Further detailed information is contained in the Information Memorandum (IM)Download IM
ZOOM Health Limited (the Company) has prepared this Information Memorandum based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided relation to the fairness, accuracy, correctness, completeness or reliability of information, or opinions or conclusions expressed in this Information Memorandum.
The historical financial information relating to the Company included in this Information Memorandum has been prepared on the basis of the Company’s records but is unaudited and may be subject to revision if audited.
All forward-looking statements contained in this Information Memorandum are qualified by the particular assumptions upon which they are based. Such projections are preliminary and subject to change and the Company undertakes no obligation to update or revise the projections. Inevitably, some assumptions may be incorrect and unanticipated events or circumstances may affect the Company’s ultimate financial results. Further, projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks. Therefore, actual results of the Company may vary significantly from the forecasts or projections contained in this Information Memorandum.
This offer is not open to any “authorised prescriber or “delegated prescriber” (as those terms are defined in the Medicines Act 1981) which includes but is not limited to any medical practitioner, nurse practitioner, dentist, optometrist or registered midwife (as each of those terms are defined in the Medicines Act 1981)*.
If you have any questions or concerns about investing into the Company, ZOOM Care Limited (‘ZOOM Pharmacy’) or any of its associated companies, it is recommended that you consult the relevant legislation (Medicines Act 1981 and Medicines Regulations 1984), and take legal advice before establishing an interest in the Company (pursuant to this offer or otherwise).
* The provisions of the Medicines Act 1981 relevant to the exclusion of offers to “authorised prescribers” or “delegated prescribers” are outlined below:
Section 2 – Interpretation
Section 42C – Restriction on authorised prescribers and delegated prescribers holding interest in pharmacies
Founded in 2017, Zoom Health Limited (“ZOOM Health”) has developed medicines adherence software and intellectual property that utilises the latest technology to improve patient outcomes.
Poor adherence to medication is proven to be one of the biggest issues facing the healthcare sector, resulting in increased health complications, deaths and costs to the healthcare system. 44% of patients do not collect medicines prescribed by their doctor and 75% of patients do not collect the repeats on their medicines from the pharmacy. According to the World Health Organization’s (WHO) World Health Report 2003, the degree of medication non-adherence is so great that more people worldwide would benefit more from efforts to improve medication adherence than from the development of new medical treatments.
ZOOM Health licenses its technology to its associated company ZOOM Care Limited, trading as ZOOM Pharmacy, which operates a centralised pharmacy in Auckland, allowing it to serve patients across New Zealand via a direct to consumer (‘D2C’) business model. ZOOM Pharmacy has contracts in place with 10 District Health Boards (‘DHBs’), giving it access to approximately 3.8m patients in New Zealand to deliver funded medicines. ZOOM Pharmacy delivers both funded (via DHB contracts) and unfunded medicines (paid for by patients) nationwide. By mid 2021, ZOOM Pharmacy will also deliver Over The Counter (‘OTC’) medicines to consumers nationwide.
Advances in technology such as robotics, and rapidly improving logistics solutions have empowered the D2C medicine delivery business model. The model was pioneered in the US as a result of demand from health insurers to better serve their customers, and is now expanding around the globe. The global D2C medicines market was valued at approximately US$49bn in 2019 and is forecast to reach approximately US$166bn by 2027. This highly valuable and growing market is now attracting strong investor interest with several notable transactions taking place. In September 2020, the USA’s largest health insurer, UnitedHealth Group, acquired DivvyDose, a start-up that helps patients with chronic illness get their medicines delivered in pre-sorted packages, for just over US$300m. In 2018, Amazon bought PillPack for US$750m.
ZOOM has first mover advantage in the New Zealand market, with the founding shareholders having invested approximately $9m to set the company up, acquire the necessary regulatory approvals and licenses, and prove the business model works. The barriers to entry are therefore significant, and the Total Addressable Market (‘TAM’), excluding unfunded medicines, in New Zealand is large at approximately NZ$1.08bn. In Australia, the TAM is much larger at AU$26.9bn.
Since serving its first patient in 2018, ZOOM Pharmacy has fulfilled over 116,000 prescription items for 8,800 patients across New Zealand, from 2,700 prescribers. ZOOM Health and ZOOM Pharmacy (“ZOOM”) as a consolidated group is forecast to deliver revenue of $3.4m (excluding OTC) in FY21 with a very small penetration of the funded prescription medicine market of 0.2%, before a forecast $150m revenue (including OTC) in FY25 and forecast prescription market penetration of 6.6%. ZOOM is aiming to obtain OTC market share of 3.9% in New Zealand by FY25.
