Download - INVESTOR PRESENTATION FY /1/14
THEHEALTH COMPANY
INVESTOR PRESENTATIONFY 201412/1/14
FEMALE
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The Female Health Company manufactures and markets the FC2 Female Condom.
FC2 is the only product currently available: Approved by the FDA and
cleared by the WHO Under a women’s control
Which provides dualprotection against: Unintended pregnancy Sexually transmitted infections (STIs), including HIV/AIDS
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At a Glance
NASDAQ FHCO
Core product FC2 Female Condom
Gross margin ~54%
Operating margin ~16%Total current assets $13 million no L/T debt at 9/30/14
The “Worlds” of FHC
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Consumer Global Public Sector
Global Market
$4-6 Billion
Family Planning
HIV/AIDS
Global Condom Public Health
$ 400 – 500 Million
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Global HIV/AIDS Market Overview
• No. 1 cause of death globally for women age 15-44
• 80% of female cases contracted via heterosexual transmission
• Male and female condoms are the only prevention products available
• No near-term alternative prevention products on the horizon
• In U.S. 20 million new STIs annually; half occurring in young people aged 15-24
58%Female
42%Male
• In Sub-Saharan Africa, women
represent >58% of adults
with HIV/AIDS infections (1 )
• Worldwide, women living with
HIV/AIDS is 50% of the global total (1 )
(1) Source: World Health Organization
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FC2 Female Condom vs. Male Condom
FC2 is simply an alternative to the male condom
Found to be acceptable by women and partners in many cultures
Material, nitrile polymer, is stronger than latex, reducing the probability of tearing,
and is non-allergenic
Allows access to more prevention options
Transfers heat, warming to body temperature for natural feeling sex
Non-interruptive, can be inserted in advance of sexual activity
Reduces health costs by increasing HIV/AIDS prevention *
* Every $1 spent on Female Condoms represents $20 in healthcare savings per the Johns Hopkins Study published in AIDS and Behavior, 2012.
FHC Brand• Quality, Reliability, Safety
• Partnership in solving significant global issues– HIV/AIDS, other STIs– Poverty – Family planning– Female empowerment and rights
• Delivers to all stakeholders
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Why FC2 Demand Will Continue To Grow
• Continued Global Focus on HIV– Feminization of AIDS – leading cause of death women
age 15-44– 35 million persons living with AIDS, 2.3 million newly
infected in 2012
• Exploding incidence of STIs around the world– 20M new cases every year in the US alone, half
occurring in young people aged 15-24
• New Global Focus on Family Planning– Gates/DFID Summit – New Funding
• Female Controlled Protection– Basic rights, education, opportunity
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FHC Stake Holders
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InvestorsCustomers – Procurers
Government/UN Agencies
Customers – UsersEmployees
Partners - NGO’s, Social
Marketing, Advocacy
Groups
Suppliers
Distributors
Society, Countries,
Regulatory Bodies
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• Female Health owns certain worldwide rights to FC2
• Patents and Trademarks
Yellow shading shows distribution
Geographic ExpansionFC2 Now Distributed Into 144 Countries
FHC Key Goals/Strategy
• Accelerate and Grow Demand for FC2– Add sales and marketing team (Redeploy portion of training budget)– Growth in existing markets – Geographic expansion– Explore the potential for consumer product
• Diversification of Product Offering– Leverage unique channel, market focus or capabilities– Acquisition of another product, technology and/or
business – Lower business risk, improve consistency in
revenue/earnings
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State-of-the-Art Manufacturing
100 million unit capacity, with ability to add
up to an additional 100 million units.
US Programs Highlights• FC2 Prevention Programs in Key US Cities –
concentrated where HIV/AIDS most prevalent
• College Campus Program launched – raise awareness of and access to FC2 on campus
• Online Ordering Presence
• Market research into consumer product underway
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Global Program Highlights• Multilingual (English, Portuguese, Spanish and French)
website that provides downloadable training and education is visited 1,500 times per month.
• YouTube multilingual FC2 animation and instruction site has received over 10 million views.
• 184 training and education sessions in 7 countries with an estimated 118,000 people participating in these sessions.
• More than 40 countries asked for and received information and advice on training and education.
