January 2018 Dow Wilson President and Chief Executive Officer

Transcription

1 J.P. Morgan 2018 Healthcare Conference January 2018 Dow Wilson President and Chief Executive Officer

2 This presentation is intended exclusively for investors. It is not intended for use in Sales or Marketing. 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, future trends in cancer incidence and trends in cancer treatment needs, demand, innovation and growth opportunities; Varian Medical Systems, Inc. s ( Varian or the company ) 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, HyperArc TM, 360 Oncology TM, HALCYON TM, image-guided radiation therapy, stereotactic radiosurgery and proton therapy, and any statements using the terms could, believe, expect, outlook, anticipate, vision, estimate, future, horizon, aiming, driving, target 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 and changes to trends for cancer treatment regionally; the impact of changes to 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 to third-party reimbursement levels; currency exchange rates and tax rates; the impact of the Tax Cuts and Jobs Act; 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 risks associated with providing financing for the construction and start-up operations of proton therapy centers; the effect of adverse publicity; the company s reliance on sole or limited-source suppliers; 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. Reconciliations to GAAP financials can be found at and the appendix to this presentation. Medical Advice Disclaimer Varian as a medical device manufacturer cannot and does not recommend specific treatment approaches. Individual treatment results may vary. 2

3 Varian today* a snapshot Global Leader in radiation therapy $2.7B FY17 revenues 7,833 medical linear accelerators $399M FY17 cash flow from operations A focused cancer company 4,600+ software installs 65+ proton therapy rooms ~6,500 employees 52% international gross order mix 3 * As of FY17 year-end results

4 FY17 year in review Varian named Top Healthcare Equipment and Services Company on inaugural JUST 100 list from JUST Capital and Forbes Varian Board of Directors authorizes repurchase of additional 8 million shares of stock José Baselga and Jean-Luc Butel appointed to to Board of of Directors of of Varian Halcyon introduced First patient treated with Varian HyperArc high-definition radiotherapy Varian publishes 2017 Sustainability Report NOVEMBER 2016 DEC JAN 2017 FEB MAR APR MAY JUN JUL AUG SEP OCTOBER 2017 Spin-off of of Varex Varian honored as one of the top 100 most sustainable companies Varian names new CFO Varian Eclipse users generate highest scoring plans in in international treatment plan competition Varian ranks first in in overall manufacturer, system, and service performance in in 2017 Survey of of Radiation Oncology Professionals 4 Varian installs Cyclotron at Georgia Proton Treatment Center Varian announces Penn Medicine treats world s first patient on Halcyon system

5 Strengthening leadership in radiation therapy ARIA Oncology information system InSightive Oncology analytics Edge System Full-body radiosurgery platform Calypso Real-time tracking technology Eclipse Treatment planning system RapidPlan Knowledge-based planning software Multi-Criteria Optimization (MCO) Enhanced control of plan optimization Radiation oncology treatment planning Radiation oncology OIS Radiosurgery Radiation therapy TrueBeam /VitalBeam Trilogy /Clinac /UNIQUE Treatment procedures with ease, speed and accuracy HyperArc High-definition radiotherapy Graphics Processing Unit (GPU) Support Faster dose calculation and plan optimization Brachytherapy Proton therapy Halycon Image-guided IMRT treatment platform Varian Brachytherapy Product suite for planning and delivery ProBeam Proton therapy systems 5 * Based on company estimates * and industry reports and data Radiation Therapy Market * : ~$5B in 2017 growing ~4% CAGR to ~$6B in 2022

6 Radiation therapy global need and market opportunity The world has ~11,700 linear accelerators and ~2,100 cobalt teletherapy units* But the world needs 20,000+ additional linear accelerators by 2035** The greatest need is in low- and mid-income countries, where ONLY 10% OF PATIENTS have access to radiation therapy There is a shortfall of human resources to MEET THE DEMAND HALCYON ENABLES DELIVERY OF WORLD-CLASS CARE in both mature markets and resource-constrained environments 6 * IAEA database (retrieved Dec 2017) ** Expanding global access to radiotherapy. Lancet Oncol. Vol 16, Sept. 2015; includes new machines and replacements

7 Halcyon gaining traction globally Clearance in 120 countries New regulatory approvals in Japan, Brazil and Taiwan Cleared In-process No clearance required 50 orders in 16 countries* 64% mature vs. 36% emerging >40% new sites 7 * As of FY17 year-end results ** Countries are defined as mature or emerging based on the IMF World Economic Outlook Database

8 Halcyon continuing to ramp in the market Early adopters exploring multiple areas of clinical development Treating more patients per day without additional resources Improving plan dosimetry with Varian s latest beam shaping technology Utilizing Halcyon in a single vault clinic Regulatory pathways opening up additional markets Japan, Brazil, India, and Taiwan import clearances achieved in Q1 Clinical data accrual underway in China for regulatory approval process Robust product evolution to be showcased in 2018 More advanced: kv CBCT imaging and adaptive radiotherapy More accessible: Lower price configurations with simplified feature sets 8

