Nanosonics Limited · ASX:NAN
Nanosonics — H1 FY18 Earnings Presentation
38 slides from Nanosonics's earnings presentation, Feb 26, 2018
Slide 1: 2018 Half Year Results Investor Presentation
2018 Half Year Results Investor Presentation Michael Kavanagh – CEO and President McGregor Grant – CFO and Company Secretary
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. The information in this presentation, whether written or verbal, has been prepared without taking into account the commercial, financial or other needs o
Slide 3: FY18 – H1 Highlights
FY18 – H1 Highlights Significant achievements across all aspects of Nanosonics’ business ► Continued strong installed base (IB) growth of trophon® EPR units in North America with IB growing by 1,700 units in the FY18 first half. Total North American IB grew to approximately 14,100 units by end of De
Slide 4: Company Overview
Company Overview ► Healthcare company specialised in the development and commercialisation of infection control solutions Key Corporate Data ► First product, trophon® EPR - proprietary automated Share price* $2.62 technology for low temperature, high level disinfection (HLD) of ultrasound probes Sha
Slide 5: 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. 2018 Half Year Results │5
Slide 6: Corporate Objectives
Corporate Objectives Customer Product Operational Experience Innovation Excellence Establish our offerings as new Create and bring to market a Develop an agile operation with standards of care globally and portfolio of innovative and quality scalable, compliant and provide customers with a products
Slide 7: trophon - Disrupting Traditional Disinfection Methods
trophon - Disrupting Traditional Disinfection Methods In North America alone, The traditional methods: soak, spray ultrasound probes are now trophoned 42,000 times every or wipe – unchanged in 20+ years working day Chemicals present OH&S risks Pathogens may remain - increased risk of cross conta
Slide 8: trophon® - The New Standard of Care
trophon® - The New Standard of Care trophon Consumables Safe • Patient – proven effective on wide range of pathogens. • User – Safe for user • Environment – water and oxygen by products Versatile • Compatible with > 1,000 probes • Can be used at point of care Accessories • Supports streamlined pract
Slide 9: trophon® technology
trophon® technology 2018 Half Year Results │9
Slide 10: Significant Global Market Opportunity
Significant Global Market Opportunity Addressable Market 40,000 units 40,000 units 40,000 units Adoption Drivers Yes A number of countries A number of countries HLD guidelines in place & increasing & increasing Traditional disinfecting methods Soaking in chemistry No or Low level disinfection No or
Slide 11: Range of selling models in place
Range of selling models in place Direct channel Distributor channel Capital / Managed Rental (includes Capital / Capital Reseller Business consumables / Equipment Service service) consumables / model service & spares service & spares Nanosonics’ Revenue Profile* * The information in the revenue prof
Slide 12: Financial Results
Financial Results Infection Protection, For Life. f) nanosonics UL’
Slide 13: 2018 Half Year Results Highlights
2018 Half Year Results Highlights ► Sales of $30.0 million, down 4% (2% in constant $ millions currency) on prior half* Change Change FY18 FY17 FY17 H1 H2 (vs H2 FY17) H1 (vs H1 FY17) ► Gross profit of $22.3 million, or 74% of sales 6 4% 6 17% Sale of goods and services 30.0 31.4 36.1 ► Total operat
Slide 14: Regional Updates
Regional Updates
Slide 15: North America – trophon becoming standard of care
North America – trophon becoming standard of care trophon Installed Base ► Installed base grew by 1,700 units in H1 FY18. Total North American installed base now approximately 14,100 units ► New Regional President, Ken Shaw appointed to lead operations. ► Continuing investment in education, sales an
Slide 16: Increased investment in North American infrastructure
Increased investment in North American infrastructure ► Infrastructure grown to 50 people across sales, clinical applications, service, finance and distribution. ► Growth in infrastructure to support ongoing sales of trophon plus prepare for new product introductions. ► New operations facility in In
Slide 17: Material increase in sales and margin from July 2019 with new GE agreement
Material increase in both sales and margin from July 2019 associated with North American consumables resulting from new GE agreement. ► New 3 Year Capital Reseller agreement with GE Healthcare comes into effect on 1 July 2019 at end of current distribution agreement. ► Agreement is part of Nanosonic
Slide 18: Europe and Middle East – Fundamentals for adoption strengthening
Europe and Middle East – Fundamentals for adoption strengthening trophon Installed Base ► New guidelines from European Society of Radiology (ESR) mandate high level disinfection for semi-critical ultrasound procedures and refer positively to trophon. ► British Medical Ultrasound Society guidance rel
Slide 19: UK - Managed Equipment Service (MES) Model
UK - Managed Equipment Service (MES) Model ► Model helps hospitals in UK overcome capital budget constraints and provides an immediate benefit to the customer through earlier access to trophon. ► Ownership of the trophon capital equipment placed in hospitals remains with Nanosonics. ► Facilities pay
Slide 20: UK trophon adoption gaining momentum
