Nanosonics Limited · ASX:NAN
Nanosonics — FY2021 Earnings Presentation
57 slides from Nanosonics's earnings presentation, 2021
Slide 1: Infection Prevention. For Life. 2021 Full Year Results
Infection Prevention. For Life. 2021 FULL YEAR RESULTS INVESTOR PRESENTATION Michael Kavanagh, CEO and President McGregor Grant, CFO and Company Secretary Nanosonics Limited | Full Year 2021 1
Slide 2: Disclaimer
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
Slide 3: Contents
I. FY21 HIGHLIGHTS CONTENTS II. INSTALLED BASE GROWTH III. FINANCIAL RESULTS REVIEW IV. TROPHON® OPPORTUNITY V. NANOSONICS AUDITPROTM OPPORTUNITY VI. INVESTING FOR GROWTH – RESEARCH & DEVELOPMENT VII. ESG VIII. STRATEGIC PRIORITIES IX. FY22 OUTLOOK APPENDIX Nanosonics Limited | Full Year 2021 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 NanosonicsLimited Limited || Full Fu
Slide 5: FY21 Key Highlights
FY21 KEY HIGHLIGHTS A year of ongoing achievement with a significant recovery in H2 to pre-COVID growth momentum levels CONSUMABLES/ INSTALLED BASE TOTAL REVENUE C A P IT A L R E V E N U E S E R V IC E R E V E N U E FY21 26,750 $ 103.1m $ 26.7m $ 76.4m 1 1 1 13% 3% (12% cc ) 11% (8% cc ) 9%
Slide 6: FY21 Key Highlights Contd.
FY21 KEY HIGHLIGHTS CONTD. MARKETS R&D LAUNCH OF NANOSONICS AUDITPRO TM LARGER MARKET IN NORTH AMERICA Launched new digital product platform delivering a unique new New research on the U.S. ultrasound market shows significant digital workflow compliance management system. growth, indicating the TAM
Slide 7: Installed Base Growth
INSTALLED BASE GROWTH Nanosonics Limited | Full Year 2021 7
Slide 8: Global Installed Base
GLOBAL INSTALLED BASE TOTAL INSTALLED BASE NEW INSTALLED BASE BY HALF 26,750 units 26,750 Global installed base 23,720 grew 13% in last 20,930 1,650 12 months. 1,570 17,740 1,380 14,160 1,220 20% H2 vs. H1 H1 H2 H1 H2 FY17 FY18 FY19 FY20 FY21 FY20 FY21 Significant recovery in H2 as market condition
Slide 9: Regional Installed Base
REGIONAL INSTALLED BASE TOTAL INSTALLED BASE NEW INSTALLED BASE BY HALF NORTH 23,480 AMERICA 20,990 18,570 1,360 1,360 15,620 Installed base up 12% (2,490 12,400 1,130 20% H2 vs. H1 units) vs PCP. Significant 1,060 12% vs. FY20 recovery in H2 FY21 with new installed base up 28% 28% H2 vs. PCP vs
Slide 10: Financial Results Review
FINANCIAL RESULTS REVIEW Nanosonics Limited | Full Year 2021 10
Slide 11: 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 12: Global Revenue
GLOBAL REVENUE $103.1m ANNUAL GRO WTH Global, $m CONSTANT CURRENCY1 Global Revenue up 3% 111.6 (12% in constant currency). 100.1 103.1 84.3 3% vs. FY20 12% vs. FY20 60.7 FY18 FY19 FY20 FY21 FY21* CONSTANT CURRENCY1 Significant recovery in 2nd half HALF O N HALF GRO WTH Global, $m with H2 revenue
Slide 13: Global Product Revenue: Capital
GLOBAL PRODUCT REVENUE CAPITAL $26.7m ANNUAL GRO WTH Global, $m CONSTANT CURRENCY1 Capital Revenue down 11% 32.8 (8% in constant currency) 30.0 primarily due to no capital 26.7 27.5 25.6 units being sold to GE in 11% vs. FY20 8% vs. FY20 FY21 Q1 due to impacts of COVID-19. FY18 FY19 FY20 FY21 FY
Slide 14: Global Product Revenue: Consumables/Service
GLOBAL PRODUCT REVENUE CONSUMABLES/SERVICE $76.4m ANNUAL GRO WTH Global, $m CONSTANT CURRENCY1 Consumables/Service Revenue up 9% 84.1 76.4 (20% in constant currency). 70.1 51.5 9% vs. FY20 20% vs. FY20 35.1 FY18 FY19 FY20 FY21 FY21* CONSTANT CURRENCY1 Significant recovery in 2nd half HALF O N HA
Slide 15: North America Total Revenue
NORTH AMERICA TOTAL REVENUE $89.2m ANNUAL GRO WTH North America, $m CONSTANT CURRENCY1 Total revenue down 1% (up 8% in constant currency). 97.4 90.1 89.2 76.5 1% vs. FY20 8% vs. FY20 54.4 FY18 FY19 FY20 FY21 FY21* CONSTANT CURRENCY1 Significant recovery in 2nd half HALF O N HALF GRO WTH North Am
Slide 16: North America Product Revenue
NORTH AMERICA PRODUCT REVENUE CAPITAL REVENUE ANNUAL GROWTH HALF ON HALF GROWTH North America, $m North America, $m Capital Revenue down 22% compared with prior corresponding 31.0 period primarily due to no capital 27.5 24.1 purchases by GE in FY21 Q1 as a 21.3 result of COVID-19. Significant 22
