Fisher & Paykel Healthcare Delivers Record Full Year Result, Increases Dividend

Fisher & Paykel Healthcare Corporation Limited today reported record net profit after tax of NZ$113.2 million for the full year, an increase of 17% over the prior year. 

Operating revenue was also a record, at NZ$672.3 million, 8% above the prior year or 13% growth in constant currency. Operating profit increased by 19% to NZ$170.1 million. Constant currency operating profit grew a substantial 57%.

The company, which provides respiratory and acute care (RAC) systems and products for the treatment of obstructive sleep apnea (OSA), indicated in November that it expected net profit after tax for the full year to be approximately NZ$105 million to NZ$110 million.

Chief Executive Officer Michael Daniell said “We have exceeded our earnings guidance provided in November as a result of robust revenue growth in both major product groups, a continuation of gross margin expansion and through operating leverage, and despite a $26.7 million reduction in foreign exchange hedging gains compared to the prior year.”

The company’s directors have approved an increased fully imputed final dividend of 8.0 cents per ordinary share, an increase of 14% on the previous year.

“We are pleased with our record results, which demonstrate the success of our consistent growth strategy. Our medical devices are designed to increase the effectiveness and efficiency of care and we estimate that our products were used in the treatment of more than 10 million patients during the year” said Mr Daniell.

Each of the company’s major product groups, RAC and OSA, reported record operating revenue and 14% growth in constant currency. RAC product group revenue grew 9% to NZ$368.2 million and OSA product group revenue grew 8% to NZ$291.1 million.

The proportion of the company’s revenue generated from recurring items, such as consumables and accessories, continued to increase and accounted for 81% of core operating revenue.

“We are particularly encouraged by the continuing robust revenue growth, 26% in constant currency, from products used in applications outside our traditional invasive ventilation market.  Those products, which include our Optiflow and AIRVO systems, now account for almost half of our RAC consumables revenue.

“Last week a very positive clinical trial result was published in the New England Journal of Medicine. The randomised controlled trial, which included 310 patients and was conducted in 23 intensive care units in France and Belgium, found a significant reduction in mortality for acute hypoxemic respiratory failure patients treated with Optiflow nasal high flow therapy compared to standard oxygen therapy or noninvasive ventilation.

“Our range of masks used in the treatment of OSA continue to perform strongly. They have been a key contributor to the excellent growth in our OSA product group, with mask constant currency revenue up 22% compared to the prior year,” commented Mr Daniell.

The increased final dividend of 8.0 cents per share, carrying full New Zealand imputation credit, will be paid on 10 July 2015. The dividend reinvestment plan (DRP), under which eligible shareholders can elect to reinvest all or part of their cash dividends in additional shares, will again be made available in respect of the 2015 final dividend. The DRP will be offered without a discount in respect of the 2015 final dividend payment.

The company’s directors have reviewed the company’s gearing and dividend policies and have established a revised target debt to debt plus equity ratio in the range of +5% to -5% to support business growth and the operation of its foreign currency hedging policy. The company now expects that a dividend pay-out ratio of approximately 70% of net profit after tax will be appropriate to achieve and maintain that target gearing.

The company’s ongoing improvement in gross margin resulted in a a 443 basis point increase, in constant currency, over the prior year, due to favourable product mix, logistics and manufacturing improvements and increased volume from its Mexico manufacturing facility.

Investment in research and development (R&D) increased and R&D expenses grew by 20% to NZ$65.0 million, representing 9.7% of operating revenue.  “The recent release of our updated AIRVO flow generator system with new breathing tube technology, a new nasal cannula range and portable power supply is the first of a number of new products to be launched over the next 18 months,” said Mr Daniell.

The company also outlined changes to its distribution arrangements for its hospital respiratory care products in the United States. From 19 July 2015, Fisher & Paykel Healthcare will assume direct responsibility for sales and support of its extensive portfolio of respiratory care products in the US.

“Following the recent acquisition of CareFusion by Becton Dickinson, we believe the time is right to move to direct responsibility for our US respiratory product sales, as we have previously successfully implemented in our other major markets. We have enjoyed a longstanding relationship with CareFusion and are now working with them to ensure a smooth transition for our customers,” said Mr Daniell.

Fisher & Paykel Healthcare has established an expanded distribution centre in the US and is doubling the size of its US hospital sales and support team.

