Varian Medical Systems — Merger or Acquisition (August 2020)
33 slides from Varian Medical Systems's merger presentation, Aug 4, 2020
Slide 1: One STEP Two LEAPS: Siemens Healthineers plans to acquire Varian
One STEP Two LEAPS Siemens Healthineers AG plans to acquire Varian Medical Systems, Inc. Dr. Bernd Montag, CEO | Dr. Jochen Schmitz, CFO Aug 2, 2020
Slide 2: Safe Harbour Statement
Safe HarbourStatement This presentation has been prepared solely for use at this meeting. This material is given in conjunction with an oral presentation and should not be taken out of context. By attending the meeting where this presentation is held or accessing this presentation, you agree to be b
Slide 3: Safe Harbour Statement: Additional Information and Where to Find It
Safe HarbourStatement ADDITIONAL INFORMATION AND WHERE TO FIND IT This communication does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a solicitation of any vote or approval. The proposed merger will be submitted to the stockholders of Varia
Slide 4: Strategic priorities: capture short-term potential and ensure market leadership beyond 2025
Strategic priorities: Capture short-term potential and ensure market leadership beyond 2025 Mid-term and beyond as of Capital Market Day, January 2018 Mid-term New growth 2017-19 Upgrading Reinforcing Strategic Drive profitable growth Tap into adjacent “Market leadership 2025” posture in core busine
Slide 5: Varian's strategy as of Q2 comm, May 2020
Varian‘s strategy as of Q2 comm, May 2020 Q3 FY2020 Unrestricted© Siemens Healthineers AG, 2020 l 5
Slide 6: Our strategies follow the same logic
Our strategies follow the same logic Q3 FY2020 Unrestricted© Siemens Healthineers AG, 2020 l 6
Slide 7: OneSTEP – TwoLEAPS
OneSTEP – TwoLEAPS A leap in cancer care A leap in impact (through a combination with Siemens Healthineers) (through a combination with Varian) Q3 FY2020 Unrestricted© Siemens Healthineers AG, 2020 l 7
Slide 8: OneSTEP – TwoLEAPS: Benefitting from each others' strengths
OneSTEP – TwoLEAPS: Benefitting from each others’ strengths A leap in cancer care A leap in impact â–ª Most comprehensive portfolio along the complete â–ª Holistic partner for the entire customer spectrum cancer pathway all major diseases â–ª Most comprehensive portfolio for â–ª Accelerated digital
Slide 9: One STEP – Two LEAPS: Creating value for…
One STEP –Two LEAPS: Creating value for… A leap in cancer care A leap in impact The right treatment at the right time for all major …patients Less fear and uncertainty for cancer patients diseases …customers Next level of cancer care One partner for all major clinical pathways Broader access to diag
Slide 10: Cancer care is a clear growth market – driven by demographics
Cancer care is a clear growth market – driven by demographics as of JPM conf., January 2020 Future market $20bn+ addressable market size1 Q3 FY2020 Source: Varian companyinformation Unrestricted© Siemens Healthineers AG, 2020 l 10 1 Total addressablemarketin thefutureasdisclosed byVarian, November 2
Slide 11: Varian: medtech champion key highlights
70 years of leadership in medical technology have built a medtechchampion Key highlights A differentiated model – Agile, Transformative, Visionary The cancer 8% 3Y oncology $3.2bn Revenue Expanding from radiotherapy to multi- operating order CAGR FY19 disciplinary cancer care in the cloud platform o
Slide 12: A leap in cancer care
A leap in cancer care Novel cutting-edge intelligent therapy … … to re-define cancer care â–ª Leveraging the lead in diagnosis, targeted and personalized therapies and AI â–ª Developing an unmatched clinical and operational portfolio for precision oncology â–ª Making state of the art care accessible
Slide 13: A leap in impact – Shaping the future of healthcare
A leap in impact – Shapingthe future of healthcare Shared values Combining scale Shared history of innovation leadership: Combiningfootprints in >70 countries >70 years at Varian and >120 years at Siemens Healthineers Purposedriven to innovate, to help physicians 10,000 Varian employees + 54,000 Hea
Slide 14: Immediately enhanced growth profile and unique synergy potential thereafter
Immediately enhanced growth profile and unique synergy potential thereafter Revenue growth profile Synergy ramp-up (EBIT, €m) + Cost synergies Revenue synergies >300 above 5% growth p.a. time Closing FY21 FY23 FY25 FY27 Immediately accretive to Siemens Healthineers >€300m EBIT synergies in FY25 – fu
Slide 15: An attractive transaction delivers shareholder value
An attractive transaction delivers shareholder value â–ª Acquisition of 100% of shares outstanding of Varian(NYSE: VAR) for $177.50 per share Key terms – Purchase price of $16.4 billion (equity value) – 100% cash consideration Returns â–ª Attractive growth, margin and return profile being accretive
Slide 16: Q3 results
Q3 results
Slide 17: Siemens Healthineers shows resilient performance despite COVID-19 pandemic
