Adheris Health Limited · ASX:AHE
Adheris Health — Investor Presentation (November 2020)
46 slides from Adheris Health's investor presentation, Nov 2, 2020
Slide 1: Acquisition of Adheris Health and capital raising
Acquisition of Adheris Health and capital raising 2 November 2020
Slide 2: Important notice
Important notice The information contained in this presentation (Presentation) has been prepared by MedAdvisor Limited This Presentation may contain forward-looking statements about MedAdvisor’s financial results, guidance ACN 145 327 617 MedAdvisor). and/or business prospects that may involve risk
Slide 3: Agenda
Agenda SLIDES Transaction highlights 4 Understanding medication adherence and the MedAdvisor 5-8 business The Adheris business 9-15 Adheris acquisition rationale, team structure and leadership 16-22 Financials 23-27 Pro-forma financials 28-31 Offer summary 32-35 Key risks 36-41 Offer jurisdictions 4
Slide 4: Transaction highlights: Combined entity offers strong latent potential
Transaction highlights: Combined entity offers strong latent potential MedAdvisor has entered into a binding agreement to acquire MedAdvisor will undertake a target equity raising of AUD $45M at an issue Adheris, LLC from Syneos Health US, Inc. price of $0.45 per share to fund the acquisition and pr
Slide 5: Understanding medication adherence and the MedAdvisor business
Understanding medication adherence and the MedAdvisor business
Slide 6: Medication adherence: Understanding the global problem
Non-adherence Medication adherence: Understanding the global problem statistics One of the easiest ways to improve the health of people is to improve medication 125K adherence Annual deaths in US from medication Adherence is taking medication as you have been prescribed and in most global non-adhere
Slide 7: MedAdvisor: Understanding our existing business
MedAdvisor: Understanding our existing business % 60 AU PHARMACY NETWORK SHARE $ 9.6M OPERATING REVENUE 1.7M AU PATIENTS 16.5% YoY FY20 42% YoY FY20 The MedAdvisor revenue model SAAS Transaction Fees Health Programs Pharmacy Patient Pharmaceutical Pharmacy – Patient software Patient apps Secure di
Slide 8: MedAdvisor: Executing globally
MedAdvisor: Executing globally UK SEA US AU SaaS SaaS SaaS Programs Go-to-market Launched Day Lewis app Launched MedExpress App in the Launched initial program via Grew pharmacy network to 62%+. strategy Philippines Adheris. This program has been Used by 3 of the 4 largest pharmacy groups Formally e
Slide 9: Adheris Health acquisition adds distribution and analytics capability
Adheris Health acquisition adds distribution and analytics capability
Slide 10: Adheris Health: Company overview
Highlights Adheris Health: Company overview 180M ● 25 years experience and a US leader in tailored opt-out direct-to-patient Patients medication adherence programs ● Suite of products that deliver multi-channel patient communications, including 2.2B deep integrations with 8 US pharmacy dispensing s
Slide 11: Adheris Health: A highly integrated health programs network of scale
Adheris Health: A highly integrated health programs network of scale Pharmaceutical companies Pharmacy distribution Detailed script, medication and Spend on dispense data educational and coming from adherence dispense 27 pharmacy chains 82% penetration in top 100 messaging integration representing 5
Slide 12: Proven product suite powered by data and analytics, engaging patients and HCPs
Proven product suite powered by data and analytics, engaging patients and HCPs Patient inOffice® Dr’s office Patient inPharmacy® Patient inHome® Directly communicate with the Dr within the Dr’s workflow Engage the patient at the moment of dispensing Engage the Patient in their home via direct mail
Slide 13: Adheris Health: Plugging the leaky funnel and improving patient outcomes
Adheris Health: By targeting Plugging known areas of patientanon-adherence leaky funnel andto improve compliance, pharma Adheris ROI and can improve patient patient outcomes outcomes and strengthen pharma ROI. By targeting known areas of patient non-adherence and compliance, Adheris can improve 100%
Slide 14: Highlights Adheris: Data analytics capability powers programs
Highlights Adheris: Data analytics capability powers programs Proven ROI and Average program ROI 2016 2019 of 7.1x (inPharmacy and inHome) and 22.5x (inOffice)1 campaign effectiveness ROIs significantly higher than that of a typical marketing campaign which usually consist of 5 years+ general co
