Morgan Stanley - 13th Annual European Medtech Fieldtrip André-Michel Ballester, CEO. Brussels, March 8, SORIN GROUP Presentation 1

Transcription

1 Morgan Stanley - 13th Annual European Medtech Fieldtrip André-Michel Ballester, CEO Brussels, March 8, 2011 SORIN GROUP Presentation 1

2 DISCLAIMER This presentation contains management preliminary estimates and forward-looking statements, including information related to Sorin projected financial performance and the expected development of the med-tech industry, in particular in the cardiovascular segment. These statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, as of this date, though by their nature future estimates are uncertain and difficult to predict. Actual results or experience could differ materially from the information contained herein. This communication does not constitute an offer or solicitation for the sale, purchase or acquisition of securities of any of the companies mentioned in any jurisdiction. FY 2010 is unaudited preliminary data. * * * SORIN GROUP Presentation 2

3 SORIN AT-A-GLANCE FY 10 Revenues Key company data Heart valves Cardiac Rhythm Management 38% 16% By business 45% Cardiopulmonary Key facts FY 10 revenues: 745.8m 3,700 employees ww 1 million patients treated with Sorin s devices every year in over 80 countries Excellence in innovation (R&D): 66.9m (9.0% of sales) Approx 14% of employees Japan RoW 9% 15% By geography 48% Europe R&D and manufacturing sites North America 28% SORIN GROUP Presentation 3

4 MARKET AND TECHNOLOGY LEADERSHIP Market trends Sorin position Cardiopulmonary Stable market conditions: volume growth in Emerging Markets compensating stabilization in developed countries Undisputed global market leader Heart Valves Moderate growth fueled by tissue valves penetration Cannibalization of conventional surgery from TAVI and sutureless Strong competitive position in Europe and in mechanical valves globally Continuous penetration of US tissue market initiated in 2008 Leverage on Perceval S Cardiac Rhythm Management High Voltage: mid-single digit growth market, still underpenetrated vs. implant indications Low Voltage: no novel indication driving growth (stable market) Strong presence in key European countries and Japan Opportunity in the US SORIN GROUP Presentation 4

5 SORIN SHAREHOLDER BASE Equinox Two Holmo GE 7.5% 4.6% 6.7% Monte dei Paschi 7.3% 54.7% Free float Tethys 19.2% Shareholder pact (37.85% of Sorin share capital) entered in November 2009 (1): Stakes held via dedicated vehicles (BIOS S.p.A. and Tower 6 SARL for Tethys and Equinox, respectively) (2): Mittel S.p.A.. Equinox Two S.c.A. (jointly controlling. through Tethys S.p.A. and Hopa S.p.A.. BIOS S.p.A.) Hopa S.p.A.. MPS Investments S.p.A. and Unipol Gruppo Finanziario S.p.A. (controlling Holmo S.p.A.) subscribed on October 12, 2009 a Shareholders Pact (effective from November 18, 2009) concerning the respective shares directly or indirectly held in Sorin S.p.A.. The Shareholders Pact is relative to n shares and expires in November SORIN GROUP Presentation 5

6 THE CARDIOPULMONARY REFERENCE MARKET Data in m Other segments 453 ATS HLM CPB 1,270 Market value 1, CAGR % +3.3% Stable +1.0% Stable Market trends On-pump procedures: 1.8% growth per year Congenital procedures: 3.9% expected growth per year Heart Valves procedures: 3.7% expected growth per year due to marginal TAVI cannibalization CABG (ONCAB) flat/slightly decreasing Off-pump procedures incidence flat Over 50% of WW procedures are already performed outside EU, US and Japan Traditional markets substantially flat CPB - driven by modest growth in units balanced by modest price decline and geographic mix HLM - slightly growing (natural price decline countered by product content enrichment) ATS - moderate units growth offset by price erosion Significant growth in ROW driven by increase in procedures partially balanced by ASP decrease Other higher growth segments include Low Bleeding ATS, Patient Monitoring, Cannulae, EVH and ECMO SORIN GROUP Presentation 6

7 CARDIOPULMONARY UNDISPUTED GLOBAL LEADER Key facts & figures Recognized as true leader beyond units sold and market share Undisputed leader in HLM a base for growth 70% WW market share 92% market share in Europe Breadth of product range FY 10 Financial results FY 10 Key achievements Continuous geographic expansion Increased equipment installed base Blocked erosion of CPB s market share in the US and Europe Lean program and supply chain optimization Successful integration of Gish Biomedical Continuous focus on innovation: XTRA TM, LinOx Sorin s product range Data in m %* Products HLM CPB (Oxy) ATS Disease Treatment Heart valves diseases; Coronary arteries diseases; Congenital heart defects Valve replacement; Bypass; Valve repair (i.e., need for extra-corporeal circulation) * At comparable FX rates & at constant perimeter SORIN GROUP Presentation 7

