Fisher & Paykel Healthcare Reports Record Half Year Net Profit, up 27%

Click here to download the full news release and interim report.

Fisher & Paykel Healthcare Corporation Limited today announced record net profit after tax of NZ$62.0 million for the half year ended 30 September 2015, an increase of 27% over the first half last year. Operating revenue was a record NZ$381.0 million, 20% above the prior comparable period.

The company’s directors have approved an increased interim dividend of 6.7 NZ cents per ordinary share, an increase of 16% on the previous year.

Chief Executive Officer Michael Daniell said, “The record result is attributable to a continuation of our consistent growth strategy, which has driven strong revenue growth in both of our major product groups and further gross margin improvements.”

Operating revenue in the company’s respiratory and acute care/hospital (RAC) product group grew 18% to NZ$200.0 million, or 11% growth in constant currency, for the half. Operating revenue in the obstructive sleep apnea/homecare (OSA) product group grew 23% to NZ$175.3 million or 14% growth in constant currency, for the half. Revenue generated from recurring items, such as consumables and accessories, continued to increase, accounting for 83% of operating revenue.

“During the first half we introduced the first of a number of innovative new products to international markets and moved to a direct sales model for our RAC products in the US. Historically we have sold our products to hospitals in the US, our largest market, through a distributor. With the move to a direct sales model in the US, as we have already done in our other major markets, we expect that the increased sales focus will enable us to maximise opportunities and increase revenue growth in the US.

“In the hospital setting, our products are designed to assist clinicians to improve the effectiveness and efficiency of care, to improve outcomes and to reduce length of stay. In homecare, our focus is on technologies that improve comfort and are simple to use, which aids patient compliance with their therapy and reduces the need for homecare provider intervention.

“In our RAC product group, revenue from consumables used in non-invasive ventilation, Optiflow nasal high flow therapy and surgical humidification grew 22% in constant currency, and accounted for almost half of RAC consumables revenue. That strong growth was particularly pleasing, given the previously anticipated sell down of our former US distributor’s inventory, as we transitioned hospital sales to our own team.

“Sales of masks used in the treatment of OSA continued to be robust, with 25% growth in constant currency. Our customers appreciate the ease of use, functionality and comfort offered by our F&P Simplus and F&P Eson masks in particular,” said Mr Daniell.

Gross margin increased by 276 basis points to 63.3%, or a 348 basis points increase in constant currency compared to the first half last year, primarily as a result of favourable product mix, increased production in Mexico and manufacturing efficiencies.

The company again increased its investment in research and development, with expenditure increasing 14.3% to NZ$35.8 million, representing 9.4% of operating revenue for the half.

“During the first half we announced a number of new products for use with the F&P AIRVO 2 system,” said Senior Vice President of Products and Technology and CEO Designate, Lewis Gradon. “These included an uninterruptible power supply transport system, a new range of Optiflow+ nasal interfaces and new breathing tube technology, all of which have been well received by clinicians. We also recently announced the F&P HumiGard SH870 surgical humidification system and, in our OSA product range, the Eson 2 nasal mask which incorporates over 20 design improvements to enhance comfort and ease of fitting.

“We have a significant pipeline of new products that we expect to release in the coming year including new humidifier controllers, flow generators, masks and consumables,” said Mr Gradon.

The increased interim dividend of 6.7 cps, carrying full New Zealand imputation credit, will be paid on 23 December 2015. The dividend reinvestment plan, under which eligible shareholders can elect to reinvest all or part of their cash dividends in additional shares, will again be made available in respect of the 2016 interim dividend. The directors have determined that the DRP will be offered without a discount in respect of the 2016 interim dividend payment.

Outlook for FY2016
“Our strategic direction remains consistent as we continue to develop new, innovative products, expand our market opportunities and grow our international presence.

Exchange rates are slightly less favourable than when we provided an earnings guidance update at our annual shareholders’ meeting in August. However, at current exchange rates (NZD:USD = 0.66, NZD:EUR = 0.62) we continue to expect full year operating revenue to be approximately 800 million NZ dollars and net profit after tax to be approximately 135 to 140 million NZ dollars” concluded Mr Daniell.

Result highlights for the first half

  • 27% growth in net profit after tax to a record NZ$62.0 million.
  • 16% increase in interim dividend to 6.7 cps (2015: 5.8 cps).
  • 20% growth in operating revenue to a record NZ$381.0 million, 12% growth in constant currency.
  • 31% increase in operating profit to NZ$95.2 million, 25% growth in constant currency.
  • 18% growth in RAC operating revenue, 11% growth in constant currency.
  • Revenue growth for RAC consumables used in NIV, Optiflow and surgical applications of 22% in constant currency, accounting for almost half of RAC consumables revenue.
  • 23% growth in OSA operating revenue, 14% growth in constant currency.
  • Continued strong performance from OSA masks, 25% revenue growth in constant currency.
  • Investment in R&D increased by 14% to NZ$35.8 million, representing 9.4% of operating revenue.

Constant Currency Information
Constant currency information included within this news release is non-conforming financial information, as defined by the NZ Financial Markets Authority, and has been provided to assist users of financial information to better understand and track the company’s comparative financial performance without the impacts of spot foreign currency fluctuations and hedging results and has been prepared on a consistent basis each year. A constant currency analysis is included on page 17 of the company’s Interim Report 2016 and the company’s constant currency income statement framework can be found on the company’s website at www.fphcare.com/ccis

Half Year Results Conference Call
Fisher & Paykel Healthcare will host a conference call today to review the results and to discuss the outlook for the 2016 financial year. The conference call is scheduled to begin at 10:00am NZDT, 8:00am AEDT (4:00pm USEST) and will be broadcast simultaneously over the Internet.

To listen to the webcast, access the company’s website at www.fphcare.com/investor. Please allow extra time prior to the webcast to visit the site and download the streaming media software if required. An online archive of the event will be available approximately two hours after the webcast and will remain on the site for two weeks.

To attend the conference call, participants will need to dial in to one of the numbers below at least 5 minutes prior to the scheduled call time and identify yourself to the operator. When prompted, please quote the conference code of: 73441223.

New Zealand Toll Free 0800 446 046   USA Toll Free 1800 742 9301
Australia Toll Free 1800 725 000   Hong Kong Toll Free 800 906 648
United Kingdom Toll Free 0808 234 1369   International +61 2 8373 3610

An audio replay of the conference call will be available approximately 2 hours after the call and will be accessible for two weeks by dialing one of the numbers below. When prompted please enter the conference code of: 73441223.

New Zealand Toll Free 0800 453 213   USA Toll Free 1855 452 5696
Australia Toll Free 1800 153 898   Hong Kong Toll Free 800 963 117
United Kingdom Toll Free 0808 234 0072   International +61 2 900 34211