Introduction to HuntsworthOctober 2019

Huntsworth Plc

Huntsworth

• A marketing services, medical consultancy & communications Group focused on the Healthcare sector

• Founded in the late 90s as a PR Group

• Listed on the main market in London HNT.L

• Rapid evolution of the Group into Healthcare from 2015 onwards

• 50%+ of Group revenues from the USA

• 70%+ of Group revenues / c. 85% of Group profits from Healthcare

• Healthcare marketing and medical spend less susceptible to changes in global GDP and consumer spending

2

Healthcare Group

Split into 3 distinct Healthcare divisions

Medical – Medistrava

Activities related to pre-launch communications and post-launch real-world evidence

Marketing – Evoke

US biased marketing to patients, HCPs and payers for prescription drugs

Immersive – The Creative Engagement Group

All activities, both internal and external, of an experiential nature including expo booth design, medical congress & symposia organisation and execution

3March 2019

With a legacy Communications division providing financial, consumer, corporate and brand PR and public affairs

4

Financials 2015 to 2019

-

5

10

15

20

25

30

35

40

45

2015 2016 2017 2018 2019*

£m

HPBT

-

50

100

150

200

250

300

2015 2016 2017 2018 2019*

£m

Revenue

* Range based on analyst expectations

£268 - £273m £39m - £42m

Financials 2015 to 2019

5

* Range based on analyst expectations

EPS

Dividend

8.6

3.0

4.0

5.8

7.1

8.0

1.75 1.75 2.00

2.30 2.40

-

1

2

3

4

5

6

7

8

9

2015 2016 2017 2018 2019*

2.80

The investment case

Huntsworth Plc

Demand Is Growing – as the world ages . . .

• Within 10 years there will be one billion >60 yr olds

• The world’s over-65 population is projected to

double over the next 30 years

• By 2050 global life expectancy is projected to

increase by 8 years

• The ‘oldest old’- those over 80 – are expected to

triple between 2015 and 2050

7

49m 88mOver 65s in US

68yrs 76yrsGlobal life expectancy

126m 446mOver 80s globally

Source: An Ageing World: 2015 – US National Institute of Health/US Census

1bnOver 60s worldwide

. . . and needs more healthcare

• 133m Americans have at least one chronic

disease

• By 2025, chronic diseases are predicted to affect

an estimated 164m Americans

• Obesity rates amongst 65 to 74 year olds is 30%

• Alzheimer’s projected to triple by 2050

8

45%of the population

5%increase since 2000

5m 16mAlzheimers in US

30%

Sources: (1) Wu S, Green A. Projection of Chronic Illness Prevalence and Cost Inflation. RAND Corporation, October 2000;

(2) Partnership for Solutions. Chronic Conditions: Making the Case for Ongoing care; (3) CDC Summary Health Statistics for

US: National Health Interview Survey; (4) Alzheimer’s Association (www.alz.org)

Pharma Growth Is Resilient

Sources: (1) WW Drug Sales Source: Adapted from Evaluate Pharma, May 2018;

(2) Global GDP Source: Adapted from Statista, 2018

5.5%Global GDP (2018 –2022) CAGR

6.5%Global Pharma CAGR

5.5%

Generics CAGR

11.9%

Orphan CAGR

5.4%

Prescription CAGR

60 66 67 70 76 78 80 81 84 89 95 100 104 109 11469 77 82 88 94 100 112 125 138 151 169 192 216 240 262

558590 572 569 581 565 576 583 608 631

663706

749785

828

0

20,000

40,000

60,000

80,000

100,000

120,000

0

200

400

600

800

1000

1200

1400

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Glo

ba

l G

DP

in

$b

n

WW

Pre

scrip

tio

n D

rug

Sa

les

in $

bn

Worldwide Total Prescription Drug Sales (2010-2024) and Global

GDP ($Bn)

Generics Orphan Prescription excl Generics & Orphan Global GDP in $bn

9

SPEND INCREASING IN BIOTECH IN ORDER TO REACH NEED IN CHANGE IN MEDICAL LANDSCAPE

EXPANDING ROLE OF EARLY BIOTECH IN DEVELOPING INNOVATIVE MEDICINES

NEW MOLECUALR ENTITIES (NMES) ARE

ON THE RISE

ROBUST GROWTH

IN R&D

$3bn2003

$2m2007

$1,0002017

$200(?)