Slide 15: MedAdvisor acquisition rationale for Adheris Health
MedAdvisor acquisition rationale for Adheris Health
Slide 16: US pharmaceutical market: Two stakeholders - pharmaceutical companies and insurers
US pharmaceutical market: Two stakeholders - pharmaceutical companies and insurers ● Generic pharmaceutical companies typically don’t invest in ● Significant budget is allocated by pharmaceutical companies adherence. Many of the most common chronic medicines are to invest in sales and marketing. The
Slide 17: Highlights MedAdvisor: Digital solutions and increased distribution enhances network effect
Highlights MedAdvisor: Digital solutions and increased distribution enhances network effect Reach of ~12 Americans attracts sponsors wanting to reach the patient network. Adheris primarily works with pharmaceutical companies Sponsors of programs help grow revenue for retail pharmacy, thereby Pharma
Slide 18: Acquisition rationale: Unlocking latent potential
Acquisition rationale: Unlocking latent potential Growth initiatives Current state Future state Changes in leadership Combined strong global leadership People Headcount freeze Incremental and targeted headcount Adheris has significant Under-investment in BD investments in marketing and sales latent
Slide 19: Acquisition rationale: Existing partnership lays foundations, execution already underway
Acquisition rationale Existing partnership lays foundations, execution already underway ACTIVITY TIME TO IMPACT STATUS COMPLETE US health programs product 18 months HIPAA and ISO 27001 compliant global health Complete Before transaction build programs product MedAdvisor Technical integration 69 mo
Slide 20: Highlights MedAdvisor: Combined global leadership team
Highlights MedAdvisor: Combined global leadership team The MedAdvisor team and external advisors have experience John Ciccio working across both businesses President & CEO, USA John Ciccio was originally VP of Business Analytics & Development, spending 9 years at Adheris between 2005 and 2014. He re
Slide 21: Acquisition rationale: Adheris accelerates MedAdvisor US expansion plans
Acquisition rationale: Adheris accelerates MedAdvisor US expansion plans Creating scale Existing integration Relationships Data and analytics Products Growth MedAdvisor aims to Technical Long term Highly experienced Proven products Launch dynamic be the leader in integration with relationships with
Slide 22: Financials
Financials
Slide 23: Adheris financial performance
Adheris financial Financials: Adheris performance (USD $M* performance FY18 saw revenue of USD $49.5m and ~USD $5m EBITDA MDR has set targets to reinvigorate the US business back to these levels within 34 years. FY20 1H saw performance stabilise as the business recovered from the loss of revenue
Slide 24: Financials: Revenue breakdown by product
Highlights Financials: Revenue breakdown by product Current Adheris product mix Post acquisition product mix Adheris’ inPharmacy and inHome products provide a strong platform to grow the digital offering MedAdvisor’s revenue is allocated 100% digital Combining the two platforms, we can offer data-dr
Slide 25: Highlights Financials: Opportunity to invest for growth
Highlights Financials: Opportunity to invest for growth Revenue by client (2019 actual) Strong contracted revenue to close out Q4 CY20 and lay The next 40 foundations for CY21 clients equal 31.9% of revenue Additional resourcing in business development to execute (currently just 3.33% of headcount)
Slide 26: Highlights Financials: Pro forma revenue and product margin
Highlights Financials Pro forma revenue and product margin 2019 actual, USD $M Adheris plan to offer dynamic patient engagement to enable optimisation of spend to drive pharmaceutical ROI 92.50% Introduction of digital products is expected to increase margins as they reach scale 70.60% 56.20% Gro
Slide 27: Pro-forma financials
Pro-forma financials
Slide 28: Financials: Combined MedAdvisor and Adheris income statement pro-forma
Financials: Combined MedAdvisor and Adheris Financial income statement pro-forma (AUD $M commentary MedAdvisor Limited results have been restated to align to fiscal year of Adheris for comparative purposes (31 December) CY19A represents 12 months to 31 December 2019, with MedAdvisor Limited based o
Slide 29: Financials: Combined MedAdvisor and Adheris balance sheet pro-forma
