$2,000,000 Min. target (11.73% equity)

$3,000,000 Max. target (16.63% equity)

$2,027,519 Still available

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Further detailed information is contained in the Information Memorandum (IM)

Investor Webinar

ZOOM Health plans to host an investor webinar on Tuesday, 1 December at 1pm. The format of the webinar will include a brief presentation on the business followed by a Q&A session.

Register for the Webinar here.

Disclaimer

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

References for the information provided in the online offer can be found in the Information Memorandum which is available to download via the 'Offer' tab. The 'Offer' tab also provides access to additional documentation that may be useful to investors as part of their due diligence process.

Investment Highlights

First mover advantage in a large target market with significant technical barriers to entry.
Proven business model offshore with particular success in the US and UK.
Average month on month dispensing volume growth of 19% during the 12 months to September 2020.
95% customer retention after 6 months of using ZOOM (for sachet patients).
Experienced management team with significant industry knowledge.
Disruptive Impact Investment – Adherence is worst amongst Māori and Pasifika.
State of the art robotics enable high volume, accurate, fully traceable prescriptions and exceptionally low error rate of < 0.01%.
High completion rate – 99.5% of all medicines are completed and delivered to patients.
Integrated into GP desktop practice management software and patient portals, allowing patients to choose ZOOM as their pharmacy of choice.
Majority of revenue paid for by the Government (via Evergreen DHB contracts).

Executive Summary

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.

The Team

Board Members & Advisors

Core Team Members

David Taylor Managing Director

David has 30 years commercial healthcare experience in Multinational Pharma Astra Zeneca, and the Virgin LifeCare Wellness programme. He has established several privately owned healthcare companies including Radiant Health Ltd and most recently ZOOM Health and has a proven record commercialising healthcare IT.

Din Redzepagic Pharmacy Director

Din is a progressive pharmacist with a strong interest in commercial healthcare. He completed postgraduate studies in clinical pharmacy and a high honours grade in business studies from Harvard Business School. Din leads the pharmacy team utilising sophisticated IT and robotics that help patients to realise the full benefit of the medicines they are prescribed.

Matt Burrows Financial Controller

Matt is a Chartered Accountant with twenty years’ experience in public practice, consultancy, investment banking and financial control.

Jim Chaung IT Manager

Jim has over 15 years of experience supporting various technology- related projects in the healthcare industry. Jim is obsessed with new technologies and techniques that benefit the company and passionate about automating processes that liberate people to spend time on work that matters.

Sue Griffin Marketing Manager

Sue has extensive sales and marketing management experience across the pharmaceutical industry including at Astra, Sanofi, Novartis, and Radiant Health. Sue also has Account Management experience serving multinational pharmaceutical companies.

Jenny Alison Project Manager

Jenny has extensive healthcare experience, as an Intensive Care Nurse and experienced pharma executive. Jenny is also a qualified Project Manager who ensures the timely delivery of critical functionality within an agile environment.

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The Problem

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.

The Opportunity

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.

The ZOOM Solution

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:

Delivering a patient-centric healthcare service - Each patient is provided with a pharmacy service that is individually tailored to their specific needs.
Increasing the likelihood of prescription delivery - 99.5% of ZOOM Pharmacy prescriptions are confirmed and delivered to the patient.
Encouraging medication adherence - All patients are directly contacted by pharmacist regularly and 40% of patients regularly use the ZOOM Pharmacy App.
Reducing the number of missed refills - ZOOM Pharmacy automates and escalates the prescription refill process.
Ultimately reducing the cost to patients and the DHBs - All while improving patient health within existing DHB funding.

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 Market

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.

Total Addressable Market

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:

RECENT ACQUISITIONS*

RECENT INVESTMENTS*

* The information in the tables above is based on publicly available information and has not been validated by each respective company.

The New Zealand Health System

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.

KEY PHARMACY ACTIVITIES AND EXPENDITURE STATISTICS

(ICPSA monitoring - July 2020)

There has been a drop in ‘new’ initial scripts since the initial COVID breakout in March. The assumption is that patients who are not regular users are not engaging with medical centres and that there was also a decline in cold and flu patients, meaning less people were visiting GPs.
There has been an increase in ‘repeat’ scripts since the initial COVID breakout. Repeats increased as a result of Pharmac implementing monthly dispensing to relieve pressure on medicine suppliers. This has now ceased and we expect repeat item dispensing to normalise.

