Nanosonics Limited · ASX:NAN
Nanosonics — H1 FY23 Earnings Presentation
45 slides from Nanosonics's earnings presentation, Feb 23, 2023
Slide 1: 2023 Half Year Results Investor Presentation
Infection Prevention. For Life. 2023 HALF YEAR RESULTS INVESTOR PRESENTATION Michael Kavanagh, CEO and President McGregor Grant, CFO and Company Secretary Nanosonics Limited | Half Year Results 2023 1
Slide 2: Disclaimer
This presentation is intended to provide a general outline only and is not intended to be a definitive statement on the subject matter covered in it. The information in this presentation, whether written or verbal, has been prepared without taking into account the commercial, financial or other need
Slide 3: Contents
I. Highlights II. Installed base, upgrades and total units placed III. Financial results IV. Research & development V. CORIS® – our next instrument reprocessing product platform VI. Outlook Appendix Contents Nanosonics Limited | Half Year Results 2023 3
Slide 4: Our Mission
OUR MISSION We improve the safety of patients, clinics, their staff and the environment by transforming the way infection prevention practices are understood and conducted and introducing innovative technologies that deliver improved standards of care. Nanosonics Limited | Half Year Results 2023 4
Slide 5: H1 FY23 Key Highlights
FY23 H1 FY23 – KEY HIGHLIGHTS H1 “Total revenue for the half year grew 35% to $81.6 million resulting from improved pricing, increased total capital unit placements and consumables N E W I N ST AL L ED U PG R ADE S T O T AL U N I T S T O T AL C API T AL C O NSUMABLE S/ volume growth. B ASE PL AC ED
Slide 6: H1 FY23 Key Highlights Contd.
H1 FY23 – KEY HIGHLIGHTS CONTD. FY23 PERFORMANCE H1 SUCCESSFUL TRANSITION OF NORTH AMERICAN SALES MODEL delivering ability to manage and support total installed base, margin improvements, growth in upgrade volumes plus execution of enterprise agreements with all major Integrated Delivery Networks (I
Slide 7: Installed base and Upgrades
Installed base and Upgrades Nanosonics Limited | Half Year Results 2023 7
Slide 8: Installed Base
INSTALLED BASE FY23 H1 GLOBAL TOTAL INSTALLED BASE Units NORTH AMERICA 27,240 26,130 31,120 4% In last 6 units months 24,680 10% In last The global installed 12 months 29,850 31,120 H1 H2 H1 base increased by 23,720 26,750 FY22 FY23 1,270 units to 31,120 20,930 units, an increase of EUROPE AND M
Slide 9: New Installed Base
NEW INSTALLED BASE FY23 H1 NORTH GLOBAL NEW INSTALLED BASE AMERICA Units 1,270 820 units 590 610 630 430 680 8% FY23 H1 vs FY22 H1 The global new installed 58% FY23 Q2 vs FY23 Q1 940 base increased by 750 750 780 Q1 Q2 Q3 Q4 Q1 Q2 1,270 units in the half 660 FY22 FY23 with 490 units in Q1 490 EU
Slide 10: Upgrades
UPGRADES FY23 H1 NORTH GLOBAL UPGRADES AMERICA Units 800 units 540 310 400 58% FY23 H1 vs FY22 H1 210 200 800 trophon2 upgrades 170 190 100% FY23 Q2 vs FY23 Q1 were installed in the first 375 half up 100% compared 260 Q1 Q2 Q3 Q4 Q1 Q2 FY22 FY23 with prior corresponding 170 230 225 EUROPE AND pe
Slide 11: Total Units Placed
TOTAL UNITS PLACED FY23 H1 GLOBAL TOTAL UNITS PLACED NORTH Units AMERICA 1,950 8% FY23 H1 vs. 2,070 1,710 units 1,580 500 FY22 H1 380 600 Upgrades Q2 represented 63% 1,450 Total unit placements 2,290 New IB 1,200 1,110 of total placements in the half. 2,070 grew 14% on prior 1,810 600 H1 H2 H1 cor
Slide 12: Financial results
