Zimmer Biomet Holdings, Inc. · NYSE:ZBH
Zimmer Biomet — Zimmer Holdings — 22nd Annual JPMorgan Healthcare Conference (January 2004)
41 slides from Zimmer Biomet's conference presentation, Jan 13, 2004
Slide 1: Perfect Fit: 22nd Annual JPMorgan Healthcare Conference
Perfect Fit = + 22nd Annual JPMorgan Healthcare Conference
Slide 2: Additional Disclaimers
Additional Disclaimers Zimmer has filed a registration statement, including a proxy statement/prospectus and other relevant materials with the SEC, for the issuance of its shares in connection with the proposed acquisition of Implex. Shareholders of Implex are urged to read the relevant materials wh
Slide 3: Agenda For Today: Four Topics
Agenda For Today . . . . . Four Topics Strategy Conformation Minimally Invasive Update Centerpulse Integration Implex Acquisition
Slide 4: Arthritis
Arthritis Arthritis is the most common chronic condition Arthritis is the number one cause of U.S. disability 63 percent are working age patients Arthritis affects 1 out of 6 individuals Today 42.7 million Americans have arthritis By year 2020, 60 million Americans will have arthritis Center for Dis
Slide 5: Zimmer's Long-Standing Strategy
Zimmer's Long-Standing Strategy New Markets Spine New Geographies Europe New Products "New Patient" Strategies
Slide 6: Zimmer "New Patient" Philosophy
Zimmer "New Patient" Philosophy New Products "New Patient" Strategies Younger, active and better informed patients. Innovative Materials Hybrid Biologics DTC Lifestyle Designs MIS Revision
Slide 7: Minimally Invasive Solutions (MIS)
Minimally Invasive Solutions(tm) (MIS) For the patient and for Zimmer, it's not about small incisions, it's about living life big! Revision Innovative Materials Hybrid Bio- technology DTC Lifestyle Designs MIS "New Patient" Strategies
Slide 8: "Living Life Big" With MIS
"Living Life Big" With MIS . . . . . less invasion, less pain and less systemic cost same day mobility, ambulation and discharge patient-defined "normal life" in a few weeks post-op We Believe Patient Quality of Life Will be the Key Measure A younger, informed more active patient will rule
Slide 9: MIS Total Hips and Knees
MIS Total Hips and Knees . . . . . Less blood loss Less rehab Less hospital time Less scar Min. blood donation or loss 50% -60% less rehab Min. tissue disruption and scar Home the same day "Painless" Image-Guided Less cost
Slide 10: What's All This Talk About the Zimmer 2-Incision Hip?
What's All This Talk About the Zimmer 2-Incision Hip? Video Presentation
Slide 11: Potentially 13+ MIS Patents With Claims
Potentially 13+ MIS Patents With 400 Claims MIS HIP (139 Pending Claims) MIS HIP (139 Pending Claims) MIS HIP (139 Pending Claims) TITLE NUMBER OF CLAIMS STATUS Lit Anterior Retractor 28 Pending Ligametum Teres Femoris Cutter 42 Pending Method and Apparatus for Performing Total Hip Arthroplasty 17 A
Slide 12: Our Zimmer MIS Requires Intense Education
Our Zimmer MIS Requires Intense Education Total Surgeons Trained in Zimmer MIS Institutes 2003 MIS 2-Incision MIS "Mini" Hip MIS "Mini" Knee All Other TOTAL 493 1162 1030 687 3372
Slide 13: Hip Fixation Morbidity
Hip Fixation Morbidity 4% of patients die during initial hospitalization 25% of patients die within one year of surgery 40% of patients require long- term care 50% of patients never walk unassisted 90% of hip fractures are associated with osteoporosis Source: AAOS, "Hip fracture epidemic requires he
Slide 14: Shouldn't MIS Hip Fracture Fixation be in Our Future?
