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Healthcare Opportunitiesfor Tech GBU

DRAFT on April 11, 2008

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Today’s Agenda

» Current State in Tech GBU

» Labeling Opportunity (DYMO)

» The CardScan Fit in Healthcare Workflow

» Endicia Opportunity

» mimio Opportunity

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Tech GBUCurrent State

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DYMO’s USA Healthcare Business: $5MM??

» We did $2.5MM in direct sales in 2007:

▪ Quest Diagnostic Labs: purchased 25,000 LabelWriter printers over the last 10 years. $1MM in printers and labels from DYMO in 2007.

▪ Compulink: ophthalmic software company, using LW to print bar codes, file labels, chart labels, address and medical record labels. 

▪ Concentra Health Systems: medical clinics that use the LW and DYMO labels for address, shipping, file, pharmacy and barcode labeling

▪ Cytyc: a Women's medical device company specializing in cancer screening.  They use a LW SE300 printing on thermal paper.

▪ International Technidyne Co.- a Hemostasis Management and point of care testing company- use the LW to print readings from their portable blood testing device. 

▪ Biologics: a laboratory Instrumentation, drug testing company.  They use the LW to print test equipment readings, on thermal paper.

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We probably do another $2.5MM “indirectly”

» Channel business can’t be measured as firms simply purchase LabelWriter printers from their favorite PC products reseller.

» Occasionally we uncover a big user :

▪ Military Hospital facilities (Portsmouth Naval, Camp Lejeune)

– Portsmouth has 400 printers, throws them away when they break. Used SDK to link printer to documentation system. Also some specimen labeling (blood, urine, saliva.) Also working with St Johns to get wristbands because wanted thermal and okay with lower capacity per roll since printers are a lot cheaper than Zebra.

– Camp Lejeune has 40 in use, more coming.

▪ HCA-operated facilities in Texas (TX Orthopedic)

– Filing application. Wanted to store documents electronically. Needed to bar code them so they matched patient records before they were scanned and then scanned into the patient record file.

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It’s clear that our Software Developers’ Kit (SDK)

plays a crucial role as it enables easy

integration of the printer.

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DYMO Healthcare Personnel = .25 FTE

» Brad Lyon spends 25% of his time on healthcare accounts:

▪ the rest on IT accounts.

▪ Nobody outside the USA with healthcare focus.

» Brad’s part-time healthcare-related activities include:

▪ Calling on practice management (PM) systems companies seeking integration of LabelWriter in their applications.

▪ Attending certain healthcare shows to generate leads.

▪ Account management.

» Nobody is focused on healthcare across all channels (i.e. CDW, Corporate Express, Office Depot)

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What Else is Missing?

» No Systems Engineer - to support customers with integration.

» No Marketing Support - trade shows, advertising.

» Limited Custom label capabilities

▪ We frown on making specialty labels (substrates, adhesives) without guaranteed volume.

▪ Our label manufacturing is set up for large runs, not special runs in low volume.

» No Healthcare section on DYMO.com

» No White papers and Webinars.

» LIMITED PROFIT OPPORTUNITY FOR RESELLERS

▪ Our printers are inexpensive – under $200. Street prices leave little margin for resellers, just 15%.

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Other Data Points

» 15% of DYMO Stamps user list classified in healthcare industry.

» No meaningful % of Endicia, CardScan or mimio users are in healthcare.

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Our Labeling Opportunity

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Label Applications: Medical Offices

» Medical offices generally use two types of labels.▪ Pre-printed labels for

alerts & warnings, color-coded filing systems, etc.

▪ Standard white office labels for medical charts, documentation, specimen collection, and all the normal office needs such as mailing out insurance forms, bills and other correspondence.

DYMO LabelWriter printers and labels can be used for the standard white labels as long as the printers work with the software the office is using.

Other options are laser and inkjet printers.

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Label Applications: Hospitals

» Point-of-care items that require bar codes. ▪ Unit dose

▪ IV Bags

▪ Vials and syringes

▪ Wrist bands.

▪ Specimens.

The size and shape of labels can vary widely by application and HIS software vendor.

Some labels require special adhesives, coatings, materials. For example, blood bag labels have many specific requirements for adhesives and materials.

DYMO printers can be used once integrated with software.

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Hospital Labels: Key Points

» Much of the hospital label business has become commoditized.

▪ Many suppliers of thermal labels besides the printer manufacturers.

▪ Large national converters as well as regional competitors.

▪ Hospitals consolidate label purchases to get lower pricing

» Unique SKUs do exist:

▪ Example is specific wristbands made by Precision Dynamics; Zebra anti-bacterial wristbands.

» Integration with HIS systems is important.

▪ Laboratory – interfaced with LIS

▪ Pharmacy – interfaced with CPOE/Pharmacy IS

▪ Admitting – interfaced with ADT/HIS; (often laser)

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Printer Competitors

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Thermal Printing Is An Important Category

» Direct thermal printing is a popular technology for point-of-care applications:▪ Fast print speed

▪ Easy readable text and machine readable bar codes.

▪ Fulfills HIPAA privacy requirement as there is no copy left behind.

» Many thermal printer vendors targeting healthcare market.▪ Zebra, Intermec, Datamax, Cognitive, Brother and others.

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Why Buy DYMO?