2020

THE FALLING COST TO MAP A HUMAN GENOME3

Sources: (1) IQVIA Institute of Human Data

Science, 2019

(2) Evaluate Pharma , 2019

(3) ‘Personalised medicine: coming soon to a

clinic near you’ Rathbones, Apr 2017

(4) Adapted from Statista, 2018

(5) ClinicalTrials.gov

NMEs treat infectious disease1

20%

NME in 2018 -highest in 5

years1

59 NMEs treat cancer1

27%

Orphan Drug CAGR in 20242

12%

invested by VCs in 20181

$23bn

Pharma R&D spend in 2024. $171.0bn in 20182

$203.9bn

raised in 2018 in Biotech2

$7.2bn

R&D spend by top 15 pharma over 5 years1

32%

Number of trials current ongoing5

GlobalPharma CAGR

increasing with Global GDP CAGR4

303,828

number of molecules in late-stage

development in 20181

39%

Increase in progression time from PHASE I → MARKET over past 10 years1

26%

growth in R&D based on number

of 2018 clinical trials1

9%

of NMEs launched in 2018 originated from early biotechs1

64% of the therapies launched in the US in 2018 were attributed to early biotechs1

47%

Biotech IPOs in 2018268

Supply is growing

Huntsworth is healthcare-focused

Revenue

* Based on Analyst consensus

Profit

51%49%

2016

Heathcare Comms

72%

28%

2019*

Heathcare Comms

77%

23%

2016

Heathcare Comms

85%

15%

2019*

Heathcare Comms

11

Deepening Healthcare Relationships

12

Client revenues No. clients No. products

£5m + 6 37

£2m - £5m 16 62

£1m - £2m 25 60

Below £1m 114 134

161 293

Strong organic growth

Combined healthcare divisions target like-for-like annual revenue growth of 5% to 7%over the next 5 years

Sustainable

Margins

Marketing 22%+

Medical 24%+

Immersive increasing

to 17%+ over next 3

yrs

10%12%

6%

£91m

£119m

£152m

2016 2017 2018

13

c. 6%

2019*

c. £200m

* Based on analyst expectations

Strong cash generation

14

• Defensive fundamentals:

➢ Healthcare biased: demand driven by fundamentals of expanding healthcare sector, not consumer led

• Strong cash generation

➢ 98% 2015-18 average cash conversion

• Dividend well covered: 3x

• Covenant headroom

1.6x vs 3.0x

2019 leverage covenant limit

10%+FCF yield*

* Based on analyst expectations for 2020

Track record of delivery

CAGR in HPBT31%

28% CAGR in EPS

LEVERAGE BROADLY

UNCHANGED

* Range based on analyst expectation

15

1.9x1.5x

1.1x1.9x 1.6x

3.0

4.0

5.8

7.1

8.0

13.316.0

24.4

30.9

39.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

8.0x

9.0x

2015 2016 2017 2018 2019*

2015-19 results

Leverage EPS HPBT

8.6

42.1

Medical

Huntsworth Plc

17

• Value Evidence Generation

• Strategy for Global Pricing and

Market Access maximisation

• Health Economics

• Preparation for Health

Technology Assessment

• Scientific strategy

• Publications

• Medical education

• Payer communications

• Medical congress activity

• Patient journey mapping

• Medical affairs strategy

• Medical information architecture

• Data and analytics

• MSL planning and effectiveness

• RWE planning

MEDiSTRAVA is the medical division of Huntsworth group.

It includes more than 350 professionals (including 120 PhDs) in 20 locations across Europe, North America, Asia, Africa and Oceania.

