COMPUMEDICS LIMITED — Investor Presentation 2015

Apr 30, 2015

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May, 2015
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Compumedics Limited Corporate Presentation – February 2015

1

Investor Overview

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• Core business: returned to growth.

• Neurology growth opportunity: New market for CMP. We have the leading brain source localisation software.

• Asian EEG - largest segment of $886.8 m brain monitoring device market

• Asian EEG - 2013 $81.8m PA to 2018 $133.0m by 2018, CAGR: 10.40% (1)

• Trend towards Home Sleep Testing (HST) - CMP well positioned – growing market (2)(3)

• eHealth: Moving Compumedics’ proprietary technology to the cloud. $10m of contracts already won.

• Spin offs/strategic decisions to unlock significant value for shareholders

• FY15 guidance: $33m sales, revenue growth >10%, EBITDA $3.5-4m, NPAT $1.8-$2m.

2

(1) RFM:15215; (2) RFM: 15218; (3) RFM: 15214

Who is Compumedics?

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• Compumedics is a leading global, innovative developer and manufacturer of medical devices for:

• Diagnosing sleep disorders

• Monitoring neurological disorders including long-term epilepsy monitoring (LTEM)

• Highly sophisticated brain research

• Ultrasonic monitoring of blood flow through the brain (Transcranial Doppler [TCD])

• Compumedics is a technological leader in its chosen markets:

• 1 Australia sleep & neuro diagnostics device supplier

• 1Japan sleep diagnostics device supplier

• 1 China sleep diagnostic device supplier to China’s premier facilities & #1 TCD device supplier

• 3 USA sleep diagnostic device supplier and emerging #3 supplier for neurological monitoring devices

• Compumedics has a rich intellectual property portfolio

• Compumedics e-Health platform is the next growth phase in the company’s development

• Compumedics listed ASX Dec 21, 2000

3

Directors & Executive Team Key Management

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David Burton, Ph.D.
Executive Chairman, CEO
Founder, Tenure 26yrs
NED Mr. David Lawson
Mr. Alan Anderson Chief Financial Officer &
Leading USA Attorney Company Secretary
CMP Tenure : 11 yrs CMP Tenure 13 yrs
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Mr. Warwick Freeman Kerry Hubick, Ph.D . Mr. Christoph Witte
Chief Technology Officer Trademark, Patent & General Managing Director Compumedics Germany
CMP Tenure 15 yrs General Legal Attorney GmbH CMP/DWL
Tenure 24 yrs
CMP Tenure 7 yrs
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A Tradition of Innovation

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Comperio DQ Summit IP
SynAmps2 2004 2005
Somté 2003
2001 Siesta 802
Siesta
2005
2000
P Series
1994
S Series
1987
Somté PSG
2006
Neuvo LTM
SynAmpsRT 2007
2008
CURRY6
Somnilink SPAP 2009
2010
Grael HD
Somfit
2010
2015 Somté PSG 2.0
2011
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Established Client Profile

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Core Sleep and Brain Diagnostic Monitoring Business

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7

Core Business Overview

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• Core business has now recovered post GFC and high AUD

• We continue to transition product manufacturing and assembly offshore, which will result in reducing the cost of manufacturing to between 1/3 and 1/2 while maintaining premium functionality

• We have traditionally targeted the premium end of the market, which was hit hard by the GFC. We can now target the mass market.

• CMP will be a market disruptor for the first time in its history

• 20,000 installed systems worldwide. Strong brand name and reputation.

• Expecting average sales growth >10% pa

Product Matrix

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Product		Used for	Bought by	Average selling price
Grael		Sleep and neurology	Hospitals, doctors and service providers	USD17,500
Somte PSG		Sleep	Hospitals, doctors and service providers	USD10,000
Siesta		Sleep and neurology	Hospitals, doctors and service providers	USD18,000
Neuvo LTM		Neurology	Hospitals, doctors and service providers	USD35,000
Synamps RT		Brain Research	Universities and teaching hospitals	USD38,000
CURRY		Brain research and neurology	Universities, teaching hospitals and regular hospitals	USD20,000

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Revenue Composition at ≈$15.6m 31 December 2014

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By geographic region

By product/market

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Europe,
USA,
18%
32%
Asia,
33%
Aust,
17%
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Tech.
Supply Service,
Items, 9%
Sleep,
11%
32%
Brain
Blood Neuro,
Flow, Brain 11%
20% Res,
17%
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Software upgrades 5 to 10% of system sales

Compumedics sells directly to end-user customers in Australia, USA and Germany and through its network of more than 50 distributors to all other parts of the world

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Historical First Half Revenues 6 months to 31 December

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0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0	Shipped and invoiced
	H1 FY13 H1 FY14 H1 FY15 F'cast H2 FY15 H1 Rev F'Cast Rev

