Arjo spin-off & Getinge targets

Transcription

1 Arjo spin-off & Getinge targets Mattias Perjos, President and CEO, Getinge Joacim Lindoff, President and CEO, Arjo November 10, 2017

2 Agenda The proposal distribution and listing of Arjo Arjo a brief introduction to the company Getinge restated financials, new targets and reconfirmed strategy with fine-tunings Q&A Page 2

3 Distribution and listing of Arjo Creating increased shareholder value Overview of the spin-off Why What When Strategic review in Getinge resulted in an aim to increase presence in the Acute Care Therapies and Surgical Workflows Arjo and Getinge are better positioned as standalone platforms to develop market leading offerings for their respective customers where Arjo will increase its presence within Long Term Care Enables management for each entity to focus on key operational matters for the respective business Acute Care Therapies Sales 2017 Sep R12M As a percentage of Getinge including Arjo Surgical Workflows PPAC +Desinfection flushers 26% 24% EBITDA* 2017 Sep R12M As a percentage of Getinge including Arjo 18 Oct 2016 Announcement of spin-off 1 Apr 2017 Arjo as an internal standalone company Today Launch of transaction and prospectus published 4 Dec 2017 EGM to decide on spin-off 7 Dec 2017 First day of trade in Getinge share excl Arjo 8 Dec 2017 Record date 12 Dec 2017 First day of trading in Arjo *Adjusted for acquisition-, restructuring and integration costs Page 3

4 Arjo in brief November, 10, 2017 Joacim Lindoff, President & CEO Arjo

5 SEK 7.8 bn in sales and market leading position across most product categories Arjo in essence Net sales of 7.8 SEK billion (2016) Customers in 60 countries 6 production sites employees Sales per customer type Sales per geography Sales per revenue type 67% 37% 40% 17% 15% 18% 33% 48% 25% Long Term Care Acute Care RoW WE NA Consumables Rental Capital Service 21% 8% 3% 16% 21% 11% 3% 17% Patient Handling Hygiene Disinfection Medical Beds Therapeutic Surfaces VTE Prevention Diagnostics Service Page 5

6 Listing Arjo is about focus Following the strategic direction in Getinge 2015 to integrate its business areas, Getinge gravitated towards the dominant customer segment Acute Care in terms of: Strategic focus a standalone Arjo with a dedicated Management and Board of Directors will in addition to Acute Care be able to capitalize on the faster growing Long Term Care segment Portfolio focus a standalone Arjo will be able to prioritise R&D projects and inorganic opportunities Sales & Service focus a standalone Arjo with devoted sales and service reps will be able to better cater to customers needs across customer segments Page 6

7 Arjo investment highlights Large addressable market driven by favourable trends Complete Acute- and Long Term Care offering with strong market positions Global business platform with low operational risk Proven business model with sustained competitive advantages Well identified strategic plan supported by a strong governance structure and long term committed principle owner Page 7

8 Arjo is active on a SEK ~65bn global market growing at 4% annually Addressable market Comments ~SEK 65bn Market size 2017 ~SEK 80bn Market size CAGR (*) ~4% Arjo plays in a market that is expected to grow at 4% annually up until Market growth largely different between geographies where developing countries are expected to grow at a higher rate 6-9% 2-4% Arjo s current exposure is primarily in developed countries that are expected to grow some 2-4% annually 2-4% Western Europe North America Rest of the world Source: The economist Group, 2017 (*) From 2017 to 2022; Page 8

9 Complete offering for care of patients with reduced mobility and age-related health challenges Patient Handling Lifts, sliding sheets, slings and flites Hygiene Bathing and showering systems, chemicals and liquids Medical Beds Ergonomically designed for acute care and long term care 21% of sales % of sales % of sales 2016 Therapeutic Surfaces Foam mattresses, alternating pressure and low air loss systems VTE Prevention Active compression systems, pumps and garments Disinfection Flusher-disinfectors and chemicals for safe cleaning and disinfection 21% of sales % of sales % of sales 2016 Diagnostics Cardiovascular and obstetric dopplers, fetal monitors 3% of sales 2016 Service After-sales support and service to help customers get the most out of their equipment 17% of sales 2016 Page 9

