Investor Presentation

Transcription

1 Investr Presentatin Sleep Centres America Inc. and Pr rata accelerated entitlement issue Cpyright and registered trademark ntice ASX Investr Presentatin Page 0

2 Disclaimer & Regulatry Disclsure This dcument has been prepared as a summary nly, and des nt cntain all infrmatin abut the Cmpany s assets and liabilities, financial psitin and perfrmance, prfit and lsses and the rights and liabilities attaching t the Cmpany s securities. This dcument shuld be read in cnjunctin with any public annuncements and reprts (including financial reprts and disclsure dcuments) released by SmnMed Limited. The securities issued by the Cmpany are cnsidered speculative and there is n guarantee that they will make a return n the capital invested, that dividends will be paid n the Shares r that there will be an increase in the value f the Shares in the future. Sme f the statements cntained in this release are frward-lking statements. Frward lking statements include but are nt limited t, statements cncerning estimates f future sales, expected revenues and csts, statements relating t the cntinued advancement f the Cmpany s peratins and ther statements which are nt histrical facts. When used in this dcument, and n ther published infrmatin f the Cmpany, the wrds such as aim, culd, estimate, expect, intend, target, frecast, future, will, may, ptential, shuld and similar expressins are frward-lking statements. Althugh the Cmpany believes that its expectatins reflected in the frward-lking statements are reasnable, such statements invlve risk and uncertainties and n assurance can be given that actual results will be cnsistent with these frward-lking statements. Varius factrs culd cause actual results and prjectins f future perfrmance t differ frm these frward lking statements as a result f knwn and unknwn risks, uncertainties and ther factrs nt anticipated by the Cmpany r disclsed in the Cmpany s published material. Many f these factrs are beynd the cntrl f SmnMed Limited and may invlve subjective judgement and assumptins as t future events, which may r may nt be crrect. The Cmpany des nt purprt t give financial r investment advice. N accunt has been taken f the bjectives, financial situatin r needs f any recipient f this dcument. Recipients f this dcument shuld carefully cnsider whether the securities issued by the Cmpany are an apprpriate investment fr them in light f their persnal circumstances, including their financial and taxatin psitin. Investr Presentatin Slide 1

3 Transactin Summary Opprtunity verview SmnMed has btained an exclusive license with Simple Sleep Services LLC ( S3 ), an established sleep centre peratr, t pen and perate direct t patient sleep treatment centres in the USA (excluding in the State f Texas) and glbally New SmnMed subsidiary - Sleep Centres America Inc. ( SCA ) is 84% wned by SmnMed, with S3 and its funders hlding a minrity equity interest f 16% SCA aims t perate at least 5 centres by the end f FY2017 and 15 centres by the end f FY2018 Funding Pr-rata nn-renunceable accelerated 2:25 entitlement issue at $2.50 per share t raise apprximately $10.5 millin Wilsn HTM Crprate Finance Ltd is Lead Manager f the issue Timetable Institutinal ffer May 3 rd t May 4 th Retail Offer May 10 th t May 27 th Qutatin f new shares June 7 th Investr Presentatin Slide 2

4 SmnMed has achieved significant grwth by develping dental and medical distributin channels FULFILMENT FULFILMENT CHANNEL CHANNEL SmnMed SmnMed Dental Dental netwrk netwrk nw nw in in cuntries cuntries (24 (24 OECD OECD cuntries) cuntries) Educated Educated ver ver 10,000 10,000 dentists dentists in in dental dental sleep sleep medicine medicine and and Cntinuus Cntinuus Open Open Airway Airway Therapy Therapy ( COAT ) ( COAT ) t t date date Treated Treated ver ver 250, ,000 Obstructive Obstructive Sleep Sleep Apnea Apnea ( OSA ) ( OSA ) patients patients with with SmnDent SmnDent devices devices REFERRAL REFERRAL CHANNEL CHANNEL Over Over the the past past fur fur years years SmnMed SmnMed has has educated educated and and wrked wrked clsely clsely with with medical medical specialists, specialists, sleep sleep clinics, clinics, hspitals hspitals and and health health insurers insurers The The aim aim has has been been t t increase increase referrals referrals f f patients patients fr fr COAT COAT and and channel channel these these patients patients t t the the SmnMed SmnMed dental dental netwrk netwrk by by changing changing the the prescribing prescribing behaviur behaviur f f medical medical specialists specialists Investr Presentatin Slide 3

