Innovation and Automation for Blood Management

Transcription

1 Innovation and Automation for Blood Management Raymond James 35 th Annual Institutional Investors Conference Orlando March 4, 2014 Brian Concannon President & CEO Gerry Gould VP, Investor Relations office; mobile

2 Forward-looking statements and non-gaap financial information This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of Such statements involve risks and uncertainties which are detailed in the Company s filings with the Securities and Exchange Commission ( SEC ). These forward looking statements are based on estimates and assumptions made by management of the Company and are believed to be reasonable, though inherently uncertain and difficult to predict. Actual results could differ materially from the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forwardlooking statements: the effects of disruption from the manufacturing transformation making it more difficult to maintain relationships with employees and timely deliver high quality products, unexpected expenses incurred during our Value Creation and Capture program, technological advances in the medical field and standards for transfusion medicine and our ability to successfully implement products that incorporate such advances and standards, demand for whole blood and blood components, product quality, market acceptance, regulatory uncertainties, the effect of economic and political conditions, the impact of competitive products and pricing, blood product reimbursement policies and practices, foreign currency exchange rates, changes in customers ordering patterns including single-source tenders, the effect of industry consolidation as seen in the plasma and blood center markets, the effect of communicable diseases and the effect of uncertainties in markets outside the U.S. (including Europe and Asia) in which the Company operates. Please see the Company s filings with the SEC, including its Annual Report on Form 10K, for the full cautionary statement regarding these and other factors. Forward-looking statements are current as of the date of this presentation. The Company disclaims any intention or obligation to update any of the forward-looking statements or the factors that may affect actual results. In addition to disclosing financial results in accordance with U.S. generally accepted accounting principles ( GAAP ), the Company also discloses supplemental non-gaap financial information including elements of operating income, operating income, net income, net income per common share and free cash flow on an adjusted basis that excludes restructuring costs, contingent consideration income and asset write downs. Reconciliations between GAAP and adjusted numbers are on the Company s website: 2

3 3 10 years ago: a niche medical device manufacturer

4 Today: the leader in Blood Management Solutions From the Arm of the Donor to the Arm of the Patient 4

5 Haemonetics diversified portfolio provides growth opportunities ~ $1B Annualized Revenue Plasma $275M* 70% market share ~ $400M market Blood Centers $425M* > 30% market share > $1.2B market Hospital $150M* <20% market share > $1B market Software and Equipment $150M* Total Market Opportunity Exceeds $3B 5 *Based on annualized run rate, includes whole blood acquisitions

6 6 Plasma

7 Plasma: biopharmaceutical drug demand drives growth Liters (M) 50 Plasma Demand

8 Plasma: Haemonetics market share is well protected with long term contracts Market Size / Share % Market Size ($M) % 60% 40% - NA Europe Japan AsiaPac HAE Other 8

9 Plasma: a history of innovation and automation Streamlining the Commercial Plasma Supply Chain Cost efficiency Process verification for regulatory compliance/higher likelihood of donor return Thereby, improving yields and lowering cost per unit collected Market share 40% 70% Stability: Long-Term Contracts Consistent market growth from strong end user demand Additional Opportunity: Market Growth Market is anchored by IVIG and potential is large; also Albumin, Alpha 1, others 9

10 Plasma blood management a blueprint for whole blood automation Opportunity and Growth Razor / Razor Blade Model Whole Blood Automation Long-term Agreements for Disposables ~ 80% thru 3Q FY19 Plasma Blood Management 10

11 11 Blood Centers

12 Current lack of automation in manual whole blood collection process Creates inefficiency, compliance challenges, low donor retention Lower yields and higher cost per unit 97% of RBC collections are from manual collections of whole blood Difficulty of technology implementation in remote locations Process for donating blood is lengthy and cumbersome Gravity bleeding process with limited automation 12 Manual keying of collection data causing inefficiency and waste

13 U.S. blood center market dynamics changing rapidly Patient Blood Management Trends Patient blood management rapidly advancing Lower transfusion triggers Increased use of TXA U.S. transfusions / 1,000 population: approx during FY14-FY15 Implications For Blood Centers 8-10% decline in collections in each year FY14 & FY15 Intense focus on operational efficiencies / cost reduction Differentiation / increased relevance to Hospitals needed Price: near term driver in disposables sourcing Implications For HAE Short/intermediate price and margin pressures Two single-source tenders = 60% of U.S. market HAE pipeline of products designed for this environment 13

