019 (in thousands): 

Full recourse 
Limited recourse 
Total 
Contingent provision for receivables with recourse 

Commitments 

2020 

2019 

  $ 

  $ 
  $ 

 916    $ 

 21,890   
 22,806    $ 
 (6,647)   $ 

 19,209  
 10,241  
 29,450  
 (1,752) 

In  the  normal  course  of  business,  we  enter  into  agreements  to  purchase  goods  or  services  that  are  not  cancelable  without  penalty, 
primarily related to supply arrangements. Obligations under our purchase agreements at June 30, 2020 were as follows (in thousands): 

Minimum purchase obligations 

  $ 

 462,996    $ 

 458,623    $ 

 3,678    $ 

 518    $ 

 111    $ 

 66    $ 

 - 

Total   

2021 

2022 

2023 

2024 

2025 

  Thereafter 

Fiscal Years Ending June 30 

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PART II 

(18)  Business Combinations  

Fiscal year ended June 30, 2020 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

On January 31, 2020, we completed the acquisition of 100% of the membership interests in SnapWorx, LLC (“SnapWorx”), a software 
company providing patient contact management and workflow optimization for the sleep apnea resupply market. This acquisition has 
been accounted for as a business combination using purchase accounting and the results of SnapWorx are included in our consolidated 
financial statements from the acquisition date. This acquisition is not considered a material business combination and accordingly pro 
forma information is not provided.  The acquisition was funded by drawing on our existing revolving credit facility and through cash 
on-hand.   

We  completed  our  purchase  price  allocation  during  the  quarter  ending  June  30,  2020,  which  was  not  materially  different  from  the 
preliminary purchase price allocation. The cost of the acquisition was allocated to the assets acquired and liabilities assumed based on 
estimates of their fair values at the date of acquisition. The goodwill recognized as part of the acquisition is reflected in the Software as 
a Service segment and is deductible for tax purposes. It mainly represents the synergies that are unique to our combined businesses and 
the potential for new products and services to be developed in the future. 

During the year ended June 30, 2020 we did not record any material acquisition-related expenses. 

Fiscal year ended June 30, 2019 

MatrixCare 

On November 13, 2018, we completed the acquisition of 100% of the shares in MatrixCare, Inc. and its subsidiaries (“MatrixCare”), a 
provider of software solutions for skilled nursing, life plan communities, senior living and private duty, for base purchase consideration 
paid of $750.0 million. This acquisition has been accounted for as a business combination using purchase accounting and included in 
our consolidated financial statements from November 13, 2018. The acquisition was paid for using borrowings under our revolving 
credit facility. 

We completed the purchase price allocation in relation to this acquisition during the quarter ended December 31, 2019.  The cost of the 
acquisition was allocated to the assets acquired and liabilities assumed based on estimates of their fair values at the date of acquisition. 
The goodwill recognized as part of the acquisition is reflected in the Software as a Service segment and is not deductible for tax purposes. 
It mainly represents the synergies that are unique to our combined businesses and the potential for new products and services to be 
developed in the future. The fair values of assets acquired and liabilities assumed, and the estimated useful lives of intangible assets 
acquired are as follows (in thousands): 

Current assets 
Property, plant and equipment 
Trade names 
Developed technology 
Customer relationships 
Goodwill 
Assets acquired 
Current liabilities 
Deferred revenue 
Deferred tax liabilities 
Debt assumed 
Total liabilities assumed 
Net assets acquired 

Intangible 
assets - 
useful life 

7 years 
7 years 
15 years 

Preliminary as of  
June 30, 2019 

Adjustments 

Final 

  $ 

  $ 

  $ 
  $ 

 50,325    $ 
 4,401   
 18,000   
 133,000   
 114,000   
 517,995   
 837,721    $ 
 (13,751)  
 (18,339)  
 (41,570)  
 (151,665)  
 (225,325)   $ 
 612,396    $ 

 -   $ 
 -  
 -  
 -  
 2,000   
 5,664   
 7,664    $ 
 (255)  
 (166)  
 (7,243)  
 -  

 (7,664)   $ 
 -   $ 

 50,325   
 4,401   
 18,000   
 133,000   
 116,000   
 523,659   
 845,385   
 (14,006)  
 (18,505)  
 (48,813)  
 (151,665)  
 (232,989)  
 612,396   

