Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — Deutsche Bank NZ Corporate Day (March 2017)
43 slides from Fisher & Paykel Healthcare's conference presentation, Mar 8, 2017
Slide 1: Deutsche Bank NZ Corporate Day March 2017
Deutsche Bank NZ Corporate Day 8 March 2017 Fisher& Paykel HEALTHCARE
Slide 2: Overview
A ~@ > ‘ T —_ - Overview.”
Slide 3: Fisher & Paykel Healthcare at a Glance
Fisher & Paykel Healthcare at a Glance mi SCSC*~*~*S Global leader in respiratory Global presence humidification devices 36 © Medical device manufacturer with 258 plaipsople are leading positions in respiratory care Pier seen able and obstructive sleep apnea in Europe 922 ; ; ; f lei o 45 years’ exp
Slide 4: Our Competitive Advantage
Our Competitive Advantage o Significant expertise in, and history of, 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 invasive ventilation ¢ Heated humidificat
Slide 5: ~US$6+ Billion and Growing Market Opportunity
~US$6+ Billion and Growing Market Opportunity HOSPITAL HOMECARE Invasive Noninvasive Hospital Surgical Home CPAP Ventilation Ventilation Respiratory Support Humidification Respiratory Support Therapy “NEW APPLICATIONS” Applications outside of invasive ventilation 5 Fisher& Paykel HEALTHCARE
Slide 6: Markets & Products
Markets & Products © Hospital Revenue by Product Group ¢ Heated humidification 6 months to 30 September 2016 % ¢ Respiratory care « Neonatal care ¢ Surgery o Homecare « Masks « Flow generators « Data management tools ¢ Respiratory care in the home Recurring items, consumables and accessories approxi
Slide 7: Impact of Changing Demographics
Impact of Changing Demographics a o Population age and weight both US Population over age 65 increasing 100 (millions) ¢ US population 65 years+ to grow «0 ~80% over next 20 years! « US males 60 - 74 years, 80 average weight increased 0 0.4 kg/year since 19602 o 60% of US healthcare cost is after ”
Slide 8: Hospital Cost Breakdown
Hospital Cost Breakdown ee Medical devices Other - includes labour, utilities, drugs, supplies, food, depreciation. Source: Estimates of Medical Device Spending in the United States, Donahoe, G and King, G, June 2014 8 Fisher & Paykel HEALTHCARE
Slide 9: Lower Care Intensity = Lower Cost
Lower Care Intensity = Lower Cost 2 Mean Annual COPD-Related Medical, Pharmacy, and Total Costs by Care Intensity Cohort $50,000 $40,000 $30,000 $20,000 $10,000 - . —_ co LJ Outpatient cohort Urgent outpatient cohort ED cohort Standard admission cohort ICU cohort Mean cost (2008 US$) Source: Anand A
Slide 10: Hospital Product Group
Hospital Product Group Invasive Noninvasive Hospital Surgical Ventilation Ventilation Respiratory Support Humidification V “NEW APPLICATIONS” Applications outside of invasive ventilation 10 Fisher & Paykel HEALTHCARE
Slide 11: Respiratory Humidification
Respiratory Humidification 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 Ly en * 44mg/L 100% saturated . - 1"
Slide 12: Optiflow - Displacing Conventional Oxygen Therapy
Optiflow - Displacing Conventional Oxygen Therapy CONVENTIONAL NONINVASIVE OXYGEN THERAPY VENTILATION £5 Fisher& Paykel HEALTHCARE
Slide 13: Clinical Outcomes of Optiflow Nasal High Flow Therapy
Clinical Outcomes of Optiflow Nasal High Flow Therapy a Optiflow NHF therapy is associated with: ADULTS: o REDUCED intubation o REDUCED re-intubation® 7 § o REDUCED bilevel ventilation’ o REDUCED nursing workload’ o INCREASED ventilator free days® o IMPROVED comfort & patient tolerance® o IMPROVED c
Slide 14: Optiflow NHF - A Growing Body of Clinical Evidence
Optiflow NHF - A Growing Body of Clinical Evidence a Nasal High Flow Clinical Papers Published Annually 2000 2003 2006 2009 2012 2015 —Adult — Neonatal & Paediatric Source: PubMed 14 Fisher & Paykel HEALTHCARE
Slide 15: Consistently Strong Growth in Hospital New Applications
Consistently Strong Growth in Hospital New Applications a Constant Currency Revenue Growth Rate in 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 52% of Hospital consumables revenue, up from 46% in FY2015 and 5
Slide 16: Homecare Product Group
Homecare Product Group uuu Home CPAP Respiratory Support Therapy 16 Fisher & Paykel HEALTHCARE
Slide 17: Obstructive Sleep Apnea
Obstructive Sleep Apnea 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. We estimate the market is growing approximately 6-8% p.a. o Estimate >5
Slide 18: Revolutionary Masks
Revolutionary Masks uuu oO Market leading mask technology o Unique, patented designs o Mask Matters Most ¢ Masks are key to compliance F&P ESON 2” F&P SIMPLUS” F&P BREVIDA™ 'e Fisher & Paykel HEALTHCARE
Slide 19: Home Respiratory Support
Home Respiratory Support 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 death in the US'6 o 6% of US adul
Slide 20: High Level of Innovation and Investment in R&D
High Level of Innovation and Investment in R&D o R&D represents 9.8% of operating revenue:! NZ$41.6M o Product pipeline includes: * Humidifier controllers « Masks « Respiratory consumables « Flow generators * Compliance monitoring solutions o 147 US patents, 358 US pending, 654 ROW, 666 ROW pending?
