Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — FY2021 Earnings Presentation
49 slides from Fisher & Paykel Healthcare's earnings presentation, May 27, 2021
Slide 1: Full Year Results Presentation FY2021
Full Year Results Presentation FY2021 1 For twelve months ended 31 March 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) Annual Report 2021 and accompanying market releases. Nothing in this presentation should be construed as an invi
Slide 3: Impact of COVID-19
Impact of COVID-19 An extraordinary year Hospital product group • Our customers, healthcare professionals • FY21 hardware growth of 337% CC* around the world, have responded with • During FY21 we increased output for some of incredible care and courage our hospital hardware products by • Our people
Slide 4: Full year business highlights
Full year business highlights IMPACTED the lives of approximately COMMITTED $20 million to establish the 20 million patients around the world, including Fisher & Paykel Healthcare Foundation. millions treated for COVID-19. LAUNCHED myAirvo 2 in China, along with PLACED our own sales representatives
Slide 5: Key full year financial results
Key full year financial results FY21 (12 months to 31 March 2021) % of Revenue NZ$M PCP^ CC* Operating revenue 100% 1,971.2 56% 61% Hospital operating revenue 76% 1,498.1 87% 94% Homecare operating revenue 24% 465.6 2% 4% Gross margin / Gross profit 63% 1,245.6 -295bps -165bps SG&A 20% (396.6) 17%
Slide 6: Hospital product group
Hospital product group HARDWARE FY21 HOSPITAL REVENUE COMPOSITION 37% CONSUMABLES 63% Invasive Non-invasive OptiflowTM nasal Surgical ventilation ventilation high flow Hardware Consumables FY20 Hospital revenue composition* Hardware: 16% Consumables: 84% 6 *~$21m has been re-classified from Hospital
Slide 7: Hospital product group
Hospital product group H2 FY21 77% OF OPERATING • H2 FY21 Hospital REVENUE hardware growth of 308% in constant currency, with HOSPITAL OPERATING REVENUE strong demand for our (H2 FY21 $817.1M) range of humidifiers and Airvos NZ$ 83% • Strong customer demand for our Optiflow and CONSTANT CURRENCY 94%
Slide 8: Homecare product group
Homecare product group HARDWARE FY21 HOMECARE REVENUE COMPOSITION 18% CONSUMABLES CPAP Therapy/OSA Home Respiratory Support 82% Hardware Consumables FY20 Homecare revenue composition Hardware: 16% Consumables: 84% 8
Slide 9: Homecare product group
Homecare product group H2 FY21 23% OF OPERATING • Home Respiratory REVENUE Support business grew strongly, driven by strong HOMECARE OPERATING REVENUE myAirvo sales (H2 FY21 $239.4M) • OSA mask revenue -1% NZ$ impacted by reduced new patient diagnosis due to COVID-19 3% CONSTANT CURRENCY • Introduce
Slide 10: Gross Margin
Gross Margin GROSS MARGIN 70% 60% • Gross margin for the year: 50% − decreased by 295 bps to 63.2% − decreased by 165 bps in constant currency 40% − Increased freight and COVID-19 related 30% costs were partially offset by overhead leverage 20% • Increased freight costs adversely impacted 10% consta
Slide 11: Operating Margin
Operating Margin OPERATING (EBIT) MARGIN Operating expenses 40% • $533.3M, +17% (+19% CC) 35% • Operating margin increased by 612 bps (+782 bps CC) to 36.1% due to operating expense 30% growth of 17%, significantly lower than sales growth 25% of 56% 20% Research & Development expenses 15% • $136.7M,
Slide 12: Interest and Tax
Interest and Tax FY20 FY21 Change Financing expense NZ$M NZ$M NZ$M Interest income 2.2 1.5 (0.7) Lease interest expense (1.8) (1.6) 0.2 Interest expense (2.1) (3.4) (1.3) FX gain (loss) on interest bearing liabilities (7.1) 9.4 16.5 Net financing expense (8.8) 5.9 14.7 FY20 FY21 Change Tax and R&D g
Slide 13: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet FY20 NZ$M FY21 NZ$M Operating cash flow 321.4 625.3 Capital expenditure (including purchases of intangible assets) 170.7 184.7 Lease liability payments 9.7 10.2 Free cash flow 141.0 430.4 FY20 NZ$M FY21 NZ$M Net cash /(debt) (including short-term investments) 42.2 302.9 T
Slide 14: Dividend
Dividend DIVIDEND HISTORY • Increased final dividend by 42% 45 40 − 22.0 cps + 8.5556 cps imputation 35 credit for NZ residents (gross dividend of NZ 30.5556 cps) 30 Dividend (CPS) 25 − Fully imputed 20 − 3.8824 cps non-resident 15 supplementary dividend 10 5 • Total dividend for the year increased
Slide 15: Foreign exchange effects
Foreign exchange effects • 52% of operating revenue in USD (FY20: 49%) and 19% in € (FY20: 19%). Year to 31 March Hedging position for our main exposures FY22 FY23 FY24 FY25 FY26-27 USD % cover of expected exposure 85% 55% 30% 30% - USD average rate of cover 0.664 0.655 0.631 0.624 - EUR % cover of
Slide 16: Revenue and expenses by currency
Revenue and expenses by currency FY21 (for the 12 months ended 31 March 2021) REVENUE BY CURRENCY COST OF SALES BY CURRENCY OPERATING EXPENSES BY CURRENCY 1% 6% 8% 17% 26% 3% <1% 43% 10% 49% 2% 52% 19% 40% 24% NZD USD EUR MXN Other NZD USD EUR MXN Other NZD USD EUR MXN Other 16
Slide 17: FY2022 Observations
FY2022 Observations No guidance provided for the 2022 financial year • With the ongoing uncertainties of vaccinations, lockdowns, COVID-19 variants, localised waves and return to stable hospitalisation rates around the world, the company is not providing guidance for the 2022 financial year. • The c
Slide 18: Key Financials
Key Key Financials Financials 18
Slide 19: Key full year financial results
