Interim Results. September Ewan Phillips, CEO Paul Mitchell, CFO Andy Mears, Group Sales Director.

Transcription

1 Interim Results September Ewan Phillips, CEO Paul Mitchell, CFO Andy Mears, Group Sales Director September

2 Market leading position in ODM Robust evidence base in intra-operative fluid management: better outcomes, lower costs Significant market opportunity as healthcare systems around the world seek to increase quality of patient care while controlling costs Market leading positions in the most developed markets for intra-operative fluid management First ever medtech business to persuade the world s largest healthcare provider (the NHS) to adopt its technology at pace and at scale Building strong platforms for growth in other evolving major markets Strengthening financials Building strong base of recurring revenue from probe sales High gross margins Costs remain under tight control Generating substantial cash returns from UK sales operation 2

3 H1 Overview Surgical probe revenues up 12% to 2.3m UK up14%; Q2 over 30% USA up 17% International up 3% Dedicated trainer accounts expanded in UK and US Strong growth Pipeline building US reimbursement established Signs of US market acceleration Positive French clinical guidelines Cash loss before Premier 588,000 (2012: 754,000)

4 Surgical probes high growth Monitor related ICU probes 4

5 P&L Summary New format Key Performance Indicators Profitability on cash basis Profitability pre- & post-premier Gross margin probes around 77% Cash loss reduced by 164,000 Probe margin up 144,000 Net monitor income down 55,000 Cash costs down 67,000 nil H1 barter income ( 388,000) H1 H Probe revenue 2,652 2,426 Gross profit 2,030 1,886 Sundry income 15 4 Net monitor income Cash costs (2,700) (2,767) Loss before Premier investment and non-cash items (588) (754) Clinical research income Non-cash costs (502) (848) Loss before Premier investment costs (1,090) (1,214) Costs of Premier investment (293) - Operating loss (1,383) (1,214) 293,000 Premier costs 5

6 Prior years Probe revenue 5,265 4,800 4,595 Gross profit 3,962 3,562 3,393 Sundry income 2 6 (1) Net monitor income less costs Cash costs (5,427) (5,165) (4,733) Loss before Premier investment and non-cash items (1,062) (1,127) (491) Clinical research income Non-cash costs (1,415) (775) (1,181) Loss before Premier investment costs (2,029) (1,402) (1,353) Costs of Premier investment (49) - - Operating loss (2,078) (1,402) (1,353) 6

7 P&L summary continued R&D R&D H1 H Cash cost Clinical trial amortisation Total incurred: Capitalised (209) (208) Amortised P&L charge ODM+ released in 2012 ODM3 development Further platform development 7

8 Non-cash items/net monitor income Non cash costs Share based payments Equity settled costs Clinical trial charges (net) Dep n and amortisation Net monitor income Revenue from monitors sold Maintenance revenue Cost of sales - monitors Amortisation costs of placed monitors (54) (162) (102) (55)

9 Balance sheet assets and other liabilities 30 June 31 December 2012 PPE Intangible (R&D) 1,230 1,076 Inventories 1, Trade and other Income tax recoverable 2,909 2, Cash 1, Trade payables Tax and Soc. Sec. 30 June 31 December Other Accruals ,971 1,866 7,414 6,255

10 Sales & clinical globally: harmony works Sales Lead generation & pursuit Local evaluation inc education/training Business case, pricing, procurement Cross-selling: surgeries, system/network Clinical training Classroom & bedside Coaching: change practice Cross-selling: surgeries Dedicated training for super-users Sales & training together Expand types of surgery Keep it fresh Metrics Probe consumption = unit sales Pipeline: dedicated trainer accounts 1. Get in there 2. Get established 3. Expand Champion(s) GET ESTABLISHED Routine use Surgeries GET IN EXPANSION Install monitors Budget Systems 10

11 UK sales growth focus Dedicated trainer programme Expand via cross-selling Ad hoc: individual users Slow, expensive training investment unless sell monitor Systemic: national CQUIN minima Early days: await year 2 targets & sanctions Systemic: NICE guidance 3 tier pricing: qualified accounts Historic: pay for monitor, lifetime training Ad hoc use, DM box: pay for training CQUIN etc 11

12 UK progress Surgical probe revenue increased by 14% over prior year (Q2 up 30%) Compliance with NHS implementation drive varies between Trusts Focus on Trusts most advanced in plans to adopt Dedicated trainer programme commenced in two NHS Trusts Probe run rate doubled in both Pipeline extended: two imminent UK ICU probe sales flattening off Installed base Surgical installed base increased by 66 monitors (681) Total installed base passed 1, monitors placed by Company during period 12

13 Quarterly UK surgical probe usage Q1 Q2 Q3 Q

14 International sales Active in circa 30 countries Distribution Joint venture Direct Direct in Spain, others distribution France probe sales up 21% Largest ever IOFM pilot results published Movement towards JV s for more developed markets Distribution Low cost market entry Works well if distributor invests in training Joint venture Low set up costs from established distribution Drive installed base at manufacturing cost Pooled margin justifies training Platform for direct Direct sales High set up costs Focused entry: cheaper, higher initial return fund expansion organically 14

