Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — FY2016 Earnings Presentation
45 slides from Fisher & Paykel Healthcare's earnings presentation, May 27, 2016
Slide 1: Full Year Results Presentation FY2016
Full Year Results Presentation FY2016 For personal use only 1
Slide 2: FY2016 Business Highlights
FY2016 Business Highlights Innovative new products launched For personal use only o Released new range of products for use with the AIRVO™ 2 system including the Optiflow™+ nasal Optiflow™+ nasal cannula range high flow cannula o Eson™ 2 nasal mask and HumiGard™ SH870 surgical humidification system
Slide 3: Hospital / Respiratory & Acute Care (RAC) H2 FY2016
Hospital / Respiratory & Acute Care (RAC) H2 FY2016 For personal use only Operating revenue growth NZ$ +26% Constant currency +19% New applications consumables revenue growth H2 FY2016 (Noninvasive ventilation (NIV), OptiflowTM, AIRVO, Surgical) NZ$ +45% Constant currency +36% o New applications con
Slide 4: Homecare / Obstructive Sleep Apnea (OSA) H2 FY2016
Homecare / Obstructive Sleep Apnea (OSA) H2 FY2016 For personal use only Operating revenue growth NZ$ +19% Constant currency +11% Mask revenue growth H2 FY2016 Constant currency +17% o Masks continue to take market share 4
Slide 5: Second Half Financial Highlights
Second Half Financial Highlights H2 FY2016 (6 months to 31 March 2016) For personal use only PCP^ CC* Operating revenue +22% +15% Gross margin (bps increase) +290bps +213bps Net profit after tax +27% +15% Hospital/RAC operating revenue +26% +19% RAC new applications consumables revenue +45% +36% H
Slide 6: Full Year Financial Highlights
Full Year Financial Highlights FY2016 (12 months to 31 March 2016) For personal use only NZ$M PCP^ CC* Record operating revenue 815.5 +21% +14% Gross margin (bps increase) +284bps +278bps Record net profit after tax 143.4 +27% +19% Record Hospital/RAC operating revenue 436.3 +22% +15% RAC new appl
Slide 7: Dividend and Gearing
Dividend and Gearing o Increased final dividend by 25%: For personal use only • 10.0 cps + 3.8889 cps imputation credit for NZ residents (gross dividend of NZ 13.8889 cps) • Fully imputed • 1.7647 cps non-resident supplementary dividend • Dividend reinvestment plan available for New Zealand and Aust
Slide 8: Outlook FY2017
Outlook FY2017 For personal use only o Expect at exchanges rates of NZD:USD 0.68, NZD:EUR 0.61 • Operating revenue – approximately NZ$900 million • Net profit after tax – approximately NZ$165 – NZ$170 million 8
Slide 9: Overview.
9 For personal use only Overview.
Slide 10: Fisher & Paykel Healthcare at a Glance
Fisher & Paykel Healthcare at a Glance Global leader in respiratory Global presence For personal use only humidification devices 36 o Medical device manufacturer with 258 Our people are located in 36 leading positions in respiratory care Employees countries and obstructive sleep apnea in Europe 922
Slide 11: Competitive Advantage – Years' Experience
Competitive Advantage – 45 Years’ Experience o Significant expertise in, and history of, For personal use only changing clinical practice to therapies that improve clinical outcomes, are more effective and efficient and that ultimately reduce cost to the healthcare system • Heated humidification in
Slide 12: ~US$6+ Billion and Growing Market Opportunity
~US$6+ Billion and Growing Market Opportunity For personal use only HOSPITAL / RESPIRATORY & ACUTE CARE HOMECARE / OBSTRUCTIVE SLEEP APNEA Invasive Noninvasive Hospital Surgical Home CPAP Ventilation Ventilation Respiratory Support Humidification Respiratory Support Therapy “NEW APPLICATIONS” Applic
Slide 13: Markets & Products
Markets & Products o Hospital / Respiratory & Acute For personal use only Revenue by Product Group Care (RAC) 12 months to 31 March 2016 • Heated humidification • Respiratory care • Neonatal care • Surgery o Homecare / Obstructive Sleep Apnea (OSA) • Masks • Flow generators • Data management tools •
Slide 14: Impact of Changing Demographics
Impact of Changing Demographics o Population age and weight both US Population over age 65 For personal use only increasing 100 (millions) • US population 65 years+ to grow 90 ~80% over next 20 years1 • US males 60 - 74 years, 80 average weight increased 70 0.4 kg/year since 19602 60 o 60% of US hea
Slide 15: Hospital Cost Breakdown
