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Presentation on theme: "Investor Presentation"— Presentation transcript:

1 Investor Presentation
NASDAQ: FHCO Investor Presentation Q1 2016

2 Yellow shading shows distribution of FC2
Female Health Company Markets FC2 Female Condom Worldwide 519 Million Units Sold to Date Saves Lives and Reduces Healthcare Costs Improves Women’s Health Yellow shading shows distribution of FC2 2

3 FC2 Female Condom FC2 is the only product currently available:
Approved by the FDA and cleared by the World Health Organization (WHO) Under a women’s control Which provides dual protection against: Unintended pregnancy Sexually transmitted infections (STIs), including HIV/AIDS and Zika Virus

4 At a Glance NASDAQ FHCO Core product FC2 Female Condom
Gross margin ~66% Operating margin ~29% Total current assets $24 million no L/T debt at 12/31/15 Profitable Starting 2006 Debt Free $10M Unused Credit Facility

5 FC2 Market Women’s Health Issues
HIV/AIDS Leading cause of death globally for women age 15-44 80% of female cases contracted via heterosexual transmission Male and female condoms are the only prevention products available No near-term broad-use alternative prevention products on the horizon STIs Explosive incidence numbers around the world In U.S., Center for Disease Control (CDC) sees 20 million new cases annually of the 3 STIs tracked; half of cases occur within the age group and accounts for almost $16 billion in healthcare costs 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 Developments Recent Zika Virus(1) WHO Declares Global Emergency: Emerging Women’s Health Issue Babies Devastating birth defects Microcephaly – head and brain abnormalities Transmission Via mosquito bite Sexually transmitted Adults Possible link to Guillain-Barré Syndrome Neurological disorder that can cause muscle weakness, paralysis, and death Impact 33 countries and territories impacted 6 more showing indications of such transmission and 7 experiencing a parallel rise of microcephaly and Guillain-Barré As many as 4 million people could be impacted by 2016 year end Prevention Women who become infected while or before becoming pregnant may give birth to babies with significant birth defects including head and brain abnormalities. Female and male condoms are the only products that can prevent pregnancy and infection through sexually transmitted infections. (1) Source: World Health Organization and CDC

7 UNAIDS Calls For 20 Billion Condoms A Year By 2020(1)
Developments Recent UNAIDS Calls For 20 Billion Condoms A Year By 2020(1) Every day more than 1 million people acquire a sexually transmitted infection. 80 million unintended pregnancies occur every year. “UNAIDS is calling for increased investments by donors and governments for promotion and distribution of male and female condoms in order to ensure everyone has access to condoms to protect themselves and their partners from HIV, STIs, and unintended pregnancies – investing in condoms saves lives” UNAIDS Deputy Executive Director Luiz Loures. (1) Source: United Nations Joint Programme on HIV/AIDS

8 Global Condom Public Health
The Condoms Markets Consumer Global Public Sector Global Market $4 – 6 Billion Units ~10 – 12 Billion Family Planning HIV/AIDS Global Condom Public Health $ 400 – 500 Million Units ~10 Billion

9 FC2 Female Condom vs. Male Condom
FC2 is an alternative to the male condom Found to be preferred by women and partners in many countries Material, nitrile polymer, is stronger than latex, reducing the probability of tearing, and is non-allergenic Allows the woman to take control of protection Transfers heat, warming to body temperature for natural feeling sex Non-interruptive, can be inserted in advance of sexual activity Reduces health costs by increasing HIV/AIDS prevention and decreasing STI’s* * Every $1 spent on Female Condoms represents $20 in healthcare savings per the Johns Hopkins Washington D.C. Study published in AIDS and Behavior, 2012.

10 FC2 Market Advocacy One of few markets where independent groups advocate use of company’s product Well organized and funded independent women’s groups Advocate for gender equality Through increased funding for/availability of female condoms worldwide Examples Center for Health and Gender Equity (CHANGE) – Washington, D.C. Universal Access to Female Condoms (UAFC) – Netherlands UAFC Sponsors Global Female Condom Conference 2015 – Durban, RSA, Dec 1-3, 2015 Worldwide attendees Meeting mission: “Make female condoms available/affordable for all” Positive long term market impact

11 Market Changes and Potential Expansion Opportunities
US Market Changes Female condoms (FC2) reimbursable under Obamacare Growing need for non-hormonal birth control Role of social marketing to young women Increasing online purchases of condoms US Potential Opportunities Direct-to-consumer marketing Women seeking non-hormonal birth control Female condoms less disruptive, more pleasurable Selling FC2 to institutions where non-hormonal birth control products are important, i.e. for patients with breast cancer Selling to health care organizations/physicians to access reimbursement from Obamacare Online sales via Walmart/ShopFemaleHealth.com/Amazon/Walgreens/CVS

12 Market Changes and Potential Expansion Opportunities
Worldwide Market Changes Zika virus can be sexually transmitted Can impact pregnant women and their babies with devastating birth defects Microcephaly (babies) Guillain-Barré Syndrome (adults) Potential to become global epidemic (up to 4 million impacted by year end) Detected in 33 countries and territories UNAIDS Call for 20 Billion Male and Female Condoms by 2020(1) UNAIDS calls for increased investments by donors and governments Objective is to ensure everyone has access to condoms “Investing in condoms saves lives,” said UNAIDS Deputy Executive Director Luiz Loures (1) Source: UNAIDS – February 12, 2016

