Fisher & Paykel Healthcare Corporation Limited

Welcome to Fisher and Pichol Healthcare Results Conference Call. My name is Justin and I'll be your operator for today's call. At this time, everyone except the guest speakers will be in a listen only mode. Later, we'll conduct a question and answer session. We ask for your assistance in keeping the call to a maximum of one hour. If assistance is required at any time, please press star followed by zero on your phone and wait for a coordinator. If you require further assistance, you should redial into the call. Please note this conference call is being recorded. I would now like to turn the call over to Marcus Driller, VP Corporate.

Thank you, Justin. Good morning, everyone, and welcome to Fisher & Paykel Healthcare's 2021 Financial Year Results Conference Call. On the call today are Lewis Graydon, our Managing Director and Chief Executive Officer, Lyndall York, Chief Financial Officer, Paul Shearer, Senior VP of Sales and Marketing and Andrew Somerville, our VP of Products and Technology. Lewis and Lyndall will first provide an overview of the results and then we'll open up the call to questions for the team. We'll be discussing our results for the year ended 31 March 2021. We have earlier today provided our 2021 annual report including financial statements and commentary on our results to the NZX and ASX. These documents can be accessed on our website at fphcare.com forward slash investor. With that I'd now like to turn the call over to Lewis.

Okay, well thanks Marcus and welcome everyone. So today I'm going to be referring to the investor presentation pack that we released to the NZX and ASX this morning. But first, we would like to begin by thanking some people who are very important to us all. And that's the healthcare professionals around the world who have been caring for patients during a global pandemic. Our thoughts are with them and their families wherever they may be. I also want to personally acknowledge the people of Fisher & Paykel Healthcare for their commitment to delivering for our customers and to thank their partners and families. Because of your contribution our products were used to treat an estimated 20 million patients during the 2021 financial year. We also want to thank our suppliers for your commitment. They had to work under very challenging conditions to provide the raw materials, the components and the services that we needed to make our products. Operating during a pandemic has tested their resilience and we have been amazed at their ability to scale up and adapt. Thank you. So starting now on page three. Our key achievement for the 2021 financial year was increasing output for some of our hospital products by approximately six times and doubling output for some of our hospital consumable products. To do this we hired and trained around 1,800 people over the year and that's an achievement all in itself. It's an important part of our company culture to recognise the efforts of our people. and this year they've made an outstanding commitment and this would not have been possible without the help of our families and our partners. To recognise this the board have doubled our standard profit sharing bonus for our people and that's a total profit share of $29 million for the year. So turn now to page 4. We've also made progress against our long-term strategy in spite of the challenges of COVID-19. During this year, we've managed to release hospital and home care products into new markets, and we expanded our direct sales presence in five more countries. Developing long-term partnerships in our local communities has always been important to us, and today we announced a $20 million commitment to establish the Fisher and Paykel Healthcare Foundation. This independent charitable organisation will enable us to have a more sustainable model for funding of community and charitable activities. The foundation's purposes include supporting and funding health research and programs that improve access to healthcare, environmental protection initiatives and promoting awareness of opportunities in STEM subjects such as science, technology, engineering and mathematics. So turning now to page five, I think we can sum this up by saying it's a year like no other. Operating revenue for the 2021 financial year was $1.97 billion, 56% higher than the previous financial year. or 61% in constant currency. Net profit after tax was $524 million, 82% higher than the previous financial year or 94% in constant currency. This extraordinary full year result is driven by our hospital product group and that includes OptiFlow and Evo systems used to deliver nasal high flow therapy. For the full financial year revenue for the hospital product group was $1.5 billion and that's an increase of 87% over FY20 or 94% in constant currency. Revenue for the home care product group was $466 million, an increase of 2% over the previous year or 4% in constant currency. So now looking more closely at our product groups, starting with the hospital product group on page 6. These are the devices and systems used with invasive ventilation, non-invasive ventilation, nasal high flow and surgery. Hardware was 37% of revenue this year. versus 16% of revenue for FY20, so I just want to point that out. On page 7, hospital products made up 77% of operating revenue for the second half of the financial year. We saw extraordinary demand for a range of humidifiers and airvotes systems, and that's driven by experience in clinical trials of treating COVID-19 patients. In the second half of the year, our revenue in hardware and consumables continued to follow COVID hospitalisations around the world. The third quarter was a peak for the year in both hardware and consumable demand. And for the fourth quarter, consumables remained above our first half average and hardware sales remained elevated, but a little below the first half average. So now let's move on to the home care product group on page So this includes products used in the treatment of obstructive sleep apnoea or OSA and chronic obstructive pulmonary disease or COPD as well as other chronic respiratory conditions. On page 9, home care products made up 23% of operating revenue on the second half of the year. product grew strongly through the year and the home respiratory support part of that business now makes up over 15% of the home care business. Reported revenue for OSA masks was flat in the second half in constant currency terms, impacted by the reduction in new patient diagnoses due to COVID-19. Progress in markets where Arbiterra and Avora masks were released prior to COVID-19 restrictions applying is encouraging, although it's still impacted by ongoing restrictions and the periodic lockdowns. So now I'll turn over to our CFO, Lyndall York, to give you more details on the year. Lyndall.