A reconciliation of the base consideration to the net consideration is as follows (in thousands): 

Base consideration 
Cash acquired 
Debt assumed 
Net working capital and other adjustments 
Net consideration 

  $ 

  $ 

 750,000  
 15,873  
 (151,665) 
 (1,812) 
 612,396  

During the year ended June 30, 2019, revenues of $79.2 million and losses from operations of $9.1 million related to MatrixCare were 
included in the consolidated statement of comprehensive income. The losses from operations for the year ended June 30, 2019 was 
negatively impacted by $19.0 million of amortization of acquired intangible assets and fair value purchase price adjustments relating to 

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PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

deferred revenue of $5.3 million. Excluding the impact of these items, revenue for the year ended June 30, 2019 was $84.6 million and 
income from operations was $15.3 million.  

The acquisition is considered a material business combination and accordingly unaudited pro forma information presented below for 
the year ended June 30, 2019, includes the effects of pro forma adjustments as if the acquisition of MatrixCare occurred on July 1, 2017. 
The pro forma results were prepared using the acquisition method of accounting and combine our historical results and MatrixCare’s 
for the years ended June 30, 2019 and June 30, 2018, including the effects of the business combination, primarily amortization expense 
related  to  the  fair  value  of  identifiable  intangible  assets  acquired,  interest  expense  associated  with  the  financing  obtained  by  us  in 
connection with the acquisition, and the elimination of incurred acquisition-related costs. 

The pro forma financial information presented below is not necessarily indicative of the results of operations that  would have been 
achieved if the acquisition occurred at the beginning of the earliest period presented, nor is it intended to be a projection of future results. 
The following table summarized unaudited pro forma consolidated results for the years ended June 30, 2019 and 2018 (in thousands, 
except per share information): 

Revenue 
Net income 
Basic earnings per share 
Diluted earnings per share 

$ 
$ 
$ 
$ 

2019 

2018 

 2,652,059    $ 
 446,721    $ 
 3.12    $ 
 3.09    $ 

 2,457,242  
 295,628  
 2.07  
 2.05  

The unaudited pro forma consolidated results for the years ended June 30, 2019 and June 30, 2018 reflect primarily the following pro 
forma pre-tax adjustments: 

•  Net amortization expense related to the fair value of identifiable intangible assets acquired of $0.6 million and $8.3 million for 

the years ended June 30, 2019 and June 30, 2018, respectively. 

•  Net interest expense associated with debt that was issued to finance the acquisition of $2.6 million and $12.7 million for the 

years ended June 30, 2019 and June 30, 2018, respectively. 

•  Elimination  of  pre-tax  acquisition-related  costs  incurred  by  ResMed  and  MatrixCare  of  $3.7  million  and  $16.7  million, 

respectively, for the year ended June 30, 2019. 

•  Net income tax expense of $1.8 million and $3.2 million for the years ended June 30, 2019 and June 30, 2018, respectively. 

Other acquisitions 
During the year ended June 30, 2019, we also completed the following acquisitions: 

•  On  July 6,  2018,  we  completed  the  acquisition  of  100%  of  the  shares  in  HEALTHCAREfirst  Holding  Company 
(“HEALTHCAREfirst”),  a  provider  of  software  solutions  and  services  for  home  health  and  hospice  agencies,  for  a  total 
purchase consideration of $126.3 million. 

•  On October 15, 2018, we completed the acquisition of 100% of the shares in HB Healthcare, a homecare provider in South 

Korea.  

•  On December 11, 2018, we completed the acquisition of assets in Interactive Health Network, a provider of integrated clinical 

and financial management software solution for long-term care companies. 

•  On December 13, 2018,  we completed  the acquisition of assets in  Apacheta, a provider of cloud-based SaaS software that 

manages the medical equipment delivery process for HME dealers. 

•  On January 6, 2019, we completed the acquisition of Propeller Health, a digital therapeutics company providing connected 
health solutions for people living with chronic obstructive pulmonary disease and asthma, for a total purchase consideration of 
$242.9 million,  which  adjusts  for  cash  acquired  and  debt  assumed  at  the  time  of  acquisition.  We  previously  held  a  non-
controlling interest in Propeller Health’s outstanding shares. As a result of the acquisition, we recognized a fair value gain of 
$1.9 million in other income during the year ended June 30, 2019 associated with the previous equity investment. 

