Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — FY2022 Earnings Presentation
50 slides from Fisher & Paykel Healthcare's earnings presentation, May 26, 2022
Slide 1: Full Year Results Presentation FY2022
To be updated once interim cover complete Full Year Results Presentation FY2022 1 For Year ended 31 March 2022
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 2022 and accompanying market releases. Nothing in this presentation should be construed as an invi
Slide 3: Full year business highlights
Full year business highlights IMPACTED the lives of approximately 20 UNVEILED the Airvo™ 3, our new nasal high- million patients around the world. flow device set to build upon the success of the Airvo 2. LAUNCHED the Optiflow Switch™ and SECURED regulatory clearance in the United Optiflow Trace™ in
Slide 4: Key full year financial results
Key full year financial results FY22 (12 months to 31 March 2022) % of Revenue NZ$M PCP^ CC* Operating revenue 100% 1,681.7 -15% -14% Hospital operating revenue 72% 1,207.1 -19% -19% Homecare operating revenue 28% 469.5 1% 2% Gross margin / Gross profit 63% 1,052.7 -59bps -147bps SG&A 23% (393.1)
Slide 5: Hospital product group
Hospital product group HARDWARE FY22 HOSPITAL REVENUE COMPOSITION 27% CONSUMABLES Invasive Noninvasive OptiflowTM nasal Surgical 73% ventilation ventilation high flow Hardware Consumables FY21 Hospital revenue composition Hardware: 37% Consumables: 63% 5
Slide 6: Hospital product group
Hospital product group FY22 72% OF OPERATING • Strong customer demand REVENUE for our Optiflow and Airvo systems, driven by the growing body of HOSPITAL OPERATING REVENUE clinical evidence and (FY22 $1,207.1M) COVID-19 NZ$ -19% • New applications consumables* made up -19% CONSTANT 71% of H2 FY22 Hos
Slide 7: Homecare product group
Homecare product group HARDWARE FY22 HOMECARE REVENUE COMPOSITION 16% CONSUMABLES CPAP Therapy/OSA Home Respiratory Support 84% Hardware Consumables FY21 Homecare revenue composition Hardware: 18% Consumables: 82% 7
Slide 8: Homecare product group
Homecare product group FY22 28% OF OPERATING • Introduced F&P Evora Full REVENUE in the US following FDA regulatory clearance HOMECARE OPERATING REVENUE (FY22 $469.5M) • OSA mask revenue impacted by reduced new 1% NZ$ patient diagnosis, due to the impact of COVID-19 and the limited supply of 2% CONS
Slide 9: Our aspiration – prior to COVID-19
Our aspiration – prior to COVID-19 OUR ASPIRATION: Sustainably DOUBLING our constant currency revenue every 5-6 years. 9
Slide 10: Our aspiration - now
Our aspiration - now OUR ASPIRATION: Sustainably DOUBLING our constant currency revenue every 5-6 years. COVID-19 has accelerated placement of hospital hardware and given us the opportunity to advance our longer-term plans. 10 The image above is an illustration of the company’s long-term growth aspi
Slide 11: Optiflow Anesthesia – Switch & Trace
Optiflow Anesthesia – Switch & Trace • Optiflow Switch™ and Optiflow Trace™ have been developed specifically for Enables delivery of humidified oxygen use in anesthesia. in the peri-anesthesia environment User can Switch between bag mask ventilation and Optiflow without needing • With these new prod
Slide 12: F&P Airvo 3
F&P Airvo 3 Key features • Closed loop system: Integrated control of oxygen % for target SpO2 range, improve targeting of oxygen delivery • Flow range extension: 2 – 70 l/min • Expanded use: for pediatric and neonatal patients • Large touchscreen GUI: input and view settings/data • Integrated batter
Slide 13: Gross Margin
Gross Margin GROSS MARGIN 70% 60% • Gross margin for the year: 50% − decreased by 59 bps to 62.6% − decreased by 147 bps in constant currency 40% • Freight costs have remained elevated 30% compared to pre-COVID-19 levels and adversely impacted constant currency gross 20% margin by around 240 bps in
Slide 14: Operating Margin
Operating Margin Operating expenses OPERATING (EBIT) MARGIN • $547M, +3% (+4% CC) 40% • Operating margin of 30.1% with continued 35% investment in operating expenses 30% • Excluding donations in 2021, +8% (+9% CC) 25% Research & Development expenses 20% • $154M, +13% (+13% CC) 15% • Reflecting under