Financial results Nanosonics Limited | Half Year Results 2023 12
Slide 13: Global Revenue
GLOBAL REVENUE FY23 H1 $81.6m H1 H2 T O T AL R E V E NUE Total revenue for the half year Global, $m was $81.6 million, up 35% on 120.3 the prior corresponding period 100.1 $103.1 (27% in constant currency1) and 84.3 59.7 $81.6 35% vs. FY22 H1 37% compared with the prior 51.6 60.0 27% vs. FY22 H1
Slide 14: North America Revenue
NORTH AMERICA REVENUE FY23 H1 $74.1m H1 H2 T O T AL R E V E NUE North America, $m Total revenue for the half was 106.9 $74.1 million, up 36% on FY22 90.1 89.2 H1 and 41% compared with 76.5 $74.1 52.5 36% vs. FY22 H1 FY22 H2. 39.4 46.5 52.3 Capital revenue for the half was $23.4 74.1 54.4 million u
Slide 15: Europe and Middle East Revenue
EUROPE AND MIDDLE EAST REVENUE FY23 H1 $3.6m H1 H2 Total revenue for the half was T O T AL R E V E NUE Europe and Middle East, $m $3.6 million up 6% on prior 7.5 corresponding period and down 7.2 12% on prior half. 5.2 3.6 4.1 6% vs. FY22 H1 Performance in the first half was impacted by 3.8 $3.6 2
Slide 16: Asia Pacific Revenue
ASIA PACIFIC REVENUE FY23 H1 H1 H2 $3.8m T O T AL R E V E NUE Asia Pacific, $m Total revenue for the half was 6.7 $3.8 million up 31% on prior 5.9 corresponding period and 27% 4.7 $3.8 compared with the prior half. 4.0 4.1 3.0 31% vs. FY22 H1 2.3 2.1 Capital revenue for the half was $1.6 million u
Slide 17: Global Gross Profit Margin
GLOBAL GROSS PROFIT MARGIN FY23 H1 H1 H2 78.9% T O T AL G R O SS PR O FI T MAR G I N Global, $m Gross profit margin was 78.9% for the half year, up 2.3 points compared with H1 FY22. 79.4% 78.9% 77.0% 76.6% 76.2% 2.3PTS vs. FY22 H1 H1 H2 H1 H2 H1 FY21 FY22 FY23 The stronger gross margin was driven
Slide 18: Global Operating Expenses
GLOBAL OPERATING EXPENSES FY23 H1 H1 H2 $54.5m T O T AL O PE R AT I NG E XPE NSE S Global, $m 90.5 In line with the Company’s ongoing strategy to invest for 63.2 70.8 growth, operating expenses 49.2 47.8 $54.5 28% vs. FY22 H1 of $54.5 million for the half 32.5 37.7 14% vs. FY22 H2 year increased
Slide 19: Investing in a significant Infection Prevention market opportunity
OPERATING COSTS Investing in a significant Infection Prevention market opportunity MARKET DEVELOPMENT Nanosonics has SUSTAINING MATURE MARKET GROWTH established significant • Maintain new installed base unit momentum • Convert significant installed base upgrade opportunity • Deliver exceptional cust
Slide 20: Global Profit Before Tax
GLOBAL PROFIT BEFORE TAX FY23 H1 H1 H2 $ 11.4m T O T AL PR O FI T B E FOR E T AX Global, $m Profit before tax was $11.4m for the half year up from $3.3 $11.4 million in prior corresponding 11.0 245% vs. FY22 H1 period. 3.3 0.2 -1.7 H1 H2 H1 H2 H1 FY21 FY22 FY23 Graphs are not to scale and therefor
Slide 21: Free Cash Flow
FY23 H1 $6.1m FREE CASH FLOW Global, $m Free cash flow for the half year 8.3 $6.1 of $6.1 million compared with 3.6 a net outflow of $3.8 million in H1 FY22. -2.4 -3.8 H1 H2 H1 H2 H1 FY21 FY22 FY23 $99.3m CASH AND CASH EQUIVALENTS Global, $m as at 31 December 2022 $99.3 96.0 94.5 Cash and cash equiv
Slide 22: Profit and Loss Summary
PROFIT AND LOSS SUMMARY FY23 H1 FY23 FY22 Change % FY22 Change % HIGHLIGHTS $ millions H1 H1 (vs H1 FY22) H2 (vs H2 FY22) • Half year revenue of $81.6 million, up Capital revenue 25.9 19.0 36% 18.7 39% 35% (27% in cc1) on prior corresponding period. Consumable/service revenue 55.7 41.6 34% 41.
