Analyst and Investor Day. SORIN GROUP Presentation 1

Transcription

1 Analyst and Investor Day Milan, March 21, 2011 SORIN GROUP Presentation 1

2 DISCLAIMER This presentation contains management preliminary estimates and forward-looking statements, t t including information related to Sorin projected financial i 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. SORIN GROUP Presentation 2

3 TODAY S AGENDA Topic Timing Speaker Welcome & Opening Remarks Group Overview Cardiopulmonary Cardiac Rhythm Management Heart Valves R. Bifulco A.M. Ballester M. Darnaud S. Di Lullo D. Bianchi Guest: Dott. G. Troise FY 10 Financials and FY 11 Outlook D. Mauro Strategy & Closing Remarks A.M. Ballester Questions & Answers SORIN GROUP Presentation 3

4 A GLOBAL MEDICAL DEVICE COMPANY Welcome and Opening Remarks Rosario Bifulco Chairman SORIN GROUP Presentation 4

5 MANAGEMENT TEAM André-Michel dé BALLESTER Chief Executive Officer Davide BIANCHI Pres. Heart Valves Michel DARNAUD Pres. Cardiopulmonary & Intercontinental Stefano DI LULLO Pres. Cardiac Rhythm Management Edward ANDRLE Vice Pres. Business Development Stéphane BESSETTE Vice Pres. Human Resources Demetrio MAURO Chief Financial Officer Brian SHERIDAN General Counsel Kieran TUITE Vice Pres. Operations SORIN GROUP Presentation 5

6 SORIN AT-A-GLANCE FY 10 Revenues Key company data Heart valves 16% Key facts Focus on 3 Business Units FY 10 revenues: 745.8m By business 45% Cardiopulmonary 3,700 employees worldwide Over 5,000 hospitals served around the world Cardiac Rhythm Management Japan RoW 38% 9% 15% By geography 48% Europe One million patients treated with Sorin s devices every year in over 80 countries Excellence in innovation (R&D) R&D and manufacturing sites North America 28% SORIN GROUP Presentation 6

7 KEY STRATEGIC IMPERATIVE Turnaround Restructuring Value Financial i discipline Manufacturing cost reduction Growth Innovation Geographic expansion Revenue generating acquisitions SORIN GROUP Presentation 7

8 A GLOBAL MEDICAL DEVICE COMPANY Group Overview André-Michel Ballester CEO SORIN GROUP Presentation 8

9 A GLOBAL LEADER IN THE TREATMENT OF CARDIOVASCULAR DISEASES Worldwide undisputed Leader in Cardiopulmonary Innovative player in CRM Growing global presence in HV Cardiopulmonary Heart Valves Cardiac Rhythm Management Market trends Stable market conditions: volume growth in Emerging Markets compensating stabilization in developed countries Moderate growth fueled by tissue valves penetration Cannibalization of conventional surgery from TAVI and sutureless valves High Voltage: mid-single digit growth market Low Voltage: no novel indication driving growth Sorin position Undisputed global market leader #2 global mechanical Heart Valve player #2 Heart Valve company in Europe Continuous penetration of US tissue market Leverage on Perceval S Strong presence in key European countries and Japan Opportunity in the US SORIN GROUP Presentation 9

10 WITH A BROAD RANGE OF PRODUCTS AND A RICH PIPELINE OF INNOVATIVE TECHNOLOGY A tradition of Excellence in Innovation 66.9m dedicated to R&D (9.0% of Revenues) 14% of employees work in R&D (500 people in North America, France, Italy and Germany) CP A Portfolio of Innovative Products* HLM Oxy ATS Partnerships with cardiology specialists and cardiac surgeons as well as world-renowned universities and research centers Relying on engineer-physician i i intelligence networks to develop innovative therapeutic solutions CRM CRT-D ICD Pacemaker Remote Monitoring Tissue valves Mech. valves Sutureless A portfolio of over 2,000 patents HV * In grey products recently launched or expected to obtain CE mark in FY 11 SORIN GROUP Presentation 10

11 DELIVERING OPERATIONAL AND FINANCIAL EXCELLENCE Operational Financial Data in m Data in m 3.2x 55.8% 54.0% 58.9% 1.8x x Gross Profit Gross Margin Design for manufacturing and cost Lean program and supply chain optimization Quality and process control Net Debt Net Debt/EBITDA Significant improvement in profitability Strong WC improvement Significant Cash Flow generation SORIN GROUP Presentation 11

