Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — H1 FY2003 Earnings Presentation
31 slides from Fisher & Paykel Healthcare's earnings presentation, Nov 12, 2002
Slide 1: Overview & H1/Q2 FY03 Update
Overview & H1/Q2 FY03 Update Auckland, Wellington, Melbourne, Sydney 12 - 15 November 2002 H
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may include forward-looking statements and actual results could vary. Such forward-looking statements, including statements regarding our future revenue and earnings projections and the development of new markets for our products, are subject to risks and
Slide 3: Investment Highlights
Investment Highlights • Leading player in heated humidification devices and consumables for a variety of respiratory markets • Estimated US$1 billion+ market opportunity • High level of innovation • Global presence • Competitive NZ cost base • Strong financial performance • Experienced management te
Slide 4: Markets and Products
Markets and Products • Respiratory humidification OSA Neonatal 40% and other • Obstructive sleep apnea 10% • Neonatal and other Respirat ¯ Consumable products represent ory Humid- approx. 50% of core product sales ification 50% * 6 months to 30 Sept 2002 H
Slide 5: Respiratory Humidification
Respiratory Humidification • Normal airway humidification is bypassed or compromised during ventilation or O2 therapy • Mucociliary transport system operates less effectively – increases risk of infection – impairs gas exchange • Need to deliver gas at physiologically normal levels – 37°C body core
Slide 6: Market Opportunity
Market Opportunity Humidification systems are utilized to create, control and deliver optimal levels of humidity • Estimated US$300+ million market worldwide – heated humidifier controllers – humidifier chambers – breathing circuits – unheated humidifiers – oxygen therapy supplies ¯ Heated humidifie
Slide 7: Fisher & Paykel's Humidification Systems
Fisher & Paykel’s Humidification Systems Fisher & Paykel has a full range of industry-leading respiratory humidification systems Products include: MR850 Respiratory Humidification System – invasive ventilation, O2 therapy and non-invasive ventilation – patented flow measuring technology – integrated
Slide 8: Single-use Components
Single-use Components • Single-use chambers – patented auto filling MR290 – manual filling models • Single-use breathing circuits – adult and neonatal – patented spiral heater wire – less condensation – delivery of optimal humidity ¯ On average, 35 system set-ups used per controller per year H
Slide 9: Competitive Advantage
Competitive Advantage • Creating, controlling and delivering optimal humidity poses technical challenges • Integrated humidifier, chamber, circuit system provides: – optimal performance – marketing advantage • Bundled consumable sales driven by installed controllers – Estimate F&P has >50% global co
Slide 10: Respiratory Humidification FY03 Q2
Respiratory Humidification FY03 Q2 • Revenue growth (USD) +9% on pcp • Good growth North America and rest of world • Improving demand from Europe and OEM customers for humidifier controllers • Continued strong growth in breathing circuits • Neonatal circuits launched in Australasia, Europe and Asia
Slide 11: Obstructive Sleep Apnea
Obstructive Sleep Apnea • Temporary closure of airway during sleep • Can greatly impair quality of sleep, leading to fatigue; also associated with stroke and heart attack • Estimated US$600+ million worldwide Normal breathing market, growing 15%-20% • 12 million affected by OSA in US alone • Most co
Slide 12: Fisher & Paykel's CPAP Systems
Fisher & Paykel’s CPAP Systems Fisher & Paykel has a broad range of CPAP products, including flow generators, humidifiers and masks Products include: HC150 Humidifier • suitable for use with most OSA flow generators • patented ambient tracking system HC220/HC221 Integrated Flow-Generator Humidifier
Slide 13: Mask Systems
Mask Systems • Aclaim2 Nasal Mask – proprietary sliding attachment – bias flow diffuser ¯ less leaks, greater comfort • Oracle™ Oral Mask – proprietary oral interface – no headgear required H
Slide 14: Competitive Advantage
Competitive Advantage ¯ Fisher & Paykel is the pioneer of heated humidification technologies in OSA • Leveraging heated humidification expertise into rapidly growing market – increased penetration of heated humidification in OSA, increased reimbursement • Benefits of integrated flow-generator humidi
