Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — FY2019 Earnings Presentation
43 slides from Fisher & Paykel Healthcare's earnings presentation, 2019
Slide 1: Presentation FY2019
s Presentation FY2019 | Care by des Fisher & Paykel HEALTHCARE
Slide 2: Business Highlights
Business Highlights + GREW the body of clinical evidence supporting the use of Optiflow nasal high flow, including a key publication demonstrating significant benefits for Chronic Obstructive Pulmonary Disease (COPD) patients in the home using our myAirvo™ device. + INTRODUCED F&P Vitera™ full face
Slide 3: Key Full Year Financial Results
Key Full Year Financial Results FY2019 (12 months to 31 March 2019) % of Revenue NZ$M OPCP* Occ* Operating revenue 100% 1,070.4 +9% +8% Hospital operating revenue 60% 642.3 +12% +11% Homecare operating revenue 39% 421.4 +6% +4% Gross margin / Gross profit 67% 715.8 +56bps +58bps SG&A 31% 3278 +13% +
Slide 4: Hospital Product Group
Hospital Product Group Fisher & Paykel 4 *New applications = Noninvasive ventilation (NIV), Optiflow™, AIRVO™, Surgical HEALTHCARE
Slide 5: Homecare Product Group
Homecare Product Group FY2019 tt. Strong contribution from 3 9 % ie successfully completed roll out of our new SleepStyle OSA CPAP system H2 FY2019 Home Respiratory Support business continued to grow strongly _ 2% Hiatus in OSA mask launches HOMECARE OPERATING REVENUE impacted masks revenue CONSTANT
Slide 6: Gross Margin Improvements
Gross Margin Improvements GROSS MARGIN 70% ox a Ft ~ * Gross margin for the full year: 50% - increased by 56 bps to 66.9% - increased by 58 bps in constant currency “on ¢ Primarily driven by favourable product mix 30% * Offset by OSA price declines 20% 10% 0% 2015 2016 2017 2018 2019 — — = Long Term
Slide 7: Operating Margin
Operating Margin 25% 20% 15% 10% 5% 0% Research & Development expenses OPERATING (EBIT) MARGIN . . e NZ$100.4M +6% (+6% CC) compared to FY18 Lower than revenue growth following several years of above revenue growth Long term plan to grow in line with constant currency revenue growth NZ$327.8M +13% (
Slide 8: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet Full Year (for the 12 months ended 31 March) 2018 2019 NZ$M NZ$M Operating cash flow 247.8 253.3 Capital expenditure (including purchases of intangible assets) 98.7 133.3 Free cash flow 149.3 120.0 Full Year (as at 31 March) 2018 2019 NZ$M NZ$M Net cash (including short-t
Slide 9: Gearing and Dividend
Gearing and Dividend * Target gearing ratio* of +5% to -5% debt to debt plus equity - Gearing ratio as at 31 March 2019 was GEARING* -6.7% * Increased final dividend by 8%: - 13.5 cps + 5.25 cps imputation credit 15% for NZ residents (gross dividend of NZ 18.75 cps) - Fully imputed - 2.382 cps non-r
Slide 10: Foreign Exchange Effects
Foreign Exchange Effects * 50% of operating revenue in USD (FY18: 51%) and 19% in € (FY18: 20%). Year to 31 March Hedging position for our main exposures FY20 FY21 FY22 FY23 FY24 FY25-27 USD % cover of expected exposure 85% 60% 15% - - - USD average rate of cover 0.668 0.656 0.663 - - - EUR % cover
Slide 11: Profit & Loss by Currency
Profit & Loss by Currency FY2019 (for the 12 months ended 31 March 2019) REVENUE BY CURRENCY COST OF SALES BY CURRENCY OPERATING EXPENSES BY CURRENCY =NZD mUSD BEUR @MXN m Other = NZD USD BEUR @MXN m Other m@NZD @USD EUR @MXN m Other Fisher & Paykel N HEALTHCARE
Slide 12: Outlook FY2020
Outlook FY2020 Expect at current exchange rates (of NZD:USD 0.65, NZD:EUR 0.58): * Operating revenue - approximately NZ$1.15 billion * Net profit after tax - approximately NZ$240 million to NZ$250 million Capital expenditure expected to be approximately NZ$150 million * New facility in New Zealand *
Slide 13: Key Financials
r Key Financials | Fisher & Paykel ALT HCARE
Slide 14: Key Full Year Financial Results
Key Full Year Financial Results FY2019 (12 months to 31 March 2019) NZ$M OPCP* &cc* Operating revenue 1,070.4 +9% +8% Hospital operating revenue 642.3 +12% +11% Homecare operating revenue 421.4 +6% +4% Hospital new applications consumables revenue +22% +20% OSA masks revenue +2% +0% Gross margin (ba