ZOOM has successfully built and tested its business model and now, with the business infrastructure, hardware, software, systems and processes all in place, the company is ready to scale. ZOOM Health is now seeking to raise $3m to execute a marketing strategy to penetrate the large target market in New Zealand, and in time enter the OTC medicine market and explore viable expansion opportunities into offshore markets.
ZOOM’s goal is to improve medicines adherence and drive better patient outcomes, all while building a world class healthcare company. This is our opportunity to strengthen the New Zealand Healthcare system and we invite you to join us in doing so.
Healthcare is traditionally complex and hard to fund globally. The cost of providing health services through the current model is unsustainable in the long term. In New Zealand alone, Treasury estimates that, if nothing were to change in the way New Zealand funds and delivers services, health spending will rise from about 7% of GDP, to about 11% of GDP in 2060.
According to the Ministry of Health, it is essential that we find new and sustainable ways to deliver services, investing resources in a way that will provide the best outcomes possible for people’s health and wider wellbeing (MOH 2018). The most efficient way to improve the healthcare system, with little to no additional investment, is to improve medicine adherence through convenient and affordable solutions.
“Improving medicines adherence is the single biggest opportunity to improve health outcomes, resulting in less disease progression, fewer hospital admissions, faster recovery times and lower mortality rates.”
- Haynes et al Cochrane database 2002
This remains true as the traditional pharmacy model has remained unchanged for a long time. Failure to take medication causes increased health complications, unnecessary deaths and costs to the healthcare system.
It is estimated by ZOOM Health that adherence to chronic medications is as low as 50% and typically, adherence rates of 80% or more are needed for optimal efficacy. The key factors impacting adherence are cost, lack of access and poor support. Non-adherence conservatively costs the New Zealand healthcare system around $700m per annum as a result of hospital admissions and medicines wastage.
According to the World Health Organization’s (WHO) World Health Report 2003, the degree of medication non-adherence is so great, that people worldwide would benefit more from efforts to improve medication adherence, than from the development of new medical treatments.
Ultimately, the responsibility to take medication correctly and in the prescribed manner lies with patients, as opposed to the doctor or the pharmacist. Unfortunately, however, for the patient, the traditional method of prescription fulfillment is time-consuming, inconvenient and those who require on-going follow-ups and support from their doctors and pharmacists do not always receive it.
The traditional pharmacy model relies on physical in-store pickup of prescription medicines. This model attracts customers into stores that are filled with other products. As a result, pharmacists have little time to attend to each individual patient’s needs while also selling retail items.
”44% of patients do not collect medicines prescribed by their doctor and 75% of patients do not collect the repeats on their medicines from the pharmacy.”
Lowering direct and indirect costs of medicines, increasing patient-doctor communication, helping patients access medicines, and implementing automatic prescription refill programs are some effective measures that improve adherence and positively impact the New Zealand healthcare budget.
Delivery of important medicine and consistent follow-ups with patients is proven to drive better medicine adherence.
“A study by the Pharmaceutical Care Management Association (PCMA) found that those who only used local pharmacies were 56% adherent to their prescriptions, while patients who received medications through home delivery were nearly 88% adherent.”
One of the traditional core tasks for most pharmacists is to give medications to patients. Getting the right medication, to the right patient, at the right time, enables direct and early intervention that will improve a patient’s health outcome. Automated dispensing robots can operate 24/7, make far fewer mistakes and free up pharmacists and technicians to do clinical services that require human judgment. They also allow pharmacists to focus on engaging with patients and ensuring patients receive the treatments they need.
Consumer demand has driven the increase in delivery services globally. This includes healthcare services and the supply of pharmaceutical products. The increase in medicine delivery is one of the many changes impacting the healthcare industry, and due to COVID-19 these changes are all the more likely to become permanent.
It is only a matter of time before the bulk of the pharmacy industry will fulfill customer needs through delivery. By offering a much more convenient, efficient, and low-cost service, ZOOM Health increases the likelihood of timely prescription fills, encourages medication adherence, reduces the number of missed refills, ultimately reducing costs to health funders and providing better consumer health.
ZOOM Health is ready to leverage the rapidly increasing consumer demand for delivery services and the convenience and efficiencies created by mobile apps, technology and robotics to reshape the New Zealand healthcare system and increase medicine adherence.
At our core, our objective is to increase the beneficial impact that medication can have on a person’s quality of life, and to do so for people of all demographics. Our solution is particularly valuable for patients in the most vulnerable communities.
ZOOM Health offers an array of customer-centric technology including mobile app, text, email and calling as well as operational technology, such as robotic dispensing to count pills and to pack medicines into sachets. Its associated company, ZOOM Care Ltd, licences the ZOOM Health technologies to serve patients throughout New Zealand.
