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| 8-K - SHARPS COMPLIANCE CORP. 8-K 1-10-2014 - SHARPS COMPLIANCE CORP | form8k.htm |
Exhibit 99.1
Comprehensive Medical Waste and Unused Medication
Management Solutions Provider
Management Solutions Provider
INVESTOR PRESENTATION
JANUARY 2014
NASDAQ: SMED
2
Safe Harbor
These slides contain (and the accompanying oral discussion will contain) “forward-
looking statements” within the meaning of the Private Securities Litigation Reform
Act of 1995. 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.
looking statements” within the meaning of the Private Securities Litigation Reform
Act of 1995. 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.
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.
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
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
manufacturer, retail pharmacy, professional, and assisted living/long-term
care
Investment Considerations
§ 7.7% organic 4-year CAGR in core business segments
§ Sales and marketing team in place to drive continued growth
Long-Term Organic
Growth
Growth
§ Aging population
§ Shift to alternative site healthcare
§ Increasing medical waste regulations
§ Need to save money in changing healthcare environment
At Nexus of Several
Compelling Trends
Compelling Trends
§ 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 nation-wide customers
Challenging the
Industry Standard
Industry Standard
§ 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
software, and one of ten medical waste incinerating facilities in the country
Attractive Business
Model
Model
§ $15.3M in cash as of September 30, 2013
§ No long-term debt
§ 15.4M shares outstanding
§ 44,000 shares repurchased under current repurchase plan
Solid Balance Sheet
§ Creates “touch points”
§ Improves patient compliance
§ Extends medication adherence
§ Builds brand loyalty
Transforming How
Pharma Interacts with
Patients
Pharma Interacts with
Patients
§ 21.7% YOY revenue growth in 1Q14
5
Mail-back
in home
healthcare
in home
healthcare
Expanded markets:
§ Assisted Living
§ Retail Pharmacy
§ Distributors
Pharmaceutical
Manufacturer
Patient Support
Programs
Manufacturer
Patient Support
Programs
Launch of
inside sales and
e-commerce
driven website -
Professional
Market
inside sales and
e-commerce
driven website -
Professional
Market
Alliance with
Daniels
Sharpsmart
Daniels
Sharpsmart
1996
2006
2010
2012
6
Full Service Provider: Daniels Alliance
Traditional Pick-up Services
(Dedicated truck & driver)
Mail-back Solutions
(using existing USPS infrastructure)
Sharps’ Comprehensive Solution
§ Sharps + Daniels alliance services 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
Alliance with Daniels Allows Sharps to Remain Asset-Light
While Offering a Full Solution
While Offering a Full Solution
7
TRENDS DRIVING GROWTH
8
Traditional
Healthcare
Setting
Healthcare
Setting
§ Core Traditional Waste
Hauler Market
Hauler Market
§ Core Sharps Markets
Urgent Care
Clinics
Clinics
Assisted
Living/Long-
Term Care
Living/Long-
Term Care
Home Health
Care
Care
Clinics/Retail
Pharmacies
Pharmacies
Sharps Serves All Medical Waste Markets
9
Large Healthcare
Setting
Setting
Non-hospital/Alternative Care
Retail Pharmacies
Clinics
Home Healthcare
Setting
Setting
Assisted Living
Larger Market
Faster Growth
10
Aging Demographic
Source: US Census Bureau
US Population Aged 65+ Expected to Double Within Next 25
Years
Years
11
Growing North American Drug Market
Source: MarketsandMarkets
North American Injectable Drug Market Projected
CAGR of 12.3%
CAGR of 12.3%
12
BUSINESS OVERVIEW
14
Unused Medication Management Solutions
Market Opportunity
§ United States generates an estimated 250
million pounds of unused medication waste
million pounds of unused medication waste
§ Changing regulatory environment that would
require pharmaceutical manufacturers to pay
and allow collection and transportation of
controls
require pharmaceutical manufacturers to pay
and allow collection and transportation of
controls
Customers
§ Assisted Living Facilities
§ Independent Pharmacies (drive foot
traffic)
traffic)
§ Retail Pharmacies (resell to
consumers)
consumers)
§ Government
Solution
§ Mail and ship back proprietary solutions
for the proper treatment of unused
patient medications
for the proper treatment of unused
patient medications
15
Opportunity for Significant Growth in Markets We Serve
|
Market
|
Market Size
|
Market Growth
Rate |
Sharps
Revenue Run Rate |
Current
Penetration |
|
Professional
|
$648M
|
5%¹
|
$4.3M
|
<1%
|
|
Pharmaceutical
Manufacturer |
$23M²
|
12%
|
$2.5M
|
11%
|
|
Assisted
Living/Long- term Care |
$84M
|
5.7%
|
$1.6M
|
2%
|
|
Home Health
Care |
$100M
|
7.7%
|
$6.9M
|
7%
|
|
Retail
Pharmacy |
$8M³
|
15-20%
|
$5.7M
|
75-80%
|
³Assumes only 16% of U.S. flu shots administered in retail pharmacies (23% historical 5-year CAGR)
²Reflects only specific program opportunities we have identified, not the entire market
