Fisher & Paykel Healthcare’s $880m sales of hospital hardware over the past two years deserves NZ’s plaudits

New Zealand’s biggest company by  capitalisation  on the  NZX, Fisher & Paykel Healthcare which  sells  its  products in  120  countries, has  supplied $880 million of hospital hardware over the past two years.  That’s the equivalent of about 10 years’ hardware sales before COVID-19.

This  remarkable performance deserves  the  plaudits  of  all New  Zealanders.

And  as a  company  which spends nearly  10%  of  its revenue  on research it has  new products coming  on the market.

CEO Lewis  Gradon  (surely he  deserves a knighthood) says the growing body of evidence supporting the use of nasal high flow and  other respiratory therapies shows that its products have a clear role to play in improving care and outcomes beyond COVID-19 patients.

“We have a proven fifty-year track record of changing clinical practice and now we have the additional benefit of customers already having our hardware and clinical experience with its use.”

Following an unprecedented 2021 financial year, the company’s performance was once again strong, with operating revenue 33% above the pre-COVID-19 2020 financial year. Total operating revenue for the 2022 financial year was $1.68 billion, down 15% or 14% in constant currency.

Net profit after tax was $376.9 million, a 28% decline from the previous financial year, or a 30% decline in constant currency.

In the  past  12  months  $154m was invested  into research and development and the  company brought a number of exciting new products to the market.

“Today, we announced the launch of Optiflow Switch™ and Optiflow Trace™ nasal high flow interfaces, two new products that allow easier use of our Optiflow therapy in anesthesia. We have accelerated our investment in a specialist sales force to take advantage of this opportunity, and we plan to continue investing in this area in the coming years,”  Gradon said.

The company also announced the launch of its revolutionary new Airvo™ 3 device, which is designed to facilitate high flow therapy for more patients in more areas of the hospital. The Airvo 3 incorporates the company’s OptiO2™ closed-loop system for targeted oxygen delivery and an integrated battery to enable therapy while a patient moves through different areas of the hospital.

F&P Healthcare’s share price hit a peak of $37.68 in August 2020 on the back of Covid-19 demand for its products. It has since drifted back to  trade  about $20.45.

According to World Heath Organisation data, the rate of Covid infection around the world has fallen sharply since January.

In the Hospital product group, which includes humidification products used in respiratory, acute and surgical care, the company’s revenue was $1.21b, a decline of 19%.

In the Homecare product group, which includes products used in the treatment of obstructive sleep apnea (OSA) and respiratory support in the home, revenue was $469.5m, a 1 %  increase over the previous financial year.

Gross margin decreased by 59 basis points for the year to 62.6%, or a 147 basis points decline in constant currency terms.

High air-freight use and elevated freight rates continued to weigh overall compared to pre-Covid-19 rates, impacting constant currency gross margin by about 240 basis points.

“During the second half of the 2022 financial year, there was a sharp peak for our hospital consumables sales in December, followed by a low in February,” the company said.

Hospital consumables subsequent trading to date was exhibiting a slow recovery from February.

The company did not give an earnings guidance for the current year given “ongoing uncertainties regarding our customers’ stockholding choices”.

Gradon said the  last several years have been remarkable for the company.

“Above all, we showed our customers they can rely on Fisher & Paykel Healthcare and that we’re doing all we can to create the best-possible outcomes for patients. We want to thank our customers, suppliers, clinical partners and employees for their support. We look forward to what’s in store for the years ahead.”  

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