Slide 17: Europe and Middle East Total Revenue
EUROPE AND MIDDLE EAST TOTAL REVENUE $7.2m ANNUAL GRO WTH Europe and Middle East, $m CONSTANT CURRENCY1 Total revenue up 38% 7.4 (up 43% in constant currency). 7.2 5.2 38% vs. FY20 43% vs. FY20 3.8 3.0 FY18 FY19 FY20 FY21 FY21* HALF O N HALF GRO WTH CONSTANT CURRENCY1 Despite COVID-19 restrictio
Slide 18: Europe and Middle East Product Revenue
EUROPE AND MIDDLE EAST PRODUCT REVENUE CAPITAL REVENUE ANNUAL GROWTH HALF ON HALF GROWTH Europe and Middle East, $m Europe and Middle East, $m Capital Revenue up 91% compared with prior 2.7 corresponding period as installed base grew throughout 1.4 91 % vs. FY20 1.5 20% FY21 H2 vs. H1 the year.
Slide 19: Asia Pacific Total Revenue
ASIA PACIFIC TOTAL REVENUE $6.7m ANNUAL GRO WTH Asia Pacific, $m CONSTANT CURRENCY1 Revenue up 42%. 6.7 6.7 4.7 4.0 42% vs. FY20 43% vs. FY20 3.3 FY18 FY19 FY20 FY21 FY21* HALF O N HALF GRO WTH CONSTANT CURRENCY1 H2 revenue up 58% vs. H1 to Asia Pacific, $m $4.1m driven by 100% growth in new ins
Slide 20: Asia Pacific Product Revenue
ASIA PACIFIC PRODUCT REVENUE CAPITAL REVENUE ANNUAL GROWTH HALF ON HALF GROWTH Asia Pacific, $m Asia Pacific, $m Capital Revenue up 143% compared with prior 2.7 corresponding period (36% excluding upgrades). H2 143% vs. FY20 2.0 growth in capital revenue 186% FY21 H2 vs. H1 primarily associate
Slide 21: Operating Expenditure and Profit Before Tax
$70.8m OPERATING EXPENDITURE Global, $m The Company continued to invest 70.8 in its strategic growth agenda with 63.2 operating expenses up 12% to 20.3 Q4 The company returned to its 49.2 intended investment run rate. $70.8m. As market conditions 42.6 37.0 improved in the 2nd half, Q4 expenses of
Slide 22: Free Cash Flow and Cash Position
$5.9m FREE CASH FLOW Global, $m 20.9 Total Free Cash Flow for the year of $5.9m, with H2 FCF 15.1 FY 5.9 of $8.3m offsetting negative 8.3 FCF in the 1st half . 6.2 2.6 -2.4 FY17 FY18 FY19 FY20 FY21 H1 FY21 H2 $96.0m CASH AND CASH EQUIVALENTS Global, $m as at 30 June 2021 96.0 91.8 87.9 Cash and cash
Slide 23: Profit and Loss Summary
PROFIT AND LOSS SUMMARY $ million FY21 FY20 Change% H I G H LI G H T S • Revenue of $103.1 million, up 3% (up 12% in Revenue 103.1 100.1 5 3% constant currency1). 5 12% cc1 • Gross profit of $80.4 million or 78.0% of revenue. Gross profit 80.4 75.5 5 6% • Continued investment in the Company’s growth
Slide 24: trophon Opportunity
TROPHON ® OPPORTUNITY Nanosonics Limited | Full Year 2021 24
Slide 25: Ultrasound Procedures
ULTRASOUND PROCEDURES There are over 150 procedures that use 1 ultrasound probes across many departments that risk contact with mucous membranes, non-intact skin and/or sterile tissue. EXAMPLES ENDOCAVITARY UG2 BIOPSY INTRAOPERATIVE NERVE BLOCKS WOUNDS Abdominal Duplex Biopsy of liver Intraoperative
Slide 26: Significant Global Market Opportunity
SIGNIFICANT GLOBAL MARKET OPPORTUNITY Market Penetration GLOBAL Installed base opportunity • Significant global growth opportunity. • Increasing number of international guidelines requiring high level 140,000 UNITS 1 19% disinfection (HLD) supporting growing international demand. • Nanosonics expand
Slide 27: North America Installed Base Opportunity
NORTH AMERICA INSTALLED BASE OPPORTUNITY INSTALLED BASE There has been a significant increase in the trophon® 60,000 1 UNITS 20,990 23,480 18,570 opportunity in North America resulting from increased MARKET PENETRATION 15,620 12,400 estimate of Total Addressable Market, revised up to 1 39% 60,000 un
Slide 28: Europe and Middle East Installed Base Opportunity
EUROPE AND MIDDLE EAST INSTALLED BASE OPPORTUNITY INSTALLED BASE Guidelines across Europe for ultrasound probe 40,000 UNITS 1,510 1,120 disinfection continue to strengthen with preferences MARKET PENETRATION 730 880 UK for automated solutions that can be validated. This 490 4% 16% has supported inst