12 2010 KEY ACHIEVEMENTS Financial Top line growth +4.9%* Revenue growth vs 2009 Strong increase in profitability Gross Margin at 58.9% vs 55.8% in 2009 EBITDA at 16.1% vs 14.4% in 2009 Net Profit up 68.5% to 39.1m R&D expenses increased from 8.6% to 9.0% of Revenues Significant ifi cash flow generation Net Debt down to 128.8m vs 181.6m as of December 31, 2009 Business Strengthening of product portfolio Launch of the new Xtra ATS Launch of new generation Paradym CRT CLEAR study on heart failure patients: reduction in non-responder rate from 38% in control to 14% with SonR Perceval S: significant procedure time reduction and excellent hemodynamic results Gish Biomedical successful integration completed Execution of manufacturing efficiencies programs Sales force expansion and re-organization Direct sales in the Netherlands and Austria US HV & CRM distribution network strengthened 13 th Consecutive quarter of successful execution on targets * At comparable FX rates and constant perimeter SORIN GROUP Presentation 12

13 CP market is stable CHANGES SINCE 2010 INVESTOR DAY: CHALLENGING MARKET CONDITIONS CRM market growth is slowing down vs last years prospects HV benefits from the sutureless new untapped market Slower growing markets will intensify competition Sorin reference markets CAGR vs CAGR CP CAGR % 2.0% CAGR % CRM CAGR CAGR % 6.3% HV CAGR CAGR % 4.8% Source: Management s estimates SORIN GROUP Presentation 13

14 CHANGES SINCE 2010 INVESTOR DAY: WITH EMERGING MARKETS DRIVING GROWTH CP: increasing units with lower ASP CRM: highly underpenetrated markets - some, like China, with attractive ASPs HV: 70% of mechanical heart valves volumes coming from Emerging Countries Sorin reference markets Developed markets vs RoW CAGR CP Dev. Mkts RoW 0.6% 3.1% CRM Dev. Mkts RoW 2.8% 10.7% HV Dev. Mkts 4.5% RoW 5.6% Source: Management s estimates SORIN GROUP Presentation 14

15 CHANGES SINCE 2010 INVESTOR DAY: AND A CHANGING MACRO-ECONOMIC ENVIRONMENT Changing ghealthcare environment and macro-economic conditions Scrutiny on healthcare spending Pressure on prices More challenging regulatory environment Currency volatility that Sorin is well positioned to face today Diversified portfolio and global presence Track record in new technology at premium price Solid balance sheet and prudent hedging strategy SORIN GROUP Presentation 15

16 CHANGES SINCE 2010 INVESTOR DAY: NEW OPPORTUNITIES FOR UNMET CLINICAL NEEDS Heart Failure: a significant unmet clinical need The largest unmet clinical need in cardiovascular medicine today In developed countries, 6-10% of adults over age 65 suffer from HF More than $39bn is spent in the US Healthcare system to treat HF patients CRT-D & CRT-P: market size 3.0bn in 2011 CRT effective but limited: less than 5% of HF patients eligible for CRT, 30% non-responders Incremental 3.7bn market opportunity available if address CRT-D non-responders and diastolic HF patients Heart Failure: 3.0bn market in 2011 Systolic HF Drugs, 41% Drugs & Devices, 10% 13.3m US & EU HF Patients No approved Therapies, 49% Diastolic HF SORIN GROUP Presentation 16

17 CHANGES SINCE 2010 INVESTOR DAY: NEW OPPORTUNITIES FOR UNMET CLINICAL NEEDS Atrial Fibrillation: a significant unmet need A 1.6bn market opportunity in 2011 with 12% Approx. 10% of adults over age 65 suffer from AF CAGR 7 million AF patients in the US and EU Total AF patients More than $7bn is spent in the US to treat AF patients US: 2.5m patients of which only 5% treated 15-20% of all strokes are due to AF EU: 5.0m patients of which only 1% treated Atrial Fibrillation: 1.6bn market in 2011 Surgical Abl., 7% Diagnostic & Other, 64% A 12% CAGR market EP Abl., 29% SORIN GROUP Presentation 17

