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April 2010. Forward-Looking Statements & Statutory Rights of Action. FORWARD-LOOKING STATEMENTS
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Forward-Looking Statements& Statutory Rights of Action FORWARD-LOOKING STATEMENTS Certain statements in this presentation (the "Presentation") may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Patient Home Monitoring Corporation and its predecessor companies ("PHM"), or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this Presentation, such statements use such words as "may", "will", “estimate(d)”, "expect", "believe", "plan", "intend", "should", "anticipate" and other similar terminology. These statements reflect current assumptions and expectations regarding future events and operating performance and speak only as of the date of this Presentation. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward-looking statements, including, but not limited to, the risk factors typical of businesses operating in PHM's industry. Although the forward-looking statements contained in this Presentation are based upon what management believes are reasonable assumptions, PHM cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this Presentation, and PHM assumes no obligation to update or revise them to reflect new events or circumstances. STATUTORY RIGHTS OF ACTION If this Presentation is delivered to you for the purpose of assisting you in making a decision about investing in securities of PHM and you decide to purchase such securities, this document may be considered an offering memorandum pursuant to securities laws applicable in the Province of Ontario. This means that if this Presentation contains a misrepresentation and it was a misrepresentation at the time of purchase of securities by you, you will be deemed to have relied upon the misrepresentation and will, as provided below, have a right of action against PHM for damages or, while still the owner of such securities, for rescission, provided: (a) an action is commenced to enforce such right: (i) in the case of an action for rescission, not more than 180 days after the date of purchase; or (ii) in the case of an action for damages, not more than the earlier of (i) 180 days following the date you first had knowledge of the misrepresentation and (ii) three years after the date of purchase; (b) PHM will not be liable if it proves that you purchased the securities with knowledge of the misrepresentation; (c) in the case of an action for damages, PHM will not be liable for all or any portion of the damages that it proves does not represent the depreciation in value of the securities as a result of the misrepresentation relied upon; and (d) in no case will the amount recoverable in any action exceed the price at which you purchased the securities. If you elect to exercise the right of rescission, then you will have no right of action for damages against PHM. The foregoing summary is subject to the express provisions of the Securities Act (Ontario) and the regulations, rules and policy statements thereunder and reference is made thereto for the complete text of such provisions. The rights of action described herein are in addition to and without derogation from any other right or remedy that you may have at law. 2
Investment Highlights Large market with massive growth potential Key competitive advantage – systemization and scalability PHM has successfully secured customers and is generating revenue Proven management team with experience in fast growth, in-home healthcare services 3
Patient Home Monitoring Inc. (PHM) PHM provides insurance covered, in-home healthcare services to patients with heart disease in the US market (exclusively) 4
Target Market: In-home Testing for US Patients on Blood Thinners The FDA estimates at least 4 million people in the US are currently taking blood thinners for chronic disease As a patient, a diagnostic test to determine blood coagulation levels is a requirement for being on a blood thinner Until recently, this test, known as a PT/INR test, was only paid by insurance if performed at a laboratory or clinic In 2009, Medicare, the leading insurer for these patients, approved payment to include in-home patient self-testing Because of this expansion of Medicare coverage, the market could reach billions and is currently growing at a massive rate 5
Target Market: Large and Growing Medicare Payment for In-home Coagulation Testing: Medicare now pays up to $1500 per year per patient for in-home PT/INR monitoring services If all 4 million patients enrolled, this would represent a $6.5 billion market In the past 12 months, only an estimated 40,000 patients (only 1% of the market) have already enrolled for in-home testing This market was created about 1 year ago by Medicare’s expansion of coverage for in-home testing The market is expected to be multi-billion market in the coming years are more patients enroll 6
The PHM Business: In-home Logistics and Monitoring PHM provides patients taking blood thinners a service to monitor their in-home blood coagulation levels using an in-home finger test meter PHM monitoring services include: Delivery and supply of a 5 year life, in-home meter (finger test similar to diabetes) and weekly testing supplies Weekly contact with the patient to acquire their testing results Communication of that result to their referring physician 7
PHM Business: Per Patient revenue and Costs Revenue: Medicare pays PHM about $140 per month for its monitoring service Costs: A 5 year life, in-home meter weekly testing supplies Direct monthly costs of $47 per month Weekly contact with the patient to acquire their testing results Direct monthly costs of roughly $20 per month depending on volume Communication of that result to their referring physician Direct monthly costs of roughly $5 per month PHM projects 50% gross profit margins 8