5 Strng grwth in sales vlumes and revenues Glbal unit sales grwth Glbal revenues grwth Units A$ ,000 50,000 50,000 40,000 40,000 30,000 CAGR- Glbal Direct +21% 30,000 CAGR-Ttal revenues +29% 20,000 10,000 CAGR-US Licensees -3% 20,000 10,000 CAGR-MAS revenues +25% e APAC EUROPE US Direct US Licensee MAS revenues Other revenues 0 * * e * Surce: Cmpany guidance (further details n slide 11) Investr Presentatin Slide 4

6 Direct T Patient pprtunity fr SmnMed Large pl f diagnsed patients nt in treatment Ttal patient pl f diagnsed patients nt in treatment in the USA is apprximately 10 t 15 millin patients - grwing at apprx millin patients p.a. (estimated t be millin patients by 2020) +3 millin patients newly diagnsed with OSA in the USA every year and 50-70% 1 f these patients cannt r d nt want t accept Cntinuus Psitive Airway Pressure ( CPAP ) as a treatment fr their chrnic cnditin and either reject CPAP ut f hand r give up in the first few mnths after trying Untreated patients usually d nt return t medical specialists unless their cnditin has wrsened significantly Highly effective alternative treatment exists COAT is a clinically prven, nn-invasive and cmfrtable alternative treatment f OSA Research prves SmnDent patients shw a very high cmpliance (95% n CPAP definitin and 85% n an all night every night definitin) 1 Virtually all USA health insurers are reimbursing all r a large part (depending n the individual s insurance plan) f the cst f COAT Ntes: 1. Cmpany research Investr Presentatin Slide 5

7 Direct T Patient pprtunity fr SmnMed Prven direct t patient business mdel A Direct T Patient OSA treatment business has been successfully develped ver the last 3 years and is nw ne f SmnMed s largest custmers Simple Sleep Services LLC ( S3 ), in Texas, USA perates tw treatment centres - its first centre in Dallas was pened in mid 2013 and generated A$4.7 millin in revenue and A$1.7 millin in PBT in CY2015 (based n AUD:USD f 0.77) S3 advertises t the target market, assists patients with their reimbursement claims, uses independent sleep physicians and cntracted sleep dentists t diagnse/treat patients and uses SmnDent devices exclusively Overview f the direct t patient business mdel Marketing and advertising specifically targeted at OSA diagnsed patients nt in treatment and educates OSA patients f the existing f alternative treatments Patient is ffered integrated diagnstic and treatment services in easy t reach treatment centres Treatment centre facilitates reimbursement apprvals n behalf f patient Treatment centre fits suitable patients with COAT - uses independent sleep physicians and cntracts sleep dentists t diagnse/treat sleep patients COAT devices surced frm the SmnMed prduct range Treatment centre prcesses insurance claim n behalf f patient Investr Presentatin Slide 6

8 SmnMed s Direct T Patient distributin business SCA verview SmnMed has btained exclusive license t pen and perate S3 centres in the USA (excluding in the State f Texas) and glbally New SmnMed subsidiary - Sleep Centres America Inc. ( SCA ) is 84% wned by SmnMed, with S3 and its funders hlding a minrity equity interest f 16% N cash cnsideratin paid t S3 and its funders SmnMed t fund the rll-ut f new treatment centres (further detail prvided in fllwing pages) S3 funders have jined the bard f SCA as nn-executive directrs and have entered int a three year cnsultancy agreement SCA is gverned by a sharehlder s agreement which cntains terms usual fr such an arrangement and a put and call ptin ver the minrity interest in SCA exercisable in 2020 Subject t suitability, SmnDent prducts will be used exclusively in all S3 and SCA s centres Investr Presentatin Slide 7

9 SmnMed s Direct T Patient distributin business Ratinale SCA t ptentially becme a significant business fr SmnMed ver the next 3-4 years SCA expected t be earnings accretive t SmnMed thrugh attractive treatment centre ecnmics Significant additinal SmnDent device sales flwing frm SCA treatment centres will als benefit SmnMed Grup revenue and margin grwth Executin plan SCA aims t perate at least 5 centres by the end f FY2017 and 15 centres by the end f FY2018 Detailed rllut plan being develped based n reimbursement rates in different states in the USA Senir executive search underway Investr Presentatin Slide 8