18 WHERE WE WERE AND WHERE WE WANT TO BE: FROM VALUE TO GROWTH 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 ti 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) Financial objectives: leverage P&L for higher profitability and CF generation Geographic expansion Potential acquisitions & partnerships Data in % on Revenues 10.4% 12.4% 14.4% 4% 16.1% 1% > 20.0% /2015 SORIN GROUP Presentation 18

19 A WORLD LEADER IN CARDIOPULMONARY BYPASS Cardiopulmonary Michel Darnaud President Cardiopulmonary BU and Intercontinental SORIN GROUP Presentation 19

20 THE CARDIOPULMONARY REFERENCE MARKET Data in m 1,265 Other segments 450 Autotransfusion systems Heart-lung machines Oxygenators/ Disposables Market value 1, CAGR % +3.3% Stable +1.0% 10% Stable Market trends On-pump procedures: 1.3% growth per year Congenital procedures: 4% expected growth per year Heart Valves procedures: 3.7% expected growth per year due to marginal TAVI cannibalization CABG procedures decreasing due to PCI (stents) Off-pump procedures res incidence flat Over 50% of worldwide procedures are already performed outside EU, US and Japan Traditional markets substantially flat Growth in ROW driven by increase in procedures partially balanced by pricing erosion Growth in other segments* mainly coming from EU and the US, driven by increasing adoption of more sophisticated solutions Source: Management s estimates based, among others, on Global Market Survey 2010, Health Research International US report, Millenium Research Global report * Other segments include Low Bleeding ATS, Patient Monitoring, Cannulae, EVH and ECMO SORIN GROUP Presentation 20

21 CARDIOPULMONARY UNDISPUTED GLOBAL LEADER FY 10 Key achievements Continuous geographic expansion (Brazil, China) Strongest year ever in Heart-Lung Machines Market share gains (primarily in the US) thanks to Gish Biomedical successful integration Stopped erosion of CPB s market share in the US and Europe Lean program and supply chain optimization Continuous focus on innovation: XTRA TM, LinOx FY 10 Financial results Sorin s product range Data in m %* Products HLM OXY ATS * At comparable FX rates & at constant perimeter Disease Treatment Heart valves diseases; Coronary arteries diseases; Congenital heart defects Valve replacement; Bypass; Valve repair (i.e., need for extra-corporeal circulation) SORIN GROUP Presentation 21

22 SORIN COMPETITIVE POSITIONING TRUE LEADER ABOVE AND BEYOND UNITS SOLD AND MARKET SHARE Undisputed leader in HLM a base for growth Product segment WW Market share Other key market shares Major competitors 95% Terumo HLM #1 Sorin 65% 70% Maquet (Getinge) 53% Local manufacturers (China, Brazil) CPB Sorin 35% 45% #1 30% 26% Medtronic Terumo Maquet (Getinge) #2 Sorin 40% 35% 30% 9% ATS Note: Management data and estimates based on 2010 revenues. Data for Chinese market refer to imported products only. Haemonetics Medtronic Fresenius SORIN GROUP Presentation 22

23 CARDIOPULMONARY PIPELINE Product/Project Key features Impact/Opportunity Expected sales availability XTRA New ATS (equipment and disposable sets) Increase ATS market share LinOx CP5 Bcare5+ Multiparametric ILBM New generation of adult Increase Adult Oxy market oxygenators with improved share performance, ease of use and Increase gross margin manufacturing efficiency System sell New Data Management System Reinforce product line New Centrifugal Pump Console for S5/C5 systems HLM accessories enrichment Bcare5+: arterial (+ venous) Increase Monitoring i market monitor integrated into S5/C5 share Multi-parametric In-Line Blood Monitor: Sphere technology New Kids New generation of newborn and infant oxygenators Increase Paediatric Oxy market share LBATS New Auto Transfusion System for Expansion into new higher- low-bleeding surgeries growth segment onwards SORIN GROUP Presentation 2015 onwards 23

24 XTRA THE INNOVATIVE, INTUITIVE AND POWERFUL ATS SYSTEM Key technical features Innovative Compact, ergonomic, robust ATS equipment Graphic color touch screen user interface and advanced data management capabilities Intuitive Refined ergonomics and fast and intuitive set up Powerful High HCT (>60%), good RBC recovery and wash quality, high h volume processing and quiet powerful vacuum Objectives Increase market share in Europe and the US Ensure recognition as Best in class system commanding premium price Full product availability Q in EU Q in the US Official launch at CREF, March 2011 SORIN GROUP Presentation 24

