Goldman Sachs. 13 th Annual European Healthcare Services Conference. September 7, 2016

Transcription

1 Goldman Sachs th Annual European Healthcare Services Conference September 7, 206

2 Safe Harbor Statement This presentation includes forward-looking statements concerning Baxter s expected business prospects, long range plan, capital structure, cost savings initiatives, R&D pipeline (including regulatory actions and commercial launch events), business development plans and other growth strategies of Baxter. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: demand for and market acceptance of risks for new and existing products, and the impact of those products on quality and patient concerns; product development risks; product quality or patient safety concerns; future actions of regulatory bodies and other governmental authorities, including the FDA and foreign counterparts; failures with respect to compliance programs; future actions of third-parties, including payors; U.S. healthcare reform and other global austerity measures; pricing, reimbursement, taxation and rebate policies of government agencies and private payers; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; global, trade and tax policies; accurate identification of and execution on business development and R&D opportunities and realization of anticipated benefits; fluctuations in supply and demand; the availability of acceptable raw materials and component supply; the inability to create timely production capacity or other manufacturing supply difficulties; the ability to achieve the intended results (including targeted margin improvements) associated with the separation of Baxter s biopharmaceutical and medical products businesses; the ability to enforce owned or in-licensed patents or the patents of third-parties preventing or restricting manufacture, sale or use of affected products or technology; the impact of global economic conditions; fluctuations in foreign exchange and interest rates (including with respect to emerging market currencies); any change in law concerning the taxation of income, including income earned outside the United States; actions taken by tax authorities in connection with ongoing tax audits; breaches or failures of the company s information technology systems; loss of key employees or inability to identify and recruit new employees; the outcome of pending or future litigation; the adequacy of the company s cash flows from operations to meet its ongoing cash obligations and fund its investment program; and other risks identified in Baxter s most recent filing on Form 0-K and other Securities and Exchange Commission filings, all of which are available on Baxter s website. Baxter does not undertake to update its forward-looking statements.

3 Baxter Profile By Business By Region $0.0B 205 Revenue 62% 8% Renal 40% 28% 20% US EMEA Asia Pacific Latin America 8% 4% Canada Portfolio Presence Broad Offering Of Medically Necessary And Therapies Channel Strength And Therapy Leadership Iconic Brand With Majority Of Sales In Market Leading Positions Global Footprint With Sales In 00+ Countries And Manufacturing Operations In 28 Countries Resilient Portfolio Of Market Leading With Broad Geographic Reach Europe, Middle East, Africa

4 Demonstrating Solid Progress Against Initial Plans Financial Performance Product Launches Standalone Financial Performance For H 206 Ahead Of Expectations Delivered Strong Top Line Growth Continued Operating Margin Expansion Cash Flow Performance On Track To Meet Expectations Capitalizing On Important New Product Launches And Geographic Expansions: AMIA And HOMECHOICE CLARIA Cefazolin 2g NUMETA GE SIGMA SPECTRUM Vancomycin Saline HEMOPATCH Cost Management Balance Sheet Announced Restructuring In October 205 (~5% Of Non-Manufacturing Workforce) Disciplined Management Of Discretionary Expenses Accelerating Work On Other Cost Reduction Initiatives Disposition Of The Retained Stake Provides Significant Financial Flexibility To Create Value Increased Dividend Rate By % In May 206, Resulting In Annual Dividend Of $0.52 Per Share Building Upon Momentum To Drive Further Improvements In Performance

5 Delivering Balanced Top Line Growth Total Baxter 205 Sales $0.0B CAGR ~4% Outlook By Market (CAGR ) 205 Sales CAGR Integrated Pharmacy ~$2.B % - 4% Fluid Systems ~$2.B % - 4% 5% - 6% Surgical Care ~$.B ~% BioPharma Solutions ~$0.5B ~% ~% % - 4% 206 Guidance 2020 Outlook US Established Emerging ~$6.2B ~% Chronic Renal ~$.4B ~4% Acute Renal ~$0.4B 0% - % Renal ~$.8B ~5% CAGR calculated from 206 to 2020

6 Aspiration For Baxter 2020 Quality And Patient Safety Best Place To Work Industry Leading Performance Continuing To Invest In Quality Systems And Processes To Help Ensure The Highest Standards Demonstrating Strong Progress On Key Quality Metrics BRIDGE AWARD 205 Portfolio And Innovation Management Operational Excellence Strengthening Relationships With Key Regulators Around The World Capital Allocation Improve Execution And Value Creation To Achieve Top Quartile Performance

