The Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) share price is on the move on Thursday morning.
At the time of writing, the medical device company’s shares are up 2% to $31.50.
Why is the Fisher & Paykel Healthcare share price rising?
Investors have been bidding the Fisher & Paykel Healthcare share price higher following the release of its half year results. Here’s a summary of how it performed during the six months ended 30 September:
- Operating revenue was down 1% (up 2% in constant currency) to NZ$900 million
- Hospital operating revenue down 2% to NZ$670.2 million
- Homecare revenue up 0.3% to NZ$226.9 million
- Net profit after tax down 2% (1% in constant currency) to NZ$222 million
- Interim dividend increased 6% to 17 NZ cents per share
What happened during the half?
During the first half of FY 2022, Fisher & Paykel Healthcare reported a 1% decline in operating revenue to NZ$900 million and a 2% reduction in net profit after tax to NZ$222 million.
The main drag on the company’s performance was its Hospital product group, which includes humidification products used in respiratory, acute and surgical care. Segment revenue fell 2% after cycling the surge in demand for its respiratory products during the prior corresponding period at the height of pandemic.
Within the segment, consumables revenue grew 8% in constant currency and reached 67% of segment revenue. The remaining 33% of revenue was from the sale of hardware.
The Homecare product group, which includes products used in the treatment of obstructive sleep apnoea (OSA) and respiratory support in the home, delivered a modest 0.3% increase in revenue to NZ$227 million.
Pleasingly, despite contending with elevated freight costs, Fisher & Paykel Healthcare was able to deliver a 135 basis point increase in its gross margin to 63.1%.
Fisher & Paykel Healthcare’s managing director and CEO, Lewis Gradon, continued to warn that the second half will be tough. However, this isn’t weighing on the Fisher & Paykel Healthcare share price today.
He said: “We have not changed our view on outlook for the remainder of the financial year since we last provided an update on the 18th of August. For the second half, we expect our Hospital hardware sales will continue to be impacted by COVID19-related hospital admissions. However, as we said in our August trading update, many countries have already boosted their hospital treatment capacity, so we do not expect Hospital hardware revenue to continue at an elevated level for the rest of the year.”
Mr Gradon also warned that demand for consumables is uncertain due to a number of factors.
He explained: “In our Hospital product group, consumables volume is likely to be impacted by a number of different factors. Those include the ongoing COVID-19 hospitalisations around the world, the severity of the flu season during the Northern Hemisphere winter, and the ability of hospitals to return to their preCOVID-19 rates for surgeries.”
“Our second half last year corresponded to peak COVID-19 hospitalisations in North America and most European countries. In the absence of further comparable hospitalisation surges around the world, we would expect our consumables revenue for the second half of this financial year to be lower than the second half last year,” Mr Gradon added.
Unfortunately, the Homecare segment is also facing challenges of its own.
The CEO explained: “In our Homecare product group, growth in OSA masks is dependent on new patient diagnosis rates, which may continue to be impacted by COVID-19 and the supply of treatment hardware. We continue to expect new patient diagnoses to be at or above FY21 rates for the second half of the 2022 financial year.”