Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — FY2023 Earnings Presentation
49 slides from Fisher & Paykel Healthcare's earnings presentation, May 26, 2023
Slide 1: Full Year Results Presentation FY2023
Full Year Results Presentation FY2023 1 For the year ended 31 March 2023
Slide 2: Important notice: Disclaimer
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 2023 and accompanying market releases. Nothing in this presentation should be construed as an invi
Slide 3: Full year business highlights
Full year business highlights the lives of ~20 million regulatory clearance in the United patients around the world States for Airvo™ 3 our online Education Hub for development of our new clinicians in the United States manufacturing facility in China Overseas Investment Office expansion of our Anes
Slide 4: Key second half financial results
Key second half financial results H2 FY23 (6 months to 31 March 2023) % of Revenue NZ$M PCP^ CC* Operating revenue 100% 890.5 14% 12% Hospital operating revenue 66% 584.8 9% 7% Homecare operating revenue 34% 303.9 25% 22% Hospital new applications consumables revenue 14% 13% OSA masks revenue 28%
Slide 5: Hospital product group
Hospital product group HARDWARE FY23 HOSPITAL REVENUE COMPOSITION 15% CONSUMABLES Invasive Noninvasive OptiflowTM OptiflowTM Surgical ventilation ventilation nasal high flow anesthesia 85% Hardware Consumables FY22 Hospital revenue composition Hardware: 27% Consumables: 73% 5
Slide 6: Hospital product group H2 FY23
Hospital product group H2 FY23 HOSPITAL OPERATING REVENUE • Hospital consumables moving to more stable $584.8M NZ$ 9% ordering patterns CONSTANT CURRENCY 7% • New applications consumables* made up NEW APPLICATIONS 72% of H2 FY23 Hospital CONSUMABLES NZ$ 14% consumables revenue, 71% in H2 FY22 REVENU
Slide 7: Homecare product group
Homecare product group FY23 HOMECARE REVENUE COMPOSITION HARDWARE 14% CONSUMABLES CPAP Therapy/OSA Home Respiratory Support 86% Hardware Consumables FY22 Homecare revenue composition Hardware: 16% Consumables: 84% 7
Slide 8: Homecare product group H2 FY23
Homecare product group H2 FY23 HOMECARE OPERATING REVENUE • Almost full year of F&P $303.9M NZ$ 25% Evora Full has contributed significantly to the strong CONSTANT CURRENCY 22% OSA mask revenue • OSA flow generator MASK revenue grew 22% in 2H REVENUE NZ$ 28% FY23 as raw material CONSTANT CURRENCY 24
Slide 9: Gross Margin
Gross Margin GROSS MARGIN 70% • Gross margin for the full year: 60% − decreased by 325 bps to 59.4% 50% − decreased by 369 bps in constant currency • Continued elevated freight costs impacted constant 40% currency gross margin by approximately 230 basis points compared to pre-COVID-19 rates for the
Slide 10: Operating Margin
Operating Margin OPERATING (EBIT) MARGIN Operating expenses 40% • $606.2M, +11% (+7% CC) 35% • Operating margin decreased by 905bps (-944bps CC) to 21% with continued investment in 30% operating expenses to support COVID-19 driven 25% hardware sales and accelerate future product pipeline 20% Researc
Slide 11: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet FY22 NZ$M FY23 NZ$M Operating cash flow 324.3 238.2 Capital expenditure (including purchases of intangible assets) (169.8) (211.3) Lease liability payments (14.0) (14.4) Free cash flow 140.5 12.5 FY22 NZ$M FY23 NZ$M Net cash / (debt) (including short-term investments) 221
Slide 12: Dividend
Dividend DIVIDEND HISTORY • Increased final dividend by 2% 45 − 23.0 cps + 8.94 cps imputation 40 credit for NZ residents (gross 35 dividend of NZ 31.94 cps) 30 Dividend (CPS) − Fully imputed 25 − 4.06 cps non-resident 20 supplementary dividend 15 • Total dividend for the year increased 10 by 3% to
Slide 13: Foreign exchange effects
Foreign exchange effects FY22 FY23 Change Reconciliation of Constant Currency to Reported Revenue NZ$M NZ$M NZ$M Revenue (constant currency) 1,645.1 1,497.7 (147.4) Spot exchange rate effect 2.6 79.9 77.3 Foreign exchange hedging result 39.3 (7.5) (46.8) Balance sheet revaluation (5.3) 11.0 16.3 Tot