“The investment we will be making over the next six months will ensure that we have the resources in place to serve our hospital customers and to better promote the benefits of our innovative respiratory care products. We expect that the specialised sales representative focus on Fisher & Paykel Healthcare products will support an increase in revenue growth over time, particularly in non-invasive therapies such as Optiflow. An inventory sell down by our current distributors will have a temporary effect on RAC revenue growth in the first half”, said Mr Daniell.

Outlook for FY2016

“We continue to focus on our strategy of continually improving our products, serving more patient groups, extending our range of products and growing our international presence.  We believe that this strategy will continue to deliver robust revenue growth in the current year.

“At current exchange rates we expect full year operating revenue to be approximately NZ$750 million and net profit after tax to be approximately NZ$125 million to NZ$130 million,” concluded Mr Daniell.

Result highlights:

  • 17% growth in net profit after tax to a record NZ$113.2 million
  • Operating profit increased by 19% to NZ$170.1 million, 57% growth in constant currency
  • Increase in the final dividend to 8.0 cps, an increase of 14%
  • 8% growth in operating revenue to a record NZ$672.3 million, 13% growth in constant currency.
  • 9% growth in RAC operating revenue, 14% in constant currency.
  • New applications consumables operating revenue grew 26% in constant currency, accounting for 46% of RAC consumables revenue.
  • 8% growth in OSA operating revenue, 14% in constant currency.
  • Strong performance from OSA masks, 22% growth in constant currency.
  • Gross margin improvement of 252 basis points for the full year, 443 bps in constant currency.
  • Investment in R&D increased by 20% to NZ$65.0 million, representing 9.7% of operating revenue.

About Fisher & Paykel Healthcare

Fisher & Paykel Healthcare is a leading designer, manufacturer and marketer of products and systems for use in respiratory care, acute care, surgery and the treatment of obstructive sleep apnea.  The company’s products are sold in over 120 countries worldwide.  For more information about the company, visit our website

Full Financial Statements and Commentary

Attached to this news release are condensed NZ dollar financial statements and commentary.  For convenience the income statement has been translated into US dollars.  The US dollar financial statement is non-conforming financial information, as defined by the NZ Financial Markets Authority.

The company’s financial statements for the year ended 31 March 2015 and the comparative financial information for the year ended 31 March 2014 have been prepared under the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS). 

A constant currency analysis is also included.  A constant currency income statement is prepared each month to enable the board and management to monitor and assess the company’s underlying comparative financial performance without any distortion from changes in foreign exchange rates. The constant currency data provided is an estimate of the changes in the main income statement items after excluding the impact of movements in foreign exchange rates, hedging results and balance sheet translations. The data is based on the NZ dollar income statements for the relevant periods which have all been restated at the budget foreign exchange rates for the 2015 financial year.

The constant currency analysis is non-conforming financial information, as defined by the NZ Financial Markets Authority, and has been provided to assist users of financial information to better understand and track the company’s comparative financial performance without the impacts of spot foreign currency fluctuations and hedging results and has been prepared on a consistent basis each year. The company’s constant currency income statement framework can be found on the company’s website at

Full Year Results Conference Call

Fisher & Paykel Healthcare will host a conference call today to review the results and to discuss the outlook for the 2016 financial year.  The conference call is scheduled to begin at 10:00am NZST, 8:00am AEST (6:00pm USEDT) and will be broadcast simultaneously over the Internet.

To listen to the webcast, access the company’s website at  Please allow extra time prior to the webcast to visit the site and download the streaming media software if required.  An online archive of the event will be available approximately two hours after the webcast and will remain on the site for two weeks.

To attend the conference call, participants will need to dial in to one of the numbers below at least 5 minutes prior to the scheduled call time and identify yourself to the operator.  When prompted, please quote the conference code of: 34898546.

New Zealand Toll Free 0800 446 046       USA Toll Free 1800 742 9301
Australia Toll Free 1800 725 000   Hong Kong Toll Free 800 906 648
United Kingdom Toll Free 0808 234 1369   International +61 2 8373 3610

An audio replay of the conference call will be available approximately 2 hours after the call and will be accessible for two weeks by dialing one of the numbers below.  When prompted please enter the conference code of: 34898546.

New Zealand Toll Free 0800 453 213       USA Toll Free 1855 452 5696
Australia Toll Free 1800 153 898   Hong Kong Toll Free 800 963 117
United Kingdom Toll Free 0808 234 0072   International +61 2 9003 4211

Contact: Michael Daniell MD/CEO on +64 9 574 0161 or Tony Barclay CFO on +64 9 574 0119.