New Zealand Health Companies Take Flight
New Zealand health companies are making waves as they expand into new markets or improve existing ones. This trend mirrors the performance of their Australian counterparts, who have had to adapt to compete globally. The success of these companies is evident in the strong financial results and strategic moves they’ve made.
Fisher & Paykel Healthcare: A Strong Performance
Fisher & Paykel Healthcare (ASX:FPH), with a market capitalization of NZ$20 billion ($16bn), has shown impressive growth. The company reported a net profit of NZ$468.5 million for the year ending March, a 24% increase. Revenue rose by 14% to NZ$2.31 billion. The company’s guidance for the current year includes operating revenue of $NZ2.45-$2.57 billion, with a net profit of NZ$500-550 million.
On the hospital products side, revenue grew by 18% to NZ$1.51 billion. CEO Lewis Gradon noted that the growth in consumables occurred despite subdued hospital admissions for seasonal respiratory illnesses in the US and other major markets. This suggests that changing clinical practices continue to drive growth.
The home care arm of Fisher & Paykel Healthcare saw revenue grow by 8% to NZ$802.7 million. OSA mask revenue increased by 7%, driven by new product releases. Despite the impact of US tariffs on NZ-sourced products, the company’s gross margin improved by 122 basis points to 63.7%.
RBC Capital Markets described the results as in line with guidance and consensus expectations. They noted that the company usually exceeds its initial guidance. Given the weak share price prior to the results, the firm expected a small relief rally, which materialized with a 9% stock rise.
Aroa Biosurgery: A Breakout Year
Aroa Biosurgery (ASX:ARX) has signaled strong revenue growth for the current year, with a focus on bolstering sales of its high-margin, directly distributed salves. In a “breakout year,” Aroa generated revenue of NZ$104 million, up 23% year on year. Underlying earnings (EBITDA) of $NZ13 million exceeded guidance of NZ$5-8m, marking the company’s second consecutive EBITDA-positive year.
Management flagged current-year revenue guidance of NZ$115-125 million, representing growth of between 13-23%. EBITDA should come in at NZ$8-11 million. Aroa’s business is split between direct sales of three products for soft tissue and complex wounds, led by the Myriad range.
The company licensed TELA Bio to sell its Ovitex range, used for applications such as hernias. While direct sales should grow 24-40%, Aroa expects TELA Bio sales to be flat. The EBITDA guidance reflects investment in expanding Myriad’s presence and orchestrating a US toehold for Aroa’s Symphony range.
Symphony is used for biological wound grafts in complex situations. Aroa founder and CEO Brian Ward highlighted that Symphony should benefit from US reimbursement reform, which abolished a perverse incentive for surgeons to use the costliest products. Aroa also highlights Symphony’s efficacy, as reflected in a recently completed randomised controlled trial.
Having generated NZ$5 million of cash during the year, Aroa’s March end cash stood at NZ$27m. “We’ve got plenty of cash on hand [and are] debt-free,” Ward said. “We’re certainly in a situation where we can self-fund the growth of the business.”
Ryman Healthcare: A Business Reset
After a painful reconstructive phase, Ryman Healthcare (ASX:RYM) expects to generate more cash than a poker machine on RSL pensioner night. The trans-Tasman aged care provider shrugged off “mixed” market conditions to produce its first free cash flow positive result in a decade.
Ryman generated operating earnings of NZ$88 million, up 94%. Management highlighted free cash flow of $188 million, compared with the previous NZ$94m deficit. The company narrowed its net loss to NZ$171 million, from a NZ$513m shortfall previously.
Ryman targets releasing NZ$500 million of cash by the 2028-29 year, with NZ$169m unleashed last year. Currently, Ryman gleans around three-quarters of its revenue from Kiwiland, where it is the biggest operator. But it’s also encroaching across the Tasman, having invested $2 billion in new facilities in Victoria.
Noxopharm: Surging on Cancer Hope
Noxopharm (ASX:NOX) shares today soared 40% on the back of data showing its Sofra platform could be good for treating certain cancers. To date, the company has focused on the inflammatory immune condition lupus, bearing in mind the commonalities with immune-oncology.
Noxopharm’s program zeroes in on enhancing the cancer-busting ability of a bodily agent called the Toll-like receptor 8 (TLR8). “The company has now developed oligonucleotides capable of greatly amplifying the activity of TLR8 compared to current best-in-class drugs in clinical development,” Noxopharm says.
This “combinatorial approach” promises to enhance the cancer-fighting activity of chemotherapy and radiotherapy. Today’s excitement stems from early-stage in vivo and ex vivo test work in mouse and human cancer models. In one human skin biopsy cultured ex vivo, Noxopharm’s candidate increased the level of immune activity more than 200-fold.
