Fisher & Paykel Healthcare Corporation Limited

Good day everyone and welcome to the Fisher and Paykel Healthcare conference call. Today's call is being recorded and now at this time I'd like to turn the call over to Marcus Driller. Please go ahead.

Thanks April. Good morning everyone and welcome to Fisher and Paykel Healthcare's results conference call for the first half of the 2022 financial year. On the call with me 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 can open up to your questions for the team. We'll be discussing our results for the six months ended 30 September 2021. Earlier today, we issued our 2022 interim report including financial statements and commentary to the NZX and ASX. These documents can be accessed on the investor section of our website at fphcare.com. With that, I'll pass over to Lewis.

OK, thanks, Marcus, and welcome to the call, everyone. Today I'm going to be referring to the investor presentation pack that we released to the NZX and the ASX this morning. But before we dive into those details of the results, I would like to acknowledge a few things and thank some important people. This pandemic continues to be a challenge across the globe. Earlier this month, the world surpassed 250 million cases of COVID-19. And while some countries appear to be well placed in their recovery at present, others are experiencing new surges. I'd firstly like to extend my thanks to our customers and the healthcare workers around the world who have worked tirelessly on this COVID-19 response for almost two years now. Their courage and their perseverance is just inspiring. I'm also grateful to our suppliers, who are working so hard to provide us with the raw materials and the components in what are really some very challenging times. And I'd also like to thank the people of Fisher & Paykel Healthcare, We especially acknowledge the role of our partners and families in supporting us and supporting Fisher & Paykel Healthcare. This remains a demanding period for our company and it requires relentless commitment. Our people in many locations are still navigating through lockdowns, extended periods of remote work and challenging environments, but they continue to go above and beyond. Thanks to their efforts, we have achieved another strong result. So now I'd like to turn to page three of the investor pack. Firstly, the safety and wellbeing of our people continues to be paramount for us. To this end, we provided convenient access to vaccinations for everyone at our manufacturing sites in New Zealand and Mexico. This included onsite vaccinations for more than 4,000 New Zealand employees and their family members. We launched the Viscero mask for non-invasive inhalation in the US, and the Evora full mask for obstructive sleep apnea in New Zealand and Australia. We welcomed Dr. Lisa McIntyre to the board. She brings with her a wealth of experience in healthcare and technology, and Lisa fills the spot left by our former board chair, Tony Carter, who retired last year. We are making good progress on our third manufacturing facility in Mexico. And Earthworks are underway on our fifth building site in Auckland. Once that fifth building site is complete, our current site here in Auckland will be full. So we have initiated the search for a second R&D and manufacturing campus in New Zealand to accommodate our future growth. And we expanded our direct sales footprint into several new locations. We now have a physical presence in more than 50 countries. So move now to our financials, page four. First half operating revenue was $900 million. This is a 1% decline from the first half in 2021, and it's a 2% increase in constant currency. Net profit after tax was $221.8 million. That's down 2% on the first half in 2021, and down 1% in constant currency. And again, our result was largely driven by a hospital product group. That accounted for 74% of revenue, and we'll look at that in more detail shortly through the pack. Last year was truly an extraordinary one amid COVID-19, and intense demand for our air and opti-flow systems fuelled the growth in hospital hardware sales. We said at our annual shareholders meeting in August that sales were still being impacted by COVID-19 related hospitalisations. And we saw this continue in the last two months of the half year as North America saw a surge in COVID-19 hospitalisations. In other key northern hemisphere markets, hospitalisation rates remained below their prior peaks and demand for our hospital products tracked largely in line with that. So let's go to page five and we'll look at the hospital products. So this is divided into hardware and consumables. It includes our products and systems for invasive and non-invasive ventilation, nasal high flow and surgery. Hardware continued to account for a large proportion of revenue compared to the pre-pandemic levels, making up 33% of hospital revenue for this first half. Moving now to page six. Hospital operating revenue for the first half was $670.2 million, down 2% year on year, but up 1% in constant currency. And in constant currency, hospital hardware declined 10%, offset by 8% growth in the consumables. New applications consumables was a key growth driver, up 24% in constant currency over the first half of 2021. This category includes non-invasive ventilation, OptiFlow nasal high-flow therapy, and surgical, and it accounted for 72% of our hospital consumables revenue, reflecting that ongoing shift in clinical practice towards nasal high-flow therapy. The treatment of COVID-19 patients and a growing number of generalized clinical practice guidelines have continued to support this demand for our OptiFlow and Evo systems. So move on now to our home care product group on page seven. This category includes products used in the treatment of obstructive sleep apnea and chronic obstructive pulmonary disease, or COPD, as well as other chronic respiratory conditions. In terms of revenue composition, 18% came from hardware and the remaining 82% from consumables. So on to page eight now. Operating revenue was $226.9 million, up 0.3% on the first half of 2021, and up 3% in constant currency. We expanded our product range with the launch of the Evora Full mask for OSA in Australia and New Zealand. And this has been supported by positive trial results, and we're looking forward to launching that in more markets once we receive clearances and get manufacturing up to speed. Overall, we were pleased to see the 3% growth in constant currency growth in our OSA masks. Our Viterra and Evora masks are performing pretty well. I'm now going to hand over to our CFO, Lyndall York, for a more detailed look at the financials. Lyndall.