Nanosonics Limited · ASX:NAN
Nanosonics — FY2022 Earnings Presentation
54 slides from Nanosonics's earnings presentation, 2022
Slide 1: Infection Prevention. For Life. 2022 Full Year Results
Infection Prevention. For Life. 2022 FULL YEAR RESULTS INVESTOR PRESENTATION Michael Kavanagh, CEO and President McGregor Grant, CFO and Company Secretary Nanosonics Limited | Annual Results 2022 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. FY22 highlights II. Installed base growth III. Financial results review IV. trophon® opportunity V. Successful North American direct sales model transition VI. AuditProTM opportunity VII. Investing for growth VIII. Research & development IX. CORIS® – our next instrument reprocessing product platf
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 | Annual Results 2022 4
Slide 5: FY22 – Key Highlights
FY22 – KEY HIGHLIGHTS “Total revenue for the year grew 17% to $120.3 million resulting from continued growth in new installed base, upgrades and consumables/service. IN ST AL LE D B ASE T O T AL R E V E N UE C APIT AL R EVEN UE C O NSUMABLES/ SER VIC E R EVEN UE This was a very pleasing result takin
Slide 6: FY22 – Key Highlights Contd.
FY22 – KEY HIGHLIGHTS CONTD. PERFORMANCE SUCCESSFUL TRANSITION OF NORTH AMERICAN SALES MODEL with Nanosonics now managing all trophon customers directly for the ongoing provision of consumables. This largely direct sales model aims to capture the full market opportunity for trophon in North America
Slide 7: Installed Base Growth
Installed Base Growth Nanosonics Limited | Annual Results 2022 7
Slide 8: Global Installed Base
GLOBAL INSTALLED BASE TOTAL INSTALLED BASE NEW INSTALLED BASE BY HALF Units Units 29,850 units 29,850 The global installed 26,750 base increased 12% to 23,720 1,650 1,690 1,570 29,850 units, an 20,930 1,220 1,380 1,410 increase of 3,100 units 17,740 for the year. The installed base increased 1,690 u
Slide 9: Regional Installed Base
REGIONAL INSTALLED BASE TOTAL INSTALLED BASE NEW INSTALLED BASE BY HALF Units Units NORTH AMERICA 26,130 23,480 20,990 Installed base increased 2,650 18,570 1,360 1,360 1,450 units for the year to 26,130 15,620 11 % vs. FY21 1,060 1,130 1,200 21% H2 vs. H1 representing an 11% increase. Hospital
Slide 10: Upgrades
UPGRADES GLOBAL UPGRADES Developing strong momentum Units 600 133% vs. FY21 in capturing upgrade value. 370 400 50% H2 vs. H1 60 Globally, 1,000 trophon EPR devices were upgraded in H1 H2 H1 H2 FY22, up 133% vs. FY21. FY21 FY22 Upgrade momentum continued into H2 with N. AMERICA UPGRADES Units upg
Slide 11: Financial Results Review
Financial Results Review Nanosonics Limited | Annual Results 2022 11
Slide 12: 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 13: Global Revenue
GLOBAL REVENUE H1 H2 $120.3m T O T AL R E V E NUE Global, $m CONSTANT CURRENCY1 Total revenue was up 17% (15% in cc1) $120.3 118.7 vs. FY21. 100.1 103.1 * H2 revenue growth in capital and consumables was impacted by the 84.3 59.7 * 17% vs. FY21 58.4 * 15% vs. FY21 transition to the largely direc
Slide 14: North America – Revenue
NORTH AMERICA – REVENUE H1 H2 $106.9m T O T AL R E V E NUE North America, $m Total revenue for the year was up 20% $106.9 vs. FY21. 90.1 89.2 76.5 Capital revenue was up 58% vs. FY21, 52.5 * 20% vs. FY21 while consumables and service revenue 54.4 46.5 52.3 %* H2 vs. H1 was up 8% vs. FY21. 39.4 3
Slide 15: Europe and Middle East – Revenue
EUROPE AND MIDDLE EAST – REVENUE H1 H2 $7.5m T O T AL R E V E NUE Europe and Middle East, $m Total revenue for the year was up 4% $7.5 7.2 vs. FY21, with H2 FY22 revenue up 21% compared with H1 FY22. 5.2 3.6 4.1 4% vs. FY21 Capital revenue was down 22% vs. 3.8 FY21, reflecting the delayed easing
Slide 16: Asia Pacific – Revenue
ASIA PACIFIC – REVENUE H1 H2 $5.9m T O T AL R E V E NUE Asia Pacific, $m Total revenue for the year was down 6.7 12% vs. FY21. H2 FY22 revenue was $5.9 up 3% compared with H1 FY22. Importantly, FY21 included a one-off 4.0 4.7 12% vs. FY21 4.1 3.0 upgrade deal of 200 units with I-MED 3.3 % H2 vs.
