Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — H1 FY2022 Earnings Presentation
44 slides from Fisher & Paykel Healthcare's earnings presentation, Nov 25, 2021
Slide 1: Half Year Results Presentation FY2022
To be updated once interim cover complete Half Year Results Presentation FY2022 1 For six months ended 30 September 2021
Slide 2: Important notice
Important notice Disclaimer The information in this presentation is for general purposes only and should be read in conjunction with Fisher & Paykel Healthcare Corporation Limited’s (FPH) Interim Report 2022 and accompanying market releases. Nothing in this presentation should be construed as an inv
Slide 3: Half year business highlights
Half year business highlights CONTRIBUTED to the fight against COMMENCED construction on our third COVID-19 by providing convenient access to manufacturing facility in Mexico and started vaccinations for our employees. earthworks on our fifth facility in New Zealand. LAUNCHED F&P Visairo™ mask for I
Slide 4: Key half year financial results
Key half year financial results H1 FY22 (6 months to 30 September 2021) % of Revenue NZ$M PCP^ CC* Operating revenue 100% 900.0 -1% 2% Hospital operating revenue 74% 670.2 -2% 1% Homecare operating revenue 25% 226.9 0% 3% Gross margin / Gross profit 63% 567.7 135bps 53bps SG&A 21% (189.6) 1% 5% R&
Slide 5: Hospital product group
Hospital product group HARDWARE H1 FY22 HOSPITAL REVENUE COMPOSITION 33% CONSUMABLES 67% Invasive Noninvasive OptiflowTM nasal Surgical ventilation ventilation high flow Hardware Consumables H1 FY21 Hospital revenue composition Hardware: 37% Consumables: 63% 5
Slide 6: Hospital product group
Hospital product group H1 FY22 74% OF OPERATING • Strong customer demand REVENUE for our Optiflow and Airvo systems, driven by HOSPITAL OPERATING REVENUE the growing body of (H1 FY22 $670.2M) clinical evidence and COVID-19 NZ$ -2% • New applications consumables* made up CONSTANT CURRENCY 1% 72% of H
Slide 7: Homecare product group
Homecare product group HARDWARE H1 FY22 HOMECARE REVENUE COMPOSITION 18% CONSUMABLES CPAP Therapy/OSA Home Respiratory Support 82% Hardware Consumables H1 FY21 Homecare revenue composition Hardware: 17% Consumables: 83% 7
Slide 8: Homecare product group
Homecare product group H1 FY22 25% OF OPERATING • Introduced F&P Evora REVENUE Full, a compact full-face mask, in Australia and HOMECARE OPERATING REVENUE New Zealand (H1 FY22 $226.9M) • OSA mask revenue 0% NZ$ impacted by reduced new patient diagnosis, due to the impact of COVID-19 3% CONSTANT and
Slide 9: Gross Margin
Gross Margin GROSS MARGIN 70% 60% • Gross margin for the half year: 50% − increased by 135 bps to 63.1% − increased by 53 bps in constant currency 40% − freight remained elevated but lower than 30% prior half year • Increased freight costs adversely impacted 20% constant currency gross margin by ~19
Slide 10: Operating Margin
Operating Margin OPERATING (EBIT) MARGIN Operating expenses 40% • $265.3M, +5% (+8% CC) 35% • Operating margin decreased by 37 bps 30% (-121 bps CC) to 33.6% with continued investment in operating expenses to support hardware sales 25% Research & Development expenses 20% • $75.7M, +17% (+17% CC) 15%
Slide 11: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet H1 FY21 NZ$M H1 FY22 NZ$M Operating cash flow 218.1 127.5 Capital expenditure (including purchases of intangible assets) 94.5 81.3 Lease liability payments 5.3 6.6 Free cash flow 118.3 39.6 FY21 NZ$M H1 FY22 NZ$M Net cash / (debt) (including short-term investments) 302.9
Slide 12: Dividend
Dividend DIVIDEND HISTORY 40 • Increased interim dividend by 6% 35 30 − 17.00 cps + 6.6111 cps imputation Dividend (CPS) 25 credit for NZ residents (gross dividend of NZ 23.6111 cps) 20 − Fully imputed 15 − 3.0000 cps non-resident 10 supplementary dividend 5 0 2017 2018 2019 2020 2021 2022 Interim c
Slide 13: Foreign exchange effects
Foreign exchange effects • 49% of operating revenue in US$ (FY21: 52%) and 17% in € (FY21: 19%). Year to 31 March Hedging position for our main exposures FY22 FY23 FY24 FY25 FY26-27 USD % cover of estimated exposure 95% 70% 50% 30% - USD average rate of cover 0.675 0.665 0.656 0.624 - EUR % cover of
Slide 14: Revenue and expenses by currency
Revenue and expenses by currency H1 FY22 (for the 6 months ended 30 September 2021) REVENUE BY CURRENCY COST OF SALES BY CURRENCY OPERATING EXPENSES BY CURRENCY 1% 6% 16% 10% 32% <1% 4% 38% 11% 47% 49% 1% 17% 42% 25% NZD USD EUR MXN Other NZD USD EUR MXN Other NZD USD EUR MXN Other 14
Slide 15: H2 FY22 Observations
