EndoChoice Corporate Presentation

January 2016

Safe Harbor
This presentation contains forwardlooking statements. You should not rely upon
forwardlooking statements as predictions of future events. All statements other than
statements of historical facts contained in this presentation, including information
concerning our possible or assumed future results of operations and expenses, business
strategies and plans, competitive position, business environment and potential growth
opportunities, are forward-looking statements. Forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking statements.
These risks and uncertainties are described in our filings with the SEC, including the
Registration Statement on Form S-1, as amended, for our initial public offering and our
Form 10-Q for the period ended September 30, 2015. Given these uncertainties, you
should not place undue reliance on any forward-looking statements in this presentation.
Except as required by law, we disclaim any obligation to update any forwardlooking
statements for any reason after the date of this presentation.
This presentation shall not constitute an offer to sell or the solicitation of an offer to buy,
nor shall there be any sale of securities in any state or jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.

EndoChoice at a Glance
Platform GI Company

Differentiated Tech

$6B Addressable Market

Growth Drivers

Single Use Products

Pathology

Imaging

2015 Revenue of
$72.3M,
18% growth YoY

Shipped 82 Fuse
$6B Global
end-user systems,
GI market,
year over year
growing annually
growth of 116%
at 7%

New Products,
Expanding Sales
Team, 2,500+ US
customers

GI Market Opportunity

EndoChoice Platform for GI Endoscopy

~$6 Billion Global GI Market
7% GI Market Growth Rate

Single-Use Products

Source:
Markets & Markets, Endoscopy Equipment, Global Forecasts to 2018;
The U.S. Anatomic Pathology Market, Forecast & Trends 2014-15;
Annual Reports and EndoChoice Internal Estimates
Note: Devices do not include ERCP and EUS opportunity

2008

Pathology

2010

Imaging

2013

EndoChoice is Targeting
95% of GI Procedures

Source: iData & EndoChoice Internal Data

6

A World of Opportunity
Tissue Acquisition

Visualization

Inventory Mgt

Luminal Access
Airway

Diagnostic Tests

Dilation
EndoKits

Suction

Luminal Patency

Patient Monitoring
Patient Service

Hemostasis

Preparation
Infection Risk
Quality Measures

Data Management

Transport

Retrieval
Mobility

Cleaning

Personal Protection
Disinfection
7

Fragmented GI Community

GI Procedure
Cycle

EndoChoice Platform

Proven Track Record in GI Innovation

ASP Range of $2 to $225,000

10

Three Growth Engines

Serving the GI Caregiver with Differentiated Products and Services

Single-Use Products

Pathology

Imaging

2015 Revenue $36.1M

2015 Revenue $13.9M

2015 Revenue $22.4M

Total 2015 Revenue: $72.3M 2 Year CAGR: 18%

Leveraging a Unified Sales Team

The EndoChoice Platform

12

Single-Use Products
~$1.7B Market Size Globally
XX%

2015 Revenue

$36.1 Million
2-Year CAGR 8%

Single-Use Products

2016 SUP Growth Drivers

More than 2,500 customers in the US
New Products to increase wallet share
New 20 Dedicated Account Managers

Stable SUP Revenue Underpins Model

$50,000

$45,000
$40,000
$35,000
$30,000

30,700
2,062

33,845
1,984

36,076
2,198

$25,000
$20,000
$15,000

28,638

31,861

33,878

2014

2015

$10,000
$5,000
$0
2013

(000s)

Domestic Single-Use Products

International Single-Use Products

Presence in >2,500 GI departments (1/3 of U.S. market)

65% of our SUP customers buy multiple products
Fuse customers buy 2.5x vs non-Fuse customers
14

GI Pathology
~$1B Market Size in US
XX%

2015 Revenue

$13.8 Million
7% CAGR

GI Pathology

2016 SUP Growth Drivers

Automated ADR Reporting
Stickiness via EMR integration
New 20 Dedicated Account Managers

Pathology Growth
(2 Year CAGR of 9% in Specimens Processed)
$15,000

140,000

Specimen 2 Yr.
CAGR 9%

135,000

$13,000
130,000

125,000

$11,000

120,000

$9,000

115,000
110,000

$7,000
105,000
$5,000

(000s)