10 Well invested asset base with state of the art production facilities Cardiff, Wales, UK Employees Product categories 158 Monitoring and Doppler diagnostics equipment Magog, Canada Employees Product category 143 Patient handling Poznan, Poland Employees Product categories 670 Hospital beds, patient handling, hygiene, disinfection Santo Domingo, Dominican Republic Employees 464 Product categories Patient handling, VTE prevention Suzhou, China Employees Product categories 150 VTE prevention, Pressure ulcer treatment Zhuhai, China Employees Product category 183 Hospital beds Arjo s has undergone a transformation of the manufacturing footprint, as 15 production units have been reduced to 6 highly efficient units specifically designed for the company s production and distribution needs Page 10

11 Arjo strategic intent To be recognized globally as the most trusted partner in enabling care and improving quality of life for people with reduced mobility and age-related health challenges, we will Maintain market leadership in Acute Care Become market leader in Long- Term Care Become the preferred solutions provider A lean and focused sales approach will drive the organic growth, while acquisitions will be explored to support portfolio strategy and drive market presence Page 11

12 We will transform revenue composition in 3 ways resulting in a sustained increase in profitability and robustness ILLUSTRATIVE Transformation of: Customer Segment Split Geographic Split Revenue Type Acute Care Long Term Care Western Europe North America Rest of World Service Consumables Capital Rental Re-establishment of market leadership within Long Term Care, while Maintaining leading position in Acute Care Increase exposure in higher growth developing markets and increasing share in North America Stronger focus on establishing lifetime customer relationships in order to capture full service and consumable opportunities Page 12

13 Mid-term financial targets - aligned with Arjo s 2020 plan Organic sales CAGR: 2-4% Arjo s mid-term financial targets EBITDA CAGR: >10% Cash conversion: >70% Dividend Policy: The aim is for the dividend to correspond to percent of net income after tax. Page 13

14 A dedicated and experienced management team Joacim Lindoff President & CEO Jonas Lindqvist CFO Kornelia Rasmussen Marketing Communication & PR Christian Stentoft Corporate Development & Projects Marion Gullstrand Human Resources & CSR Katarzyna Bobrow Quality Regulatory Compliance Mikael Persson Product Development and Supply Chain & Operations Jan Andersson Segment & Product Marketing Paul Lyon Global Sales & Service Anne Sigouin North America Sales & Service.together with a long-term principle owner and a skilled and committed Board of Directors will enable a favourable and sustainable development of Arjo Page 14

15 Arjo as a stand-alone company Reconciliation of historical financials ILLUSTRATIVE Commentary Extended Care / PPAC net sales Disinfection flushers net sales = Arjo net sales Extended Care / PPAC costs Disinfection flushers costs The base line for Arjo s financials is the information that has historically been presented as the business segment Extended Care, and later PPAC, within the Getinge 1 The adjacent product category Disinfection flushers has also been included 2 Compared with being a Getinge business area, certain new functions and processes have been established that will lead to higher administrative costs as Arjo becomes a stand-alone company 3 However, a majority of stand-alone functions have gradually been carried out during 2017 The company believes that the full costs related to new functions and processes will have full effect in Stand-alone costs = Arjo EBITDA Page 15

16 Snapshot financials Net sales and EBITDA margin Commentary Net sales EBITDA margin ~60% Recurring revenue providing top-line visibility Recent organic growth decline and margin volatility driven by a combination of factors Challenging rental market Lower volumes within Hygiene Increasing competition within VTE and Pressure ulcers prevention 21,0% 15,0% 19,7% 16,1% however, growth and profitability trajectory is reversing Positive momentum with good order intake on several key markets, such as the US 18.3% Adjusted EBITDA margin (*) Discrepancy between organic and reported net sales largely driven by FX Organic growth Reported growth Q R12M N.a. -2.3% -2.6% N.a N.a. 7.2% -3.8% N.a Capital structure External financing for Arjo in place Around SEK 4.4bn of net debt at listing Corresponds to a R12M Net debt / Adjusted EBITDA of approx. 3.1x ( * ) (*) Adjusted EBITDA defined as operating profit before amortization, depreciation and write downs, with add-back of acquisition, restructuring and integration costs Page 16

17 Arjo investment highlights Large addressable market driven by favourable trends Complete Acute- and Long Term Care offering with strong market positions Global business platform with low operational risk Proven business model with sustained competitive advantages Well identified strategic plan supported by a strong governance structure and long term committed principle owner Page 17