ZOOM Health is responding to the need for increased medicine adherence and the rapidly increasing consumer demand for delivery services and mobile apps. ZOOM Health is disrupting the healthcare industry by offering a much more convenient, efficient, and low cost service while solving the issue of poor medicine adherence by:
ZOOM Health primarily services patients who need prescriptions for chronic illnesses, generally taking 4 or more medicines a day over an extended time period. These are patients well suited to medicine sachet packs and a delivery model, as traditional medicine dosing arrangements and quantities can be overwhelming.
Key to ZOOM Health’s success is ZOOM Care’s contracts with 10 District Health Boards (DHBs) across New Zealand. These DHBs fully fund medicines and dispensing services under the ICPSA for patients. Some DHBs have moratoriums in place as they work through what pharmacy services are required for their particular regions. ZOOM Pharmacy already has 3.8 million customers in frame for funded medicines.
The growth and financial health of the pharmaceutical industry is driven predominantly by public health expenditure but also by a range of factors including discretionary income and demand from pharmacies, hospitals and aged care facilities.
The industry is made up of pharmacies and mass-market retailers. Generally, the medicines can be split into two key categories: prescription medicines which are often subsidised by the government, and Over the Counter (OTC) medications which are products that don’t require a doctor’s prescription.
ZOOM’s total addressable market spans both the prescription and OTC medicines markets in Australasia and the potential growth of the company is a function of general healthcare expenditure. At present, ZOOM operates in New Zealand but is exploring the option to expand offshore into Australia and further abroad.
There is an increasing demand for online pharmacies that offer doorstep delivery of prescription medicines and over-the-counter products. The efficiency, low cost and convenience these pharmacies create, is driving the global market growth for the segment. Companies such as DoorDash, NowRX and more locally, Countdown and Chemist Warehouse, offer delivery of OTC medicines and other products that are found in a normal pharmacy.
The Global ePharmacy market was valued at US$49.8 bn in 2018 and is projected to reach US$177.8 bn by 2026. Many of the largest retailers, tech companies and health insurers are investing in the online pharmacy space, which aim to make it cheaper and easier for patients to take their medicines. The table below outlines a few recent examples:
* The information in the tables above is based on publicly available information and has not been validated by each respective company.
Pharmac is the centralised organisation in the New Zealand health system which enters into supply contracts with pharmaceutical companies to ensure they continue to supply medicines to New Zealand. There are harsh penalties in place if these companies do not deliver the contracted medicines. Under the directive of the DHBs, Pharmac also makes decisions on which medicines and devices are funded, in order to get the best health outcomes from within the available funding.
The District Health Boards (DHBs) hold the funding for most publicly funded health services. Of the 20 DHBs in New Zealand, ZOOM Pharmacy has funding contracts with 10, comprising the major metropolitan DHBs with the largest populations, accounting for 3.8 million people. ZOOM is pursuing funding contracts with the remaining largley smaller, regional DHBs that could result in a significant number of additional potential patients.
Prescribers, including General Practitioners, determine which funded or unfunded medicines are suitable to each patient. Pharmacists dispense these medicines and advise patients on how and when to use them.
(ICPSA monitoring - July 2020)
The total value of the New Zealand pharmacy services fees paid by DHB’s to pharmacies under the Integrated Community Pharmacy Service Agreement (ICPSA) is estimated to be approximately NZ$500m per annum, which includes, but is not limited to, case mix fees, handling fees, pharmaceutical margins, long-term condition funding and other medicine benefit schemes. This does not include the value of unfunded medicines.
While ZOOM is targeting the total prescription service market in New Zealand, the initial target market opportunity is the chronic medicines service fee market estimated to be worth NZ$180m. In New Zealand, over 1 million people take 8 or more medicines (including prescription and OTC) and more then 500,000 patients are taking 5 or more prescription medicines daily.
In the US 33% of all chronic prescription medicines are now delivered directly to patients.
The New Zealand OTC retail market was valued at NZ$587.4m in 2019 with the General Health and Beauty categories accounting for the majority of sales, with respective values of NZ$384m and NZ$203m.
ZOOM is positioned to penetrate both the online direct-delivery prescription service fee, the non-funded medicines market and online OTC retail markets. ZOOM has been instrumental in establishing this trend in New Zealand and has given consumers the choice of going online. ZOOM conservatively expects that it will be able to obtain a 6.6% share in the prescription service fee market and 3.9% share in the OTC retail market by 2025.
The Sixth Community Pharmacy Agreement (6CPA) between the Australian Government and the Guild provides approximately $18.9 bn to over 5000 community pharmacies across Australia for dispensing PBS medicines, providing pharmacy programs and services.