15 US Market Aim to establish a number of model accounts 35+ within two years US market strengths C-suite accessibility Focus on outcomes & costs Anaesthesia more generalist = easier cross-selling once established Physician payment Accelerating clinical acceptance Key accounts: Most deeply penetrated Deltex accounts in the world More deeply penetrated than competitor reference accounts High returns, rapid growth from dedicated trainer model 15

16 US Progress Reimbursement fully established - $101 and separate specific code Sales Hospital evaluations Acceleration in evaluations by hospitals/systems Two strategically important system evaluations completed Two further implementation agreements completed since end of period embedded trainers being recruited Additional trainer hired at key hospital VP US Sales hired in July Strong pipeline Other Ongoing Washington based market access activity RCT published showing significant reductions in complications in ERAS setting 510K for ODM+ submitted 16

17 US Progress continued Status Hospitals Targets in system Dedicated trainer 2 +5, +14 Since June Targets in system Implementation agreed Formal evaluation Under/pending evaluation Active but limited 8 n/a n/a Premier: 2015 end date /+++ 17

18 Topic Selected Burden of Illness Study Recruit Faculty Develop Change Concept Enroll Health Systems Predictive Model Act Plan Act Plan Study 2 nd Action Period Do Review & Change Study 1 st Action Period Do Finalize Program Design Execute Dissemination Plan Disseminate

19 Summary Growing traction in key markets Significant increase in evaluations in the USA Strong pipeline of accounts in UK and USA under dedicated trainer programmes Strong and increasing cash returns from UK business Move to owning monitor fleet UK maximise probe s Migrate more developed distributors to JV 19

20 Appendices Cash and net debt Sales analysis Board of Directors Key statistics 20

21 Cash and net debt Operating cash Op. cashflow before movements in w/cap and Premier 884k (2012: 895k) cost base (exc. Premier) set so that cash generative at c 600,000 per month sales Working capital 300k investment in inventory 2012 Cash 1, Convertible (1,013) (1,009) US loan (407) (374) Invoice facility (665) (724) Finance lease (8) (12) (633) (1,452)

22 Sales analysis Probes Units Mon s Units Probes Mon s Other Total Probes Units Mon s Units Probes Mon s Other Total Direct UK* 21, , ,948 19, , ,118 USA 3, , Spain Distributed Europe 7, , Row , , ,919 31, , ,206 *UK Probe split Units 2012 Units 2012 Surgical ,350 16,235 1,184 ICU 3, , Total 21,455 1,738 19,920 1,589

23 Board of Directors Ewan Phillips MA ACA Chief Executive Ewan joined Deltex Medical as Group Finance Director in August 2001 with a background in corporate finance. He took on responsibility for UK sales in October 2002 and was appointed managing director of the UK subsidiary in November 2005 before being appointed Chief Executive in September Paul Mitchell BSc FCA Finance Director Mr Mitchell joined Deltex Medical in August 2002 as Financial Controller, after qualifying as a Chartered Accountant with PricewaterhouseCoopers. In November 2004 he was appointed Company Secretary. Nigel Keen MA FCA Chairman Nigel has been involved with Deltex Medical since 1988, and Chairman since He is also the Non-executive Chairmanof Bioquell plc, Laird plc and Oxford Instruments plc. Nigel is the Chairman of the Remuneration Committee and the Audit Committee. Dr Edwin Snape MSc PhD Vice-Chairman Ed has been connected with Deltex Medical for over ten years and Vice-Chairman since He is currently a Director of Sultan Scientific Limited, Myoscience Inc., Spectra Analysis Instruments, Inc. and Lab 21 Limited. He has over 30 years experience investing in medical devices and life sciences businesses in the USA and Europe. Professor Sir Duncan Nichol Duncan has been an influential figure in the provision of acute health services in the UK throughout his career. He worked for the NHS for nearly 30 years in a number of senior management roles and was Chief Executive from 1989 to Duncan was the Deputy Chairman of the Christie NHS Foundation Trust from 2008 to 2012 and is currently Chairman of the Countess of Chester NHS Foundation Trust. Duncan is also currently a Nonexecutive Director of Synergy Healthcare plc, a provider of healthcare support services to the NHS and the first Chairman of the UK Academy for Healthcare Science. Julian Cazalet MA FCA Julian joined the Board in April He was until 2007 a Managing Director Corporate Finance of JPMorgan Cazenove. After graduating in Economics from Cambridge, he qualified asa Chartered Accountant before joining Cazenove in He became a Partner in From 1989 he worked in Corporate Finance, firstly in Equity Capital Markets and subsequently advising listed companies. He is Chairman of Herald Investment Trust plc and a Director of Charles Taylor plc, Private Equity Investor plc and of a number of charities. 23

24 Key Statistics Share Price: 15.88p Market: AIM Ticker: DEMG Market Cap: 26.6m Ord. Shares in Issue: 164.8m Significant Shareholders % of Issued Share Capital Black Rock Inv Mgnt Ltd 8.78% Legal and General Inv Mgngt Ltd 7.94% Herald Inv Mgnt Ltd 6.52% Charles Stanley & Co. Ltd 6.00% Nigel Keen 4.10% Julian Cazalet 2.46% 24