Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — Deutsche / Craigs NZ Corporate Day (March 2019)
37 slides from Fisher & Paykel Healthcare's conference presentation, Mar 6, 2019
Slide 1: Half Year Results Presentation FY2019
Half Year Results Presentation FY2018 Care by design Half Year Results Presentation FY2019 | Deutsche / Craigs NZ Corporate Day 1 For six months ended 30 September 2018
Slide 2: H1 FY2019 Business Highlights
H1 FY2019 Business Highlights + WELCOMED + AWARDED + ANNOUNCED first major clinical study into the use two Gold Pins at the New Zealand the appointment of Lyndal York as of Optiflow nasal high flow therapy in Design Awards for our F&P InfoSmart Chief Financial Officer and Neville the home web applic
Slide 3: First Half Financial Highlights
First Half Financial Highlights H1 FY2019 (6 months to 30 September 2018) NZ$M PCP^ CC* Record operating revenue 511.3 +12% +8% Record Hospital operating revenue 297.3 +13% +11% Record Homecare operating revenue 211.1 +10% +6% Hospital new applications consumables revenue +24% +22% OSA masks reven
Slide 4: Hospital Product Group
Hospital Product Group H1 FY2019 Respiratory humidification and support 58% OF OPERATING REVENUE H1 FY2019 HOSPITAL OPERATING REVENUE 13% NZ$ 11% CONSTANT CURRENCY Surgical technologies • New applications consumables* made up 60% of H1 FY2019 Hospital consumables revenue, 55% in H1 NEW APPLICATIONS*
Slide 5: Homecare Product Group
Homecare Product Group H1 FY2019 CPAP therapy / Obstructive Sleep Apnea (OSA) 41% OF OPERATING REVENUE H1 FY2019 HOMECARE OPERATING REVENUE 10% NZ$ 6% CONSTANT CURRENCY Home respiratory support MASKS REVENUE 6% NZ$ 2% CONSTANT CURRENCY 5
Slide 6: First Half Operating Results
First Half Operating Results H1 FY2019 (6 months to 30 September 2018) % of Revenue NZ$M PCP^ CC* Operating revenue 100% 511.3 +12% +8% Cost of sales 33.2% 169.7 +9% +8% Gross profit 66.8% 341.6 +13% +9% Other income (R&D grant) 2.5 0% 0% SG&A 31.2% 159.4 +11% +8% R&D 8.9% 45.7 -3% -3% Total opera
Slide 7: Gross Margin Improvements
Gross Margin Improvements GROSS MARGIN 70% 60% • Gross margin for the first half: 50% − increased by 77 bps to 66.8% − increased by 22 bps in constant currency 40% • Primarily driven by favourable product mix 30% • Offset by OSA price declines 20% 10% 0% 2014 2015 2016 2017 2018 1H 2019 Long Term Gr
Slide 8: Operating Margin
Operating Margin OPERATING (EBIT) MARGIN Research & Development expenses 30% • NZ$45.7M 25% • -3% (-3% cc) compared to 1H FY18 • Higher one-off costs in the prior half 20% relating to product introductions and patent renewal fees 15% • Underlying rate of R&D increasing Selling, General & Administrat
Slide 9: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet H1 FY2019 (for the 6 months ended 30 September 2018) NZ$M Operating cash flow (+14%) 93.4 Capital expenditure (including purchases of intangible assets) 61.1 Depreciation and amortization 20.9 H1 FY2019 (as at 30 September 2018) NZ$M Net cash 14.8 Total equity 776.7 Total
Slide 10: Gearing and Dividend
Gearing and Dividend • Target gearing ratio* of +5% to -5% debt to debt plus equity − Gearing ratio at 30 September 2018 was GEARING* -2.0% • Increased interim dividend by 11%: − 9.75 cps + 3.792 cps imputation credit for NZ residents (gross dividend of NZ 13.542 cps) − Fully imputed − 1.721 cps non
Slide 11: Foreign Exchange Effects
Foreign Exchange Effects • 50% of operating revenue in USD (FY18: 51%) and 19% in €. Year to 31 March Hedging position for our main exposures (as at 26th November 2018) FY19 FY20 FY21 FY22 FY23 FY24 FY25-27 USD % cover of expected exposure 95% 75% 50% 10% - - - USD average rate of cover 0.681 0.668
Slide 12: Profit & Loss by Currency
Profit & Loss by Currency 1H FY2019 (for the 6 months ended 30 September 2018) REVENUE BY CURRENCY COST OF SALES BY CURRENCY OPERATING EXPENSES BY CURRENCY 1% 7% 20% 9% 30% 3% 0% 42% 46% 50% 12% 0% 35% 19% 26% NZD USD EUR MXN Other NZD USD EUR MXN Other NZD USD EUR MXN Other 12
Slide 13: Overview
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Slide 14: Fisher & Paykel Healthcare at a Glance
Fisher & Paykel Healthcare at a Glance Global leader in respiratory humidification Global presence devices 37 Our people are • Medical device manufacturer with leading 294 located in 37 positions in respiratory care and obstructive of our people in Europe countries sleep apnea 1,314 of our people in
