Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — H1 FY2023 Earnings Presentation
45 slides from Fisher & Paykel Healthcare's earnings presentation, Nov 29, 2022
Slide 1: Half Year Results Presentation FY2023
Half Year Results Presentation FY2023 Fisher & Paykel HEALTHCARE For six months ended 30 September 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) Interim Report 2023 and accompanying market releases. Nothing in this presentation should be construed as an inv
Slide 3: Half year business highlights
Half year business highlights CONTINUED 60 build out our anesthesia sales force in Europe and North America. ADVANCED construction of our fifth facility at our first New Zealand campus. ENTERED into conditional agreement for land to construct our second New Zealand campus. COMPLETED ithe constructio
Slide 4: Key half year financial results
Key half year financial results H1FY23 (6 months to 30 September 2022) % of Revenue NZ$M SPCP* acc* Operating revenue 100% 690.6 -23% -27% Hospital operating revenue 64% 438.7 -35% -37% Homecare operating revenue 36% 249.9 10% 4% Gross margin / Gross profit 60% 413.2 -325bps -533bps SG&A 29% (202.3)
Slide 5: Hospital product group
Hospital product group HARDWARE H1 FY23 HOSPITAL REVENUE COMPOSITION iii = | cy 950 System 850 System Airvo 3 AIRVO2 HumiGard coseeseeneee CONSUMABLES Invasive Noninvasive Optiflow™ Optiflow™ Surgical ventilation ventilation nasal high flow anesthesia 9! mHardware ™ Consumables gy Se ad 2, HE H1 FY2
Slide 6: Hospital product group
Hospital product group 97.3M Fisher & Paykel 6 HEALTHCARE
Slide 7: Homecare product group
Homecare product group H1 FY23 HOMECARE REVENUE COMPOSITION _.. HARDWARE myAIRVO2 810System CPAP Therapy/OSA © Home Respiratory Support Hardware Consumables 2 ae & H1 FY22 Homecare revenue composition . Hardware: 18% Consumables: 82% ig Evora Full Evora _ Brevida 7 Fisher &.Paykel HEALTHCARE
Slide 8: Homecare product group
Homecare product group H1FY23 E Full O OF OPERATING te + Strong contribution from @) REVENUE F&P Evora Full following successful launch in the HOMECARE $ 9 ) 5 US REVENUE 24 o M - OSA mask revenue was CONSTANT CURRENCY 4% impacted by reduced new patient starts, due to the limited supply of MASKS eg
Slide 9: Gross Margin
Gross Margin GROSS MARGIN ie (rrr rrrrerrrrrrnny * Gross margin for the half year: 60% - decreased by 325 bps to 59.8% 50% - decreased by 533 bps in constant currency tox * Continued elevated freight costs and air freight ° utilisation impacted constant currency gross margin 50% by approximately ~29
Slide 10: Operating Margin
Operating Margin OPERATING (EBIT) MARGIN Operating expenses 35% * $286.5M, +8% (+3% CC) Operating margin decreased by 1,526 bps 30% | seeeeeseserecsseeess TM ecsee dl eceeeeee (-1,770bps CC) to 18.3% with continued investment in , operating expenses to support COVID-19 driven 25% hardware sales and
Slide 11: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet H1 FY22 Nz$m H1 FY23 Nz$m Operating cash flow 127.5 1.9 Capital expenditure (including purchases of intangible assets) 81.3 124.8 Lease liability payments 6.6 6.7 Free cash flow 39.6 (129.6) FY22 Nz$m H1 FY23 Nz$m Net cash / (debt) cincluding short-term investments) 221.6
Slide 12: Dividend
Dividend « Increased interim dividend by 3% DIVIDEND HISTORY - 17.50 cps + 6.8056 cps imputation 4, credit for NZ residents (gross . dividend of NZ 24.3056 cps) - Fully imputed g - 3.0882 cps non-resident supplementary dividend 2 e a 15 * The company’s dividend 10 reinvestment plan has been 5 Tf I r
Slide 13: Foreign exchange effects
