Fisher & Paykel Healthcare increases annual profit and revenue guidance as strong demand for its respiratory care products 'continues to approximately track the spread of COVID-19 around the world'

*Note the video interview above was recorded in July.

Medical device maker Fisher & Paykel Healthcare, whose products are being used to treat patients with COVID-19, has increased its annual revenue and profit forecasts as strong demand for its hospital respiratory care products continues.

F&P Healthcare now estimates its March 2021 year operating revenue will be about $1.61 billion, up 9% from the $1.48 billion guidance provided in June, and net profit after tax will be between $365 million and $385 million, up 12% to 13% from June's guidance for profit between $325 million and $340 million.

"For the first four months of the financial year, to the end of July 2020, strong demand for the company’s hospital respiratory care products continues to approximately track the spread of COVID-19 around the world, and reflects a changing trend in clinical practice to lead with nasal high flow therapy for treatment of COVID-19 patients in hospital," F&P Healthcare's Managing Director and CEO Lewis Gradon said.

“Hospital hardware sales have continued to steadily increase over the first four months of FY21 with +390% constant currency revenue growth to the end of July compared to the prior comparable period. Our manufactured output of the related consumables has steadily increased over the four months, allowing us to begin some rebuilding of inventory levels after a peak in shipments in April,” said Gradon.

In June the company posted record annual profit of $287.3 million for the March 2020, a 37% year-on-year rise. Operating revenue rose 18% to $1.26 billion. Tuesday's guidance suggests a profit increase this year of up to $97.7 million, or 34%, with revenue rising as much as $350 million, or 28%.

At the time of writing F&P Healthcare shares were up 6% at $37.11.

Gradon spoke to interest.co.nz in July about the products F&P Healthcare makes that are used to treat patients with COVID-19, and the Auckland-based company's COVID-19 journey which sees it as the world's largest supplier of one of the two primary treatments for COVID-19. See more here: A tiger by the tail; F&P Healthcare's COVID-19 journey, as seen by CEO Lewis Gradon.

"Due to significant uncertainty in the extent and duration of the impact of COVID-19 on global demand for our products, we have made some assumptions to allow us to provide a guide to the potential impact on our financial results for FY21. We provided an initial set of assumptions in our announcement on 29 June 2020 for the full financial year and have now updated the set of assumptions used as COVID-19 has progressed around the world," Gradon said on Tuesday.

“The updated guide now assumes that global hospitalisations requiring respiratory support steadily return to normal by the end of this calendar year. It also assumes that countries around the world continue to build respiratory care infrastructure, including inventory of established ICU ventilators requiring our humidifiers, and that the trend toward nasal high flow as a preferred frontline therapy continues for both COVID and non-COVID patients."

“We have maintained our assumption that OSA diagnosis rates are reduced for the year. We also assume some costs related to COVID-19, particularly freight, remain elevated for the year, resulting in a reduction in gross margin of up to 200 basis points in constant currency for the year," said Gradon.

“On this basis and at current exchange rates, full year operating revenue for the 2021 financial year would be approximately $1.61 billion and net profit after tax would be approximately $365 million to $385 million."

“We cannot predict the course of COVID-19 around the world, the effectiveness or adoption of preventative measures, the impact on future hospitalisation rates, the adoption of evolving clinical practice guidelines, or the investments countries may make in treatment measures and the impact on our business. Consequently, we have provided a trading update, and an assumptions-based guide to the potential impact of those assumptions on our results for the full financial year,” Gradon added.