These acquisitions have been accounted for as business combinations using purchase accounting and are included in our consolidated 
financial statements from the acquisition dates. These acquisitions, individually and collectively, are not considered a material business 
combination and accordingly pro forma information is not provided.  The acquisitions were funded by drawing on our existing revolving 
credit facility and through cash on-hand.   

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PART II 

RESMED INC. AND SUBSIDIARIES 
Notes to the Consolidated Financial Statements 

Item 8 

We have completed the purchase price allocation in relation to all of these acquisitions. The cost of the share acquisitions was allocated 
to the assets acquired and liabilities assumed based on estimates of their fair values at the date of acquisition. The goodwill recognized 
as part of these acquisitions, which is predominantly not deductible for tax purposes, mainly represents the synergies that are unique to 
our combined businesses and the potential for new products and services to be developed in the future. Goodwill from these acquisitions 
has been reflected in the Software as a Service segment except for the goodwill resulting from the HB Healthcare and Propeller Health 
acquisitions, which have been recorded in the Sleep and Respiratory Care segment. 

The fair values of assets acquired and liabilities assumed of acquisitions during the year ended June 30, 2019, excluding MatrixCare, 
and the estimated useful lives of intangible assets acquired are as follows (in thousands): 

Current assets 
Property, plant and equipment 
Deferred tax assets 
Trade names 
Non-compete 
Developed technology 
Customer relationships 
Goodwill 
Assets acquired 
Current liabilities 
Deferred revenue 
Deferred tax liabilities 
Debt assumed 
Total liabilities assumed 
Net assets acquired 

Intangible 
assets - 
useful life 

10 years 
3 years 
5 to 6 years 
5 to 15 years 

  $ 

  $ 

  $ 
  $ 

Final 

 31,648   
 2,290   
 5,211   
 7,828   
 1,000   
 48,280   
 53,712   
 287,469   
 437,438   
 (7,648)  
 (3,619)  
 (2,367)  
 (35,104)  
 (48,738)  
 388,700   

During the year ended June 30, 2019, we recorded acquisition-related expenses of $6.1 million. 

(19)  Restructuring Expenses  

During the year ended June 30, 2020, we did not incur material restructuring expenses. 

During  the  year  ended  June 30,  2019,  we  incurred  restructuring  expenses  of  $9.4  million  associated  with  the  reorganization, 
rationalization  and  relocation  of  some  of  our  research  and  development  and  SaaS  operations  including  the  closure  of  our  German 
research and development site. We recorded the full amount of $9.4 million during the year ended June 30, 2019, within our operating 
expenses, which was separately disclosed as restructuring expenses and had $5.4 million remaining in our accruals at year end, which 
was paid during the year ended June 30, 2020.  The restructuring expenses consisted primarily of severance payments to employees and 
contract exit costs associated with several impacted sites. 

During the year ended June 30, 2018, we incurred restructuring expenses within the Sleep and Respiratory Care segment of $18.4 million 
associated with a global strategic workforce planning review, which resulted in a reduction in headcount across most of our functions 
and locations and closure of our Paris site. We recorded the full amount of $18.4 million during the year ended June 30, 2018, within 
our  operating  expenses  which  was  separately  disclosed  as  restructuring  expenses.  We  had  $1.5  million  remaining  in  our  employee 
related  costs  accrual  at  June  30,  2018,  which  was  paid  during  the  year  ended  June  30,  2019.  The  restructuring  expenses  consisted 
primarily of severance payments to employees and the remaining expense relating to legal and consulting services associated with the 
completion of the employee severances and contract exit costs associated with the Paris site. 

(20)  Litigation Settlement Expenses 

We did not recognize any material litigation settlement expenses during the years ended June 30, 2020 and 2018. 

During the year ended June 30, 2019 we recognized litigation settlement expenses of $41.2 million associated with a tentative agreement 
with  the  United  States  Department  of  Justice  to  civilly  resolve  the  investigation  of  certain  marketing  practices.  We  finalized  the 
settlement in December 2019, and announced it in January 2020 on terms that were consistent with our prior reserve. The settlement 
amount consisted of the payment to the United States and to various states that joined the action, as well as attorneys’ fees and other 
costs  to  the  private  litigants  that  filed  the  suits  that  the  Department  of  Justice  pursued.  We  also  entered  into  a  corporate  integrity 
agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services with accompanying oversight 
of our sales and marketing practices in the United States for five years.  