Foreign exchange effects * 45% of operating revenue in US$ (FY22: 49%) and 20% in € (FY22: 17%). Year to 31 March Hedging position for our main exposures FY23 FY24 FY25 FY26 FY27 FY28 FY29- (as at 10 November 2022) FY31+ USD % cover of estimated exposure 90% 80% 65% 55% 50% 25% 5% USD average rate o
Slide 14: Revenue and expenses by currency
Revenue and expenses by currency H1 FY23 (for the 6 months ended 30 September 2022) REVENUE BY CURRENCY COST OF SALES BY CURRENCY OPERATING EXPENSES BY CURRENCY =NZD m#USD BEUR @MXN m Other = NZD USD MEUR @ MXN m@ Other =NZD mUSD BEUR @MXN mOther 14 Fisheré.Paykel HEALTHCARE
Slide 15: Our aspiration
Our aspiration © iS) @ @ @ _ our aspiration: RESPIRATORY cpap HOSPITAL ANESTHESIA HOME SURGICAL Sustainably HUMIDIFICATION THERAPY/OSA RESPIRATORY RESPIRATORY TECHNOLOGIES ‘SUPPORT SUPPORT DOUBLING our constant currency revenue every 5-6 years. SHORT-TERM MEDIUM-TERM LONGER-TERM interpreted as being
Slide 16: Looking ahead
Looking ahead Given the uncertainties outlined in the company’s news release dated 29 November 2022, we are not providing full-year quantitative revenue or earnings guidance at this time. However, we expect H2 FY23 revenue will be higher than H1 FY23 revenue. Hospital product group + Pre-COVID-19 se
Slide 17: Overview
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Slide 18: Healthcare at a glance
Fisher & Paykel Healthcare at a glance Global leader in respiratory humidification devices * 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
Slide 19: ~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 Va Noninvasive Ventilation Invasive Ventilation Hospital Respiratory Support Anesthesia Surgical RMS Applications outside of invasive ventilation 19 Home
Slide 20: Our aspiration
Our aspiration © iS) @ @ @ _ our aspiration: RESPIRATORY cpap HOSPITAL ANESTHESIA HOME SURGICAL Sustainably HUMIDIFICATION THERAPY/OSA RESPIRATORY RESPIRATORY TECHNOLOGIES ‘SUPPORT SUPPORT DOUBLING our constant currency revenue every 5-6 years. SHORT-TERM MEDIUM-TERM LONGER-TERM interpreted as being
Slide 21: Consistent growth strategy
Consistent growth strategy Our inputs Our outputs ancl PROFITAB) Gp Sie ot spusiness IN a Way thar, On, ~ gg ay creat HAHEEr prog SS My 0 Net yan Changing cing ets Vv BVOOOG Market context Spon bua eu peeanig | Othe estarnal aors Fisher & Paykel 21 Ageing population | Technology a: HEALTHCARE
Slide 22: 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 23: High level of innovation and investment in R&D
High level of innovation and investment in R&D * R&D represents 12% of operating ~ revenue*: NZ$84.2M *« Product pipeline includes: - Humidifier controllers - Masks - Respiratory consumables - Flow generators - Compliance monitoring solutions * 492 US patents, 518 US pending, 2140 Rest of World pate
Slide 24: Growing patent portfolio
Growing patent portfolio FISHER & PAYKEL HEALTHCARE US PATENT PORTFOLIO (2008 - 2022) 500 400 300 200 . i I | hdl 2008 2010 2012 2014 2016 2018 2020 2022 mUS Patents m US Patent Applications — Average remaining life of FPH patent portfolio (all countries): 11.3 years* Fisher & Paykel HEALTHCARE
Slide 25: Insert image of products in action
• • Insert image of products in action and or Sales • talking with clinician • •
Slide 26: Strong global presence
Strong global presence * Direct/offices Revenue by Region 6 months to 30 September 2022 - Hospitals, home care dealers - Sales/support offices in North America, Europe, Asia, South America, Middle East and Australasia, 18 distribution centres - ~1,300 employees in 53 countries - Ongoing internationa
Slide 27: Hospital
Slide 28: Impact of changing demographics
Impact of changing demographics Population age and weight both increasing - Global population 60 years+ is expected to more than double over the next 30 years! - 18% of adults are forecast to be obese by 20302 40-50% of healthcare spend is on persons 65 years and older, in OECD countries Low-upper m