13 Online Sales ShopFemaleHealth.com Amazon.com Walgreens.com CVS.com
Walmart.com Kmart.com MyQuestStore.com Drugstore.com 13

14 Product Development Consumer: What’s Next
Coming Soon: Updated Branding Updated Packaging New Product Colors – submitted for appropriate quality approvals Marketing campaign to target users To include social media, PR, targeted advertising 14

15 Competitive Barriers To Entry
Patents principally on use of nitrile and nitrile/design elements: 39 patents in 52 countries; expiring in 2023 and 2024 FDA approval/WHO clearance FC2 proprietary material formulation Worldwide product specific training and education Country registration process 15

16 FC2 Competition Cupid PATH – Women’s Condom Marketed Globally
Marketed Outside U.S. Not Marketed Only one other female condom approved by WHO – Cupid – not approved by FDA

17 Competition FC2 Cupid PATH – Women’s Condom Nitrile Polymer
Natural rubber latex Polyurethane 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-allergenic Allergenic 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 be inserted in advance FHC capacity 100MM, with ability to double Website indicates approx 10MM capacity

18 Competitive Impact on FHC
First competitive product cleared by WHO – June 2012 After 3 years of competition achieved no significant market share FHC remains market leader as demonstrated by 2015 results

19 FHC Strategy Focus: return on investment/impact on shareholder value
Capitalize on: long-term female condom public sector growth; FHC’s position as market leader FC2 product development/marketing Pursue female condom market expansion opportunities – direct-to-consumer/online purchasing Diversify product line based on ROI/impact on shareholder value

20 Key Project Status Direct to Consumer Promotion
6 month study completed this quarter Diversification of Product Line Specific opportunities identified and under evaluation

21 Why FC2 Demand Will Continue To Grow
Zika virus outbreak Potential to become global epidemic UNAIDS calls for 20 billion male and female condoms by 2020(1) Continued Global Focus on HIV Feminization of AIDS – leading cause of death women age 15-44 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 15-24 Tapping into Direct-to-Consumer Market, Non-hormonal birth control alternative, Online Sales Many US women report dissatisfaction with the side effects of hormonal birth control Advocacy by independent women’s groups Create gender equality and increase funding for global availability of female condoms (1) Source: UNAIDS – February 12, 2016

22 Talented Management Team
O.B. Parrish – Chairman and Chief Executive Officer Effective July 13, 2015 Oversees Sales and Marketing A FHCO founder Previous Experience Pfizer – Executive V.P. of International Division G.D. Searle – President of Global Pharmaceuticals Michele Greco – Executive Vice President and Chief Financial Officer Effective January 1, 2013 Ernst & Young LLP Audit Partner 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

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

24 Low Risk, Unique Business Model
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 $10M unused credit facility NOL carryforward: UK: ~$62 M – No expiration date US: ~$13 M – Expiring in years 2020 to 2027 State: ~$13 M – Expiring in years 2020 to 2027

25 Tax Loss Carryforward FHC: No longer records P&L NOL benefit
Records tax charge Continues to benefit from NOL cash impact Example: Q1 FY2016 Tax Charge - $ ,453 Taxes Paid - $ ,856 Cash Saved - $ ,597

26 FY 2016 – 2015 Results Profitable starting in 2006 No debt
YTD 2016 (millions, except EPS) YTD 2015 Units 15.4 12.2 Revenue $8.2 $6.7 Gross Margin $5.4 $3.8 Operating Income $2.4 $1.5 Tax Expense $0.8 $0.7 Net Income EPS - Diluted $0.05 $0.03 Tax-cash payments $0.07 $0.06 Adjusted EBITDA $2.6 $1.8 EPS – Diluted, as adjusted $0.09 Profitable starting in 2006 No debt Brazil tender for up to 50 million units: 37 million units shipped Strategy to accelerate growth in current markets and expand into new markets NOL’s utilized to reduce cash payments for income taxes

27 Unit Sales CAGR 16 % 61.0 54.8 42.5 19.6 15.4 FC1 FC1 & FC2 FC2
100% sales of lower price, higher margin, next generation FC2 CAGR 16 % 61.0 54.8 42.5 19.6 15.4 FC1 FC1 & FC2 FC2

28 Net Revenues $32.6 $31.5 $24.5 $14.8 $8.2 FC1 FC1 & FC2 FC2
100% sales of lower price, higher margin, next generation FC2 $32.6 $31.5 $24.5 $14.8 $8.2 FC1 FC1 & FC2 FC2

29 Gross Margin 65.6 58.2 53.6 37.0 FC1 FC1 & FC2 FC2
100% sales of lower price, higher margin, next generation FC2 58.2 65.6 53.6 37.0 FC1 FC1 & FC2 FC2

30 FHC Summary Stable, profitable company
New strategy focused on driving Company growth Potential 10 billion unit condom market virtually untapped = opportunity for growth Experienced leadership with track record of success 30


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