MEDiSTRAVA

Large share of launch productsLarge growth in biotech

18

2018 was a record

breaking year

59 new drugs approved(vs industry average of 27

over the last 10 years)

Biotech transforming

to commercial players

60% of 2018 approvalsfor small pharma / Biotech

Productivity of large pharma

continuing to decrease

Sea change in

drug development

and approvals

More supportive

FDA than ever

MEDiSTRAVA supported

drugs approvals in 2018MEDiSTRAVA support for

in 2019

40% of global MEDiSTRAVA revenues and 50% of US revenues are from Biotech

and niche pharma

Deep expertise in fast growing therapeutic areas

19

Share of

total revenue

Growth

vs 2017

19% 25% 9%

12% 62% 70%

Oncology Specialised

Medicine

Dermatology

20

Medical Growth: 2015 - 2019

10

20

30

40

50

60

2015 2016 2017 2018 2019

£’m

Core Medical Acquisitions

Revenue CAGR

25%

28%Average Margin

* 2019 based on analyst expectation

*

Marketing

Huntsworth Plc

Multi-service capabilities

22

Direct to Consumer (DTC) marketing

Healthcare Professional (HCP) marketing

Payer marketing

Public relations & disease awareness

Continued growth in digital

• 75% of consumers say the use of technology in managing their health is somewhat or very important

• 60% of consumers say they are willing to share personal health data generated from digital devices

• 79% of doctors prefer getting information online instead of a sales rep visit

23

Sources: (1)Mckinsey, Healthcare Consumerism , 2018;

(2) Deloitte, Inside the Parient Journey, 2018

Rise in specialist medicines requires more targeted marketing

• Nearly 7,000 medicines are currently in development with ~3/4 of them potentially first-in-class

• Between now and 2020, 55% of drugs seeking FDA approval will be considered speciality drugs

• By 2020, about half of the money spent on the pharmacy benefit will be on specialty drugs, and these medications will be prescribed for fewer than 2% of patients

24

Sources: (1) CVS Health, Managing the Thriving Speciality Pipeline, 2018;

(2) Pharmacy practice News, 2018;

(3) 2017 Consumer Report, Quintiles IMS

Decline of traditional sales rep model means new forms of HCP marketing

• Percentage of hospital-employed physicians increased by more than 70%

• 36% of US hospitals denied access to pharma reps in 2016 (2010: 22%)

• 45% of HCPs restrict sales rep access – twice that of 2008

25

Sources: (1) Physicians Advocacy Institute, 2018;

(2) SK&A, 2016;

(3) ZS Associates, 2018

Marketing Growth: 2015 - 2019

26

20

40

60

80

100

120

140

2015 2016 2017 2018 2019

£’m

Core Marketing Acquisitions

Revenue CAGR

25%

24%Average Margin

* 2019 based on analyst expectation

*

Immersive

Huntsworth Plc

Brand Engagement

Employee Engagement

Scientific Engagement

Live Events

Logistics Environments

Fast Film

FilmDigital &

Interactive

Hybrid & Virtual Events

Strategic services:

Experiential:

Supported by advanced capabilities:

Immersive(VR & AR)

Learner Engagement

Healthcare focused, experiential based

29

• Acquired Jul-17

• 29% growth in revenues since acquisition

• 20% IRR

Strong growth under Huntsworth ownership

30

• Healthcare-focused currently but sector agnostic

• Learning and employee engagement are high growth areas in all industry sectors

• Significant white space opportunities in existing client space as well as with new customers

Significant opportunities for growth

Acquisition strategy

Huntsworth Plc

MEDICAL

SCIENTIFIC

COMMUNICATIONS

AND PUBLICATIONS

MEDICAL

EDUCATION

CONSULTANCY EVIDENCE

GENERATION

REGULATORY

US ROW US ROW US ROW US ROW US ROW

MARKETING

HCP CONSUMER PR & INFLUENCE PAYER MEDIA

BUYING

East

US

US

West[Giant]

ROW US US ROW US

[Navience]

US

[Above

Nation]

