October 2019 Matt Sassone Chief Executive Officer Tim Hall Chief - - PowerPoint PPT Presentation

Interim Results Presentation Six months to 31 July 2019

October 2019

Matt Sassone Chief Executive Officer Tim Hall Chief Financial Officer

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Disclaimer

The Presentation Materials includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the anticipated future performance of the Company. Any such forward-looking statements in the Presentation Materials reflect the Company’s current expectations and projections about future events but, by their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Save as required by law or regulation or the rules of any securities exchange, the Company undertakes no obligation to release the results of any revisions to any forward-looking statements in this Presentation that may occur due to any change in its expectations or to reflect events

• r circumstances after the date of the Presentation Materials. In particular, no representation or warranty is given by the Company as to the achievement of, and no

reliance should be placed on, any projections, targets, estimates or forecasts and nothing in the Presentation Materials is or should be relied on as a promise or representation as to any future event.

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Hemodynamic monitoring company, helping doctors to manage patient’s cardiac function during high risk surgery and critical illness.

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Market Overview

Enhanced Recovery to Accelerate Segment Growth

• 1. Third party research and internal estimates 2. Includes pulmonary artery catheters and invasive

pressure monitoring products, excludes capital 3. Includes minimally invasive and non-invasive advanced hemodynamic monitoring products, excludes capital

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Competitive Landscape

Advanced Hemodynamics Market Share* Competitive Landscape Changing Due To Recent Acquisitions

In 2014 Getinge acquired Pulsion for €139m representing 4 times revenues and 11 times EV/EBITDA

* Source: internal estimates based on published data

Edwards Lifesciences Getinge Cheetah Medical LiDCO

2019: Agreement to be acquired by Baxter

• Healthcare. Transaction consists upfront $190 million

with additional $40 million based on clinical & commercial milestones

Deltex Medical Other Manufacturers:

CN Systems Osypka Retia Medical Vygon Acquired BMEYE in 2012 for €28m Acquired CASMED for $100m. At time of acquisition CASMED had revenues of $21m and negative EBITDA of 6.4m.

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Respective Competitive Offerings

Non- Invasive Finger Cuffs Blood Pressure Transducers Arterial Line Sensors Pulmonary Artery Catheters Bio- Impedence sensors

Advanced Hemodynamic products

Calibrated Technology Sensors

More invasive Less invasive Strategy

Differentiate through innovation i.e. incorporating AI into technology Recently addressed product offering by launching non-invasive finger cuff technology Planned acquisition by Baxter may change strategy Multiple technologies on legacy monitor Address today’s customer needs of economical value & ease of use

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LiDCO Product Sales 10% (H1 2019)

USA

47%

EUROPE

27%

ROW

27%

UK

8%

Continued success of the HUP offering LiDCO product revenues (H1 2019) and % growth vs H1 2018 Retained leading market share – reported revenues down as transitioning largest customers to HUP Appointment of Elysian Fields as Master Distributor for South America Latest monitor regulatory approval (China & S Korea) New distribution in Poland & Romania

£0.3m £1.6m £0.9m £0.5m

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H1 Revenues

2.0 2.5 3.0 3.5 4.0 H1 FY19 H2 FY19 H1 FY20

Revenue (£m)

LiDCO 3rd Party 1.6 0.9 0.3 0.5

By region (£m)

UK US Europe ROW 0.8 2.5 0.0

By revenue type (£m)

Capital Recurring Other

• LiDCO product sales up 10% on prior

year and 5% on prior 6 months

• Total revenue down 4% due to

termination of Argon distribution contract

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LiDCO – HUP strategy

HUP REVENUES UP 115% to £0.8m (H1 2018: £0.4m)

OFFERING STRATEGY

Software as a Service Treat unlimited number of patients Potential for significant cost saving No expensive per patient disposable required Disruptive model to take share & expand globally Accelerate US market penetration Drive greater adoption of hemodynamic monitoring Customers sign multi-year agreements