Total OTC pharmacy market in Australia was $8.45bn in 2018, comprising of the following categories:
Online pharmacy sales were estimated to be $350m in 2019 and the Australian pharmacy industry is in a state of change, evidenced by recent news related to rural pharmacy closures and the introduction of delivery apps to the industry. Additionally, with more people relying heavily on technology, virtual healthcare is expected to be one of the most significant pharmacy trends for Australia this year. The rise of e-health and e-prescription services enable pharmacists to provide health services online and on demand.
ZOOM Pharmacy’s medicines are supplied by Pharmacy Wholesalers Limited (‘PWL’) and CDC Pharmaceuticals Limited (‘CDC’). Based in the Bay of Plenty, PWL serves 50% of pharmacies in NZ with daily deliveries twice a day. CDC services 300+ Pharmacy and Hospital customers from 5 warehouses across NZ.
ZOOM Pharmacy operates out of a central location in Auckland, with its end-to-end, dispensing and dispatching process driven by a combination of robotics and pharmacists. ZOOM Pharmacy is staffed by 5 pharmacists, 5 technicians, 2 dispatchers and 1 customer services representative each working at different stages of the script fulfillment process.
Prescriptions (scripts) arrive at ZOOM Pharmacy primarily via email from the prescriber (i.e. the GP), or in some cases by fax, or secure docs (health docs). ZOOM Pharmacy’s system automatically prints the scripts regardless of which channel it comes from. >70% of scripts have barcodes which are scanned into ZOOM’s Practice Management System (PMS), Toniq, to auto-populate the details of the patient and prescriber. Non-barcoded scripts are manually entered.
Each script is then pulled from Toniq, a centralised prescription PMS, and coded into the bespoke ZOOM Pharmacy admin system. Each script is reviewed by a dedicated team of qualified pharmacists on a first come first served basis. Unlike traditional pharmacies, ZOOM pharmacists do not get distracted by the need to count bulk pills into usable quantities, walk-in patients and a busy retail store.
A clinical assessment is undertaken to confirm that the medicines have been prescribed correctly, the patient’s personal details are correct, and the patient understands the ZOOM Pharmacy model. It is common for a ZOOM Pharmacist to call the prescriber to discuss the prescription and double-check that the medicine being prescribed is fit for purpose. Patients are contacted directly via phone, email or text.
A legal assessment is undertaken to ensure that scripts are legally compliant (e.g. morphine scripts require a signature) and a pharmacist approves the script for dispensing.
ZOOM Pharmacy has three main dispensing machines with capacity to dispense 5,000 medications per 8 hour shift. The Cretem Multi-Tablet Counter robot (MTC) enables ZOOM Pharmacy to break down bulk medicines supply into monthly and 3 monthly packages. The Consis robot dispenses these packages along with other items such as inhalers and is able to be re-stocked while simultaneously dispensing medicines. The third machine is the Cretem Sachet Robot which prints the outside and packages medicines into eco-friendly sachets.
Patients with four or more medicines are eligible for sachets and are offered this if pharmacists feel it will aid with their adherence. Sachet boxes include a detailed list with images of all the medications and dosage instructions. Each individual sachet of daily medicines is also clearly labelled. Items that are too big for sachets are packaged manually. For accuracy, a pharmacist checks every packet at multiple points in the process.
When dispatching, scripts are packaged into plain packages to maintain confidentiality and discretion.
Shipments of sachet medicines include a medication sheet that has a picture of each medicine, a description of the medicine, and notes on how it should be taken. Medicines that require cooling are placed in chiller boxes.
Each dispatched script is video recorded as it exits the pharmacy and is accepted by the delivery agency. ZOOM Health uses Supply Chain Solutions (SCS) a logistics partner which manages the relationship between ZOOM Pharmacy and NZ Post.
Patients are notified that their medications have been dispatched, and are provided with a track and trace link and prompted to update their delivery details if required. Delivery details can be updated in the app before shipping.
Once prescriptions are delivered to patients, patients can choose to access information about their medicine via their ZOOM Pharmacy App, which is driven by a bespoke software platform to help manage their medications, coordinate refills, and support adherence. Customers can engage with ZOOM Pharmacy even if they don’t wish to use the app. If a patient is prescribed a new medicine, a pharmacist will contact them to ensure they understand how to properly administer it.
10 days before running out (if not a repeat), ZOOM will contact the patient to ensure a new prescription is arranged.
The ZOOM Health App streamlines the process with features such as:
Non-sachet patients are required to pay a $5 Government co-payment per funded medicine. Sachet patients are not charged the $5 Government co-payment. Funded medicine payments are automatically managed by the ZOOM Pharmacy PMS system and are generally paid by the DHBs around 3 weeks after each claim.