25 LINOX (LEADERSHIP IN OXYGENATION) A NEW GENERATION PRODUCT IN PERFUSION Objectives Increase Adult oxygenators market share Increase oxygenators profitability Lower average manufacturing cost per unit New technology and lean manufacturing Reinforce oxygenators product line Improve performance and build best-in-class products Reduce complexity decreasing the number of SKUs (-50%) via a modular approach Achieve CE mark in Q SORIN GROUP Presentation 25

26 TRACK RECORD OF A SUCCESSFUL ACQUISITION: Deal Terms Date: June 7, 2010 Target: Gish Biomedical, US-based manufacturer of CPBs and other CP products with sales of approx. 8m (mainly US and int l) and 65 employees Seller: Ventizz Capital Partners, German private equity firm Execution Rationale Opportunistic deal with almost immediate return on investment Increase market share in the US: +1.5% MS in Oxygenators Maintain Gish WW business increasing its profitability Strong synergies (S&M, production) No quality or regulatory issue Gish plant shut-down in Oct and smooth and rapid integration of activities to Arvada & Mirandola sites Presence of Sorin s multifunctional i l team at Gish site and close coordination i with sales force Fast turnaround and results better than expected Sales conversion: 74% in H vs 54% planned Fast conversion of Inventory and A/R into cash SORIN GROUP Presentation 26

27 CARDIOPULMONARY STRENGTHEN GLOBAL LEADERSHIP Raise our market share in disposable products, leveraging on our unrivalled strength in equipment installed base and on LinOx innovation Reinforce ATS presence leveraging on the launch of Xtra TM Enter new growth opportunity segments Pursue geographic expansion into faster-growing RoW markets (China, India, Brazil, Russia) Continue operational excellence (manufacturing, logistics, quality) Consolidate our worldwide #1 position and increase profitability and cash flow SORIN GROUP Presentation 27

28 FIRST FIRST TO IMAGINE. FIRST TO INVENT. Cardiac Rhythm Management Stefano Di Lullo President Cardiac Rhythm Management BU SORIN GROUP Presentation 28

29 THE CARDIAC RHYTHM MANAGEMENT REFERENCE MARKET Data in m High Voltage Low Voltage Market value CAGR ,973 8,183 6,591 5,088 3,096 3, % +5.3% +1.8% Market trends Key trends of the global CRM market: Growth slowdown Convergence of technology Innovation focused 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 High Voltage: ICD/CRT-D EU market still underpenetrated vs. implant indications Market development opportunity in Japan and moreover, RoW and China Technology innovation focused on: Heart Failure and Atrial Fibrillation Source: Management s estimates based, among others, on Eucomed data, Competitive market overview and research analysts estimates SORIN GROUP Presentation 29

30 CARDIAC RHYTHM MANAGEMENT AN INNOVATIVE PLAYER IN HEART FAILURE 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 FY 10 Financial results Sorin s product range Data in m %* Products CRT-D Defibrillators (ICD) Pacemakers High Voltage Low Voltage Disease Heart Failure Sudden cardiac death Bradycardia Treatment Pacing + defibrillation Defibrillation Pacing * At comparable FX rates SORIN GROUP Presentation 30

31 SORIN COMPETITIVE POSITIONING STRONG MARKET POSITIONING IN LOW VOLTAGE IN EUROPE AND JAPAN #1 Low Voltage player in France #2 Low Voltage player in Italy Fastest growing player in High Voltage #2 Low Voltage player in Japan Product segment WW Market share Other key market shares Major competitors Sorin 6% 12% Low Voltage 1% 20% Medtronic Sorin 2% 5% 1% St Jude Boston Scientific Biotronik High Voltage 7% Note: Management data and estimates based on 2010 units sold SORIN GROUP Presentation 31