Slide 21: Growing Patent Portfolio
Growing Patent Portfolio mi SCSC*~*~*S Fisher & Paykel Healthcare US Patent Portfolio (2006 - 2016) 350 300 250 200 100 2006 2008 2010 2012 2014 jo) mUS Patents m US Patent Applications Average remaining life of FPH patent portfolio: 15.8 years* Fisher& Paykel as As at 31 March 2016 HEALTHCARE
Slide 22: Manufacturing & Operations
Manufacturing & Operations Vertically integrated « COGS improvements: Mexico, lean manufacturing, supply chain Ample capacity to grow Auckland, New Zealand ¢ Three buildings: 82,000 m? / 885,000 ft? total * 100 acres / 40 hectares land ¢« Fourth building planned Tijuana, Mexico * 18,000 m2 / 200,000
Slide 23: Strong Global Presence
Strong Global Presence mmm SCSC~*~*S o Direct/offices Revenue by Region * Hospitals, home care dealers 6 months to 30 September 2016 * Sales/support offices in North America, Europe, Asia, South America, Middle East and Australasia, 15 distribution centres ¢« More than 800 staff in 29 countries * On
Slide 24: Our Global Coverage
Our Global Coverage a rs 24 bia IGanada Germany Netherlands Balgium England) Sweden Finland == oe Portugal Spain Switzerland, ttaly Austria @ Direct Sales @ Distributed sales with FPH staff © Distribution Centres © Manufacturing Facilities China * ° Australia New Zealand Fisher& Paykel HEALTHCARE
Slide 25: Doubling our Constant Currency Revenue every 5-6 Years
Doubling our Constant Currency Revenue every 5-6 Years a Constant Currency Operating Revenue NZ$000 800 800 700 700 600 600 500 500 CAGR*: 13% 400 400 CAGR*: 12% 300 300 200 200 Mar-06 Mar-16 Mar-06 Mar-16 @ Total Group Revenue Hospital m Homecare Ban. Fisher& Paykel Compound Annual Growth Rate (CAG
Slide 26: Long Term Margin Targets
Long Term Margin Targets 2 Gross Margin Operating Margin 70% 304 ome eee eH === 60% 25% 50% 20% 40% 15% 30% 10% 20% 10% 5% 0% 0% 2012 «2013-2014. Ss 2015's 2016 _~—SsIHI17 2012, 2013)-«- 2014.) Ss 2015. 2016_~—SsIHI17 = = = Gross margin target = = = Operating margin target Note: the long term margin
Slide 27: Ownership Structure and Listings
Ownership Structure and Listings a o Listed on NZX and ASX (NZX.FPH, ASX.FPH) Shareholding Structure as at Geographical Ownership as at 30 September 2016 30 September 2016 m= North America @ Other Institutions mNew Zealand wm Australia m Europe (ex UK) Asia Fisher& Paykel NZ Institutions m Brokers &
Slide 28: Consistent Growth Strategy
Consistent Growth Strategy mmm SCSC~*~*S o Improving care and outcomes o Four key pillars: o Reducing cost to the LY Continuous product healthcare system improvement Increase ‘@!_ Broadening the range of * Effectiveness of care * devices for each patient ¢ Efficiency of care Reduce C ¢ Intensity of
Slide 29: Financials
Slide 30: H1 FY2017 Business Highlights
H1 FY2017 Business Highlights Innovative new products launched Som o Released three innovative new 30 products: F&P 950™ heated humidification system, F&P Nivairo™ hospital mask and F&P Brevida™ OSA mask Entered agreement for purchase of a new 15 hectare site in Mexico Began planning for fourth buil
Slide 31: Hospital Product Group
Hospital Product Group Operating revenue growth H1 FY2017 NZ$ +19% Constant currency +23% New applications consumables revenue growth H1 FY2017 (Noninvasive ventilation (NIV), Optiflow™ nasal high flow, Surgical) NZ$ +30% Constant currency +35% o New applications consumables make up 52% of Hospital
Slide 32: Homecare Product Group