Slide 23: Research & Development
Research & Development Nanosonics Limited | Half Year Results 2023 23
Slide 24: Investment in R&D
INVESTMENT IN R&D During the half, Global, $m 22.3 17.2 Nanosonics continued to 15.6 11.6 13.6 27% vs. FY22 H1 invest in its product 11.4 8.8 9.6 expansion strategy 5.9 10.7 13.6 across Ultrasound 5.5 6.8 7.6 Reprocessing, FY19 FY20 FY21 FY22 FY23 H1 Endoscopy Reprocessing and Traceability & FIVE
Slide 25: Transforming the cleaning of flexible endoscopes
Transforming the cleaning of flexible endoscopes Our Next Instrument Reprocessing Product Platform All research and new product development programs involve inherent risks and uncertainties which can impact commercialisation timelines. Product shown is a pre-production unit. Nanosonics Limited | Hal
Slide 26: Endoscope reprocessing is an established global practice
Endoscope L AR G E V AR I E T Y O F E N D OSCOPE S F O R C O MPLE X C L I NI C AL PR O CE DUR E S… reprocessing is an established Colonoscopy Gastroscopy Duodenoscopy Enteroscopy Endoscopic Ultrasound Bronchoscopy Urology E.N.T. Gynaecology Endoscopes require cleaning and disinfection (reprocessing)
Slide 27: Reprocessing failures and infections have been reported
REPROCESSING FAILURES AND INFECTIONS HAVE BEEN REPORTED ACROSS ALL MAJOR ENDOSCOPE TYPES… Boroscope & Scanning Electron Microscope Images …indicating a significant unmet need with current methods. SUCTION/BIOPSY SUCTION/BIOPSY CHANNEL# DISTAL TIP# CHANNEL# FDA MAUDE database Increase in adverse even
Slide 28: There is nothing on the market that addresses manual cleaning limitations
A MAJOR ROOT CAUSE OF REPROCESSING “To expect a human individual to perform over 100 steps FAILURES IS THE CURRENT LIMITATIONS OF to clean an object and expect that to be done perfectly MANUAL CLEANING every single time without any residue with no mistakes is unrealistic and it's not a possibility.
Slide 29: A unique solution that aims to set a new benchmark in cleaning efficacy
A unique solution that aims to set a new benchmark in cleaning efficacy, replacing manual processes with automation and a revolutionary mode of action. All research and new product development programs involve inherent risks and uncertainties which can impact commercialisation timelines. Product sho
Slide 30: CORIS Aims to Address the Limitations of Manual Cleaning
CORIS® AIMS TO ADDRESS THE LIMITATIONS OF MANUAL CLEANING N O VE L MO D E O F AC T I O N N E W B E N CHMAR K S I N C L E ANI N G E F F I CACY 1 CORIS® uses a proprietary, environmentally-friendly cleaning agent – coupled with an advanced delivery mechanism – 3 Testing to date demonstrates that: CORI
Slide 31: CORIS Is Being Designed to Address the Limitations of Manual Cleaning
CORIS® IS BEING DESIGNED TO ADDRESS THE LIMITATIONS OF MANUAL CLEANING N E W B E N CHMAR K S I N CORIS® technology delivers far superior efficacy over manual cleaning C L E ANI NG E F F I CACY in removing biofilm from small channels that cannot be brushed today. HEAD-TO-HEAD CLEANING TEST ON A SIMUL
Slide 32: Aiming to set a new benchmark in cleaning efficacy
AI MI N G T O SE T A N E W B E N CHMAR K I N C L E ANI NG E F F I C ACY “There is no doubt that this new technology has the potential to greatly improve the effectiveness of flexible endoscope reprocessing.” Michelle Alfa, PhD, FCCM, Clinical Microbiologist, International expert in biofilm and endos