10 S3 Treatment centre ecnmics S3 Dallas Centre pened in mid 2013 December year end Patients treated 860 1,506 Revenues (A$m) PBT (A$m) PBT margin (%) 41% 37% S3 secnd centre is in Frt Wrth (nt included in the numbers in the table t the left) and pened in July 2015 shwed a similar revenue ramp up prfile t Dallas and brke even by September 2015 S3 third centre due t pen in San Antni in September 2016 Surce: Unaudited S3 accunts; FX translatin at AUD:USD f 0.77 Investr Presentatin Slide 9

11 Expected SCA treatment centre ecnmics Year 1 Year 2 Year 3 Patients treated 450 1,250 1,650 Revenue per centre (A$m) EBITDA per centre (A$m) Centre EBITDA margin N/A 25% 30% Assumes AUD:USD f 0.77 Ramp up based n SmnMed s mre cnservative assumptins cmpared with the actual perfrmance f the Dallas Centre Ttal investment per new centre expected t be apprximately A$500,000 Break-even expected within 12 mnths f pening Year 1 assumes 3 mnths pre pening and 9 mnths perating EBITDA cntributin per SCA centre befre SCA verhead expenses Investr Presentatin Slide 10

12 FY2016 utlk Based n ur current estimates and trends fr Q4, FY2016 vlume 58,000-60,000 units, dwn frm previus guidance f 62,000 units Direct sales 56,000-57,500 - up 22% t 24% Licensee sales 2,000-2,500 - dwn 55% t 60% Ttal vlume grwth 13%-16% Q4 direct sales in the US nw assumed t grw by 25% instead f YTD 28.4%, due t increased insurance premiums FY2016 revenue f $44-45 millin, up frm previus guidance f $42 millin, up 28-30% n FY2015 higher share f direct sales and higher managed care revenues in US and Eurpe FY2016 underlying EBITDA f $ millin, up 130%-175% n FY2015 (dwn frm previus guidance f $3.0 millin) lwer sales vlume and prduct mix in US negatively impact grss margin FY2016 underlying EBITDA excludes set up csts f apprximately $0.7 millin assciated with SCA including legal, travel, cmpany frmatin, recruitment, relcatin and emplyee csts Investr Presentatin Slide 11

13 Accelerated pr-rata entitlement issue Pr-rata nn-renunceable accelerated 2:25 entitlement issue at $2.50 per share t raise apprximately $10.5 millin The ffer price represents a discunt t TERP f 10.0% and a discunt t last clse f 10.7% Funds t prvide wrking capital and fund any capital investment assciated with SCA T the extent that there is a shrtfall in entitlements taken up cmpared t the target ttal capital raising f $10.5 millin, TDM Asset Management Pty Ltd ( TDM ) has agreed t subscribe fr any shrtfall nt taken up by the bkbuild prcess In cnsideratin f TDM s cmmitment t subscribe fr any shrtfall, as well as the prvisin f strategic advice relating t the SCA grwth initiative, TDM will be granted 400,000 ptins exercisable within 12 mnths frm the issue at a strike price f $3.00 per share Issued capital millin shares pst issue Wilsn HTM Crprate Finance Ltd is Lead Manager f the issue Investr Presentatin Slide 12

14 Timetable Prcedure Step Date Trading halt 3 May 2016 Annuncement f Entitlement ffer 3 May 2016 Ineligible Sharehlder Letter 3 May 2016 Institutinal Offer Opens 3 May 2016 Institutinal Offer Clses 4 May 2016 Annunce Results f Institutinal Offer 5 May 2016 Release Retail Offer Dcuments t ASX 5 May 2016 Trading Halt Lifted Trading is n ex-entitlement basis 5 May 2016 Recrd date fr hlders (7pm Sydney time) 5 May 2016 Prcedure Step Infrmatin Bklet and Entitlement and Acceptance Frm sent t Retail Investrs Date 10 May 2016 Retail Entitlement Offer Opens 10 May 2016 Issue and Qutatin f New Shares 16 May 2016 Retail Offer Clses (5pm Sydney time) 27 May 2016 Annunce Results f Retail Offer 1 June 2016 Retail Offer Settlement 3 June 2016 Issue New Shares under Retail Offer 6 June 2016 Qutatin f New Shares under Retail Offer 7 June 2016 Dispatch Hlding Statements under Retail Offer 7 June 2016 Investr Presentatin Slide 13