Unfunded medicines are required to be paid for by the patient through the ZOOM App and are only shipped once they have been paid for.
The ZOOM Pharmacy service is suitable for a wide variety of patients. A key focus for ZOOM is supporting DHB efforts to reduce healthcare inequities. Primary non-adherence rates in Māori (57%) and Pasifika (54%) are particularly poor when compared to primary non-adherence in Europeans (41%) and Asian (48.6%).
It is expected that in the near to medium term post COVID-19, levels of deprivation will increase sharply. ZOOM Pharmacy is committed to serving disadvantaged communities. The ability to pay for medicines is a major hurdle to medicines adherence and improved health outcomes. ZOOM Pharmacy is well placed and highly motivated to serve these communities. Its model is based on existing DHB funding providing most of the revenue to serve these communities.
This all adds up to better health outcomes: less disease, fewer hospital visits, fewer deaths, and is a model that would be difficult to replicate in a traditional pharmacy.
ZOOM Pharmacy is integrated into GPs practice management software meaning it is part of standard clinic workflows. ZOOM pharmacists regularly interact with prescribers to provide the safest possible coordinated healthcare for their patients.
The management team believes that ZOOM Health’s advantage over competitors is its first-mover advantage and unique adherence service, driven by bespoke technologies and 10 large DHB funding contracts.
ZOOM Health has also created a capital-efficient model for scaling, with low fixed overheads (one centralised pharmacy), robotic automation and nationwide delivery. Competition can be split into three categories:
There are significant barriers to entry, particularly in acquiring DHB contracts. Increasingly DHBs are looking at what the traditional pharmacy model is delivering and what new entrants can contribute to reduce inequity, especially in Pasifika or Māori communities.
High capital investment and set up costs act as a deterrent for new entrants. However, if capital is available to new entrants it takes time to build the required systems, technology and relationships with various DHBs and healthcare organisations. ZOOM’s contractual relationship with NZ Post is favourable to ZOOM and gives it the ability to deliver medicines direct to patients at much lower prices than others in the industry.
Investment into technology and having the correct team/individuals to execute on a delivery pharmacy model is important. It has taken ZOOM 3-years to develop a system which allows it to scale and consistently achieve a patient NPS score of 70-90 week-on-week.
Since inception, ZOOM Health shareholders have invested significant capital to navigate industry complexities and regulations, establish pharmacy operation (software and hardware setup), rethink pharmacy workflows, establish distribution channels, prove the business model works and give all patients an unrivalled experience.
By focusing on the internal systems and by working closely with healthcare professionals, ZOOM Health has been able to change the cost structure of dispensing medicines and invest more in helping patients.
ZOOM initially focused on patients on one to two medicines in order to develop the business model. Once satisfied that the service was fully realised in late 2019 ZOOM pivoted and focused on the high needs patients prescribed four or more chronic medicines. These patients often take large numbers of funded medicines, who benefit the most from delivery of medicines and are suited to sachet adherence packaging.
In time ZOOM will look to expand into delivering OTC retail medicines and supplements, while also exploring new international markets.
COVID-19 had a massive effect on our growth curve both positive and negative but the underlying picture is one of steady month on month growth in sachet service patients.
COVID-19 also had a significant effect on the team. ZOOM was placed under enormous pressure and the team rose to the challenge. The ZOOM systems and processes were placed under enormous pressure and ultimately at least a tenfold increase in capacity resulted of process changes that were implemented. Most importantly the team, our systems and IT delivered a service during COVID-19 that maintained our NPS score of 70+.
Made up of healthcare professionals, clinical pharmacists and commercial specialists, the management team of ZOOM has over 100 years of experience and is well placed to build on its solid foundations. ZOOM believes that it can leverage current trends toward delivery of medicines to build its customer base and improve medicine adherence with a three-pronged strategy:
ZOOM’s offering will continue to evolve and will always be driven by customer experience. Patients can currently order prescriptions and refills via the ZOOM Pharmacy App, text, fax, email or phone as well as directly through their GP. ZOOM will continue to develop these tools to ensure it delivers the best customer experience that leads to improving medicine adherence.
Part of the strategy is to make it as easy as possible for patients to use ZOOM. This includes removing the need for physical paper scripts and coordinating refill and repeat prescriptions on behalf of the patient.
ZOOM has identified Over the Counter (OTC) medicines and supplements as a large opportunity and will launch its OTC e-commerce platform in mid 2021. OTC Medicines will be supplied by our current medicines’ wholesalers initially and once the volume has scaled, we will source the products directly from the manufacturers which will offer better rebates and purchase prices. The OTC products will be distributed alongside prescription medicines.
ZOOM Pharmacy plans to secure additional DHB contracts to further solidify its leading position in the New Zealand market.