H2 FY22 Observations No quantitative guidance provided for the remainder of the 2022 financial year given the continuing uncertainties associated with COVID-19. H2 FY22 Observations* • Hospital Consumables: H2 FY21 peak COVID-19 hospitalisations in North America / Europe. In the absence of further c
Slide 16: Overview
Overview Overview Overview Overview 16
Slide 17: Fisher & Paykel Healthcare at a glance
Fisher & Paykel Healthcare at a glance Global leader in respiratory Global presence humidification devices • Medical device manufacturer with leading positions Our people in respiratory care and obstructive sleep apnea are located in • >50 years’ experience in changing clinical practice to 51 countr
Slide 18: ~NZ$20+ billion and growing market opportunity
~NZ$20+ billion and growing market opportunity Total addressable market estimates HOSPITAL HOMECARE ~90+ million patients ~100+ million patients Invasive Non-invasive Hospital Surgical Home Respiratory Obstructive Sleep Ventilation Ventilation Respiratory Support Humidification Support Apnea NEW APP
Slide 19: Our aspiration
Our aspiration OUR ASPIRATION: Sustainably DOUBLING our constant currency revenue every 5-6 years. 19
Slide 20: Markets and products
Markets and products • Hospital REVENUE BY PRODUCT GROUP 6 MONTHS TO 30 SEPTEMBER 2021 − Heated humidification <1% − Respiratory care − Neonatal care 25% − Surgery • Homecare 74% − Masks − Flow generators − Data management tools − Respiratory care in the home Recurring items, consumables and Hospita
Slide 21: Impact of changing demographics
Impact of changing demographics US POPULATION OVER AGE 65 (MILLIONS)* • Population age and weight both increasing 100 − US population 65 years+ to grow ~80% over 90 next 20 years1 − US males 60 - 74 years, 80 average weight increased 70 0.4 kg/year since 19602 60 • 60% of US healthcare cost is after
Slide 22: Hospital cost breakdown
Hospital cost breakdown 6% Medical devices Other – includes labour, utilities, drugs, supplies, 94% food, depreciation. 22 Source: Estimates of Medical Device Spending in the United States, Donahoe, G and King, G, June 2014
Slide 23: Lower care intensity = lower cost
Lower care intensity = lower cost MEAN ANNUAL COPD-RELATED MEDICAL, PHARMACY AND TOTAL COSTS BY CARE INTENSITY COHORT $50,000 $40,000 Mean cost (2008 US$) $30,000 $20,000 $10,000 $0 Outpatient cohort Urgent outpatient cohort ED cohort Standard admission cohort ICU cohort 23 Source: Anand A Dalal, La
Slide 24: Hospital
_ - ha « Hospital 24 Fisher & Paykel HEALTHCARE
Slide 25: Respiratory humidification
Respiratory humidification • Normal airway humidification is bypassed or compromised during ventilation or oxygen therapy • Mucociliary transport system operates less effectively • Need to deliver gas at physiologically normal levels − 37°C body core temperature − 44mg/L 100% saturated 25
Slide 26: Optiflow - displacing conventional oxygen therapy
Optiflow - displacing conventional oxygen therapy CONVENTIONAL NON-INVASIVE OXYGEN THERAPY VENTILATION 26
Slide 27: Patient groups who may benefit from Optiflow
Patient groups who may benefit from Optiflow ADULTS: • Acute respiratory • Emphysema failure • Palliative Care • Asthma • Pneumonia • Atelectasis • Pulmonary embolism • Bronchiectasis • Respiratory • Bronchitis compromise • Burns • Viral pneumonia • COPD • Carbon monoxide • Chest trauma poisoning PA
Slide 28: Clinical outcomes of Optiflow nasal high flow therapy
Clinical outcomes of Optiflow nasal high flow therapy Optiflow NHF therapy is associated with: ADULTS: PAEDIATRICS: • REDUCED intubation6 • REDUCED intubation11 • REDUCED re-intubation7, 8, 9 • REDUCED length of stay12 • REDUCED bilevel ventilation8 • REDUCED respiratory distress13 • REDUCED nursing
Slide 29: Optiflow NHF - a growing body of clinical evidence
Optiflow NHF - a growing body of clinical evidence NASAL HIGH FLOW CLINICAL PAPERS PUBLISHED ANNUALLY 500 • The publication of 638 clinical papers 400 on NHF continues to signify a high level of 300 clinical interest in the therapy 200 100 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Adu
Slide 30: International Clinical Practice Guidelines
International Clinical Practice Guidelines Management of Adult Patients With ERS Clinical Practice Guidelines: high-flow The role for high flow nasal cannula as a Oxygen in the Acute Care Setting nasal cannula in acute respiratory failure respiratory support strategy in adults: a clinical practice g
Slide 31: Clinical practice guideline: NHF evidence from the ED
Clinical practice guideline: NHF evidence from the ED 29 30 31 32 33 34 35 36 37 38 39 31 Studies from the AARC, ERS and ESICM clinical practice guidelines associated with Nasal High Flow use in the ED.
