F&P  Healthcare gets a shot in the arm (it seems) as Covid-19 reappears in different guises

The  emergence of   new Covid-19 variants    has  sent   shock  waves  around  the  world,  even  in  countries    with  high  rates  of  vaccination.  In  the  US,  with  50%  of  the  population vaccinated,  Florida (for  example) has   had  10,000 cases    in   a day.

But while Covid in its different guises has  done  no  favours for the  global economy,  it has  possibly been a shot in the arm for one  of  New Zealand’s companies,  Fisher  & Paykel   Healthcare.  In  its  last financial  year the company’s net profit surged  by  a  remarkable 82%  to  $524m,  largely  because  of the  demand for  its  Optiflow product and  Airvo systems  at  the  height of the pandemic.

F&P  Healthcare  has  become  renowned for   its  products in  the  health  field,  and  last year  its Optiflow  technology  treated  an  astonishing  7m patients.

But as   the  Covid  pandemic  appeared   to be  loosening  its grip,  the  expectation   had  been   that demand for F&P  Healthcare’s hi-tech products would fall   back.  That  was  the   rationale  for  the  market  knocking   down  F&P Healthcare’s  share price by 15% soon  after  it  had  announced  its  result   in  May – a  result  which, because it was 82%  up  on  its  previous  best,  might have been  expected to  boost its share price. 

At   that  point  it  would have taken  some  kind  of  second   sight  to  have  anticipated  another   wave  of  the  Covid-19  virus.  But    now  it  has  happened and,  almost  certainly,  the  staff   at  F&P Healthcare’s  manufacturing  units  have  been working similar   hours to  those  they were working last  year ( rewarded when  the  board decided  to  pay  out  a  bonus of, wait  for it, $29m  to  the  company’s  workers).

Next  week,  the  company  is   holding  its  annual  meeting in Auckland  and  there   will  be   keen  interest  in  how   it is  progressing,  not  just  from  investors  but also from  the  broader  community.

F&P  Healthcare   has  become  a  flagbearer  for  NZ’s  hi-tech  industry, now one  of our biggest as  measured by foreign  exchange  earnings.  The   bulk  of its  operating  revenue  last year  of $1.97bn   came  from  overseas markets.

Managing  director  Lewis  Gradon  said  in  May the unprecedented result was driven by the Hospital product group, which includes Optiflow and Airvo systems used to deliver nasal high flow therapy.

“Sales of our Hospital hardware and consumables have continued to track COVID-19 hospitalisation surges in countries around the world,” he said.

Revenue for the hospital product group was $1.5bn, an increase of 87% over the previous financial year. Hospital products made up 76% of the company’s operating revenue.

Although COVID-19 restrictions impacted sleep clinics and reduced OSA diagnosis rates, revenue for the Homecare product group was $460m, an increase of 2% over the previous year, or 4% in constant currency.

What   the  Covid  pandemic  has  made  plain is  the  value  of   the  Optiflow   product  in   treating  respiratory   illness  patients.  The   company reported in  May that its hospital revenue

“… continues to remain variable with higher volumes of hospital hardware and consumables to locations with hospitalisation surges and an ongoing shift towards Optiflow nasal high flow therapy”.

The company also said  the pre-Covid-19 trend towards more usage of nasal high-flow therapy for general respiratory support was expected to continue.

One of the  consequences of the  company achieving  a  record profit  last year was its decision to  commit $20m to establish the Fisher & Paykel Healthcare Foundation. The Foundation’s charitable purposes include

“… supporting and funding health research and programmes that improve access to healthcare, supporting environmental protection initiatives and promoting awareness of opportunities in science, technology, engineering and mathematics”.

The value of its total donations for the year, including product donations, was $26m.

Surely  an example  for  other successful companies to  follow?

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