Direct to Consumer Testing Trends and Directions Francisco

Direct to Consumer Testing Trends and Directions Francisco R. Velázquez, M. D. , S. M. President and Chief Executive Officer PAML, LLC & PAML Ventures Confidential – Do Not Duplicate

Consumer Trends (1) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. RED CARPET DIY HEALTH DEALER-CHIC ECO-CYCOLOGY CASH-LESS BOTTOM OF THE URBAN PYRAMID IDLE SOURCING FLAWSOME SCREEN CULTURE RECOMMERCE EMERGING MATURIALISM POINT & KNOW MORE-ISM (1) 12 Crucial Consumer Trends; http: //trendmatching. com/trends/22 trends 2012/accessed 3/7/2013 Confidential – Do Not Duplicate

Multi-Generational Impact (2 – 5) Traditionalists: -Born before 1945 (68 years or older) -Known for civic duty and commitment to hard work Baby Boomers: -Born between 1946 – 1964 (49 - 67 years of age) -As a group they are the wealthiest, most educated and most active (80% of financial assets, 50% of consumers spending, 77% overall prescription drugs) Generation X: -Born between 1965 – 1979 (34 - 48 years of age) -Independent, entrepreneurial, goal oriented, sense of independence and skepticism Generation Y: -Born Between 1980 – 2000 (13 - 33 years of age) -Also known as millenial’s -Generation where media and technology blurred reality and fantasy -Technology is an extension of who they are Post Millenial’s: -Born between 2001 - present (12 years or younger) -Also known as the “Global Generation” -Web-enabled (2) (3) (4) (5) Economy faces bigger bust without Boomers; Reuters, January 1, 2008 Horovitz, Bruce: “After Gen. X, Millenial’s, what should next generation be? ” USA Today, May 4, 2012 Chosewood, L. , Casey: Safer and Healthier at any age strategies for an aging workforce. National Institute for Occupational Safety and Health, Jul. 19, 2012 (5) Elam, Carol, et al: Welcoming a new generation to college: The millennial students, Journal of College Admission, 2007 pp. 20 - 25 Confidential – Do Not Duplicate

National Market Trends (6) The Physicians Foundation: Consumer attitudes toward family/primary care physicians and the Healthcare System, July 2012 Confidential – Do Not Duplicate

National Market Trends (6) The Physicians Foundation: Consumer attitudes toward family/primary care physicians and the Healthcare System, July 2012 Confidential – Do Not Duplicate

National Market Trends (7 - 16) q Consumerism in Healthcare - Employers to offer defined contributions instead of defined benefit health plans (7) - Greater transparency in cost differentials (8, 9) - Use of cost/quality data to make healthcare decisions (10) - DIY health (11) q Fewer primary care physicians (12) - Inadequate -number of training program positions (13) q Retail presence (14) - Physician Extenders • Pharmacists, Nurses, NP’s - CVS Caremark • 628 Walk-in clinics • 1500 by 2017 - Walgreens / Theranos Partnership (15, 16) (7) Spoert, Bob: 6 Trends in an era of consumer-driven healthcare: Becker Hospital Review, June 6, 2012 (8) Rabin, Roni C. : The confusion of hospital pricing: New York Times Health/Science, April 23, 2012 (9) Brill, Steven: Bitter Pill; Why medical bills are killing us. Time Special Report: Vol 181, No 8, p 16 – 55 March 4, 2013 (10) Stuart, Kirsten: Utah insurers scoring your doctor on quality, price. The Salt Lake Tribune March 17, 2013 (11) Becker, Scott, et a: 8 Key issues for hospitals and health systems – 2013 (12) Becker Hospital Review: November 6, 2012 (13) Beck, Melinda: Squeeze Looms for Doctors: More medical students are in the pipeline, but too few residences await. The Wall Street Journal: March 14, 2013 p A-13 (14) Wieczner, Jen: 10 Things drugstores won’t tell you: The Wall Street Journal: Sunday, March 17, 2013 (15) Walgreens enters clinical lab source partnership: Chain Drug Reviews, September 9, 2013 (16) Rago, Joseph C. : A Drop of Blood an Instant Diagnosis. The Wall Street Journal: September 7 -8, 2013, p A-13 Confidential – Do Not Duplicate