Slide 32: Strong growth in hospital new applications
Strong growth in hospital new applications CONSTANT CURRENCY REVENUE GROWTH RATE IN NEW APPLICATIONS CONSUMABLES* 60% 50% 40% 30% 20% 10% 0% FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 H1 FY22 • New applications consumables currently make up 72% of Hospital consumables revenue, from 63% i
Slide 33: Homecare
33 Fisher & Paykel HEALTHCARE
Slide 34: Obstructive Sleep Apnea
Obstructive Sleep Apnea • Temporary closure of airway during sleep • Can greatly impair quality of sleep, leading to fatigue; also associated with hypertension, stroke and heart attack • Estimate >100 million people affected in developed countries • Most common treatment is CPAP (Continuous Positive
Slide 35: Mask matters most
Mask matters most • Masks are key to compliance • Unique, patented designs • Released F&P Evora compact full-face mask in Australia and New Zealand and will be launched in other countries upon receiving clearances. F&P EVORA NASAL™ F&P EVORA FULL-FACE™ F&P BREVIDA™ 35
Slide 36: Home respiratory support
Home respiratory support • Chronic obstructive pulmonary disease (COPD) is a lung disease which is commonly associated with smoking • Emphysema and chronic bronchitis are both forms of COPD • Chronic respiratory disease, primarily COPD, is the third leading cause of death in the world17 • 6% of US a
Slide 37: High level of innovation and investment in R&D
High level of innovation and investment in R&D • R&D represents 8% of operating revenue*: NZ$75.7M • Product pipeline includes: − Humidifier controllers − Masks − Respiratory consumables − Flow generators − Compliance monitoring solutions • 411 US patents, 491 US pending, 1,699 Rest of world patents
Slide 38: Growing patent portfolio
Growing patent portfolio FISHER & PAYKEL HEALTHCARE US PATENT PORTFOLIO (2008 – 2021) 500 Average 400 remaining life of FPH patent 300 portfolio (all countries): 200 11.7 years* 100 0 2008 2010 2012 2014 2016 2018 2020 H1 2022 US Patents US Patent Applications 38 * As at 30 September 2021
Slide 39: Manufacturing and operations
Manufacturing and operations New Zealand • Four buildings: 110,000 m2 / 1,180,000 ft2 • Co-location of R&D and manufacturing • Commenced earthworks on building 5 • Initiated search for second R&D and manufacturing campus in New Zealand Tijuana, Mexico • Two buildings: 41,000 m2 / 450,000 ft2 • Comme
Slide 40: Environmental, Social & Governance
Environmental, Social & Governance ESG Summary Sustainability disclosures People and indices Supporting our people: Through an internal We participate annually in a suite of well- respected sustainability disclosure campaign called unite in the fight. We reminded programmes and have been included th
Slide 41: Strong global presence
Strong global presence REVENUE BY REGION • Direct/offices 6 MONTHS TO 30 SEPTEMBER 2021 − Hospitals, home care dealers − Sales/support offices in North 8% America, Europe, Asia, South America, Middle East and Australasia, 18 distribution centres 30% − ~1,100 employees in 51 countries 36% − Ongoing i
Slide 42: Ownership structure and listings
Ownership structure and listings • Listed on NZX and ASX (NZX.FPH, ASX.FPH) SHAREHOLDING STRUCTURE AS AT GEOGRAPHICAL OWNERSHIP AS AT 30 SEPTEMBER 2021 30 SEPTEMBER 2021 1% 1% 4% 16% 5% 23% 9% 35% 20% 60% 26% New Zealand Australia North America UK NZ Institutions Other Institutions Europe (ex UK) As
Slide 43: Consistent growth strategy
Consistent growth strategy 43
Slide 44: References
References References 1. Clinical guidelines for use of NHF on Covid-19 patients, including those issued by the HHS, WHO, SCCM, ACEP, NIH and the CDC. 2. Grayson K. Vincent, Victoria A. Velkoff. The Next Four Decades. The Older Population in the United States: 2010 to 2050. US Census Bureau, 2010. 3
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