15 Risks SmnMed is subject t a number f risks and ther factrs that may impact bth n its future perfrmance and the market price at which its Shares trade. Bradly, these risks can be classified as risks general t investing in the stck market and risks specific t an investment in SmnMed. The New Shares issued under this entitlement ffer d nt carry any guarantee f prfitability, dividends r the price at which they trade n ASX. The Directrs cnsider that the fllwing summary, which is nt exhaustive, represents sme f the majr risk factrs f which investrs need t be aware. Hwever, befre taking up any Rights r investing in SmnMed, the Directrs strngly recmmend investrs examine the cntents f the entitlement ffer Infrmatin Bklet in its entirety and cnsult their prfessinal advisers befre deciding whether t subscribe fr New Shares pursuant t this entitlement ffer Infrmatin Bklet. General As with all stck market investments, there are risks assciated with an investment in SmnMed. Share prices may rise r fall and the price f Shares might trade belw r abve the issue price fr the New Shares under this entitlement ffer. General factrs that may affect the market price f SmnMed Shares include: ecnmic cnditins in bth Australia and internatinally; investr sentiment and lcal and internatinal share market cnditins; changes in interest rates and the rate f inflatin; changes t gvernment regulatin, plicy r legislatin; changes in exchange rates; and the nature f cmpetitin in the industry in which SmnMed perates. Specific risks relating t SmnMed Directrs believe that risks assciated with an investment in SmnMed include, but may nt be limited t, the fllwing: Grwth Management and Additinal Capital Requirements The existing and future peratins f SmnMed may place a significant strain n the Cmpany s managerial, peratinal and financial resurces. Future success will als depend n the ability t attract and retain persnnel. Inability t manage grwth, r t attract and retain the necessary persnnel, culd have a material adverse effect n SmnMed. The develpment f the Direct T Patient channel f the Cmpany has been mdelled n an existing successful business cnducted in the state f Texas in the United States f America. Whilst the Directrs believe this mdel can be replicated in ther parts f the Unites States f America and pssibly utside the USA, there is n guarantee that such peratins will be successful due t a number f factrs which may be peculiar t the varius markets in which this channel is develped. Operatins in any new markets can be affected by insurance reimbursement levels, the csts f perating, the levels f demand fr varius treatment ptins fr bstructive sleep apnea, the Cmpany s prducts and services and the availability f suitable persnnel. Additinal funding may be required fr the glbal expansin f SmnMed s business in the future. There is n assurance that additinal funding will be available t SmnMed in the future at ecnmically feasible terms. Whilst the Directrs are f the belief that the level f demand fr the Cmpany s prducts and the resultant revenues are expected t cntinue t grw in the future, there can be n guarantee that this grwth will cntinue. Executin risk in establishing a new business channel Despite SmnMed having acquired an exclusive license fr an existing and successful Direct t Patient business, there are many risks assciated with establishing any new business channel and rlling ut the acquired cncept US wide and internatinally. There may be unfreseen difficulties, delays r expenses in develping any new business which culd als apply t the Direct t Patient channel SmnMed will be building in the USA and pssibly elsewhere. SmnMed s exclusive licence frm S3 can be terminated by S3 if SCA des nt pen at least ne utlet by 1 July 2017 r becme nnexclusive if SCA des nt pen at least five utlets by 1 July Shuld either f these factrs ccur, SmnMed s future earnings frm the S3 channel may be adversely impacted. Changes ptentially affecting prices charged There can be n guarantee that SmnMed s prducts will cntinue t be successful in the market nr that SmnMed will cntinue t receive significant revenues frm the sale f its prducts r services. Unexpected expenses r dwnward pressure n the prices SmnMed charges as a result f changes in regulatins by natinal health authrities, emergence f alternative treatments fr OSA delivering a higher level f efficacy and patient cmpliance as well as better health ecnmics, cmpetitive pressures, r levels f reimbursement prvided health insurers in the places in which SmnMed perates, may affect the prfitability f that business. Prduct Liability Whilst SmnMed had in its ver ten years histry treating ver 250,000 patients nt a single law suit resulting frm mal treatment and/r serius side effects r harm being caused t a patient, SmnMed culd be expsed t prduct liability claims r ther lawsuits if such events wuld ccur. SmnMed has implemented cntrls and prcesses designed t mitigate these risks and maintains what it believes is adequate liability insurance whenever ecnmic and prudent. Cmpetitin There is a risk that the cmpetitive landscape might change; new cmpetitrs might emerge r existing cmpetitrs might be taken ver by larger and better resurced cmpanies which may ffer services that cmpete with the prducts and services prvided by SmnMed. There can be n assurance that a cmpetitr f SmnMed will nt develp r achieve cmmercialisatin f services that cmpete with, r supersede, SmnMed services r prducts. The Directrs believe that the ptential market size fr the services t be prvided by SmnMed is large enugh t absrb a number f cmpetitrs. Freign Exchange Risk All f SmnMed s prductin and ver 90% f its sales and revenues are taking place utside Australia. As SmnMed is based in Australia and its accunts are kept in the Australian Dllar currency, changes t currencies will affect SmnMed s prfit and lss accunts. Mst f SmnMed s business is carried ut in US Dllars r in Eurs. A strengthening f the Australian Dllar against the US Dllar and/r the Eur will affect SmnMed s prfits adversely, whereas a weakening f the Australian Dllar against these cuntries will enhance its prfits reprted in Australian Dllars. Investr Presentatin Slide 14