ZOOM realises that it may benefit from licensing additional pharmacies in strategic locations in New Zealand. By virtue of proximity to patients, this would result in operational cost efficiencies (lower delivery cost) and from a marketing perspective, lower customer acquisition costs.
ZOOM aims to identify and enter international markets based on ease of access and lack of existing solutions. Based on high-level research and analysis, ZOOM will initially explore the following markets, due to their health systems being similar to New Zealand; and having limited barriers to enter.
ZOOM’s customer acquisition strategy focuses on both business to consumer (B2C) and business to business (B2B) channels.
ZOOM Health is entering into a strategic partnership with a specialist digital media and marketing company, Glass Elephant, to drive consumer awareness and grow its customer base. Glass Elephant focuses on Direct Response Performance Marketing and utilises data to drive the best results.
Given the customer demographic, it is likely that traditional media will be involved, such as radio and TV advertising. Consumer marketing will be highly selective and will grow as the company scales.
ZOOM Health will continue to focus on resource efficient channels such as GPs and healthcare professionals, as these can carry considerable weight with patients trying the service for the first time. ZOOM also plans to work with aligned organisations which can speak to their communities on its behalf:
ZOOM Health has formulated strategic partnerships throughout the New Zealand healthcare system, some of which are outlined below:
nib promoted the benefits of the ZOOM Pharmacy service in a pilot of its insured population, including staff. ZOOM Pharmacy supplies nib monthly with dispensing volumes to nib customers (no patient details are shared). nib is now rolling out the ZOOM Pharmacy promotion to a larger and older segment of the membership.
ZOOM is party to 2 of 5 collectives, chosen by Counties Manukau DHB to co-design a model of care for Māori and Pasifika people living with 2 or more long term conditions. Funding contracts were due to start in September but have been delayed by COVID-19.
Existing relationships with diabetes specialists in Auckland led to ZOOM being the pharmacy chosen to assist with study randomisation and supply of study medicines to all participants in a coordinated fashion, including delivery to rural locations. ZOOM Pharmacists work with clinical staff to monitor and report side-effects.
ZOOM Pharmacy was approached by an Extended Care Paramedic running a PHO-funded pilot in Levin. A paramedic can leave a patient with acute medicines for immediate symptom control and also leave a supply for 10 days while assisting the patient to become enrolled at a medical practice. ZOOM Pharmacy is the supplier of medicines to this St John initiative.
ZOOM Pharmacy is a partner of SuperGold. The Ministry of Social Development allows ZOOM Pharmacy free advertising in its promotions to SuperGold members. The free ZOOM Sachet Pack service is highly valued by members, as it removes cost of medicines from their fixed income expenditure.
ZOOM Pharmacy has been invited to BBM-led health initiatives, to encourage members to speak privately with healthcare providers about their pharmaceutical entitlements, to ensure they can get the best outcome from their medicines.
Via our service agreement with Supply Chain Logistics, ZOOM Pharmacy has secured competitive shipping charges for our customers using NZ’s preferred courier, to all addresses in the country. During Covid-19 Level 3 lockdown in May 2020, ZOOM worked with NZ Post to ensure that medicine shipments were afforded priority during that period of heightened demand on courier services.
ZOOM Pharmacy offers reduced delivery charge to all members. Due to their remote locations, home delivery of low-cost medicines is one less worry for rural farmers.
We have registered trademarks for our brands in New Zealand. The following table outlines our current trademark registrations.
We also own the domain names associated with our brands.
All financial projections contained in this document are based on our best assessment of future financial performance and assume that we successfully raise the funding target of $3m. The assumptions on which the projections were prepared may prove incorrect and actual results may vary.
We have a good understanding of our market opportunity and have a clear line of sight as to what is required to achieve our forecast projections.
The financial information outlined below represents the consolidation of ZOOM Health Ltd and it’s associated company, ZOOM Care Ltd (ZOOM Pharmacy). ZOOM Health owns 49% of ZOOM Care Ltd and profit/losses in ZOOM Care Ltd are transferred to ZOOM Health by way of the Services and Licence Agreement between the companies.
Our financial year runs from 1st April to 31st March. The historical financial information relating to the Company included in this Information Memorandum has been prepared on the basis of the Company’s records but is unaudited and may be subject to revision if audited.
All figures have been rounded to the nearest thousand.
ZOOM Health is seeking to raise the $3m of target new equity by issuance of ordinary shares, with the allowance to accept oversubscriptions to a total of $5m if the board elects to do so. The capital will fund the company’s growth strategy which includes:
In the event that ZOOM Health raises the minimum funding target of $2m, we will reduce advertising and marketing expenditure by approximately 60% which will reduce growth in line with the graph below.
