Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — FY2014 Earnings Presentation
27 slides from Fisher & Paykel Healthcare's earnings presentation, May 26, 2014
Slide 1: 2014 Full Year Results Presentation
2014 Full Year Results Presentation Year ended 31 March 2014 26 - 30 May 2014 1
Slide 2: Full year result highlights
Full year result highlights 12 months to 31 March 2014 NZ$M PCP CC1 Record net profit after tax 97.1 +26% +46% Record operating revenue 623.4 +12% +13% Record RAC operating revenue 336.9 +12% +14% Record OSA operating revenue 270.0 +15% +15% RAC new applications consumables revenue +26% +29% OSA m
Slide 3: Second half result highlights
Second half result highlights 6 months to 31 March 2014 PCP CC1 Net profit after tax +20% +53% Operating revenue +10% +14% Gross margin (bps increase) +247- +423- RAC new applications consumables +23% +27% revenue OSA mask revenue +22% +26% 3 1. CC = constant currency
Slide 4: Innovative products driving growth
Innovative products driving growth • Respiratory & Acute Care - Optiflow™ oxygen therapy system - Evaqua™2 breathing circuits - AIRVO™2 & myAIRVO™2 humidifiers with integrated flow generators • Obstructive Sleep Apnea - Simplus™ full face mask - Eson™ nasal mask - Pilairo Q™ nasal pillows mask - ICO
Slide 5: Full year operating results
Full year operating results FY14 (12 months to 31 March 2014) %Revenue NZ$M PCP CC1 Operating revenue 100% 623.4 +12% +13% Cost of sales 41.4% 258.0 +4% +4% Gross profit 58.6% 365.4 +19% +22% Other income (R&D grant) 3.7 SG&A 27.5% 171.5 +13% +14% R&D 8.7% 54.1 +18% +18% Total operating expenses 3
Slide 6: Dividend
Dividend • Final dividend for the 2014 financial year: - 7.0 cps + 2.7 cps imputation credit for New Zealand residents (gross dividend of 9.7 NZ cps) - Fully imputed - 1.235 cps non-resident supplementary dividend - Dividend Reinvestment Plan offered for New Zealand and Australian residents - 3% dis
Slide 7: Respiratory & acute care (RAC)
Respiratory & acute care (RAC) H2 FY2014 • Operating revenue growth - NZ$ +9% - Constant currency +13% • New applications consumables revenue growth (Noninvasive ventilation (NIV), Optiflow, AIRVO, Surgical) - NZ$ +23% - Constant currency +27% • New applications consumables now make up 42% of RAC co
Slide 8: Obstructive sleep apnea (OSA)
Obstructive sleep apnea (OSA) H2 FY2014 • Operating revenue growth - NZ$ +13% - Constant currency +17% • Mask revenue growth - Constant currency +26% • Our Eson, Pilairo Q and Simplus masks are designed for comfort, seal and ease of use and have been very well received by our customers. All are now
Slide 9: Balance sheet & cash flow
Balance sheet & cash flow FY14 (as at 31 March 2014) NZ$M • Operating cash flow 104.1 • Capital expenditure 31.9 • Depreciation and amortisation 29.9 • Net debt 98.9 • Total shareholders equity 406.1 • Total assets 630.3 • 34% pre-tax return on equity, 22% on total assets 9
Slide 10: Foreign exchange effects
Foreign exchange effects • NZ$360.4M of hedging in place at 31 March 2014 for FY15. • 48% of operating revenue in USD (FY13: 50%) and 24% in €. As direct sales operations increase an increasing proportion of our revenue is generated in local currencies, reducing operating revenue exposure to USD. •
Slide 11: Outlook FY15
Outlook FY15 • Operating profit headwind of NZ$32 million in FY15 from reduced hedging and less favourable spot rates • Expect to again deliver robust constant currency net profit growth of approximately 40% for FY15 • Expect at a NZD:USD exchange rate of 0.86 - Operating revenue – approximately NZ$
Slide 12: Investment highlights
Investment highlights • A leader in respiratory and OSA treatment devices • Consistent growth strategy • Estimated US$5.0+ billion and growing market opportunity • High level of innovation • Global presence • Strong financial performance NZSX:FPH, ASX:FPH 12
Slide 13: Markets & products