Slide 17: Operating Expenditure and Profit Before Tax
$90.5m OPERATING EXPENDITURE Global, $m $90.5 In line with the Company’s Q4 deliberate strategy to invest for 70.8 growth, operating expenses for the 63.2 $24.6 28% vs. FY21 year increased 28% to $90.5 million. 49.2 In FY22, the Company incurred 42.6 12% H2 vs. H1 additional costs of approximate
Slide 18: Free Cash Flow and Cash
$(0.2)m FREE CASH FLOW Global, $m 20.9 Free cash flow for the year was a net outflow of $0.2 million driven mainly by capital expenditure associated with the new corporate headquarters and 6.2 5.9 2.6 3.6 the increase in the Company’s inventory holding. Free cash flow in H2 FY22 was a net inflow of
Slide 19: Managing a Complex Supply Chain in This Environment
MANAGING A COMPLEX SUPPLY CHAIN IN THIS ENVIRONMENT We are proactively managing the risks Inventory Management of operating a Inventory increased by 91%, driven by the need to carry more safety inventory in response to increased supply chain risks caused by the COVID-19 pandemic and the Company’s co
Slide 20: Profit and Loss Summary
PROFIT AND LOSS SUMMARY $ million FY22 FY21 Change% HIGHLIGHTS • Full year revenue of $120.3 million, up 17% (15% in Capital Revenue 37.7 26.7 5 41% cc1) on prior corresponding period. Consumable / service revenue 82.6 76.4 5 8% — Global installed base up 12% (3,100 units) to 29,850 — Full year capi
Slide 21: trophon Opportunity
trophon® Opportunity Nanosonics Limited | Annual Results 2022 21
Slide 22: 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 FY22 KEY PERFORMANCE METRICS Revenue $106.9m INSTALLED BASE OPPORTUNITY INS
Slide 23: 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 21% disinfection (HLD) supporting growing international demand. • Nanosonics expand
Slide 24: 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 25: Successful North American Direct Sales Model Transition
Successful North American Direct Sales Model Transition Nanosonics Limited | Annual Results 2022 25
Slide 26: North America – Direct Sales Model
NORTH AMERICA – DIRECT SALES MODEL “Our North American team is now Nanosonics has successfully transitioned to a well positioned to manage the overall growth strategy associated with new largely direct sales model, delivering capability installed base, upgrade adoption & and capacity to take advanta
Slide 27: Nanosonics Limited | Annual Results 2022
Nanosonics Limited | Annual Results 2022 27
Slide 28: AuditPro – End-to-end ultrasound infection prevention traceability
NORTH AMERICAN MARKET OPPORTUNITY AU D IT PRO U L T RASOUND 1:1 End-to-end ultrasound infection prevention traceability Designed to sit alongside the ultrasound Best practice infection prevention is console to track all types of procedures built into everyday workflow with Nanosonics AuditPro. Uniqu
Slide 29: Customer Feedback
CUSTOMER FEEDBACK AuditPro is currently installed at key reference sites, where feedback has indicated consistent clinical compliance to ultrasound infection control SOPs, resulting in increased clinical efficiency and risk reduction through standardisation and automation. Up to Efficiency improveme
Slide 30: Investing for Growth
Investing for Growth Nanosonics Limited | Annual Results 2022 30
Slide 31: Operating Costs
OPERATING COSTS Nanosonics has Investing in a significant established Infection Prevention market opportunity significant MARKET DEVELOPMENT capabilities and SUSTAINING MATURE MARKET GROWTH • Maintain 2,800-3,000+ new installed base unit momentum continues to focus • Convert significant installed ba
Slide 32: Investing in Scale
INVESTING IN SCALE Our new Macquarie Park facilities will support future SPAC E T O G R O W company growth. 2 x Manufacturing Capacity 3 x Laboratory Space G L OBAL H E ADQUARTERS 400 + Employee Capacity 7–11 Talavera Road 35–41 Waterloo Road R& D C ENTRE + L A BS M A N UF ACTURING WA RE HOUSE ST AT
Slide 33: Research & Development
Research & Development Nanosonics Limited | Annual Results 2022 33
Slide 34: Investment in R&D
INVESTMENT IN R&D Global, $m $22.3 During the year, Nanosonics continued to invest in its 17.2 30% vs. FY21 product expansion strategy. 15.6 % 11.4 11.6 8 H2 vs. H1 R&D investment increased to 9.9 9.6 8.8 5.2 5.9 10.7 $22.3m 6.8 7.6 4.6 5.5 FY18 FY19 FY20 FY21 FY22 directed across multiple proje
Slide 35: Platforms for Growth
PLATFORMS FOR GROWTH Our technology platforms offer significant growth potential within current and potential future indications. Market Introduction In-market Launched CY2023 Growth focus Adoption focus Development focus Coris® 23 patent families 1 patent family 9 patent families CURRENT Ultrasound
Slide 36: CORIS – Our Next Instrument Reprocessing Product Platform
Nanosonics aims to address the challenges of manual cleaning of endoscope channels through a novel automated technology that revolutionises the cleaning CORIS ® process, thereby reducing the risk of Transforming the cleaning ineffective endoscope reprocessing and of flexible endoscopes resulting pat