The short-term goal for ZOOM Health is to sustainably drive revenue growth. However, we believe that the most likely mid-term exit opportunity for the founders of the business, and shareholders, will be through a trade sale or IPO as ZOOM continues to grow.
The healthcare, online pharmacy and delivery medicine categories have been an active space for acquisitions and IPOs. Many large companies and investors, such as Amazon, Walmart and Softbank are investing into start-ups in the online pharmacy space, which aim to make it easier for patients to take their medicines.
At this stage, the company has no plans to pay a dividend, instead preferring to reinvest profits into ongoing growth of the business. The board will review this position and various dividend policy options on a regular basis.
ZOOM Health is now seeking to raise $3m of new growth capital, with the allowance to accept oversubscriptions to a total of $5m, to fund its growth strategy.
The founding shareholders have committed to invest a further $250k of capital at the same valuation as new investors. These funds will be cleared and available in November 2020.
Valuation of the company before funds are invested
Amount required for the offer to be deemed successful
The target amount the company is looking to raise
The maximum amount the company is looking to raise
Percentage of the company offered at the minimum target
Percentage of the company offered at the funding target
Percentage of the company offered at the maximum funding target
The cost of each share
The minimum investment amount for this offer
See the Subscription Agreement for details
ZOOM Health Limited may have rights to shorten or extend this period
The founding shareholders have committed to invest a further $250k of capital at the same valuation as new investors. These funds will be cleared and available in November 2020.
The ZOOM Health board is seeking to raise $3m of growth capital. However, the ZOOM Health board reserves the right to accept oversubscriptions to a total of $5m as part of this capital raising round, which would be used to accelerate growth plans.
The board and management team of ZOOM Health, having regard to significant market opportunity and first mover advantage, have set the pre-money valuation at $15.04m. This equates to a multiple of approximately 4.32x FY21 forecast revenues of $3.48m.
This valuation takes into account a number of factors including:
The below table presents a comparison of recent transactions involving comparable companies offshore. There have been no comparable transactions in Australasia (so far as the board is aware).
The following transactions indicate an average equity valuation of 4.22x revenue.
The below graph presents median revenue multiples for publicly listed Medical Technology companies:
ZOOM Health is offering ordinary voting shares (Ordinary Shares) to be held on trust by a nominee for the benefit of the investor.
The shareholder rights which will attach to the Ordinary Shares are set out in the Shareholder's Agreement and Constitution for ZOOM Health Limited. The Ordinary Shares will rank equally with all other shares on issue.
Holders of Ordinary Shares have:
Holders of Ordinary Shares are also subject to drag and tag along rights (as set out in the Shareholders' Agreement).
The Subscription Agreement, Shareholders' Agreement and Constitution set out other terms that will apply to a shareholding in ZOOM Health. You should read these documents before subscribing for Ordinary Shares under the Offer.
We are making use of a nominee shareholding structure to simplify the share register and prevent ZOOM Health from becoming a "Code Company" for the purposes of the Takeovers Code in the future. In broad terms, a company becomes a Code Company when it has 50 or more (voting) shareholders and share parcels and it (including subsidiaries) has total assets of at least $30 million or total revenue of at least $15 million at the end of its last financial year. Shareholders of Code Companies can be restricted in how and when they are able to transfer their shares. Given its forecast growth, the ZOOM Health directors do not believe it is in the best interests of the company, its existing shareholders, or investors for ZOOM Health to become a Code Company and bear increased compliance costs.
The Ordinary Shares to be issued by ZOOM Health are to be issued to the nominee company Snowball Nominees Limited (the Nominee), who will hold legal title to those Ordinary Shares on trust for the relevant beneficial owner of those Ordinary Shares (i.e. the investor). The full terms on which the Nominee will hold the shares are set out in the Nominee Deed Poll (which forms part of the Offer Documents).
In broad terms, the Nominee must:
Under the Nominee Deed Poll, each beneficial owner indemnifies the Nominee against any losses, damages, costs, actions, proceedings, claims and demands that may be made against or incurred by the Nominee as a result of it holding the Ordinary Shares under the Nominee Deed Poll (unless the Nominee has been fraudulent or grossly negligent).
Our business is subject to a number of risks and uncertainties, including those highlighted below:
Restriction on companies operating pharmacies (Medicines Act 1981, 55D)
New Zealand's pharmacy ownership rules state that the majority of the share capital of any pharmacy operated by a company (such as ZOOM Care Ltd), being over 50%, must be owned by an individual pharmacist or pharmacists. That pharmacist or those pharmacists must have effective control of the company at all times.
