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InterFit: Convenient, Affordable Health Testing Services

InterFit provides convenient, accurate, and affordable health testing services, empowering individuals to manage their own health. With a strong demand and a growing market, InterFit aims to revolutionize the way people check their health.

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InterFit: Convenient, Affordable Health Testing Services

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  1. Business Plan Summary October 2000

  2. InterFit’s Vision and Mission • Our Vision A world where people manage their own health, because health is everything. • Our Mission To provide convenient, accurate, and affordable health testing services, helping people to check their health themselves.

  3. InterFit’s Existing Business • InterFit was created 11 years ago to promote corporate wellness. • Through InterFit’s Medical Director, a Board certified pathologist, people can request lab tests without visiting a physician. • InterFit organizes health fairs and performs screenings for corporations. • Through a Randall’s contract, InterFit offered health screening tests to the public and encountered a strong demand. • In 1999 InterFit did 4,800 tests at corporate health fairs and 2,200 tests at fitness clubs, store pharmacies, and other retail locations. • In 2000, volumes are up nearly 25% over 1999.

  4. InterFit’s Existing Business • InterFit uses the two largest national labs, Quest and LabCorp, to process all test specimens. • These two labs account for 25% of all U.S. lab testing. • Hospitals and physicians send these reference labs most tests, except those using automated equipment in-house. • The two labs have 2,400 drawing stations between them; Quest having 1,500 and LabCorp having 900.

  5. InterFit’s Existing Business A representative list of Corporate Clients includes: • Enron • El Paso Energy • Randalls, now Safeway • Baker Hughes • BMC Software • Texaco • Columbia Gulf • Reliant Energy • BP Amoco • St. Luke’s Episcopal Hospital

  6. InterFit’s Management Team InterFit was started by two women who will maintain their active role in the firm. • Laurie Lee is the President of InterFit. She is primarily responsible for day to day operations, including management of the staff. Ms. Lee worked as a program director for a large community service agency and as a freelance interpreter before co-founding InterFit Health Services. She is immediate past President of the Association for Worksite Health Promotion, Region VI, and on the Board of Directors of The Houston Wellness Council. Ms. Lee earned a B.A. in Psychology from the University of Texas and a Masters in Social Work from the University of Houston. She is active in many civic, charity, and professional organizations.

  7. InterFit’s Management Team • Cathey Gordon is the Vice President of InterFit. Her focus is on Business Development and Customer Relations. Before she became involved in the corporate health and fitness field, Ms. Gordon worked for several years as a client relations liaison for Merrill Lynch Relocation Management. She is President of the Region VI Association for Worksite Health Promotion (AWHP), on the Board of the American Heart Association, on the Board of the Houston Well Workplace/Well City Initiative, and is an active member of several business and health-related organizations. Ms. Gordon earned a Bachelor of Business Administration from the University of Texas.

  8. InterFit’s Management Team Joining InterFit in its move to the internet are two others with experience in both healthcare and internet start-ups. • Walt Mischer Jr., who currently serves as CEO of InterFit and as President of Mischer Healthcare, will assist in strategic planning and raising investment capital. He is a past Chairman of the Board of Trustees for Hermann Hospital and served as CEO there for two years. He co-founded Belmont Village Assisted Living, a national developer and operator of seniors’ housing communities. Mr. Mischer earned a B.B.A. in Finance from the University of Texas.

  9. InterFit’s Management Team • Jeannie Frazier, also currently a partner with Mischer Healthcare, serves InterFit as Chief Financial Officer. She was previously CFO at Hermann Hospital, a large urban teaching hospital, and has a seventeen year career in healthcare finance. Ms. Frazier served as CFO for MedeCoach.com during its development and was also involved in the development of an online corporate education site called CorpusOptima.com. She serves on the Texas State Correctional Managed Healthcare Committee. Ms. Frazier earned a B.S. in Mathematical Sciences and a M.S. in Operations Research from Stanford University.

