Why FP Healthcare continues to break through new highs
Shares in Fisher and Paykel Healthcare rallied by 8 per cent to hit their highest-ever point yesterday on the back of an earnings upgrade — the second in less than two months.
The company revised up its earnings forecast after receiving regulatory clearance to sell a new, full-face obstructive sleep apnea (OSA) mask in the United States, which is the biggest market for the product. Other factors came in to play. Assuming a NZ/US dollar exchange rate of about 63 cents for the balance of the year, the company expects fullyear operating revenue to be about $1.19 billion and net profit after tax to be in a range of $255 million to $265m, up from a previous guidance of between $245m and $255m.
“We have had an ongoing strong start to the year in our hospital product group and our new OSA mask, Vitera, has been well received in Australia, Canada, New Zealand and Europe,” managing director and chief executive Lewis Gradon said.
“Clearance of Vitera for sale in the US this month is sooner than we had previously guided and this has been a meaningful contributor to the increase in our guidance,” Gradon said.
The updated full-year guidance also incorporates a further weakening of the New Zealand dollar and the effects of an expected research and development tax credit.
When F&P Healthcare gave its last earnings upgrade in August, the New Zealand dollar was trading at US64c compared with US$63c yesterday.
Shares in F&P Healthcare last traded at $18.32, up 7.6 per cent, or $1.32 a share. The stock finished last year at $11.85.
Gradon told the Herald the company — which makes most of its products in New Zealand and about a third in Mexico — was not caught up the decline of manufacturing worldwide and ongoing trade friction between the China and United States.
“Underlying that is that we have a business that is based on treating sick patients, so that’s independent of trade moves and things like that.
“And then we don’t manufacture in China or the United States, so that does not really have any impact on us.”
He added that this year will be the first in the past three that F&P Healthcare has not had to set aside big sums for legal costs after it agreed to settle all outstanding patient patent infringement disputes with its US competitor ResMed.
The settlement involves no payment or admission of liability by either side.
Gradon said the new Vitera mask performs well and that patients were likely to find it more comfortable.
In terms of the update, there was “a bit of volume growth” across the rest of the business as well.
“We had a pretty strong start to the first half as signalled at the August shareholders meeting.
“So we have rolled a little bit of that into the second half,” he said.
“It’s not all down to this new product, although it’s been part of it,” he said.
For the year to March this year, F&P Healthcare reported a record net profit after tax up $209.2m on revenue of $1.07b.
F&P Healthcare is one of New Zealand’s biggest listed companies, with a market capitalisation of $10.5 billion.
The company designs, makes and markets of products and systems for use in respiratory care, acute care, surgery and the treatment of obstructive sleep apnea, and sells to 120 countries worldwide.