ResMed Announces Record Financial Results for Quarter and Nine Months Ended March 31, 2005

San Diego, CA - May 5, 2005

ResMed Inc. announced record revenue and income results for the quarter ended March 31, 2005. Revenue for the quarter was $108.5 million, a 19% increase over the quarter ended March 31, 2004. For the March 31, 2005 quarter, income from operations and net income, both excluding the impact of restructuring expenses described below, were $28.6 million and $18.9 million, an increase of 27% and 26% respectively. Diluted earnings per share, excluding the impact of restructuring expenses, for the quarter ended March 31, 2005 were $0.52, an increase of 21%, compared to the March 2004 quarter. Net income for the current quarter was $17.9 million or $0.50 per diluted share including after-tax restructuring expenses of $1.0 million. Gross margin was 65%.

Selling, general and administration (SG&A) costs for the quarter were $34.4 million, an increase of $6.2 million over the same period in fiscal 2004. The increase in SG&A related primarily to an increase in selling and administration personnel to meet expanding opportunities in the sleep-disordered breathing market. SG&A expenditure as a percentage of revenue was 32% in the March quarter compared to 31% in the same period in fiscal 2004. 

Research and development expenditure, at approximately 7% of revenues, increased 6% during three months ended March 31, 2005, to $7.2 million from $6.9 million in the quarter ended March 31, 2004. The increase reflects ResMed's continuing commitment to clinical research and product development. ResMed intends to continue to spend approximately 7% of revenues on R&D during the rest of the fiscal year 2005.

For the nine months ended March 31, 2005, revenues were $300.1 million, an increase of 22% over the $246.4 million for the nine months ended March 31, 2004. For the nine months ended March 31, 2005, income from operations and net income, both excluding the impact of restructuring expenses and foundation donations were $78.6 million and $52.3 million, an increase of 28% and 25% respectively. Net income for the nine months ended March 31, 2005 was $49.2 million or $1.38 per diluted share including after tax restructuring expenses of $2.8 million.

Restructuring expenses incurred during the quarter ended March 31, 2005 of $1.6 million ($1.0 million net of tax) consisted of expenses associated with the previously-announced integration of the Company's German operations.

With the financial information included in this press release, the Company is providing a tabular reconciliation of GAAP operating income and GAAP net income with operating income, and net income, excluding the impact of restructuring expenses and excluding the impact of the donation to the foundation, for the three month and nine month periods ended March 31, 2005 and 2004.

Inventory at $75.5 million, increased by $10.6 million compared to December 2004 levels reflecting management's decision to increase inventory levels to support increased sales volumes together with a specific inventory build associated with the introduction of the S8, ResMed's new flow generator. Accounts receivable days sales outstanding, at 70 days, increased compared to the December 2004 quarter of 66 days.

Peter C. Farrell PhD, Chairman and Chief Executive Officer, commented, "ResMed's sales and profit growth in the third quarter of fiscal 2005 are an encouraging indication of our continued success in expanding the market for our sleep disordered breathing products. Domestic sales increased by 29% over the March 2004 quarter to $57.9 million, reflecting favorable market conditions and strong demand for our new Mirage Swift patient interface. International sales increased by 9% over the March 2005 quarter, to $50.6 million, reflecting acceptable growth in most markets, offset by German results. German revenues were impacted by the previously-announced integration of our German operations, which has caused some administrative delays in order processing. Excluding Germany and the impact of acquisitions of Resprecare and Hoefner, international sales increased 16% for the quarter, reflecting solid growth in the rest of Europe and Asia. Our operating cash flow for the March quarter was $10.9 million, lower than the previous quarter, primarily reflecting increases in working capital, particularly inventory and accounts receivable."

Dr. Farrell continued, "In the March quarter we were pleased to introduce our S8 Escape flow generator, one of the smallest devices on the market. The Escape launch in the U.S. is the beginning of a phased launch of the new S8 flow generator platform, which we expect to continue over the next 12 months. During the quarter, we also expanded our international operations with the acquisition of Hoefner Medizintechnik GmbH, our distributor in Bavaria, Germany. We continue to evaluate additional opportunities for international expansion. Our newly announced acquisition of Saime SA, a leader in ventilatory products and technology in Europe, positions us to capitalize on the attractive market opportunities in both non-invasive ventilation and sleep-disordered breathing in Europe. By the end of the fiscal year, we expect to have completed integration of our German operations and to be selling a complete line of ventilation products into the European homecare market."

About ResMed
ResMed is a leading manufacturer of medical equipment for the treatment and management of sleep-disordered breathing and other respiratory disorders. We are dedicated to developing innovative products to improve the lives of those who suffer from these conditions and to increasing awareness among patients and healthcare professionals of the potentially serious health consequences of untreated sleep-disordered breathing. For more information on ResMed, visit www.resmed.com.

ResMed will host a conference call at 1:30 p.m. U.S. Pacific Daylight Time (USPDT) today to discuss these quarterly results. Individuals wishing to access the conference call may do so via ResMed's Web site at www.resmed.com or by dialing (800) 510-9834 (domestic) or +1 (617) 614-3669 (international) and entering conference I.D. No. 95374372. You may also access the Webcast at www.earnings.com . Please allow extra time prior to the call to visit the Web site and download the streaming media player (Windows Media Player) required to listen to the Internet broadcast. The online archive of the broadcast will be available approximately 90 minutes after the live call and will be available for two weeks. A telephone replay of the conference call is available by dialing (888) 286-8010 (domestic) and +1 (617) 801-6888 (international) and entering conference I.D. No. 39008246.

Further information can be obtained by contacting Hillary Theakston at ResMed Inc. San Diego (858) 746-2610; Brett Sandercock at ResMed Limited Sydney on (+61 2) 9886-5406; or by visiting the Company's multilingual Web site at www.resmed.com . 

Statements contained in this release that are not historical facts are "forward-looking" statements as contemplated by the Private Securities Litigation Reform Act of 1995. These forward-looking statements, including statements regarding the Company's future revenue, earnings or expenses, new product development and new markets for the Company's products, are subject to risks and uncertainties, which could cause actual results to materially differ from those projected or implied in the forward-looking statements. Those risks and uncertainties are discussed in the Company's Annual Report on Form 10-K for its most recent fiscal year and in other reports the Company files with the US Securities & Exchange Commission. Those reports are available on the Company's Web site.