Slide 14: Outlook FY24
Outlook FY24 Operating Revenue Guidance • Guidance assumptions result in: • operating revenue of approximately $1.70 billion at May 2023 exchange rates*; and • approximately similar revenue growth rates for Hospital and Homecare product groups. Hospital hardware sales are difficult to predict. We ha
Slide 15: Key Financials
Key Key Financials Financials 15
Slide 16: Key full year financial results
Key full year financial results FY23 (12 months to 31 March 2023) % of Revenue NZ$M PCP^ CC* Operating revenue 100% 1,581.1 -6% -9% Hospital operating revenue 65% 1,023.4 -15% -18% Homecare operating revenue 35% 553.8 18% 13% Hospital new applications consumables revenue -3% -6% OSA masks revenue
Slide 17: Hedging cover
Hedging cover • 45% of operating revenue in US$ (FY22: 49%) and 20% in € (FY22: 18%). Year to 31 March Hedging position for our main exposures FY29- FY24 FY25 FY26 FY27 FY28 (as at 12 May 2023) FY31+ USD % cover of estimated exposure 85% 70% 60% 50% 30% 5% USD average rate of cover 0.659 0.623 0.608
Slide 18: Revenue and expenses by currency
Revenue and expenses by currency FY23 (for the year ended 31 March 2023) REVENUE BY CURRENCY COST OF SALES BY CURRENCY OPERATING EXPENSES BY CURRENCY 1% 5% 17% 11% 33% >0% 3% 37% 10% 45% 48% 1% 44% 25% 20% NZD USD EUR MXN Other NZD USD EUR MXN Other NZD USD EUR MXN Other 18
Slide 19: Overview
r ; Overview 19
Slide 20: 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 21: ~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 Noninvasive Hospital Home Respiratory Obstructive Sleep Respiratory Support Anesthesia Support Apnea Ventilation Ventilation Infant Care Surgical
Slide 22: Our aspiration
Our aspiration OUR ASPIRATION: Sustainably DOUBLING our constant currency revenue every 5-6 years. 22 The image above is an illustration of the company’s long-term growth aspirations. It is not a graph and should not be interpreted as being indicative of levels of revenue or profitability in the sho
Slide 23: Consistent growth strategy
Consistent growth strategy 23
Slide 24: 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 25: High level of innovation and investment in R&D
High level of innovation and investment in R&D • R&D represents 11% of operating revenue*: NZ$174.3M • Product pipeline includes: − Humidifier controllers − Masks − Respiratory consumables − Flow generators − Compliance monitoring solutions • 522 US patents, 534 US pending, 2,329 Rest of World paten
Slide 26: Growing patent portfolio
Growing patent portfolio FISHER & PAYKEL HEALTHCARE US PATENT PORTFOLIO (2008 – 2023) 500 Average 400 remaining life of FPH patent portfolio (all 300 countries): 11.2 years* 200 100 0 2008 2010 2012 2014 2016 2018 2020 2022 US Patents US Patent Applications 26 * As at 31 March 2023
Slide 27: 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 28: Strong global presence
Strong global presence • Direct/offices Revenue by Region 12 months to 31 March 2023 − Hospitals, home care dealers 5% − Sales/support offices in North America, Europe, Asia, South America, Middle East and 25% Australasia, 18 distribution centres 43% − ~1,300 employees in 53 countries − Ongoing inte
Slide 29: Hospital
rc Sa ds Hospital HEALTHCARE
Slide 30: Impact of changing demographics
Impact of changing demographics Population age and weight both increasing Global population over age 65 1,800 (Millions)* − Global population 60 years+ is expected to more than double over the next 30 years1 1,600 − 18% of adults are forecast to be obese by 1,400 20302 1,200 40-50% of healthcare spe
Slide 31: Hospital cost breakdown
Hospital cost breakdown 7% Medical devices Other – includes labour, utilities, drugs, supplies, 93% food, depreciation. Source: (2022). The European Medical Technology in Figures. MedTech Europe from diagnosis to cure. 31 https://www.medtecheurope.org/datahub/expenditure/#sources
