VARIAN MEDICAL SYSTEMS Jefferies Healthcare Conference June 2, January VARIAN MEDICAL SYSTEMS. ALL RIGHTS RESERVED.

Transcription

1 VARIAN MEDICAL SYSTEMS Jefferies Healthcare Conference June 2, 2015 January VARIAN MEDICAL SYSTEMS. ALL RIGHTS RESERVED.

2 Forward-Looking Statements Forward-Looking Statements Except for historical information, this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Statements concerning industry outlook, including growth drivers; the company s future orders, revenues, backlog, or earnings growth; future financial results; market acceptance of or transition to new products or technology such as our Edge radiosurgery system, TrueBeam and radiographic flat panel detectors, image-guided radiation therapy, stereotactic radiosurgery, filmless X-rays, proton therapy, and security and inspection, and any statements using the terms could, believe, expect, outlook, or similar statements are forward-looking statements that involve risks and uncertainties that could cause the company s actual results to differ materially from those anticipated. Such risks and uncertainties include global economic conditions; the impact of the Affordable Health Care for America Act (including excise taxes on medical devices) and any further healthcare reforms (including changes to Medicare and Medicaid), and/or changes in third-party reimbursement levels; currency exchange rates and tax rates; demand for the company s products; the company s ability to develop, commercialize, and deploy new products; the company s ability to meet Food and Drug Administration (FDA) and other regulatory requirements for product clearances or to comply with FDA and other regulatory regulations or procedures; changes in the regulatory environment, including with respect to FDA requirements; the company s assessment of the goodwill associated with its particle therapy business, challenges associated with the successful commercialization of the company s particle therapy business; the effect of adverse publicity; the company s reliance on sole or limited-source suppliers; the impact of reduced or limited demand by purchasers of certain X-ray products; the company s ability to maintain or increase margins; the impact of competitive products and pricing; the potential loss of key distributors or key personnel; challenges to public tender awards and the loss of such awards or other orders; and the other risks listed from time to time in the company s filings with the Securities and Exchange Commission, which by this reference are incorporated herein. The company assumes no obligation to update or revise the forward-looking statements in this presentation because of new information, future events, or otherwise. 2 VARIAN MEDICAL SYSTEMS

3 OUR VISION: TO HELP SAVE MILLIONS OF LIVES EVERY YEAR, EVERYWHERE. 3 VARIAN MEDICAL SYSTEMS

4 Technology Leader in Growing Markets Varian Oncology Systems Radiotherapy Radiosurgery Brachytherapy Varian Imaging Components X-Ray Tubes Digital Flat Panels Security & Inspection Products Varian Particle Therapy Proton therapy 4 VARIAN MEDICAL SYSTEMS

5 FY15 Focus on Our Big 5 Strategic Priorities Go Global Grow Software and Services Innovate Commercialize Protons Drive Operational Excellence 5 VARIAN MEDICAL SYSTEMS

6 Oncology Systems 6 VARIAN MEDICAL SYSTEMS

7 7,000 Varian Accelerators 60% of global installed base >35m treatments annually 7 VARIAN MEDICAL SYSTEMS 7

8 People 60 Years and Older ( in Millions) Cancer Needs Growing with Aging Populations >80% Rise in world population over Source: U.S. Census Bureau VARIAN MEDICAL SYSTEMS

9 10,000 Linacs Needed Radiotherapy Machines per Million People Over 64 Years * Machines include Linac and Cobalt Units Source: IAEA and World Health Organization 9 VARIAN MEDICAL SYSTEMS 9

10 New Products Drive Growth 45% of FY2014 orders came from products introduced in the last 5 years 10 VARIAN MEDICAL SYSTEMS

11 Promising SBRT Results in Lung Study "Technologies have developed in the last few years that have yielded game-changing, paradigm-shifting approaches, allowing us to reconsider how radiation is delivered in combination with surgery, chemotherapy, and other systemic therapies. Dr. Robert Timmerman, UT SW Medical Center 11 VARIAN MEDICAL SYSTEMS