18 Getinge after the spin-off of Arjo Mattias Perjos, President and CEO Page 18

19 Getinge 2018 leading positions in well defined segments Enabling better healthcare to more patients with the same resources 170 BSEK Addressable market 2-4% Organic growth in addressable market Cath Lab Products used in CSSD* Operating Room ICU Endo suite Offering leading therapies, infrastructure solutions and digitalized integration for a focused and critical area in the hospital The value we bring to patients and hospitals Improving outcomes and reducing length of stay Improving efficiency and minimizing HAI** +10,000 Employees worldwide BSEK Sales in +150 countries Net sales*** *Central Sterile Supply Department. ** Hospital Acquired Infections. ***R12 September 30, 2017 Page 19

20 The value we provide to hospitals Solutions for better clinical outcome and rapid recovery as well as improved efficiency and reduced risk of infection Improving outcomes and reducing length of stay + Improving efficiency and minimizing HAI* = Enabling better healthcare to more patients with the same resources *Hospital Acquired Infections Page 20

21 Getinge in financials after Spin-off of Arjo Share of Net Sales, EBIT, Total Assets & Operating Cash Flow (pro forma) R12 September 2017 Share of Net Sales R12 Share of EBIT R12 Share of assets Sep 2017 Share of operating Cash Flow R12 Getinge Arjo Getinge Arjo Getinge Arjo Getinge Arjo Approximately one-fourth of sales and assets follow Arjo -fifth of EBIT and operating Cash Flow Page 21

22 Key financial figures for Getinge excl Arjo (pro forma) Jan-Sep 2017 Income statement September 30, 2017, R12 (SEK M) Getinge Getinge excl Arjo Net sales 30,124 22,558 Gross Profit 14,324 10,808 Gross Profit Margin, % EBIT 2,412 1,956 EBIT Margin, % EBT 1,761 1,396 EBT Margin, % Net Profit 1,295 1,029 Net Profit Margin, % Key figures September 30, 2017, R12 Getinge Getinge excl Arjo EBITA 1 1), SEK M 4,311 3,420 EBITA 1 Margin, % Net Debt/Equity, multiple Equity/Assets ratio, % Net debt, SEK M 17,608 13,208 Net debt/ebitda 2), multiple EBITDA, SEK M 5,082 3,827 Cash conversion, % Earnings Per Share, SEK 3) Average number of shares, thousands 243, ,073 1) EBITA 1: EBITA before acquisition, restructuring and integration costs 2) EBITDA before acquisition, restructuring and integration costs 3) The calculation of earnings per share is based on the average number of shares in Getinge. Page 22

23 Getinge after the Spin-off of Arjo A well balanced business with a high proportion of recurring revenue (R12, September 30, 2017) Sales Regions Business Area Revenue Split EMEA 40% Americas 40% APAC 20% Surgical Workflows 46% Acute Care Therapies 54% Capital equipment 42% Recurring items 58% Page 23

24 Strategy: reconfirmation & fine-tuning Mattias Perjos, President and CEO Page 24

25 A reconfirmation of the strategy Strategic priorities going forward Strategic priorities Strengthen our offering in prioritized segments Expand our presence to capture growth Drive operational and commercial excellence Enabler Continue to build a global organization with high engagement Page 25

26 Estimated market growth: 2-4%* in addressable segments Active in multiple sub-segments with different growth dynamics Acute Care Therapies Sub segment Share Net Sales** Growth estimate Products Critical Care 25% 4-5% Ventilators, Anesthesia, Monitoring Vascular Systems 20% 4-5% Stents, grafts, thoracic drainage Cardiopulmonary 23% 2-3% Heart-lung machines, Extra Corporeal Life Support Cardiac Systems 32% 1-2% Intra Aortic Counterpulsation, Endoscopic Vessel Harvesting Addressable market: 85 BSEK Surgical Workflows Sub segment Integrated Workflow Solutions Infection Control (Infrastructure) Surgical Workplaces (infrastructure) Share Net Sales** growth in addressable sub-segments Growth estimate Products 4% 8-10% Digital solutions for efficient workflows in hospitals 36% 2-4% Sterilizers and Autoclaves 37% 2-4% Integrated OR, tables, lights, pendants Life Science 20% 3-5% Sterilization, isolation, containment Other*** 3% growth in addressable sub-segments Global addressable market: 170 BSEK Strategic actions going forward Prioritize between segments and products Focused approach towards R&D Strategic partnerships Reduce long tail of products Will gradually take us back to profitable growth In line with the overall addressable market Securing leading positions in prioritized segments Addressable market: 85 BSEK (incl. Life Science 23 BSEK) *Organic growth estimate for , CAGR, based on assessment of BCG market analysis and several other independent data sources. ** R12, September 30, 2017 *** Getinge will continue to distribute Arjo products in some minor markets and these sales will be reported in Surgical Workflows. Page 26