  10. Existing Lab Environment • 1 billion lab tests are performed annually in the US at a cost of $20 billion. • Nearly 470 million tests are done on hospital inpatients. • Over 400 million tests are done in doctors’ offices and other outpatient settings. This is InterFit’s potential market. • The most common tests done are cholesterol, CBC, urinalysis, pregnancy and PSA, all of which can be ordered through InterFit. Source: CLIA data, 1997

  11. Growing Internet Health Usage Million Individual Users • Online health information use is growing much faster than the number of adult internet users. • Activemedia’s survey showed that health information is the 2nd most frequently viewed online topic for seniors and women. • Popular health topics include: • disease-specific content, • nutrition, • women’s health, • pharmaceuticals, • alternative medicine and • fitness. Source: Harris, from VHA Presentation at the e-Healthcare Tour on 1/14/00, Houston

  12. InterFit’s Financial Forecast Forecast Income Statement (in $000) Year 1 Year 2 Year 3 Year 4 Revenues $1,935 $9,378 $26,724 $32,194 Cost of Goods 1,130 3,881 9,913 12,113 Gross Profit ` 804 5,497 16,764 20,082 Gross Margin % 41.6% 58.6% 62.7% 62.4% Sales Expense 1,754 4,417 9,885 10,039 G&A Expense 1,231 1,793 2,071 2,215 EBITDA ($2,181) ($713) 4,808 $ 7,827

  13. InterFit’s Financial Forecast • Financial projections over a four (4) year period indicate: • the cost of good sold is approximately 38% of revenues, • the enterprise becomes profitable in the 2nd year of operations, • EBITDA is 24% of revenues in Year 4, and • national market penetration required to meet these forecasted revenues is slightly greater than one-tenth of one percent.

  14. InterFit’s Capital Needs • The first offering will raise up to $1,500,000 in exchange for preferred stock convertible into 21% of the company’s common stock. Investors will have a preemptive right to participate in the subsequent offering. • Funding will be used to secure InterFit’s market position in the Upper Gulf Coast of Texas and prepare for the phased national rollout by meeting these objectives: • Contract for laboratory services covering a minimum of the Upper Gulf Coast market with multiple vendors, • Establish contracts with major employers for the use of Interfit’s online services, • Serve as a marketing link for pharmaceutical and other health-related firms, • Set up the healthcare provider network for the Upper Gulf Coast of Texas, • Form strategic relationships with other web-based healthcare businesses and linkages for fulfillment of health mall services, • Build and launch web site in January, 2001, and • Establish marketing and media plan for phased national rollout following the second round funding. • The estimated rate of return for investors per year is 54% over four years, assuming a 5 EBITDA multiple, and 83% using a 10 EBITDA.

  15. InterFit’s Capital Needs • The second offering will fund up to $4,000,000 in exchange for preferred stock convertible into 27% of the company’s common stock. • Proceeds from this offering will be used to expand the regional strategy to major urban markets and initiate a broader national awareness campaign. The remainder of the presentation describes the expansion’s business plan. • No debt or additional equity capital is anticipated to be required to bring the company to profitable status. • The estimated rate of return for investors in the second offering is 27% over four years assuming a 5 EBITDA multiple and 51% using a 10 EBITDA multiple.

  16. InterFit’s Capital Needs PRELAUNCH YEAR ONE SOURCES OF FUNDS • Equity (Net of Issuance Costs) $1,054,000 $4,000,000 • Revenues 120,000 1,864,000 TOTAL SOURCES $1,174,000 $5,862,000 USE OF FUNDS • Capital Equipment Web Development 250,000 50,000 Furniture and Equipment 60,000 30,000 Software 25,000 80,000 Start-up Expenses 83,000 • Total Capital 418,000 160,000 • Cash for Operations 376,000 4,059,000 • Cash Reserves 380,000 $2,023,000 TOTAL USES $1,174,000 $5,862,000

  17. InterFit’s Internet Expansion • InterFit’s website will: • inform consumers about lab tests, • allow them to order and pay for a lab test online, • help them select a nearby blood drawing station. • After blood is drawn, within two days the easy-to-read results will be: • stored in a personalized, password-protected part of the website, • forwarded to the consumer’s physician if they so desire. • If the results are out of the expected range the system will: • suggest that the individual contact their physician or • provide links to local physician referral networks if requested. • A toll-free number will allow those without internet access to order tests. Results will be faxed or mailed to the individual and to the physician, if requested.

  18. InterFit’s Internet Expansion • Individuals can set up a personal record on the website to: • store their actual lab results, • display trends of results as repeat testing is done, • track other personal health information, such as blood pressure, • take a health risk appraisal to evaluate their own health risks. • E-mails will be sent to previous users containing: • recommendations for follow-up testing and • health-related information. • The site will contain health news and links to other health-related sites. • The site will make available other items and services for sale such as: • home testing kits, • health coaching, and • links to sites for pharmaceuticals, vitamins and other items.