IMMERSIVE

LIVE EXPERIENCE FILM AND IMMERSIVE EMPLOYEE

ENGAGEMENT

TRAINING AND SCIENTIFIC

ENGAGEMENT

US ROW US ROW US ROW US ROW

Established Acquisitions Start up Expansion areas

Creativ Ceutical

KYNE

32

Adding & Integrating Capabilities

Acquisition Performance

Above Nation Feb 18 Cost $8m for 75% IRR 40%

TCEG July 17 Cost £25.2m for 100% IRR 20%

Giant July 18 Cost $72m for 90% IRR 14%

Navience Sept 18 Cost $24m for 80% IRR 17%

KYNE May 19 Cost $17.4m for 85% TBD

CC May 19 Cost €15.5m for 70% TBD

33

Prudent financial management

Jun2019

Dec2019

Dec

2020

£66m*

£75m*

£86m

1.8x

1.6x1.1x

Facilities

£130m +

£50m accordion

Covenant

3.0x EBITDA

Leverage target

< 1.5x

* Based on Analyst consensus

34

Appendices

Huntsworth Plc

US healthcare expenditure

36

Source: HCTadvisor

10%

33%

3%4%5%

20%

25%

Relative contribution to US health expenditure, 2018

Prescription drugs

Hospitals

Home Health

Dental

Nursing care

Physicians & clinics

Other health

68%Projected growth in

prescription drugs, 2018-26

37

Divisional split of revenues and profits

42%52%

17%

22%14%

11%

27%

16%

0%

20%

40%

60%

80%

100%

Rev Profits

Marketing Medical Immersive Communications

FY18 divisional revenue by geography

38

14%

6%

48%

32%

Communications

71%

29%

Medical

26%

74%

Immersive

90%

10%

Marketing

5%

50%

35%

10%

Group

Rest of the World

USA

United Kingdom

Europe

39

FY18 divisional headline operating profit by geography

88%

12%

Marketing

74%

26%

Medical

34%

66%

Immersive

14%

-9%

57%

38%

Communications

2%

64%

28%

6%

Group

Rest of the World

USA

United Kingdom

Europe

Deferred consideration and put/call liabilities

40

£’m 2020 2021 2022 2023

Above Nation Put option 2.9

Navience Deferred consideration 10.2

Put option 8.3

Giant Put option 4.9

KYNE Working capital acquisition

Deferred consideration 6.1

Put option 4.3

Creativ Ceutical Deferred consideration 7.6 2.0

Put option 13.3

17.8 13.0 8.3 20.5

* Huntsworth has the option to equity settle all deferred consideration and put/call liabilities

Consolidated balance sheet

£m Jun-19 Jun-18 Dec-18

Non-current assets

Goodwill & Intangibles 344.9 185.4 287.3

Other non - current assets 55.9 12.6 13.0

400.8 198.0 300.3

Current Assets

Trade debtors and other receivables 94.1 81.8 82.0

Other current assets 11.2 13.1 9.5

Cash and short-term deposits 18.6 11.6 22.8

123.9 106.5 114.3

Current Liabilities

Trade and other payables (86.8) (78.0) (69.4)

Other current liabilities (15.2) (2.0) (2.7)

Provisions (1.9) (1.1) (6.4)

(104.0) (81.1) (78.5)

Non-current Liabilities

Bank loans and overdrafts (96.8) (49.2) (99.2)

Other non current liabilities (52.4) (3.3) (8.8)

Provisions (68.0) (4.6) (28.0)

Trade and other payables - (3.7) (4.1)

(217.2) (60.8) (140.1)

NET ASSETS 203.5 162.6 196.0

41

Shareholding at 8 July 2019

% share capital

No. voting shares

Aberforth Partners 12.1

Canaccord Genuity Wealth Management 9.0

Merian Global Investors 8.7

Fidelity International 8.7

Aviva Investors 8.3

Kames Capital 5.9

Kabouter Management 5.0

Michinoko 4.8

Miton Asset Management 3.6

BlackRock 3.4

Other 30.5

TOTAL 100.0 368,870,178

42

The shareholding figures and percentages in the table above include shares where the holder manages those shares on behalf of a third party (i.e. managed holdings) as well as shares beneficially owned indirectly or directly by the holder