JPM 2023 Baxter.pdf

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1、41STANNUAL J.P.MORGAN HEALTHCARE CONFERENCEJos(Joe)AlmeidaChairman&Chief Executive Of ficerJ A N U A R Y 9,2 0 2 31This presentation includes forward-looking statements concerning the companys financial results and business development,transformation and regulatory activities(including the proposed

2、spinoff of the companys Renal Care and Acute Therapies businesses,the simplified operating model and the potential sale or other strategic transaction involving the companys BioPharma Solutions business).These forward-looking statements are based on assumptions about many important factors,including

3、 the following,which could cause actual results to differ materially from those in the forward-looking statements:the ability to effect the transactions described above and to meet the conditions related thereto;potential uncertainty during the pendency of the transactions that could affect the comp

4、anys financial performance;the possibility that the transactions will not be completed within the anticipated time period or at all;the possibility that the transactions will not achieve their intended benefits;the possibility of disruption,including changes to existing business and employee relatio

5、nships,disputes,litigation or unanticipated costs in connection with the transactions;uncertainty of the expected financial performance of the company or the new kidney care company following completion of the spinoff transaction;negative effects of the announcement or pendency of the transactions o

6、n the market price of the companys securities or on the financial performance of the company;evolving legal,regulatory and tax regimes;changes in general economic and/or industry specific conditions;actions by third parties,including government agencies;demand for and market acceptance of risks for

7、new and existing products(including challenges with the companys ability to accurately predict changing customer preferences,which has led to and may continue to lead to increased inventory levels);continuity,availability and pricing of acceptable raw materials and component parts(and the companys a

8、bility to pass some or all of these costs on to its customers);inability to create additional production capacity in a timely manner or the occurrence of other manufacturing or supply difficulties(including as a result of a natural disaster,public health crises and epidemics/pandemics,geopolitical c

9、rises,regulatory actions or otherwise);product development risks(including any delays in obtaining required regulatory approvals or failures to obtain such approvals or ones associated with evolving regulatory requirements);product quality or patient safety concerns(leading to product recalls,withdr

10、awals,launch delays,warning letters,import bans,sanctions,seizures,litigation,or declining sales);the impact of global economic conditions(including the ongoing war in Ukraine,the related economic sanctions being imposed globally in response to the conflict,potential trade wars and global inflationa

11、ry pressures)and public health crises and epidemics,such as the ongoing coronavirus(COVID-19)pandemic,on the company and its employees,customers and suppliers,including foreign governments in countries in which the company operates;fluctuations in foreign exchange and interest rates;the adequacy of

12、the companys cash flows from operations and other sources of liquidity to meet its ongoing cash obligations and fund its investment program(including as a result of any ratings downgrade);accurate identification of and execution on business development,additional portfolio optimization and R&D oppor

13、tunities and realization of anticipated benefits(including the acquisitions of Cheetah Medical,SeprafilmSeprafilm Adhesion Barrier,specified OUS rights to CaelyxCaelyx/DoxilDoxil,full U.S.and specific OUS rights to Transderm Scop,PerClotPerClot,Hillrom and certain rights to ZosynZosyn in the U.S.and

14、 Canada);breaches or failures of the companys information technology systems or products,including by cyberattack,unauthorized access or theft;loss of key employees or inability to identify and recruit new employees;future actions of regulatory bodies and other governmental authorities,including FDA

15、,the Department of Justice,the SEC,the New York Attorney General and foreign regulatory agencies,including the continued delay in lifting the warning letter at the companys Ahmedabad facility;the outcome of pending or future litigation,including the opioid litigation and ethylene oxide litigation or

16、 other claims;proposed regulatory changes of the U.S.Department of Health and Human Services in kidney health policy and reimbursement,which may substantially change the U.S.end-stage renal disease market and demand for the companys peritoneal dialysis products,necessitating significant multiyear ca

17、pital expenditures,which are difficult to estimate in advance;failures with respect to compliance programs;future actions of third parties,including payers;U.S.healthcare reform and other global austerity measures;pricing,reimbursement,taxation and rebate policies of government agencies and private