27 Strategic focus going forward Based on prioritized segments and regions our offering Market segmentation in two dimensions 1. Depth of engagement based on our current position and the attractiveness going forward 2. Geographical based on income VHI HI M&LI Depth of engagement Core strongholds we want to protect Build opportunities to become core Selective niche strategy Geographical Global (GL) Very High Income (VHI) High Income (HI) Middle & Low Income (M&LI) Page 27

28 Creating better outcome in healthcare our offering global positions and future priorities * *Incl admission/cathl ab Page 28

29 Creating better outcome in healthcare our offering global positions and future priorities * *Incl admission/cath lab Page 29

30 Regional outlook and expansion Strongest growth expected outside EMEA No significant differences in growth expectations between regions in addressable market segments Deeper penetration with existing products geographically and enter selective areas of the value segment Addressable market Americas 74 BSEK EMEA 51 BSEK APAC 46 BSEK Premium segment present position, from where we expand our offering. Estimated organic growth The larger and faster growing value segment Getinge will enter the value segment in selected categories The market seen as a diamond with the premium segment at the top and the growing value segment in the middle Page 30

31 Already accomplished: Organizational adjustments aligning with our ambitions Clarity, accountability and decisions close to the customer synergies will still be able to carve out Production moved to Business Areas Innovation Simplified sales organization Accountability and value chain, from R&D to aftermarket, Continuous improvements Capital efficiency Customer satisfaction Customer satisfaction index Customer retention Employer of Choice Employee Engagement Index Employee turn-over Commercial excellence Customer oriented Moving closer to the customer, nurturing our strong continues to be captured in logistics and sourcing Operational excellence Quality efficient distribution of best practice Page 31

32 Intention to launch a new business area January 1 st 2018: Life Science Adjusting to the different characteristics within Life Science Getinge excl. Arjo Getinge Structure New structure Jan 2018 Rationale for establishment of Life science business area Acute Care Therapies Acute Care Therapies 100% Sep 2017 R12M Critical care 25pp Cardiopulmonary 23pp Vascular Systems 20pp Cardiac Systems 32pp Still the same base technology 12.2Bn Sep 2017 R12M Surgical Workflows complex system solutions Surgical Workflows 80% Sep 2017 R12M Surgical Workplaces 37pp Infection Control 36pp Integrated Workflow Solutions 4pp Other 3pp Experienced management within life science technology that can focus on realize opportunities in the business area 10.4Bn Sep 2017 R12M Life Science 20% Sep 2017 R12M Life Science 20pp Page 32

33 New financial targets Mattias Perjos, President and CEO Page 33

34 Financial Targets Growth in organic net sales is expected to be ramped up gradually in 2018 Organic net sales 2-4% 2-4% annual average growth average growth Earnings Per Share >10% average growth Dividend policy 30-50% of net income Page 34

35 Summary I(II) Arjo distribution and listing Key dates for Arjo distribution and listing December 4: EGM to decide on spin off December 7: First day of trading in Getinge share excl right to Arjo December 8: Record date December 12: First day of trading in Arjo share Strategic intent Maintain market leadership in Acute Care Become market leader in Long Term Care Become the preferred solutions provider Arjo's Financial targets (mid term) Organic sales CAGR: 2-4% EBITDA CAGR: >10% Cash conversion: >70% Dividend policy: 30-50% of net income Page 35

36 Summary II(II) Getinge financial targets and strategy Revised financial targets Average organic growth in net sales: 2-4% Average EPS growth: >10% Dividend policy: % of net income Strategic priorities Strengthen our offering in prioritized segments Additional focus on developing an attractive offering towards selected parts of the growing value segment Expansion with our global salesforce penetrate geographically with existing products Commercial and Operational Excellence customer oriented approach Enablers Organizational adjustments in production and sales organization accomplished Bringing clarity, accountability and customer centricity all through the value chain Will continue to carve out synergies Page 36

37 Q&A Page 37

38 Thank you Page 38

39 Forward looking information This document contains forwardmanagement. Although management deems that the expectations presented by such forward-looking information are reasonable, no guarantee can be given that these expectations will prove correct. Accordingly, the actual future outcome could vary considerably compared with what is stated in the forward-looking information, due to such factors as changed conditions regarding business cycles, market and competition, changes in legal requirements and other political measures, and fluctuations in exchange rates. Page 39

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