Health Check: Fisher & Paykel Healthcare defies the hospital cost crunch with record revenue
Fisher & Paykel Healthcare posts record full-year revenue and shrugs off the US tariff threat
Truscreen signs Indian distributor
Renerve is off to the Middle East
New Zealand-based medical devices supplier Fisher & Paykel Healthcare (ASX:FPH) has shrugged off hospital budgetary pressures to post record revenue for the year to March of NZ$2.2 billion ($1.98 billion), 16% higher.
Net profit surged 43%, to NZ$377 million.
Assuming currencies remain constant, management has guided to current-year revenue of NZ$2.15 billion to NZ$2.25 billion.
Net profit is expected to come in at NZ$390-$440 million.
Crucially, this includes a 50-basis point impact of US tariffs on hospital products sourced from New Zealand.
'Our actions in response to any trade policy developments will be driven by our longstanding approach, which is to mitigate cost increases," CEO Lewis Gradon says.
This will be "by identifying and implementing continuous improvements and efficiency gains across all of our business processes."
The $19 billion market cap FPH's products cover respiratory and healthcare.
These include humidifiers, nasal cannulas and devices for high-flow therapy, anaesthesia and laparoscopic and open surgery.
FPH's obstructive sleep apnoea (OSA) masks and pumps compete directly with sector Big Daddy ResMed (ASX:RMD), especially in the US market.
Global reach
FPH demerged from mothership Fisher & Paykel Industries in 2001 and listed on the Australian and Kiwi bourses.
While FPH sells in 120 countries, 48% of its revenue derives from the US.
Revenue from FPH's hospital products – those used in respiratory, acute and surgical care – gained 18% to NZ$1.28 billion.
Hospital sales were driven by the company's launch of a new nasal high flow device, Airvo 3.
Homecare, which includes the OSA pumps and masks, rose 13% to NZ$740 million.
However, growth in this sector slowed in the second half, partly because of rivals introducing new masks in the US.
The business hopes to offset the impact with the recently launch of two new OSA masks, Nova Micro and Nova Nasal.
The company's gross margin improved 181 basis points to 62.9%, but still is below the long-term target of 65% and 66.9% just before the pandemic.
'Everything we did around the business made a positive impact,' said CFO Lyndal York, noting reduced freight costs.
'We are back to business as usual.'
Gradon said the hospital cost pressures were not new.
'I can't remember a time when these cost pressures didn't exist, or we felt like it had any material impact on us.'
On tariffs, management assumes the US impost of 10% on NZ goods will remain, although the company also manufactures in Mexico and China.
At least one product range – the OSA masks – look to be protected by the Nairobi Protocol. This global agreement stipulates duty-free treatment of devices for the 'disabled'.
The board declared a final dividend of NZ24 cent per share, taking the full-year payout to NZ42.5 cents (up 2%).
FPH shares were about 3% off the pace this morning – presumably because of some second half weakness - but have gained 30% over the last 12 months.
Truscreen strengthens its Indian foray
We're still on Kiwi companies.
The maker of a cervical cancer test that can be used without access to labs, Truscreen Group (ASX:TRU) has been anointed the Indian distributor of its Chinese partner's in-vitro diagnostic, for human papilloma virus (HPV).
The compact is with Hangzhou Dalton Bioscience Limited. This company makes DNA-based HPV tests as well as lab equipment for cervical cancer screening.
Truscreen notes that co-testing its eponymous AI-powered test with the HPV assay has increased the effectiveness of its own test.
A Chinese study showed a co-testing sensitivity rate – the ability to detect the disease – of 98.4% compared with Truscreen's 'already impressive' stand-alone 87.5%.
Truscreen recently re-entered India with its own test, via local distributor Renovate Biologicals.
Truscreen CEO Marty Dillon says the tie-up 'strengthens our product offering in the world's second most populous country and is a blueprint for similar agreements ... for other markets".
On that note, Truscreen currently sells its test in China and last month began a large-scale screening program in Vietnam's Ho Chi Minh City.
Including Indonesia, the company has a presence in three of the four most popular nations (the US – which it's not targeting – is the glaring exception).
On Monday, Truscreen reported revenue of NZ$1.71 million for the year to March. This was down 18%, with a net loss of NZ$2.24 million compared with a previous NZ$2.05 million deficit.
Management attributed the revenue dip to delays in its Vietnam and Zimbabwe rollouts, as well as tardy product registration in Indonesia and Uzbekistan.
The company flags current year revenue of NZ$2.8 million.
Renerve wins Bahrain approval
Peripheral nerve repair outfit ReNerve (ASX:RNV) has won marketing consent for its flagship product in Bahrain, its first approval in the promising Middle Eastern region.
The approval was by way of Renerve's partnership with its Middle Eastern partner, Union Mediscience BSC.
The product is the Nervalign Nerve Cuff, a protective wrap naturally absorbed within six months of surgery.
The device already is approved in the US, where it is making a 'dramatic difference' to surgical results.
The Middle East/North Africa market is worth around US$80 million a year and growing at a 35% clip. Relative to the US, there are fewer competitors.
'We look forward to the commercialisation in Bahrain and further expanding our sales and marketing efforts in the region,' Renerve director Dr Julian Chick says.
Emyria is ecstatic over PTSD trial results
Better known as a party drug among the younger set, MDMA (Molly or ecstasy) appears to have hit the mark as a treatment for post-traumatic stress disorder (PTSD).
In a six-month follow-up to its early-stage trial, Emyria (ASX:EMD) reports that five out of eight patients had improved to the extent that they no longer met the criteria for PTSD diagnosis.
The company says the patients achieved an average 55.5% reduction in PTSD symptom severity, as measured by a five-point scale known as PCL-5.
On a self-reported measure, they also achieved a 121% improvement in quality of life.
Th company says these results suggest 'clinically meaningful and sustained improvements in a patient cohort previously considered treatment resistant'.
The ongoing trial has enrolled 30 patients across two Perth sites.
While psychiatrists oversee the patients, the results were achieved in a 'real world' setting.
Difficult to treat, PTSD affects up to 11% of Australian adults, or 800,000 individuals.
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