Joint Statement by Baillieu Limited Chairperson David Trude and Managing Director Gavin Powell

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Profile: ResMed Inc. (RMD) designs, manufactures, distributes and markets medical devices and masks to treat respiratory and sleep-related illnesses, and provides Software as a Service (SaaS) products and services related to the healthcare industry. Its headquarters are in San Diego, California. ResMed is listed on the NYSE (NYSE: RMD) and on the ASX as a 10:1 CHESS Depositary Interest (CDI).

History: RMD’s story began with the development of the nasal continuous positive airway pressure (CPAP) device by Professor Colin Sullivan et al. at the University of Sydney in 1981 for the treatment of Obstructive Sleep Apnea (OSA). In 1987, Dr Peter Farrell (founder and current Chairman of RMD), at the time a representative of Baxter International, Inc. (NYSE:BAX), invested in the technology developed by Sullivan. In 1989, after BAX decided not to enter the sleep apnea market, Dr Farrell founded RMD to commercialise the CPAP device.

Earnings composition: In FY19, the US, Canada and Latin America (‘North America’) Devices segment reported revenues of $743m (28%). The North America Masks segment reported $677m (26%) of group revenue, while North America Software as a Services (SaaS) delivered $276m (11%) of group revenue. The combined Europe, Asia and other markets (‘Rest of World’) devices segment reported $619m (24%) of group revenue, and Rest of World Masks generated $292m (11%).

Most recent result – 2Q20: Underlying operating profit (non-GAAP income from operations) increased 21% on the prior corresponding period (pcp) to US$218.5m. Underlying (non-GAAP) net income increased 22% on the pcp to US$176m. This was driven by a 13% (14% on a constant currency basis) increase in revenue – with growth across all segments – to US$736m and an improvement in gross margin to 59.7%, from 59.1%. Total Device revenue increased 8% on the pcp on a constant currency (cc) basis to US$366m and total Mask revenue rose 16% on the pcp (cc) to US$284m, with strong customer demand for new mask products. SaaS revenue increased 37% on the pcp to US$87m. RMD declared a second quarter interim dividend of US$0.39, up from US$0.37 in the pcp.

Company outlook: FY20 gross margins expected to be “broadly consistent” with Q2 (59.7%). Selling, general and administrative expenses to be 23-25% of revenue for the remaining quarters of FY20. FY20 effective tax rate in the range of 19-21%.

Important dates: Ex-dividend date is 12 February 2020.

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