Slide 15: Key Second Half Financial Results
Key Second Half Financial Results H2 FY2019 (6 months to 31 March 2019) NZ$M OPCP* &cc* Operating revenue 559.1 +7% +7% Hospital operating revenue 345.4 +11% +12% Homecare operating revenue 210.4 +2% +1% Hospital new applications consumables revenue +19% +20% OSA masks revenue -2% -2% Gross margin (
Slide 16: Fisher & Fisher& Paykel
rc ey Fisher & Fisher& Paykel VO ALT HGCARE
Slide 17: Healthcare at a Glance
Fisher & Paykel Healthcare at a Glance Global leader in respiratory humidification devices 7 Medical device manufacturer with leading positions in respiratory care and obstructive sleep apnea 50 years’ experience in changing clinical practice to solutions that provide better clinical outcomes and im
Slide 18: ~US$6+ Billion and Growing Market Opportunity
~US$6+ Billion and Growing Market Opportunity HOSPITAL HOMECARE Invasive Hospital Non-invasive Surgical _ Home CPAP Ventilation Respiratory Support Ventilation Humidification Respiratory Support Therapy a 18 Fisher & Paykel HEALTHCARE “NEW APPLICATIONS” Applications outside of invasive ventilation
Slide 19: Our Aspiration
Our Aspiration @ ® A) @ OUR ASPIRATION: RESPIRATORY | a HOSPITAL HOME SURGICAL Sustainably HUMIDIFICATION | THERAPY/OSA RESPIRATORY RESPIRATORY TECHNOLOGIES SUPPORT SUPPORT DOUBLING our constant currency revenue every 5-6 years. ns) oon] SHORT-TERM MEDIUM-TERM LONGER-TERM . Fisher & Paykel “CONSTANT
Slide 20: Markets & Products
Markets & Products * Hospital - Heated humidification - Respiratory care - Neonatal care - Surgery * Homecare - Masks - Flow generators - Data management tools - Respiratory care in the home Recurring items, consumables and accessories approximately 86% of operating revenue (FY18: 87%) 20 REVENUE BY
Slide 21: Impact of Changing Demographics
Impact of Changing Demographics * Population age and weight both us roe MILLIONS) 65 increasing 100 - US population 65 years+ to grow 30 ~80% over next 20 years! - US males 60 - 74 years, average weight increased 70 0.4 kg/year since 19602 «co 60% of US healthcare cost is after age 65 years? ° Devel
Slide 22: Hospital Cost Breakdown
Hospital Cost Breakdown 6% Medical devices Other - includes labour, utilities, drugs, supplies, 94% food, depreciation. ' . . , so Fisher& Paykel 22 Source: Estimates of Medical Device Spending in the United States, Donahoe, G and King, G, June 2014 HEALTHCARE
Slide 23: Lower Care Intensity = Lower Cost
Lower Care Intensity = Lower Cost $50,000 $40,000 $30,000 $20,000 $10,000 Mean cost (2008 US$) $0 MEAN ANNUAL COPD-RELATED MEDICAL, PHARMACY AND TOTAL COSTS BY CARE INTENSITY COHORT Outpatient cohort Urgent outpatient cohort ED cohort Standard admission cohort ICU cohort Source: Anand A Dalal, Laura
Slide 24: Hospital
Hospital “4 & ¢ Lp & Fisher & Paykel HEALTHCARE
Slide 25: Hospital Product Group
Hospital Product Group HARDWARE FY19 HOSPITAL REVENUE COMPOSITION AIRVO2 HumiGard “--» CONSUMABLES @ Invasive © Non-invasive © Optiflow nasal @ Surgical ventilation ventilation high flow mHardware ™ Consumables os ; Fisher& Paykel HEALTHCARE
Slide 26: 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 Fisher & Pay
Slide 27: Optiflow - Displacing Conventional Oxygen Therapy
Optiflow - Displacing Conventional Oxygen Therapy CONVENTIONAL NON-INVASIVE OXYGEN THERAPY VENTILATION ) Smillion ESTIMATED PATIENTS WERE TREATED WITH OUR OPTIFLOW NASAL HIGH FLOW THERAPY OVER THE PAST YEAR Fisher & Paykel 27 HEALTHCARE
Slide 28: 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 intubation® * REDUCED intubation’? ¢ REDUCED re-intubation® 7 ® ¢ REDUCED length of stay" * REDUCED bilevel ventilation” * REDUCED respiratory distress!2 * REDUCED nursing wo
Slide 29: Optiflow NHF - A Growing Body of Clinical Evidence
