Assured Pharmacy - the

Document Sample
Assured Pharmacy - the Powered By Docstoc
    November 2006
 Safe Harbor Statement

Statements in this presentation are forward-
looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on
current expectations that could be affected by
risks and uncertainties from time to time in
Assured Pharmacy, Inc’s reports to the
Securities and Exchange Commission, which
include Assured Pharmacy, Inc’s Annual Report
on Form 10-K.

                                       Bringing faster relief for those in chronic pain
                                           Snap Shot
 Assured Pharmacy is a specialty pharmacy with expertise in dispensing
                       controlled pain medication
Ticker Symbol:                  OTC BB: APHY

Organized:                      2003 - reverse merger / 2005 reorganization
Headquarters:                   Irvine, CA
Employees:                      26                                  Current Footprint as of June 2006

Shares Outstanding/F.D.:            52 mil / 74 mil       5 pharmacies opened – 15 planned over next 3 years
Warrants – Avg strike price$0.60:   19 mil            Riverside, CA; Santa Ana, CA; Seattle, WA; Portland, OR; Cedar Hills, OR
Insider Stock Ownership (F.D.):     25.18%
                                                           Current patients served: 1,700 + household = 6,500
52 Week Hi/Low:                     $0.25 - $0.59
                                                            Scripts and re-authorizations filled YTD: 23,400
Market Cap                          $21mil

                                                                                   Recent Events:
Fiscal year end – December 31
                                                          October 2006 – Sixth Pharmacy is preparing to open
Revenue 2006E / 2007E         $8.5mil / $20.0mil          July 2006 – Marketing and Brand Awareness Campaign launched
Earnings 2006E / 2007E        $(1.9)mil / $1.1mil         July 2006 – Launches Durable Medical Equipment Line
EPS: FY2006E / 2007E          $(0.3) / $0.03 (F.D.)       June 2006 – Fifth Assured Pharmacy is opened
                                                          May 2006 – Haresh Sheth Appointed COO; Eric Mutter Named CTO
(as of 9/30/06)                                           March 31, 2006 – Began to offer custom compounded prescriptions
Cash & Equivalents             $0.4mil
Accounts Receivable            $1.1mil
Inventory                      $0.4mil
Long Term Debt:                None
NOL:                           $15mil
                                                                                       Bringing faster relief for those in chronic pain
                       Industry Overview

 The US market for prescription pain medication is estimated to be over $100 billion
   annually, according to a 2006 Nelson survey, the fastest growing segment of the
   health care industry.

 The American Pain Society, the National Chronic Pain Outreach Association and the
   American Academy of Pain management determined that there are over 50 million
   people suffering from chronic pain in the U.S. An estimated 7 million cannot relieve
   their pain without opiods (narcotics).

 The sale of controlled pain medication has become increasingly challenging. Both
   physicians and pharmacists face a high level of scrutiny from the Drug
   Enforcement Agency, requiring a maze of recordkeeping both to control the drugs,
   and to provide an audit trail on the use of these drugs.

 The pharmacies have reacted by retrenching from the controlled pain medication
   market, ordering supplies only as needed. The industry’s top pain medication,
   Oxycontin, is no longer stocked by most pharmacies – Result: Patient must wait
   days to pick up medication.

 Patients using opiods during treatment are likely to require medications more
   frequently and for a longer period of time than patients in most other medical
   categories. Today’s sophisticated treatments of chronic pain and terminal disease
   require “cocktails” of drugs thereby increasing the number of prescriptions per

                                                                  Bringing faster relief for those in chronic pain

To capitalize on a pharmacy model focused on chronic pain management by providing the
                    patient with a materially better prescription process

Traditional pharmacies are set up as retail stores – catering to the masses in need of temporary and
periodic medication. Assured pharmacy focuses on chronic recurring patient needs of controlled
medication – Offering patients faster relief of their pain as well as security and convenience by…

   1. enabling the patient to obtain pain medication from a convenient and understanding pharmacy staffed with
   pharmacists and professionals experienced to deal with pain medications and pain patients.

   2. streaming the frustrating process for phone-in authorization for non-class II medications as well as handling new
   prescriptions requests. On-site inventory of pain medication to provide rapid service – free home delivery.

   3. maintaining detailed records of individual patient’s medicines, including pain prescriptions, always checking for
   the possibility of negative drug-to-drug reactions.

   4. establishing one-on-one relationship with patients – pharmacist initiated monthly outgoing phone call advising
   patient of the timing of medication refills.