Slide 37: Endoscope reprocessing is an established global practice
Endoscope L AR G E V AR IE T Y O F E N D OSCOPES F O R C O MPLEX C L INIC AL PR O CEDUR ES… reprocessing is an established Colonoscopy Gastroscopy Duodenoscopy Enteroscopy Endoscopic Ultrasound Bronchoscopy Urology E.N.T. Gynaecology global practice … W IT H ST R O N G F U NDAME N TALS AN D ST AN D
Slide 38: A Recognised Risk
A RECOGNISED RISK Reusable endoscopes have been associated with infections and reprocessing failures across all endoscope types. THERE ARE MANY WELL -DOCUMENTED INSTANCES OF… FDA MAUDE database1 Increase in adverse event reports relating to IN F E CT ION O U TBR E AK S… endoscope reprocessing, 2014
Slide 39: The Problem
THE PROBLEM A T O P 1 0 H E AL T H T EC H NOLOG Y H AZAR D In 2018, ECRI drew attention to “The cleaning step, A major root cause of reprocessing failures which is largely manual and technique-dependent. If biologic debris and other foreign material is not cleaned is the current limitations of manua
Slide 40: CORIS is being designed to address these problems
CORIS® is being designed to address these problems The U.S. Food & Drug Administration (FDA) recently accepted the CORIS® technology into the agency’s Safer Technologies Program (STeP), a recognition that CORIS® has the potential to improve the risk-benefit profile of endoscopic procedures. C O MPLE
Slide 41: Superior Biofilm Removal
SUPERIOR BIOFILM REMOVAL CORIS® technology delivers far superior efficacy over manual cleaning in removing biofilm from small channels that cannot be brushed today. HEAD-TO-HEAD CLEANING TEST ON A SIMULATED NARROW CHANNEL SIMULATE NARROW CHANNEL 1 Auxiliary channel conditions: 1.5 mm diameter, 3.6 m
Slide 42: CORIS Designed to Set a New Standard in Cleaning
Far surpasses cleaning benchmarks recognized CORIS ® by regulators DESIGNED TO SET A NEW STANDARD IN CLEANING PROTEIN REMAINING (μg/cm2) Protein is a major component of clinical soils in endoscopes. It is routinely used as a EFFICACY benchmark of soil removal due to its relative abundance and the av
Slide 43: Significant Global Opportunity
SIGNIFICANT GLOBAL OPPORTUNITY An established and growing market >60m procedures growing at 6% annually9 MAJOR GROWTH DRIVERS Aging population Increasing incidence of colorectal cancer Various national-level screening programs Expensive and ineffective ANNUAL current standard of care Procedure Growt
Slide 44: Varying Regulatory Requirements
“CORIS® is being VARYING REGULATORY REQUIREMENTS designed as a global United States Acceptance into the FDA Safer De novo Regulatory solution ultimately to be Food and Drug Technologies Program (STeP) Pathway Products accepted into this program are In the United States, CORIS® used across all Admini
Slide 45: Environment, Social, and Governance
Environment, Social, and Governance Nanosonics Limited | Annual Results 2022 45
Slide 46: Continued Commitment to Sustainability
CONTINUED COMMITMENT TO SUSTAINABILITY SU ST AIN ABIL IT Y H IG H LIG HT S 1 ~98k Patients protected daily from the risk of cross-contamination Progressed sustainable Supply Chain initiatives Establishment of the Community Engagement Committee Strengthened IT, privacy & cybersecurity protections as
Slide 47: Our people, our advantage
Our people, our advantage D IVER SIT Y & IN C LUSION We value all aspects of Our organisational growth has been diversity fostering an focused on growing and supporting our inclusive workplace customer base, and on Nanosonics’ for all to fulfil their innovation agenda to drive future growth. potenti
Slide 48: Sustainable Products
SUSTAINABLE PRODUCTS Nanosonics prioritises sustainability throughout the product lifecycle – from research, development and product design stages, to operational usage and end-of-life waste management. INNOVATION MANUFACTURING DISTRIBUTION IN-USE END-OF-LIFE Aim to use of non- 68% of total waste Ma
Slide 49: Outlook
Outlook Nanosonics Limited | Annual Results 2022 49
Slide 50: FY23 Business Targets
“Nanosonics is well positioned to continue to invest in its longer-term strategic growth agenda and expand its participation as a leading infection prevention company in the multi-billion-dollar global infection prevention market.” - Michael Kavanagh FY23 BUSINESS TARGETS * REVENUE + Increasing glob
Slide 51: Appendix
Appendix Nanosonics Limited | Annual Results 2022 51
Slide 52: Leadership
LEADERSHIP Nanosonics has a highly experienced and dedicated team of professionals leading the development and implementation of our strategic growth agenda. B O AR D O F D IR EC T ORS STEVEN MAURIE MICHAEL MARIE DAVID LISA GEOFF SARGENT STANG KAVANAGH MCDONALD FISHER MCINTYRE WILSON E XE C UT IVE T
Slide 53: 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 54: Income Tax
INCOME TAX $ million FY22 FY21 KEY POINTS • Effective income tax rate for the period was (137)% Income tax (benefit) / expense (2.1) 2.4 • Deferred tax asset attributable to carried forward tax losses relate to the recognised portion of losses for UK and Canada • R&D tax credits were generated at an