RE:TLC-2000 Business Modelcoalbet wrote: 0
No Up Front Fee
Practitioners sign a 42 month lease (6 payments @ $99 per month, followed by 36 payments at $500 + tax per
month) for the Professional Model, which allows for a $1,000 trade up allowance. Program includes: 42 month
equipment warranty and 42 month marketing program. At end of 42 month term, customer must continue with
monthly payments into perpetuity or system ceases to operate.
Unlimited Use (Tracked through Internet)
10 treatments per month @ $50 per treatment covers cost of lease. Medical practitioner retains all revenue in
excess of $500 per month (typically $10,000 per month generated from use of product)
Monthly report of usage per condition e-mailed to customer with marketing support to increase usage per
condition
Conclusions
Practitioner Revenue: 200 patient treatments @ $50 per treatment = $10,000 monthly revenue
Practitioner Cost: $500 per month
Practitioner is generating 20X return on investment
2014 Objective
Installed base of 400 units financed initially through 42 month leases at $16,500 each equating to $6.6 M in
annual revenueU.S. Healthcare Demo
Exciting isn't it.... I think the 5 year 50million revenue target for the TLT division is reasonable if it catches on, market conditions good, therapy emerges
but it is a high number. New hardware, new "service", new revenue model with monthly payments into perpetuity. If all 1200 TLC1000 units generated $500 a month, that would be 6+M a year, every year. A lot depends on a) new sales year after year/market itself grows/reach new market (us/intl) b)time - for perpetual monthly fees to add up.
50m is possible... it's really not if, it's when. The TLC1000 is a great device and has had a great run... now imagine the next generation... building on Theralase's already good repuation. The Theralase brand, network, value-added services, support, training, quality and technologically.... a disruptive device. The Theralase TLC2000 is a next generation patented biofeedback therapeutic laser system that the Company has been researching and systematically developing over the last 12 years. There will be nothing like it.
----- cantechletter interview ------
Can you explain how the TLC-2000 technology works, what are the benefits and why it is considered a disruptive technology? src
All therapeutic lasers in the world today are known as “open loop” systems; whereby, the practitioner sets the power and time of the system and treats a patient. There is no ability to know if the therapeutic laser system delivered the correct dose of energy to the injured tissue, undertreated or overtreated the tissue. The First Law of Photochemistry states that, “Light must be absorbed for photochemistry to occur” or alternatively “Light of the correct wavelength must reach the tissue of interest to perform photochemistry”. Extrapolated, this law states that if you undertreat or overtreat a volume of tissue, you will achieve less effective results than possible. Therefore, the delivery of light to tissue is a biphasic effect, in other words “light is a drug”, too little light and you will get minimal results (same as for pharmaceutical drugs), too much light and you will bioinhibit the tissue and again achieve minimal or negative effects (same as with pharmaceutical drugs). Therefore, you must deliver the exact dose of light at the tissue surface based on the depth of the patient’s condition and their physical characteristics (skin colouration, amount of subcutaneous fat, amount of muscle fiber, amount of connective tissue and amount of bone) to deliver the exact optimized dose of energy at tissue depth, as light attenuates as it passes through the different strata of tissue. The TLC-2000 is a patented biofeedback therapeutic laser system that is able to accomplish just this. It automatically determines the depth of a patient’s condition based on the practitioner’s diagnosis and the patient’s physical characteristics and then proceeds to deliver that exact dose of energy to that tissue each and every time and discontinuing treatment when the desired dose at tissue depth has been achieved. In other words, a perfect therapeutic laser treatment, where the TLC-2000 fulfills the first law of photochemistry exactly, taking into account the depth of a patient’s condition and their physical attributes providing the highest efficacy achievable with a therapeutic laser system. Clearly, a disruptive technology.
Why will this displace all other competitive devices?
By providing a next generation therapeutic laser technology which can automatically determine the depth of a patient’s condition, adjust automatically to a patient’s physical characteristics and deliver an exact dose of energy at a specified depth in tissue and then automatically discontinue treatment, this new technology precisely fulfills the first law of photochemistry and, according to scientific and clinical data, is able to deliver the most effective therapeutic laser treatment available. When presented with the scientific and clinical rigour of the benefits and attributes of the TLC-2000 to their practice versus their current technology, most potential customers, being highly educated healthcare practitioners would make the logical decision to upgrade their existing technology to the new technology or at a minimum invest in the new technology in addition to their current technology.
