ResMed Inc. Announces Record Financial Results for Quarter and Year Ended June 30, 2006

San Diego, CA - August 18, 2006

ResMed Inc. announced record revenue and income results for the quarter ended June 30, 2006. Revenue for the quarter was $171.2 million, a 36% increase over the quarter ended June 30, 2005. For the current quarter, pro forma income from operations and pro forma net income were $43.4 million and $31.0 million, an increase of 43% and 43% respectively (pro forma measures exclude the impact of stock-based compensation costs, restructuring expenses, American Jobs Creation Act of 2004 ('AJCA') repatriation tax, amortization of acquired intangible assets and an in-process research and development charge, which are described below). Pro forma diluted earnings per share for the quarter ended June 30, 2006 was $0.40, an increase of 33%, compared to the June 2005 quarter. GAAP operating income was $37.8 million for the current quarter, while net income was $23.1 million or $0.30 per diluted share. Gross margin was 61% for the quarter ended June 30, 2006.

Pro forma selling, general and administration (SG&A) costs for the quarter were $50.6 million, an increase of $9.4 million, or 23%, over the same period in fiscal 2005. Pro forma SG&A costs were 30% of revenue in the June quarter, compared to 33% in the same period in fiscal 2005. GAAP SG&A costs were $53.7 million for the quarter, an increase of $12.4 million or 30% over the quarter ended June 30, 2005. The increase in SG&A was primarily due to recent acquisitions, the addition of selling and administration personnel, and infrastructure investment in Europe.

Pro forma research & development expenditure was $10.6 million for the quarter, excluding stock-based compensation costs. GAAP R&D expense during the quarter was $11.1 million or approximately 6% of revenue. GAAP R&D expenses increased 36% year over year and are expected to remain between 6% and 7% of net revenue through fiscal year 2007.

For the year ended June 30, 2006, revenue was $607.0 million, an increase of 43% over the $425.5 million for the year ended June 30, 2005. For the year ended June 30, 2006, pro forma income from operations and pro forma net income were $154.1 million and $108.6 million, or $1.42 per diluted share, an increase of 42% and 47% respectively. On a GAAP basis, income from operations was $131.3 million, while net income for the year ended June 30, 2006 was $88.2 million or $1.16 per diluted share.

Amortization of acquired intangibles of $1.7 million ($1.1 million net of tax), incurred during the quarter ended June 30, 2006 consisted of amortization of acquired intangible assets associated with our acquisitions of Resprecare, Hoefner, Saime, Pulmomed and PolarMed. Stock-based compensation costs incurred during the quarter ended June 30, 2006 of $3.9 million ($3.3 million net of tax), consisted of expenses associated with stock options granted to employees and the employee stock purchase plan. The recognition of these stock-based compensation expenses is in accordance with SFAS No. 123(R), which was adopted for the first time in the quarter ended September 30, 2005.

During the quarter, the Company made the decision to repatriate earnings from certain foreign subsidiaries to take advantage of a temporary incentive under the AJCA. This temporary incentive provides an 85% exclusion from US taxable income for qualifying dividends received from controlled foreign corporations. The repatriation of $75 million resulted in a one-time additional income tax expense of $3.5 million for the quarter. The repatriation of these funds to the United States provides the Company with increased flexibility in the utilization of cash to further its strategic objectives.

The Company is providing tabular reconciliation of GAAP operating income and GAAP net income with pro forma operating income and pro forma net income, excluding the impact of stock-based compensation costs, AJCA repatriation tax, restructuring expenses, amortization of acquired intangible assets and an in-process research and development charge, for the quarters and years ended June 30, 2006 and 2005.

Inventory at $116.2 million, increased by $7.5 million compared to March 31, 2006 levels, consistent with supporting the strong sales growth. Accounts receivable days sales outstanding, at 70 days, were consistent with the March 31, 2006 quarter.

Peter C. Farrell Ph.D., Chairman and Chief Executive Officer, commented, "In the fourth quarter of fiscal 2006, sales in the Americas increased to a record $89.6 million. This represents a 44 percent increase over the year ago quarter, which reflects the continued strong demand for both our nasal and full face masks, and our S8 flow generator platform. International sales, including incremental revenue contributions from the acquisitions of Saime, Pulmomed and PolarMed, totaled $81.6 million, a 29 percent increase over last year. Pro forma net income for the June quarter 2006 was $31.0 million, an increase of 43 percent over the same period in 2005, driven primarily by strong sales growth. Our operating cash flow for the June quarter was an extremely robust $35.3 million."

Dr. Farrell further continued, "I am also delighted to report the final quarter of fiscal 2006 was our 45th consecutive record quarter since we went public in June, 1995. I can also report that we are finally starting to get excellent traction with our focus on sleep-disordered breathing in the cardiac market. Finally, our strategies for diagnosing and treating sleep-disordered breathing in both the diabetic and occupational health markets are starting to pay dividends. We still remain very excited about the continually evolving potential of the global sleep 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 for the potentially serious health consequences of untreated sleep-disordered breathing. For more information on ResMed, visit www.resmed.com.