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HUP Performance

• To date 242 monitors signed on

the Software as a Service “SaaS” model

• US: 130 monitors spread across

15 hospital accounts

• 26% of UK business converted to

HUP

• Total annualised contract value

(ACV) £2.1m

• £7.0m total value of HUP

contracts signed as of August 2019 trading statement

500 1000 1500 2000 2500 50 100 150 200 250 300 Jan '18 Jul '18 Jan '19 Jul '19 YTD USA UK Distributors Annual Revenue

• No. of HUP

Monitors ACV (£000s)

HUP performance by region

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Building market share in US

15 HUP accounts currently: 1. Multiple teaching institutions across US 2. Increasing penetration in multiple Depts 3. Long term renewal for largest US HDM user 4. 4 renewals for longer terms (2-4 years)

Gaining share, winning trust Exciting pipeline

• Excellent customer/user feedback
• Major hemodynamic monitoring accounts

across USA engaged

• 10+ centres in Purchasing stage today
• Competitor reaction: new capital, bundling,

research grants & leveraging relationships

Interest Evaluation Decision Purchasing

Current Prospects

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UK Market

LiDCO products

8%

• Active strategy to convert largest customers to HUP. Following success of

largest customer converted in January 2018

• To date eight customers converted, representing 26% of LiDCO’s annual

recurring revenues in the UK

• H1 disposable revenues impacted strategy, as customers typically de-

stock inventory ahead of transitioning to HUP

• Supporting large UK clinical study (FLoELA) investigating the impact of

hemodynamic monitoring in patients undergoing emergency surgery

• Team ramping up efforts with 3rd party products

* Percentage of H1 recurring revenues generated from HUP licences

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USA Market

• Revenues were up 42% on a constant currency basis
• Utilising independent resources when appropriate
• Increased clinical presence & expertise
• ‘Trust in Better’ marketing campaign launched
• HUP performance:
• Increasing penetration in multiple departments
• Long-term renewal for largest US HUP customer
• 4 renewals for longer terms (2-4 years). Only 1 from 16 HUP’s not renewed, opting to

revert to per patient option, still with LiDCO

• New NED appointment, brings extensive US knowledge and relationships

* Percentage of H1 recurring revenues generated from HUP licences

47%

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Distributor Markets

• Aim is to build a number one or two position in specific target countries

that are rapidly adopting relevant clinical pathways such as enhanced recovery after surgery

• In the first six months achieved regulatory approval for latest

hemodynamic monitor LiDCOrapidv3 in both China and South Korea

• China commercial launch at end of October 2019
• Elysian Fields appointed as master distributor in Latin America
• European distributors building inventory ahead of a no-deal Brexit
• Good progress with new distributors in Eastern Europe

* Percentage of H1 recurring revenues generated from HUP licences

27%

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• One-off quick sale
• Excellent market feedback
• Portability meets key clinical

needs

3rd party distribution in UK

Disposable NIBP cuffs Pressure Transducers Advanced Nerve Stimulation

• Excellent market feedback
• Highly competitive product

features

• Price sensitive

Key Learnings Strategy moving forward

• Leveraging existing

relationships by targeting existing LiDCO accounts using competitor products

• Market concerns about

environment impact of shifting to disposables

• Highly price sensitive
• Selective opportunities
• Ancillary product to the LiDCO

product sale

• Leveraging existing relationships

Over time target is to collectively exceed the financial contribution previously generated by the Argon distribution

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Income Statement

• LiDCO product revenues up 10%
• Gross margin increasing to 73.0% (H1

2018: 65.7%) due to the decline in sales

• f low margin third-party products
• Total operating expenses decreased by

8% to £3.30m (H1 2018: £3.60m)

• Loss before tax of £0.82m (H1 2018:

loss £1.27m)

• EBITDA loss for the period was reduced

by 70% to £0.26m (H1 2018: £0.88m)

Six months ended 31 July 2019 Six months ended 31 July 2018 Unaudited Unaudited £'000 £'000 Revenue 3,511 3,643 Cost of sales (948) (1,251) Gross profit 2,563 2,392

Sales and Marketing (1,702) (2,038) Operations (507) (542) Administration (704) (626) Product Development (393) (396)

Total Costs (3,306) (3,602) Operating loss before sbp (743) (1,210) Share based payment (69) (65) Operating loss (812) (1,275) Finance (expense)/income (8) 1 Loss before tax (820) (1,274) Income tax (1) 9 Loss after tax (821) (1,265) EBITDA (261) (884)