9 ProBeam proton therapy extending global footprint 21 ProBeam Sites* 68 Treatment Rooms* Operational Centers Centers Under Development 9 * As of FY17 year-end results

10 ARIA Qin: software localization to leverage growth in China ARIA Qin Built-in collaboration with key opinion leaders in China (Beijing Cancer, Shandong Tumor) New UI optimized for local workflow and patient throughput Dedicated Engineering team based in Beijing 10

11 Varian signs MoU with Ping An China to expand cost-effective and high-quality cancer care Ping An Insurance World's largest insurer, worth approximately US$200B as of December 2017 Business scope includes developing software and network information technology and providing services to healthcare providers Significant investment in cloud technology, artificial intelligence, etc. Joint mission To improve the digitalization and understanding of the entire cancer life cycle, covering prevention, detection, diagnosis, treatment, rehabilitation and palliation Strategy To investigate the use of artificial intelligence, cloud computing and big data technologies to deliver high quality and cost-effective cancer care to a far greater number of people in China, close to where they live 11

12 Long-term growth and value creation strategy Global Leader in Radiation Therapy Global Leader of Multi-Disciplinary, Integrated Cancer Care Solutions Radiation oncology OIS Radiosurgery Interventional oncology Surgical oncology Call on all oncologists Aggregate data Radiation oncology treatment planning Radiation therapy Radiation oncology Disseminated insights Build AI/ML capabilities Medical oncology Brachytherapy Proton therapy Generate insights Diagnostic imaging Precision medicine 12

13 Long-term growth and value creation strategy Global Leader of Multi-Disciplinary, Integrated Cancer Care Solutions Expand Addressable Market* to Patient-Centered Care Coordination Interventional oncology Surgical oncology Care Coordination Radiation Oncology 20%+ $6.0B $12.3B Call on all oncologists Aggregate data Radiation oncology Disseminated insights Build AI/ML capabilities Medical oncology $7.3B $2.0B $5.3B ~4% $6.3B Generate insights Diagnostic imaging Precision medicine * Based on company estimates and industry reports

14 360 Oncology: knowledge-guided, patient-centered oncology workflow Patient Survivorship Diagnose Standard of Care Treatment Short-Term Follow-up Long-Term Follow-up Medical Oncology Surgical Oncology Radiation Oncology Interventional Oncology 14 Longitudinal patient story: Retrospective to prospective assessment

15 Building a cancer care operating system Clinical Decision Support Intelligent Clinical Workflow Team-Based Coordinated Care Patient Engagement Tumor Board Clinical Insights Guidelines Precision Medicine Physician Centric Adaptive Intuitive and Guided Collaboration Care Paths Navigation Care Settings Patient Outcomes Survivorship Education Communication Analytics Clinical Operational Financial Contextual Insights Predictive Models Benchmarking 15 Imaging Informatics Treatment Response Assessment Longitudinal Follow Up Radiomics

16 Positive early customer experience with 360 Oncology Learning experience from first customers Genesis Care UK (UK) Integrated with 3 rd party record and verify (R&V) system for operational insights on RT care delivery Focusing on data interoperability to create an integrated clinical workflow from disparate data sources Cone Health (US) Implemented 360 Oncology multi-disciplinary tumor board (MDTB) application for neurooncology tumor boards Neurosurgeons, neurooncologists, radiation oncologists and other team members determining combined modality treatment for their patients Prior to 360 MDTB, multiple systems were in use for this type of review 16

17 Positive early customer experience with 360 Oncology Before Conference list with summary info prepared manually Brief patient summary prepared manually Brain tumor conference One tumor board worth of leftover printouts With 360 Oncology Comprehensive care management system to prospectively discuss patients and make collaborative, knowledge -guided decisions via one platform 17

18 Building momentum in cancer care coordination Pursuing key opinion leader cancer center adoption of 360 Oncology Continually expand 360 platform capabilities (Clinical Decision Support, Imaging, Analytics) Build enterprise and SaaS channel capabilities Measure and publish real-world evidence for 360 Oncology applications 18

19 IT/CIO Evolving the enterprise software sales model Enterprise software channel Key elements for success 50% - 60% of opportunities $$$ C-Suite Identify and cultivate KOL opportunities 20% 20% Demonstrate solution value 100% of opportunities $$ Cancer Center Director Deliver and manage customer success 20% 20% Consult and design the solution 20% 19 20% - 30% of opportunities $ RO Leader Prepare and present the proposal

20 Growth priorities and strategic enablers Long-Term Growth and Strategic Value Creation Strategy Growth Priorities We are here Strengthen Leadership Extend Global Footprint Expand Addressable Market Where we are headed Global Leader in Radiation Therapy in Radiation Therapy Strategic Enablers Global Leader of Multi-Disciplinary, Integrated Cancer Care Solutions High Quality Care Through Innovation Build Software Services & Big Data Expertise Operational Efficiency Optimize Cash Conversion & Capital Structure 20

21 Our promise People powering victories Imagine a world without fear of cancer. We do, every day. We innovate new technologies for treating cancer and for connecting clinical teams to advance patient outcomes. Through ingenuity we inspire new victories and empower people in the fight against cancer. We are Varian. 21