The Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) share price is up 12% after revealing its HY23 result and outlining some FY23 commentary.
Fisher & Paykel Healthcare says it’s a leading designer, manufacturer and marketer of products and systems for use in acute and chronic respiratory care, surgery and the treatment of obstructive sleep apnea.
HY23 result
Here are some of the main highlights from the result for the six months to 30 September 2022:
- Operating revenue of $690.6 million was down 23%, though this beat the $670 million guidance
- Net profit after tax (NPAT) was $95.9 million, or a 57% decline from the prior comparable period
- Increased interim dividend by around 3% to 17.5 cents per share
The company explained that its numbers were down because it was lapping against significant COVID-19-driven demand. But, compared to pre-COVID times, this represented “solid growth”. Compared to the first half of FY20, revenue was up 21%.
Revenue breakdown
In the hospital product group, which includes humidification products used in respiratory, acute and surgical care, revenue was $438.7 million. That was a 35% year on year decline, though it was up 24% compared to the first half of FY20.
Management said that there were positive signs that its hospital customers are working through excess inventory. Hospital consumables have increased sequentially on a month by month basis since May. This trend “has continued in the second half to date.” This is another positive sign for the Fisher & Paykel Healthcare share price.
In the homecare product group, which includes products used in the treatment of obstructive sleep apnea (OSA) and respiratory support in the home, revenue rose by 10% to $249.9 million. OSA masks and accessories revenue increased 16%.
Management said that there had been a strong reception of its new Evora full mask where it began selling into the US in April after approval.
Gross profit margin reduces
The company reported that its gross profit margin was 59.8%, down from 63.1% in the prior period and below the company’s long-term target of 65%. Although global freight rates are seeing prices soften, legs in and out of New Zealand are lagging this trend, which continues to weigh on the margin.
Fisher & Paykel Healthcare has also been impacted by “manufacturing inefficiencies”.
Outlook for the Fisher & Paykel Healthcare share price
The second half of FY23 is expected to see higher revenue than the first half.
It’s expecting this within its hospital product group, with seasonal patterns resulting in higher sales of hospital consumables in the second half. It is also likely that some customers will have worked through their COVID-driven consumables stock.
In the homecare product group, it believes that the recent launch of the new Evora full face mask, combined with improving global supply of CPAP hardware, will contribute to continued growth for the remainder of the year.
It’s also expecting the second half gross profit margin would improve compared to the first half by approximately 200 basis points.
With the Fisher & Paykel Healthcare share price down 30% this year, it could be an opportunity, though it’s not one I have on my own watchlist.
