jefferies 2015 healthcare conference · 2015. 6. 11. · aging population, emerging and re-emerging...
TRANSCRIPT
Jack Kraeutler
Chairman & CEO
June 1, 2015
Jefferies 2015
Healthcare Conference
Forward Looking
Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements accompanied by
meaningful cautionary statements. Except for historical information, this report contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, which may be identified by words such as
“estimates”, “anticipates”, “projects”, “plans”, “seeks”, “may”, “will”, “expects”, “intends”, “believes”, “should” and similar expressions or the
negative versions thereof and which also may be identified by their context. Such statements, whether expressed or implied, are based upon current
expectations of the Company and speak only as of the date made. The Company assumes no obligation to publicly update or revise any forward-
looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. These
statements are subject to various risks, uncertainties and other factors that could cause actual results to differ materially, including, without limitation,
the following:
Meridian’s continued growth depends, in part, on its ability to introduce into the marketplace enhancements of existing products or new products that
incorporate technological advances, meet customer requirements and respond to products developed by Meridian’s competition, and its ability to
effectively sell such products. While Meridian has introduced a number of internally developed products, there can be no assurance that it will be
successful in the future in introducing such products on a timely basis. Meridian relies on proprietary, patented and licensed technologies, and the
Company’s ability to protect its intellectual property rights, as well as the potential for intellectual property litigation, would impact its results. Ongoing
consolidations of reference laboratories and formation of multi-hospital alliances may cause adverse changes to pricing and distribution. Recessionary
pressures on the economy and the markets in which our customers operate, as well as adverse trends in buying patterns from customers can change
expected results. Costs and difficulties in complying with laws and regulations, including those administered by the United States Food and Drug
Administration, can result in unanticipated expenses and delays and interruptions to the sale of new and existing products. The international scope of
Meridian’s operations, including changes in the relative strength or weakness of the U.S. dollar and general economic conditions in foreign countries,
can impact results and make them difficult to predict. One of Meridian’s growth strategies is the acquisition of companies and product lines. There can
be no assurance that additional acquisitions will be consummated or that, if consummated, will be successful and the acquired businesses will be
successfully integrated into Meridian’s operations. There may be risks that acquisitions may disrupt operations and may pose potential difficulties in
employee retention and there may be additional risks with respect to Meridian’s ability to recognize the benefits of acquisitions, including potential
synergies and cost savings or the failure of acquisitions to achieve their plans and objectives. The Company cannot predict the possible impact of U.S.
healthcare legislation enacted in 2010 – the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation
Act – and any modification or repeal of any of the provisions thereof, and any similar initiatives in other countries on its results of operations. In
addition to the factors described in this paragraph, Part I, Item 1A Risk Factors of our Form 10-K contains a list and description of uncertainties, risks
and other matters that may affect the Company.
Meridian Bioscience, Inc.
Meridian
“VIVO”
Clinical Diagnostic
Tests
~$150 million
Life Science
Components
~$50million
~560 Employees 13 Worldwide Locations 70+ Global Markets >30 Regulatory Agencies
Clinical Diagnostic Tests
~$150 million
Hospital
Labs
Reference Labs
Outpatient
Clinics
Clinical Lab Diagnostics
Broad Testing
Platform Choices
Isothermal DNA Amplification
<60 minutes
1-10 tests/run
Rapidly expanding menu
Point-of-care
<15 minutes
Single use
Batch immunoassay
~2 hours
Up to 96/run
Life Science Components
~$50 Million
Large Dx
Manufacturers
Academic &
Private
Research
Biopharma
AgriBio
Rapidly
Growing
Asia
Markets
Meridian Bioscience
Global Presence
Sydney, Australia
Life Sciences (Bioline) sales,
warehouse, R&D and
manufacturing
Boca Raton, Florida
Life Sciences manufacturing
Memphis, Tennessee
Life Sciences manufacturing
• Life Sciences (Bioline) sales
and warehouse
Boston, Massachusetts
Cincinnati, Ohio
• Corporate headquarters
• U.S. Diagnostics
manufacturing, R&D, sales,
marketing and support
• Life Sciences / Diagnostics
Paris, France
• Life Sciences (Bioline) sales
warehouse, distribution, R&D,
manufacturing and admin.
