Transcript Slide 1

THE FEMALE
HEALTH COMPANY
INVESTOR PRESENTATION
Q1 2015
2/6/15
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
FHCO
Core product
FC2 Female Condom
Gross margin
~57%
Operating margin
~22%
Total current assets
$14 million
no L/T debt at 12/31/14
3
The “Worlds” of FHC
Consumer
Global Market
$4-6 Billion
Global Public Sector
Family Planning
HIV/AIDS
Global Condom Public Health
$ 400 – 500 Million
4
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
(1) Source: World Health Organization
42%
Male
58%
Female
• 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 )
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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.
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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
7
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
•
Non-hormonal birth control alternative
•
New Global Focus on Family Planning
– Gates/DFID Summit – New Funding
•
Female Controlled Protection
– Basic rights, education, opportunity
8
Geographic Expansion
FC2 Now Distributed Into 144 Countries
• Female Health owns certain worldwide rights to FC2
• Patents and Trademarks
Yellow shading shows distribution
9
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
10
Progress on Strategy
Consumer FC2
• New FHC Direct online purchase starting mid-February
• Channel expansion – new distributors brought on
e.g. Kaiser Permanente
• Product line extensions in development
multiple colors/scents
• Multiple target segment focus groups ongoing to refine
strategic approach
• OB-GYN strategy in development
11
Progress on Strategy
Diversification
• Focus on Women’s Reproductive Health
• Many companies/products evaluated
• Ongoing discussions with a few targeted
opportunities
12
State-of-the-Art Manufacturing
100 million unit capacity, with ability to add
up to an additional 100 million units.
13
US Programs Highlights
• FC2 Prevention Programs in Key US Cities –
concentrated where HIV/AIDS most prevalent
• College Campus Program – raise awareness of and
access to FC2 on campus
• Online Ordering Presence
• Market research into consumer product underway
14
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:
– US:
– State:
~$63 M – No expiration date
~$17 M – Expiring in years 2018 to 2027
~$17 M – Expiring in years 2018 to 2027
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FY 2015 – 2013 Results
Q1
FY 2015
(millions)
2014
2013
(millions) (millions)
Units
12.2
42.5
54.8
Revenue
$6.7
$ 24.5
$31.5
Gross Margin
$3.8
$ 13.1
$17.5
Operating
Income
$1.5
$ 3.9
9.8
Tax Expense
(Benefit)
$0.7
$ 1.5
($4.4)
Net Income
$0.8
$ 2.4
$14.3
EPS - Diluted
$0.03
$ 0.08
$0.50
Tax-cash
payments
$0.06
$0.77
$0.35
• 8 years profitable
• No debt
• Accumulated cash for
acquisitions
• Brazil tender for up to 50
million units / 25 million
units ordered
• Strategy to accelerate
growth in current
markets and expand into
new markets
• NOL’s utilized to reduce
cash payments for
income taxes
17
Unit Sales
100% sales of lower
price, higher margin,
next generation FC2
Millions
70
61.6
60
54.8
50
40
34.7
30
20
CAGR
13.2 %
40.2
42.5
38.9
32.9
25.9
19.6
10
0
2006
FC1
2007
2008
2009 2010
FC1 & FC2
2011
2012
2013
FC2
2014
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Net Revenues
100% sales of lower price,
higher margin,
next generation FC2
$ in millions
40
$35.0
35
$31.5
30
$25.6
25
20
15
$27.5
$24.5
$22.2
$19.3
$18.6
$14.8
10
5
0
2006
FC1
2007
2008
2009
FC1 & FC2
2010
2011
2012
2013
2014
FC2
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Gross Margin
100% sales of lower price,
higher margin,
next generation FC2
% of net revenue
53.1
49.1
50
40
58.9
58.2
60
55.6
53.6
2013
2014
41.9
37.0
37.0
2006
2007
30
20
10
0
FC1
2008
2009
FC1 & FC2
2010
2011
2012
FC2
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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
•
Effective January 20, 2014
–
Previous Experience
• Royal DSM – President Biologics and
BioSolutions
• The Female Health Company –
Executive Vice President
• Baxter International
–
Effective January 1, 2013
–
Previous Experience
• Ernst & Young LLP Audit Partner
•
Karen King – CEO and President
–
Michele Greco – Executive Vice President and Chief
Financial Officer
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
22
Competition
FC2
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
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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
24
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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