UK trophon adoption gaining momentum ► MES unit growth of 86% in first half ► trophon continuing to be adopted across the major luminary sites and NHS trusts • King’s College Hospital, London adopting 40 trophons across nine specialities • NHS Fife Hospital, Scotland adopting 20 trophons ► trophon n
Slide 21: Asia Pacific
Asia Pacific ANZ trophon Installed Base ► Adoption in Australia and NZ continues further strengthening the position of trophon as standard of care ► High market penetration with strong fundamentals of adoption. Japan ► Pre market activities commenced following distribution agreement with leading inf
Slide 22: Strengthening Fundamentals for Global Adoption
Strengthening Fundamentals for Global Adoption
Slide 23: New studies and guidelines reinforce the need for HLD – last 12 months
New studies and guidelines reinforce the need for HLD – last 12 months Guidelines evolving rapidly to reflect disinfection best practice ► World Federation for Ultrasound in Medicine and Biology • Recommends HLD for all semi critical probes. ► Australasian Society for Ultrasound in Medicine (ASUM) +
Slide 24: New studies and guidelines reinforce the need for HLD – last three months
New studies and guidelines reinforce the need for HLD – last three months ► European Society of Radiology • Best practice recommendations mandate HLD for semi-critical ultrasound procedures • Automated systems presented as preferred option with trophon presented as favoured automated system • Import
Slide 25: Large opportunity for all Semi-critical Probes
Large opportunity for all Semi-critical Probes Many surface probe The need for HLD is based on procedures are semi- critical and require intended probe usage − not High Level Disinfection probe type ► trophon traditionally used in departments using intracavity probes for internal examinations. ► Ult
Slide 26: Industry experts issue a call to action…
Industry experts issue a call to action… ► Preliminary survey highlighted that immediate action is needed to bridge gaps in awareness about ultrasound probe reprocessing requirements, and to enhance education ► The Call to Action explores: • challenges presented by ultrasound probe infections • curr
Slide 27: Follow up study confirms need for stricter HLD controls for semi critical probes
Follow up study* confirms need for stricter HLD controls for semi critical probes Example of surface probes requiring HLD where it is not currently performed as standard practice* 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Scan to guide Scan to guide Scan to guide Scan on non- Scan to guide periphe
Slide 28: First population-level study shows increased infection risk after probe procedures
First population-level study demonstrates increased risk of both infection and antibiotic prescriptions following semi-invasive ultrasound probe procedures • Scottish study published by National Service Scotland has shown epidemiological link between improper endocavitary ultrasound probe disinfecti
Slide 29: Growth Strategies and Outlook
Growth Strategies and Outlook
Slide 30: Growth Strategies to Meet Growing Demand
Growth Strategies to Meet Growing Demand Expand trophon Geographic Product usage in existing expansion expansion markets ► Establish trophon as ► Entry into new markets with ► Continued Investment in Standard of Care for all trophon and new products R&D semi-critical probes across ► Introduce a rang
Slide 31: Focussed Ramp Up in R&D Program
Focussed Ramp Up in R&D Program ► Large unmet needs exist in infection prevention. ► R&D spend to increase in 2nd half ► Beyond FY18 expect the introduction of new products including the 2nd generation of trophon and targeting one or more new infection prevention solutions in FY20, subject to regula
Slide 32: Business outlook - Business model evolving
Business outlook - Business model evolving ► Installed base continues to grow (key driver for annuity revenue) and fundamentals for adoption strengthening internationally ► Direct Business – Business model mix • Capital equipment sales • Capital equipment rentals • Managed Equipment Service (MES) ►
Slide 33: Business outlook
Business outlook FY18 second half Beyond FY18 ► Continued growth in installed base in North America – FY18 H2 similar ► Continued growth in trophon installed base in all core markets as to FY18 H1 new guidelines continue to be released and the requirements for • Healthcare reform in USA ongoing – po
Slide 34: Thank you
Thank you
Slide 35: Appendix
Appendix
Slide 36: FY18 H1: Income Tax
FY18 H1: Income Tax Key points: $ million ► Deferred tax assets recognised following Components of deferred tax assets assessment of operations of the Group. Tax losses 0.4 R&D tax credits 9.9 ► Assessment of probability of recovery (and All other timing differences 2.5 therefore recognition of rela
Slide 37: FY18 H1: Impact of FX
FY18 H1: Impact of FX Key points: $ million Outstanding FX contracts at 31 December USD Ave. USD 2017 covered rate ► The Company takes a conservative FX cover in place 15.5 0.7671 approach in covering currency exposure on forecast USD net inflows. P&L impact of FX H1 FY18 H1 FY17 ► At 31 December 20
Slide 38: trophon’s patented disinfection technology
trophon’s patented disinfection technology Step 1: Ultrasonic vibrations generate soundwave energy to create micro-sized droplets. Step 2: The droplets are converted into an ultrafine mist that enters the disinfection chamber. Step 3: The mist covers the entire surface of the probe and handle, and i