Why the Fisher & Paykel Healthcare (ASX:FPH) share price is rising today

This medical device company's shares are rising on Wednesday…

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The Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) share price is rising on Wednesday morning.

At the time of writing, the medical device company's shares are up 3% to $31.74.

Why is the Fisher & Paykel Healthcare share price rising?

The Fisher & Paykel Healthcare share price is pushing higher today following the release of a trading update.

This is despite its update revealing that the medical device company's growth has started to fade as it cycles a tough comparable period.

According to the release, revenue for the first four months of FY 2022 was NZ$583 million. In constant currency, this represents a 2% decline on the revenue recorded in the prior corresponding period. Management notes that the prior period experienced high demand during the initial surges of COVID-19 in North America and Europe.

Segment performance

The company's key Hospital product group reported a 3% reduction in constant currency revenue for the four months. This comprises a 13% decline in hardware sales and 2% growth in consumables.

In North America and Europe, constant currency total hardware sales declined 62% and total consumables sales declined 14% from the prior comparable period. This was due to reduced COVID-19 hospital admissions and customers' stockholding decisions.

Outside North America and Europe, hardware sales grew 42% and consumables grew 31% over the prior comparable period in constant currency.

The company's Homecare product group reported a 4% increase in constant currency revenue for the four months. This reflects a 4% increase in sales of obstructive sleep apnoea (OSA) masks.

Outlook

Fisher & Paykel Healthcare's Managing Director and CEO Lewis Gradon, advised that the uncertain operating environment means no guidance will be offered for FY 2022.

He also warned that sales in the key Hospital segment could continue to soften in the coming months.

Mr Gradon commented: "With the ongoing global vaccination activity, and most countries now having experienced a COVID19 hospitalisation surge resulting in a corresponding boost in hospital treatment capacity, we do not expect our Hospital hardware revenue to continue at this elevated level for the remainder of the financial year."

"Individual customers' stockholding decisions in response to rapid increases and decreases in COVID-19 related demand and the length of time it takes to return to normal hospital admissions are likely to influence our consumable sales over the short term. This all contributes to an environment which is very difficult to predict."

However, things are looking more positive for its Homecare products segment. "In our Homecare product group, growth in OSA masks is dependent on new patient diagnosis rates, which we currently expect will continue to be at or above FY21 rates for the remainder of the 2022 financial year," he commented.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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