Hospital Cost Breakdown For personal use only 6% Medical devices Other – includes labour, utilities, drugs, supplies, 94% food, depreciation. Source: Estimates of Medical Device Spending in the United States, Donahoe, G and King, G, June 2014 15
Slide 16: Lower Care Intensity = Lower Cost
Lower Care Intensity = Lower Cost Mean Annual COPD-Related Medical, For personal use only 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 Sourc
Slide 17: Hospital / Respiratory & Acute Care (RAC)
Hospital / Respiratory & Acute Care (RAC) For personal use only Invasive Noninvasive Hospital Surgical Ventilation Ventilation Respiratory Support Humidification “NEW APPLICATIONS” Applications outside of invasive ventilation 17
Slide 18: Respiratory Humidification
Respiratory Humidification For personal use only o Normal airway humidification is bypassed or compromised during ventilation or oxygen therapy o Mucociliary transport system operates less effectively o Need to deliver gas at physiologically normal levels • 37°C body core temperature • 44mg/L 100% s
Slide 19: Optiflow - Displacing Conventional Oxygen Therapy
OptiflowTM - Displacing Conventional Oxygen Therapy For personal use only CONVENTIONAL NONINVASIVE OXYGEN THERAPY VENTILATION 19
Slide 20: Clinical Outcomes of Optiflow Nasal High Flow Therapy
Clinical Outcomes of Optiflow™ Nasal High Flow Therapy Optiflow is associated with: For personal use only ADULTS: PAEDIATRICS: o REDUCED intubation5 o REDUCED intubation9 o REDUCED re-intubation6, 7, 8 o REDUCED length of stay10 o REDUCED bilevel ventilation7 o REDUCED respiratory distress11 o REDUC
Slide 21: Optiflow - A Growing Body of Clinical Evidence
Optiflow™ - A Growing Body of Clinical Evidence For personal use only Nasal High Flow Clinical Papers Published Annually 80 70 60 50 40 30 20 10 0 2000 2003 2006 2009 2012 2015 Adult Neonatal & Paediatric Source: PubMed 21
Slide 22: Consistently Strong Growth in Hospital New Applications
Consistently Strong Growth in Hospital New Applications Constant Currency Revenue Growth Rate in For personal use only New Applications Consumables 35% 30% 25% 20% 15% 10% 5% 0% 2010 2011 2012 2013 2014 2015 2016 o New applications consumables now make up 51% of Hospital/RAC consumables revenue, up
Slide 23: Homecare / Obstructive Sleep Apnea (OSA)
Homecare / Obstructive Sleep Apnea (OSA) For personal use only Home CPAP Respiratory Support Therapy 23
Slide 24: Obstructive Sleep Apnea
Obstructive Sleep Apnea For personal use only o Temporary closure of airway during sleep o Can greatly impair quality of sleep, leading to fatigue; also associated with hypertension, stroke and heart attack o Estimated US$3+ billion worldwide market, growing approximately 6-8% p.a. o Estimate >50 mi
Slide 25: Revolutionary Masks
Revolutionary Masks o Market leading mask technology For personal use only o Unique, patented designs o Mask Matters Most • Masks are key to compliance F&P ESON 2 F&P SIMPLUS F&P PILAIRO Q 25
Slide 26: Home Respiratory Support for COPD
Home Respiratory Support for COPD For personal use only o Chronic obstructive pulmonary disease (COPD) is a lung disease which is commonly associated with smoking o Emphysema and chronic bronchitis are both forms of COPD o Chronic respiratory disease, primarily COPD, is the third leading cause of de
Slide 27: High Level of Innovation and Investment in R&D
High Level of Innovation and Investment in R&D For personal use only o R&D represents 9% of operating revenue:* NZ$73.3M o Product pipeline includes: • Humidifier controllers • Masks • Respiratory consumables • Flow generators • Compliance monitoring solutions o 138 US patents, 329 US pending, 559 R
Slide 28: Growing Patent Portfolio
Growing Patent Portfolio Fisher & Paykel Healthcare US Patent Portfolio (2006 – 2016) For personal use only 350 300 250 200 150 100 50 0 2006 2008 2010 2012 2014 2016 US Patents US Patent Applications o Average remaining life of FPH patent portfolio: 15.8 years* 28 * As at 31 March 2016
Slide 29: Manufacturing & Operations
Manufacturing & Operations For personal use only o Vertically integrated • COGS improvements: Mexico, lean manufacturing, supply chain o Ample capacity to grow Auckland, New Zealand • Three buildings: 82,000 m² / 885,000 ft² total • 100 acres / 40 hectares land Tijuana, Mexico • 18,000 m2 / 200,000
