Accendra Health, Inc. · NYSE:ACH
Accendra Health — Owens & Minor — Investor Presentation (April 2018)
42 slides from Accendra Health's investor presentation, Apr 9, 2018
Slide 1: Investor Presentation April 2018
Investor Presentation April 2018 Exhibit 99.1
Slide 2: Safe Harbor
Safe Harbor This presentation is intended to be disclosure through methods reasonably designed to provide broad, non-exclusionary distribution to the public in compliance with the Securities and Exchange Commission (“SEC”) Fair Disclosure Regulation. This release contains certain “forward-looking''
Slide 3: Agenda and Presenters
Agenda and Presenters Company Overview Strategy and Transformation Overview Target Overview Key Investment Highlights Historical Financial Overview Appendix Jon Leon Vice President and Corporate Treasurer Randy Meier Executive Vice President, Chief Financial Officer, and President, International
Slide 4: Company Overview
Company Overview
Slide 5: Company Overview
Company Overview Leading global healthcare solutions company that connects the world of medical products to the point of care Operations focused on delivering point of care services and providing our customers with a service portfolio that covers procurement, inventory management, delivery and sourc
Slide 6: Domestic, International and Proprietary Products Businesses
Domestic Distribution, logistics and value-added services for leading providers and manufacturers Network of distribution centers reaching multiple points of care nationwide Includes supplier management, analytics, inventory management, outsourced resource management, and clinical supply management
Slide 7: Post-Closing Business Segments
Post-Closing Business Segments Selected Examples What We Do Global Solutions Global Products Provider Solutions Manufacturer Solutions Third Party Payor Solutions Pro forma FY 2017 percentage of Net Revenue: 86% (1) Private label Clinical & Procedural Solutions – Medical Action & ArcRoyal Global Sou
Slide 8: Customers & GPOs
Customers & GPOs Hospitals, Alternate Site Channels (“ASCs”), and Physicians Integrated Delivery Networks (“IDNs”) Group Purchasing Organizations (“GPOs”) Third Party Payors Customers and GPO relationships include: Suppliers / Manufacturers Purchase products from or provide services to most global m
Slide 9: Strategic Partner of Choice for Providers & Manufacturers
Strategic Partner of Choice for Providers & Manufacturers Primary Owens & Minor Counterparties Complexity Faced Key Counterparty Needs Type Examples Providers U.S. and EU-based: Hospitals IDNs Home Health Third Party Payors Pressure on pricing and reimbursement Regulatory uncertainty Transition to v
Slide 10: Strategy and Transformation Overview
Strategy and Transformation Overview
Slide 11: A History of Growth
A History of Growth 1880 1882 Owens & Minor Drug Company opens its first location in Richmond, Virginia 1950 1960 1970 1980 1990 2000 2010 2017 1988 Owens & Minor begins trading on the NYSE under the symbol OMI 2002 Creates MediChoice, the Company’s first private label line 1994 Acquires Stuart Medi
Slide 12: Transformational Plan to Strengthen Competitive Position
Transformational Plan to Strengthen Competitive Position Why Change is Needed Executing the Strategy Market consolidation Increased complexity Outcomes based reimbursement Universal cost control pressures Consumerization of healthcare Regulatory Pressures Executing on a transformational plan to stre
Slide 13: Transformation Strategy
Transformation Strategy Key Transformation Strategies Build Most Intelligent Route to Market Expand Along Continuum of Care Become Preferred Outsourcer for Leading Manufacturers Transform via Data, Analytics, and Services Progress with new value proposition and solution offering Beginning to aggrega
Slide 14: Strategy Expands Our Addressable Market and Strengthens Margin Profile
Strategy Expands Our Addressable Market and Strengthens Margin Profile Enhances Margin Profile Expands Addressable Market Leading player in the acute care setting Entered direct-to-patient services market through the acquisition of Byram S&IP acquisition brings an experienced, global sales force wit
Slide 15: Rapid Business Transformation
