Comprehensive Medical Waste and Unused Medication Management Solutions Provider NASDAQ: SMED

Transcription

1 Comprehensive Medical Waste and Unused Medication Management Solutions Provider NASDAQ: SMED INVESTOR PRESENTATION NOVEMBER

2 Safe Harbor These slides contain (and the accompanying oral discussion will contain) forwardlooking statements within the meaning of the Private Securities Litigation Reform Act of The words believe, estimate, anticipate, project and expect and similar expressions are intended to identify forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company, conditions affecting the Company s customers and suppliers, competitor responses to the Company s products and services, the overall market acceptance of such products and services, the effectiveness of the Company s strategy and other factors disclosed in the Company s periodic reports filed with the Securities and Exchange Commission. Consequently, such forward looking statements should be regarded as the Company s current plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. 2

3 Company Overview Sharps Compliance is a leading full-service provider of cost-effective, customized, and unique solutions for the proper management of medical waste and unused medications. Comprehensive mail-back solutions Ability to bolt-in route-based pick-up services where needed to complement mail-back Provides valuable data to support regulatory and patient compliance Serving high growth alternate site areas of the market: pharmaceutical manufacturer, retail pharmacy, professional, and assisted living/long-term care 3

4 Investment Considerations Long-Term Organic Growth 12.3% organic 5-year CAGR in core business segments 12% YOY revenue growth in 1Q16 Sales and marketing team in place to drive continued growth At Nexus of Several Compelling Trends Aging population Shift to alternative site healthcare Increasing medical waste regulations Need to save money in changing healthcare environment Challenging the Industry Standard Industry has historically relied on expensive and inefficient waste haulers Sharps offers a better option for small quantity generators One of only two providers that can service nationwide customers Transforming How Pharma Interacts with Patients Attractive Business Model Creates touch points Improves patient compliance Extends medication adherence Builds brand loyalty Asset-light; low maintenance capital expenditures Recurring revenue and high operating leverage High barriers to entry: highly regulated market, sophisticated tracking software, and one of ten medical waste incinerating facilities in the country Solid Balance Sheet $16.0M in cash as of September 30, No long-term debt 15.4M shares outstanding 4

5 Sharps has Transformed to a Comprehensive Medical Waste Solutions Provider Mail-back in home healthcare Alliance with Daniels Sharpsmart Acquisition of Alpha Bio/Med, route-based pick-up serving PA, MD and OH Established Companyowned route-based pick-up in select TX and Shreveport, LA markets Expanded markets: Assisted Living Retail Pharmacy Distributors Pharmaceutical Manufacturer Patient Support Programs Launch of inside sales and e-commerce driven website Professional Market Expanded network of medical and hazardous waste service providers 5

6 Full Service Provider Mail-back Solutions (using existing USPS infrastructure) Traditional Pick-up Services (Dedicated truck & driver) Sharps Comprehensive Solution Sharps + a network of medical and hazardous waste service providers including those with route-based services Allows Sharps to address the entire U.S. medical waste market Allows Sharps to provide pick-up service where needed to complement mail-back Stericycle is only other national provider Key for customers with large quantity locations Enhances pipeline by over $30 million Network of Medical and Hazardous Waste Service Providers Allows Sharps to Remain Asset-Light While Offering a Full Solution 6

7 Expanding Portfolio of Solutions Recently Acquired Alpha Bio/Med Adds route-based pick-up capability to complement mail-back solution in Pennsylvania, Maryland, and Ohio Expands Sharps service offerings and customer base Exploring opportunities to establish Northeast treatment facility to better serve growing customer base in the region Launch of Company-Sponsored Pick-Up Service in Texas Will serve Dallas, Houston, San Antonio, and Austin, TX as well as Shreveport, LA Focus on Professional, Assisted Living, and Long-Term Care markets with expansion to medium-quantity markets such as surgery centers Leverages existing treatment facility in Texas 7

8 TRENDS DRIVING GROWTH 8

9 Point of Care Shifting Towards Sharps Core Customers Clinics/Retail Pharmacies Home Health Care Traditional Healthcare Setting Urgent Care Clinics Core Traditional Waste Hauler Market Core Sharps Markets Assisted Living/Long- Term Care Sharps Serves All Medical Waste Markets 9

10 Focused on the Largest, Fastest Growing Segment of Medical Marketplace Large Healthcare Setting Non-hospital/Alternative Care Retail Pharmacies Clinics Home Healthcare Setting Assisted Living Larger Market Faster Growth Recurring Revenues 10

