Global Leaders in Sleep and Respiratory Medicine. Investor Update Q Peter Farrell, PhD. Chairman & CEO. Q2 Fiscal Year 2007 ResMed

Transcription

1 Global Leaders in Sleep and Respiratory Medicine Investor Update Q Peter Farrell, PhD Chairman & CEO Q2 Fiscal Year 2007 ResMed

2 Forward-Looking Statements Statements contained in this presentation that are not historical facts are forward-looking statements as contemplated by the Private Securities Reform Act of These forward-looking statements, including statements regarding the Company s future revenues, earnings or expenses, new product development and new markets for the Company s products, are subject to risks and uncertainties which could cause actual results to materially differ from those projected or implied in the forward-looking statements. Those risks and uncertainties are discussed in the Company s annual report on form 10-K for its most recent fiscal year and in other reports the Company files with the US Securities and Exchange Commission. Those reports are available on the Company s website. Q2 Fiscal Year 2007 ResMed 2

3 Global Leaders in Sleep and Respiratory Medicine ABOUT RESMED Q2 Fiscal Year 2007 ResMed

4 ResMed Overview Leading manufacturer of medical devices for sleepdisordered breathing (SDB) market Global market size: $2 billion 1 Market growth estimated at 15-20% Market <10% penetrated Operate in over 68 countries through wholly owned subsidiaries and independent distributors ~3,000 personnel in direct offices in 18 countries Manufacture in Australia, US, and Europe NYSE: RMD ASX: RMD.AX 1 Frost & Sullivan 2004 reported $1B but growth is ~20% Q2 Fiscal Year 2007 ResMed 4

5 Global Reach Norway, 27 Sweden, 19 San Diego 516 Netherlands, 20 Finland, 10 UK, 48 France, 186 Germany, 375 Switzerland, 34 Spain, 1 Austria, 32 Italy, 1 Japan, 4 India, 1 Hong Kong, 8 Malaysia, 1 Singapore, 7 Australia, 1054 New Zealand,1 Q2 Fiscal Year 2007 ResMed 5

6 Innovation Center in Sydney Australia Q2 Fiscal Year 2007 ResMed 6

7 Innovation Strategy Patent new products to address current and unmet clinical needs in both sleep disorders and respiratory insufficiency with a commitment to providing the highest quality products in the market. Education and Awareness Effective global marketing to increase the awareness of sleep-disordered breathing via public relations and clinical education campaigns. Investing for Global Growth Reinvest capital into dedicated long term resources geared toward expanding our global reach. Q2 Fiscal Year 2007 ResMed 7

8 US$ (Million) Strong Financial Performance FY 2000 FY 2001 FY 2002 Annual 32% CAGR 274 FY FY FY FY 2006 * Excluding stock-based compensation, restructuring, AJCA repatriation tax, acquisition-related costs and acquired intangible assets Net Income* Revenue Q2 Fiscal Year 2007 ResMed 8

9 US$ (Million) 180 Strong Financial Performance Quarterly Quarterly Net Revenues to Q2 FY Trailing 12 Months: $675.5M Revenues $123.6M Net Income* Q4, 95 Q2, 96 Q4, 96 Q2, 97 Q4, 97 Q2, 98 Q4, 98 Q2, 99 Q4, 99 Q2, 00 Q4, 00 Q2, 01 Q4, 01 Q2, 02 Q4, 02 Q2, 03 Q4, 03 Q2, 04 Q4, 04 Q2, 05 Q4, 05 Q2, 06 Q4, 06 Q2, 07 * Excluding stock-based compensation, restructuring, AJCA repatriation tax, acquisition-related costs and acquired intangible assets Q2 Fiscal Year 2007 ResMed 9

10 Q ResMed Financial Overview ResMed s 47 th Consecutive Quarter of Revenue and Profit Growth Revenue $178.4M ( 22%) Organic Revenue $176.1M ( 20%) Net Income $33.7M* ( 25%) EPS (diluted) $0.43* ( 20%) * Excluding stock-based compensation, restructuring, AJCA repatriation tax, acquisition-related costs and acquired intangible assets Q2 Fiscal Year 2007 ResMed 10

11 Sales by Geographic Region Q2 of FY 07 Americas 53% Europe 39% Asia-Pacific 8% Q2 Fiscal Year 2007 ResMed 11

12 Sales by Product Category Q2 of FY 07 Masks, Accessories 48% CPAP/APAP 30% VPAP/Ventilators 22% Q2 Fiscal Year 2007 ResMed 12