New Zealand Market

In New Zealand 78.9 million funded prescription medicines were dispensed in the 12 months leading up to June 2020. 47.1 million were initial items and 31.8 million were repeat items.
Repeat requests are especially suited to a direct delivery model, saving time and removing unnecessary cost from the process.
3,500 GPs prescribed funded medicine to 3.77m New Zealanders in 2018/19.
Covid-19 has driven increased demand for virtual GP consultations which in turn has increased the demand for the delivery of medicines.
Groups such as Tend, White Cross, Green Cross Health and independents have started developing an online doctor offering, which complements the ZOOM Pharmacy service model.
Virtual healthcare is expected to experience significant growth moving forward.

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.

Australia

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:

Health $4.69b
Beauty $3.3b
General Merchandise $0.46b

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.

Operations

Medicine Supply

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.

Processing (Input, Dispensing, Dispatch)

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.

Step 1 – Input

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.
Step 2 – 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.
Step 3 – Dispatch

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.

Patient Engagement

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:

Daily Reminders and Notifications
Payment Processing
Updating Patient Details
Repeat Script Automation
Medicine Ordering

Payment

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.

Resourcing

ZOOM Customers

Patients

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.

Why patients use ZOOM Pharmacy

ZOOM Pharmacy lowers direct and indirect costs and eliminates time spent at the pharmacy.
ZOOM Pharmacy provides discrete and personalised pharmacist support.
The ZOOM app sends reminders and provides patient-specific medicine information.
ZOOM Pharmacy organises repeats, meaning patients don’t run out.
Medicines information is supplied with each order - either in the ZOOM app or in hard copy (for sachet pack patients).
ZOOM Pharmacy saves its patients time and money as there is no need to take time off work, park or wait in store.
ZOOM Pharmacy provides exceptional customer service by friendly, helpful staff (NPS 70+).
Patients can contact ZOOM Pharmacy via freephone, email and by text, allowing them to connect with ZOOM Pharmacy in their own time and place.

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.

General Practitioners

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.

Why GPs send prescriptions to ZOOM Pharmacy

More and more patients are requesting that their prescriptions are sent to ZOOM Pharmacy.
Improving medicines adherence improves patient health outcomes.
Aligns with growth in virtual consultations post COVID-19.
Meets growing patient demand for medicines to be delivered.
Full integration in Practice Management Systems delivers completely paperless prescribing.
Increasing patient satisfaction by reducing patient time and the cost involved in getting repeats.

Competitive Landscape

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:

Barriers to Entry

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.

ZOOM PHARMACY DHB CONTRACTS

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Current Stage of Business

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.

Key Highlights:

ZOOM Pharmacy served its first patients’ half-way through 2018 and focused on patients who are prescribed four or more chronic medicines in 2019.
The ZOOM Pharmacy team has grown to 13 staff, comprising 5 pharmacists, 5 pharmacy technicians, 2 dispatch representatives and 1 customer service representative.
ZOOM consistently scores a weekly NPS of 70-90.
ZOOM has dispensed more than 116,000 prescription items to over 8,800 patients Annual Value of approximately $376 p.a per sachet patient (with a retention rate of 95%).

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.

Medicine Dispensing Growth

The sachet service commenced in October 2019 and dispensing grew 30% month on month until March 2020

We experienced extraordinary demand during the March 2020 COVID-19 outbreak

Growth normalised to the pre COVID-19 rate

We estimate a third of the patients who used us because they were locked down left in July

Growth normalised to the pre COVID-19 rate

Pharmac reinstates 3 monthly dispensing (from dispensing a month at a time to dispensing all three months at once) in August and we lose 20% volume in September and October

In October despite losing 20% volume due to the reinstatement of 3 monthly dispensing we are back into growth higher than what was observed pre-COVID

Impact of COVID-19

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+.

Growth Plan

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:

1. Products and Services

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.
2. Geographical Coverage

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.
- Australia
- Singapore
- UK
3. Customer Acquisition Strategy

ZOOM’s customer acquisition strategy focuses on both business to consumer (B2C) and business to business (B2B) channels.

Business to Consumer

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.

