Fisher & Paykel Healthcare Corporation Limited (ASX FPH) released its result for the financial year 2019. The FPH share price declined 4.75% today to AU$15.06 on the back of the company’s Annual Report and Investor Presentation.
The company posted a record annual profit, blew past the NZD$1 billion revenue milestone and provided optimistic guidance for FY2020. It declared a final dividend of 13.5 cents per share carrying full NZ imputation credit.
Despite the strong numbers, the FPH share price dropped as the revenue growth rate of 8% was lower than the consensus target of 12%.
We also have research for F&P Healthcare here.
About Fisher & Paykel Healthcare (ASX FPH)
Fisher & Paykel Healthcare is a 50-year old healthcare company headquartered in New Zealand. It is a leading designer, manufacturer and marketer of products and systems for use in respiratory care, acute care, surgery and the treatment of obstructive sleep apnea.
The company’s products are sold to about 14 million patients in over 120 countries worldwide. The company operates in four regions namely North America, Europe, Asia Pacific and Others.
Fisher & Paykel Healthcare reports robust growth
Operating revenue surged 9% to a record NZ$1.07 billion, boosted by 12% growth in hospitals, 20% in consumables used for ventilation, nasal flow therapy and surgeries, and 6% growth in home care.
New applications are generating an increasingly large portion of revenue. In the Hospital segment, there was strong customer demand of the company’s Optiflow and AIRVO systems following clinical trial results. In Homecare, the company successfully rolled out its new SleepStyle OSA CPAP system.
Regionally, all regions reported good revenue growth but the Asia Pacific led with 15%.
“Our record results were driven by our innovative products, the dedication of our teams around the world, a culture of continuous improvement and the value we offer for clinicians and patients,” said Managing Director and CEO, Mr. Lewis Gradon.
“It is now 50 years since the inception of our business and our results this year are a reflection of our long term and consistent growth strategy.”
Gross margin improved from 66.3% to 66.9% in 2019.
Net profit after tax grew 9% impressively to NZ$209.2 million.
Total dividend paid has jumped 9% from 21.25 cents per share in 2018 to 23.25 cents per share in 2019.
Robust outlook for the future for Fisher & Paykel Healthcare
“Demand for quality healthcare continues to increase, alongside the rising costs of caring for aging and growing populations,” said Chairman, Mr Tony Carter. “Healthcare providers and patients are seeking solutions that deliver improved patient outcomes in more sustainable and effective ways.”
The company aspires to sustainably double its revenue every 5-6 years, translating to 12%+ per annum revenue growth. It claims there are high barriers to entry in its business.
The company’s revenue mix, which includes 86% of recurring items, consumables and accessories, is a major driver of profitability.
Operations at its second manufacturing facility, under construction in Mexico, are likely to commence in FY20. The fourth building in the New Zealand campus is also expected to complete construction in that year.
For FY2020, the company expects operating revenue of about NZ$ 1.15 billion and net profit after tax approximately in the range of NZ$240 million to NZ$250 million.
Despite the impressive numbers, at the current FPH share price, the valuation metrics are a bit pricey as below:
Though the outlook is robust for FPH, its share price is ruling at all-time highs and investors may do well to wait for a correction.
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