1.   Founder Scott Hillstrom is a lawyer in Minneapolis who created HealthStore after surviving a near- death car collision. He recently stepped aside but remains chairman and org evangelist. Mission  To dramatically improve the quality and access to healthcare for the poor in Africa. HealthStore Analysis  This is one of our 4 key investments in the field of health franchising. Among the first to apply the franchise business model to improve healthcare in the developing world, HealthStore has built a network of clinics in Kenya and gained widespread attention in the media.  Faber joins at a critical juncture: HealthStore management had made operational miscues and poor personnel decisions, growing too fast and failing to adhere to franchising principles. But the model is promising.  Hillstrom is a tireless advocate of health franchising and HealthStore, but fundraising and board giving remain as challenges. He’s been more successful in obtaining subject expertise, especially the significant pro bono consulting from industry expert Michael Seid.  Average yearly sales of $2,319 per CFWshop (pharmacy) and $5,902 for CFWclinic (with nurse who sees patients).  In 2007, HealthStore provided 41k malaria treatments, 48k worm treatments, 9k diarrhea treatments, and sold 3k bednets. DWFF contact: Josh Kwan, Director of International Giving. joshkwan.dwff@gmail.comjoshkwan.dwff@gmail.com Updated: 9/08. Site visit: 8/07 in Kenya, 4/08 in Rwanda. www.healthstore.orgwww.healthstore.org 1 World Health Organization, 2 USAID Plan for Scale Problem  Many of the diseases of the world’s poor are easily treatable. But partly due to a lack of knowledge and access to basic health products, each year 1 million people die of malaria 1 and 2 million from diarrhea-related causes 2. Status: Approved May 2008 Since: 2007 Model  Market-driven approach relies on two forms of payment: out-of-pocket from individuals and reimbursement from govt insurance plan (Rwanda). Also developing a third-party payor system in which HealthStore franchisees receive payment from donors & U.S. govt aid for services rendered.  Extend credit to nurses to join franchise and buy inventory. Concept  Franchising offers a set of financial incentives, internal controls, and potential enforcement options to ensure high quality service and reliable products for customers.  Nurses who own and run HealthStore franchises (branded CFWshops and clinics) are motivated by a combination of community service and opportunity for profits that can exceed salaries at govt hospitals.  Buy medicine in bulk from legitimate sources to stem two major problems for the poor: high costs and counterfeit drugs.  Employ franchising principles of training, operating support and oversight, quality control, consistent product/service offerings, branding, and benefits of scale. Progress  1997: Launch in Kenya.  2000: 11 shops  2006: 61 shops  2008: Launch in Rwanda. Revenue  2002:  2003:  2004:  2005:  2006: $62k $217k $645k $1,146k $626k 20082009 CFWshops open1135 HealthStore (franchisor) revenue $12k$54k Expenses($203k)($318k) Capital spending($33k)($91k) Net cash required($224k)($355k) 200820092010 Kenya/US ops$936k$1.85M$2.03M Rwanda$79k$400k$500k # New countries133 Expansion costs$300k$1.3M$2.6M Total need$1.3M$3.5M$5.1M New outlets2665144 Total outlets93158302 RwandaHealthStore  New CEO Gunther Faber was the top executive in Africa for the pharma giant GlaxoSmithKline (and its pre-merger predecessor) for the past 19 years. Recruited to HealthStore in summer 2008. Leadership This HealthStore clinic in rural Kenya, run by a nurse- entrepreneur, is the only source of medical care for miles. Below the CFWshops brand, nurses often name their clinics after saints.