Rapid Business Transformation In Q1 2017, Owens & Minor unveiled its Rapid Business Transformation (“RBT”) process to reduce expenses, increase efficiency and productivity and add significant operating income (to replace lost margin) Throughout 2017, the RBT process identified and implemented initia
Slide 16: Strategic Acquisitions
Strategic Acquisitions A leading direct to patient home solutions provider Portfolio of over 600 payor contracts Dedicated infrastructure to support claims filing and collections processes More than 900 teammates Focused, market leading global medical products Surgical drapes & gowns, medical exam g
Slide 17: Byram Acquisition
Byram Acquisition Attractive channel with strong growth, supported by aging of U.S. population Extends O&M presence across the continuum of care Cultural fit Expands capabilities and expertise Complements transaction processing Gain expertise in managing third party reimbursement Customer-facing sal
Slide 18: Byram Healthcare Business Overview
Byram Healthcare Business Overview Business Description Direct-to-patient distributor of medical supplies in the United States, reimbursed by health insurance providers Major product segments: ostomy, diabetes, urology, wound care, incontinence and breast pumps Chronic conditions that require regula
Slide 19: Strategic Rationale of S&IP Transaction
Strategic Rationale of S&IP Transaction Augments owned-brand portfolio Gain scale with targeted vertical integration Leverages existing relationships in acute and non-acute care settings Expands global presence Accelerates strategy to deliver value at the point of care Product opportunity extends al
Slide 20: Evolution from Distributor to Global Healthcare Solutions Provider
Evolution from Distributor to Global Healthcare Solutions Provider Valued-added partner to providers and manufacturers across continuum of care Bundle branded products with services and technology that solve complexity, lowering total cost & elevating quality of care Post S&IP transaction, owned pro
Slide 21: Target Overview
Target Overview
Slide 22: Halyard S&IP Business Snapshot
Main product categories consist of surgical drapes and gowns, medical exam gloves, sterilization wraps, facial protection, and protective apparel Halyard S&IP Business Snapshot Leading global provider of medical supplies and solutions for the prevention of healthcare-associated infections across the
Slide 23: Leading Market Positions
Leading Market Positions Category Surgical Drapes and Gowns Medical Exam Gloves Sterilization Wraps Facial Protection Over 600+ patents for advanced non-woven fabrics Unique product designs, along with proprietary materials, enable S&IP to create low cost OR solutions Recognized brands include MICRO
Slide 24: Overview of Customers
Overview of Customers FY 2017 Net Sales by Geography FY 2016 North America Net Sales by Care Setting S&IP’s direct and end customer base consists of a wide variety of IDNs, GPOs, and hospitals, with Owens & Minor representing its largest direct customer S&IP supports customer sales through a dedicat
Slide 25: Overview of Expected Cost Synergies
Overview of Expected Cost Synergies Cost reductions of distributing higher margin S&IP products instead of higher cost comparable products sourced from third parties and substituting S&IP gloves in place of comparable products Expected benefits from increased spend given scale and supplier concentra
Slide 26: Key Investment Highlights
Key Investment Highlights
Slide 27: Leading Global Healthcare Solutions Company Well Positioned to Succeed
Leading Global Healthcare Solutions Company Well Positioned to Succeed S&IP Business Focused Vertical Approach New Markets Across Continuum of Care Strong Core Acute Care Offering Meaningful Synergies from Channel Access + Market Leading Owned / Sourced Products
Slide 28: Key Investment Highlights
Key Investment Highlights Transformation to a Global Healthcare Solutions Business with a Diversified Business Model and Focused Vertical Approach Strong and Diverse Customer Base and Manufacturing Relationships with Market-Leading Brands Global Scale and Expected Synergies Position Owens & Minor fo
Slide 29: Transformation to a Global Healthcare Solutions Business