Consumer Empowerment (17) In 2040 the Consumer view will be: “I am the CEO of my own body the doctors are my consultants. I will decide what treatment I want, how I will receive it, and who provides the treatment”. - Knowledgeable and wants to embrace the most reliable health information, has an ability to access knowledge when required Paying for a service and looking for value for money Concerned with their health and wants to simply feel their best Quality of life/symptom relief is important in addition to disease management Searching: western medicine cannot provide absolutely everything Seeking treatments that are congruent with their values and beliefs With an open mind have a pragmatic pursuit of better outcomes Expedience – need for immediacy – “what will help me right now”. High expectation – demand to be treated with respect and dignity Seeking a doctor to interpret information and personalize for the individual. Not to know all the answers but to know where to look Has a choice, discerning Seeking a welcoming engaging environment and expecting more convenience and personal comfort (17) Paslawsky, Liz: International trends in healthcare – The consumer view of healthcare – 2040 AFG Venture Group Dispatches 2012 Confidential – Do Not Duplicate

Generational and Gender Differences in the Valuation of Healthcare (18) Health Cast: The Customization of diagnosis, care and cure: Price. Waterhouse Cooper: Health Research Institute, March 2010 Confidential – Do Not Duplicate (18)

What Do Consumers Want? (18) Health Cast: The Customization of diagnosis, care and cure: Price. Waterhouse Cooper: Health Research Institute, March 2010 Confidential – Do Not Duplicate

Health Related Information Services (18) Health Cast: The Customization of diagnosis, care and cure: Price. Waterhouse Cooper: Health Research Institute, March 2010 Confidential – Do Not Duplicate

Technology Enablers and Enabled Applications q Internet q Smartphones q Telemedicine q M-Health q Direct to Consumer Testing q Retail Segment Confidential – Do Not Duplicate

Internet (19, 20) q 81% of U. S. Adults use the internet 59% use it for health information (18) q 79% of caregivers have access to internet, of those 88% look for health information q 52% of smartphone users download health apps, 19% of smartphone users downloaded a health app (19) Fox, Susannah: Health Online 2013; Pew Internet, Pew Internet & American Life Project, January 15, 2013 (20) Fox, Susannah: Pew Internet Health; Pew Internet & American Life Project, February 20, 2013 Confidential – Do Not Duplicate

m-Health (21 - 23) q M-Health: (mobile health) “Use of mobile phones and technology in medical care. ” (21) q Home monitoring systems 2. 8 Million worldwide (2012 projected to be 9. 4 million by 2017 (26. 9 CAGR) q Applications/Home monitoring -Cardiac rhythm management -ECG monitoring -Sleep therapy -Blood pressure monitoring -Glucose/diabetes monitoring -Medication adherence q Market size $50 Billion (2010) (23) (21) Healthcare Information and Management Systems Society: www. himss. org (22) m-Health and Home Monitoring – 5 th Edition, Berg Insight January 1, 2013 (23) Dolan, Brian: Mc. Kinsey: Future of Medicine is Doc-In-A-Phone Mobilehealth news; July 13, 2011 Confidential – Do Not Duplicate

Smartphones (24 - 26) q 80% Of the worlds population has a mobile phone (5 Billion phones) 21. 6% are smartphones (1. 08 Billion) (24) q 918. 6 million smartphones will be shipped this year, increasing the percent of smartphones to 50. 1% (12. 1% US, 111, 150, 600 phones) (25) q 54. 9% of all mobile phones in the US are smart phones (26) (24) Go Blog: Smartphone users around the world statistics and facts, January 1, 2012 (25) Kovalski, Nick: Smartphones will overrun feature in 2013. . Slashdot Business Intelligence, March 4, 2013 (26) Two thirds of new mobile buyers now opting for smartphones, Nielsen, Mobile Newswire, July 7, 2012 Confidential – Do Not Duplicate

Smartphones US Market (27, 28) q Gender (27) 50. 9% Female 50. 1% Male q Ethnicity (26) 67. 3% Asian/Pacific Islander 57. 3% Hispanic 54. 4% Black/African American 44. 7% Whites q Market penetration by age segment 18% 13 -17 years 80% 18 -24 years 74% 35 -44 years 65% 45 -54 years 56% 55 -64 years 43% 65+ years (28) (27) America’s New Mobile Majority: A look at smartphone owners in the U. S. , Nielsen Mobile Newsline. May 7, 2012 (28) Survey New U. S. Smartphone Growth by Age and Income, Nielsen Mobile Newsline. February 20, 2012. Confidential – Do Not Duplicate

Healthcare Applications: U. S. Smartphones Market (29, 30) q 91% of US smartphone owners would use an app to gain health information (28) q 58% would be interested in using apps to manage a disease or a drug (28) q 48% would use apps to track health information (28) q 70% of Americans are self-trackers (29) q 60% are tracking weight, diet or exercise (29) q 33% are tracking a health indicator for a loved one (29) Bau, Ignatius; Consumer Health Information Corporation: Motivating consumers to use Health Apps. CHIC Health Policy Consultation Services May 4, 2011 (30) Pew Internet American Life Project, 2012 Confidential – Do Not Duplicate