8 CARDIOPULMONARY PIPELINE Xtra HLM acc. HLM C5 LinOx onwards SORIN GROUP Presentation 8

9 LINOX (LEADERSHIP IN OXYGENATION) A NEW GENERATION PRODUCT IN PERFUSION Improve performance and build best-in-class products for all segments and regions Reduce complexity with product modularity and modules and SKUs reduction (-50%) Reduce Manufacturing cost with new technology and lean manufacturing SORIN GROUP Presentation 9

10 CARDIOPULMONARY STRENGTHEN GLOBAL LEADERSHIP Raise our share in disposable products, leverage on our strong equipment installed base and on LinOx Reinforce ATS presence leveraging on the launch of Xtra TM Continue operational excellence (manufacturing, logistics, quality) Pursue geographic expansion into faster-growing emerging markets Enter new growth opportunity segments Consolidate our worldwide #1 position and increase profitability and cash flow SORIN GROUP Presentation 10

11 THE CARDIAC RHYTHM MANAGEMENT REFERENCE MARKET Data in m High Voltage Low Voltage Market value CAGR , % 8, % 6,591 5, % 3,096 3, Market trends Key trends of the global CRM market: Growth slowdown Convergence of technology Innovation more on new device features vs. new patient outcome breakthroughs Long term growth primarily from RoW and China Low Voltage: Low-single digit market growth driven by demographics and aging of population No novel indication driving growth High Voltage: Mid-single digit market growth ICD/CRT-D US market still underpenetrated vs. implant indications Market development opportunity in Japan, and, moreover, RoW and China SORIN GROUP Presentation 11

12 CARDIAC RYTHM MANAGEMENT AN INNOVATIVE PLAYER IN HEART FAILURE Key facts & figures Strong market positioning in Low Voltage in Europe and Japan #1 Low Voltage player in France #2 Low Voltage player in Italy #2 Low Voltage player in Japan Gold standard technological features State-of-the art manufacturing facilities in Clamart (France) and Saluggia (Italy) FY 10 Financial results FY 10 Key achievements Fastest growth in High Voltage, particularly in CRT-D Increased penetration in the US market Launch of Paradym CRT-D and ICD, respectively, in the US and Japan Cost reduction, quality and service level improvement programs Continuous focus on innovation: Remote Monitoring and CLEAR study Sorin s product range Data in m %* Products CRT-D Defibrillators (ICD) High Voltage Pacemakers Low Voltage Disease Heart Failure Sudden cardiac death Bradycardia Treatment Pacing + defibrillation Defibrillation Pacing * At comparable FX rates SORIN GROUP Presentation 12

13 CARDIAC RYTHM MANAGEMENT PRODUCT PIPELINE 2010/ onwards Paradym SonR SonRfix Lead Paradym RF Remote Monitoring Beflex Brady Lead Tri V device SonR tist lead positioning Paradym CRT Paradym VR/DR Esprit Pacemaker Situs2 LV Bipolar Lead TX Brady Lead Beflex Brady Lead Paradym VR/DR Paradym CRT Situs2 LV Bipolar Lead Beflex Brady Lead TX Brady Lead Spiderflash AFIB Reply MRI Pacemaker MRI Brady Lead Tachy Lead New LV approaches RF Programmer Remote monitoring V2 New algorithms Platinium ICD CRT-D Paradym RF Remote Monitoring Paradym SonR SonRfix Lead Tri V device SonR tist lead positioning Tachy Lead Reply MRI Pacemaker MRI Brady Lead SORIN GROUP Presentation 13

14 REMOTE MONITORING: PATIENT-FOCUSED ADVANCED SOLUTION IN CARDIAC DISEASE MANAGEMENT Sorin s advanced CRM knowledge combined with Orange s vast expertise in application and program management of complex integration projects Agreement with Orange (March 2009) Innovative algorithms with intelligent diagnostic features A user interface built-on user center design principles Cutting-edge technology for safe and effective data transmission CE mark expected for 4Q 2011 Best Change Maker World Communication Awards Remote Monitoring Demo Patient Home Monitor Back-office Web Application Physician & Helpdesk Physician Configures System Home Monitor Collects Data From Device Home Monitor Sends Data to Back-office Back-office Produces Clinical Report Physician Evaluates Clinical Report and Treats Patient SORIN GROUP Presentation 14

