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?