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Ok, the hardware is going to be great, how are we going to get them! We've all heard of the expanded sales team. What else? Aggressive sales and flexibile pricing, upgrade discounts, longer terms are all possible.
$500 a month is commonly mentioned number on 36 months. or 42 months with $1000 upgrade credit. $99 for first 6 months, $500 thereafter.... but TLT will be flexible based on configuration, term and by replacing competitors hardware. 2014 annual information form:
"
Theralase in keeping with its mandate of world-class customer service will allow every Theralase
customer, the ability to trade up to the new state of the art TLC-2000 laser system. In order to allow
all laser practitioners a common tool to use in the delivery of precision therapeutic laser treatments,
Theralase will allow purchasers of competitive products the ability to trade up to the TLC-2000, under certain terms and conditions. Theralase intends to employ a recurring revenue model; whereby, the Company will share in the revenue generated by the TLC-2000 laser system. Practitioners participating in the program will pay between $150 to $500 per month, dependent on system configuration, for
60 months via binding agreement and then optionally $75 to $250 monthly, dependent on system
configuration; thereafter, to maintain lifetime: equipment warranty, marketing support and software upgrades. Theralase’s corporate mandate is to capture at least 1% of the therapeutic laser market, thus achieving annual revenues of >$50 million in a recurring revenue model within five years of launch. Theralase intends to achieve this goal through the direct sales, marketing and international distribution of the patented TLC-2000 product."
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Value locked
More on the revenue model.
What is the business model that you are using to launch the TLC-2000?
The TLC-2000 will be sold as a recurring revenue model; whereby, the practitioner will be charged $99 + tax for 6 months allows an opportunity for the practitioner to integrate the new TLC-2000 technology into their practice, then $500 + tax per month for an additional 36 months. The lease agreement is emblazoned with the Theralase name and logo at the top, but it is actually a lease agreement from either a top Canadian or US medical device leasing company depending on which country the product is being leased. Once executed by the customer and approved by the lease company, the lease company now owns the Theralase TLC-2000 product and leases it to the customer in exchange stream of payments. This stream of payments would have a net present value of approximately $16,500, which would be paid to Theralase at the time of lease commencement. If the customer defaults on the payment stream, the lease company would enforce their contractual rights to ensure payment including legal remedies and removal of the equipment. Because of the control of the TLC-2000 through a tablet computer and the internet, Theralase has the ability to disable the technology remotely, as required, on our own behalf or on the behalf of the lease company. For the term of the lease, the customer is contractually locked into the stream of payments with the lease company which would enforce their legal rights if the payment stream is not received in a timely manner.
At the end of the term of the 42 months lease, what are the customers options?
They can continue to pay at $500 + taxes per month and
receive unlimited warranty, ongoing marketing in the form of direct and indirect patient marketing and promotion of their clinic though all of our website and media channels. If we have done our job correctly doing the 42 months,
there will be a high number of customers who stay with the program. We are estimating 80%, as most of our customers generate in excess of $10,000 a month with our technology, a 2000% annual return. They can discontinue use of the product and return it to the Company to receive their equipment deposit fee of $500. If they refuse to return the product or refuse to pay for its use, the Company would simply disable the TLC-2000 remotely rendering it unusable. The customer can also Commence a new 42 month lease, on the 2018 model of the TLC-2000 and commence a stream of payments to the lease company again. If the customer does not renew the lease, then the product would need to be returned to the Company in exchange for an equipment deposit fee equal to one month’s lease payment of $500. If the product was not returned by the customer for whatever reason, then the Company would disable its use and the customer would forego their equipment deposit.
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SMART DEVICE. VALUE. The TLC 2000 is effectively a "smart device", internet/wifi connected. Under lease,
it will always have an equipment warranty, marketing support and software upgrades. It almost becomes comparable to SasS models that have taken over internet tools... Theralase will essentially be
Therapy as a Service (billed as a service, not a one time purchase).