Optiflow NHF - A Growing Body of Clinical Evidence NASAL HIGH FLOW CLINICAL PAPERS PUBLISHED ANNUALLY ¢« The publication of 200 247 clinical papers 175 on NHF continues 150 to signify a high ps level of clinical interest in the 100 therapy. 75 50 25 0) oO ~ we) be \e} fo <\ & 2) O Lb \e) o <\ No} A
Slide 30: Optiflow outside medical ICU: recent clinical studies
Optiflow outside medical ICU: recent clinical studies 30 Surgical ICU Emergency Department Emergency Department Emergency Department ED/Ward Home Intermediate Care REDUCED escalation / readmission REDUCED REDUCED IMPROVES REDUCED IMPROVES REDUCED hospital respiratory oxygenation | PaCO2 comfort dysp
Slide 31: Consistently Strong Growth in Hospital New Applications
Consistently Strong Growth in Hospital New Applications CONSTANT CURRENCY REVENUE GROWTH RATE IN NEW APPLICATIONS CONSUMABLES* 35% 30% 25% 20% 15% 10% 5% 0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 * New applications consumables now make up 62% of Hospital consumables revenue, up from 54% in FY2
Slide 32: Homecare
r Homecare Fisher & Paykel HEALTHCARE 32
Slide 33: Homecare Product Group
Homecare Product Group HARDWARE FY19 HOMECARE REVENUE COMPOSITION a “**-. CONSUMABLES QO CPAP Therapy/OSA mHardware ™ Consumables 33 810System © Home Respiratory Support Fisher & Paykel HEALTHCARE
Slide 34: Obstructive Sleep Apnea
Obstructive Sleep Apnea 34 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$3+ billion worldwide market. Estimate >50 million people affected in developed countries Most common tr
Slide 35: Mask Matters Most
Mask Matters Most « Masks are key to compliance ¢« Unique, patented designs ¢ Vitera launched in May in NZ, Australia, Europe and Canada. Will be released in the US and other markets upon receipt of regulatory clearances. F&P ESON 2” F&P VITERA”™ F&P BREVIDA™ Fisheré.Paykel 35 HEALTHCARE
Slide 36: 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 US!” * 6% of US adu
Slide 37: 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$100.4M * Product pipeline includes: - Humidifier controllers - Masks - Respiratory consumables - Flow generators - Compliance monitoring solutions * 222 US patents, 427 US pending, 988 Rest of world patents,
Slide 38: Growing Patent Portfolio
Growing Patent Portfolio FISHER & PAYKEL HEALTHCARE US PATENT PORTFOLIO (2008 - 2019) 450 400 350 300 250 200 150 100 WE ) 2008 2010 2012 2014 2016 2018 mUS Patents mm US Patent Applications Average remaining life of FPH patent portfolio (all countries): 12 years* 38 * As at 31 March 2019 FisheréPay
Slide 39: Manufacturing & Operations
Manufacturing & Operations ¢ Vertically integrated ¢ Will grow manufacturing capacity to accommodate future volume growth * Modest growth in NZ ¢ Most growth outside NZ Auckland, New Zealand * Three buildings: 82,000 m2 / 885,000 ft? total * 100 acres / 40 hectares land ¢« Fourth building due to be
Slide 40: Strong Global Presence
Strong Global Presence * Direct/offices Hospitals, home care dealers Sales/support offices in North America, Europe, Asia, South America, Middle East and Australasia, 17 distribution centres More than 1,000 employees in 31 countries Ongoing international expansion * Distributors 100+ distributors wo
Slide 41: 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 2019 31 MARCH 2019 mNZ Institutions @ Other Institutions mNew Zealand wm Australia m North America m Brokers & Retail m= Other mUK mEurope (ex UK) Asia Fishe
Slide 42: Consistent Growth Strategy
Consistent Growth Strategy 42 Our inputs Our outputs Improved care & outcomes for pationts our 4,500+ people 50 years of trusted relationships Increased efficiency of care Increased shareholder value Excellence in R&D Global supply networks Benefits to our people Doubling ‘our constant ‘currency rev
Slide 43: Important Notice and References
Important Notice and References 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) 2019 Annual Report and accompanying market releases. Nothing in this presentation should be const
Fisher & Paykel Healthcare — FY2019 Earnings Presentation on 6ix