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Historical First-Half Earnings 6 months to 31 December

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NPAT

EBITDA

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1
0.8
0.6
0.4
0.2
0
H1 FY13 H1 FY14 H1 FY15 H2 Fcast
-0.2
FY15
-0.4
-0.6
-0.8
-1
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2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
H1 FY13 H1 FY14 H1 FY15 H2 Fcast
FY15
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NPAT F'Cast NPAT EBITDA F'Cast EBITDA

Full year EBITDA for FY2015 is estimated between $3.5m and $4.0m. Excluding Medical Innovation costs EBITDA is estimated between $4.5m to $5.0m

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Employee Composition at ≈130 staff 31 December 2014

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By geographic region

By function

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Asia, Mid
2% East,
1%
Europe, USA,
24% 32%
Aust,
41%
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Admin
Sales &
Quality,
& Fin,
Mark,
2%
12%
24%
Manuf,
28%
Service,
R&D, 12%
22%
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Compumedics has its Head Office in Melbourne, Australia with additional offices in Charlotte (NC), USA and Singen, Germany

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Tide turning post GFC and high AUD

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4 45
40
3
35
2 30
25
1
20
0 15
FY08 FY09 FY10 FY11 FY12 FY13 FY14
10
-1
5
-2 0
AUDm AUDm
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EBITDA Revenues

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120
100
80
60
40
20
0
FY08 FY09 FY10 FY11 FY12 FY13 FY14
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AUD/USD Average

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Growth Drivers – Core business

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• Compumedics/NeuroScan LTEM innovative brain analysis software and high performance amplifiers are unrivalled world class technology

• We have >20,000 systems installed worldwide. Strong reputation and brand name. Customers like buying from Compumedics.

• Trend towards Home Sleep Testing (HST) – Compumedics well positioned

• Asia Expansion – emphasis on China through our unique and long established relationships there

• Grow sleep diagnostic market position in the US by continuing to expand direct sales force

• Continuing to grow and expand our European business, with emphasis on Germany

• We are the only competitor left who can rival the largest player – Natus Medical

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Growth Strategies – core business USA Clinical Sales Force Expansion

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More sales representatives > more revenue for both sleep and neurology

Past

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USD4.5m USD8.0m

FY2014 - Now

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FY2016

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FY2017

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USD12.5m USD15.5m

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China - We are the number 1 Premier Supplier

Compumedics Clients in China

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China Sales – USD’s
4
2
0
FY12 FY13 FY14
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Earnings improvement activities

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• Outsourcing Manufacturing – lower cost regions of China and Taiwan

• EEG cap production completely relocated at Dec 14 and Grael and Somte production to be completed by July 2015

• Offshore purchasing houses to increase quality and drive down costs. Grael and Somte purchasing relocation complete April 2015

• Streamlining of logistics (final product assembly, testing and shipment) as the business grows

• Completed redesign of all major product lines for aggressive global full market access - based on at least halving cost of goods but retaining quality and performance

• New generation Grael to be released for sale June 2015

• These benefits will start to flow through in FY16 and beyond

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Strategic Value Realisation

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Strategic value realisation

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The company is currently considering options to simplify its business and unlock significant value for shareholders by:

• Spinning out its Germany based DWL Transcranial Doppler (TCD) ultrasound blood flow business

• Spinning out its Brain Research business (NeuroScan)

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DWL Spin out opportunity

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• DWL is the founding business and global leader in TCD ultrasound.

• Short term growth opportunities in 3D Transcranial Colour Doppler (TCCD)/Duplex Imaging

• Medium term growth opportunities in TBI and Stroke Market

• 3D TCCD is a US$900m vs DWL’s current market of $US30m. Relatively small investment required in upgrading the user interface to be able to play in this market.

• Traumatic Brain Injury (TBI) – DWL work with some of the world’s most respected researchers.

• 3D TCCD and TBI are beyond the current financial capability of DWL. Growth capital needed for this business.

• The potential listing/spin off of DWL based on revenue multiples of comparable listings:

• • Revenue of $US6m (based on 4x current revenue) = $US24m
• • Valuing a 30% stake (assuming CMP spin off 70%) in the new entity of US$7.2m

• and US$16.8m of cash freed up for investment in growth of Compumedics and potential returns to shareholders

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Brain Research Spin Out Opportunity

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• Enormous neurology devices demand – est. $7bn pa by 2017 up from $2bn in 2010

• Growth outlook – significant for Neuroscan CURRY – World’s best of class brain analysis software

• CURRY multi modal brain analysis technology – traditional research market - $50m pa

