25 Nov

AGM Presentation

The Manager Company Announcements Office Australian Securities Exchange Limited 20 Bridge St Sydney NSW 2000 Chairman’s AGM address by Guy Russo 20 2 1 Annual General Meeting 2 5 November, 20 2 1 Dear Shareholders It is an honour to address you today as your Chairman. It has now been just over a year since I joined as Chairman and I remain incredibly excited about the o pportunit ies that lie ahead . T he global market size and the amazing passion and commitment of our teams give me that confidence. Somno M ed change s peoples ’ lives – literally. SomnoMed gives people the opportunity to function again through its effective technology . This completely aligns with my own business passions, a clear focus on real commercial opp ortunities and the direct satisfaction of our customer s. SomnoMed has had a challenging year once again, due to th e ongoing COVID - 19 pandemic. SomnoMed focused on maintaining cautious fiscal discipline while instilling confidence within the business and within all its staff. Our executive team ha s led by example and re - enforced the strong culture that exists globally. The business grew its revenues in FY 21 by 9% ( 15 % in constant currency ) and although this was a ffected by COVID - 19, the Company is now looking towards a more “managed COVID” situation in the future . The opportunity to help treat millions of patients suffering from OSA (Obstruct ive Sleep A p nea ) remains large and growing. Treating OSA with COAT ™ (“Continuous Open Airway Therapy”), which has been pioneered by SomnoMed, has enormous potential because it is the “patients ’ choice” . SomnoMed offers a wide range of clinically validated and researched oral appliances that are comfortable to wear, durable and highly effective. SomnoMed operates under all the necessary medical manufacturing regulations around the world to ensure the delivery of a high - quality medical device to the patients of our clinical partners. Neil and his team continue to work tirelessly to promote stronger clinical guidelines, as well as investing in and supporting clinical research, which validates our treatment optio n. The number of patients throughout the world treated with a SomnoDent ® device surpassed 650 , 000 recently , while t he company drives greater acceptance and adoption of its technology within all medical and dental communities. I would like to thank the Board for their efforts and input throughout the past year. Our board is engaged, insightful and extremely hard working. I would like to thank Ms Amrita Blickstead, Ms Karen Borg, Mr Michael Gordon, Mr Hilton Brett and Mr Hamish Corlett for their tireless contribution to this company. Before I hand over to Neil to give you more colour on the current trading conditions and future direction s , allow me to thank you for your support during 202 1 and express the Board’s full confidence in Neil and his team . Your business has never been stronger. It is now my pleasure to introduce our Managing Director and CEO, Mr Neil Verdal - Austin. Managing Director’s address by Mr Neil Verdal - Austin 202 1 Annual General Meeting 2 5 November, 202 1 It is indeed an honour to address you today and provide you with an update on the business. It is now t hree years ago that I was appointed as your CEO and we began a new journey for SomnoMed Limited. Throughout my 1 3 years at SomnoMed and especially during this past, very difficult COVID effected period , it has become even clearer to me that our C ompany is a n incredible organisation . Incredible, simply because of what we do for patients who suffer from Obstructiv e Sleep Apnea (“OSA”) and how we positively affect their lives. Incredible also, because of the people who are SomnoMed . I have many stories that depict and evidence the true attitude, passion and energy which exists at SomnoMed. Our employees and partners all know what it means and how it feels when we help treat OSA patients . I t i s this mind - set and culture that will ensure that this business will achieve its potential in the future. It is that future that I want to address today. Firstly , I would like to provide a quick trading update. As you know our C ompany finished the FY2 1 year on revenues of $ 63 m illion ( +9 % to prior year) and posted an underlying EBITDA 1 profit of just under $ 4 m illion . We have also recently posted the results for Q1. The Q1 numbers confirmed the improving sales momentum , with r evenues of $ 1 5.6m illion and up 14 % ( 16 % constant currency) to prior year . It is anticipated that Q2 will continue with this momentum seen in Q1 . SomnoMed has achieved many of the goals I had set the organization for the year: ? A return to s trong sales growth in the US , where the restructured teams are seeing great results in all aspects of the business , with leading d igital product offering s with the proprietary BFlex c omfort l iner material ? In Europe , we continue to invest in the developing markets where we see positive reimbursement trends ch anging in our favour with incredible results ? In