Fisher & Paykel Healthcare H1 2026 Earnings: Growth Momentum vs. Tariff Headwinds

Fisher & Paykel Healthcare reported H1 2026 revenue of $1.089 billion, a 14% increase. Net profit rose 39% to $213 million. Hospital product revenue grew 17% to $692 million, driven by strong consumables demand. Operating expenses, however, increased 8%, outpacing revenue growth. Gross margin expanded 110 basis points to 63% due to manufacturing efficiency gains. Full-year guidance points to $2.17–$2.27 billion in revenue and $410–$460 million in net profit, supported by FX tailwinds. Hardware sales may moderate in H2, a potential headwind.

Growth Drivers & Margin Expansion

Hospital product demand surged in the first half of 2026, with revenue climbing 17% to $692 million. This growth was fueled by strong ongoing consumption of disposables, indicating robust substitution demand within healthcare facilities. According to company data, these consumables represent a recurring revenue stream, underpinning market penetration. The company achieved significant gross margin expansion, reaching 63% for the period. This improvement primarily stemmed from manufacturing efficiency gains, demonstrating operational discipline. However, this positive trajectory faced headwinds from new tariffs. US tariffs on Mexican imports (25%) and Chinese imports (10%) impacted roughly 60% of the company's US sales sourced from Mexico, shaving 32 basis points off gross margin in H1 2026.

Despite this tariff drag, the margin expansion reflects underlying operational strength. The company is actively managing the cost pressures through ongoing efficiency initiatives and supply chain adjustments. While the tariffs may delay the achievement of its long-term 65% gross margin goal by two to three years, the core drivers of growth and margin improvement remain intact. Full-year guidance, anticipating $2.17–$2.27 billion in revenue and $410–$460 million in net profit, is supported by these operational gains alongside FX tailwinds and cost discipline, though hardware sales are expected to moderate in the second half.

Risk Assessment & Margin Constraints

Fisher & Paykel Healthcare faces structural vulnerabilities tied to U.S. tariff policies, with 43% of revenue exposure and 60% of U.S. sales sourced from Mexico, where 25% tariffs now apply. Combined with 10% duties on Chinese imports, these trade barriers have already shaved 32 basis points off gross margins in H1 2026, with annualized impacts projected at 130 bps. The company's 65% gross margin target is now delayed by two to three years, as supply chain adjustments and cost pressures outweigh short-term efficiency gains.

While operational discipline-such as manufacturing optimizations and FX tailwinds-has partially offset tariff impacts, the structural reliance on Mexico-China supply chains leaves limited room for maneuver. The firm's $1.089 billion H1 revenue growth and 63% gross margin reflect resilience, but hardware sales moderation in H2 and persistent tariff uncertainty could test margin resilience further. Strategic flexibility remains constrained, with supply chain diversification efforts likely to yield incremental relief over years rather than quarters.

The delay in hitting margin goals underscores a broader tension: short-term cost mitigation cannot fully neutralize policy-driven structural risks. Shareholders should monitor May 2026 outlook updates for clarity on supply chain pivots and cost-recovery pathways, even as the firm's disciplined financial execution cushions near-term volatility.