18、payers;the impact of competitive products and pricing,including generic competition,drug reimportation and disruptive technologies;the ability to enforce owned or in-licensed patents or the prevention or restriction of the manufacture,sale or use of products or technology affected by patents of thir

19、d parties;global,trade and tax policies;any change in laws concerning the taxation of income(including current or future tax reform),including income earned outside the U.S.and potential taxes associated with the Base Erosion and Anti-Abuse Tax or the Build Back Better framework;actions taken by tax

20、 authorities in connection with ongoing tax audits;and other risks identified in Baxters most recent filings on Form 10-K and Form 10-Q and other SEC filings,all of which are available on Baxters website.Baxter does not undertake to update its forward-looking statements unless otherwise required by

21、the federal securities laws.2SAFE HARBOR STATEMENT3OPERATING AT THE INTERSECTION THE INTERSECTION OF PROGRESSPROGRESSAND PURPOSEPURPOSEA CENTURY OF SAVING AND SUSTAINING LIVES4RECOGNIZED TOP EMPLOYER&OUTSTANDING CORPORATE CITIZENFor more information on Baxters efforts to benefit our communities,empl

22、oyees,and stakeholders,refer to our 2021 Corporate Responsibility Report and Sustainability Accounting Standards Board(SASB)Index.Representative HighlightsDow Jones Sustainability IndicesLongtime component of DJSI Global and DJSI U.S.IndicesNewsweek:Americas Most Responsible CompaniesRecognized for

23、ESG leadershipCorporate Equality Index100%score on Human Rights Campaign LGBTQ+inclusion index3BL Media:100 Best Corporate CitizensRecognized for ESG leadershipDisability Equality IndexBest Place to Work listSeramount Inclusion IndexRecognized as a leading organization for DEI best practicesCapital

24、Allocation5InnovationMarket ExpansionPortfolio Management Debt RepaymentDividendsShare RepurchasesTO SAVE AND SUSTAIN LIVESTO SAVE AND SUSTAIN LIVESTransform healthcare with customer focus:improve patient outcomes,enhance workflow efficiency and enable cost-effective careStrategic Value Strategic Va

25、lue Creation Drivers:Creation Drivers:Revenue SynergiesGeographic ExpansionChannel ExpansionMarket DevelopmentConnected CareCore TherapiesOperational EfficiencyMission:Mission:Vision:Vision:Catalysts:Catalysts:Cost SynergiesDigital TransformationQuality,Safety,and Supply Chain ResilienceCOMPELLING S

26、TRATEGY FOR VALUE CREATIONRenal Care and Acute Therapies to spin off into a standalone,leading global healthcare companyInitiating plans to simplify Baxters operating model to drive strategic clarity,improve end-to-end operational efficiencies,and accelerate growth Pursuing strategic alternatives fo

27、r BioPharma Solutions businessJANUARY 6,2023 ANNOUNCEMENT6Challenges facedChallenges facedRapidly changing macroeconomic conditionsSimplifying operating model to accelerate decision making and executionHighly diverse product portfolio challenging resource allocationsExecuting set of portfolio moves

28、to drive strategic clarity and focus capital allocation into innovation and commercialInefficiencies created from complex manufacturing network and supply chainOptimizing manufacturing network footprint focus and investing in digital/automation solutions to create supply chain resiliencySteps being

29、takenSteps being takenCHALLENGES FACED AND STEPS BEING TAKEN7ESTABLISHING TWO LEADING HEALTHCARE COMPANIES,WITH SHARED HERITAGE OF SAVING AND SUSTAINING LIVES812021 PD sales include Renal Technical Services sales and HD sales include Renal Care Services sales.2Pro forma sales presents sales for 2021

30、 as if the acquisition of Hillrom and the proposed spinoff of the Renal Care and Acute Therapies businesses had occurred as of January 1,2021.Pro forma sales is a non-GAAP measure and a reconciliation to the comparable U.S.GAAP measure can be found herein.KidneyCoKidneyCoGlobal innovator in kidney c