Homecare Product Group Operating revenue growth H1 FY2017 NZ$ +5% Constant currency +8% Mask revenue growth H1 FY2017 Constant currency +14% o Masks continue to take market share @ Ee Ss i 2 Simplus” Eson”2 Brevida" (ZL) info Technologies” 32 Fisher& Paykel HEALTHCARE
Slide 33: First Half Financial Highlights
First Half Financial Highlights a H1 FY2017 (6 months to 30 September 2016) NZ$M OPCP* OCC * Record operating revenue 425.2 +12% +16% Record Hospital operating revenue 236.6 +19% +23% Record Homecare operating revenue 183.2 +5% +8% Hospital new applications consumables revenue +30% +35% OSA masks re
Slide 34: Dividend and Gearing
Dividend and Gearing a o Increased interim dividend by 23%: * 8.25 cps + 3.2083 cps imputation credit for NZ residents (gross dividend of NZ 11.4583 cps) ¢ Fully imputed * 1.455882 cps non-resident supplementary dividend ¢ Dividend reinvestment plan available for New Zealand and Australian residents
Slide 35: Half Year Operating Results
Half Year Operating Results a H1 FY2017 (6 months to 30 September 2016) % of Revenue NZ$M APCP* ACC* Operating revenue 100% 425.2 +12% +16% Cost of sales 35.1% 149.3 +7% +6% Gross profit 64.9% 275.9 +14% +21% Other income (R&D grant) 2.5 0% 0% SG&A 29.7% 126.1 +12% +17% R&D 9.8% 416 +16% +16% Total
Slide 36: Cash Flow & Balance Sheet
Cash Flow & Balance Sheet 2 H1 FY2017 (for the 6 months ended 30 September 2016) NZ$M Operating cash flow (+117%) 76.2 Capital expenditure 30.5 Depreciation and amortisation 19.9 H1 FY2017 (as at 30 September 2016) NZ$M Debt (net) 43.7 Total equity 590.0 Total assets 805.0 % Pre-tax return on averag
Slide 37: Foreign Exchange Effects
Foreign Exchange Effects 2 o 52% of operating revenue in USD (1H FY16: 51%) and 20% in €. Year to 31 March Hedging position for our main exposures 2017 2018 2019 2020 2021 USD % cover of expected exposure 100% 77% 40% 22% 18% USD average rate of cover 0.696 0.675 0.664 0.630 0.615 EUR % cover of exp
Slide 38: Product
' Product.
Slide 39: Hospital Hardware
Hospital Hardware o F&P 950 and F&P 850 respiratory humidification systems * Invasive ventilation, nasal high flow therapy and non-invasive ventilation a iii © 810 respiratory humidification we system 950"System 850"System ¢ Entry level system o AIRVO 2 flow generator/humidifier * Optiflow™ nasal hi
Slide 40: Hospital Single Use Consumables
Hospital Single Use Consumables o Single-use chambers « Patented auto filling MR290 o Single-use breathing circuits ¢ Patented spiral heater wire ¢ Proprietary Evaqua expiratory tube « Minimal condensation * Delivery of optimal humidity oO Breathing circuit components : ° ¢ Filters, catheter mount,
Slide 41: Optiflow Nasal High Flow Therapy - Delivery Options
Optiflow™ Nasal High Flow Therapy - Delivery Options 850” System AIRVO"2 950”System 4 These products are not available in all regions until regulatory clearance has been obtained. Fisher & Paykel HEALTHCARE
Slide 42: Homecare Hardware and Consumables
Homecare Hardware and Consumables a ICON"+ (Z), info Technologies” AIRVO"2 810" System Se ' Simplus” Eson"2 Brevida™ Optiflow’+ 42 These products are not available in all regions until regulatory clearance has been obtained. Fisher Paykel
Slide 43: Important Notice and References
Important Notice and References mmm SCSC~*~*S 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) 2017 Interim Report and accompanying market releases. Nothing in this presentation
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