APAC , we are focused on growing our network of medical referrers, who are accepting COAT™ more regularly as the most comfortable and effective alternative to CPA P ? We continue on o ur di gital manufacturing journey a nd explore ways to bring this closer to the sales regions and our customers ? We continue to build on our Human Resources, Finance and Operations capabilities on a global basis to enable to deliver an unparalleled customer exper ience in the 28 countries in which we trade . Secondly, I would now like to turn to the future of our C ompany . SomnoMed has an exciting and long - term opportunity to invest in a transformational technology to build on its competitive advantage. We are now at the start of this journey. While we always focus on our treatment offering and the investment in sales and marketing resources on a regional basis, S omnoMed is also d evelop ing a new smart ecosystem for the future. We will announce further details of this technology in early 2022. The slide presentation which will come up on your screens provide s further detail on a number of the matters contained in my address . Finally, I would like to thank you, our shareholders for the support over these past 12 months. My thanks also go to the many new shareholders who joined us during the year and invested in SomnoMed as we embark on a new era. Thank you all for your trust and support in our C ompany , in me as your Managing Director and CEO and to the executive team who have helped me to achieve the results that we have seen during the past 12 months. We look forward to continued growth in the current financial year and beyon d. Thank you for the opportunity to lead this company and change people’s lives. _________________________________oooo_________________________________ This release has been approved by the Board of SomnoMed Limited AGM Presentation 25 November 2021 Treatment focused. Technology driven. Financial results are unaudited Our vision is to lead in the treatment of patients suffering from obstructive sleep apnea and relevant adjacent conditions Our mission is to advance the adoption, acceptance and treatment of oral sleep apnea therapies by medical specialists, dentists, patients and insurers SomnoMed’s Vision/Mission © November 2021 SomnoMed Highly experienced and supportive board of directors © November 2021 SomnoMed Guy Russo Non - Executive Chairman Highly accomplished business leader with strong commercial & customer oriented background Amrita Blickstead Non - Executive Currently COO & CMO for eBay Australia Trained biomedical engineer Michael Gordon Non - Executive Currently CFO of Rokt , a high growth technology business Hamish Corlett Non - Executive Founder and director of TDM Growth Partners TDM made its first investment in SomnoMed in 2010 and has been a substantial shareholder since 2012 Hilton Brett Non - Executive Currently operating partner at TDM Growth Partners, with extensive consumer retail experience Neil Verdal - Austin Managing Director 25+ years experience with various medical distribution and manufacturing companies CEO since 2018; previously CFO for 10 years Karen Borg Non - Executive Currently CEO of Healthdirect Australia Former President APAC, ResMed Passionate and driven management team © November 2021 SomnoMed Neil Verdal - Austin CEO Herv é Fiévet CFO Matthew Conlon EVP, Sales & Marketing North America Marco van Kleef VP, Sales & Marketing Europe Mark Harding Senior VP, Global Marketing Paul Cottee VP, Sales & M arketing APAC Christopher Bedford VP, Research & Development Joined SomnoMed in April 2019 Extensive experience in all aspects of managing finance, IT, supply chains, global purchasing, legal and HR Joined SomnoMed in July 2019. Strong track record of executing sales & marketing strategies in APAC, Europe and Australia Joined SomnoMed in October 2019 Extensive experience in the medical devices industry and technologies sector and navigating strategic change Joined SomnoMed in April 2018 Marketing and sales leader with extensive medical device experience Joined recently with vast medical device and sleep experience of 22+ years in the European region 17+ years at SomnoMed Appointed VP of R&D in August 2017 27+ years experience with various medical device , distribution and manufacturing companies CEO since 2018; previously CFO for 10 years A total of 900+ million patients suffer globally from the effects of sleep apnea Significant addressable markets globally Obstructive sleep apnea, a growing burden on the medical system affecting a significant portion of the population 25% of men suffer from sleep apnea globally Untreated OSA can lead to increased risk of stroke, heart attack, depression, diabetes 9% of women suffer from sleep apnea globally 1. Benjafield et.al : Estimation of the global prevalence and burden of obstructive sleep apnoea: a literature - based analysis, Lancet Respir Med 2019 511 million m ild OSA patients globally Obstructive sleep apnea (OSA) is a disorder that occurs when a person’s breathing is interrupted during sleep