Slide 30: Strong Global Presence
Strong Global Presence o Direct/offices Revenue by Region For personal use only • Hospitals, home care dealers 12 months to 31 March 2016 • Sales/support offices in North America, Europe, Asia, South America, Middle East and Australasia, 15 distribution centres • More than 700 staff in 29 countries
Slide 31: Our Global Coverage
Our Global Coverage For personal use only 31
Slide 32: Doubling our Constant Currency Revenue every 5-6 Years
Doubling our Constant Currency Revenue every 5-6 Years Constant Currency Operating Revenue NZ$000 For personal use only 800 800 700 700 600 600 500 500 CAGR*: 13% 400 400 CAGR*: 12% 300 300 200 200 CAGR*: 15% 100 100 0 0 Mar-06 Mar-16 Mar-06 Mar-16 Total Group Revenue Hospital / RAC Homecare / OSA 3
Slide 33: Long Term Margin Targets
Long Term Margin Targets For personal use only Gross Margin Operating Margin 70% 30% 60% 25% 50% 20% 40% 15% 30% 10% 20% 10% 5% 0% 0% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Long term gross margin target Long term operating margin target Note: the long term margin targets are based on an a
Slide 34: Ownership Structure and Listings
Ownership Structure and Listings For personal use only o Listed on NZX and ASX (NZX.FPH, ASX.FPH) Shareholding Structure as at Geographical Ownership as at 31 March 2016 31 March 2016 2% 3%2% 4% 18% 31% 15% 47% 29% 49% NZ Institutions Other Institutions New Zealand Australia North America Brokers &
Slide 35: Consistent Growth Strategy
Consistent Growth Strategy For personal use only o Improving care and outcomes o Four key pillars: o Reducing cost to the Continuous product healthcare system improvement Increase Broadening the range of • Effectiveness of care devices for each patient • Efficiency of care Serve more patient Reduce
Slide 36: Product.
For personal use only 36 Product.
Slide 37: Hospital Hardware
Hospital Hardware For personal use only o 850 respiratory humidifier system • Invasive ventilation, nasal high flow therapy and non-invasive ventilation o 810 respiratory humidifier system • Entry level system • Ventilation and nasal high flow therapy • Optional heated breathing circuit o AIRVO 2 fl
Slide 38: Hospital Single Use Consumables
Hospital Single Use Consumables o Single-use chambers For personal use only • Patented auto filling MR290 o Single-use breathing circuits • Patented spiral heater wire • Proprietary Evaqua 2 expiratory tube • Minimal condensation • Delivery of optimal humidity o Breathing circuit components • Filter
Slide 39: Optiflow Nasal High Flow Therapy – Delivery Options
Optiflow™ Nasal High Flow Therapy – Delivery Options For personal use only 39
Slide 40: Homecare Hardware and Consumables
Homecare Hardware and Consumables For personal use only 40
Slide 41: Figures.
Full Year Results Presentation FY2016 For personal use only Figures. Figures. 41
Slide 42: Full Year Operating Results
Full Year Operating Results FY2016 (12 months to 31 March 2016) For personal use only % of Revenue NZ$M PCP^ CC* Operating revenue 100% 815.5 +21% +14% Cost of sales 36.0% 293.8 +12% +6% Gross profit 64.0% 521.6 +27% +19% Other income (R&D grant) 5.0 0% 0% SG&A 29.7% 242.3 +34% +23% R&D 9.0% 73.3
Slide 43: Cash Flow & Balance Sheet
Cash Flow & Balance Sheet For personal use only FY2016 (for the 12 months ended 31 March 2016) NZ$M Operating cash flow (-2%) 144.6 Capital expenditure 65.7 Depreciation and amortisation 35.2 FY2016 (as at 31 March 2016) NZ$M Debt (net) 44.4 Total equity 541.7 Total assets 766.8 % Pre-tax return on
Slide 44: Foreign Exchange Effects
Foreign Exchange Effects o 52% of operating revenue in USD (1H FY16: 51%) and 21% in €. For personal use only Year to 31 March Hedging position for our main exposures 2017 2018 2019 2020 2021 USD % cover of expected exposure 85% 42% 24% 22% 18% USD average rate of cover 0.689 0.659 0.643 0.626 0.614
Slide 45: Important Notice and References
Important Notice and References Disclaimer For personal use only The information in this presentation is for general purposes only and should be read in conjunction with Fisher & Paykel Healthcare Corporation Limited’s (FPH) 2016 Annual Report and accompanying market releases. Nothing in this presen
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