11 Aging Demographic 90, Years and Older 80,000 Population in thousands 70,000 60,000 50,000 40,000 30,000 20, US Population Aged 65+ Expected to Double Within Next 25 Years Source: US Census Bureau 11

12 Growing North American Drug Market $18 North American Injectable Drug Delivery Technologies Market $16 $14 $ in billions $12 $10 $8 $6 $4 $2 $ North American Injectable Drug Market Projected CAGR of 12.3% Source: MarketsandMarkets 12

13 BUSINESS OVERVIEW 13

14 Offering Solutions Across High Growth Sectors Retail Pharmacy Pharmaceutical Manufacturer Professional/ Assisted Living/Long- Term Care Cost-effective and comprehensive mail-back solutions for flu and yearround immunizations Customized branded mailback solutions Compliance data which is used to improve medication adherence Build brand loyalty and awareness Cost-effective solutions Accommodates all facilities 14

15 Market Opportunity Unused Medication Management Solutions Including Controlled Substances United States generates an estimated 250 million pounds of unused medication waste Drug Enforcement Agency (DEA) issued new regulations effective October 9, for the proper disposal of patient dispersed unused and expired medications, including controlled substances Healthcare facilities need solutions that comply with the DEA rules Solution designed to meet or exceed new DEA regulations MedSafe system for safe collection, transportation and proper disposal of unwanted and expired prescription medications, including controlled substances Customers Long-term care facilities Pharmacies Local law enforcement Narcotic treatment programs Hospitals and clinics with onsite pharmacies Government 15

16 Opportunity for Significant Growth in Markets We Serve Market Market Size Market Growth Rate Revenue (TTM) Current Penetration Professional $648M 5%¹ $6.5M 1% Pharmaceutical Manufacturer Assisted Living/Longterm Care Home Health Care Retail Pharmacy $+50M 9.4% $4.7M 10% $84M 5.7% $2.0M 2% $100M 7% $7.0M 7% $10M² 20-25% $8.5M 75-80% Government $+50M N/A (new market) $2.1M 4% ¹Average projected growth rates of physician, dental, and veterinary spending ²Assumes only 25% of U.S. flu shots for adults administered in retail pharmacies 16

17 Customers Dental Veterinarian Physicians Solution Sharps Recovery System and pick up to supplement larger chains Sales and Distribution Channels Telemarketing/Inside Sales E-commerce Distributors Direct (larger chains) Other service-related practices Dental and Veterinarian chains Professional Market Daniels Alliance / Direct / Enterprise Sales Professional Market Billings (in millions) $5.3 $6.2 $6.5 Market Opportunity Currently 800,000 professional offices across the US Translates to a $648M market opportunity 1Q16 TTM 17

18 Pharmaceutical Manufacturer Market Customers Large global Pharmaceutical Manufacturers Self-injectable high end drugs Complex injection devices Solution Customized/branded solutions Creating touch points Data supporting improved drug compliance Extended medication adherence Building brand loyalty Sales and Distribution Channels Direct/Enterprise Sales Pharmaceutical Manufacturer Market Billings (in millions) $3.7 $4.9 $4.7 1Q16 TTM Market Opportunity North American injectable drug delivery technologies market projected to grow at a CAGR of 12.3% from 2012 to 2017 Source: MarketsandMarkets 18

19 Creating Patient Touchpoints for Pharma Industry Increasing Pharma s Ability to Drive Sales and Ensure Medication Discipline Patient diagnosed and prescribed medication at professional/ specialist office Patient opts in to the Patient Support Program including mail-back Sharps treats waste and collects valuable data used to determine patient compliance Patient compliance data provided to Pharmaceutical Manufacturer; creates patient touch points 19

20 Assisted Living/Long-Term Care Market Customers Solution Mail-back Route-based pick-up Sales and Distribution Channels Direct/Enterprise Sales Market Opportunity Total addressable market of $84M US population age 65+ expected to double within the next 25 years 1 of 5 Americans will be 65+ by 2030 Age 85+ fastest growing segment Daniels Alliance / Direct / Enterprise Sales $1.7 Assisted Living/ Long-term Care Billings (in millions) $1.9 $2.0 1Q16 TTM Source: National Institute on Aging 20

21 Government Market Customers Government Billings (in millions) Solution TakeAway Medication Recovery System MedSafe Solution Daniels Alliance / Direct / Enterprise Sales $1.8 $2.1 Sales and Distribution Channels $0.5 Direct/Enterprise Sales 1Q16 TTM Market Opportunity New solutions approved and added to Federal/GSA supply schedules as well as to the Company Distribution and Pricing Agreement (DAPA) for purchase by the Department of Defense agencies. Approvals facilitate efficient purchase of Sharps unused medication management solutions by government agencies 21