15 CARDIAC RYTHM MANAGEMENT INNOVATION IN HEART FAILURE Gain share in High Voltage and consolidate foundations in Low Voltage across key Geographies: US: Grow in Concentric Circles Europe: Invest in key countries to grow share in High Voltage and consolidate # 3 Low Voltage position Japan: mantain #2 in Low Voltage and grow in High Voltage Emerging Markets: selected/focused investments Drive product cost reduction programs Focus Innovations and R&D investments on Heart Failure Become the innovative leader in Haemodynamic Management of Heart Failure SORIN GROUP Presentation 15

16 THE HEART VALVES REFERENCE MARKET Market value Market trends Data in m Sutureless Repair 1, , CAGR % +4.3% Heart Valves continues to be an attractive market Procedure growth (+3.7% CAGR ) driven by an aging population and early referrals Large undertreated population High barriers to entry Mechanical valves flattening with price erosion Tissue % Continuing conversion to tissue, which could accelerate due to valve in valve procedures Potential upside from new anticoagulant therapies Mechanical % Tissue valve growing at a lower pace due to partial cannibalization by TAVI and sutureless Sutureless market expected to develop as MIS alternative for medium/high risk population SORIN GROUP Presentation 16

17 HEART VALVES LEADING EUROPEAN PLAYER Key facts & figures 40 years of heart valve breakthroughs and leading innovations #2 Heart Valve player in Europe #2 Heart Valve global player in mechanical valves Approx. 10% market share in aortic tissue valve in the US in 2010 FY 10 Financial results FY 10 Key achievements Market share gains of Mitroflow TM in the US Increasing weight of tissue valves on BU sales Significant Gross Margin expansion driven by manufacturing efficiency and mix Focus on Perceval S: CE mark obtained on Jan. 31 st, 2011 followed by immediate commercial launch Sorin s product range Data in m %* Products Sutureless valves Tissue valves Mechanical valves Annuloplasty rings Disease Structural heart valves diseases; Congenital heart defects Treatment Valve replacement & repair * At comparable FX rates SORIN GROUP Presentation 17

18 HEART VALVES PRODUCT PIPELINE Perceval S TM Bioconduit Solo Mitroflow Memo 3D 3G Bicarbon 2011 Size 21 & 23 Size SILK 2012 onwards All sizes Expected Expected SILK SORIN GROUP Presentation 18

19 PERCEVAL S TM Key features Bovine pericardium for ultimate biological durability and hemodynamic performance Built on a proven Sorin Biological Pericarbon Valve Self-expanding Super Elastic Alloy technology Self-anchoring device and truly sutureless Anatomical tailors to individual patient anatomy Potential broader access to MIS procedures Perceval S CE mark on January 31, 2011 Key clinical benefits Significant procedure time reduction Excellent hemodynamic results Better fitting prosthesis Greater durability Less risk of migration Potentially less pain and less risk of infection, reduces patient ICU and hospital length of stay and relative costs Perceval S positioning in the AVR market Patient risk High Medium Low Good TAVI Transfemoral Peripheral Access PERCEVAL TM S Surgical AVR Bad TAVI Transapical SORIN GROUP Presentation 19

20 HEART VALVES FOCUS ON CARDIAC SURGEONS Leverage on Perceval S to develop a full cardiac surgery portfolio beyond Heart Valves (Minimally Invasive Surgery) US market penetration with tissue valves Extend tissue position in Europe whilst defending mechanical share world wide Drive operational efficiencies Be an innovator for Surgeons To be the Choice of Cardiac Surgeons worldwide SORIN GROUP Presentation 20

21 FY 10 FINANCIAL RESULTS DELIVERING ON OUR COMMITMENTS FY 10 Guidance FY 10 Actual Drivers Revenue growth FY 10/09* 4 6% 4.9% Positive contribution from all 3 BUs Growth across geographies EBITDA Margin 15 16% 16.1% Gross Margin expansion and operating cost containment Net Profit 36 40m 39.1m Higher operating profitability Net Debt 150m 128.7m Strong CF generation driven by profitability and WC improvements FY 10: a strong base for Sorin Group s long-term underlying growth * At comparable FX rates and constant perimeter Latest guidance revised up on 29 July, 2010 SORIN GROUP Presentation 21

22 FY 10 TOP LINE GROWTH REVENUES: 745.8m (+4.9%* ) FY 10 Revenues Revenues growth by BU and product segment Data in m %* Cardiopulmonary (+2.1%* ) HLM CPB ATS 2.3% 0.2% 5.7% Cardiac Rhythm Management (+8.4%*) HV LV 2.3% 21.6% Heart Valves (+3.4%*) -5.0% MV TV 14.0% CP BU driven by HLM s solid performance in Europe and the US and by the Oxygenators segment, which benefitted from Gish successful integration CRM strong performance, driven by the positive performance in the US market and in key European markets Heart Valves performance driven by the tissue valve segment (Mitroflow TM market share gains in the US) * At comparable FX rates; At constant perimeter SORIN GROUP Presentation 22