14 Transforming whole blood collection through innovation and automation Leveraging acquired market share to accelerate adoption Pall Transfusion Medicine acquisition FY13 Wireless data automation package FY13 / FY14 SOLX storage solution FY14 Automated whole blood collector FY15 Improved donor retention Lower cost Higher yield Blood Center Benefits Single vendor for all needs Increased efficiency Better compliance 14

15 Haemonetics whole blood market strategy Immediate market presence, commercial capabilities, wet set and filter manufacturing Acquire Pall Transfusion Medicine Assets + Gained access to differentiating technologies, SOLX storage solution Acquire Hemerus Technology + Develop core automation software, disposables and automated Whole Blood collector Internal Development 15

16 U.S. blood center market dynamics changing rapidly GPO formed Sept 2013 Blood Systems (AZ) ITxM (PA) OneBlood (FL) NY Blood Center (NY) Puget Sound Blood Ctr. (WA) 20% of U.S. whole blood collections Single-source tender awarded to HAE Jan 2014 Transition underway; expected completion by June 2014 ~ 40% of U.S. whole blood collections HAE responding to a single-source tender expected to be awarded in 1 st or 2 nd quarter of calendar year 2014 Strategy: price competitively, then secure with differentiation HX win + smaller tender lost = ~ 5% U.S. share gain FY15: margin headwinds from pricing > share gain benefit Beyond FY15: product value engineering improves margins 16

17 U.S. blood center market dynamics have long-term positive implications for HAE Meaningful price concessions Product cost reductions Competitive advantage Solidify long-term relationships Prices set / margins pressured over the intermediate term VAVE / value engineering with customer participation WB margins / profitability restored WB product cost lowered HAE better able to compete for tenders in larger international markets / gain share New product pipeline: SOLX, automated whole blood collection Innovation differentiates HAE; customers able to address full cost of providing blood 17

18 Whole blood business: Plasma déjà vu During market shift Plasma Customer consolidation Cost pressure = margin pressure New norm: sole source buys Share gain / margin pressure HAE technology introduction U.S. WB After market shift Cost reduction / VAVE Margin recovery HAE technology introduction Long-term contract / renewals Share retention Plasma U.S. WB

19 19 Hospitals

20 Hospitals: solving patient blood management problems Providing the right blood product at the right time in the right dose to the right patient 60 million red cell units transfused annually; declining Health care reform, aging population, high blood costs 20

21 Hospitals: end-to-end solutions Hospital IMPACT Online Cell Salvage TEG Remote Inventory and Monitoring Data Integrity Blood Utilization Metrics to Engage Clinicians Personalized Dashboards Education and Change Management Salvages washed and provides red cells shed during surgery back to the patient Reduces the need for banked blood Diagnostic device used to assess the patient s hemostasis and help guide the blood transfusion component strategy Help manage the hospital blood supply chain Point of care dispensing Just-in-time remote blood allocation 21

22 22 VCC and financial impact

23 Our strategic plan has three areas of focus Product & Market Development Description Strengthen our position in Blood Center and Hospital customer segments, with launch of products such as Automated Whole Blood and TEG Educate market and stakeholders on clinical and economic benefit of our products Commercial Excellence Accelerate go to market (GTM) strategies in North America, Europe, and China Leverage what we learn in North America, Europe, and China to drive GTM changes in Japan and rest of world Manufacturing & Quality Improve Manufacturing performance and productivity through enhanced competencies, footprint, and facilities, while maintaining quality 23

24 VCC Manufacturing transformation both strategically and financially beneficial 7 key projects to be executed within the next 2-3 years Timeline / Tijuana Our plan generates $40M in savings by FY18 $M FY15 FY16 FY17 FY18 24

25 Investment highlights Advantaged Market Positions Uniquely serving both blood collection and hospital markets Inherent market growth from aging populations Stable revenue base: 85% single-use disposables Value Delivery To Customers Blood Management Solutions on right side of Health Care Reform Improving patient care Reducing health care costs Profitable Growth Strong cash flow generation enables reinvestment Numerous meaningful growth drivers History of profitable acquisitions and share buybacks Long-term growth in organic revenue, total revenue, Op Income & EPS 25