  19. InterFit’s Market Approach • The market approach will have two initiatives: • a regional focus and • a broader national awareness campaign. • The plan for the regional roll-out will: • begin with Houston, • expand to other major Texas cities, then • move to other areas based on population and demand from employers, retailers, and other business partners. • In each region InterFit will: • partner with local healthcare providers, including physician referral sources, • utilize InterFit look-alikes to reach corporate clients in that area, • market to companies, fitness clubs and retailers in that area.

  20. InterFit’s Market Approach • National marketing efforts will: • build on a growing interest in wellness and disease prevention, • educate people about their ability to request lab tests without a doctor office visit, and • encourage the public to take responsibility for their own health. • Tactics used may include: • public relations stories in national media, • articles or advertising in publications such as Modern Maturity, Prevention, or Good Housekeeping, and • sponsorships on health-related internet sites.

  21. Business to Business Strategy • The internet site will allow InterFit to expand its corporate business to meet the needs of companies in multiple regions of the country. It will accomplish this by staffing events itself or with contract service agencies or by partnering with InterFit look-alikes in other regions. • Utilization by corporate client employees of both health screening and fitness programs will rise because of increased access to services. • InterFit will have the resources to serve national retail and fitness companies as it rolls out on a region by region basis.

  22. Business to Business Strategy • InterFit is forming strategic partnerships with other web-based healthcare businesses that market to employers’ health benefits or EAP programs. • InterFit will also establish links from health content portals whereby people visiting the portal and reading about a particular medical condition will see a click-through asking them if they want to be tested for that particular condition.

  23. Profiles of Corporate Clients • Corporations who engage InterFit to operate health fairs are: • employers with over 1,000 local employees, • self insuring on their health benefit plan, • reducing insurance costs through wellness and disease prevention. • Internet ASPs and health portals who may wish to private label the InterFit product as part of their own health site which is: • focused on health and fitness, • with personalized medical record features, or • focused on corporate benefit or employee assistance programs. • National retail chains that wish to make testing services available to their customers as a promotion might include: • retail pharmacy chains, • grocery stores, and • fitness centers

  24. Business to Consumer Strategy • InterFit offers individuals the ability to purchase lab tests without a visit to the doctor. This offers many advantages: • pricing averages 30% lower than the cost of lab tests done in a physician’s office, • the client saves the time of the office visit and is able to have blood drawn without an appointment at their convenience, • testing locations are generally easier to access than hospitals or physician offices, • results are received in two days, much quicker than most tests done elsewhere, • results are confidential and seen only by the client; there is no involvement by an employer insurance plan or doctor’s office staff, and • although InterFit requires payment up front by the client, receipts for insurance can be printed and submitted for possible reimbursement.

  25. Business to Consumer Strategy • InterFit is negotiating with large grocery and drug store chains to place kiosks with internet access and potentially blood pressure cuffs in the store pharmacies. This would allow people to seek health and drug information, measure their blood pressure, and purchase blood screening while they wait for their prescriptions to be filled. • Similar kiosks are anticipated in fitness facilities located nationally, providing members with access to health and wellness information, as well as to the facility’s web site where members can schedule classes, court time, or spa services in the fitness facility.

  26. Internet Security • Protecting users’ confidentiality and privacy is the highest priority. • InterFit will address security issues at every level: • Common protection technologies such as SSL encryption, firewalls, • and web server authentication will be utilized. • Health information is covered by the new HIPAA government • privacy regulations and InterFit will comply with those laws, • Using a database architecture and administrative access policies • that ensure security will be of key importance. • Storefront e-commerce interface will be used to protect credit card • data.

  27. Summary • With over 400 million lab tests done annually on outpatients and revenues of $8 billion, the market for patient self referral testing is significant. • InterFit will become a major facilitator of personal health testing by allowing individuals to be tested without first visiting their doctors. • The business to business market is large, with corporate health fairs, retail promotions and internet sites as major market segments. • With tests priced 30% lower than in physicians’ offices and the convenience of blood draws when the customer prefers, InterFit will appeal to many consumers. • Many customers will prefer the confidentiality and convenience InterFit offers over that of a physician’s office. • Limited competition exists, InterFit can have first mover advantage. • The customer experience is more complete because: • they get their own complete results, • the results are explained clearly, and • results are received on a timely basis.

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