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PART II 

Year ended June 30, 2020 
Applied against asset account 
Allowance for doubtful accounts 
Year ended June 30, 2019 
Applied against asset account 
Allowance for doubtful accounts 
Year ended June 30, 2018 
Applied against asset account 
Allowance for doubtful accounts 

SCHEDULE II 
RESMED INC. AND SUBSIDIARIES 
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES 
June 30, 2020, 2019 and 2018 
(in thousands) 

Item 8 

Balance at 
Beginning 
of Period 

Charged to costs 
and expenses 

Other 
(deductions) 

Balance at 
End of 
Period 

  $ 

  $ 

  $ 

 25,171   $ 

 18,283   $ 

 (14,946)   $ 

 28,508 

 19,258   $ 

 12,379   $ 

 (6,466)   $ 

 25,171 

 11,150   $ 

 15,189   $ 

 (7,081)   $ 

 19,258 

See accompanying report of independent registered public accounting firm. 

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PART II 

Items 9 – 9B 

ITEM 9  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 

RESMED INC. AND SUBSIDIARIES 

DISCLOSURE  

None.  

ITEM 9A  CONTROLS AND PROCEDURES  

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange 
Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that 
such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, 
as  appropriate,  to  allow  for  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 management is required to apply its judgment in evaluating the 
cost-benefit relationship of possible controls and procedures.  

As required by SEC Rule 13a-15(b), 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 June 30, 2020. 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 June 30, 2020.  

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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Table of Contents 

PART II 

RESMED INC. AND SUBSIDIARIES 

Items 9 – 9B 

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING 

Our  management  is  responsible  for  establishing  and  maintaining  adequate  internal  control  over  financial  reporting  as  defined  in 
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is 
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for 
external purposes in accordance with generally accepted accounting principles in the United States of America. Our internal control 
over financial reporting includes those policies and procedures that:  

(i)  Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of 

our assets;  

(ii)  Provide  reasonable  assurance  that  transactions  are  recorded  as  necessary  to  permit  preparation  of  financial  statements  in 
accordance  with  generally  accepted  accounting  principles,  and  that  our  receipts  and  expenditures  are  being  made  only  in 
accordance with authorizations of our management and directors; and  

(iii) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our 

assets that could have a material effect on the financial statements.  

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections 
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in 
conditions, or that the degree of compliance with the policies or procedures may deteriorate.  

Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2020.  In making this assessment, 
management  used  the  framework  in  Internal  Control-Integrated  Framework  (2013)  issued  by  the  Committee  of  Sponsoring 
Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design of our internal control over 
financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Management reviewed the 
results of its assessment with the audit committee of our board of directors.  

Based  on  that  assessment  under  the  framework  in  Internal  Control-Integrated  Framework  (2013),  management  concluded  that  the 
company’s internal control over financial reporting was effective as of June 30, 2020.  

KPMG  LLP,  independent  registered  public  accounting  firm,  who  audited  and  reported  on  the  consolidated  financial  statements  of 
ResMed, Inc. included in this report, has issued an attestation report on the effectiveness of internal control over financial reporting. 

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Table of Contents 

PART II 

RESMED INC. AND SUBSIDIARIES 

Report of Independent Registered Public Accounting Firm 

Items 9 – 9B 

To the Stockholders and Board of Directors 
ResMed Inc.: 

Opinion on Internal Control Over Financial Reporting  

We have audited ResMed Inc. and subsidiaries’ (the Company) internal control over financial reporting as of June 30, 
2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of 
Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, 
effective internal control over financial reporting as of June 30, 2020, based on criteria established in Internal Control – 
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.   

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United 
States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2020 and 2019, the related 
consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in 
the three-year period ended June 30, 2020, and the related notes and financial statement schedule II (collectively, the 
consolidated financial statements), and our report dated August 12, 2020 expressed an unqualified opinion on those 
consolidated financial statements. 