   5. offering one-stop pain-centric services including compounding capabilities and durable medical equipment.

                                                                                      Bringing faster relief for those in chronic pain
                         Business Strategy

 Target patients with a highly focused marketing and branding campaign which
    includes direct marketing materials to increase communities awareness of Assured
    Pharmacy product offerings and services.

 Target physicians specializing in pain management, neurology, psychiatry, oncology
    and orthopedics and patients with long-term acute, chronic and terminal pain. Offer
    free prescribing software to doctors.

 Carry required inventory of pain medications to be able to fill patient prescriptions
    without delay and provide topical compounding drugs.

 Generate revenue from the sale of pain-centric and ancillary pharmaceuticals,
    products and services.

 Expansion focused within densely populated medical communities. Pharmacies are
    highly service oriented and responsive to pain management patient’s requirements
    for prescription accuracy, availability and privacy.

                                                                     Bringing faster relief for those in chronic pain
Assured Facilities

                     Bringing faster relief for those in chronic pain
                                 Unit Economics

 Assured pharmacy will locate its facilities in heavily populated communities.
 Facilities average 800 - 1,200 sq. ft. Pharmacies are staffed with one pharmacist, one technician
    and 1-3 support personnel.
   The average “Assured” patient receives approximately 3.5 scripts per doctor visit versus
    national average of 1.8 scripts per doctor visit.
   Average revenue per script $130.00.
   Average patient generates revenues of $5,300 per year.
   Average investment to open a pharmacy is $50,000 - $75,000 plus an additional $50,000 of initial
   Each store is projected to be cash flow positive after nine months of operations, and on average
    breaks even at 50 scripts/day with maturity at approximately 150 scripts/day.

                    At maturity, a each pharmacy is expected to generate annual
                       Revenue - $5.1 million        Total Op Exp - $420,000
                       Gross Margin – 25%            EBITDA - $855,000

                                                                          Bringing faster relief for those in chronic pain
Barriers to Entry/Competition

  •   Governmental Regulation and Approvals:
       – State Board of Pharmacy
       – Federal Drug enforcement agency and
       – Substance license to dispense Schedule
         2 drugs

  •   First to Market and Branding

  •   Direct Pain Management-focused Specialty
      Pharmacy Competition is limited. Secondary
      competition includes national, regional and
      local drugstore and food store with in-house
      pharmacy operations.

                                         Bringing faster relief for those in chronic pain

Robert Delvecchio – Chief Executive Officer (February 2005)
   Appointed to the Board of Directors in March 2005. Previously Mr. DelVecchio was Chief
   Executive Officer and President of Brockington Securities, Inc, a broker-dealer which is a
   member of NASD.

Haresh Sheth – Chief Operating Officer (May 2006)
   Appointed to the Board of Directors in December 2005. Previously Group Financial Officer
   of Mosaic Capital Advisors LLC since 2004. President of Janus Finance Corp. since 1991.
   Engineering graduate of West Virginia University.

Richard Falcone – Chairman, Board of Directors (2004)
   CEO of Tasker Products. Previously Mr. Falcone was CFO of the A Consulting Team, Inc.,
    an IT service company (2001-2006). Mr. Falcone has been CFO of and Bed,
    Bath and Beyond. Mr. Falcone joined Tiffany & Company as audit manager, Director of
    Financial Control, and Director of Internal Finance and Operations. Previously he was with
    PriceWatterhouseCoopers & Co.

James Manfredonia – Member, Board of Directors (2004)
   Since 2002, Mr. Manfredonia has been running equity trading at Bear Stearns. He is
   currently Chairman of the NYSE Upstairs Traders Advisory Committee and a member of
   the Market Performance of the NYSE. Prior to Bear Stearns, Mr. Manfredonia managed the
   listed trading desk at Merrill Lynch for 10 years. He was the founder general partner of a
   hedge fund/broker-dealer, Blair Manfredonia Ltd. Partners. Mr. Manfredonia worked at
   Lehman Brothers, Salomon Brothers and Drexel Burnham.

                                                                      Bringing faster relief for those in chronic pain
             Milestones Accomplished

•   Reorganized Business – Operating Cost Initiatives – Human Resource Improvement
    – Renegotiated Wholesaler Relationship – Secured Financing.

•   Developed a detailed Business Plan with accountability base business structure –
    Implemented business systems and process methodologies.

•   Renegotiated ownership with TAPG in the northwest pharmacies from 75/25% to

•   Broadened medical specialty reach requiring pain treatment to include oncology,
    neurology and psychiatry.