Key full year financial results FY21 (for the 12 months ended 31 March 2021) NZ$M PCP^ CC* Operating revenue 1,971.2 56% 61% Hospital operating revenue 1,498.1 87% 94% Homecare operating revenue 465.6 2% 4% Hospital new applications consumables revenue 43% 49% OSA masks revenue -1% 1% Gross margin
Slide 20: Key second half financial results
Key second half financial results H2 FY21 (for the 6 months ended 31 March 2021) NZ$M PCP^ CC* Operating revenue 1,061.0 53% 62% Hospital operating revenue 817.1 83% 94% Homecare operating revenue 239.4 -1% 3% Hospital new applications consumables revenue 45% 53% OSA masks revenue -5% 0% Gross mar
Slide 21: Overview
Overview Overview Overview Overview 21
Slide 22: 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 45 countr
Slide 23: ~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 Obstructive Sleep Ventilation Ventilation Respiratory Support Humidification Respiratory Support Apnea NEW APP
Slide 24: Our aspiration
Our aspiration OUR ASPIRATION: Sustainably DOUBLING our constant currency revenue every 5-6 years. 24
Slide 25: Markets and products
Markets and products • Hospital REVENUE BY PRODUCT GROUP 12 MONTHS TO 31 MARCH 2021 − Heated humidification <1% − Respiratory care − Neonatal care 24% − Surgery • Homecare 76% − Masks − Flow generators − Data management tools − Respiratory care in the home Recurring items, consumables and Hospital a
Slide 26: 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 27: Hospital cost breakdown
Hospital cost breakdown 6% Medical devices Other – includes labour, utilities, drugs, supplies, 94% food, depreciation. 27 Source: Estimates of Medical Device Spending in the United States, Donahoe, G and King, G, June 2014
Slide 28: 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 28 Source: Anand A Dalal, La
Slide 29: Hospital Overview
Overview Overview Hospital Overview Overview 29
Slide 30: 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 30
Slide 31: Optiflow - displacing conventional oxygen therapy
Optiflow - displacing conventional oxygen therapy CONVENTIONAL NON-INVASIVE OXYGEN THERAPY VENTILATION ~7million Estimated patients were treated with our Optiflow nasal high flow therapy over the past year 31
Slide 32: 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 33: 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 34: 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 35: International Clinical Practice Guideline
International Clinical Practice Guideline • The first clinical practice guideline in nasal high flow was published in November 2020, which makes the following four recommendations for its use: 35
Slide 36: International Clinical Practice Guideline
International Clinical Practice Guideline • Nearly all of the publications referred to in the clinical practice guideline utilised Optiflow nasal high flow products. * * Authors from: Canada, Israel, Spain, Italy, France, Thailand, Australia, Tunisia, Brazil, Hong Kong, India and USA 36 * Represents
Slide 37: 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% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 • New applications consumables currently make up 66% of Hospital consumables revenue, from 65% in FY20 a
Slide 38: Homecare
- 38 Homecare
Slide 39: 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 40: Mask matters most
Mask matters most • Masks are key to compliance • Unique, patented designs • Released F&P Evora compact nasal mask in the US, and a patient mask app in the US, Canada, Australia and UK. F&P EVORA™ F&P VITERA™ F&P BREVIDA™ 40
Slide 41: 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 42: High level of innovation and investment in R&D
High level of innovation and investment in R&D • R&D represents 7% of operating revenue*: NZ$136.7M • Product pipeline includes: − Humidifier controllers − Masks − Respiratory consumables − Flow generators − Compliance monitoring solutions • 381 US patents, 454 US pending, 1,508 Rest of world patent
Slide 43: 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 11.6 years* 100 0 2008 2010 2012 2014 2016 2018 2020 US Patents US Patent Applications 43 * As at 31 March 2021
Slide 44: Manufacturing and operations
Manufacturing and operations Auckland, New Zealand • Four buildings: 110,000 m2 / 1,180,000 ft2 • Co-location of R&D and manufacturing in NZ a competitive advantage Tijuana, Mexico • Two buildings: 41,000 m2 / 450,000 ft2 • Commenced construction of third manufacturing facility in Tijuana, which is
Slide 45: Environmental, Social & Governance
Environmental, Social & Governance ESG Summary Sustainability disclosures People and indices Supporting our people: Through an internal campaign We participate annually in a suite of well- called unite in the fight. We reminded our people of the respected sustainability disclosure vital role their w
Slide 46: Strong global presence
Strong global presence REVENUE BY REGION • Direct/offices 12 MONTHS TO 31 MARCH 2021 − Hospitals, home care dealers − Sales/support offices in North 8% America, Europe, Asia, South America, Middle East and 18% Australasia, 18 distribution centres − ~1,100 employees in 45 countries 42% − Ongoing inte
Slide 47: 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 31 MARCH 2021 31 MARCH 2021 1% 1% 4% 17% 6% 23% 8% 36% 22% 59% 23% New Zealand Australia North America UK NZ Institutions Other Institutions Europe (ex UK) Asia Broke
Slide 48: Consistent growth strategy
Consistent growth strategy 48
Slide 49: 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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