• CURRY – multi modal brain analysis monitoring – new imaging market - $4bn pa

• CURRY – MEG Imaging – currently the preferred solution

• NeuroScan/CMP – 9% revenue growth expected. EBITDA approx. $1.1m

• Similar AIM IPO comparables – post money 5x revenue market capitalization

• Would unlock significant value, fund growth initiatives and potentially allow a capital distribution to shareholders

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eHealth – Next Phase in Compumedics Growth

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Medical Innovations – eHealth

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• Compumedics is developing eHealthMedics, an online professional sleep services platform

• Sleep diagnostics is traditionally delivered as a lab-based (equipment intense) or Home Sleep Testing service eHealthMedics has re-architected its solution such that the sleep monitoring and algorithms that translate the raw data into sleep stages run on the cloud, so that all that is required on-site is a mobile sleep system to buffer and transfer the raw data

• The platform is based on Compumedics’ core world-class sleep diagnostic technology, built up over more than two decades and $100m+ in accumulated R&D and $500m+ in total system sales

• eHealthMedics will provide the backbone and infrastructure to professional sleep service providers

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eHealthMEDICS - Competitive Advantage

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• The scalability and cost efficiencies of eHealthMedics vs traditional sleep diagnostics allow the service to accommodate very large sleep-disordered populations, even in regions where private or public health insurance is limited or non-existent (eg China – a key market for eHealthMedics)

• The numerous validated and proven algorithms & report templates have been developed over 25+ years of ongoing R&D – they cannot be replicated

• Compumedics possess a broad spectrum of medical diagnostic and monitoring technologies that are unrivalled globally

• These technologies have served clients including NASA, Stanford, Mayo Clinic, Yale, Beijing University, University of Tokyo and a range of leading hospitals worldwide, as well as provided the infrastructure for the worlds largest home based sleep study and database of its kind – the USA National Institute of Health’s ‘Sleep Heart Health Study’

• The above provides eHealthMedics with the ability to leverage existent proven systems and relationships into the professional sleep services space with “gold standard”, regulatory approved and certified diagnostic technology backed by key opinion leaders within the industry

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eHealthMEDICS – Making Progress

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• eHealthMedics has already locked in excess of $10m of forward orders over the next three years (primarily in China) for its professional services platform. Initial pilot sites commence in May and June this year

• Operational systems have been developed for the cloud based capture, transfer and translation of medical grade sleep parameters from any web-enabled device. The system can then store, analyse

• and interpret that data in a simple and actionable manner, reducing the need for on-site professionals

• Compumedics are now approaching a select group of strategic partners/investors to expedite the process and rapidly deploy the platform to market

• Key partners being pursued include web, telco, eHealth, consumer health/electronics providers and device manufacturers

• Compumedics will update the market as significant further progress is achieved

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eHealthMEDICS - We bring to the table a eHealth services platform that leverages core competencies built over 25 years

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mHealth Product Ecosystem: Required Competencies [traditional business]

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• Inc. medical data security
[traditional business]
(FDA, CE, TGA compliant, US
est. 1987
HIPPS)
• Medical grade • Established
Cloud
‘life-signals’
global
Over 250 product patents monitoring Medical Regulatory
network of
Established medical Data Compliance Physicians
credentials - 000s of medical Processing
publications / leading R&D Patents / Health
team IP Services
Government / regulatory
certification and compliance
new
Clinical diagnostic software Clinical
(inc. sleep disorders, neurology, Govt. mHealth
Grade
heart, epilepsy, diabetes) Funding Platform
Products
Medical monitoring devices –
home and hospital
Cloud-based algorithms, data • Eligibility for •
Applications
processing and security govt. health • Network
scheme rebates
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• Over 250 product patents

• Established medical

• credentials - 000s of medical publications / leading R&D team

• Government / regulatory certification and compliance

• Clinical diagnostic software (inc. sleep disorders, neurology, heart, epilepsy, diabetes)

• Medical monitoring devices – home and hospital

• Cloud-based algorithms, data processing and security

• Global Network of Physicians

• Sensors / wearables

• Clinical monitoring sensors

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Investor Summary

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• Core business returned to growth: FY15: $33m revenue, >10% sales growth

• Sales force expansion, neurology market opportunity and earnings improvement initiatives to drive growth of core business

• Intense company focus on improving returns to shareholders. Current share price does not reflect the significant value of our company. We believe that in time the share price will reward our efforts and our shareholders

• e-Health platform is the next step for CMP’s growth. Moving 25+years and $100m+ in cumulative R&D to a modern platform to solve a massive and growing problem. $10m of contracts already locked in.

• Spin off/strategic decisions to unlock significant value, provide funds for growth and potentially capital returns to shareholders

• FY15 guidance: $33m revenue, $3.5-$4m EBITDA, $1.8-$2m NPAT

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