31、are delivering value for patients throughout their therapeutic journeysHealthcare leader focused on providing an array of medical products and services across the care continuumKidneyCo Pro Forma 2021 SalesPeritoneal Dialysis1$2.8BHemodialysis1$1.1BAcute Therapies$0.8BKidneyCo Pro Forma$4.7BPharmace

32、uticals&BPS$3.0BMedication Delivery$2.9BPSS&GSS(pro forma)2$1.9BFront Line Care(pro forma)2$1.1BAdvanced Surgery$1.0BClinical Nutrition$1.0BBaxter Pro Forma2$10.9BBaxter Pro Forma 2021 SalesSPIN POSITIONS BOTH BUSINESSES TO DRIVE ADDITIONAL SHAREHOLDER VALUEKidneyCoKidneyCoBaxterBaxterRenal-focused

33、healthcare company with leading product portfolio,history of innovation and broad geographic footprintLeading medtech company with broad portfolio of core therapy and connected care offerings across the care continuumCapital allocation directed towards R&D to help bring innovative technologies to ma

34、rketTargeting inorganic investments on connected care and core growth value vectorsAbility to build upon commercial capabilities to further penetrate target marketsWorking to finalize a simplified operating model to provide additional business transformation opportunitiesFocused strategy to unlock i

35、ncremental growth potentialImproved margin profile to enable incremental investment in R&D and commercial infrastructure9Key Strategic ObjectivesKey Strategic Objectives Increase PD therapy penetration globally Deliver additional connected care solutions Advance new technologies to simplify therapy

36、and drive greater adoptionPeritoneal Peritoneal DialysisDialysisHemodialysisHemodialysis Increase Expanded Hemodialysis(HDx)therapy penetration in existing geographies Optimize dialyzer manufacturing capacity Evaluate strategic exits in select geographies to improve profitabilityAcute Acute therapie

37、stherapies Introduce additional connected care and core therapy offerings Increase therapy adoption across geographies Expand treatment possibilities with next-generation blood purification Acute TherapiesAcute TherapiesKIDNEYCO HAS CLEAR,WELL-DEFINED STRATEGIC OBJECTIVES10 Increase PD and HDx thera

38、py penetration in existing geographies Drive CRRT portfolio expansion in the U.S.and geographic expansion in emerging marketsCommercialCommercial Accelerate R&D investment in patient-focused opportunities Shift R&D investment from sustaining to new product developmentInnovationInnovationOperationsOp

39、erations Transform manufacturing network to renal-specific sites Optimize fit-for-purpose business support functionsEnhance value creation Enhance value creation through accelerated through accelerated revenue growth revenue growth Chart path to attractive Chart path to attractive operating income o

40、perating income growthgrowthSPIN EXPECTED TO ACCELERATE VALUE CREATION POTENTIAL11Structure/Structure/TimingTiming Baxter expects to spin off its Renal Care and Acute Therapies business units into a new independent,publicly traded company(“KidneyCo”)Spinoff expected to be structured as a tax-free di

41、stribution of newly issued shares of KidneyCo common stock to Baxter shareholders with completion expected to occur in 12-18 months(subject to satisfaction of customary conditions)Baxter is targeting maintenance of an investment grade credit rating Baxter to maintain disciplined capital allocation s

42、trategy KidneyCo expected to be appropriately capitalized to provide the business with the liquidity it needs to drive its investment and growth opportunitiesConditions/Conditions/ApprovalsApprovalsSubject to the satisfaction of customary conditions,including:Consultations with works councils and ot

43、her employee representative bodies,as required Final approval from Baxters Board of Directors Receipt of a favorable opinion and Internal Revenue Service ruling with respect to the tax-free nature of spin SEC declaring KidneyCos related Form 10 effectiveLeadershipLeadership KidneyCo leadership team

44、to be announced in coming monthsTRANSACTION OVERVIEW AND NEXT STEPS12PORTFOLIO ACTIONS COUPLED WITH SIMPLIFIED OPERATING MODEL ENHANCE BAXTERS VALUE CREATION POTENTIAL Streamline portfolio and commercial structure to fulfill Baxters vision Accelerate commercial investments to further penetrate targe