Slide 15: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet FY21 NZ$M FY22 NZ$M Operating cash flow 625.3 324.3 Capital expenditure (including purchases of intangible assets) (184.7) (169.8) Lease liability payments (10.2) (14.0) Free cash flow 430.4 140.5 FY21 NZ$M FY22 NZ$M Net cash / (debt) (including short-term investments) 30
Slide 16: Dividend
Dividend DIVIDEND HISTORY 45 • Increased final dividend by 2% 40 35 − 22.5 cps + 8.75 cps imputation credit for NZ residents (gross 30 Dividend (CPS) dividend of NZ 31.25 cps) 25 − Fully imputed 20 − 3.97 cps non-resident 15 supplementary dividend 10 5 • Total dividend for the year increased by 4% t
Slide 17: Foreign exchange effects
Foreign exchange effects • 49% of operating revenue in US$ (FY21: 52%) and 18% in € (FY21: 19%). Year to 31 March Hedging position for our main exposures (as at 17 May 2022) FY23 FY24 FY25 FY26 FY27 FY28 USD % cover of estimated exposure 90% 75% 50% 40% 35% 5% USD average rate of cover 0.667 0.658 0
Slide 18: Revenue and expenses by currency
Revenue and expenses by currency FY22 (for the 12 months ended 31 March 2022) REVENUE BY CURRENCY COST OF SALES BY CURRENCY OPERATING EXPENSES BY CURRENCY 1% 5% 16% 10% 31% <1% 4% 38% 11% 49% 47% 1% 25% 18% 42% NZD USD EUR MXN Other NZD USD EUR MXN Other NZD USD EUR MXN Other 18
Slide 19: Looking ahead
Looking ahead No guidance provided for the 2023 financial year. Medium term scenario modeling Homecare product group for Hospital Consumables • OSA mask growth dependent on new patient diagnosis If number of Resulting hospital rates years to consumables CAGR over convert was* that period† • Subject
Slide 20: Key Financials
Key Key Financials Financials 20
Slide 21: Key full year financial results
Key full year financial results FY22 (for the 12 months ended 31 March 2022) NZ$M PCP^ CC* Operating revenue 1,681.7 -15% -14% Hospital operating revenue 1,207.1 -19% -19% Homecare operating revenue 469.5 1% 2% Hospital new applications consumables revenue 2% 3% OSA masks revenue 3% 4% Gross margi
Slide 22: Key second half financial results
Key second half financial results H2 FY22 (for the 6 months ended 31 March 2022) NZ$M PCP^ CC* Operating revenue 781.7 -26% -27% Hospital operating revenue 536.9 -34% -34% Homecare operating revenue 242.6 2% 1% Hospital new applications consumables revenue -12% -13% OSA masks revenue 7% 6% Gross m
Slide 23: Overview
Overview Overview Overview Overview 23
Slide 24: 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 53 countr
Slide 25: ~NZ$25+ billion and growing market opportunity
~NZ$25+ billion and growing market opportunity Total addressable market estimates HOSPITAL HOMECARE ~150+ million patients ~100+ million patients Invasive Non-invasive Hospital Home Respiratory Obstructive Sleep Surgical Technologies Ventilation Ventilation Respiratory Support Support Apnea NEW APPL
Slide 26: Consistent growth strategy
Consistent growth strategy Our inputs Our outputs Improved Our care and 7,000+ outcomes people for patients 50+ years Increased of trusted efficiency of relationships care Increased Excellence shareholder in R&D value Global Benefits to supply our people networks Doubling our constant Trusted curren
Slide 27: F&P product fundamentals
F&P product fundamentals What are we here to do? A drive to not only improve, but transform, clinical practice. Provide products with protected, value differentiation. Get our products, including the evidence, knowledge and supporting tools, into the hands of the customer A deep understanding of the
Slide 28: High level of innovation and investment in R&D
High level of innovation and investment in R&D • R&D represents 9% of operating revenue*: NZ$154.0M • Product pipeline includes: − Humidifier controllers − Masks − Respiratory consumables − Flow generators − Compliance monitoring solutions • 454 US patents, 504 US pending, 1947 Rest of world patents
Slide 29: Growing patent portfolio
Growing patent portfolio FISHER & PAYKEL HEALTHCARE US PATENT PORTFOLIO (2008 – 2022) 500 Average 400 remaining life of FPH patent portfolio (all 300 countries): 11.5 years* 200 100 0 2008 2010 2012 2014 2016 2018 2020 2022 US Patents US Patent Applications 29 * As at 31 March 2022
