Fisher & Paykel Healthcare Corporation Limited Analysis

Overview

Fisher & Paykel Healthcare is a global leader in medical devices and systems for use in respiratory care and acute care, and in the treatment of obstructive sleep apnea. The company has a consistent growth strategy to provide an expanding range of innovative medical devices which can help to improve care and outcomes for patients in an increasing range of applications.

Its products are sold to hospitals and healthcare facilities around the world through direct sales offices operations and a network of distributors that sell to hospitals, homecare providers and other manufacturers of medical devices.

Formerly Fisher & Paykel Industries, Fisher & Paykel Healthcare arose from the separation of the major trading businesses of Fisher & Paykel Industries into Appliances and Healthcare in November 2001. The company's securities are listed in both New Zealand and Australia.

Performance

The following information was extracted from Fisher & Paykel Healthcare Corporation Limited's full year result, released on 29 May 2024:

Fisher & Paykel Healthcare announces its FY24 result and provides revenue and earnings guidance for FY25

Auckland, New Zealand, 29 May 2024 – Fisher & Paykel Healthcare Corporation Limited today announced its results for the full year ended 31 March 2024.

Total operating revenue for the 2024 financial year was $1.74 billion, an increase of 10% over the previous financial year, or 8% in constant currency. Growth was driven by solid demand in hospital consumables and strong growth in the obstructive sleep apnea (OSA) mask business.

Reported net profit after tax for the financial year of $132.6 million was impacted by three abnormal items which are discussed in further detail below. Excluding these items, underlying net profit after tax was $264.4 million, a 6% increase over the previous financial year, or 5% in constant currency.

Managing Director and CEO Lewis Gradon said, “After several years of changing demand patterns, we are pleased to have returned to a trajectory of growth. All the right foundations are in place for future success – we have an impressive portfolio of products, strong relationships with our customers and the right infrastructure to meet our future needs,” said Mr Gradon.

For the Hospital product group, which includes humidification products used in respiratory, acute and surgical care, revenue for the full year was $1.1 billion, up 6% from the previous financial year, or 5% in constant currency. New applications consumables were up 15% over the previous financial year, or 13% in constant currency. Consumables sales returned to normal, pre-pandemic patterns.

For the Homecare product group, which includes products used in the treatment of obstructive sleep apnea and respiratory support in the home, revenue for the full year was $652.3 million, up 18% over the previous financial year, or 16% in constant currency. Growth was driven by the continued success of the F&P EvoraTM Full mask in both North America and Europe.

During the 2024 financial year, the company made progress in returning to its long-term gross margin target of 65%. Excluding the provision for a product recall, underlying gross margin was 61.1%, an increase of 216 basis points in constant currency over the previous financial year. This was achieved through lower freight costs, manufacturing efficiencies and pricing, which more than offset the impact of inflationary cost increases. Including the provision for a product recall, gross margin was 59.9% for the 2024 financial year, an increase of 95 basis points in constant currency.

Overview of key results for the 2024 financial year

• 10% growth in operating revenue to $1.74 billion, 8% growth in constant currency.
• 6% growth in underlying** net profit after tax to $264.4 million, 5% growth in constant currency.
• 6% growth in Hospital operating revenue to $1.1 billion, 5% growth in constant currency.
• 15% revenue growth for new applications consumables, 13% growth in constant currency.
• 18% growth in Homecare operating revenue to $652.3 million, 16% growth in constant currency.
• 21% growth in OSA masks revenue, or 18% growth in constant currency.
• Investment in R&D was 11% of revenue, or $198.2 million.
• 2% increase in final dividend to 23.5 cps (2023: 23.0 cps).
• 2% increase in total dividends for the financial year to 41.5 cps (2023: 40.5 cps).