F&P Healthcare on course in US
Obamacare repeal will have no ‘meaningful’ effect, says chief executive
Fisher & Paykel Healthcare has posted a record profit and does not expect any “meaningful changes” to its US operations from plans to repeal “Obamacare”.
The medical device maker posted an 18 per cent jump in full-year profit to $169 million for the year ended March 31, on the back of record operating revenue of $894.4m, up 10 per cent.
Chief executive Lewis Gradon said the company was happy with the results and had few reservations going into next year.
Gradon told the Herald that President Donald Trump’s plan to repeal and replace the Affordable Care Act would not result in “meaningful changes” to its operations in the United States.
F&P Healthcare counts North America as its biggest market and in the latest year revenue grew 13 per cent to $435m, making it the company’s best-performing market.
The company expects to boost its Tijuana manufacturing operations in the next 12 months.
Gradon said it had acquired 15ha of land and had begun the process of building a new manufacturing site, which it hoped to have up and running next year.
Gradon said the company had benefited from changing clinical treatments and practices, along with ageing populations across the globe.
“Healthcare costs across the world, in almost every country, are growing faster than the rate of GDP growth,” Gradon said.
“There’s a huge sensitivity to the cost of healthcare and it’s going to get worse before it gets better. Everything we do, we try to ensure we can save costs for the healthcare system and improve care at the same time.
“We are well placed to meet the growing global demand for our products,” Gradon said.
“We have a consistent, well-proven strategy for delivering sustainable, profitable growth.”
The medical device maker’s profit was within the $165m to $170m range the company affirmed with its firsthalf results in November.
Performance for the 2018 year is expected to be better again, with operating revenue predicted to rise to about $1b at current exchange rates, with forecast profit of between $180m and $190m.
F&P Healthcare declared a final dividend of 11.25c a share, making 19.5c for the year, up from 16.7c a year earlier.
Sales in Europe rose 7 per cent to $272m while Asia Pacific sales advanced 9 per cent to $155m.
Sales in its hospital division rose 15 per cent to $500m, while homecare product sales increased a more modest 4 per cent to $381m. Helping drive profit growth was a 205-basispoint increase in gross margin to 66 per cent, which the company said reflected a favourable product mix but also increased output from its manufacturing plant in Tijuana.
F&P Healthcare competes with Resmed and Respironics and is currently engaged in a patent dispute with Resmed which it said generated $20.7m in legal costs in the 2017 year.
“We recognise that this is a significant cost and did not enter into litigation lightly,” Gradon said.
“We have been providing unique solutions for patients for more than 45 years and we take pride in our proprietary technology,” he said.
“We also respect the valid intellectual property rights of others and we are confident in our position.”
The company filed patent infringement proceedings against Resmed, which countered with its own suit claiming that F&P Healthcare’s OSA (obstructive sleep apnea) products infringed its patents.
Research and development costs rose 17 per cent to $86m in the latest year.
F&P Healthcare shares closed at $10.10 yesterday, which was the same price as a year earlier, compared to a 7.3 per cent gain for the S&P/NZX 50 Index.
Healthcare costs across the world, in almost every country, are growing faster than the rate of GDP growth. — Fisher & Paykel Healthcare chief executive Lewis Gradon