12 VitalBeam* Introduced Based on TrueBeam platform High quality, high throughput Affordable Upgradable Optimized for radiotherapy Introduced at ESTRO 2015 * CE mark and FDA 510(k) clearance pending. VitalBeam is currently not available for sale in any market. 12 VARIAN MEDICAL SYSTEMS

13 Data Analytics Driving Software Growth Oncology Software RapidPlan InSightive Analytics Qumulate QA Velocity Flat Iron Partnership RapidPlan $200M 5-Year Opportunity 13 VARIAN MEDICAL SYSTEMS

14 Upgrades Create Growth Opportunity Upgrade 6DOF Couch $440M 5-Year Opportunity RapidArc MLC / PV TrueBeam 2.0 OBI SRS Package 14 VARIAN MEDICAL SYSTEMS

15 Growing Oncology Services to $1B 40% of FY14 OS Revenues Delivers strong profitability 15 VARIAN MEDICAL SYSTEMS

16 Long Term Oncology Growth Drivers Demographics Multi-Year Agreements Emerging Markets Service & Software System Upgrades Aging Installations 4-6% Annual Growth Opportunity 16 VARIAN MEDICAL SYSTEMS

17 Imaging Components 17 VARIAN MEDICAL SYSTEMS

18 Imaging Components Designs & Manufactures X-ray Tubes Linear Accelerators Workstations Flat Panel Detectors Sells to Equipment Manufacturers Aftermarket Distributors Security System Integrators 18 VARIAN MEDICAL SYSTEMS

19 Varian Share in Imaging Components Market Diagnostic and CT Tubes Flat Panel Detector 11% 24% 65% Modality OEMs Varian Other 23% 42% Modality OEMs Varian Other 35% 19 VARIAN MEDICAL SYSTEMS

20 Imaging Growth Initiatives Grow with current OEM customers Add new customers in Asia, Brazil Extend leadership in tubes, panels with new capabilities Expand software offerings Focus on industrial market Develop/acquire new product lines 7-9% Annual LT Growth Opportunity 20 VARIAN MEDICAL SYSTEMS

21 Particle Therapy 21 VARIAN MEDICAL SYSTEMS

22 Value of protons - lower complications, costs? Head & neck cancer study suggests protons could have lower costs through lower complications Dr. Steven J. Frank, M D Anderson 22 VARIAN MEDICAL SYSTEMS

23 Varian Particle Therapy Projects Three centers treating;11 more to come Clinical In Development Scripps Proton Therapy Center University of Maryland PTC St. Petersburg, Russia Contracted Dallas Holland Aarhus Rinecker Proton Therapy Center Cincinnati Children s Hospital Georgia PT Center (Emory) Deals Won UCLH (UK) The Christie (UK) Paul Scherrer Institute KFMC-King Fahd Medical Center National Taiwan University 23 VARIAN MEDICAL SYSTEMS

24 Proton Market: YTD Share of Orders 1.3B Signed Contracts 3% Hitachi IBA Mevion Mitsubishi ProNova 49% 29% 62% FY15 Win Rate (# rooms) Sumitomo Varian 5% 3% 8% 3% 24 VARIAN MEDICAL SYSTEMS * 62% of all rooms ordered in 2015

25 Proton Project Potential $2.5B by treatment rooms by 2030 Source: MEDraysintell 25 VARIAN MEDICAL SYSTEMS

26 Long Term Growth Drivers - Protons Demand for Optimal Dose Distribution Evolving Technology Clinical capability Cost efficiency 26 VARIAN MEDICAL SYSTEMS

27 Long-Term Growth Opportunities 27 VARIAN MEDICAL SYSTEMS

28 Long-Term Growth Targets Revenue Gross Profits Operating Profits OS aiming for mid single digit growth IC aiming for mid-to-high single digit growth PT aiming for > $250M Maintain gross margin at current levels Service v. Geo Pricing pressures mitigated by cost reductions 5-8% 5-8% Proton becomes profitable more Service R&D and SG&A grow slower than Revenue 8-10% Goal: Drive Operating Earnings Faster Than Revenue Double Digit EPS Growth 28 VARIAN MEDICAL SYSTEMS