Cell Phone-Enabled Devices q Diabetes Glucose monitors Automotive applications q Immunoassays Lateral flow tests Infectious diseases q Microscopy Histology Microbiology Hematology q Molecular Tests Amplification Nucleic acid lateral flow Microfluidic cartridges Confidential – Do Not Duplicate

(31) Rosen, Shara: Cellphone-enabled diagnostics; m. Health applications in IVD. Kalorama Market Intelligence Report; August 2012. Confidential – Do Not Duplicate

(31) Rosen, Shara: Cellphone-enabled diagnostics; m. Health applications in IVD. Kalorama Market Intelligence Report; August 2012. Confidential – Do Not Duplicate

(31) Rosen, Shara: Cellphone-enabled diagnostics; m. Health applications in IVD. Kalorama Market Intelligence Report; August 2012. Confidential – Do Not Duplicate

Ford SYNC (32) http: //www. diabetespharmacist. com/uploads/image/Ford%20 dashboard. Accessed March 3, 2013 Confidential – Do Not Duplicate

Ford SYNC (33) http: //static. ddmcdn. com/gif/blogs/Ford-Sync-Allergy. Alert. Accessed March 3, 2013 Confidential – Do Not Duplicate

Holomic US (34) http: //holomic. com/content/up-content/themes/executive/img_resize/timthumb. php? src=ht. Accessed March 12, 2013 Confidential – Do Not Duplicate

Telemedicine Tools and Applications q Remote monitoring for chronic diseases and/or injuries q Intensive care units (e-ICU) (35 - 42) (35 -37) (38) q Remote patient monitoring during and after surgery and for cardiovascular, neurological, prenatal, psychological critical care and examination uses (RP-VITA) q Pre-anesthesia evaluations (39) (40) q Diagnosis of congenital heart disease q i. Phone Interpath (histology) (41) (42) q Diagnostic Applications: Diabetes, infectious diseases, skin cancer (42) (35) (36) (37) (38) (39) (40) (41) Girard, P: Military and VA telemedicine systems for patients with traumatic brain injury: J. Rehabil. Res. Dev. : 44 (7): 1017 -26, 2007 Monegain, Bernie: VA looks at the telemedicine to help boost diabetes care. Healthcare IT News: Nov. 1, 2010 The Veterans E-Health Telemedicine Support (VETS) Act of 2012 (H. R. 6107) Alltucker, Kim: Hospitals turn to telemedicine for remote care of patients: The Arizona Republic: July 3, 2011 Hand, Larry: FDA clears telemedicine robot for use in hospitals. Medscape News February 1, 2013 Applegate, Richard, et al; Telemedicine pre-anesthesia evaluation: A randomized pilot trial. Telemedicine and e-Health. Vol. 19, Issue 3 March 12, 2013. Haley, E. Jessica, et al; Remote diagnosis of congenital heart disease in Southern Arizona: Comparison between tele-echocardiography and videotapes. Telemedicine and e-health Vol. 18 Issue 10, December 12, 2012. (42) Rosen, Shara: Cellphone-enabled diagnostics; m. Health applications in IVD. Kalorama Market Intelligence Report; August 2012. Confidential – Do Not Duplicate

Health and Wellness 2013 (43, 44) q “Wellness” is no longer equivalent with simple notions of physical wellbeing. q “Quality of Life” now represents the major aspiration of most consumers. q 54% Of all consumers say they have recently changed their views on health and wellness (43) q The average household spends $148. 48 per month on categories that have a wellness halo (44) (43) Health and Wellness Deep Dive: A customized presentation for Oldways. The Hartman Group, Inc. 2012 (44) Health and Wellness Trends Update 2012. The Hartman Group, Inc. 2012 Confidential – Do Not Duplicate

Wellness Spending by Category (45) Health and Wellness Trends Update 2012. The Hartman Group, Inc. 2012 Confidential – Do Not Duplicate

Where do People Shop for Health & Wellness Products? (46) Health & Wellness Deep Dive: A customized presentation for Oldways. The Hartman Group, Inc. 2012 Confidential – Do Not Duplicate

Beyond Laboratory Testing (47) Solo. Health Stations (47) Solo. Health Kiosk gets FDA’s OK. Chain Drug Review 2013 Confidential – Do Not Duplicate

Solo. Health Stations (48, 49) q 2100 currently deployed (3500 expected by year-end) (48) q. Usage ~ 9 Million people q. Average 2. 5 MM/month (85, 000/day) q. Within 10 minute drive time of 48% of US population q 55% male / 45% female q. Walmart to deploy in 2013 (49) (48) Solo. Health Stations now in more than 2, 000 retail pharmacy locations. PRWeb, March 18, 2013 (49) Appleby, Julie: Walmart to open health screening kiosks. Kaiser Health News, February 25, 2013 Confidential – Do Not Duplicate