Dale Griffiths, the former Lead Pharmacist at ZOOM Care Ltd owns 51% of ZOOM Care Ltd. Dale is in the process of transferring his shareholding in ZOOM Care Ltd to Din Redzepagic, the new Lead Pharmacist at ZOOM Care Ltd. Medicines Control has agreed to issue an amended licence to reflect that change.
ZOOM Health and ZOOM Care Ltd entered into an agreement pursuant to which ZOOM Care Ltd engages ZOOM Health to provide certain services and ZOOM Health grants to ZOOM Care Ltd a licence to use its software and other intellectual property. In return, where ZOOM Care Ltd records show an operating profit, ZOOM Care Ltd must pay to ZOOM Health fees calculated and charged to ensure that ZOOM Care maintains a residual profit before tax of $20k p.a.. Where ZOOM Care records show an operating loss, the fees are satisfied by ZOOM Health paying to ZOOM Care a market support payment calculated and charged to cover ZOOM Care operating losses.
Radiant Health was previously owned by David Taylor and Craig Dallas, both directors and significant shareholders of ZOOM Health. Radiant Health supplies medicine to ZOOM Healths related company ZOOM Care Ltd. David Taylor is contracted 1.5 days per week at Radiant Health until January 2023. Craig Dallas is the current Managing Director of Radiant Health.
David Taylor is a director in both ZOOM Health Ltd and ZOOM Care Ltd.
Owen Waller is a director and 50% shareholder in Solarc and a current director of ZOOM Health. Max Waller, a 50% shareholder in Solarc, is a shareholder in ZOOM Health. Solarc is engaged to provide ZOOM Health with software development services.
ZOOM Health has a $1m overdraft facility with BNZ to cover any short term negative cashflow positions.
David Taylor, Craig Dallas and ZOOM Care Ltd are Guarantors to the overdraft facility.
ZOOM Health has granted a security interest to BNZ securing the overdraft facility.
All remuneration of key executives and team members will be reviewed regularly by the board to ensure that remuneration is market driven and reflects individual performance and achievement of role objectives.
The chairperson will be paid director fees of $50k per annum and the vice-chairman will be paid fees of $40k per annum. Director fees will be reviewed regularly to ensure that they are market norm. Director fees are included in staff costs in the financial forecasts.
The company has agreed to offer incentives to certain employees, contractors and directors of the company, with such incentives to be triggered on a successful sale of the business or shares of the company.
In the event that the Board resolves to take the Company to an initial public offering the Board will endeavor to convert this plan to a share scheme so that participants may participate in such an initial public offering as shareholders holding an appropriate number of shares in ZOOM Health after taking into account any necessary dilution.
The following table sets out the current shareholding structure and the shareholding structure on completion of the offer. The final shareholder structure may vary from this due to the actual amount raised and rounding of individual allotments.
*The founding shareholders have committed to invest a further $250k of capital at the same valuation as new investors. These funds will be cleared and available in November 2020.
ZOOM Health currently has five directors:
Biographies for the directors can be found in 'Team Overview' Section of this document.
While there is no existing plan, or identified requirement, to raise additional funds after this funding round, the ZOOM Health board may elect to raise additional capital in the future to accelerate growth plans or take advantage of other opportunities that will increase shareholder value, as they arise.
There are no past or current litigations or disputes known to the directors or management.
The company intends to use Orchestra.co.nz to manage their share registry.
We intend to keep our investors updated through:
Snowball Effect charges a fee, if the company successfully reaches its minimum funding target, of the greater of 7.5% of the funds raised (subject to a $25,000 minimum).
The distribution of this offer outside of New Zealand may be restricted by law. This is not intended to, and does not, constitute an offer of securities in any place which, or to any person to whom, the making of such offer would not be lawful under the laws of any jurisdiction outside New Zealand. This includes, but is not in any way limited to, Australia and the United States. It is the responsibility of any Snowball Investor to ensure compliance with all laws of any country outside New Zealand relevant to their subscription, and any such Snowball Investor should consult their professional advisers as to whether any governmental or other consents are required, or other formalities need to be observed to enable them to apply for securities pursuant to each offer. The failure to comply with any applicable restrictions may constitute a violation of securities law in those jurisdictions. The securities in each offer have not been and will not be registered under the US Securities Act or the securities laws of any state of the United States.
It's crucial for you to understand the characteristics and risks of this investment opportunity. New Zealand law normally requires people who offer financial products to provide in-depth information to investors before they invest. The usual rules do not apply to offers by companies through Snowball Effect. As a result, you may not be given all the information you need to make an informed decision. Investing is risky. Some of the key risks include loss of capital, illiquidity, lack of returns, dilution, loss of key people and customers, and lack of control. You should only invest money that you can afford to lose.