Basis for Opinion  

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its 
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s 
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal 
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are 
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the 
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was 
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an 
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing 
and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also 
included performing such other procedures as we considered necessary in the circumstances. We believe that our audit 
provides a reasonable basis for our opinion. 

Definition and Limitations of Internal Control Over Financial Reporting  

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the 
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with 
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and 
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the 
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are 
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting 
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of 
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely 
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the 
financial statements. 

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PART II 

RESMED INC. AND SUBSIDIARIES 

Items 9 – 9B 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become 
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may 
deteriorate. 

San Diego, California  
August 12, 2020 

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Table of Contents 

PART II 

ITEM 9B  OTHER INFORMATION 

None. 

RESMED INC. AND SUBSIDIARIES 

Items 9 – 9B 

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Table of Contents 

PART III 

RESMED INC. AND SUBSIDIARIES 

PART III 

Items 10 – 14 

ITEM 10  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  

Information  required  by  this  Item  is  incorporated  by  reference  from  our  definitive  proxy  statement  for  our  next  annual  meeting  of 
stockholders, which will be filed with the Securities and Exchange Commission within 120 days after June 30, 2020.  

We have  filed as exhibits to this report for the  year ended  June 30, 2020, the certifications of our chief executive officer and chief 
financial officer required by Section 302 of the Sarbanes-Oxley Act of 2002.  

ITEM 11  EXECUTIVE COMPENSATION  

Information  required  by  this  Item  is  incorporated  by  reference  from  our  definitive  proxy  statement  for  our  next  annual  meeting  of 
stockholders, which will be filed with the Securities and Exchange Commission within 120 days after June 30, 2020.  

ITEM 12  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT  AND  RELATED 

STOCKHOLDER MATTERS  

Information  required  by  this  Item  is  incorporated  by  reference  from  our  definitive  proxy  statement  for  our  next  annual  meeting  of 
stockholders, which will be filed with the Securities and Exchange Commission within 120 days after June 30, 2020.  

ITEM 13  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE  

Information  required  by  this  Item  is  incorporated  by  reference  from  our  definitive  proxy  statement  for  our  next  annual  meeting  of 
stockholders, which will be filed with the Securities and Exchange Commission within 120 days after June 30, 2020. 

ITEM 14  PRINCIPAL ACCOUNTING FEES AND SERVICES  

Information  required  by  this  Item  is  incorporated  by  reference  from  our  definitive  proxy  statement  for  our  next  annual  meeting  of 
stockholders, which will be filed with the Securities and Exchange Commission within 120 days after June 30, 2020.  

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Table of Contents 

PART IV 

Items 15 – 16 

RESMED INC. AND SUBSIDIARIES 

PART IV 

ITEM 15  EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES  

The following documents are filed as part of this report:  

(a) 

(b) 

2.1 

3.1 

3.2 

4.1 

4.2 
10.1 

Consolidated Financial Statements and Schedules – The index to our consolidated financial statements and schedules are 
set forth in the “Index to Consolidated Financial Statements” under Item 8 of this report. 

Exhibit Lists 

Agreement and Plan of Merger, dated November 5, 2018, by and among ResMed Operations Inc., Evolved Sub, Inc., 
ResMed Inc., OPEL GI Holdings Limited, in its capacity as the agent acting on behalf of the holders of common stock of 
MatrixCare Holdings, Inc., and MatrixCare Holdings, Inc. (Incorporated by reference to Exhibit 2.1 to the Registrant’s 
Report on Form 8-K filed on November 8, 2018) 
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) 
Sixth Amended and Restated Bylaws of ResMed Inc. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Report 
on Form 8-K filed on February 26, 2020) 
Form of certificate evidencing shares of Common Stock. (Incorporated by reference to Exhibit 4.1 to the Registrant’s 
Registration Statement on Form S-1 (No. 33-91094) declared effective on June 1, 1995) 
Description of ResMed Inc.’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 
Licensing Agreement between the University of Sydney and ResMed Ltd dated May 17, 1991, as amended. (Incorporated 
by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 (No. 33-91094) declared effective on 
June 1, 1995) 

10.2*  ResMed Inc. 2006 Incentive Award Plan. (Incorporated by reference to Exhibit 99.1 to the Registrant’s Report on Form 8-

