NZ Market Darling Fisher & Paykel Demonstrates Value and Growth

  • Jun 30, 2020 NZST
  • Team Kalkine
NZ Market Darling Fisher & Paykel Demonstrates Value and Growth

Summary

  • Due to the increasing demand for enhanced portable and compact respiratory care devices, the healthcare players in this domain are focusing on expanding their geographical reach.
  • Respiratory care product manufacturer, Fisher & Paykel Healthcare provided its full-year results for FY2020; operating revenue up 18% and NPAT up 37%.
  • The revenue upsurge was driven by growth in the use of OptiflowTM nasal high flow therapy, increased demand for products to treat COVID-19 patients, and impressive hospital hardware sales.
  • For FY21 FPH projects its operating revenue to be nearly NZ$1.48 billion and NPAT in the range NZ$325-NZ$340 million.

The healthcare sector is facing several challenges, including fluctuating patient demographics, the ever-increasing number of infections, new market entrants, evolving consumer expectations, and rising costs, to name a few. 

COVID-19 which is caused by SARS-CoV-2 virus (severe acute respiratory syndrome coronavirus 2), is a deadly viral infection that has taken nearly 499,913 lives and infected more than 10 million individuals as per the World Health Organization (as of 3:15 PM CEST on 29 June). The COVID-19 pandemic has resulted in a big hit to the share markets across the globe, including the New Zealand share markets.

Even some healthcare companies that are considered as defensive in the times of market uncertainty have undergone their worst session amid the ongoing turmoil.

However, amid the coronavirus pandemic, the respiratory measuring devices are being utilized more than ever, and the market is getting a significant growth.

Provided the increasing demand for enhanced portable as well as compact respiratory care devices, the healthcare sector companies in this domain are focusing on increasing their geographical reach. The increasing requirement for the multimodal method for ventilation and implementation of non-invasive ventilation are the key trends in the respiratory care devices market.

With this backdrop, let us acquaint you with Fisher & Paykel Healthcare

About Fisher & Paykel Healthcare

NZX and ASX listed medical devices manufacturer Fisher & Paykel Healthcare Corporation Limited (NZX:FPH) provided respiratory care products and is a leader in designing and marketing of these systems and products.  Fisher & Paykel mainly operates into Hospital and Homecare product groups-

  • The hospital product group of F&P comprises humidification products that are used in acute, respiratory (both adult as well as an infant), and surgical care.
  • The homecare product group of F&P includes products that are used to provide respiratory support as well as in the treatment of obstructive sleep apnea (OSA) in the home.

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Full-year 2020 results out, Net profit rose by 37%

In the financial year 2020, products of Fisher & Paykel touched the lives of approximately 16 million patients, which also include many patients having COVID-19.

The highlights from the results of FY2020 are-

  • In the fiscal year 2020, Fisher & Paykel recorded a net profit after tax of approximately NZ$287.3 million climbed by 37% as compared to FY2019.
  • The operating revenue growth reported to be NZ$1.26 billion up by 18% on pcp, and 14% in constant currency (cc).
  • The hospital operating revenue increased by 25%, 21% growth in cc.
  • Homecare operating revenue rose by 9%, 4% growth in cc.
  • In obstructive sleep apnea (OSA) masks 4% growth in constant currency revenue.
  • Moreover, the investment in R&D was nearly NZ$118.5 million or 9% of revenue.
  • Final dividend increased to 15.5 cps from 13.5 cps, increased by 15% on pcp.

Source: Company's presentation

The upsurge in revenue was largely driven by growth in the use of OptiflowTM nasal high flow therapy of F&P, increased demand for products to treat COVID-19 patients, as well as strong hospital hardware sales during the year.

Managing Director and CEO of Fisher & Paykel, Lewis Gradon stated:

Let us now discuss revenue from homecare and hospital product group of Fisher & Paykel-

Homecare Product Group Revenue

In the fiscal year 2020, from homecare product group, the contribution in revenue was NZ$457.3 million climbed by 9% on pcp. The composition of FY20 homecare revenue was 16% from hardware and the remaining 84% from consumables.

In the second half of FY20 hospital revenue reported to be NZ$242.6 million backed by strong growth in OSA masks, the launch of F&P Vitera OSA masks in the United States in October 2019. 

Source: Company's presentation

Hospital Product Group Revenue

Hospital operating revenue was reported to be NZ$801.3 up by 25% on pcp, 21% on constant currency.

In the hospital product group, 14% of revenue generated from hardware such as F&P 950 system, F&P 850 system, F&P AIRVO and F&P HumiGard. However, the remaining 86% revenue generated from consumables such as invasive & non-invasive ventilation, OptiflowTM nasal high flow and surgical.

In the 2nd half of FY20, hospital operating revenue reported to be NZ$447.7 million, supported by strong customer demand for Optiflow and AIRVO systems, driven by clinical trial outcomes as well as due to COVID-19.

Source: Company's presentation

Outlook for FY21

For the first three months of FY21: Hospital hardware growth >300% and Hospital consumables growth more than 33% on pcp and Homecare growth closer to the fiscal year 2020 full-year rate of growth in Homecare.

The Company provided some guidance assumptions-

  • Respiratory hospitalizations peak in the first quarter due to COVID-19, return to normal by starting of the second half.
  • OSA diagnosis rates were lower in the first half and coming back to normal by the second half.
  • Freight costs continued at elevated levels through the end of 2020.
  • The exchange rates assumed to be NZD:EUR 0.57, NZD:USD 0.64.

Based on the assumptions above, F&P anticipates the operating revenue to be nearly NZ$1.48 billion and Net profit after tax (NPAT) in between NZ$325-NZ$340 million for FY21. The capital expenditure for FY21 is anticipated to be almost NZ$160 million.

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Stock Information:

On 30 June 2020, FPH last traded at NZ$35.600, up by 6.27% from its previous close. The market cap of the Company stood at NZ$20.46 billion. With a P/E ratio of 66.950x, the gross dividend yield of FPH stock was 0.498%.             

Bottomline

Fisher & Paykel Healthcare has delivered outstanding results amid the COVID-19 turmoil, due to increased demand for its respiratory care products. The Company has displayed resilience and is well-positioned to respond to the COVID-19 pandemic and adapt to this ‘new normal’ situation. Moreover, Fisher & Paykel is confident that its innovative products and therapies shall continue to shape the future of the hospital and home care industry.

 


Disclaimer
The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site.

 

   
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