100,000
2013

2014
Pathology Revenue

2015
Specimens Processed

Specimen growth outpacing impact of reimbursement cuts in 2014

16

Imaging
~$3B Market Size Globally
XX%

2015 Revenue

$22.4M
67% CAGR

Imaging

2016 SUP Growth Drivers

New Sales Hires/Increased Productivity
Expanding Clinical Data

A New Standard in GI Imaging

18

Fuse Gaining Traction

$30,000
$25,000

22,382

$20,000

5,429
14,979

$15,000
4,865
$10,000
$5,000

8,072

16,953

3,372

10,114

4,700

$0
2013

(000s)

2014
Domestic Imaging

2015

International Imaging

19

Fuse Installed Base Now Over 100 Systems

End-User Installed Base by Quarter
150
123

125
104
100

86

75
50

61
41
8

25

32

26

20

10
51

91

78

66

33

0
Q4 2014

Q1 2015

Domestic - End Customer

Q2 2015

Q3 2015

Int - End Customer

Q4 2015

Linear (Total)

81% of Fuse customers buy our Single Use Products

20

Limited View with 170 Colonoscopy

21

Panoramic 330 Field of View with Fuse

22

170
Field of View

23

330
Field of View

24

Fuse Enabling Technologies

Integrating LEDs and Multiple Imagers
Traditional Colonoscope
Light Guides

1 Imager

Fuse Colonoscope
LEDs

3 Imagers
25

Compelling Clinical and

Cost-Effectiveness Data
Fuse detected 69% more pre-cancerous
polyps, improving quality of care
Fuse provides confidence with a negative
exam. Fuse found pre-cancerous polyps in
6% of patients which had normal findings by
standard colonoscopy
9% of patients were recalled on an earlier
interval. GI physician can retain and attract
more patients

Potential $300M annual cost savings in U.S.

alone
Sources:
Gralnek IM, Siersema PD, Rex DK, et al. Standard forward-viewing colonoscopy versus full-spectrum
endoscopy: an international, multicentre, randomised, tandem colonoscopy trial. The Lancet Oncology
2014; 15: 353-60.
Hassan, et al, Cost-effectiveness of full spectrum endoscopy colonoscopy for colorectal cancer
screening , Digestive and Liver Disease, 2015

26

Expanding Set of Clinical Data

Improve(s) the efficacy
of colorectal cancer screenings
Gralnek et al., The Lancet Oncology

An advancement in colonoscopy
Papanikolaou et al., UEGW 2014 Abstract

More effective in identifying

multiple polyps
Hassan et al., UEGW 2014 Abstract

Advancement time to the cecum

was faster with Fuse
Neumann et al., UEGW 2014 Abstract

Greatly expanded view

of the upper GI tract
Stein et al., NYSGE Abstract 2013

27

Direct to Patient: Insist on Fuse!

28

Fuse Adds Value For All Stakeholders

Physician
Significant GI advance
Differentiated practice, more procedures

Hospital/ASC
Differentiated technology
Marketing advantage

Payor
Cost saving technology
Addressing problem of interval cancer

Patient
Reduced fear of missed polyps
Increased confidence in negative exam

29

The EndoChoice Platform

Serving the GI Caregiver with Differentiated Products and Services

Single-Use Products

Pathology

Imaging

2015 Revenue $36.1M

2015 Revenue $13.9M

2015 Revenue $22.4M

Total 2015 Revenue: $72.3M Total 2-Year CAGR: 18%

Leveraging a Unified Sales Team.

Driving Commercial Success

31

Multi-Pronged Growth Strategy

Expand
US Sales Force

Launch New
Products

Enter New
International Markets

GPO Contracts/
Creative Bundling

32

US Sales Force Expansion & Optimization

Territory Managers (TMs)
sell entire portfolio.
Account Managers (AMs)
focused exclusively on Single-Use Products and Pathology.