London, United Kingdom
• European Diagnostics sales
and admin.
Boxtel, Netherlands
• Life Sciences (Bioline) sales,
warehouse and manufacturing
Luckenwalde, Germany
• Business Development office
Beijing, China
European Diagnostics sales
and admin.
Waterloo, Belgium
• European Diagnostics
distribution
Milan, Italy
• Distribution and sales
management
Singapore, Republic of
Singapore
Public Financial
Guidance
Net Sales
Growth(1)
$193 to $200M
+4%
$188.8
Flat
Diluted EPS
Growth(1)
$0.85 to $0.91
+6%
$0.83
-9%
(1)2014 growth calculated based on mid-point of range
FY 2015G FY 2014A
C. difficileLife Science
H. pylori
Foodborne
RespiratoryWomen’s
Health/STD
Other Dx
$32,000
$30,000+$2M
$25,000+$2M
$23,000+$6M
$7,000+$1M
$32,000
$48,000+$1M
2015 Estimate
Strategic Growth Contributors
Strategic Growth
Contributors ($000s)
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
Pre-analytics Life Science Molecular ImmunAssay NexGenPlatform
New
NewNew
New
New
Financially Efficient
0
5
10
15
20
25
2011 2012 2013 2014
ROA ROC
Gross Profit Margin 62%
Operating Income Margin 28%
Net Income Margin 18%
EBITDA Margin 32%
Industry-Leading Profitability Measures
Perc
ent
Six Months Ending March 31, 2015
Financially Efficient
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%Return on Invested Capital (ROIC)
WACC, 10.8%
The graph above shows the firm’s ROIC (excluding goodwill) compared with historical averages and WACC.
36.8%
47.2%
44.2%
94.2%
81.0%
67.9%
Dividend Yield as of 5/15/15 4.4%
Valuentum Securities/Seeking Alpha
April 29, 2015
RECENT DEVELOPMENTS
illumigene® Test Menu
HAI
C. difficile
C. difficile
Pediatric
STD
CT/NG
HSV-1 & 2
Blood
Related
Pathogens
eg. Babesia
eg. Malaria
Prenatal/
Women’s
Health
Group B
Strep
HSV-1 & 2
Respiratory
Group A
Strep
Mycoplasma
Pertussis
Foodborne
Campylobacter
Expand Number of
illumigene® Customers
125
~650
~950
~1,200~1,300
~1,400
0
200
400
600
800
1000
1200
1400
1600
Nov. 2010 Nov. 2011 Nov. 2012 Nov. 2013 Nov. 2014 Apr. 2015
•Approximately 75% U.S., 25% ROW
•Approximately 35% using multiple assays
illumigene® Pertussis
• Whooping cough is the only
reportable disease having
increasing trends
• Testing on adolescents and
young adults with a
prominent cough
• 20 million test potential
• Approximately 183
illumigene® Pertussis
customers to-date
Electrokinetic Sensor
Technology
• Accelerated surface
binding in minutes
• Minimum sample
preparation
• Capable of detecting
proteins and genetic
markers
Meridian Investment
Considerations
Favorable
Healthcare Trends
Clearly Defined
Growth Drivers
21% Return on Capital (LTM)
25 year Dividend Payout – Current yield 4+%
Innovative Products
Expanding product menu
New technologies for diagnostics and life science
Global expansion leverage
Aging population, emerging and re-emerging diseases
Commitment to improved healthcare outcomes
Founded 1977 – IPO 1986
Focused on decentralized testing; OEM supply
agreements; research markets
Multiple user-friendly technologies
FDA cleared diagnostics and innovative components
Durable Business
Model
Industry-Leading
Returns