13 Global Leaders in Sleep and Respiratory Medicine AWARENESS & EDUCATION Q2 Fiscal Year 2007 ResMed

14 What Is SDB? Disordered breathing during sleep due to collapse of the upper airway Serious disorder linked to leading causes of death in the US (heart disease, stroke) Affects over 40 million Americans, 90% of cases are undiagnosed 1 1 Young et al. Am J Respir Crit Care Med 2002 Q2 Fiscal Year 2007 ResMed 14

15 Signs and Symptoms of SDB/OSA Hypertension Nocturia Impotence Reflux Morning headaches Arrhythmias (brady/tachycardia) Depression Cognitive dysfunction Excessive daytime sleepiness Pre-diabetes (high blood sugar) Q2 Fiscal Year 2007 ResMed 15

16 Treatment for Sleep Apnea CPAP - Continuous Positive Airway Pressure OSA treatment first described in 1981 by Sullivan (Lancet) Works as an air splint to keep upper airway open during sleep Prevents upper airway collapse and associated physiologic responses Most effective non-invasive therapy Q2 Fiscal Year 2007 ResMed 16

17 Public Awareness of SDB Public relations campaign with another industry leader Today Show: Matt Lauer Launched HealthySleep.com: resource on symptoms and risks of sleep apnea Supporting centers of excellence and thought leaders to educate physicians and public The View: Rosie O Donnell ResMed Foundations (US, AUS), funding research for non-profit organizations Q2 Fiscal Year 2007 ResMed 17

18 US Market Opportunity 221.3M 44M 4M Adult population 44M SDB Prevalence 4M 2.5M Diagnosed Treated New User Share Compliant Share Q2 Fiscal Year 2007 ResMed 18

19 Growth Drivers Increased understanding of the links between SDB and the three major health epidemics Aging population base Q2 Fiscal Year 2007 ResMed 19

20 Educating Physicians: Hub and Spoke Model Cardiology: Educational symposia and CEU programs on the links to SDB Diabetes (Type II): Prevalence of SDB (~72%) and CPAP use positively impacts glucose control Anesthesia: Education of surgeons on post-operative risks Q2 Fiscal Year 2007 ResMed 20

21 Growth in SDB Publications Q2 Fiscal Year 2007 ResMed 21

22 Sleep Apnea Prevalence in Comorbid Patients Drug-Resistant Hypertension 80%+ Logan et al. J. Hypertension 2001 Diabetes 70% Erman et al. APSS 2005 Congestive Heart Failure Atrial Fibrillation All Hypertension Coronary Artery Disease Angina 50-70% ~50% 35-45% ~30% ~30% Javaheri et al. Circulation 1999 Somers et al. Circulation 2004 Sjostrom et al. Thorax 2002 Schafer et al. Cardiology 1999 Sanner et al. Clin Cardiology 2001 Q2 Fiscal Year 2007 ResMed 22

23 CPAP Effectiveness in Cardiovascular Disease Sleep apnea is first of 9 identifiable causes of hypertension 1 One month of CPAP improves daytime blood pressure, heart rate, and left ventricular function 2 Effective CPAP reduces arterial blood pressure by 10 mmhg after 9 weeks of therapy 3 Left ventricular wall thickening (88% of apnea patients) improves after 6 months of CPAP 4 1 National Institutes of Health s Joint National Committee on High Blood Pressure 2003 (JNC 7) 2 Kaneko et al., New England Journal of Medicine Becker et al.,circulation Cloward et al., Chest 2003 Q2 Fiscal Year 2007 ResMed 23

24 Type 2 Diabetes and CPAP Postmeal glucose values significantly reduced with CPAP Glucose Mean mg/dl CPAP use >4 hrs. (n=12) CPAP use <4 hrs. (n=12) 100 Breakf Lunch Dinner Breakf Lunch Dinner Pretherapy Posttherapy Ambika R. Babu, MD*, James Herdegen, MD+ Archives of Internal Medicine VOL 165, FEB 28, 2005 *Department of Medicine, Rush University Medical Ctr. + Department of Medicine, University of Illinois. Q2 Fiscal Year 2007 ResMed 24

25 OSA Increases Stroke Risk New England Journal of Medicine; Nov. 10, 2005 Of 1022 patients, 697 had OSA syndrome OSA syndrome tripled the risk of stroke or death in the most severe OSA patients OSAS independently doubled* risk of stroke or death after adjustment for: age diabetes race sex BMI alcohol-consumption hypertension atrial fibrillation hyperlipidemia smoking status H. Klar Yaggi,M.D.,M.P.H. 1, John Concato,M.D.,M.P.H. 2 1 Pulmonary, Critical Care Medicine,Yale Ctr for Sleep Medicine 2 General Medicine, Yale University School of Medicine *1.97 Hazard Ratio; 95%Confidence Interval Q2 Fiscal Year 2007 ResMed 25