¹Average projected growth rates of physician, dental, and veterinary spending
16
Professional Market
Customers
Solution
§ Sharps Recovery System™ and pick up to
supplement larger chains
supplement larger chains
Market Opportunity
§ Currently 800,000 professional offices across
the US
the US
§ Translates to a $648M market opportunity
§ Dental
§ Veterinarian
§ Physicians
§ Other service-related practices
§ Dental and Veterinarian chains
Sales and Distribution Channels
§ Telemarketing/Inside Sales
§ E-commerce
§ Distributors
§ Direct (larger chains)
17
Pharmaceutical Manufacturer Market
Customers
Solution
§ Customized/branded solutions
§ Creating “touch points”
§ Data supporting improved drug compliance
§ Extended medication adherence
§ Building brand loyalty
Market Opportunity
§ North American injectable drug delivery technologies
market projected to grow at a CAGR of 12.3% from
2012 to 2017
market projected to grow at a CAGR of 12.3% from
2012 to 2017
Source: MarketsandMarkets
§ Large global Pharmaceutical Manufacturers
§ Self-injectable “high end” drugs
§ Complex injection devices
Sales and Distribution Channels
§ Direct/Enterprise Sales
Pharmaceutical
Manufacturer Market
Manufacturer Market
Billings
(in millions)
18
Creating Patient Touchpoints for Pharma Industry
§ Patient diagnosed
and prescribed
medication at
professional/
specialist office
and prescribed
medication at
professional/
specialist office
§ Patient “opts in” to
the Patient Support
Program including
mail-back
the Patient Support
Program including
mail-back
§ Sharps treats waste
and collects
valuable data used
to determine patient
compliance
and collects
valuable data used
to determine patient
compliance
§ Patient compliance
data provided to
Pharmaceutical
Manufacturer;
creates patient
“touch points”
data provided to
Pharmaceutical
Manufacturer;
creates patient
“touch points”
Increasing Pharma’s Ability to Drive Sales and Ensure Medication Discipline
19
Assisted Living/Long-Term Care Market
Customers
Solution
§ Mail-back
Market Opportunity
§ Total addressable market of $84M
§ US population age 65+ expected to double
within the next 25 years
within the next 25 years
§ 1 of 5 Americans will be 65+ by 2030
§ Age 85+ fastest growing segment
Assisted Living /
Long-term Care
Billings
(in millions)
Source: National Institute on Aging
Sales and Distribution Channels
§ Direct/Enterprise Sales
20
Retail Pharmacy Market
Customers
Solution
§ Mail-back (Sharps Recovery System™)
Sales and Distribution Channels
§ Direct
§ Vaccine distributors
21
FINANCIAL OVERVIEW
22
Attractive Business Model
§ Costs are relatively fixed
§ Operating infrastructure in place to grow 2-3X
§ 50% gross margins on incremental revenues
§ 5-10% SG&A increase on incremental revenues
Significant Operating
Leverage
Leverage
§ Recurring revenue model; high retention
High Recurring Revenue
§ Alliance with Daniels allows Sharps to remain asset-light
while offering a full-service solution
while offering a full-service solution
Asset-Light Cost Structure
§ Sharps has no direct dependence on Medicaid, Medicare, or
other third-party payers
other third-party payers
No Third-Party Payer Risk
Start to Fiscal Year 2014 30.1% 37.1% ($ in millions, % of Revenue) $(0.4) $0.1 $(0.4) Q1FY13X Q1FY14Y X Excludes Q1 FY 2013 deferred tax valuation allowance of $217 thousand. Y Excludes Q1FY 2014 deferred tax valuation allowance benefit of $41 thousand. 6.3%
24
Positioned for Margin Expansion
($ in millions)
$22.7
$39.2
$19.4
$21.8
$21.5
(2011)1 Excludes FY 2011 special charge of $378 thousand and unusual expense of $264 thousand.
(2012)2 Excludes FY 2012 unusual expense of $197 thousand and deferred tax valuation allowance of $2.0 million.
(2013)3 Excludes FY 2013 unusual expense of $102 thousand, special charge of $121 thousand and deferred tax valuation allowance of $923 thousand.
(2014 ttm)4 Excludes Q1FY 2014 TTM unusual expense of $102 thousand, special charge of $121 thousand and deferred tax valuation allowance of $665 thousand.
25
Diverse Revenue Mix
FY 2008 Billings
$13.2 million
$13.2 million
Q1 FY 2014 TTM Billings
$22.6 million
$22.6 million
Seeing Growth Across All Core Segments
26
Strong Balance Sheet Provides Financial Flexibility
Cash and Cash Equivalents
6/30/12
6/30/13
6/30/10
6/30/11
9/30/13
Cash Available for Organic Growth; No Long-
Term Debt
Term Debt
27
Growth Strategy
Increase awareness of Sharps’ services; pursue customers in the
high-growth alternative site areas of the healthcare market
high-growth alternative site areas of the healthcare market
Capture opportunities arising from favorable industry trends
Leverage pick-up service to pursue larger quantity national
customers
customers
Utilize capabilities to drive more business in the increasing self-
injectable market
injectable market
Control costs to maintain highly scalable business and operating
leverage
leverage
Thank You
INVESTOR PRESENTATION
JANUARY 2014
NASDAQ: SMED