Female Health Company

Message from the Chairman and C.E.O.

Partnering with organizations worldwide to improve women’s health

2009 was a year of remarkable accomplishments for The Female Health Company. The most important was increasing women’s access to Female Condoms through the global availability of the FC2 Female Condom (FC2).  Our second-generation advance provides protection against HIV, AIDS, other sexually transmitted infections and unintended pregnancy at a significantly lower price than our original product.

FC2 became globally available about the same time the World Health Organization (WHO) released a tragic fact:  Among women 15 to 44 years of age, HIV/AIDS ranks as the No. 1 cause of death worldwide.
 

Thus, the need for Female Condoms is undeniable. FC2 is now the only woman-initiated HIV/AIDS prevention product approved by the U.S. Food and Drug Administration (FDA) and cleared by the WHO for purchase by UN agencies. Used appropriately, FC2 reduces the spread of the HIV virus and, thus, is an additional method to save lives, reduce human suffering and control global health costs due to its preventative  nature.

Sustaining a strong financial position enabled development and regulatory approval of FC2 – a multiyear journey – and allowed us to continue worldwide education and programming regarding HIV/AIDS and its prevention.  After the FDA approved FC2 in March 2009, all major customers were transitioned to the more affordable second generation unit. FC2 production capacity expanded in Malaysia to more than 80 million units annually. FC1  production was discontinued in an orderly process in the United Kingdom, where The Female Health Company continues to maintain a significant presence.

Our strong growth resulted in Fortune magazine recognizing us among “America’s 100 Fastest Growing Small Public Companies,” including No. 1 among health care and No. 8 of all companies listed.

Additional FY2009 accomplishments include:

• Exclusive of the restructuring charge related to the transition to FC2, a 95 percent increase in operating earnings to $6.2 million, surpassing  prior guidance of an increase ranging from 60 percent to 85 percent.
• Earnings per share of $0.24 in FY2009 vs. $0.18 in FY2008, including restructuring charge and tax benefit, an increase of roughly 33 percent.
• Being listed on the NASDAQ stock exchange in July 2009 and joining the Russell® 2000 Index.
• Share price rising 66 percent from $3.05 (9/30/08) to $5.05 (9/30/09).
• Generating $5.7 million in cash from operations during FY2009, ending the year with no debt and with $1.5 million in unused credit lines.

To fulfill our vision, we work with a number of public and community-based organizations throughout the world, which explains our report focus on Vision + Partnership.

I am grateful to our shareholders for their support, our global team and our many partners worldwide. You have helped make our accomplishments possible, and you continue to provide the motivation to expand our capabilities – a seemingly limitless future to fulfill an essential mission. Our company’s contribution to prevention is significant, but our vision is only beginning to be realized in reference to the potential to improve women’s health worldwide.

O.B. Parrish

Chairman and Chief Executive Officer