Fisher & Paykel Healthcare, a global player in respiratory care and obstructive sleep apnea (OSA) treatment, recently released its Q4 2024 earnings transcript. While most analysts focused on the impressive revenue growth and anticipated margin improvement, a subtle but significant detail emerged, potentially signaling an even more robust year ahead than predicted. This overlooked gem lies in the company's discussion of "seasonal hospitalizations."

For years, Fisher & Paykel segmented its hospital business based on product categories, tracking the performance of consumables for "new applications" (like Optiflow) and "acute care" (like invasive ventilation). This year, however, a shift occurred. The transcript introduces a new framework, focusing on the broader concept of "seasonal hospitalizations." This change suggests the company is no longer solely focused on individual product adoption but is strategically aligning itself with the cyclical patterns of hospital admissions.

Why is this Significant?

Because it reveals a potential goldmine. By grouping COVID, flu, and RSV-related hospitalizations under the umbrella of "seasonal hospitalizations," Fisher & Paykel can leverage a predictable trend to drive significant sales growth, even if individual disease outbreaks are less severe than in the past. The transcript explicitly states that FY 2024 experienced lower overall seasonal hospitalizations than FY 2023, yet new applications consumables still grew by a remarkable 9% in the second half.

This hints at a crucial insight: Fisher & Paykel's market penetration is accelerating. Despite lower hospitalization rates, the company managed to achieve substantial growth in its new applications consumables, indicating increased adoption of its therapies across a wider spectrum of hospital admissions. The company's own projections for FY 2025 reinforce this hypothesis. They predict mid-teens growth for new applications consumables, a significant leap from the 9% achieved in the second half of FY 2024, even assuming similar seasonal hospitalization rates.

"Bullish Outlook: This bullish outlook suggests Fisher & Paykel is confident it can outperform even with moderate respiratory disease activity. The company's focus on "seasonal hospitalizations" reveals a strategic shift, capitalizing on a predictable, recurring trend to fuel future growth. By no longer relying solely on individual disease outbreaks, Fisher & Paykel has created a more robust foundation for long-term success."

The Numbers Get Exciting

Consider that in FY 2023, hospital consumables revenue was NZD 945.9 million. If we apply the 13.5% growth rate (NPAT midpoint excluding currency impact) to this figure, we arrive at a potential FY 2025 hospital consumables revenue of NZD 1.07 billion. This represents a substantial increase of NZD 124.1 million, significantly higher than the NZD 10 million "lightness" attributed to FY 2023.

Projected Hospital Consumables Revenue

Revenue Growth Trends

The chart below illustrates the revenue growth trends for Fisher & Paykel Healthcare's key product segments based on data from their Q4 2024 earnings transcript:

These figures suggest the market may be underestimating the potential of Fisher & Paykel's hospital business. The company's strategic focus on "seasonal hospitalizations" combined with its accelerating market penetration could lead to a surprisingly strong FY 2025, potentially exceeding even the company's optimistic guidance.

"Fun Fact: Did you know that Fisher & Paykel Healthcare started as a refrigerator importer in New Zealand? It wasn't until the 1960s that the company ventured into the medical device field, collaborating with a renowned anesthesiologist to develop a revolutionary respiratory humidifier. This innovation marked the beginning of Fisher & Paykel's journey to becoming a global leader in respiratory care."