Thanks for your update and revised valuation @BoredSaint
It is difficult to fault the conclusion of your valuation - FPH is once again looking very highly valued.
Just a couple of comments about the potential sustainability of its earnings:
- The pandemic has done some funny things to healthcare. Health care systems are all in dire straits. This is not something I and other healthcare workers are imagining. It is a global problem.(see below)
- The burden of disease has jumped significantly, and it is not clear if this will return to a baseline that existed prior to the pandemic. The sharp rebound in respiratory infectious diseases is likely to do so but much of the undiagnosed and untreated pathologies will be around for a lot longer.
- FPH product set is definitely more skewed to managing respiratory infections and COVID. Hi-Flo is a significant part of that process and is a standout in FPH increased sales. However, it is also becoming a standard of care for respiratory support for most respiratory problems, as robust data becomes available and providers and systems become more familiar with the devices. This is likely to be persistent. As mentioned in a previous post, there is a great consumables market for these devices.
- Healthcare spending is likely to trend up over the any time period you want to choose!
- Their CPAP devices are also performing well, and this market (despite what Somnomed might suggest!) is only set to grow
- Does this justify the lofty valuation? Probably not. The valuation also likely reflects a general market move to safety/quality/health and avoidance of any company that might deliver a nasty surprise. It is highly likely one can buy it cheaper in a year or tow's time when market sentiment shifts to more "risk-on".
Held IRL, but will likely sell in next few weeks
Excess deaths are soaring as health-care systems wobble
What lessons can be learned from a miserable winter across the rich world?
Jan 19th 2023
Five centuries later, those who prefer to be ill in hospital would struggle to make it past the lobby. People often lament the shortcomings of their own country’s health system. They tend to ignore the extent to which pressure is visible across the rich world. Britain’s National Health Service (nhs) is in a winter crisis like none before, with people who have heart attacks waiting 90 minutes for an ambulance. In Canada things are so bad that a children’s hospital called in the Red Cross. Even in Switzerland, whose health care is often admired, the system is under enormous stress.
Worse care is contributing to huge numbers of excess deaths. Mortality in Europe is about 10% higher than expected in a normal year. In mid-December French and German deaths were a quarter higher. The chaos is also damaging in ways that cannot be measured. It is distressing to think that one day you will need to call 911, 112 or 999—and that no one will come to help.
Spending on health care is at an all-time high in the rich world. The trouble is that “all-time high” does not necessarily mean “enough”. Ageing populations increase demand. Health-care systems compete for staff with other parts of the economy, so doctors’ and nurses’ wages must keep pace with prevailing rates of pay. Costs rise even if health-care productivity stagnates. The unforgiving logic of this “cost disease” means that in ageing societies health-care spending must usually grow as a share of the economy just to maintain a given level of provision. Countries, such as Britain and Italy, that in the years before the covid-19 pandemic cut health-care spending as a share of gdp, or held it constant, were already on a path to worse services.
Yet squeezed budgets do not fully explain the disarray. Even in places with ample funding, health care is struggling with the unprecedented effects of the pandemic. On the demand side, covid has left behind sicker populations. After years of avoiding flu, many people are now getting it. The world is also discovering some of the costs of lockdowns. In 2020-21 many hospitals and family doctors cancelled appointments for non-covid conditions. People who postponed treatment for other maladies are presenting with later-stage illnesses that need more expensive treatment; they also have poorer chances of recovery.
Covid hits the supply side, too. Many hospitals continue to isolate covid-positive patients and maintain strict cleaning regimes. This eats up time and resources. In addition, staff are burned out. The result seems to have been a decline in productivity. Excluding primary care, the nhs has 13% more doctors and 10% more nurses than in 2019, yet it is treating fewer patients from its waiting list.