Retail Clinics (50 - 53) q 23. 5% of consumers surveyed sought treatment at a retail clinic in 2011 (50) q Retail clinics charge 30 – 40% less than private physician offices and 80% less than emergency departments (51) q Example (52) - Tdap $232 hospital cost - $100 or less/retail q Retail store sales $733 million (53) (Increased 80% from 2005) (50) Medical Cost Trend: Behind the numbers 2013: Priceaterhouse Cooper, Health Research Institute, May 2012 (51) Comparing cost and Quality of care at retail clinics with that of other medical settings for three common illnesses: The Annals of Internal Medicine, 151, 2009. p 321 -328 (52) HRI analysis of retail clinics adjusted prices on April 17, 2012 and 2009 hospital MEDPAR data sets. PWC Health Research Institute 212 (53) Retail Clinics: Winners and losers “ 09 -11”. Kalorama Information 2012 Confidential – Do Not Duplicate

Retail Clinics – Geographical Distribution (54) Carlson, Bruce: Retail Clinics 2012 Kalorama Information Market Intelligence Report August 2012 Confidential – Do Not Duplicate

Retail Clinics: Ownership (55) Malone, Bill: The surge in retail clinics: Expansion of services signals more testing Clinical Laboratory News, Volume 38 Number 11, 2012, November 2012 Confidential – Do Not Duplicate

Retail Clinic Growth (54) Carlson, Bruce: Retail Clinics 2012 Kalorama Information Market Intelligence Report August 2012 Confidential – Do Not Duplicate

Retail Clinic Utilization by Consumer Type (54) Carlson, Bruce: Retail Clinics 2012 Kalorama Information Market Intelligence Report August 2012 Confidential – Do Not Duplicate

Direct to Consumer Testing (56) q Self directed, does not require a physician’s order q Single tests/panels q Out-of-pocket expense q Report goes directly to consumer q Covered under state regulation (34 states allow DTC) q DTC is a “retail business” (56) Whalen, R. Direct Access Testing (DAT): Clinical laboratory improvement advisory committee meeting. Centers for Disease Control and Prevention. Confidential – Do Not Duplicate

Why Would a Consumer Choose DTC? (57) PAML, LLC: Results Direct Consumer Survey Confidential – Do Not Duplicate

Direct To Consumer Testing Prevalence/Growth (58, 59) q Laboratory Industry ($65 Billion) is growing 6%/year DTC is growing 15 – 20% (58) q It is estimated that 10 - 15% of commercial and hospital laboratories offer DTC (59) (58) Kadet, Anne: When medical testing gets in your blood. Smart Money Magazine August 28, 2012 (59) Tarkan, Laurie: Blood-test labs bypass doctors, spurring debate. The New York Times Health Section March 12, 2012 Confidential – Do Not Duplicate

Results-Direct. com™ (60) Just because you're busy doesn't mean you cannot take control of your health. Results Direct™ is a convenient, safe and affordable way to get many common test results without visiting a doctor. And getting the tests you want is as easy as 1, 2, 3. Simply order a test online then visit one of our service centers so a staff member can draw a small sample. Its that convenient. (60) https: //www. results-direct. com/ Confidential – Do Not Duplicate

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Results Direct™ Demographic Distribution Males – By Age Under 18 18 - 25 25 - 30 30 - 35 30 - 40 40 - 45 45 - 50 50 - 55 55 - 60 60 - 65 65 + Age Ranges Confidential – Do Not Duplicate

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Results Direct™ Demographic Distribution Females – By Age Under 18 18 - 25 25 - 30 30 - 35 35 - 40 40 - 45 45 - 50 50 - 55 55 - 60 60 - 65 65 + Age Ranges Confidential – Do Not Duplicate

Growth Historical Distribution Average Monthly Revenue – Results Direct™ 2003 -2013 % of growth per year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Confidential – Do Not Duplicate

health 123™ / Virtual Health (61) https: //www. health 123. com/ Confidential – Do Not Duplicate

Direct-to-Consumer Testing / Retail Confidential – Do Not Duplicate

Age Management / AION Laboratories™ (62) Finding Answers. Inspiring Change. (62) AION Laboratories, a PAML, LLC wholly owned subsidiary. Confidential – Do Not Duplicate

Conclusions q Consumers are key drivers for healthcare market q Defined gender and generational/differences in utilization and adoption q Technology is an enabler of this consumer driven market q Economic pressures will drive broader market penetration q Diagnostics are key in consumer markets q These trends will accelerate in proportion to the enabler technologies growth q Retail will become a significant healthcare provider segment Confidential – Do Not Duplicate

Questions ? Confidential – Do Not Duplicate