Business to Business

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:
- Primary Health Organisation (PHO) - ZOOM Pharmacy will continue to work with ProCare and other PHOs.
- Church Groups – ZOOM Pharmacy has connected with a group to offer sachet packaging to 15 Pasifika churches in South Auckland.
- Community Groups - ZOOM Pharmacy has been selected to participate in two of the five Te Ranga Ora initiatives approved by Counties Manukau DHB.
- Health Care Companies – ZOOM Pharmacy is already engaged with nib health insurance; can process Southern Cross Easy-claims and is working with St John supporting their Extended Care Paramedics.
- Government Organisations – ZOOM Pharmacy enjoys an open relationship with the Ministry of Health (MOH), working together to provide solutions which enable patient choice.

ZOOM Health Partners

ZOOM Health has formulated strategic partnerships throughout the New Zealand healthcare system, some of which are outlined below:

nib

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.

Te Ranga Ora

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.

The WORTH Study of diabetes medicines

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.

St John

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.

Super Gold

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.

BBM

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.

Courier Post (NZ Post)

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.

Federated Farmers

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.

Intellectual Property

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.

zoomhealth.nz
zoomhealth.io
zoompharmacy.co.nz
zoompharmacy.nz
zoomcare.nz

Key Target Performance Metrics

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Financial Information

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.

Consolidated Profit & Loss

Profit & Loss Assumptions

Sales categories

Non-sachet (funded) - forecast to achieve 3.4% market share in March 2025.
Sachet (funded) - forecast to achieve 11.9% market share in March 2025.
Prescription (Total funded) – forecast to achieve 6.6% market share in March 2025.

Government funded medicines

Non-sachet – patients who take less than four medicines on an irregular basis.
Sachet – patients with chronic health conditions who regularly take four or more medicines.
Government-funded medicines attract services and handling fee revenue of $5.44 per initial item and $4.04 per refill item. There is also a small margin received on medicines however this has been treated as largely immaterial. The model assumes a 1% margin on an average $15 wholesale medicine cost.
Patients are normally charged co-payments of $5 incl. GST per funded item up to a maximum of $100 per household per year. After this, households become exempt and the government reimburses the pharmacy with co-payments not collected. In the event that the pharmacy does not collect non-exempt co-payments, it foregoes revenue of $4.35 excl. GST per item because ZOOM subsidises this expense.

Non-government funded medicines

Prescription medicines that are not subsidised by the government. We have not factored in the value of non-funded medicines in our financial forecasts.

Over the Counter (OTC) products

OTC sales forecast to soft launch in December 2020.
Forecast to achieve 3.9% market share of an estimated $611 million sales value in March 2025.
OTC products include products that do not require a prescription e.g. vitamins and cough/cold medicines.

Sales growth assumptions

Sales growth follows a sigmoid curve from the present until March 2025.

Working capital

All revenue is either paid cash in advance by the customer or claimed from the government. All government claims for a given month are received by the 20th of the following month and this lines up with the date stock payments are due. Stock is ordered largely on a just-in-time basis and this effectively means that the pharmacy is not out of pocket at any point.
Case mix fees are estimated by the Ministry of Health each month and then corrected three months later based on an actual calculation. This can cause short term fluctuations in cash received which has not been factored into forecasts.

Breakeven Assumptions

ZOOM is forecast to break even on an EBITDA basis in Oct 2021. It is forecast that ZOOM will dispense 73,883 funded prescription items and 4,516 OTC items in that month.
ZOOM’s EBITDA subsequently fluctuates between profit and loss before reaching steady-state profit from May 2022.
Breakeven is dependent on advertising expenditure, which is a factor of how much capital is raised.
Breakeven is being viewed on a consolidated basis. The timing difference on licence fees paid by ZOOM Care Ltd to ZOOM Health may delay breakeven in ZOOM Health as a standalone company.

Cost Assumptions

Outside of the cost of medicines, direct costs primarily relate to freight and courier costs, albeit with an increasing expense incurred from consumables (i.e. packaging) as the business scales. Costs also relate to merchant service fees charged on non-sachet patients.
ZOOM Health Ltd 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 will be remunerated through monthly fees and a milestone payment based on the company achieving the budgeted revenue target in 2023.

Consolidated Balance Sheet

Balance Sheet Assumptions

Inventories increase in line with the increased number of patients using ZOOM Pharmacy and the introduction of OTC Medicines.
Sachet machine rental deposit is a bond held by the supplier. This is currently for three machines, at a cost of $3,100 each per month, but could increase as the company scales. ZOOM intends to negotiate bonds to be waived for future machines.