•   Established Patient–Centric Marketing Plan. Engaged Rainmaker & Sun to initiate
    aggressive Branding/Awareness Campaign.

•   Expanded Product Offering – Compounding and Durable Medical Equipment.

•   Reestablished Store Opening Campaign - After 2 years, first store opened in June

•   Achieved average quarter-to-quarter revenue growth over the last five quarters of

                                                                 Bringing faster relief for those in chronic pain
             Quarterly Script Count

                    Script Count by Quarter:
                 1 Qtr' 2005 through 3 Qtr' 2006

16,000                                     14,816
14,000                      12,461
12,000      10,952
10,000                                  8,458
 8,000                   6,897
 6,000   4,828
          1st Qtr         2nd Qtr        3rd Qtr                 4th Qtr

                                 2005   2006

                                                    Bringing faster relief for those in chronic pain
                        Quarterly Revenues

                            Sales Revenue by Quarter:
                          1 Qtr' 2005 through 3 Qtr' 2006

$2,500,000                                           $2,303,872
                 $1,515,645                                         $1,418,750
$1,000,000                      $789,404

                1st Qtr            2nd Qtr          3rd Qtr                   4th Qtr

                                 2005                         2006

                                                              Bringing faster relief for those in chronic pain
 Financial Summary
     (As of September 30, 2006)

Cash…………………………. $0.4m
Current Assets………………$2.1m
Total Assets………..………. $2.5m
Total Current Liabilities……$2.8m
Total LT Obligations ……. ..$0.5m


                                  Bringing faster relief for those in chronic pain
                                    Capital Structure


Shares Outstanding as at October 31, 2006                        52,596,969

    Warrants and Options
        Employee stock Warrants Plan                 1,300,000                $      1,297,500
        Employee Stock Options Plan                  5,280,000                $      3,162,900
        2004 Private Placement - Warrants            4,146,875                $      2,488,125
        2005 Private Placement - Warrants            1,660,000                $        996,000
        2006 Private Placement - Warrants            2,212,500                $      1,327,500
        Warrant issued to consultants for services   2,140,000                $      1,284,000
        Debenture Conversion                         2,375,000
        Debentures - Warrant A Conversion            1,187,500                $        712,500
        Debentures - Warrant B Conversion            1,187,500                $        950,000

Total Issuable                                                   21,489,375

Fully Diluted Outstanding                                        74,086,344

                                                                                   Bringing faster relief for those in chronic pain
                       Performance Targets - 2007

For the fiscal year ending December 2007, projected revenue - $21MM (approx. 150% increased compounded over past three years)
             Revenue growth is fueled by:
                          a. Continued maturation of existing pharmacies
                          b. New store openings – 5 new pharmacies planned during 2007
                          c. New products and services contributing -
                                      Compounding and Durable Medical Equip. (launched during Q2 2006)
                          d. Expanded marketing/branding campaign as well as active investor focus
                          e. Increase company sales-force from 2 to 6

Target Margins
            Gross Margin:      27% vs 25% as of June 2006
            Net Income Margin: 11%

Management financial goals
          Cash flow Breakeven by end of first quarter January 2007
          Profitability by end of first quarter January 2007
          Debt free as of September 2006 financing

Additions to senior management and Board of Directors

                                                                                         Bringing faster relief for those in chronic pain

   Future additional regulations regarding record keeping, patient identity
    and usage verification, and inventory control of Class 2 drugs

   Success of marketing strategy

   Availability of licensed personnel with sufficient experience in pain
    medications to operate pharmacies

   Availability of suitable pharmacy locations

   Security risk of inventorying controlled substances and having
    personnel working with these drugs

   Additional competition

                                                         Bringing faster relief for those in chronic pain
                    Investment Summary

   Assured Pharmacy has completed a two-year sweeping corporate overhaul. The new business
    model is capable of generating high growth, high recurring revenues and superior margins.

   Strong opportunities for growth
         – expanding of the number of pharmacies
         -- 17% yearly growth in the number of prescriptions since 1998
         -- additional products and services

   Barriers to entry and limited Competition in the pain prescription market

   Margin expansion opportunities

   Continued Industry Consolidation - WAG purchase of Medmark(6/06) and RAD to acquire Eckerd,
    Brooks (8/06)

                                                                           Bringing faster relief for those in chronic pain
               Thank You

For more information, please visit our website at

                                         Bringing faster relief for those in chronic pain