Slide 15: ~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 “NEW APPLICATIONS” Applications outside of invasive ventilation 15
Slide 16: Our Aspiration
Our Aspiration OUR ASPIRATION: Sustainably DOUBLING our constant currency revenue every 5-6 years. 16
Slide 17: Markets & Products
Markets & Products • Hospital REVENUE BY PRODUCT GROUP 12 MONTHS TO 30 SEPTEMBER 2019 − Heated humidification 1% − Respiratory care − Neonatal care − Surgery • Homecare 41% − Masks − Flow generators − Data management tools − Respiratory care in the home Recurring items, consumables and Hospital acce
Slide 18: Impact of Changing Demographics
Impact of Changing Demographics • Population age and weight both US POPULATION OVER AGE 65 (MILLIONS) increasing 100 − US population 65 years+ to grow 90 ~80% over next 20 years1 80 − US males 60 - 74 years, average weight increased 70 0.4 kg/year since 19602 60 • 60% of US healthcare cost is after
Slide 19: Hospital Cost Breakdown
Hospital Cost Breakdown 6% Medical devices Other – includes labour, utilities, drugs, supplies, 94% food, depreciation. 19 Source: Estimates of Medical Device Spending in the United States, Donahoe, G and King, G, June 2014
Slide 20: 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 20 Source: Anand A Dalal, La
Slide 21: Hospital
Hospital 21
Slide 22: 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 22
Slide 23: Optiflow - Displacing Conventional Oxygen Therapy
Optiflow - Displacing Conventional Oxygen Therapy CONVENTIONAL NON-INVASIVE OXYGEN THERAPY VENTILATION 23
Slide 24: 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 intubation5 • REDUCED intubation10 • REDUCED re-intubation6, 7, 8 • REDUCED length of stay11 • REDUCED bilevel ventilation7 • REDUCED respiratory distress12 • REDUCED nursing
Slide 25: Optiflow NHF - A Growing Body of Clinical Evidence
Optiflow NHF - A Growing Body of Clinical Evidence NASAL HIGH FLOW CLINICAL PAPERS PUBLISHED ANNUALLY 225 200 175 150 125 100 75 50 25 0 Adult Neonatal & Paediatric 25 Source: PubMed
Slide 26: 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 • New applications consumables now make up 59% of Hospital consumables revenue, up from 50% in FY2016 a
Slide 27: Homecare
Homecare 27
Slide 28: Obstructive Sleep Apnea
Obstructive Sleep Apnea • 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 co
Slide 29: Revolutionary Masks
Revolutionary Masks • Market leading mask technology • Unique, patented designs • Mask Matters Most − Masks are key to compliance 29 F&P ESON 2™ F&P SIMPLUS™ F&P BREVIDA™
Slide 30: 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 US17 • 6% of US adul
Slide 31: 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$45.7M • Product pipeline includes: − Humidifier controllers − Masks − Respiratory consumables − Flow generators − Compliance monitoring solutions • 186 US patents, 385 US pending, 870 ROW, 912 ROW pending† *
Slide 32: Growing Patent Portfolio
Growing Patent Portfolio FISHER & PAYKEL HEALTHCARE US PATENT PORTFOLIO (2008 – 2018) 450 400 350 300 250 200 150 100 50 0 2008 2010 2012 2014 2016 2018 US Patents US Patent Applications Average remaining life of FPH patent portfolio (all countries): 12 years* 32 * As at 31 March 2018
Slide 33: Manufacturing & Operations
Manufacturing & Operations • Vertically integrated − COGS improvements: Mexico, lean manufacturing, supply chain • Ample capacity to grow Auckland, New Zealand • Three buildings: 82,000 m2 / 885,000 ft2 total • 100 acres / 40 hectares land • Fourth building underway Tijuana, Mexico • 18,000 m2 / 200
Slide 34: Strong Global Presence
Strong Global Presence REVENUE BY REGION • Direct/offices 6 MONTHS TO 30 SEPTEMBER 2018 − Hospitals, home care dealers − Sales/support offices in North 4% America, Europe, Asia, South 21% America, Middle East and Australasia, 15 distribution centres 47% − More than 950 staff in 29 countries − Ongoin
Slide 35: 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 30 SEPTEMBER 2018 30 SEPTEMBER 2018 2% 14% 4% 4% 25% 5% 37% 23% 59% 27% NZ Institutions Other Institutions Brokers & Retail Other New Zealand Australia North America
Slide 36: Consistent Growth Strategy
Consistent Growth Strategy 36
Slide 37: 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 Interim Report and accompanying market releases. Nothing in this presentation should be cons
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