7 Strategic Business Groupings Portfolio And and Innovation innovation management Management Operational Excellence excellence Capital Allocation allocation Core Growth Core Return On Capital Maintain Or Manage Differently Strategic Bets Invest Aggressively For Long-Term, High-Profit Growth Sustain And Extend Leadership; Optimize Returns Sustain Investment Or Reposition / Change Approach Evaluate Path To Leadership, Build Plan To Win, And Invest Aggressively BioSurgery Anesthesia Compounding Disruptive Renal Models Nutrition IV Solutions (Select Geographies) Elastomerics Critical Care / Extracorporeal Therapies Injectable Drugs Pumps And Sets In-Center Hemodialysis Acute Renal (CRRT ) Peritoneal Dialysis / Renal Therapy Services BioPharma Solutions Continuous Renal Replacement Therapy

8 Advancing Our New Product Portfolio Portfolio And and Innovation innovation management Management Operational Excellence excellence Capital Allocation allocation Renal Renal 7 Renal 6 Renal 4 Renal 2 Renal Lifecycle Management Geographic Expansion New Product Development Driving R&D Efficiency And Effectiveness To Accelerate Pipeline, Contributing ~$.2B Of Sales In 2020 Shifting Increasing Proportion Of R&D Investment To New Product Development Increasing R&D Operational Efficiency Enhancing Internal Capabilities Advancing Strategic Partnerships Pursuing The Most Compelling Opportunities

9 Optimizing Cost Structure And Enhancing Operational Efficiency Portfolio And and Innovation innovation management Management Operational Excellence excellence Capital Allocation allocation Cost Structure Zero-Based Spending, Zero-Based Organization Initiatives Underway Centralizing And Streamlining Global Support Functions Efforts Being Overseen By Newly Established Business Transformation Office With Accountability For Success Manufacturing, R&D, Supply Chain Optimizing R&D, Manufacturing Footprint Capturing Supply Chain Efficiencies Streamlining SKUs Exiting And Geographies With Suboptimal Returns Balance Sheet Utilized Baxalta Retained Stake To Enhance Cost Structure Retired Indebtedness Reduced Pension Liability and Pension Expense Repurchased Baxter Shares Driving Bottom Line Growth Through Relentless Assessment Of Costs

10 Opportunistically Deploying Capital To Fuel Growth And Create Value Portfolio And and Innovation innovation management Management Operational Excellence excellence Capital Allocation allocation Percent Of Operating Cash Flow M&A: Strategic Objectives 00% 80% 60% >$.4B ~$2.5B Drive Category Leadership Improve Baxter s Weighted Average Market Growth Rate Expand Into Strategic Adjacencies From Core Growth Businesses Build On Core Strengths Channel Presence, Geographic Footprint 40% M&A: General Financial Guidelines 20% Accelerate Top Line Growth And Accretive To Operating Margin 0% 206 Guidance 2020 Outlook Capex Dividends Discretionary Accretive To Cash Earnings In Near Term Preserve Investment Grade Credit Rating And Financial Flexibility Enhanced Flexibility To Reinvest In Business And Execute On M&A Opportunities To Optimize Shareholder Value

11 Baxter Financial Outlook Metric 206 Guidance 208 Outlook 2020 Outlook Sales Growth [Constant Currency] % - 4% % - 4% CAGR 2 ~4% CAGR Adjusted Operating Margin ~2% 4% - 5% 7% - 8% Adjusted Tax Rate 20.5% - 2% ~2% ~22% Adjusted EPS Growth vs. 205 $.69 - $.74 22% - 26% $2.0 - $2.25 5% - 8% CAGR $ $.00 5% - 7% CAGR Operating Cash Flow >$.4B >$.8B ~$2.5B Capital Expenditure ~$900M ~$825M ~$750M Free Cash Flow >$500M ~$.0B ~$.75B See for information regarding non-gaap financial metrics used on this slide, including constant currency sales growth, adjusted operating margin, adjusted tax rate, adjusted EPS, and free cash flow (which represents operating cash flow less capital expenditures). 2 CAGR calculated ; CAGR calculated

12 Baxter 2020 Focused, Market-Leading Product Portfolio Leaner, More Efficient Operating Model Strengthened Profitability And Returns Strong Capital Structure Sustainable Top Line Growth Accelerated Bottom Line Growth Enhanced Financial Flexibility Increasing Shareholder Return Executing A Disciplined Strategy To Deliver Top Quartile Shareholder Returns

13 Goldman Sachs th Annual European Healthcare Services Conference September 7, 206