22 Retail Pharmacy Market Customers Solution Mail-back (Sharps Recovery System ) Sales and Distribution Channels Direct Vaccine distributors Market Opportunity $6.4 Retail Pharmacy Billings (in millions) $8.7 $8.5 3,500 3,000 2,500 2,000 1,500 1, US Retail Health Clinics 2,868 2,243 1,743 1, Q16 TTM Americans visit retail clinics 10 million times a year, which represents only 2% of all primary care encounters in a retail setting* *Forbes Magazine, April 23, 22

23 FINANCIAL OVERVIEW 23

24 Attractive Business Model Significant Operating Leverage Costs are relatively fixed Operating infrastructure in place to grow 2-3X 50% gross margins on incremental revenues 5-10% SG&A increase on incremental revenues High Recurring Revenue Recurring revenue model; high retention Asset-Light Cost Structure Network of medical and hazardous waste services providers allows Sharps to remain asset-light while offering a fullservice solution No Third-Party Payer Risk Sharps has no direct dependence on Medicaid, Medicare, or other third-party payers 24

25 Positioned for Margin Expansion ($ in millions) $21.8 $1.7 $21.5 Revenue $26.6 $30.9 $31.7 Gross Margin 33.8% 35.6% 36.4% 30.0% 29.5% $20.1 FY 2012 FY 2013 FY FY 1Q16 TTM U.S. Government Contract Core Business (recurring revenue markets) EBITDA FY 2012 FY 2013 FY FY 1Q16 TTM Adjusted Net Income (Loss)¹ $2.1 $2.1 $2.3 $1.0 $1.2 $1.5 $(1.4) $(1.6) FY 2012 FY 2013⁴ FY ⁵ FY 1Q16 TTM $(2.2) $(2.4) FY 2012 FY 2013 FY FY 1Q16 TTM (Net Income (Loss))¹ Beginning in FY 2012, the Company s net deferred tax assets were fully reserved by a tax valuation allowance. Therefore the amounts shown in this graph have been adjusted to exclude any tax impact. (2012) 2 Excludes tax expense of $1.1 million. Includes unusual expense of $298 thousand. (2013) 3 Includes unusual expense of $338 thousand. () 4 Includes unusual expense of $382 thousand and income from legal settlement of $1.5 million. 25 ( TTM) 5 Includes unusual expense of $77 thousand.

26 Quarterly Growth Trends ($ in millions) $7.6 Revenue $7.1 $7.0 $8.7 $9.0 $7.9 Gross Margin $6.3 $5.6 $ % 35.2% 36.2% 33.1% 37.1% 42.0% 36.6% 25.4% 26.9% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q $1.9 EBITDA $1.6 Net Income (Loss) $ in thousands $1,649 $1,297 $1.0 $749 $0.4 $0.4 $0.2 $0.4 $122 $120 $(74) $220 Q1 Q2 $(0.7) Q3 Q4 Q1 Q2 $(0.6) Q3 Q4 Q Q1 Q2 $(935) Q3 Q4 Q1 Q2 $(812) Q3 Q4 1Q

27 Diverse Revenue Mix FY 2008 Billings $13.2 million FY 2016 TTM Billings $32.0 million Professional 6% Assisted Living/ Long-term Care 6% Other 3% Assisted Living/ Long-term Care 9% Pharmaceutical Manufacturer 7% Other 15% Retail 8% Home Health Care 55% Pharmaceutical Manufacturer 15% Retail 27% Professional 20% Government 7% Home Health Care 22% Seeing Growth Across All Core Segments 27

28 Strong Balance Sheet Provides Financial Flexibility Cash and Cash Equivalents $15.3 $15.3 $14.4 $13.7 $16.1 $16.4 $16.2 $15.2 $16.0 $ Millions 9/30/ /31/2013 3/31/ 6/30/ 9/30/ 12/31/ 3/31/ 6/30/ 9/30/ Cash Available for Organic Growth; No Long- Term Debt 28

29 Growth Strategy Increase awareness of Sharps services; pursue customers in the high-growth alternative site areas of the healthcare market Capture opportunities arising from favorable industry trends Leverage pick-up service to pursue multi-site medium and small quantity generator national customers Utilize capabilities to drive more business in the increasing selfinjectable market Control costs to maintain highly scalable business and operating leverage 29

30 Thank You NASDAQ: SMED INVESTOR PRESENTATION NOVEMBER