Transformation to a Global Healthcare Solutions Business with a Diversified Business Model and Focused Vertical Approach 1 S&IP Products S&IP Manufacturing Facilities Plant Country Main Product Categories Lexington, NC Mill USA Sterilization wraps, surgical drapes and gowns, protective apparel Acuna
Slide 30: Strong and Diverse Customer Base and Manufacturing Relationships
Strong and Diverse Customer Base and Manufacturing Relationships with Market-leading Brands 2 Selected Acute Care & Manufacturer Customers Selected Non-Acute Care Customers Selected Home Health Customers Owens & Minor has a diversified mix of products and services across the care continuum A market
Slide 31: Strong and Diverse Customer Base: Top Customers
Strong and Diverse Customer Base and Manufacturing Relationships with Market-leading Brands 2 Owens & Minor Top Customers (2017 Net Revenue) S&IP Top Customers (2017 Gross Sales) S&IP features a diverse customer base of hospitals, IDNs, and GPOs which are supported by a global sales force team S&IP
Slide 32: Global Scale and Expected Synergies Position Owens & Minor for Future Growth
Global Scale and Expected Synergies Position Owens & Minor for Future Growth 3 Where We Operate Commentary O&M Current Operations Incremental locations acquired via S&IP Note: Post-transaction countries also include South Africa. Americas EMEA Asia-Pacific Opportunity for future growth through diver
Slide 33: Experienced Management Team
Experienced Management Team 4 Name & Title Background P. Cody Phipps President & CEO Joined Owens & Minor as its President & Chief Executive Officer effective July 1, 2015 Formerly served as President and CEO of Essendent and was a Partner at McKinsey & Company, where he co-founded and led its Servi
Slide 34: Summary of Investment Highlights
Summary of Investment Highlights While maintaining its position as a market leader in acute care, Owens & Minor has expanded its services to the non-acute care setting including ambulatory surgery centers, physician offices and home health Through the acquisition of Byram, a leading direct-to-patien
Slide 35: Historical Financial Overview
Historical Financial Overview
Slide 36: Owens & Minor Historical Financial Performance
Owens & Minor Historical Financial Performance Capital Expenditures Net Revenue Adjusted EBITDA (1) Free Cash Flow (2) $ in millions $ in millions $ in millions $ in millions ____________________ For a reconciliation of Net Income to Adjusted EBITDA, see slide 40. Free cash flow defined as Adjusted
Slide 37: Owens & Minor Recent Performance
Owens & Minor Recent Performance Q4 2017 vs. Q4 2016 Revenue: Addition of Byram Healthcare offset price compression in the Domestic segment, driving modest quarter over quarter total top-line growth Proprietary Products were negatively impacted by lower revenues from sourced products Gross Margin &
Slide 38: Halyard S&IP Historical Financial Performance
Halyard S&IP Historical Financial Performance Net Sales Adjusted EBITDA(1) $ in millions $ in millions Capital Expenditures $ in millions Free Cash Flow (2) $ in millions ____________________ For a reconciliation of Net Income to S&IP Adjusted EBITDA, see slide 42. Free cash flow defined as S&IP Adj
Slide 39: Appendix
Appendix
Slide 40: Adjusted EBITDA Reconciliation
LIFO charges and credits are non-cash and related to price appreciation or deflation and year-end inventory levels Share-based compensation expense is a non-cash charge recognized over the vesting period of the restricted stock issuances Acquisition-related charges in 2017 were primarily transaction
Slide 41: Byram Adjusted EBITDA Reconciliation
Byram Adjusted EBITDA Reconciliation ____________________ The Company believes that Adjusted EBITDA provides meaningful supplemental information about Byram’s operating performance because these metrics exclude amounts that are not considered part of its core operating results when assessing its per
Slide 42: S&IP Adjusted EBITDA Reconciliation
S&IP Adjusted EBITDA Reconciliation Under GAAP, Halyard corporate overhead expense is allocated based on revenue or headcount allocation percentages. S&IP management performed an analysis to estimate the costs for the S&IP business to operate on a stand-alone basis. This adjustment is to exclude cos