Slide 33: CORIS Represents a Significant Global Opportunity
CORIS® REPRESENTS A SIGNIFICANT GLOBAL OPPORTUNITY An established and growing market >60m procedures growing at 6% annually# MAJOR GROWTH DRIVERS Aging population Increasing incidence of colorectal cancer Various national-level screening programs Expensive and ineffective ANNUAL current standard of
Slide 34: CORIS Is Being Designed as a Global Solution
“CORIS® is being VARYING REGULATORY REQUIREMENTS designed as a global Engagement with the FDA De novo Regulatory United States Pathway solution ultimately to be Food and Drug through their Safer In the United States, CORIS® Technologies Program (STeP) is used across all types of Administration ongoi
Slide 35: Outlook
Outlook Nanosonics Limited | Half Year Results 2023 35
Slide 36: Business Outlook - FY23
“The positive outcomes in the first half, coupled with anticipated ongoing growth momentum results in a positive upgrade to the outlook for the full year.” - Michael Kavanagh BUSINESS OUTLOOK – FY23* REVENUE + Maintaining pricing benefits achieved in H1. Growing capital revenue with new installed ba
Slide 37: Appendix
Appendix Nanosonics Limited | Half Year Results 2023 37
Slide 38: trophon Opportunity
trophon® Opportunity Nanosonics Limited | Half Year Results 2023 38
Slide 39: Attractive Annuity-Based Business Model
ATTRACTIVE ANNUITY-BASED BUSINESS MODEL In markets with strong fundamentals of adoption, the trophon business can generate significant operating profit associated with the attractive high-margin business model. NORTH AMERICA FY23 H1 KEY PERFORMANCE METRICS Revenue $74.1m INSTALLED BASE OPPORTUNITY I
Slide 40: Significant Global Market Opportunity
SIGNIFICANT GLOBAL MARKET OPPORTUNITY Market Penetration GLOBAL Installed base opportunity • Significant global growth opportunity. 140,000 1 • Increasing number of international guidelines requiring high level 22% disinfection (HLD) supporting growing international demand. UNITS • Nanosonics expand
Slide 41: trophon Value Opportunity
TROPHON VALUE OPPORTUNITY In addition to managing a growing installed base, we strive to deliver continuous value over the lifetime of trophon by driving improved compliance with HLD standards. Initial installation Upgrade YEAR 8 14 trophon2 + Printer CAPITAL + Cart + Mount + ... ECOSYSTEM (CONSUM
Slide 42: Consumables
Delivering consistent protection across every high-level disinfection cycle Consumables trophon®2 THE STANDARD OF CARE BROAD PROTECTION Tested against an extensive range of infectious pathogens, including STIs, hepatitis A, B and C as well as HPV, Clostridium difficile spores and drug-resistant bact
Slide 43: Range of Selling Models
RANGE OF SELLING MODELS1 DIRECT CHANNEL DISTRIBUTION CHANNEL MANAGED FULL SERVICE CAPITAL SALE EQUIPMENT SERVICE RENTAL DISTRIBUTION CAPITAL RESELLER • Capital equipment sold upfront with • Nanosonics provides capital • Customer rents capital equipment. • Distributor purchases capital • Distributor
Slide 44: Income tax
Income tax Nanosonics Limited | Half Year Results 2023 44
Slide 45: Income Tax
INCOME TAX $ million FY23 H1 FY22 H1 KEY POINTS Income tax expense / (benefit) 1.0 (0.6) • Effective income tax rate for the half year was 8.9% • Deferred tax asset attributable to carried forward tax losses relate to the recognised portion of losses for UK Components of Net Deferred Tax Asset (DTA)