Slide 15: CPAP/Obstructive Sleep Apnea FY03 Q2
CPAP/Obstructive Sleep Apnea FY03 Q2 • Revenue growth (USD) +40% on pcp • Increasing acceptance of humidification benefits • Improved Medicare reimbursement from 1 July 02 • Price reductions less significant • Masks increasing in importance H
Slide 16: Neonatal Warmers and CPAP
Neonatal Warmers and CPAP • Radiant Warmers – 400,000 pre-term live births per year in US – warmers required in delivery and NICU – precise and stable temperature control • Infant CPAP System – proprietary bubble CPAP, non- invasive, oscillating pressure – lower risk alternative to ventilation H
Slide 17: Neonatal and Warming FY03 Q2
Neonatal and Warming FY03 Q2 • Revenue growth (USD) +7% on strong pcp • Tender driven, lumpy • Neonatal CPAP now introduced in Australasia and selected European countries H
Slide 18: Research & Development
Research & Development • 120 engineers, scientists, physiologists • Significant new product pipeline for 2003 • Competitive NZ cost base • Integrated product teams • Rapid prototype development • Active clinical research program • 29 US patents, 25 pending * • NZ$3.6M funding over 4 yrs for COPD res
Slide 19: Manufacturing
Manufacturing • Vertically integrated – electronics assembly – injection moulding – motor assembly • ISO 9001; Class 100,000 controlled environment • Ample capacity to grow – 240,000 ft2 facility – expansion of 62,000 ft2 – 100 acres H
Slide 20: Global Presence
Global Presence % of Revenue* • Direct – hospitals, alternate site, home North care dealers America – sales offices in USA/Canada, 49% UK/Ireland, France/Benelux, Germany/Austria, Australia and Other 3% NZ • Distributors Asia – 100 distributors worldwide - 90 Pacific countries 20% Europe • Original
Slide 21: Growth drivers
Growth drivers • Maintain high level of innovation – continue to improve existing product lines – develop complementary product offerings • Target new medical applications – e.g. COPD • Increase international presence H
Slide 22: Revenue Growth USD
Revenue Growth USD 100 CAGR: FY 1999 FY ends 31 90 Core 17.1% FY 2000 March Total 12.7% 80 FY 2001 FY 2002 70 60 US$M 50 CAGR: 6.1% 40 CAGR: 42.4% 30 20 10 CAGR: 31.6% 0 Respiratory OSA Warming/ Other * TOTAL Humidification Neonatal * Other includes distributed and discontinued products H
Slide 23: Operating Results US$ FY03 Q2
Operating Results US$ FY03 Q2 (3 mths) % Revenue US$M %Ìpcp Operating revenue 100% 23.7 +16% Gross profit 67.2% 15.9 +9% SG&A 27.2% 6.4 +8% R&D 6.0% 1.4 +36% Total Operating Expenses 33.2% 7.9 +12% Operating Profit 34.0% 8.1 +6% Profit after Tax 7.3% 1.7 -65% H
Slide 24: Operating Results NZ$ FY03 Q2
Operating Results NZ$ FY03 Q2 (3 mths) % Revenue NZ$M %Ìpcp Operating revenue 100% 50.2 +3% Gross profit 67.2% 33.7 -3% SG&A 27.2% 13.6 -4% R&D 6.0% 3.0 +21% Total Operating Expenses 33.2% 16.7 -1% Operating Profit 34.0% 17.0 -6% Profit after Tax 6.7% 3.4 -71% H
Slide 25: Operating Results US$ FY03 H1
Operating Results US$ FY03 H1 (6 mths) % Revenue US$M %Ìpcp Operating revenue 100% 47.3 +12% Gross profit 67.9% 32.1 +6% SG&A 27.0% 12.8 +10% R&D 5.6% 2.6 +28% Total Operating Expenses 32.6% 15.4 +10% Operating Profit 35.3% 16.7 +0% Profit after Tax 33.4% 15.8 +37% H
Slide 26: Operating Results NZ$ FY03 H1
Operating Results NZ$ FY03 H1 (6 mths) % Revenue NZ$M %Ìpcp Operating revenue 100% 101.1 0% Gross profit 67.9% 68.6 -7% SG&A 27.0% 27.3 -3% R&D 5.6% 5.7 +13% Total Operating Expenses 32.6% 33.0 0% Operating Profit 35.3% 35.7 -12% Profit after Tax 33.4% 33.8 +32% H
Slide 27: Operating Results FY03 Q2
Operating Results FY03 Q2 Three months ended 30 September 02 Margins 100% 34.0% Operating 80% profit 6.0% 60% R&D 27.2% 40% SG&A GM = 67.2% 20% COGS 32.8% H 0%
Slide 28: Balance Sheet
Balance Sheet • Dividend NZ23 cps – NZ fully imputed – Other supplemental NZ4.06 cps • Cash pre-dividend NZ$63M • Inventory NZ$22.3M • DSO 52 days H
Slide 29: Foreign Currency
Foreign Currency • Policy: mix of options and contracts – 100% year 1, 75% years 2 and 3, options only up to 25% years 4 and 5. • US$ represents 80% of NZ export value • Q2 portfolio (USD): – Year 1 100% ) – Year 2 and 3 75% ) average 0.457 NZD:USD – Year 4 and 5 25% ) H
Slide 30: Guidance
Guidance • FY03 revenue on target for US$100M • Q3, Q4 operating margin approx 33% - 34% • Expect total FY03 dividend approx NZ50cps H
Slide 31: Fisher & Paykel Healthcare
Fisher «Paykel HEALTHCARE Fisher &Paykel HEALTHCARE
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