45、t segments Drive expansion into additional global markets Allocate R&D capital towards higher growth segments(e.g.,connected care)Design products to address evolving patient and provider needs Redesign operations and manufacturing to improve performance Drive improved accountability,simplified repor

46、ting,and resilient supply chainAccelerate growth from Accelerate growth from additional investments additional investments in S&M and R&Din S&M and R&DCreate path for Create path for operating margin operating margin expansionexpansionCommercialCommercialInnovationInnovationOperationsOperations13OPT

47、IMIZING MANUFACTURING AND SUPPLY CHAIN TO ENHANCE NETWORK EFFICIENCIESManufacturing footprint network optimizationManufacturing footprint network optimizationIn Region/For Region manufacturing&fulfillment(make where you sell;buy where you make mindset)Manufacturing&distribution network rationalizati

48、onFocus on enhancing operationsFocus on enhancing operationsAutomation(e.g.,automated filling,pouching,and set assembly)Vertical integration(e.g.,molding&extrusion)Inventory optimizationAnalytics(advanced planning tools,control tower,predictive analytics)14THESE ACTIONS WILL FURTHER ACCELERATE OUR D

49、ISCIPLINED CAPITAL ALLOCATION STRATEGYMaintaining DividendsDIVIDENDSExpecting to reinstate share repurchases over timeSHARE REPURCHASESCurrently pursuing strategic alternatives for BioPharma Solutions business;assessing additional inorganic growth vectors for products,therapies,and connected care pl

50、atformsPORTFOLIO MANAGEMENTUtilizing proceeds from proposed spinoff of KidneyCo and potential strategic assets sales to accelerate Baxter debt repayment scheduleDEBT REPAYMENT15 Proposed KidneyCo spinoff to create two leading healthcare companies with robust product portfolios Simplified operating m

51、odel expected to enable greater strategic clarity and faster decision making Disentanglement of manufacturing plants and supply chain expected to drive margin improvements Additional capital allows for focused investments in R&D and commercial development to accelerate value creation as well as debt

52、 repayment Plan to provide additional commentary on new organizational structure as well as 2023 as part of Q4 2022 earnings conference call CONTINUING MOMENTUM IN 2023 AND BEYOND16NON-GAAP RECONCILIATIONS17This presentation includes the companys unaudited 2021 pro forma net sales as if its acquisit

53、ion of Hillrom and proposed spinoff of its Renal Care and Acute Therapies businesses had occurred as of January 1,2021.It also includes unaudited 2021 pro forma net sales for the Patient Support Systems and Global Surgical Solutions(PSS&GSS)and Front Line Care product categories,which were added as

54、a result of the Hillrom acquisition,as if that acquisition had occurred as of January 1,2021.Pro forma net sales is a non-GAAP financial measure.It has been provided for illustrative purposes only and does not purport to represent what the companys net sales would have been if the acquisition and pr

55、oposed spinoff had occurred on January 1,2021 and is not intended to project its net sales for any future period.Additionally,there is no guarantee that the proposed spinoff(which is subject to the satisfaction of customary conditions)will be completed.The following is a reconciliation of pro forma

56、net sales to the corresponding GAAP measure,net sales,for the year ended December 31,2021(in millions):C ConsolidatedonsolidatedPSS&GSSPSS&GSSFront Line CareFront Line CareBaxter net sales as reported$12,784$142$70Hillrom preacquisition net sales2,7901,7321,058Less:Renal Care and Acute Therapies net

57、 sales(4,682)-Pro forma net sales$10,892$1,874$1,128Non-GAAP financial measures may enhance an understanding of the companys operations and may facilitate an analysis of those operations,particularly in evaluating performance from one period to another.Management believes that non-GAAP financial mea

58、sures,when used in conjunction with the results presented in accordance with U.S.GAAP and the reconciliations to corresponding U.S.GAAP financial measures,may enhance an investors overall understanding of the companys past financial performance and prospects for the future.This information should be considered in addition to,and not as a substitute for,information prepared in accordance with U.S.GAAP.NON-GAAP FINANCIAL MEASURES18