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THE HEALTH COMPANY INVESTOR PRESENTATION Q1 2015 2/6/15 FEMALE.

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Presentation on theme: "THE HEALTH COMPANY INVESTOR PRESENTATION Q1 2015 2/6/15 FEMALE."— Presentation transcript:

1 THE HEALTH COMPANY INVESTOR PRESENTATION Q /6/15 FEMALE

2 The Female Health Company manufactures and markets the FC2 Female Condom. FC2 is the only product currently available:  Approved by the FDA and cleared by the WHO  Under a women’s control Which provides dual protection against:  Unintended pregnancy  Sexually transmitted infections  (STIs), including HIV/AIDS 2

3 At a Glance 3 NASDAQ FHCO Core product FC2 Female Condom Gross margin ~57% Operating margin~22% Total current assets $14 million no L/T debt at 12/31/14

4 The “Worlds” of FHC 4 ConsumerGlobal Public Sector Global Market $4-6 Billion Family Planning HIV/AIDS Global Condom Public Health $ 400 – 500 Million

5 Global HIV/AIDS Market Overview 5 No. 1 cause of death globally for women age % of female cases contracted via heterosexual transmission Male and female condoms are the only prevention products available No near-term alternative prevention products on the horizon In U.S. 20 million new STIs annually; half occurring in young people aged In Sub-Saharan Africa, women represent >58% of adults with HIV/AIDS infections (1 ) Worldwide, women living with HIV/AIDS is 50% of the global total (1 ) (1) Source: World Health Organization

6 FC2 Female Condom vs. Male Condom 6 FC2 is simply an alternative to the male condom * Every $1 spent on Female Condoms represents $20 in healthcare savings per the Johns Hopkins Study published in AIDS and Behavior, 2012.

7 FHC Brand Quality, Reliability, Safety Partnership in solving significant global issues – HIV/AIDS, other STIs – Poverty – Family planning – Female empowerment and rights Delivers to all stakeholders 7

8 Why FC2 Demand Will Continue To Grow Continued Global Focus on HIV – Feminization of AIDS – leading cause of death women age – 35 million persons living with AIDS, 2.3 million newly infected in 2012 Exploding incidence of STIs around the world – 20M new cases every year in the US alone, half occurring in young people aged Non-hormonal birth control alternative New Global Focus on Family Planning – Gates/DFID Summit – New Funding Female Controlled Protection – Basic rights, education, opportunity 8

9 9 Female Health owns certain worldwide rights to FC2 Patents and Trademarks Yellow shading shows distribution Geographic Expansion FC2 Now Distributed Into 144 Countries

10 FHC Key Goals/Strategy Accelerate and Grow Demand for FC2 – Add sales and marketing team (Redeploy portion of training budget) – Growth in existing markets – Geographic expansion – Explore the potential for consumer product Diversification of Product Offering – Leverage unique channel, market focus or capabilities – Acquisition of another product, technology and/or business – Lower business risk, improve consistency in revenue/earnings 10

11 Progress on Strategy Consumer FC2 New FHC Direct online purchase starting mid-February Channel expansion – new distributors brought on e.g. Kaiser Permanente Product line extensions in development multiple colors/scents Multiple target segment focus groups ongoing to refine strategic approach OB-GYN strategy in development 11

12 Progress on Strategy Diversification Focus on Women’s Reproductive Health Many companies/products evaluated Ongoing discussions with a few targeted opportunities 12

13 State-of-the-Art Manufacturing million unit capacity, with ability to add up to an additional 100 million units.

14 US Programs Highlights FC2 Prevention Programs in Key US Cities – concentrated where HIV/AIDS most prevalent College Campus Program – raise awareness of and access to FC2 on campus Online Ordering Presence Market research into consumer product underway 14