32 CARDIAC RHYTHM MANAGEMENT PRODUCT PIPELINE Product/Project Key features Impact/Opportunity Expected launches Paradym RF (Tachy / HF) Remote-enabled Thin and high longevity Electronic repositioning Additional revenues in 2011 Q Paradym RF SonR (HF) Remote-enabled Automatic therapy adjustment Best-in-class response rate Breakthrough technology Growth opportunity Q * Remote Monitoring Remote Follow-up Daily Alerts Check Orange Partnership & Service Industry standard New business opportunity Enables for new algorithms Q Brady MRI & Premium MRI Conditional system Sleep Apnea monitoring Industry standard Extend brady position * Platinium (Brady & Tachy) * If no clinical Best longevity, cost effectiveness Significantly lower Best HF therapy manufacturing cost (>-50% compared to Paradym RF) Multiple site pacing Small & thin onwards onwards SORIN GROUP Presentation 32

33 REMOTE MONITORING: PATIENT-FOCUSED ADVANCED SOLUTION IN CARDIAC DISEASE MANAGEMENT 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 Q Remote Monitoring Demo Agreement with Orange (March 2009) Best Change Maker World Communication Awards 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 33

34 SONR TECHNOLOGY HEMODYNAMIC CRT OPTIMIZATION SonR sensor is a micro accelerometer located at the tip of the lead Designed to adjust CRT delivery based on hemodynamic response Allows for automatic CRT optimization The CLEAR (Clinical Evaluation on Advanced Resynchronization) study assessed the impact of Automatic SonR based CRT optimization on patients clinical outcome in severe chronic HF patients CE mark expected for Q (Paradym RF SonR) CLEAR Results: Clinical response rate to CRT Innovation award winner: SILVER 86% SONR TM TECHNOLOGY 62% IMPLANTED HEMODYNAMIC SENSOR TO IMPROVE CRT PATIENT RESPONSE RATES p= SonR group (n=57) Control group (N=99) Optimization as per clinical centres practice SORIN GROUP Presentation 34

35 CARDIAC RHYTHM MANAGEMENT ADDITIONAL GROWTH OPPORTUNITIES Improved Cardiac Resynchronization Therapy (ref patients) Domain Alternative therapies for Heart Failure and Heart Failure co-morbidities Patient t Monitoring i / Heart Failure and co-morbidities Disease Management Service SORIN GROUP Presentation 35

36 CARDIAC RYTHM MANAGEMENT INNOVATION IN HEART FAILURE Gain share in High Voltage, focusing on Heart Failure Innovation and therapy delivery Geographic strategy: US: continue on expansion plan growing Concentric Circles Europe: Invest in key countries to grow share in High Voltage and consolidate # 3 Low Voltage position Japan: maintain #2 in Low Voltage and grow in High Voltage Emerging Markets: selected/focused investments Drive product cost reduction programs Become Focus the Innovations innovative and leader R&D investments Haemodynamic on Heart Management Failure of Heart Failure SORIN GROUP Presentation 36

37 THE CHOICE OC OF CARDIAC C SURGEONS S WORLDWIDE Heart Valves Davide Bianchi President Heart Valves BU Guest Speaker: Dott. Giovanni Troise Fondazione Poliambulanza, Istituto Ospedaliero Brescia SORIN GROUP Presentation 37

38 THE HEART VALVE REFERENCE MARKET Data in m Sutureless Repair Tissue Mechanical 1, Market value CAGR Market trends 1, % Heart Valves continues to be an attractive market Procedure growth (+3.7% CAGR ) 15) driven by 182 an aging population and early referrals % Large undertreated population High barriers to entry Mechanical valves flattening with price erosion Continuing conversion to tissue, which could +3.0% accelerate due to valve in valve procedures Potential upside from new anticoagulant therapies Tissue valve growing at a lower pace due to partial cannibalization by TAVI and sutureless -2.4% Sutureless market expected to develop as MIS alternative for medium/high risk population Source: Management s estimates based, among others, on MRG, Markets for HV devices, 2010 YANO Report, 2009 Japanese, HV Market Biba Medical Data, European Market Monitor 2010 Medtech Insight Reports, Internal Survey, IHMT France Database, National Registry and financial analysts research reports SORIN GROUP Presentation 38

39 HEART VALVES 40 YEARS OF HEART VALVE BREAKTHROUGH AND LEADING INNOVATIONS FY 10 Key achievements Further market share gains of Mitroflow TM in the US Balanced tissue and mechanical valve sales Significant Gross Margin expansion driven by manufacturing efficiency and improved product/country mix Focus on Perceval S: CE mark obtained on Jan. 31 st, 2011 followed by market launch FY 10 Financial results 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 39

