Differentiated wide aperture adaptive beam forming technology delivered by a world class
engineering and management team
High barriers to entry in the form of defensible patent portfolio, access to funding, higher regulation,
and changing FDA reforms
Focus on large and high growth target markets including emerging economies and partnerships with
local OEMs
Patents, as an asset class, and licensing, as a business model, are attractive long term investment
opportunities
Experienced management team with proven track record of successful execution and OEM centric go
to market strategies
Market Overview
Overview
Structural shifts in global consumption and key macro trends create long-term growth opportunities
Expenditure driven by demographic factors: Rising income levels and increasing instances of
lifestyle diseases
US is the largest healthcare market globally (16% of GDP on healthcare increasing to 20% in
2020)
Medical device market expected to grow in proportion with living standards, healthcare systems,
and medical insurance
Ultrasound imaging represents a low cost and effective technology that continues to help
radiologists and clinicians collect diagnostic data
Flexibility, ease of use, relative lower cost, trend to miniaturization and wide adoption of portable
ultrasound equipment represents key accelerators
Emerging markets (including China and MENA) delivering 15~25% growth in the past several
years
Recent FDA reforms will shift supplier focus towards non US markets to drive and sustain growth
Worldwide medical device market by segment
Total market size in 2009: US$234bn
Population:
193 million
6%
100% of
population
233 million
Life expectancy:
M: 69 F: 76
Current Situation
Opportunities:
Source: Source: BMI; Brazil Pharmaceuticals & Healthcare Report Q3 2010, WHO Health and Social
Determinants Brazil, Health Affairs no.4 2007, Hospitialar.com,Health-tourism
Replacing more invasive, time consuming, unhealthy and costly MRI and CT scans
Ultrasound have become conventional in the practice of cardiology, obstetric, surgery and urology
Emerging applications in regional anesthesia, emergency medicine, critical care and vascular
access
Market sizing
Stand-alone and portable ultrasound machines
was worth $3.19 billion globally and forecast to
reach $6.27 billion in 2017
High population growth: 214 million people projected to reach 233 million by 2015 and 272 million
by 2025 (much higher than the global average)
Increased life expectancy: 71 years in 2009 compared to 59 years in 1980 (elderly population
increase to 20 million by 2025)
Prevalence lifestyle diseases such as diabetes, cardiovascular ailments and certain forms of cancer
US
MENA
GCC
16.2%
4.3%
3.8%
7,410
31.5
91.3
31.0
21.6
20.2
26.7
18.3
13.0
Entry of multinational companies addressing low-end of the market, expanding product lines
and creating sales channels
Little option but to import medical equipment and supplies due to limited production capability and
lack of technical know-how
Opportunities to establish technology centers of excellence in the GCC for advance imaging
research and development
Create new knowledge based industries and skill jobs in MENA regions
Leveraging long term investment horizons and move upstream along the Medical device value
chain
Source: TriMark, UltraSound Markets, 2011.
Company Profile
Company Overview
Hana Research is an intellectual property licensing company that designs, develops, licenses and
markets innovative solutions used in high resolution and small form factor clinical ultrasound
The Company provides specific innovation, patent development, and licensing around wide aperture
ultrasound technologies
Core IP
Radiology
Probes
Cardiac
Probes
Intra cavity
Probes
4D Imaging
Increased
safety/
Reliability
Superior
investment
returns
Business Model
Built around three core functions of technology development, out-licensing to partners, and systems
integration
Patents
Branded Systems
(Siemens, GE,
Philips)
Licensing
(Solutions &
Patents)
Hana Research
Medical Imaging
Device
Manufacturers
Engineering
and Design
Know How
Manufacturing
Agreements
Integration
Expertise
Contract
Manufacturer
(Flextronics/
Celestica)
Components
(Texas
Instruments/
Freescale)
End Users
Hospitals/
Doctors office
Universities/
Research
Facilities
Imaging Clinics
Equipment
Leasing
Companies
Ultrasonic Test
Equipment
Industrial
Application
Licensing
Patent Development
Innovation
Field Programmable
Gate Array containing
algorithm and code can
be incorporated into a
licensees system
Allows Company to
protect the IP that
lives on the chip
Hana Research licenses the right to use wide aperture ultrasound and associated software to its
OEM/ODM partners
Coupled with standard components from partners FPGA suppliers, these licenses enable a
complete wide aperture ultrasound solution
Licensing technology rather than taking on internal product/device development allows sales
growth without increasing investment/cost
OEM/ODM clients are responsible for product manufacture, including the costs and logistics
and support
Direct resources toward the development of innovative new solutions for ultrasound test
equipment and industrial applications