15 Global Program Highlights Multilingual (English, Portuguese, Spanish and French) website that provides downloadable training and education is visited 1,500 times per month. YouTube multilingual FC2 animation and instruction site has received over 10 million views. 184 training and education sessions in 7 countries with an estimated 118,000 people participating in these sessions. More than 40 countries asked for and received information and advice on training and education. 15

16 Low Risk, Unique Business Model 16 Modest inventory level, production primarily against orders Low foreign currency exchange risk, FHCO & Subs Report in $USD Minimal credit risk, less than 1% bad debt in past five years Shifting training/education spending to sales/marketing $2 M unused credit facility NOL carryforward: – – UK: ~$63 M – No expiration date – – US: ~$17 M – Expiring in years 2018 to 2027 – – State: ~$17 M – Expiring in years 2018 to 2027

17 8 years profitable No debt Accumulated cash for acquisitions Brazil tender for up to 50 million units / 25 million units ordered Strategy to accelerate growth in current markets and expand into new markets NOL’s utilized to reduce cash payments for income taxes 17 Q1 FY 2015 (millions) 2014 (millions) 2013 (millions) Units Revenue$6.7$ 24.5$31.5 Gross Margin$3.8$ 13.1$17.5 Operating Income $1.5$ Tax Expense (Benefit) $0.7$ 1.5($4.4) Net Income$0.8$ 2.4$14.3 EPS - Diluted$0.03$ 0.08$0.50 Tax-cash payments $0.06$0.77$0.35 FY 2015 – 2013 Results

18 % sales of lower price, higher margin, next generation FC2 18 FC1 FC1 & FC2 FC CAGR 13.2 % Unit Sales 42.5

19 Net Revenues 19 $ % sales of lower price, higher margin, next generation FC2 FC1 FC1 & FC2 FC2 $31.5 $24.5

20 Gross Margin % sales of lower price, higher margin, next generation FC2 FC1 FC1 & FC2 FC2 53.6

21 Talented New Management Team 21 OB Parrish - Chairman – – A FHCO founder – – Previous Experience Pfizer – Executive V.P. of International Division G.D. Searle – President of Global Pharmaceuticals Karen King – CEO and President – – Effective January 20, 2014 – – Previous Experience Royal DSM – President Biologics and BioSolutions The Female Health Company – Executive Vice President Baxter International Michele Greco – Executive Vice President and Chief Financial Officer – – Effective January 1, 2013 – – Previous Experience Ernst & Young LLP Audit Partner Susan Ostrowski – Executive Vice President of Sales and Marketing -- Effective July 10, 2014 – – Previous Experience DuPont, BASF, DSM, and Cambrex Martin Tayler – Executive Vice President of Global Operations – – Effective September 15, 2014 – – Previous Experience SSL International PLC (under Durex and Dr Scholl’s brands),Reckitt Benckiser Group plc

22 22 Competition FC2 Cupid PATH – Women’s Condom

23 23 Competition FC2CupidPATH – Women’s Condom Nitrile PolymerNatural rubber latexPolyurethane 2 retention rings: -External ring covers the lips of the vagina - Internal ring lies against the cervix and anchors the device Octagonal outer ring. Sponge to anchor the device internally. Large external ring: -Tabs on the exterior of the device that reportedly adhere to the vaginal wall - Inserter made from a water soluble polymer that melts in the body and may help keep the product in place Non-allergenicAllergenic Pre-lubricated Not Pre-lubricated -Must be lubricated at time of use -Only internal side of product may be lubricated. External lubrication may prevent tabs from working May use water and oil based lubricants May only use water based lubricants May use water and oil based lubricants May be inserted in advance

24 FC2 Barriers To Entry Patents principally on use of nitrile and nitrile/design elements: —38 patents in 50 countries FC2 proprietary material formulation Worldwide product specific training and education Country registration process FDA approval/WHO clearance 24

25 FHC Summary Stable, profitable company Partner in resolving critical societal needs Unique cost-effective business model Small percentage of total potential market reached to date = opportunity for growth Experienced leadership 25


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