40 #2 Heart Valve player in Europe SORIN COMPETITIVE POSITIONING LEADING PLAYER IN EUROPE #2 Heart Valve global l player in mechanical valves 10% market share in aortic tissue valve in the US Product segment WW Market share Other key market shares Major competitors Mechanical valves Sorin 30% 40% 15% St Jude 15% Medtronic Tissue valves Sorin 10% 20% 10% Edwards Medtronic St Jude Note: Management data and estimates based on 2010 units sold SORIN GROUP Presentation 40

41 HEART VALVES PRODUCT PIPELINE Product/Project Key features Impact/Opportunity Expected approvals Perceval Sutureless aortic HV, self expanding, self anchoring, surgical Access to the sutureless market estimated at 180m worldwide in Mitroflow Proven exceptional durability and hemodynamics with 21+ years of clinical data Acccess to the 70m Japanese tissue HV market Q Mitroflow Silk Phospholipidh id extraction ti Further market share gain process that reduces calcium uptake Q Q Bioconduit Ease of use design that combines the Mitroflow valve and a valsalva conduit Enter US valve conduit market (including self made conduits) Q Memo 3D Solo 3 dimensional flexibility, Nitinol core, Carbofilm Access to the 20m Japanese annuloplasty l rings market coating Designed with proven longterm Access to the US stentless durability and tissue HV market exceptional hemodynamics 2014 Q SORIN GROUP Presentation 41

42 PERCEVAL S TM Key features Built on a proven Sorin Biological Valve Self-anchoring device and truly sutureless Potential broader access to MIS procedures Objective to gain 50% of the sutureless market in 2015 Development programs for Perceval associated to new potential markets Perceval S CE mark on January 31, 2011 Key clinical benefits Significant procedure time reduction Excellent hemodynamic results Greater durability Potentially less pain and less risk of infection, potentially less mechanical ventilation, reduces patient ICU and hospital length of stay and relative costs Perceval S positioning in the AVR market Peripheral Access Good Bad High TAVI Transfemoral TAVI Transapical t risk Patient Mediu um Low PERCEVAL TM S Surgical AVR SORIN GROUP Presentation 42

43 HEART VALVES ADDITIONAL GROWTH OPPORTUNITIES Domain Haemostatic agents and sealants Minimally Invasive Surgery instruments and accessories Tissue heart valves market in China Trans Apical Aortic Valve Implant Surgical Atrial Fibrillation Mitral Percutaneous Interventions SORIN GROUP Presentation 43

44 HEART VALVES FOCUS ON CARDIAC SURGEONS Be an innovator for Surgeons leveraging on the launch of Perceval S and its development programs Continue US market penetration with tissue valves Extend tissue position in Europe, leveraging on Mitroflow and Solo new generations Protect worldwide market share in mechanical valves Pursue growth opportunities in adjacent segments Develop a broad portfolio for Minimally Invasive CS Drive operational efficiencies To be the Choice of Cardiac Surgeons worldwide SORIN GROUP Presentation 44

45 A GLOBAL MEDICAL DEVICE COMPANY FY 10 Financials and FY 11 Outlook Demetrio Mauro CFO SORIN GROUP Presentation 45

46 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 128.8m 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 46

47 FY 10 TOP LINE GROWTH REVENUES: 745.8m (+4.9%* ) FY 10 Revenues Revenues growth by BU and product segment Data in m % + 4.9%* Cardiopulmonary (+2.5%* )) HLM CPB ATS 2.3% 0.2% 5.7% Cardiac Rhythm Management (+8.4%*) 84%*) HV LV 2.3% 21.6% Heart Valves (+3.4% 4%*) -5.0% TV MV 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 47

48 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% % % bps Gross Margin expansion Manufacturing cost reduction programs ( 15m) 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 e Key projects: Perceval S, Remote Monitoring, LinOx SORIN GROUP Presentation 48

49 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 & Hedge Acc. Country Mix/Price Product mix Manufact. Eff. SG&A LTI R&D FY 10 SORIN GROUP Presentation 49

50 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 50

51 FY 10 FINANCIAL RESULTS NET DEBT BRIDGE FY NET DEBT BRIDGE Data in m Special Items -0.4 WC 7.0 Other FY 08 FY 09 Non recurring EBITDA CapEx Interest Taxes FY 10 SORIN GROUP Presentation 51