R2844Z (RFID)

H2824Z (wristbands+)

S4M (high volume)

DYMO – Designed for the Office First Zebra – More “Commercial” Design

Hardware Design PC Compatibility Connectivity2" and 4"

widthLabel

capacity DesignWindows Drivers

and SDKBuilt in command

language USB Parallel Serial 802.11 Bluetooth

Zebra X L,M,H Commercial X X X X X X XIntermec X L,M,H Commercial X X X X X X XDatamax X L,M,H Commercial X X X X X X XDYMO X L Office X X XBrother X L Commercial X X

Today, main reason to purchase DYMO is “it’s good enough for the job and less expensive.”

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Brother: Healthcare Focus since 2005

» Focus is on printing labels for slides in the lab.

» Attend trade shows with most focus on MFP printers.

» Ad focuses on link with PathLogix lab system.

» Main focus at trade shows remains Multi-function and laser printers.

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DYMO Opportunities, Challenges andSuggested Approach

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Labeling in Medical Offices:

» Opportunities:

▪ Large number of offices = large potential

▪ Features, functions and print volumes are in DYMO’s “sweet spot”

▪ Twin Turbo may fill need where two printers are now needed

▪ Outreach to PM companies with enhanced SDK/API should enhance growth

» Challenges:

▪ Getting mind share of PM companies

– May not want to integrate or sell printers if they have no financial benefit

– Creating custom BOM is difficult

– May have other partners in place

▪ Outreach must be prioritized

▪ Label sales may be more limited if labels are shopped on price

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Labeling in Hospitals:

» Opportunities

▪ Twin Turbo to print wristbands and medical chart labels in a single printer on nursing floors

– Existing channels can sell this – i.e. Corporate Express and CDW

▪ Blood bank labels

– 4” printer: test and package with FDA-approved label media and software for blood labeling

– Existing sales channel could be CDW and/or Corporate Express

» Challenges

▪ Many competitors Zebra, Cognitive, Datamax, Intermec also in the market.

▪ Not on GPO contracts

▪ Not integrated by HIS vendors

▪ Questionable ruggedness

▪ Small max OD (can only support limited wristbands)

▪ Drivers not as flexible for label formatting as is desired

– Need to be able to print 11-13” media

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How to Play

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Build Healthcare Team

» Business Unit Leader▪ Develop strategy

▪ Prioritize competing opportunities

▪ Form relationships with industry leaders

▪ Develop training materials/program to educate channel

▪ Identify new opportunities for DYMO and Tech GBU products

» 2 experienced healthcare sales/BD staff▪ Pursue opportunities with PM companies and prospective business

partners

» 1 sales coordinator▪ Manage existing HC business

» 1 systems engineer▪ Support development staff at partner companies

▪ Work with DYMO engineers on implementing new SDK needs/features

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Partner with PM Software Providers

» Identify top 10 systems per specialty (Medical, Dental, Eye, Chiropractic, etc.)

▪ Get co-marketing agreements for end-user awareness

▪ Customer lists

▪ VAR / distributor / sales force contact information for follow-up

» Support with System Engineer for quick implementation

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Develop a Healthcare “Persona”

» Have a HC-focused web page

» Document HC successes in “White papers”

» Attend appropriate trade shows.

» Educate current distribution channels with DYMO healthcare opportunities.

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» Blood bag labeling (4x4 label) – for blood banks and hospitals

– DYMO’s price point should be favorable

» Nursing floor TWIN TURBO – print wristbands and labels in 1 device

– Unique 2-roll printer saves space; small footprint fits well at nursing station as well as on COW

– Needs integration with HIS or POC systems.

» Rural/small hospital and ASC wristband printing – any printer

– Low admissions means fewer wristbands/roll doesn’t impact efficiency

– Needs integration with HIS (admissions system)

Investigate Niche Markets in Hospitals

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CardScan Opportunities

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Concept: Scan Data from Medical Cards Right Into Practice Management Systems

» Problem:

▪ Medical offices want an image of insurance cards to ensure that they have needed information to get reimbursed, saving time, paper, etc.

» Solution:

▪ Eliminate need for paper by using CardScan to capture and image and assign relevant data fields to a database that can be queried (and possibly interfaced to the Practice Management System)

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A Voice from the Industry

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Three Companies Already in the Market

» Ambir – Illinois

▪ founded 2000

» Innovative Card Scanning – Texas

▪ founded 2002

» Card Scanning Solutions – California

▪ founded 1999

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The Market Opportunity Appears Large

» Medical offices & Outpatient locations▪ Over 300,000 offices

» Pharmacies▪ 68,500 locations

» Clinical laboratories▪ Over 15,000

» Dentists▪ 124,000 offices

» Hospitals & Ambulatory Surgery Centers▪ 5,747 hospitals – most with opportunities in:

– Admitting, ER and Out patient services.

ISSUE:

The opportunity appears large yet Ambir, CCS and ICS are small firms.

Is market adoption slowed by integration with PM systems?

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Opportunity and Challenges

» Opportunity▪ Large prospect base and

compelling reasons for purchase

– Streamlined check-in process– Eliminates cost and time to make

copies – Insurance authorization; scanned

info “moves” from the Cardscan dB into the PM or HIS system to enable outbound message that checks eligibility in “real time”

▪ MGMA attendees found Cardscan (for insurance cards) most compelling Tech GBU product.

▪ Opportunity to cross sell other Tech GBU solutions

– Check scanning– Postage

» Challenges▪ 3 entrenched competitors.▪ All new business:

– Requires new insights, scanners, new software development, B2B marketing approach and new distribution.

▪ Prioritization vs. other core projects.

– CardScan/Mac– DYMO File– Check Scan– Others.

▪ No on-going revenue stream.

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How to Play

» Consider acquisition of one of the existing firms in the business to gain immediate market access and a focused medical team.