Financials: Combined MedAdvisor and Adheris balance Financial sheet pro-forma commentary The combined MedAdvisor Ltd and Adheris balance sheet as at 30 June 2020 is based on the reported MedAdvisor Ltd Balance Sheet and Adheris pro-forma pre-acquisition balance sheet as at 30 June 2020 Capital raise
Slide 30: Highlights Acquisition terms
Highlights Acquisition terms Purchase price MedAdvisor’s US subsidiary, MedAdvisor Welam USA, Inc. has entered into a binding agreement to acquire 100% of the equity interests of Adheris, LLC from Syneos Health US, Inc. (Syneos Health) for USD $27.5M AUD $39.1M plus an earn-out (of up to USD $7.0M
Slide 31: Offer summary
Offer summary
Slide 32: Offer Summary: Offer details
Offer details Offer Summary Offer details Offer structure and size Target equity raising of AUD $45.0M comprising: Source of AUD$ AUD$ - an institutional placement to raise up to a maximum of AUD $27.9M approximately; and Use of funds funds million million - a 1 for 2.5 accelerated non-renounceable
Slide 33: Offer summary: Anticipated capital structure
Anticipated capital structure Offer summary Company data Value Number of shares (M 247.9 Options (M1 5.4 Post-capital raise market Performance rights (M2 2.0 capitalisation of AUD $163.2M Market capitalisation (undiluted)3 AUD $111.1M Market capitalisation (fully diluted)4 AUD $115.0M Additional
Slide 34: Offer summary: Offer timetable
Offer timetable Offer summary Timetable1 Date Announcement of Acquisition and Offer. MedAdvisor enters back to Monday, 2 November 2020 back trading halt with two additional days of voluntary suspension Institutional Entitlement Offer and bookbuild Monday, 2 November 2020 MedAdvisor comes out of trad
Slide 35: Key risks
Key risks
Slide 36: Acquisition and offer risks
Acquisition and offer risks Key Risks Completion risk MedAdvisor or Syneos Health may terminate the Acquisition if the institutional placement and institutional entitlement offer fail to raise at least AUD $35.0M. If such termination rights are exercised, completion of the Acquisition will not occur
Slide 37: MedAdvisor risks
Key Risks MedAdvisor risks Loss making and future MedAdvisor reported a loss (before income tax) from continuing operations of $9.8m for the FY20 financial year. Adheris reported an operating loss of USD $2.4m for CY2019. The ability to return the MedAdvisor group to profitability can be affected by
Slide 38: MedAdvisor risks (continued)
MedAdvisor risks (continued) Key Risks Disruption or failure of MedAdvisor and our customers are dependent on the performance, reliability and availability of our platform, data centres and communications systems (including servers, the internet, hosting services and the cloud environment in which w
Slide 39: MedAdvisor risks (continued)
MedAdvisor risks (continued) Key Risks Attracting customers to the MedAdvisor's revenue is affected by its ability to attract customers to the MedAdvisor platform. Various factors can affect the level of customers using the MedAdvisor platform, including: platform • Marketing and promotions: if MedA
Slide 40: General risks
General risks Key Risks General market and share General economic factors such as interest rates, exchange rates, inflation, business and consumer confidence and general market factors may have an adverse impact on MedAdvisor’s performance, prospects or the value of its assets. The market price of M
Slide 41: Offer jurisdictions
Offer jurisdictions
Slide 42: Offer jurisdictions
Offer General restrictions jurisdictions Neither the Placement nor the Entitlement Offer will be made in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer. In particular, any offer documentation may not be distributed to any person, and shares may not
Slide 43: Appendix
Appendix
Slide 44: Delivering an end-to-end solution improves competitive advantage
Competitors for pharmaceutical adherence spend Delivering an Deliver secure end-to-end solution Direct-to-patient digital Deliver HCP digital comms, Direct mail to messaging to Competitor intervention opt-out patient patient Comment improves competitive OptimizeRx Yes via prescriber No No No NASDAQ
Slide 45: Key definitions
Key definitions CPG Consumer Packaged Goods Dynamic engagement: Multi-channel solution to drive right message to the right patient at the right time and in the right way to maximise impact. Insurer A person or company that underwrites an insurance risk; the party in an insurance contract undertaki
Slide 46: mymedadvisor.com/investors
mymedadvisor.com/investors 46
Adheris Health — Investor Presentation (November 2020) on 6ix