The Competition and Their Focus Currently, only Roche, Philips and Inverness offer PT/INR in-home testing services All have “pharmaceutical” style marketing: Direct to consumer Referral-based marketing to physician/nurse Focus solely on a “health benefit” sale, promoting better patient outcomes, NOT business systemization A cardiology group with 1000 patients views a partnership with PHM’s competition as a cost The missing element: No scalability or systemization The poor result: PHM competitors will have very low levels of penetration per group 9
The PHM Competitive Advantage: Systematic Scalability of Patients for Enrolment A Business Systems Approach to Enrollment: A cardiology group can add $250,000 revenue in the first year of enrollment of 1000 patients into in-home testing However, a cardiology group is a business and enrolling thousands of patients into in-home testing takes systemization PHM provides this systemization including: Patient Outreach: PHM implements a scalable, systematic method for informing patients Training: PHM systematizes the training of thousands of patients quickly ($150 fee to the doctor) Data Transmission: PHM systematizes the transmission of patient PT/INR data ($100 per year fee to the doctor) 10
A Competitive Advantage Example:Midwest Heart Specialists in Chicago In advance of PHM engagement to systematize enrollment: Midwest Heart Specialists has 3800 patients managed on blood thinners eligible for in-home testing After 6 months of marketing and “sales” calls, Philips had enrolled less than 20 patients After 12 months of marketing and “sales” calls, Inverness had enrolled 40 patients • The competition has size and marketing power: These companies design their marketing around sales representative visits to multiple doctors, hoping to attract a few patients from each • PHM has focus and a differentiated marketing method: PHM focuses on less than 200 groups and expects a high percentage of enrollment per group • Large cardiology groups serve an estimated 400,000 patients on Coumadin in the US: A typical large cardiologist group has over 1000 patients on blood thinners at any given time • PHM has a large pipeline of potential customers: PHM is in discussion with 12 large groups about systematic enrollment with a combined total of 20,000 patients 11
Status of Business: April 2010 Large Cardiology Groups Enrolling: PHM has secured large cardiology group clients who have agreed to enroll their patients with PHMs systematic approach These customers have over 6000 patients eligible for in-home monitoring; the total pool represents $9m in annual revenue to PHM Staffing: A CEO has been recruited and has agreed to start shortly after listing The operational management team is in place to service first customers (patient pool of 6000) Training and recruitment has been completed for the case management team Operations: Operations have been built-out in San Francisco IT systems are in place to monitor patients and communicate to referring physicians PHM has the proper relationship with Medicare to enroll patients PHM has submitted a purchase order for its first shipment of in-home meters for patients PHM enrolled its first patients on March, 29 2010 12
Investment Highlights Large Market with Massive Growth Potential Market has already grown from $0 to almost $100M in 2009 With millions of patients eligible for reimbursement, and less than 40,000 testing currently, the market has huge growth potential in the coming years Patients with chronic conditions requiring warfarin tend to be on the drug and need monitoring for many years Key Competitive Advantage – A Focus on Business Systems for Mass Enrolment Cardiology group business systems integration focus ensures immediate patient flow and revenue The competitors use the standard, referral-based “health outcomes” sale, with a pharmaceutical style sales force; Ignoring the issue of systemization for enrolling thousands of patients quickly The result for them has been very low patient enrolment penetration per practice Exclusive focus on chronic patients results in long term use of equipment and increase in profitability Volume based discounts lower equipment and supply costs, reducing the time for full payback PHM has successfully closed doctor groups and is enrolling patients today PHM has secured a number of large doctor groups with a combined 6000 patients on Coumadin Therapy and has a pipeline of many others There are over 200 practices in the target market with an estimated 400,000 patients Proven Management Team with experience in fast growth, in-home healthcare services 13
Leadership Soon after listing - CEO and Executive Director Current VP and GM of Healthcare services at a NYSE-listed service company managing a healthcare call center and Medicare billing support services The Wharton School of Business, MBA (top 5% of class) Michael Dalsin – Chairman and Executive Director Principal in Stanmore Capital Partners LLC – a healthcare service focused fund University of Wisconsin, BA Roger Greene – Executive Director Principal in Stanmore Capital Partners LLC – a healthcare service focused fund Harvard College, AB; Harvard Law School, JD Gerald Jacobs - Director Extensive experience as a Chairman and Director of US companies Harvard College, AB, University of Chicago, JD Nitin Kaushal - Director Former Managing Director, Healthcare of DesJardins Securities in Canada Lead several equity investments on the TSX in the healthcare space; On Nasdaq and TSX boards 14