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Balance Sheet

• Initiatives taken to reduce stocks

supported by higher monitor sales

• Historic low of debtor days
• Delay in receipt of R&D tax credit of

£0.2m

• High Usage Programme (HUP)

deferred revenues of £0.7m (H1 2018: £0.3m)

• Debt free (apart from leases)
• IFRS 16 (lease accounting)

implemented

• In negotiations to sign new short-term

UK office lease

31 July 2019 31 July 2018 Unaudited Unaudited £'000 £'000 Non-current assets 3,505 3,029 Current assets Inventory 1,539 2,118 Trade & other receivables 1,628 2,218 Cash 1,188 2,056 Total current assets 4,355 6,392 Current liabilities Trade & other payables (1,181) (1,918) Deferred income (766) (371) Total current liabilities (1,947) (2,289) Net current assets 2,408 4,103 Non-current liabilities (131)

• Net assets

5,782 7,132

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Cash Flow

• Net cash outflow was £0.53m (H1

2018: £1.17m)

• R&D tax credit of £0.2m received post

H1 (normally in H1)

• Strong balance sheet to support

growth

• Growing HUP revenues have a

positive impact on cash flow as typically receive annual payment in advance

Six months to Six months to July 2019 July 2018 £000 £000

Net cash outflow from operating activities 130 (614) Cash flows from investing activities Purchase of plant, property & equipment (232) (238) Purchase of intangible assets (309) (320) Finance income 1 1 Net cash used in investing activities (540) (557) Net cash outflow before financing (410) (1,171) Cash flows from financing activities Finance expense (9)

• Principle elements of lease payments

(110)

• Net cash outflow from financing activities

(119)

• Net decrease in cash and cash equivalents

(529) (1,171) Opening cash and cash equivalents 1,717 3,227 Closing cash and cash equivalents 1,188 2,056

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Outlook

• Second half will continue to build on the good start to the year as the business

continues to be successful with its HUP business model

• HUP strategy provides good visibility of future revenues alongside strong cash

generation

• Continued HUP success in the US with controlled transition in the UK
• New monitor launch in China October 2019
• Improved margins as business shifts to higher margin

recurring revenues

• Overheads remaining flat on the prior year
• Targeting a year of significant sales growth for LiDCO

products which will mitigate loss of lower margin 3rd party sales

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Summary

• LiDCO continues to progress its High Usage Programme

in the US and has established a foundation of prestigious accounts and late stage prospects

• Company is well positioned to take further market share

through a market disruptive ‘Software As A Service’ model in the world’s largest hemodynamic monitoring market

• Fundamentals of business very attractive
• Strong balance sheet to support growth strategy

Appendix

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Board

Peter Grant

Non-Executive Chairman

• Former Chief

Executive Officer of Skyepharma PLC

• Former Chief

Financial Officer at WorldPay plc & Group Chief Executive at Molins PLC

Matt Sassone

Chief Executive Officer

• 20+ years medical

device experience

• Former Chief

Marketing Officer

• f Maquet
• Former Regional

President for Smiths Medical

Phil Cooper

Non-Executive Director

• 30 years medical

device experience

• Former president
• f the wound care

division Mölnlycke Health Care

4 Tim Hall

Chief Financial Officer

• Chartered

Accountant with 30 years’ experience

• Former Chief

Financial Officer of Oxford Gene Technology IP Ltd & Lombard Medical Technologies PLC

Jim Wetrich

Non-Executive Director

• 35 years of

experience in the US healthcare industry

• Former Executive at

Abbott Laboratories, Molnlycke Healthcare, Premier Inc, and Providence Health & Services.

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Arterial blood pressure monitoring

A C B

Standard arterial monitoring Competitor set-up LiDCO set-up Difference between two methods:

Standard pressure transducer Cable takes arterial data from vital signs monitor Standard transducer replaced with more expensive per patient disposable

• No need to change from standard

pressure transducer

• No need for an expensive per patient

disposable

• No need to increase infection risk by

‘breaking the line’

• LiDCO is transducer agnostic

Standard pressure transducer