Slide 29: Nanosonics Presence in Europe and Middle East
NANOSONICS PRESENCE IN EUROPE AND MIDDLE EAST We have broad presence and MARKET ACCESS THRO UGH DIRECT AND DISTRI B UT I O N CHANNELS access to key markets to capitalise SWEDEN on the strengthening NORWAY FINLAND fundamentals across ESTONIA the region. DENMARK RUSSIA UNITED KINGDOM IRELAND NETHERLAN
Slide 30: Asia Pacific Installed Base Opportunity
ASIA PACIFIC INSTALLED BASE OPPORTUNITY INSTALLED BASE We have ramped up our efforts to bring new markets 40,000 UNITS 1,610 1,760 1,480 online, with particular focus on the untapped potential MARKET PENETRATION 1,270 1,390 ANZ in Japan, China and across the ASEAN countries. 4% >75% FY17 FY18 FY19 F
Slide 31: 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 CAPITAL & ACCESSORIES CONSUMABLES & SERVICE ... trophon growth Us
Slide 32: Capital Upgrades
CAPITAL UPGRADES A significant capital upgrade potential exists in the installed base GRO WIN G O PPO RTUNI TY 6,500+ units AGED INSTALLED BASE UPGRADED TO-DATE 1 8 % 9% ✓ Implemented trophon EPR 7% end-of-life policies and notified 6% customers. 2% ✓ Upgrades is a key component of growth strategy f
Slide 33: Nanosonics AuditPro Opportunity
NANOSONICS AUDITPRO TM OPPORTUNITY Nanosonics Limited | Full Year 2021 33
Slide 34: Introducing
INTRODUCING Nanosonics Limited | Full Year 2021 34
Slide 35: Infection Control Workflow Compliance Management
INFECTION CONTROL WORKFLOW COMPLIANCE MANAGEMENT Workflow compliance management tool that ensures customers consider the infection prevention requirements for all ultrasound procedures Enhances clinical workflow Practice standardization Improves staff competency with the Spaulding Standardises ultra
Slide 36: North American Market Opportunity
NORTH AMERICAN MARKET OPPORTUNITY AUDITPRO ULTRASOUND 1:1 End-to-end ultrasound 271k 1 infection prevention traceability ULTRASO UN D Designed to sit alongside the ultrasound INSTALLED BASE Best practice infection prevention is console to track all types of procedures UNITED STATES built into your e
Slide 37: AuditPro and trophon Synergies
AUDITPRO AND TROPHON SYNERGIES AuditPro further enhances the trophon2 value proposition and competitive advantage. N A N O S O N I C S A U D I T P R O TM HAS THE POTENTIAL TO DRIVE… trophon2 adoption EPR to trophon2 upgrades Consumables usage Nanosonics Limited | Full Year 2021 37
Slide 38: Investing for Growth: Research & Development
INVESTING FOR GROWTH RESEARCH & DEVELOPMENT Nanosonics Limited | Full Year 2021 38
Slide 39: New Product Development
NEW PRODUCT DEVELOPMENT There are five FIVE CO RE AREAS O F FO CUS core areas of R&D interest in the infection prevention landscape. Active programs are in place covering a number of the areas outlined above. All research and new product development programs involve inherent risks and uncertainties
Slide 40: Investment in R&D
NEW PRODUCT DEVELOPMENT During the year, INVESTMENT IN R&D Global, $m Nanosonics 17.2 15.6 11% vs. FY20 continued to invest in its product 9.9 11.4 9.5 expansion strategy. R&D investment FY17 FY18 FY19 FY20 FY21 increased to Substantial investment made in $17.2m new product development with import
Slide 41: Our Next Instrument Reprocessing Product Platform
OUR NEXT INSTRUMENT REPROCESSING PRODUCT PLATFORM All research and new product development programs involve inherent risks and uncertainties which can impact commercialisation timelines. Nanosonics Limited | Full Year 2021 41
Slide 42: Our New Product Platform Focus
OUR NEW PRODUCT PLATFORM FOCUS “more healthcare- A TOP 10 HEALTH TECHNOLOGY HAZARD associated In 2018, the ECRI Institute listed “failure to consistently and effectively reprocess flexible endoscopes” as one of the top 10 health technology hazards facing the outbreaks have Healthcare industry. In pa
Slide 43: Flexible Endoscopes