Slide 29: Hospital cost breakdown
Hospital cost breakdown 7% Medical devices Other - includes labour, utilities, drugs, supplies, 93% food, depreciation. 29 Source: (2022). The European Medical Technology in Figures. MedTech Europe from diagnosis to cure. Fisher & Paykel https://www.medtecheurope.org/datahub/expenditure/#sources HEA
Slide 30: Lower care intensity = lower cost
Lower care intensity = lower cost $50,000 $40,000 $30,000 $20,000 Mean cost (2008 US$) $10,000 $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 31: 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 3
Slide 32: Optiflow nasal high flow therapy
Optiflow nasal high flow therapy 32 Mechanisms of action Spontaneously breathing patients with or at risk of respiratory compromise Supplemental oxygen Cif required) Reduction Dynamic positive airway : pressure Fisher&.Paykel HEALTHCARE
Slide 33: Optiflow - displacing conventional oxygen therapy
Optiflow - displacing conventional oxygen therapy CONVENTIONAL NON-INVASIVE OXYGEN THERAPY VENTILATION Ma ML i, La by a Low flow nasal prongs Simple face mask Rebreather mask XQ / Optiflow Nasal high flow therapy Fisher&.Paykel 33 HEALTHCARE
Slide 34: 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 35: Clinical practice guidelines: Nasal high flow therapy
Clinical practice guidelines: Nasal high flow therapy Society and recommendations HFNC over COT in hypoxemic ARF HFNC over NIV in hypoxemic ARF HFNC over COT post-extubation HEFNC in high risk and/or obese patients following cardiac or thoracic surgery HFNC over COT during breaks from NIV HFNC or CO
Slide 36: 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 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) DD Sr PH HS KK P GO iw Kh Gh GO GO Sl G
Slide 37: 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% FY FY12 FY13 FY14 FY15 FYI6 FY17 FY18 FY19 FY20 FY21 FY22 New applications consumables: Non-invasive ventilation, C Anesthesia, Surgical Fisher & Paykel 37
Slide 38: 48 Fisher & Paykel
48 Fisher & Paykel HEALTHCARE
Slide 39: 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 40: 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. F&P EVORA NASAL” F&P EVORA FULL-FACE” F&P BREVIDA™ Evora Evora Full Brevida Fisher & Paykel 40 HEALTHCARE
Slide 41: 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 world!” * 6% of US a
Slide 42: Manufacturing and operations
Manufacturing and operations New Zealand * Four buildings: 110,000 m2 / 1,180,000 ft? * Co-location of R&D and manufacturing * Continued earthworks on building 5 * Entered into conditional agreement for additional 105 hectare campus - Tijuana, Mexico * Three buildings: 63,000 m2 / 690,000 ft? Future
Slide 43: Environmental, Social & Governance
Environmental, Social & Governance Our People The Board approved a discretionary profit-sharing payment of $4 million for company employees. Our people have continued to overcome supply chain issues, challenging operational schedules and spikes in absenteeism related to COVID-19. Key Environmental M
Slide 44: 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 2022 30 September 2022 1% m™ New Zealand mw Australia NZ Institutions @ Other Institutions a eorome toe UK) an m Brokers & Retail m Other mRest of World
Slide 45: References
References References 45 (2022). Ageing and health. World Health Organization. httos//Awwww who int/news-room/fact-sheets/detal/agsing-and-health Lobstein T.. &Brinsden, H. (2022, March 10). World Obesity Atlas 2022. World Obesity. Safiiou-Rothschild, C. (2009). ARE OLDER PEOPLE RESPONSIBLE FOR HIGH
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