Consolidated Cashflow Statement

Cashflow Statement Commentary & Assumptions

Operating working capital is based on historical ratios and projected growth rates.
Considerable set up costs have been invested to get the business to its current point. A total of $9m has been invested by the founding shareholder group to date.
The forecasts above include $1.25m invested by existing shareholders during FY21 YTD.
The forecasts above assume we raise the $3m target capital in December 2020.
The founding shareholders have committed $250k to this capital raise on the same terms as new investors. These funds will be cleared and available in November 2020.
Software development costs relate to the ZOOM Pharmacy App and further platform development.
ZOOM Health have a $1m bank overdraft facility in place to cover any short term negative cash balances.

Use Of Funds

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:

Executing our customer acquisition strategy;
Meeting operational expenses until break even;
Enhancing the customer experience with new and improved products and services;
Exploring new geographical regions for expansion;
Continuation of our work with large organisations that have aligned interests.

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.

Exit Strategy

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.

Dividend Policy

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.

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Supporting documents

Offer Details

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.

Company valuation

Valuation of the company before funds are invested

$15,044,024 NZD
Minimum target

Amount required for the offer to be deemed successful

$2,000,000 NZD
Funding target

The target amount the company is looking to raise

$3,000,000 NZD
Maximum target (with oversubscription)

The maximum amount the company is looking to raise

$5,000,000 NZD
Minimum equity offered

Percentage of the company offered at the minimum target

11.73 %
Target equity offered

Percentage of the company offered at the funding target

16.63 %
Maximum equity offered (with oversubscription)

Percentage of the company offered at the maximum funding target

24.95 %
Share price

The cost of each share

$0.90 NZD
Minimum investment

The minimum investment amount for this offer

$1,000.00 NZD
Type of share offered

See the Subscription Agreement for details

Ordinary Shares (Held in Nominee)
Offer duration

ZOOM Health Limited may have rights to shorten or extend this period

30 days

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.

Oversubscriptions

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.

Valuation

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:

$9m already invested by current shareholders to get ZOOM to this point;
Market growth opportunities, including OTC medicines, Australia and Singapore;
First mover advantage and market leading position;
Proven model offshore particularly in the US and UK (see below);
Comparable offshore revenue multiples; and
The importance to the directors for investors to enjoy a positive and profitable experience as shareholders.

Comparable Transaction Multiples*

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:

Type of Shares on Offer

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:

The right to receive notice of, and attend, every meeting of the shareholders
The right to vote at a meeting of the shareholders on any resolution
The right to an equal share in dividends authorised by the board
Certain shareholder information rights
Pre-emptive rights on share issues and transfers (subject to certain exceptions)

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.

Nominee Shareholding Structure

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:

Act in accordance with the relevant beneficial owner's instructions (e.g. in exercising the voting rights attached to the relevant Ordinary Shares)
Account to the relevant beneficial owner for all proceeds from the relevant Ordinary Shares (e.g. dividends received)
Deliver notices, letters, reports, demands, offers, agreements and other documents and communications received by the Nominee to the relevant beneficial owner.

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).

Risks & Mitigations

Our business is subject to a number of risks and uncertainties, including those highlighted below:

Staff retention / key person risks
If a key staff member was to leave suddenly then this may mean that we do not have the capacity or capability to meet customer/patient needs, that a patient could go to a competitor or that specific clinical or product knowledge may be lost to the company. These risks are mitigated in several ways. Employee contracts include notice periods, as well as intellectual property ownership and restraints provisions. This helps to ensure that any employee departures are constructively managed, enabling a structured transition to take place.
The healthcare and medicine market may change, impacting our ability to operate in target markets
The healthcare and medicines market is highly regulated and such regulations can impact our ability to operate. A significant change in, or non-compliance with, government regulations and other legal requirements could have a material adverse effect on our reputation and profitability. ZOOM will continue to stay in regular contact with the Ministry of Health, DHBs and Pharmac to ensure it is up to date with any relevant market changes.
Pharmacy Licence not renewed
ZOOM Pharmacy's pharmacy licence expires in February 2021. The current expectation is that the licence will be renewed but there is always a risk that it will not be. To address that risk ZOOM Pharmacy is regularly in contact with Medicines Control and will respond immediately to any queries; with legal input as required. The pharmacy is always kept at audit standard, in case of a spot audit, and currently has a 'Pass' status.
Intellectual Property Infringements
ZOOM Health has developed its own software and systems (or has third party licences to use and sub-licence third party software) used in connection with its operations ("ZOOM IP"). ZOOM Health has granted ZOOM Care a non-exclusive licence to use the ZOOM IP. ZOOM Health monitors any possible infringements of the ZOOM IP closely but has not to date had any need to enforce its rights against third parties.
Competitor risks
New Zealand has a small but competitive healthcare industry with existing and new entrants likely to challenge ZOOM Health. ZOOM will continue to mitigate this risk in several ways. It will continue to build consumer loyalty by providing great customer service, strategic marketing and product growth. It will keep innovating to stay ahead of any competition that may arise. It will foster and continue to build strong relationships with key healthcare organisations such as DHBs, Ministry of Health and Pharmac.
Scale-up risks
ZOOM is aware of the challenges associated with scaling a business in the Healthcare industry. The existing machinery and equipment allows it to scale up with little to no extra cost. ZOOM has outsourced logistics to Supply Chain Solutions, which comes with additional distribution costs, but provides a longer-term scalable solution. ZOOM is always exploring new technologies which will allow it to scale.
Partner Risks
Although ZOOM has built trusted relationships with key partners, there is a risk that partnerships could dissolve for unforeseen reasons. In order to mitigate this, ZOOM plans to stay in regular contact with its partners and ensure it is providing them with the best service or experience.
Market risks
Minimal market risk given that ZOOM has contracts with 10 DHBs which insulates ZOOM from market fluctuations. ZOOM has no reason to believe these contracts are at risk.
Dispensing Errors
Pharmacies run the risk of giving the wrong medication, or a medication that has been badly mixed or inaccurately dosed, to a patient. This can be very dangerous to a patient. By using state of the art robotics and technology, ZOOM has a dispensing error rate of < 0.01%. ZOOM keeps abreast of new technologies to reduce error rates further.
Budget risks
The financial forecasts may differ from current forecasts which may place additional capital constraint on the company. If this is the case ZOOM will look to reduce costs in areas that have little impact on growth. ZOOM Health will also look to raise additional capital if required.
Governance Risks
ZOOM Health and ZOOM Pharmacy have appropriate governance controls in place, with a strong and experienced management team and board.
Privacy Management and Information Risk
Managing personal information and sensitive data can be challenging. It can be challenging to balance streamlining pharmacy services with protecting data. ZOOM uses multifactor authentication when accessing patient data and reviews access rights frequently.
Data Breach Risk
As we develop and advance the technology we use, electronic records of personally identifiable information, become more vulnerable to cyber theft. Data breaches and gaps in security can cause reputational damage and accrue large legal fees. In order to avoid this, we ensure our systems are secure and encrypted. The cyber network has been audited by KPMG.
Theft / Security Risks
Having pharmaceutical goods stored in our pharmacy does make ZOOM a target for theft. ZOOM has installed camera systems, has monitored comprehensive access security systems on all doors, and engages a security guard who patrols the ZOOM offices as part of his route.

Disclosures

Pharmacy Ownership and Control

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.

Services and Licence Agreement

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.

Related Party Disclosures

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.

Overdraft Facility

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.

Remuneration

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.

ZOOM Employee Incentive Plan

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.

Shareholding Structure

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.

Governance

ZOOM Health currently has five directors:

Ian Wills
David Taylor
Craig Dallas
Colin Abercrombie
Owen Waller

Biographies for the directors can be found in 'Team Overview' Section of this document.

Future Funding

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.

Litigation and Disputes

There are no past or current litigations or disputes known to the directors or management.

Share Registry Management

The company intends to use Orchestra.co.nz to manage their share registry.

Shareholder Communication

We intend to keep our investors updated through:

A quarterly business summary update (more frequently if required);
An annual update on the outlook for ZOOM Health, including financial statements and commentary approved by the board; and
Participation in an Annual General Meeting of Shareholders.
Shareholder communication will be distributed through Orchestra.co.nz

Third Party Advisors

Accounting: PWC
Legal: Keegan Alexander
Banking: BNZ

Snowball Effect Fees

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).

International investors

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.

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