Slide 30: Changing Clinical Practice
Changing Clinical Practice • Using clinical evidence to drive change • Multi-layered with multiple stakeholders Insert image of products in action and or Sales • Building confidence with usage inline talking with clinician with the evidence, demonstrating value • Products in each care area builds fa
Slide 31: Strong global presence
Strong global presence REVENUE BY REGION • Direct/offices 12 MONTHS TO 31 MARCH 2022 − Hospitals, home care dealers − Sales/support offices in North 7% America, Europe, Asia, South America, Middle East and Australasia, 18 distribution centres 26% 39% − ~1,300 employees in 53 countries − Ongoing inte
Slide 32: Hospital
r : Hospital 32
Slide 33: 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 age
Slide 34: Hospital cost breakdown
Hospital cost breakdown 6% Medical devices Other – includes labour, utilities, drugs, supplies, 94% food, depreciation. 34 Source: Estimates of Medical Device Spending in the United States, Donahoe, G and King, G, June 2014
Slide 35: 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 35 Source: Anand A Dalal, La
Slide 36: 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 36
Slide 37: Optiflow nasal high flow therapy
Optiflow nasal high flow therapy Mechanisms of action Respiratory Spontaneously breathing patients support with or at risk of respiratory compromise Reduction of Dynamic positive dead airway space pressure Airway Patient hydration comfort Supplemental oxygen (if required) 37
Slide 38: 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 38
Slide 39: 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 40: Clinical practice guidelines: Nasal High Flow Therapy
Clinical practice guidelines: Nasal High Flow Therapy European European Society of American American Society of Respiratory Critical Care Association of College of Intensive Medicine Society Medicine Respiratory Care Physicians Society and recommendations 30 ESICM ERS SCC AARC ACP HFNC over COT in h
Slide 41: Optiflow NHF - a growing body of clinical evidence
Optiflow NHF - a growing body of clinical evidence NASAL HIGH FLOW CLINICAL PAPERS PUBLISHED ANNUALLY 700 • The publication of 600 858 clinical papers on NHF signifies the 500 high level of clinical 400 interest in the therapy through the 300 pandemic 200 100 0 Adult Neonatal & Pediatric Source: Pub
Slide 42: History of growth in hospital new applications
History of 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 FY22 • New applications consumables currently make up 71% of Hospital consumables revenue, from 66%
Slide 43: Homecare
5 I Homecare).
Slide 44: Obstructive Sleep Apnea
Obstructive Sleep Apnea • Obstructive sleep apnea is an underdiagnosed medical condition, with multiple negative outcomes to patients' health. • It can greatly impair quality of sleep, leading to fatigue; also associated with hypertension, stroke and heart attack • Estimate >100 million people affec
Slide 45: Mask matters most
Mask matters most • Masks are key to compliance • Unique, patented designs • Secured regulatory clearance in the United States for our new Evora™ Full OSA mask. F&P EVORA NASAL™ F&P EVORA FULL-FACE™ F&P BREVIDA™ 45
Slide 46: 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 47: Manufacturing and operations
Manufacturing and operations New Zealand • Four buildings: 110,000 m2 / 1,180,000 ft2 • Co-location of R&D and manufacturing • Continued 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 • Conti
Slide 48: Environmental, Social & Governance
Environmental, Social & Governance Our People Community and Sustainable Procurement Sustainability disclosures Volunteer Groups and indices We participate annually in a suite of well- The Board approved a Refer to our Annual Report FY22 Highlights: respected sustainability disclosure programmes disc
Slide 49: 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 2022 31 MARCH 2022 1% 1% 4% 5% 17% 23% 10% 34% 19% 59% 27% New Zealand Australia North America UK NZ Institutions Other Institutions Europe (ex UK) Asia Brok
Slide 50: 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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