52 Data in m FY 10 FINANCIAL RESULTS BALANCE SHEET ANALYSIS Net Debt Evolution ROI* % % Significant decrease in Net Debt of 52.8m Improved profitability More efficient working capital management Negligible Net Special Items ROI increase driven by improved profitability and, to a lesser extent, by lower investment base RC and VT still dilutive for 20 bps * EBIT before Special Items on average Invested Capital SORIN GROUP Presentation 52

53 FY 10 FINANCIAL RESULTS WORKING CAPITAL IMPROVEMENT Primary components of NWC Working Capital Days Data in m DSO DOH DPO Account Payables Inventory Account Receivables SORIN GROUP Presentation 53

54 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 3-5%* and Net Profit to be approximately 8 10m * At comparable FX rates and constant perimeter Free Cash Flow = Net earnings + Depreciation & Amortization ± Working Capital Capex Note: The numbers in the guidance are to be read approximately equivalent to SORIN GROUP Presentation 54

55 A GLOBAL MEDICAL DEVICE COMPANY Strategy and Closing Remarks André-Michel Ballester CEO SORIN GROUP Presentation 55

56 SORIN GROUP ACCELERATING LONG TERM GROWTH Revenue acquisition Geographic expansion Innovation Revenue generating acquisitions Innovation Deliver product innovation via internal R&D and/or New technologies acquisitions to prepare long-term growth Geographic expansion Drive geographic expansion in emerging markets (primarily China) and key developed markets Accelerate growth via Revenue generating targets for new growth platforms Financial discipline and excellence in execution to achieve profitability targets SORIN GROUP Presentation 56

57 INNOVATION A LONG TERM INVESTMENT THAT WILL CONTINUE TO GROW Innovation R&D Innovation strategic guidelines 10% of Revenues or approx. 400m + over the next 5 yrs Brady Premium R&D projects Perceval S More systematic review of all R&D programs across the 3 Business Units to ensure optimal capital allocation PREMIUM Greater focus can t do everything LinOx with HeartLink Platinum Next Generation Better execution and faster time-to-market = R&D + Clinical + Regulatory + Manufacturing SORIN GROUP Presentation 57

58 Data in bn POTENTIAL TECHNOLOGY DEALS: NEW TECHNOLOGIES FOR NEW GROWTH PLATFORMS Potential deal structures Creating own companies 1st European-based Taking technology earlier rather than later med-tech incubator Co-exclusive licensing and distribution deals Limited dilution acceptable for exciting technologies Transcatheter Aortic Valve Implant (TAVI) 2.5 Atrial Fibrillation 4.1 Neuromodulation for Heart Failure Data in bn Data in bn Data in bn Transcatheter Mitral Repair/Replacement Innovation SORIN GROUP Presentation 58

59 A GEOGRAPHIC EXPANSION EXAMPLE CHINA: A STRONG GROWTH OPPORTUNITY AMONG EMERGING MARKETS China: a strong macro environment supporting healthcare industry growth opportunity Increasing healthcare spending (CAGR : 2013: +17%) Aging population leading to increased per-capita healthcare spending Shift of disease pattern towards lifestyle diseases (including cardiovascular diseases) Sorin is already #1 player in specific product segments #1 in HLM with a 53% market share #1 in imported cardiac Oxygenators with a 26% market share #1 in mechanical valves with a 34% market share but further BU opportunities exist ~7% annual growth of on-pump surgeries (137,000 in 2010) of which 40% are valve replacements CRM penetration still very low when compared to mature markets where only 1/9 of demand is satisfied Potential ti for tissue valve market development Sorin will continue pursuing its organic growth plan, primarily in CP, but also evaluate alternative strategies and business models to increase presence in the Chinese market Note: Market shares refer to imported products only (i.e., excluding local manufacturers) Geographic expansion SORIN GROUP Presentation 59

60 Revenue acquisitions REVENUE GENERATING ACQUISITIONS Business Criteria Strategic fit Cardiac Surgery, Heart Valves, CRM, Heart failure, Atrial Fibrillation No additional complexity to the current Group structure Differentiation of Technology or distinctive IP profile Growth potential Operating synergies Sales & Distribution, Marketing & customer base, Clinical, Manufacturing Financial Criteria Deal size not to stretch Group s financial leverage Accretive in the short term SORIN GROUP Presentation 60