Markets & products • Respiratory & Acute Care (RAC) - Heated humidification - Respiratory care - Neonatal care OSA - Surgery RAC 43% 54% • Obstructive Sleep Apnea (OSA) - Masks - Flow generators - Data management tools 3% - Humidifiers Other • Consumable and accessory products Revenue by Product Gro
Slide 14: Hospital cost breakdown
Hospital cost breakdown Utilities, Depreciation Drugs, Devices, Supplies & Food Labour Source: Massachusetts Hospital Association, “An Update to Hospital Costs in Context Report” July 2010 14
Slide 15: Lower care intensity equals lower cost
Lower care intensity equals lower cost Mean Annual COPD-Related Medical, $50,000 Pharmacy, and Total Costs by Care Intensity Cohort $40,000 Mean cost (2008 US$) $30,000 $20,000 $10,000 $0 Outpatient cohort Urgent outpatient ED cohort Standard admission ICU cohort All cohort cohort Source: Anand A Da
Slide 16: 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 oC body core temperature - 44mg/L 100% saturated 16
Slide 17: Therapies - respiratory care, acute care & surgical
Therapies - respiratory care, acute care & surgical Invasive ventilation Noninvasive ventilation Oxygen therapy Humidity therapy Neonatal invasive Neonatal Neonatal Surgical ventilation noninvasive ventilation oxygen therapy humidification 17
Slide 18: Respiratory & acute care - hardware
Respiratory & acute care - hardware • 850 respiratory humidifier system - Invasive ventilation, oxygen therapy and non-invasive ventilation • 810 respiratory humidifier system - Entry level system - Ventilation and oxygen therapy - Optional heated breathing circuit • AIRVO 2 flow generator/humidifie
Slide 19: Respiratory & acute care - single use consumables
Respiratory & acute care - single use consumables • Single-use chambers - Patented auto filling MR290 • Single-use breathing circuits - Patented spiral heater wire - Proprietary Evaqua 2 expiratory tube - Minimal condensation - Delivery of optimal humidity • Breathing circuit components - Filters, c
Slide 20: 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 • Estimated US$2.5+ billion worldwide market, growing approximately 6 - 8% • Potentially 50-60 million affected wor
Slide 21: Revolutionary masks
Revolutionary masks • Comfortable • Easy to fit • Efficient 21
Slide 22: Stylish, smart + simplified CPAP range
Stylish, smart + simplified CPAP range • Efficiently integrates with InfoUSB and InfoSmart Web • Responsive pressure relief - SensAwake • ThermoSmart humidifier breathing tube technology • Auto-adjusting CPAP 22
Slide 23: Efficient compliance reporting
Efficient compliance reporting 23
Slide 24: Research & development
Research & development • 8.7% of operating revenue, NZ$54.1M1 • Product pipeline includes: - Humidifier controllers - Masks - Respiratory consumables - Flow generators - Compliance monitoring solutions • 111 US patents, 220 US pending, 459 ROW, 306 ROW pending1 1 at 31 March 2014 24
Slide 25: Manufacturing & operations
Manufacturing & operations • Vertically integrated - COGs improvements; Mexico, Lean manufacturing, supply chain • Ample capacity to grow Auckland, New Zealand Tijuana, Mexico - Three buildings: 82,000 m² / - 18,000 m2 / 200,000 ft2 885,000 ft² total - Consumables capacity ramping up - 100 acres/40h
Slide 26: Global presence
Global presence • Direct/offices - Hospitals, home care dealers - Sales/support offices in North America, Europe, Asia, South America, Middle East and Australasia, 15 distribution centres North Europe America 34% - More than 600 staff in 30 countries 42% - Ongoing international expansion • Distribut
Slide 27: Consistent growth strategy
Consistent growth strategy • Experts in humidification, respiratory care, and obstructive sleep apnea • Provide innovative devices which can improve patient care and outcomes Continuous product improvement More devices for each patient Serve more patient groups – invasive ventilation, NIV, oxygen th
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