FLEXIBLE ENDOSCOPES Reusable flexible endoscopes are highly sophisticated medical devices designed to enable advanced diagnostic and therapeutic interventions to diagnose and treat cancers and other life-threatening conditions. They incorporate advanced technology that gives physicians a sophisticat
Slide 44: A Recognised Risk
A RECOGNISED RISK Flexible endoscopes have been associated with a high frequency of outbreaks of healthcare-associated infections. THERE ARE MANY WELL -DOCUMENTED INSTANCES OF… INFECTIO N O UTBREAKS … …AND REPRO CESS I N G ISSUES COLONOSCOPES GASTROSCOPES BRONCHOSCOPES UROLOGICAL SCOPES E.R.C.P. HUM
Slide 45: The Problem of Cleaning Flexible Endoscopes
THE PROBLEM OF CLEANING FLEXIBLE ENDOSCOPES Challenges associated with manual cleaning, combined with reports of persistent contamination from biofilm despite routine cleaning, represents a significant unmet need and is a complex technical challenge that has existed for many years. A 2021 study on g
Slide 46: Nanosonics CORIS
NANOSONICS CORIS ® Nanosonics aims to address these challenges by replacing manual cleaning of endoscope channels with a novel automated technology that revolutionises the cleaning process, thereby reducing the risk of ineffective endoscope reprocessing and resulting patient infection. Work continue
Slide 47: Environment, Social and Governance
ENVIRONMENT, SOCIAL AND GOVERNANCE Nanosonics Limited | Full Year 2021 47
Slide 48: Focus on Sustainability and Social Responsibility
FOCUS ON SUSTAINABILITY AND SOCIAL RESPONSIBILITY SUSTAIN AB I L I TY HIGHL I GH TS 1 Patients protected every ~ 88 k day from the risk of cross-contamination Zero Major Work Health and Safety Developed Sustainable Incidents Supply Chain Initiatives Employees strongly Introduced Executive believe in
Slide 49: Investing in Our People
INVESTING IN OUR PEOPLE Our people, our advantage Our organisational growth has been focused on growing and supporting our customer base, and on Nanosonics’ innovation agenda to drive future growth. EMPLOYEE GROWTH Headcount, 2016-2021 ALL Overall global employee base grew at 24% CAGR driven by gr
Slide 50: Environmental Commitment
ENVIRONMENTAL COMMITMENT Committed to protecting the GLOBAL RENEWABLE RESPONSIBLE environment OPERATIONS Expanded scope of ENERGY 17% of our global RECYCLING ~80% of total waste climate assessment, energy consumption (up to 3.1 tonnes) covering most of our directly attributable to GREEN PRODUCTS div
Slide 51: Looking Ahead
LOOKING AHEAD Nanosonics Limited | Full Year 2021 51
Slide 52: Our Strategic Priorities
“Nanosonics’ forward- Provide awareness Ensure Customers looking growth agenda TROPHON AS Support establishment of and education to highlight risks of have a positive STANDARD experience with all remains very much OF CARE national guidelines. cross contamination for all semi critical aspects of the
Slide 53: Outlook
OUTLOOK “Despite the inherent risks and uncertainties associated with COVID-19, we remain optimistic the improved market conditions will continue as vaccination numbers increase across all major markets.” – Michael Kavanagh FY22 BUSINESS OUTLOOK (assuming the positive market recovery trends continue
Slide 54: Appendix
APPENDIX Nanosonics Limited | Full Year 2021 54
Slide 55: Our People
OUR PEOPLE Nanosonics has a highly experienced and dedicated team of professionals leading the development and implementation of our strategic growth agenda. BO ARD O F DIRECTO RS MAURIE STEVEN MICHAEL MARIE DAVID LISA GEOFF STANG SARGENT KAVANAGH MCDONALD FISHER MCINTYRE WILSON EXECUTIV E TEAM MICH
Slide 56: Consumables
Delivering consistent protection across every high-level disinfection cycle trophon®2 Consumables 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 57: Income Tax
INCOME TAX $ million FY21 FY20 KEY POINTS • Effective income tax rate for the period was Income tax expense 2.4 2.3 21.9%. • Deferred tax asset attributable to carried forward losses relates to the UK and Canada. • Assessment of probability of recovery (and therefore recognition of related benefit)