26 Economic Studies on CPAP Benefits Treating all US drivers suffering from apnea would save $11.1 billion in collision costs and save 980 lives annually 1 Higher hospitalization rates for patients with untreated apnea (251 nights vs. 90 nights) 2 Medical costs of undiagnosed sleep apnea patients were double in the year prior to diagnosis ($2720 vs. $1384) 3 Prior to apnea diagnosis, patients utilized 23-50% more medical resources 4 1 Sassani, et al., SLEEP Kryger, et al., SLEEP Kapur, et al., SLEEP Smith, et al., CHEST 2002 Q2 Fiscal Year 2007 ResMed 26

27 Occupational Health Case study: Schneider Transportation Company Results 12 months post-cpap treatment 57.4% reduction in total medical expenses = $6,456/yr/driver 91% reduction in hospital admits Does not include savings from accidents, liability Results from original 6 month follow-up study Improved retention by 229% 73% reduction in accidents 1 Berger, et al., CHEST Suppl Q2 Fiscal Year 2007 ResMed 27

28 Global Leaders in Sleep and Respiratory Medicine PRODUCT INNOVATION Q2 Fiscal Year 2007 ResMed

29 Market Segmentation High $ Specialty Segment Premium Segment Med $ Adapt SV Low $ Value Segment C Series Tango S8 Platform, VPAP Bilevel Basic Full Unique Q2 Fiscal Year 2007 ResMed 29

30 Premium Segment S8 Swift System S8 Platform Fully integrated humidification Comprehensive efficacy/usage data Remote data downloading capabilities New EPR comfort feature Customizable patient reminders Mirage Swift Light and comfortable Superior seal Improved compliance Quick fitting Simple inventory Q2 Fiscal Year 2007 ResMed 30

31 Value Segment Strategy Access value segment of the market, not previously addressed by RMD Price driven, minimal feature set Incremental US segment for RMD Value Segment Raise barriers to entry Strategic blocking point New entrants come in low, grow upward C Series Tango Gross margin support Similar GMs to core CPAP Segments Premium products from Value products Q2 Fiscal Year 2007 ResMed 31

32 Specialty Segment Strategy Access incremental 15-20% of sleep lab patients Previously unidentified patient population Mayo Sleep paper cites 15% + prevalence of complex sleep apnea Reduce non-compensated costs for channel Cost to serve problem patients Adapt SV High gross margins Unique algorithm Only FDA approved product for Periodic Breathing Q2 Fiscal Year 2007 ResMed 32

33 ResMed Paris: Saime Acquired in May Strong product and technology platform High-end ventilators augment ResMed s product range Targeting high-growth European ventilation market Leverages 12 year+ relationship with Saime management Elisee 350 Hospital Elisee 250 Ambulatory Elisee 150 Homecare Q2 Fiscal Year 2007 ResMed 33

34 ResMed Masks Masks Swift (nasal pillows) Alternative to conventional nasal masks to achieve less obtrusiveness Ultra Mirage Improved usability, including simpler forehead support and headgear clips Activa Based on Ultra Mirage with new Active cell gusset to improve seal Q2 Fiscal Year 2007 ResMed 34

35 Screening Tools With Pulse Oximetry Simple and effective screening tool for patients and physicians Identifying sleep apnea through co-morbidities Driving patients to sleep specialists in US Q2 Fiscal Year 2007 ResMed 35

36 Forbes Best Small Companies ResMed has been named one of the Best Small Companies in America for 10 consecutive years, Criteria Sales between $5 million and $750 million Share price above $5 on average volume of 10,000 Profit margins of greater than 5% Positive sales and profit growth, on average, over both the last five years and last 12 months Q2 Fiscal Year 2007 ResMed 36

37 Summary. I. SDB/OSA is a major public health problem on a level equivalent to that of tobacco smoking (NEJM, April, 1993) SDB/OSA is the major cause of hypertension (JNC7, 2003) which, in turn, is the major cause of heart disease and stroke, the #1 and #3 killers in most western countries SDB/OSA is easy to diagnose and easy to treat; it has been shockingly neglected by the medical establishment Q2 Fiscal Year 2007 ResMed 37

38 Summary. II. ResMed s biggest competitor is ignorance. ResMed is the leading global technology company in the SDB/OSA space; we have the track record to prove it. The SDB/OSA opportunity is a marathon and we are only lacing our shoes; it is time for the nation and the world to wake up to sleep Q2 Fiscal Year 2007 ResMed 38