61 Revenue acquisition INVESTMENT OPPORTUNITIES TO ACCELERATE GROWTH Geographic expansion Innovation Cardiopulmonary Cardiac Rhythm Management Heart Valves Market growth 1.3% 4.0% 4.8% Business risk Competitive position Low Moderate Moderate (EU & Japan) Innovation - Internal R&D - Tech acquisitions - Geographic expansion (RoW) (US & RoW) (US & RoW) Revenue acquisitions - SORIN GROUP Presentation 61

62 BUSINESS UNITS DELIVERING SOLID ORGANIC REVENUE GROWTH Market CAGR FY15/10 Cardiopulmonary 1.3% Sorin CAGR FY15/10* 1-2% Key Drivers LinOx market share gains, leveraging on HLM ATS expansion in Non-Cardiac/ Low bleeding Geographic expansion in RoW CRM 4.0% 5-7% Portfolio expansion (CRT, RM, Leads, DF4) Geographic expansion: grow High Voltage from Low Voltage Innovation: SonR Heart Valves 4.8% 8-10% Sutureless Perceval S launch Development programs for sutureless Portfolio expansion (Mitroflow & Solo new generations) * At comparable FX rates and constant perimeter SORIN GROUP Presentation 62

63 LONG TERM GUIDANCE BASE BUSINESS FY 10 Actual FY 15 LT Targets Revenue growth* 49% 4.9% 3-5% CAGR EBITDA Margin 16.1% 100 bps per year Net Profit 39.1m m Free Cash Flow 52.8m > 300m of cumulated FCF * At comparable FX rates and constant perimeter Free Cash Flow = Net earnings + Depreciation & Amortization ± Working Capital - Capex SORIN GROUP Presentation 63

64 SORIN WHAT WE WANT TO BECOME Innovation Geographic expansion Revenue acquisitions Base business EBITDA Margin* 17% 30% * Indicative SORIN GROUP Presentation 64

65 Q&A SESSION Investor Relations ti i Tel: Sorin S.p.A. Via Benigno Crespi, Milano Italy SORIN GROUP Presentation 65

66 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 into 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 e from November 18, 2009) concerning the respective e 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 66

67 CARDIOPULMONARY CALENDAR OF KEY CONFERENCES 31 Jan 2 Feb 9 13 March 7 8 April April 7 11 May May Date Location Event San Diego (USA) Newport B. (USA) Dublin (Ireland) New Orleans (USA) Philadelphia (USA) Lake Buena Vista (USA) STS, 47th Annual Meeting CREF Nata Amsect Mechanisms 1 4 June Vienna (Austria) EACTA AATS, 91st Annual Meeting June Berlin (Germany) 21st WW Society of Cardio-Thoracic Surgeons June Dubrovnik (Croatia) FECECT June Istanbul (Turkey) WSPCHS 2 5 October Lisbon (Portugal) EACTS SORIN GROUP Presentation 67

68 CARDIAC RYTHM MANAGEMENT CALENDAR OF KEY CONFERENCES Date Location Event 4-7 May, June, March, April, September, October, October, 2011 San Francisco (USA) Madrid (Spain) Rome (Italy) Mannheim (Germany) Avignon (France) Venice (Italy) Birmingham (UK) Heart Rythm th Annual Scientific Sessions EHRA EUROPACE 2011 New Horizons in Heart Failure Annual Conference of German Ass. of Cardiology 12èmes Journées de Rythmologie Venice Arrhythmias HRC UK SORIN GROUP Presentation 68

69 HEART VALVES CALENDAR OF KEY CONFERENCES Date Location Event 31 Jan 2 Feb Feb 4 5 May 7 11 May 8 11 June June 1 October San Diego (USA) Stuttgart (Germany) NY (USA) Philadelphia (USA) Washington DC (USA) Barcelona (Spain) Lisbon (Portugal) STS, 47th Annual Meeting 40th Annual Meeting German Society (DGTHG) ACTS - Advanced Cardiac Techniques in Surgery AATS, 91st Annual Meeting ISMICS Joint Meeting SHVD & HVSA Techno-College 2-5 October Lisbon (Portugal) EACTS 1 2 December Leipzig (Germany) LTCS SORIN GROUP Presentation 69