TM

35

TM

45

SUP
Pathology

SUP
Pathology
Imaging

December 2013

December 2014

TM
Imaging
SUP
Pathology

55

70
Territory
SUP
Managers

Pathology
Imaging

AM

20
SUP
Pathology

Q4 Expansion 2015

33

Engagement With Major GPOs

Fuse Contract
Scope Services Contract
SUP Contract

34

Strategic International Expansion

Phase 1
Europe

Phase 2
Asia

Phase 4
LATAM

Phase 3
MEA

Direct Sales in Germany and Israel

Distribution partners in 30 countries
35

International Revenue Growing Marginally Faster than

Domestic on Constant Currency Basis
$12,000
$10,000
7,539

$8,000
$6,000
$4,000

6,849
5,434
5,341

4,865
3,372

$2,000
2,062

1,984

2,198

2013

2014

2015

$0

(000s)

Single-Use Products

Imaging

2 Yr. CAGR of 33% on constant currency basis

36

Life Cycle Revenue Potential

Per New ASC Customer
2 Room Center
Revenue Value
One Time Sale
Fuse Video System, 2 Rooms

$440,000

15%
Capital

Recurring Revenue
Devices

$160,000

EndoKits

$160,000

Endoscope Reprocessing

$80,000

Endoscope Service

$120,000

Pathology Billing

$2,000,000

Total Recurring Revenue Over 5 Years

$2,520,000

5 Yr. Revenue Potential For Each

New Customer

$2,960,000

85%
Recurring

37

Single-Use Products

Imaging/Fuse

Pathology

Leveraging The EndoChoice Platform

$100

$30

$8
This ASC successfully leverages EndoChoices product platform

Note: Cost of products and services refers to cost per use / procedure

38

Growth Drivers for 2016

Single-Use Products

Imaging/Fuse

Pathology

Automated ADR
Reporting

New Product
Launches
Expanding
International Footprint

Expanding
International Footprint

Integration into EMR

systems

20 New Account
Managers in US

Expanding to 55
Territory Managers

20 New Account
Managers in US

2500+ US Customers
and GPO Contracts

Expanding Set of
Clinical Data
39

Strong Financial Profile

40

Consistent Revenue Growth Across

All Product Lines
$100,000
$90,000
$80,000

72,302

$70,000
$60,000
$50,000

61,419
50,891

22,382
14,979

8,072

$40,000
$30,000

30,700

33,845

36,076

12,119

12,595

13,844

2013

2014

2015

Single-Use Products

Imaging

$20,000
$10,000
$0

(000s)

Pathology

First sales of Fuse Generation 1 in late 2013 to gain experience;

Started deliveries of Gen 2 in Q2 2015
41

Path To Gross Margin Improvement

Gain Scale in Fuse Manufacturing
Evolution of Fuse System Margin

Current State

Fixed Manufacturing Overhead

Units Produced

Target

$11.5M
100

$15.0M
500

Fixed OH per system

Direct Materials per system
Direct Labor per system

$115
$75
$15

$30
$53
$12

Total Costs/System

$205

$95

US ASP/System

$205

$205

Gross Margin%

0%

54%

Evolution of Corporate Gross Margin

Business Unit

Percent of
Revenue

Current
Margin%

Target
Margin%

GI Equipment and Supplies

Pathology
Total/Blended

80%
20%
-

26%
61%
33%

54%
60%
55%
42

Path To Profitability
Longer Term Operating Goals
Long Term Goals
Gross Margin

~ 55%

Sales & Marketing

~ 21%

General & Administrative

~ 10%

Research & Development

~ 7%

Operating income

~17%

Gross margin expansion will be driven by:

Spreading fixed manufacturing costs over higher unit volumes
Design programs to reduce parts and improve manufacturability
Greater purchasing leverage with vendors on higher volumes
These objectives are forward-looking, are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond
the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and
those variations may be material. For discussion of some of the important factors that could cause these variations, please see the risks and uncertainties in our Form S-1, as
amended, and our Form 10-Q for the period ended September 30, 2015. Nothing in this presentation should be regarded as a representation that these goals will be
achieved, and we undertake no duty to update our goals.
43

EndoChoice at a Glance
Platform GI Company

Differentiated Tech

$6B Addressable Market

Growth Drivers

Single Use Products

Pathology

Imaging

2015 Revenue of
$72.3M,
19% growth YoY

Shipped 82 Fuse
$6B Global
end-user systems,
GI market,
year over year
growing annually
growth of 116%
at 7%

New Products,
Expanding Sales
Team, 2,500+ US
customers

44