The unit remembers the most optimized protocols based on an individual patient’s optical tissue profiles. Tissue profiles are going to be stored in the cloud/a databank. The TLC2000 biofeedback therapeutic laser system has the ability to
deliver exact doses of light energy to precise depths of target tissue, unattainable by any of its competition, thus enabling enhanced efficacy and accelerated healing for patients . The TLC2000 is a learning device that analyzes the most optimized clinical protocols based on an individual patient’s optical tissue characteristics and
relays this information wirelessly to each healthcare practitioner who uses the technology internationally ; thus ,optimizing their patient treatments on a daily basis.
"The Theralase® TLC-2000 biofeedback therapeutic laser system is a quantum leap forward in therapeutic laser technology.
The TLC-2000 is able to measure a patient’s optical profile in a matter of seconds and then deliver a precise, clinical dosage of energy to their specific condition in a matter of minutes. Clinically effective dosages specific to optical tissue profiles are stored in a HIPAA compliant cloud databank and are available real time to all practitioners utilizing the TLC-2000 therapeutic laser system via an internet connection to a tablet, which wirelessly connects to the therapeutic laser probe."
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Monthly payments into perpetuity for the TLC2000 Service is the way to look at it. Considering TLT has always been able to do
1m to 2m new sales per year of the TLC1000.. what can they do with the TLC2000?
With the new sales staff/effort with the advantages of TLT2000 service per above with lower upfront costs to customers via lease should be able to get the upgrades, new sales to generate good revenue. Just conservative I see TLT doing 4m a year easily at measily 20 units a month. The bonus comes after the lease company gets their payback and monthly fee turns over to TLT.
example of 20 units or 50 units a month. average unchanging for 7 years.. could be peaks in early years with upgrades/sales efforts then simmering a bit but then market share, market growth could yield higher units in later years... I just
went with same units each year and assuming 36month lease to make it easier... monthly fees for tlt in later years would obviouslly be better with higher conversions years before it. It balances with flat unit numbers in later years. Roger's 50m in 5 years probably projects high conversions in first two years based on upgrades and moderate to high growth for years 3/4/5, .. not sure exactly because if he was only starting with 400unit install base.. 50m is a big number... it takes awhile for recurring revenue fees to kick in.
considering just 20 units a month avg over 7 years
year 1 240 x 16500= 3.96m
year 2 240 x 16500= 3.96m
year 3 240 x 16500= 3.96m
year 1 units monthly fee now goes to TLT - 200units X 500$/mnth = 1.2m - assuming 83.33% renewal
year 4 240 x 16500 +1.2m = 5.16m
year 1 & 2 monthly fee now goes to TLT 400units x500$/mnth = 2.4m- assuming 83.33% renewal
year 5 240 x 16500 +2.4m= 6.36m
year 1 & 2 & 3 monthly fee now goes to TLT 600units x500$/mnth = 3.6m- assuming 83.33% renewal
year 6 240 x 16500 +3m= 7.56m
year 1 & 2 & 3 & 4 monthly fee now goes to TLT 800units x500$/mnth = 4.8m- assuming 83.33% renewal
year 7 240 x 16500 +4m= 8.76m
considering just 50 units a month
year 1 600 x 16500= 9.9m
year 2 600 x 16500= 9.9m
year 3 600 x 16500= 9.9m
year 1 units monthly fee now goes to TLT - 500units X 500$/mnth = 3m/yr - assuming 83.33% renewal
year 4 600 x 16500 +3m = 12.9m
year 1 & 2 monthly fee now goes to TLT 1000units x500 =6m/yr- assuming 83.33% renewal
year 5 600 x 16500 +6m= 15.9m
year 1 & 2 & 3 monthly fee now goes to TLT 1500units x500 =9m/yr- assuming 83.33% renewal
year 6 600 x 16500 +3m= 18.9m
year 1 & 2 & 3 &4 monthly fee now goes to TLT 2000units x500 =12m/yr- assuming 83.33% renewal
year 7 600 x 16500 +4m= 21.9m
So again, I think the 5 year 50million revenue target for the TLT division is reasonable in a perfect scenario if it catches on, market conditions good, therapy emerges
but it is a high number. . A lot depends on a) new sales year after year/market itself grows/reach new markets (us/intl) b)time - for perpetual monthly fees to add up. TIME.. is what it comes down to but I don't see how you lose on this investment when the technology is as good as it is and just a 40m market cap. Should be at least 100m just on the TLT division.