because the airway becomes blocked 425 million m oderate and severe OSA patients globally © August 2021 SomnoMed The SomnoMed product difference © November 2021 SomnoMed SomnoMed delivers the highest level COAT ™ comfort and quality ? Permits normal mouth opening ? Allows speech and drinking ? Professionally fitted ? Safe and effective ? Easily adjustable ? Clinically proven Technologically Advanced Materials that improve patient comfort and product function Customised Patient - specific and fitted by a qualified sleep dentist Superior Comfort Designed with proprietary materials, SomnoDent ® devices are known for their custom fit Cost Effective Solution Lower cost to fit, maintain and retain customers for sleep physicians, dentists and insurers Clinical Insight The findings are sobering. Our data suggest that despite numerous changes to machine and mask dynamics as well as behavioral interventions, CPAP adherence remains a severe problem for management of patients with OSA - the concept of CPAP as gold standard for OSA therapy is no longer valid. 1 Improving treatment effectiveness for OSA patients © November 2021 SomnoMed Efficacy Compliance Apnea events per night may be less with COAT ™ than CPAP Many patients don’t get effective treatment all night, every night SOM: Greater Compliance x Lower Efficacy = Effectiveness of Treatment CPAP: Lower Compliance x Greater Efficacy = Effectiveness of Treatment 1. Rotenberg et al. Journal of Otolaryngology - Head and Neck Surgery (2016) 45:43 Investment in the technology pathway to unlock true COAT ™ potential Strong clinical research supporting COAT ™ therapy Design and innovation driving patient comfort Growing and extensive sales and distribution footprint in both dental and medical channels Best in class service and technical support Positioned for future growth Treatment focused Technology driven © November 2021 SomnoMed COAT ™ today represents only ~8 - 10% of therapy for OSA patients Growing the sector through positioning the patient’s alternative © November 2021 SomnoMed Effectiveness Equation • Show Sleep Physicians how COAT ™ and CPAP can be equally effective over a patient’s full night of sleep • Focus is on superior compliance of COAT ™ and patient preference for COAT ™ Clinical research & reimbursement policy • Fund and support clinical trials that address barriers to COAT ™ adoption • Use health economic models to demonstrate cost effectiveness of COAT ™ vs CPAP to address reimbursement disparities Key Opinion Leaders (KOLs) • Engage medical and dental KOLs to advise on new product development and programs to reduce barriers to COAT ™ adoption ~ 900+ million sleep apnea patients globally Intensified efforts to position COAT ™ as an effective alternative to CPAP drive increases in COAT ™ share of OSA therapy Investing to achieve category leadership Financial framework for future growth and profitability © November 2021 SomnoMed Accelerated growth Balanced growth Mature growth Annual revenue growth >20% 15 - 20% 10 - 15% EBITDA 1 trends Maintain EBITDA 1 positive Margin expansion c.20% target margin Priority Top line Top & bottom line Bottom line 1 EBITDA as adjusted does not include share based payments, discontinued operations and other expenses . invest EBITDA into future horizons to accelerate growth 1 Category leadership in a multi - billion dollar opportunity Building Awareness Advancing treatment and building the core Creating Acceptance Positioning the patient’s alternative Driving Adoption Continued investment in product development and innovation Investing in Innovation Transformational technology and connectivity © November 2021 SomnoMed SomnoMed future horizons + + + Technology driven App - Nea Portal Devices Clinical evidence Data Analytics Realtime dental clinical decision & acceptance Bridge between medical & dental Connectivity, big data & personalised medicine Screening & diagnosis optimisation Patient pathway management & virtual simplification Guidelines Reimbursement policies © August 2021 SomnoMed One integrated and automated technology platform Outlook © November 2021 SomnoMed 1 EBITDA as adjusted does not include share based payments, discontinued operations and other expenses 2 Assumes no change to the current COVID - 19 lockdowns and restrictions in all trading markets FY22 guidance Key considerations Key strategic objectives • Revenue growth of at least 15% 2 • EBITDA 1 break even as we invest for future growth (expected to rebound in FY23 and beyond) 2 • Cash investment (non P&L) in technology innovations expected to be c$8m • Credit facility of $10m close to finalization • Continue to respond to changing market conditions • Drive growth opportunities • Build and expand sales and marketing teams globally Treatment focused • Focus on Medical Initiative in all three regions • Continue digital product precision • Drive Effectiveness Equation Technology driven • One Platform Project • Transformational connectivity development Thank you © November 2021 SomnoMed
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