Siemens Healthineers showsresilient performancedespite COVID-19 pandemic • Q3 comparable1 revenue down by -6.9% due to COVID-19 impacts • Revenue decline1 in Imaging with -3.3% and Advanced Therapies with -1.8% ; service continues to hold up well • Equipment book-to-bill of 0.94 in Q3 • Diagnostics
Slide 18: Testing and examination volumes have largely recovered from trough levels
Testingand examinationvolumeshavelargelyrecoveredfrom troughlevels Central lab test volumes1 Magnetic resonance exams2 China China 35,000 35,000 Typical Typical level level # of tests COVID-19 cases # of exams COVID-19 cases 0 0 0 0 Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun USA & Canada USA Ty
Slide 19: COVID-19 pandemic with regionally diverse impact
COVID-19 pandemic with regionally diverse impact Americas EMEA Asia, Australia • With pandemic still in acute state, • Improving market conditions with • Strong differences among the countries investment decisions held back by positive equipment order momentum in Asia / Australia uncertainty • Recov
Slide 20: Resilient portfolio limits negative impacts from COVID-19 crisis
Resilient portfoliolimitsnegative impactsfromCOVID-19 crisis Revenue (€m) Adjusted basic earnings per share (€) Net Income 353 271 (€m) Comparable -6.9% Growth1 Y-o-Y -21% 3,569 0.38 3,312 0.30 Q3 FY2019 Q3 FY2020 Q3 FY2019 Q3 FY2020 • Revenue declined due to COVID-19 headwinds • Adj. basic EPS down
Slide 21: Diagnostics most directly exposed to COVID-19 impacts on healthcare systems
DiagnosticsmostdirectlyexposedtoCOVID-19 impactson healthcaresystems Imaging (€m) Diagnostics (€m) Advanced Therapies (€m) Comparable -3.3% -15.9% Growth1 -1.8% Revenue 2,186 2,113 1,043 869 378 372 Q3 FY2019 Q3 FY2020 Q3 FY2019 Q3 FY2020 Q3 FY2019 Q3 FY2020 Margin Y-o-Y +210 bps -1090 bps -70 bps 7
Slide 22: Financial framework continues to be very healthy
Financial framework continues to be very healthy Resilient Cash Generation (€m) Healthy Balance Sheet (€bn) Cash conversion 0.50 0.75 Leverage³ 1.6x 2.1x rate² +35% 1,065 6.1 Free Cash Flow 790 Net debt 4.4 pre-tax1 incl. pension Q1 -Q3 FY2019 Q1 -Q3 FY2020 30-Jun-2019 30-Jun-2020 • Resilient busine
Slide 23: Full year outlook confirms resilience in continued challenging environment
Fullyearoutlookconfirmsresiliencein continuedchallenging environment Comparable1 revenue growth Q1 – Q4 FY 2020 Full year 2020 outlook • For the current fiscal year, we expect broadly flat revenue growth on a comparable1 basis • Adjusted basic earnings per share expected between €1.54 and €1.62 (pri
Slide 24: An exceptional team in extraordinary times
An exceptional team in extraordinary times #inthistogether Q3 FY2020 Unrestricted© Siemens Healthineers AG, 2020 l 24
Slide 25: Shaping the future of healthcare
Shaping the future of healthcare
Slide 26: Appendix
Appendix Q3 FY2020 Unrestricted© Siemens Healthineers AG, 2020 l 26
Slide 27: Cash Conversion Rate in Q3 FY2020
Cash ConversionRate in Q3 FY2020 above1 Q3 Siemens Healthineers EBIT to Free Cash Flow (€m) Imaging 0.9 1 CCR Diagnostics <0 Adv. Therapies 2.0 CCR1 1.12 618’ 38’ 596’ -17’ -71’ 28’ 208’ -135’ 460’ 410’ -124’ 336’ Healthineers Amortization, EBITDA Change in Change in Add. to Other Operating Add. to
Slide 28: Q3 FY2020 reconciliations and KPIs for group and segments
Q3 FY2020 reconciliations and KPIs for group and segments Q3 FY2020 Q3 FY2019 Diagnostics Advanced Diagnostics Advanced Healthineers Imaging Healthineers Imaging Position (€m) Therapies Therapies AdjustedEBIT 461 447 -32 62 539 417 76 65 therein adjusted for: Amortization of intangible -41 ——-33 — -
Slide 29: Q3 adjusted EBIT to net income and adj. basic EPS reconciliation
Q3 adjustedEBIT tonetincomeand adj.basicEPS reconciliation Position (€m) Q3 FY2020 Q3 FY2019 Adjusted EBIT 461 539 therein adjusted for: Amortization of intangibles assets acquired in business combinations -41 -33 therein adjusted for: Severance charges -9 -15 therein adjusted for: Acquisition-relat
Slide 30: Q3 balance sheet and net debt bridge
Q3 balancesheet and net debt bridge Net debt overview Capital structure development in Q3 FY2020 (in €bn) in €bn Sep. 30th 2019 June 30th 2020 Leverage1 1.4x ³ 2.1x Cash and cash equivalents 0.9 0.6 6.1 1.0 Receivables from Siemens Group 0.7 0.4 (financial cash) 4.4 1.0 Short-term and long-term debt
Slide 31: SHS loan maturity profile
SHS loan maturity profile SHS loans with Siemens Group as of 30.06.2020 1 (in mio €) Comments 1,861 â–ª Total loan volume ~5 €bn equivalent Other 90 â–ª Average interest rate ~0.8% 3 EUR 1,5142 â–ª All maturities exceeding FY 2020 USD 1,000 Top 5 loans 884 2 Volume Interest 667 Currency Volume Matur
Slide 32: Funded status unchanged: pensions and similar obligations
Fundedstatusunchanged Q3 FY2020 Key financials – Pensions and similar obligations Q1 Q2 Q3 in €bn1 FY2017 FY2018 FY2019 FY2020 FY2020 FY2020 Defined benefit obligation (DBO)2 (4.1) (3.4) (3.8) (3.7) (3.6) (3.8) Fair value of plan assets2 2.4 2.6 2.8 2.8 2.6 2.8 Provisions for pensions and similar (1
Slide 33: Q3 FY2020 Unrestricted© Siemens Healthineers AG, 2020 l 33
Q3 FY2020 Unrestricted© Siemens Healthineers AG, 2020 l 33
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