Transcript Slide 1
THE FEMALE HEALTH COMPANY
INVESTOR PRESENTATION Q3 2014
8/1/14
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 dual
protection against: Unintended pregnancy Sexually transmitted infections (STIs), including HIV/AIDS
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At a Glance
NASDAQ Core product Gross margin Operating margin Total current assets FHCO FC2 Female Condom ~54% ~23% $15 million no L/T debt at 6/30/14 3
Shareholder Return
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Closing stock price on June 30, 2014 - $5.51 vs. June 30, 2013 $9.86, a decrease of 44%
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The average annual total return for the eight year 2005-2013 period (since becoming profitable) was 67% Stock Prices 4
Consumer
The “Worlds” of FHC
Global Public Sector Global Market $4-6 Billion Family Planning HIV/AIDS Global Condom Public Health $ 400 – 500 Million 5
HIV/AIDS Market Overview
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No. 1 cause of death globally for women age 15-44 80% of female cases contracted via heterosexual transmission
42% Male 58% Female
Male and female condoms are the only prevention products available No near-term alternative prevention products on the horizon
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In Sub-Saharan Africa, women represent >58% of adults with HIV/AIDS infections (1 )
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Worldwide, women living with HIV/AIDS is 50% of the global total (1 ) (1) Source: World Health Organization 6
FC2 Female Condom vs. Male Condom
Found to be acceptable by women and partners in many cultures Allows access to more prevention options Non-interruptive, can be inserted in advance of sexual activity FC2 is simply an alternative to the male condom Material, nitrile polymer, is stronger than latex, reducing the probability of tearing, and is non-allergenic Transfers heat, warming to body temperature for natural feeling sex 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.
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FHC Brand
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Quality, Reliability, Safety
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Partnership in solving significant global issues
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HIV/AIDS, other STIs
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Poverty – Family planning Female empowerment and rights
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Environment – Population control
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Delivers to all stakeholders
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Why FC2 Demand Will Continue To Grow
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Continued Global Focus on HIV
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Feminization of AIDS – leading cause of death women age 15-44
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35 million persons living with AIDS, 2.3 million newly infected in 2012
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New Global Focus on Family Planning
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Addresses poverty, climate change, human rights Gates/DFID Summit – New Funding
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Female Controlled Protection
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Basic rights, education, opportunity
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Investors
FHC Stake Holders
Society, Countries, Regulatory Bodies
Customers – Procurers
Government/UN Agencies Distributors Partners - NGO’s, Social Marketing, Advocacy Groups
Employees Customers – Users
Suppliers
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Geographic Expansion FC2 Now Distributed Into 144 Countries
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Female Health owns certain worldwide rights to FC2
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Patents and Trademarks
Yellow shading shows distribution
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FHC Key Goals/Strategy
• – –
Accelerate and Grow Demand for FC2 Add sales and marketing team
(Utilizing portion of training budget)
Expand existing programs
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Geographic expansion Explore the potential for consumer product
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Diversification of Product Offering Leverage unique channel, market focus or capabilities
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Acquisition of another product, technology and/or business
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State-of-the-Art Manufacturing
100 million unit capacity, with ability to add up to an additional 100 million units.
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US Programs Highlights
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FC2 Prevention Programs in Key US Cities – concentrated where HIV/AIDS most prevalent.
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College Campus Program launched – raise awareness of and access to FC2 on campus.
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Online Ordering Presence
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Global Program Highlights
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Multilingual (English, Portuguese, Spanish and French) website that provides downloadable training and education is visited 1,500 times per month.
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YouTube multilingual FC2 animation and instruction site has received over 10 million views.
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133 training and education sessions in 7 countries with an estimated 19,749 people participating in these sessions.
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More than 30 countries asked for and received information and advice on training and education.
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Low Risk, Unique Business Model
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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 Low sales and marketing expense, shifting some training/education funding to sales and marketing Strong free cash flow $2 M unused credit facility NOL carryforward:
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UK: ~$63 M – No expiration date
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US: ~$19 M – Expiring in years 2018 to 2027
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State: ~$17 M – Expiring in years 2018 to 2027 16
FY 2013 – 2012 Results
Units Revenue Gross Margin Operating Income Tax Benefit/Expense Net Earnings EPS - Diluted
2013 (millions)
54.8
% Change 2013 vs. 2012
-11.2%
Q3 YTD FY2014 (millions)
32.8
% Change 2014 vs. 2013
-29% $ 31.5
$ 17.5
$ 9.8
-10.2% -15.1% -10.5% $ 18.9
$ 10.2
$ 4.4
-29% -33% -45% $ 4.4
$ 14.3
-2.2% -6.3% * $ 3.0
* -61% $ 0.50
-0.7% $ 0.10
-63% 2012 results in part reflect catch up from delayed 2011 orders.
*Tax Benefit/Expense will be considered at end of FY2014.
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Unit Sales
Millions 70 60 50 40 30 20 10 0 19.6
2006 FC1 25.9
34.7
40.2
38.9
100% sales of lower price, higher margin, next generation FC2 61.6
54.8
32.9
2007 2008 2009 FC1 & FC2 2010 2011 2012 FC2 2013
CAGR 18.7 % 18
Net Revenues
15 10 5 0 40 35 30 25 20 $ in millions $14.8
$19.3
100% sales of lower price, higher margin, next generation FC2 $35.0
$31.5
$25.6
$27.5
$22.2
$18.6
2006 FC1 2007 2008 2009 FC1 & FC2 2010 2011 2012 FC2 2013
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20 10 0 60 50 40 30
Gross Margin
% of net revenue 49.1
58.2
100% sales of lower price, higher margin, next generation FC2 58.9
55.6
53.1
41.9
37.0
37.0
2006 FC1 2007 2008 2009 FC1 & FC2 2010 2011 2012 FC2 2013
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Talented Management Team
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OB Parrish - Chairman
– A FHCO founder – Previous Experience • Pfizer – Division Executive V.P. of International • 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 – CFO and Vice President
– Effective January 1, 2013 – Previous Experience • Ernst & Young LLP Audit Partner •
Susan Ostrowski – Executive Vice President of New Business Development
-- Effective July 10, 2014 – Previous Experience • DuPont, BASF, DSM, and Cambrex •
Mike Pope – Vice President of Global Operations
– Previous Experience • Chartex, Franklin Medical, Warner Surgical Products
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FC2 Competition Cupid
PATH – Women’s Condom 22
Competition FC2 Cupid
Nitrile Polymer Natural rubber latex 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. Non-allergenic Pre-lubricated Allergenic Pre-lubricated May use water and oil based lubricants May be inserted in advance May only use water based lubricants
PATH –
Women’s Condom
Polyurethane 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 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
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FC2 Barriers To Entry
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Patents principally on design and rings:
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38 patents in 50 countries
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FC2 proprietary material formulation
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Worldwide product specific training and education
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Country registration process
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FDA approval/WHO clearance 24
FHC Summary
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Stable, profitable company
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Partner in resolving critical societal needs
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Unique cost-effective business model
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Small percentage of total potential market reached to date = opportunity for growth
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Experienced leadership
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