National Medical Health Card Systems (NMHC) Inactive
Filed: 8 Mar 04, 12:00am
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National Medical Health Card Systems, Inc.
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EXHIBIT INDEX
EXHIBIT 99 Presentation at Lehman Brothers Seventh Annual Global
Healthcare Conference on March 5, 2004
EXHIBIT 99
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
(NASDAQ: NMHC)
LEHMAN BROTHERS
SEVENTH ANNUAL GLOBAL HEALTHCARE CONFERENCE
MIAMI, FL
MARCH 2004
NMHC
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SAFE HARBOR STATEMENT
THIS SLIDE PRESENTATION CONTAINS FORWARD-LOOKING PROJECTIONS WHICH INVOLVE
KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES OR OTHER FACTORS THAT MAY CAUSE ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE
RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. FOR A DISCUSSION OF SUCH RISKS AND UNCERTAINTIES,
INDCLUDING BUT NOT LIMITED TO RISKS RELATING TO DEMAND, PRICING, GOVERNMENT
REGULATION, ACQUISITIONS AND AFFILIATIONS, THE MARKET FOR PBM SERVICES,
COMPETITION AND OTHER FACTORS, READERS ARE URGED TO CAREFULLY REVIEW AND
CONSIDER VARIOUS DISCLOSURES MADE BY NMHC IN THE COMPANY'S ANNUAL REPORT ON FORM
10K FOR THE FISCAL YEAR ENDED JUNE 30, 2003 AND OTHER SECURITIES AND EXCHANGE
COMMISSION FILINGS.
NMHC FAMILY
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/NMHC ASCEND/ /NMHC MAIL/ / NMHC RX/ / NMHC INTEGRAIL/
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Mission Statement
The mission of NMHC is to improve our members' health through the timely
delivery of effective pharmaceutical care and health information management
solutions.
NMHC PERFORMANCE
o > 25% FY '04 Earnings Growth Guidance
o Returns on Assets 4.5%
o Returns on Equity 24.1%
o Capital Expenditures 1.2% of Revenue *
o Net Income Up 35% Year Over Year*
o Free Cash Flow ** $8.2 million *
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* 1st six months of fiscal year 2004
** Defined as operating cash flow less capital expenditures and dividends
INDUSTRY DYNAMICS
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o 100+ PBMs (Oligopoly Industry)
o $182.7 Billion Drug Spend in 2002
o $20 Billion Estimated Specialty Drug Spend in 2002, and is Expected
to Double in the Next Three to Five Years*
o $33.5 Billion Mail Order Drug Spend in 2002, up 21.7%*
o Pending Acquisitions
o Continued Legal and Regulatory Scrutiny
o Changing Business Practices
o Expansion into New Service Areas (e.g., Medicare)
____________
* IMS Health, NACDS
MARKET REQUIREMENTS
o Brand Recognition (Safety/Accountability)
o Service
- Access
- One-Stop Shopping
- Solid Execution
- Outstanding Reporting
- Flexible and Customizable
o Cost
- Price versus Cost
- Effect of Scale
MARKET NICHE
o Multi-Employer Trust Funds/Unions
o Third Party Administrators
o Regional/Local Managed Care Organizations
COMPETITIVE ADVANTAGES
o Service Levels
o Relationships
o Risk Management - Managing Cost
o Actionable Information
o Technology Infrastructure
o Targeted and Customized Business Model
o Contracting Model(s)
o Pricing
FAST FACTS
Founded in 1981
Nationwide Service Center Support Network
94.5% of ALL Retail Pharmacies Nationwide
Five-year Organic Growth Rate of 30%
Profitable Every Year Since 1996
Five Acquisitions in Three+ Years
Leading Edge Technology (Scaleable, Robust, Reliable and Redundant)
Full Service Provider
Over 300 Employees
Service Over 6.4 Million Members Nationwide
SAS 70 Certified
Portland Maine. NMHC Ascend Specialty Pharmacy. Supports infertility,
growth hormone, HIV/AIDS, RSV, transplant and compounding. Upcoming therapy
areas include MS, Hepatitis C, Hemophilia, Rheumatoid Arthiritis, Crohn's
Disease, Oncology and Gaucher's Disease, Strong contracts and an outstanding
service reputation.
Miramar, Florida. NMHC Mail. State-of-the-art imaging, electronic pill
counting and conveyor based system capable of handling at least three times our
current volume. Move of captive business expected to be complete by July 1,
2004.
Latham, NY. NMHC Integrail, Corporate Call Center, Clinical, and Account
Services.
Little Rock, Arkansas. Corporate Call Center, Disaster Avoidance Center,
Member Communication Center, Clinical, and Account Services.
Port Washington, NY. Headquarters, Clinical, Account Services, Accounting,
Data Center, Information Services, Legal, and Human Resources.
MAJOR INITIATIVES
o Sales Force Build-Out (Pipeline Growth)
o Mail Order Move
o Specialty Pharmacy
o Inegrail - Expansion of Risk Management Services
> Acquisitions
INVESTMENT PARTNER
o New Mountain Capital
o $80 million, 5.25% Average 10-Year Preferred Stock,
$50 million Company self-tender
o Will resolve Brodsky family overhang, bring new capital
($30 million), and add significant quality institutional sponsorship
and rsources
o Shareholder Meeting March 18. Tender offer closes March 19.
INVESTMENT THESIS FORTUNE'S 27th
FASTEST GROWING
COMPANY
o Strong Industry Characteristics
o Attractive and Defensible Niche Markets
o Flexible and Powerful Business Model
o Substantial and Sustainable Competitive Advantages
o Scale and Scalability
o Proven Management and Track Record
EBITDA RECONCILIATION
Three of the Company's financial covenants under its revolving credit
facility ("Facility") are based upon the EBITDA (earnings before interest,
taxes, depreciation and amortization) generated by the Company over specified
periods of time. These covenants, EBITDA for the current fiscal quarter,
interest coverage ratio, and debt service coverage for the previous twelve
months, are evaluated by the Lender as a measure of the Company's liquidity and
its ability to meet all of its operations plus or minus the net changes in
assets and liabilities and the changs in certain non-cash reconciling items from
net cash from operations to net income over the reported periods. While EBITDA
is not a measure of financial performance nor liquidity under generally accepted
accounting principles, it is provided as information for investors for analysis
purposes in light of the financial covenants referred to above. EBITDA is not
meant to be considered a substitute or replacement for net income as prepared in
accordance with accounting principles generally accepted in the United States.