K filed on November 15, 2006) 

10.3*  Amendment No. 1 to the ResMed Inc. 2006 Incentive Award Plan. (Incorporated by reference to Exhibit 10.24 to the 

10.4* 

10.5* 

10.6* 

10.7* 

Registrant’s Report on Form 10-Q for the quarter ended December 31, 2006, filed on February 8, 2007) 
2006 Grant agreement for Board of Directors. (Incorporated by reference to Exhibit 10.25 to the Registrant’s Report on 
Form 10-Q for the quarter ended December 31, 2006 filed on February 8, 2007) 
2006 Grant agreement for Executive Officers. (Incorporated by reference to Exhibit 10.26 to the Registrant’s Report on 
Form 10-K for the year ended June 30, 2007, filed on August 28, 2007)  
2006 Grant agreement for Australian Executive Officers. (Incorporated by reference to Exhibit 10.27 to the Registrant’s 
Report on Form 10-K for the year ended June 30, 2007, filed on August 28, 2007) 
Form of Executive Agreement. (Incorporated by reference to Exhibit 99.1 to the Registrant’s Report on Form 8-K filed on 
July 13, 2007) 

10.8*  Amended and Restated 2006 Incentive Award Plan dated November 20, 2008. (Incorporated by reference to Appendix 1 of 

10.9 

10.10 

the Registrant’s Definitive Proxy Statement filed on October 15, 2008) 
Form of Indemnification Agreements for our directors and officers. (Incorporated by reference to Exhibit 10.1 the 
Registrant’s Report on Form 8-K filed on June 24, 2009) 
Form of Access Agreement for directors. (Incorporated by reference to Exhibit 10.2 the Registrant’s Report on Form 8-K 
filed on June 24, 2009) 

10.11*  Updated Form of Executive Agreement. (Incorporated by reference to Exhibit 99.1 to the Registrant’s Report on Form 8-K 

filed on July 2, 2012) 

10.12  Amendment and Restatement to the ResMed Inc. 2009 Incentive Award Plan. (Incorporated by reference to Appendix B of 

ResMed Inc.’s Proxy Statement filed with the Securities and Exchange Commission on September 25, 2017.) 

10.13  ResMed Inc. 2009 Incentive Award Plan. (Incorporated by reference to Exhibit 10.1 the Registrant’s Report on Form 8-K 

filed on November 23, 2009) 

10.14  ResMed Inc. Deferred Compensation Plan. (Incorporated by reference to Exhibit 10.1 the Registrant’s Report on Form 8-K 

10.15 

10.16 

10.17 

filed on May 28, 2010) 
Form of Restricted Stock Unit Award Agreement for Executive Officers. (Incorporated by reference to Exhibit 10.1 to the 
Registrant’s Report on Form 10-Q for the quarter ended September 30, 2011, filed on November 3, 2011) 
Form of Restricted Stock Unit Award Agreement for Directors. (Incorporated by reference to Exhibit 10.2 to the 
Registrant’s Report on Form 10-Q for the quarter ended September 30, 2011, filed on November 3, 2011) 
Form of Stock Option Grant for Executive Officers. (Incorporated by reference to Exhibit 10.3 to the Registrant’s Report 
on Form 10-Q for the quarter ended September 30, 2011, filed on November 3, 2011) 

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Table of Contents 

PART IV 

Items 15 – 16 

RESMED INC. AND SUBSIDIARIES 

10.18 

10.19 

Form of Stock Option Grant for Directors. (Incorporated by reference to Exhibit 10.4 to the Registrant’s Report on Form 
10-Q for the quarter ended September 30, 2011, filed on November 3, 2011) 
Form of Performance-Based Restricted Stock Unit Award Agreement for Executive Officers. (Incorporated by reference to 
Appendix A of the Registrant’s Proxy Statement filed October 4, 2012) 

10.20  Amended and Restated Credit Agreement dated as of April 17, 2018, by and among ResMed Inc., as borrower, each of the 
lenders identified on the Revolving Credit Agreement’s signature pages as a lender, MUFG Union Bank, N.A., as 
administrative agent, joint lead arranger, joint book runner, swing line lender and l/c issuer, and Westpac Banking 
Corporation, as syndication agent, joint lead arranger and joint book runner. (Incorporated by reference to Exhibit 10.1 to 
the Registrant’s Report on Form 8-K filed on April 19, 2018) 