16 Offer restrictins This dcument des nt cnstitute an ffer f new rdinary shares ( New Shares ) f the Cmpany in any jurisdictin in which it wuld be unlawful. In particular, this dcument may nt be distributed t any persn, and the New Shares may nt be ffered r sld, in any cuntry utside Australia r New Zealand except t the extent permitted belw. This annuncement des nt cnstitute an ffer t sell, r a slicitatin f an ffer t buy, securities in the United States, r in any ther jurisdictin in which such an ffer wuld be illegal. The securities referred t in this dcument have nt been and will nt be registered under the United States Securities Act f 1933 (the US Securities Act ), r under the securities laws f any state r ther jurisdictin f the United States and may nt be ffered r sld, directly r indirectly, within the United States, unless the securities have been registered under the US Securities Act r an exemptin frm the registratin requirements f the US Securities Act is available. This dcument may nt be distributed r released in the United States. Hng Kng WARNING: The cntents f this dcument have nt been reviewed by any Hng Kng regulatry authrity. Yu are advised t exercise cautin in relatin t the ffer. If yu are in dubt abut any cntents f this dcument, yu shuld btain independent prfessinal advice. Singapre This dcument and any ther materials relating t the New Shares have nt been, and will nt be, ldged r registered as a prspectus in Singapre with the Mnetary Authrity f Singapre. Accrdingly, this dcument and any ther dcument r materials in cnnectin with the ffer r sale, r invitatin fr subscriptin r purchase, f New Shares may nt be issued, circulated r distributed, nr may these securities be ffered r sld, r be made the subject f an invitatin fr subscriptin r purchase, whether directly r indirectly, t persns in Singapre except pursuant t and in accrdance with exemptins in Subdivisin (4) Divisin 1, Part XIII f the Securities and Futures Act, Chapter 289 f Singapre (the SFA ), r as therwise pursuant t, and in accrdance with the cnditins f any ther applicable prvisins f the SFA. This dcument has been given t yu n the basis that yu are an existing hlder f the Cmpany s shares. In the event that yu are nt such a sharehlder, please return this dcument immediately. Yu may nt frward r circulate this dcument t any ther persn in Singapre. Any ffer is nt made t yu with a view t the New Shares being subsequently ffered fr sale t any ther party. There are n-sale restrictins in Singapre that may be applicable t investrs wh acquire New Shares. As such, investrs are advised t acquaint themselves with the SFA prvisins relating t resale restrictins in Singapre and cmply accrdingly. Nminee Restrictins Nminees and custdians may nt distribute any part f this dcument, and may nt permit any beneficial sharehlder t participate in the Offer, in any cuntry utside Australia, New Zealand and Singapre and except, with the cnsent f the Cmpany, t beneficial sharehlders resident in certain ther cuntries where the Cmpany may determine it is lawful and practical t make the Offer. Investr Presentatin Slide 15

17 Cntact details EXECUTIVE CHAIRMAN & CEO Dr. Peter Neustadt CHIEF FINANCIAL OFFICER Mr. Neil Verdal-Austin Address Level 3, 20 Clarke Street Crws Nest NSW 2065 Australia Telephne +61 (2) Website Investr Presentatin Slide 16