23 FY 10 FINANCIAL RESULTS COST CONTAINMENT & INNOVATION Gross profit SG&A R&D Data in m Data in m Data in m % % % % 39.4% 55.8% 38.7% 8.6% 9.0% bps Gross Margin expansion Manufacturing cost reduction programs Favorable product and geographic mix Positive FX effect Excluding hedge accounting impact, SG&A fell to 38.0% of revenues compared to 38.7% in 2009 Increase of R&D spending both in absolute value and as a % of revenues Key projects: Perceval S, Remote Monitoring, LinOx SORIN GROUP Presentation 23

24 FY 10 FINANCIAL RESULTS EBITDA BRIDGE FY EBITDA BRIDGE EBITDA as % of Revenues 1.9% 0.7% 0.3% 0.5% 0.4% 0.5% 0.4% 0.3% 12.4% 14.4% 16.1% FY 08 FY 09 Disp. & Acq. FX Country Mix/Price Product mix Manufact. Eff. SG&A LTI R&D FY 10 SORIN GROUP Presentation 24

25 FY 10 FINANCIAL RESULTS PROFITABILITY EBITDA EBIT Net profit Data in m Data in m Data in m % % % 16.1% 9.6% +68.5% 7.5% % 3.4% Key impact of gross margin expansion Excluding special items EBIT grew 33.7% to 78.3m ( 58.6m in 2009) Higher operating profitability Special items include restructuring charges for: Gish integration ( 1m) Strengthening of industrial/ mgmt efficiency ( 3.5m) SORIN GROUP Presentation 25

26 FY 10 FINANCIAL RESULTS BALANCE SHEET ANALYSIS Net Debt Net Working Capital Data in m Data in m 3.2x x x Net Debt Net Debt/EBITDA Account Payables Inventory Account Receivables Significant decrease in Net Debt of 52.9m Improved profitability More efficient working capital management Negligible Net Special Items Working Capital Days DSO: from 94 in 2009 to 86 in 2010 DOH: from 168 to 156 in 2010 DPO from 72 to 68 in 2010 SORIN GROUP Presentation 26

27 GUIDANCE FOR FY 11 & Q FY 11 Guidance Revenue growth 11/10* 3 5% EBITDA Margin 17% Net Profit 49-53m ( 25 35% growth 11/10) Free Cash Flow Net Profit For the first quarter 2011 revenues are expected to grow some 3-5%* and Net Profit to be approximately 8 10m Long-term guidance to be indicated at Investor day (March 21st, 2011) * At comparable FX rates and constant perimeter Free Cash Flow = Net earnings + Depreciation & Amortization ± Working Capital - Capex SORIN GROUP Presentation 27

28 WHERE WE WERE AND WHERE WE WANT TO BE Turnaround (FY 07-09) Value (FY 10) Growth (FY11 +) Focus on core business (5 to 3 BUs) Strong re-organization: from matrix to lean Cost reduction program WW Innovation: prioritization on key projects Financial objectives: CF from Inventory & A/R; debt reduction Manufacturing efficiency programs Expansion of direct sales in key countries Optimization of RoW organization and sales force Innovation: promising products Financial objectives: CF from P&L and further debt reduction Gish opportunistic acquisition EBITDA Margin Increased focus on sales growth Continuous industrial optimization Innovation: breakthrough products (Perceval, LinOx, etc) Key financial objectives: higher profitability and CF generation Geographic expansion Potential acquisitions & partnerships Data in % on Revenues 10.4% 12.4% 14.4% 16.1% > 20.0% SORIN GROUP Presentation 28

29 BREAKDOWN OF IDENTIFIED MANUFACTURING COST SAVINGS 50m manufacturing cost savings FY ( 15m captured in FY 10) % Weight of total Savings 37% 16% 27% 20% Supply Chain and Procurement Quality and Process Control Lean and Continuous Improvement Design for Manufacturing and Cost Total # of projects in 2010: 67 Total # of projects in pipeline impacting 2011 onwards: 130 SORIN GROUP Presentation 29

30 STRATEGY AT-A-GLANCE Financial discipline to achieve long-term financial targets (>20% EBITDA Margin) Manufacturing costs reduction programs Excellence in execution (sales, R&D) Prepare long-term underlying growth R&D and Innovation Geographic expansion China Key Emerging Markets CRM US Potential acquisitions SORIN GROUP Presentation 30