10.21  Amended and Restated Unconditional Guaranty dated as of April 17, 2018, by each of the guarantors identified on the 
Revolving Facility Guaranty’s signature pages as a guarantor, in favor of MUFG Union Bank, N.A., in its capacity as 
administrative agent under the Revolving Credit Agreement. (Incorporated by reference to Exhibit 10.2 to the Registrant’s 
Report on Form 8-K filed on April 19, 2018) 
Syndicated Facility Agreement, dated as of April 17, 2018, by and among ResMed Limited, as borrower, the other parties 
party thereto, each of the lenders identified on the Term Credit Agreement’s signature pages as a lender, 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. (Incorporated by reference to Exhibit 10.3 to the Registrant’s 
Report on Form 8-K filed on April 19, 2018) 

10.22 

10.23  Unconditional Guaranty dated as of April 17, 2018, by each of the guarantors identified on the Term Facility Guaranty’s 

10.24 

signature pages as a guarantor, in favor of MUFG Union Bank, N.A., in its capacity as administrative agent under the Term 
Credit Agreement. (Incorporated by reference to Exhibit 10.4 to the Registrant’s Report on Form 8-K filed on April 19, 
2018) 
First Amendment to Amended and Restated Credit Agreement, dated November 5, 2018, by and among ResMed Inc., as 
borrower, each of the lenders identified in the First Amendment, 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. (Incorporated by reference to Exhibit 10.1 to the Registrant’s 
Report on Form 8-K filed on November 8, 2018) 

10.25  The ResMed Inc. 2018 Employee Stock Purchase Plan. (Incorporated by reference to Appendix B of ResMed Inc.’s Proxy 

Statement filed with the Securities and Exchange Commission on October 3, 2018.) 

10.26  Note Purchase Agreement, dated July 10, 2019 among ResMed Inc. and the purchasers party to that agreement (including 

21.1 
23.1 
31.1 
31.2 
32.1 

101 

form of 3.24% Series A Senior Note due 2026, form of Series B 3.45% Senior Note due 2029, and form of Subsidiary 
Guaranty Agreement). (Incorporated by reference to Exhibit 10.1 to the Registrant’s Report on Form 8-K filed on July 15, 
2019) 
Subsidiaries of the Registrant.  
Consent of Independent Registered Public Accounting Firm.  
Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.  
Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.  
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 
2002.  
The following materials from ResMed Inc.’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020 
formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated 
Statements of Income, (iii) the Consolidated Statements of Stockholders’ Equity and Comprehensive Income, (iv) the 
Consolidated Statements of Cash Flows and (v) related notes. 

*       Management contract or compensatory plan or arrangement 

ITEM 16  FORM 10-K SUMMARY 

None. 

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Table of Contents 

PART IV 

RESMED INC. AND SUBSIDIARIES 

SIGNATURES 

Signatures 

Under the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be 
signed on its behalf by the authorized persons below.  

DATED August 12, 2020 

ResMed Inc.  

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

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on 
behalf of the Registrant and in the capacities and on the dates indicated.  

SIGNATURE 

TITLE 

/S/ MICHAEL J. FARRELL 
Michael J. Farrell 

  Chief executive officer and director 

 (Principal Executive Officer) 

/S/ BRETT A. SANDERCOCK 
Brett A. Sandercock 

  Chief financial officer 

(Principal Financial Officer and 
Principal Accounting Officer) 

DATE 

August 12, 2020 

August 12, 2020 

/S/ PETER C. FARRELL 
Peter C. Farrell 

/S/ CAROL J. BURT 
Carol J. Burt 

/S/ JAN De WITTE 
Jan De Witte 

/S/ RICHARD SULPIZIO 
Richard Sulpizio 

/S/ RON TAYLOR 
Ron Taylor 

/S/ KAREN DREXLER  
Karen Drexler 

/S/ HARJIT GILL  
Harjit Gill 

  Non-executive chairman 

August 12, 2020 

August 12, 2020 

August 12, 2020 

August 12, 2020 

August 12, 2020 

August 12, 2020 

August 12, 2020 

  Director 

  Director 

  Director 

  Director 

  Director 

  Director 

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