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Low Risk, Unique Business Model
• Modest inventory level, production primarily against orders • Low foreign currency exchange risk, FHCO & Subs Report in
$USD• Minimal credit risk, less than 1% bad debt in past five years• Shifting training/education spending to sales/marketing• $2 M unused credit facility• NOL carryforward:
– UK: ~$63 M – No expiration date– US: ~$17 M – Expiring in years 2018 to 2027– State: ~$17 M – Expiring in years 2018 to 2027
• 8 years profitable• No debt• Accumulated cash for
acquisitions• Recently awarded Brazil
tender for up to 50 million units
• Strategy to accelerate growth in current markets and expand into new markets
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2014(millions)
2013(millions)
Units 42.5 54.8
Revenue $ 24.5 $31.5
Gross Margin $ 13.1 $17.5
Operating Income $ 3.9 9.8
Tax Expense (Benefit) $ 1.5 ($4.4)
Net Income $ 2.4 $14.3
EPS - Diluted $ 0.08 $0.50
FY 2014 – 2013 Results
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2006 2007 2008 2009 2010 2011 2012 2013 20140
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20
30
40
50
60
70Millions
25.9
34.740.2 38.9
61.6
32.9
19.6
100% sales of lower price, higher margin, next generation FC2
FC1 FC1 & FC2 FC2
54.8
CAGR 13.2 %
Unit Sales
42.5
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Net Revenues
2006 2007 2008 2009 2010 2011 2012 2013 201405
10152025303540
$ in millions
$19.3
$25.6 $27.5
$22.2$18.6
$35.0
$14.8
100% sales of lower price, higher margin, next generation FC2
FC1 FC1 & FC2 FC2
$31.5
$24.5
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Gross Margin
2006 2007 2008 2009 2010 2011 2012 2013 20140
10
20
30
40
50
60% of net revenue
37.041.9
49.1
58.253.1
58.9 55.6
37.0
100% sales of lower price, higher margin, next generation FC2
FC1 FC1 & FC2 FC2
53.6
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Talented New Management Team
• OB Parrish - Chairman– A FHCO founder– Previous Experience
• Pfizer – Executive V.P. of International Division
• G.D. Searle – President of Global Pharmaceuticals
• Karen King – CEO and President– Effective January 20, 2014– Previous Experience
• Royal DSM – President Biologics and BioSolutions• The Female Health Company – Executive Vice President• Baxter International
• Michele Greco – Executive Vice President and Chief Financial Officer– Effective January 1, 2013– Previous Experience
• Ernst & Young LLP Audit Partner• Susan Ostrowski – Executive Vice President of Sales
and Marketing
-- Effective July 10, 2014– Previous Experience
• DuPont, BASF, DSM, and Cambrex• Martin Tayler – Executive Vice President of Global
Operations– Effective September 15, 2014– Previous Experience
• SSL International PLC (under Durex and Dr Scholl’s brands),Reckitt Benckiser Group plc
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Competition
FC2 Cupid PATH – Women’s Condom
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CompetitionFC2 Cupid PATH – Women’s Condom
Nitrile Polymer Natural rubber latex Polyurethane
2 retention rings:-External ring covers the lips of the vagina- Internal ring lies against the cervix and anchors the device
Octagonal outer ring. Sponge to anchor the device internally.
Large external ring: -Tabs on the exterior of the device that reportedly adhere to the vaginal wall- Inserter made from a water soluble polymer that melts in the body and may help keep the product in place
Non-allergenic Allergenic
Pre-lubricated Pre-lubricated Not Pre-lubricated-Must be lubricated at time of use-Only internal side of product may be lubricated. External lubrication may prevent tabs from working
May use water and oil based lubricants
May only use water based lubricants
May use water and oil based lubricants
May be inserted in advance
FC2 Barriers To Entry• Patents principally on use of nitrile and nitrile/design
elements:— 38 patents in 50 countries
• FC2 proprietary material formulation
• Worldwide product specific training and education
• Country registration process
• FDA approval/WHO clearance
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FHC Summary• Stable, profitable company
• Partner in resolving critical societal needs
• Unique cost-effective business model
• Small percentage of total potential market reached to date = opportunity for growth
• Experienced leadership
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