The healthcare industry is experiences number of challenges, with few related to changing patient demographics, increasing number of infections, evolving consumer expectations, new market entrants, complex health and technology ecosystems, and increasing cost.
The recent challenge many of the industries, including healthcare is tackling is the coronavirus outbreak, which emerged in December 2019 and is now affecting people across the world with mainland China and Italy being the worst-hit countries.
Coronavirus is caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), which has now been declared a pandemic by WHO. The outbreak has resulted in a big hit on Australian equity markets. Owing to the pandemic, even healthcare stocks that are considered as defensive ones in the times of market uncertainty, have also experienced their worst session.
However, owing to the coronavirus outbreak, respiratory measuring devices are being used more than ever and it can be predicted that this will give a significant push to the growth of the respiratory measuring devices market. According to some research reports, respiratory care devices market is expected to surpass USD 30 billion by 2024.
Given the increasing demand for enhanced portable and compact respiratory care devices, the companies in this sector are focusing on expanding their geographical reach. The rising demand for the multimodal approach for ventilation and implementation of non-invasive ventilation are the key trends in the respiratory care devices market.
Amidst the increasing demand for respiratory devices, ASX and NZX listed healthcare sector player, Fisher & Paykel Healthcare, a manufacturer of medical devices, has experienced a spike in demand for its products due to the coronavirus pandemic.
Let us zoom our lens on this key market player in the respiratory care devices market.
Fisher & Paykel Healthcare Corporation Limited (ASX: FPH)
ASX and New Zealand listed manufacturer of medical devices, Fisher & Paykel Healthcare Corporation Limited is into providing products for respiratory care and is a leader in the marketing, manufacturing as well as designing of these systems and products.
The Company continues to develop a range of innovative medical devices to assist clinicians for improving patient care and outcomes.
FPH performance in last one year- share price increased ~60x-
Revenue and Earnings Guidance Update
On 17 March 2020, the Company updated the market with its revised revenue and earnings guidance for FY2020.
According to the previous guidance update, which was provided in February 2020, operating revenue was expected to be roughly $1.2 billion and NPAT to be around $260-$270 million, based on a NZ:US exchange rate of 64 cents.
Now, assuming an NZ:EU exchange rate to be nearly 55 cents and an NZ:US exchange rate to be around 61 cents for the remaining of the fiscal year, Fisher & Paykel anticipates complete year operating revenue lifted to $1.24 billion and NPAT to be in the range of roughly $275 million to $280 million.
It is noteworthy to mention that respiratory humidifiers and consumables of the Company are directly involved in the treatment of patients infected with coronavirus. Moreover, F&P also mentioned that due to an increase in demand across the world, the Company has ramped up its manufacturing output.
Financials for first half FY2020- (ended 30 September 2019)
- Net profit after tax (NPAT) for H1 2020 was nearly NZ$121.2 million, increased by 24% as compared to the previous corresponding period (pcp);
- Operating revenue was NZ$570.9 million, up by 12% on the pcp;
- The group operating revenue from hospital product rose by 19% to a record NZ$353.6 million;
- In the homecare product group, operating revenue climbed 2% to NZ$214.7 million.
Outlook for remaining FY2020 by the Company in November 2019
- For the second half of the fiscal year 2020, the Company anticipates consistent underlying trends in the hospital product group.
- Furthermore, for the rest half, FPH predicts constant currency hospital revenue growth similar to the second half of the fiscal year 2019.
- Fisher & Paykel anticipates that throughout the fiscal year 2020, the Company’s healthcare products would be utilised by more than 15 million patients in approximately 120 countries.
- Moreover, F&P mentioned that, in 2019, the Company completed its 50 years, and throughout, it remained focused on continuous improvement and innovation. Consequently, products are now deemed as leaders in their respective areas.
Full-year results for the financial year 2020 ending 31 March 2020 would be announced on Thursday, 28 May 2020.
Let us now discuss the stock performance of FPH, on 17 March 2020, the FPH stock settled the day’s trade at $ 25.970, up by 3.631%, from its last close. With a market cap of nearly $ 14.4 billion, the fifty-two-weeks high and low price of the stock was noted at $ 27.930 and $ 14.000, respectively.
On a year to date basis, the stock has delivered a positive return of approximately 19.50%, while the last six-month return of the stock was noted at 62.62%.
In a nutshell, with key milestones achieved in the financial year 2019, Fisher & Paykel Healthcare has a strong position in the healthcare sector, and considering the outlook and spike in demand for respiratory devices amid COVID-19, the continuous growth of the Company could be assumed in the near future.
Also Read: Stocks Benefited from COVID-19 Outbreak
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