Technology/Product
Overview
High-resolution images
Technology Comparisons
Testing on Wide aperture ultrasound has shown to be broadly effective
Image on the left was taken by a Philips cardiac system (best cardiac
imaging systems on the market)
Image on the right created using WAAB technology through a process
called sequential compounding
Improved Image
The resulting images
have:
Improved
visualization of
subtle anatomical
structures
Improved contrast
resolution and
tissue differentiation
Financial Overview
Financial Highlights
$ Million
300
200
100
0
60
0
$1
2011
0
$2
2012
0.5
$7
2013
100
$ Million
Revenues
1
$24
2014
4
$55
2015
30
10
$100
$130
$165
$185
2016
2017
2018
2019
$87
2019
EBITDA
50
0
-50
80
-$2
2011
-$2
2012
$1
2013
$7
2014
$21
$33
$47
$68
2015
2016
2017
2018
Remain focused on overall operations profitability and maintaining control of working capital
Growth of annuity income stream and support revenues
Maintaining strong margins (GM% 95, EBITDA +47%)
Continued investment in Sales & Marketing and R&D (33% and 14% of revenues)
Financial Projections
DCF Assumptions
Risk Free Rate
Market Risk Premium
Beta
Capex/Cyclical risk Premium
Cost of Equity
Perpetuity Growth Rate
Period
In $ Millions
Core Wide Aperature Ultrasound
Test and Industrial
Total Revenues
Y/Y Growth
Gross Margins $
Opex
R&D
SG&A
Total Opex
EBITDA
EBITDA
Capex
Cash Taxes
Free Cash Flow
% Growth FCF
PV Cash Flow
PV (FCFF)
Terminal value
PV (Terminal value)
Firm Value
2.15%
8.09%
1.20
0.00%
12%
4%
$
$
$
2011
0.5 $
$
0.5 $
0 $
$
$
$
$
$
2
1
3
(2)
-405%
(1)
(3) $
($3)
$
$
$
$
$
$
1
2012
2.0
2.0
300%
2
3
1
4
(2)
-105%
(1)
285
5.0%
23.0%
10.2%
WACC Used
10.2%
$
$
$
$
$
$
$
$
$
(3) $
2%
($3)
2
2013
7
0.50
8
275%
7
4
2
6
1
9%
(2)
$
$
$
$
$
$
$
$
$
$
(1) $
-56%
($1)
3
2014
24
1
25
233%
24
6
8
14
10
38%
(3)
(2)
$
$
$
$
$
$
$
$
$
$
5 $
-441%
$3
4
2015
55
4
59
136%
56
6
19
25
31
52%
(3)
(6)
$
$
$
$
$
$
$
$
$
$
21 $
367%
$15
5
2016
100
10
110
86%
105
17
36
53
52
47%
(3)
(10)
$
$
$
$
$
$
$
$
$
$
6
2017
130
30
160
45%
152
24
48
72
80
50%
(3)
(24)
$
$
$
$
$
$
$
$
$
$
7
2018
165
60
225
41%
214
34
68
101
113
50%
(3)
(34)
$
$
$
$
$
$
$
$
$
$
8
2019
185
80
265
18%
252
40
80
119
133
50%
(3)
(40)
$
$
$
$
$
$
$
$
9
2020
200
120
320
21%
304
$
$
48
86
134
170
53%
(3)
(51)
38 $
79%
53 $
38%
76 $
43%
90 $
18%
116
29%
$24
$30
$38
$41
$48
$517
M&A Catalyst
Summary
Wide aperture ultrasound is a core technology enabling broad adoption of hand-carried ultrasound
systems and will play a vital role in fueling the overall market growth for medical imaging devices
Ultrasound scanners undergoing rapid evolution as integration makes it possible to use many
channels in parallel for greater resolution and usability
Wide adoption by healthcare institutions give rise to new market opportunities for manufacturers
Hana Research is uniquely positioned to bring high resolution, low cost, patient safe, portable
imaging to the world
Vast population base, urbanization process and an aging population should boost demand for next
generation ultrasound devices in emerging markets
As the US regulatory environment becomes more challenging with FDA reforms, emerging markets
are preferred market for medical device companies to launch new products
We expect high exit value due to premium valuation on companies with capital efficient licensing
model and technology already through or nearly through the FDA process
Back Up
Investment Highlights
Development Trends
Development Strategy
Keys to success
2009-2017 CAGR
Leading Companies
Assumed per capita spending on healthcare through 2015 would mirror the growth of 9.0%
CAGR achieved between 2000 and 2009.
Healthcare spending in
the MENA region to
reach $125 billion by
2015
Large population and
growing middle class
(100 million people)
who can afford modern
healthcare
Remaining
population are
provided with
healthcare by
government funded
hospitals
Healthcare Spending
Healthcare expenditure is low both in terms of
percentage of GDP and on a per capita basis.
Spends 4.3% of the GDP on healthcare
Healthcare as % of GDP
USA
France
Germany
Canada
UK
Brazil
Australia
Japan
Russia
China
MENA
India
GCC
16.2%
11.7%
11.4%
10.9%
9.4%
9.1%
8.5%
8.3%
5.4%
4.6%
4.3%
4.2%
3.8%
0%
5%
10%
15%
20%
$7,410
$4,798
$4,629
$4,380
$3,867
$3,321
$3,285
$913
$734
$475
$315
$169
$45
0%
Healthcare spending in
the MENA region stands
at $65.6 billion
UAE: $7.5 billion
Algeria: $6.3 billion
Morocco:$5.0 billion
Saudi Arabia accounts for 56, UAE 24, Kuwait 17, and Qatar, Oman and Bahrain 12
Projects
Country
Value (Million)
Qatar
$2,300
Al-Wakra Hospital
Qatar
$500
UAE
$1,900
Al Mafraq Hospital
UAE
$871
UAE
$572
UAE
$200
Kuwait
$1,200
Kuwait
$270
Bahrain
$1,000
Bahrain
$130
Oman
$800
Oman
N/A
Saudi Arabia
$600
Saudi Arabia
$400
General radiology
probe
Cardiac probe
Intra-cavity Probe
Strategic Priorities
Intellectual
property
Product
Proof of
Concept
Regulatory
Approval
Partners
Launch and
Support
Intellectual property
Fortifying patent assets around ultrasonic imaging technology using Wide Aperture Adaptive
Beam forming
Product Development
Regulatory Approval
Partners
Increase investment and direct sales to capture early OEM design wins