Slide 32: 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 32 Source: Anand A Dalal, La
Slide 33: 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 33
Slide 34: Mechanisms of action
Optiflow nasal high flow therapy Mechanisms of action Spontaneously breathing patients Respiratory support with or at risk of respiratory compromise Reduction Dynamic of positive dead airway space pressure Airway Patient hydration comfort Supplemental oxygen (if required) 34
Slide 35: Optiflow - displacing conventional oxygen therapy
Optiflow - displacing conventional oxygen therapy CONVENTIONAL NON-INVASIVE OXYGEN THERAPY VENTILATION Low flow nasal prongs Simple face mask Rebreather mask ~6million Estimated patients were treated with our Nasal high flow therapy Optiflow nasal high flow therapy over the past year 35
Slide 36: 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 37: Opportunity for Optiflow therapy across the hospital
Opportunity for Optiflow therapy across the hospital Areas in the hospital that provide some form of respiratory support to patients: • Medical Intensive Care Units • Surgical Intensive Care Units • Emergency Departments (ER) • Floor/Ward Case study of well penetrated hospital network* Optiflow Usag
Slide 38: Hardware Utilisation v Patients Treated
Hardware Utilisation v Patients Treated Hypothetical example 100 bed ED, seeing 100k patients a year. Assume 20% of all patients visiting this ED require some form of respiratory support and the ED’s protocol would result in 5% of those patients requiring Optiflow therapy (i.e. 1,000 patients a year
Slide 39: Clinical practice guidelines: Nasal high flow therapy
Clinical practice guidelines: Nasal high flow therapy SUPPORTING CLINICAL EMERGENCY PRACTCE GUIDELINES DEPARTMENT ICU/HDU RESPIRATORY GENERAL Primary support ESICM, ERS, SSC, AARC, MEDICAL ACP, TSANZ, WHO Primary support ESICM, ERS POST-OPERATIVE Pre-escalation support/ ESICM Peri-intubation Post-ex
Slide 40: 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 600 865 clinical papers 500 on NHF signifies the high level of clinical 400 interest in the 300 therapy 200 100 0 Adult Neonatal & Pediatric Source: PubMed 40
Slide 41: 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% -10% FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 New applications consumables: Non-invasive ventilation, Optiflow, Anesthesia, Surgica
Slide 42: Homecare
Homecare 42
Slide 43: 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 44: Mask matters most
Mask matters most • Masks are key to compliance • Unique, patented designs • Released our new Evora™ Full OSA mask in the United States. 44
Slide 45: 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 world6 • 6% of US ad
Slide 46: 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 • Received Overseas Investment Office approval for the purchase of land in Karaka for our second New Zealand campus Tijuana, Mexico • Thre
Slide 47: Environmental, Social & Governance
Environmental, Social & Governance Our People Community and Volunteer Sustainable Procurement Sustainability disclosures Groups and indices The Board approved a We are proud of the community FY23 Highlights: We participate annually in a suite of well- groups supported through the respected sustainab
Slide 48: 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 2023 31 March 2023 1% 1% 5% 17% 4% 21% 9% 34% 15% 61% 32% New Zealand Australia North America UK NZ Institutions Other Institutions Europe (ex UK) Asia Broke
Slide 49: References
References References 1. (2022). Ageing and health. World Health Organization. https://www.who.int/news-room/fact-sheets/detail/ageing-and-health 2. Lobstein, T., & Brinsden, H. (2022, March 10). World Obesity Atlas 2022. World Obesity. 3. Safiliou-Rothschild, C. (2009). ARE OLDER PEOPLE RESPONSIBLE
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