Shouldn't MIS Hip Fracture Fixation be in Our Future? Create a stable biomechanical platform Create a distal fixation cavity within the bone through a 16-18 mm portal Introduce a flexible containment device which allows for collapse of the fracture Fill the containment device with an injectable, loa
Slide 15: A Transformational MIS Approach to Hip Fixation
A Transformational MIS Approach to Hip Fixation 500,000 fractures per year
Slide 16: Zimmer and Centerpulse Are a Financial "Powerhouse"
Zimmer and Centerpulse Are a Financial "Powerhouse" $2.2 billion in combined 2002 sales Earnings per year of over $650 million (combined 2002 EBITDA) Accretive to 2004 First Call EPS ($1.91 on May 18) based on key analyst's current work Projected to be debt free again by end of 2006
Slide 17: With a Strong Combined Credit Profile
With a Strong Combined Credit Profile Projected statistics consistent with investment grade credit Estimated at Closing (9/30/03) Debt / Book Capitalization 36.0% Debt / EBITDA 1.9x Net Debt / EBITDA 1.7x EBITDA / Interest 13.1x FFO / Debt 37.7%
Slide 18: And Leading Positions
And Leading Positions . . . . . Premier, Innovative, Global Orthopaedics Company Leading Technology MIS Alternate Materials CAS Biologics Disc / Nucleus Leading Scale 100,000+ SKUs 2,000+ sales people 1,000,000+ ft2 mfg 1,000+ patents 100,000+ outcomes Leading Positions #1 Reconstructive #1 Hips #1
Slide 19: To Create the World's Leader in Served Markets
To Create the World's Leader in Served Markets . . . . . ($ in Millions) Note: Includes hips, knees, shoulders, elbows, spine, trauma and dental markets. +
Slide 20: Creates the Leading Reconstructive Company
Creates the Leading Reconstructive Company . . . . . Note: Includes hips, knees, shoulders, elbows and dental markets. ($ in Millions) +
Slide 21: Reconstructive Market - 2004 Estimated
Reconstructive Market - 2004 Estimated JNJ Stryker Zimmer Biomet Centerpulse Smith & Nephew Wright Exactech Other Market Share 23.2 21.4 30 11.4 0.103 7.7 2.6 0.8 3.8 $6.4 Billion market growing at 13%
Slide 22: Creates Geographic Balance
Creates Geographic Balance ($ in Millions) Americas Europe Asia- Pacific North America Europe ROW Americas Europe ROW (1) Represents sales from continuing operations. Note: Combined Americas includes Americas sales for Zimmer and North America revenue for Centerpulse. Combined ROW includes Asia-Paci
Slide 23: With an Expanded "Footprint"
With an Expanded "Footprint" . . . . .
Slide 24: Zimmer Spine Is Crucial to Our Growth
Integrated new product development Leverage MIS programs Increase salesforce leverage Merge disc / nucleus discovery Invest in targeted biologics Zimmer Spine Is Crucial to Our Growth . . . . . Interbody Fusion Cages Instruments - rods, screws, plates, hooks Allograft and Bone Materials Artificial D
Slide 25: Zimmer Dental Provides Diversification
Maintain status as an independent division Focus on timely and increased new product development Utilize Zimmer "reconstructive" technology base Focus on earnings quality Targeted choices for global expansion Zimmer Dental Provides Diversification . . . . .
Slide 26: And With Industry Leading R&D Commitment
And With Industry Leading R&D Commitment . . . . . Transformational implants, instruments and techniques Co-develop imaging and guidance tools Metrology and Tribology skillsets utilization Orthopaedic biologics with a cartilage and BMP focus Zimmer + Centerpulse R&D ($ in Millions) 2002 R&D as % of
Slide 27: Targeted Synergies
Targeted Synergies ($ in millions) Estimate (full year) As % of ZMH & CEP Actions COGS $25 - 30 4 - 5% Increased capacity utilization Insource forgings and castings High speed axis mills and robotic polishing Selling 5 1 Sales administration Sales training Marketing /Distribution 10 - 15 4 - 6 Meeti
Slide 28: Targeted Synergies - $'s and Timing
Targeted Synergies - $'s and Timing 2004 2005 2006 2007 2008 Sales Dis-Synergies $ (50) $ (25) - - - Op Profit from Sales Dis-Synergies (20) (10) - - - Expense synergies: COGS 2 8 30 30 30 R&D 6 15 15 15 15 Selling 2 5 5 5 5 Marketing and Distribution 3 15 15 15 15 G & A 8 23 25 25 25 Total Expense
Slide 29: Zimmer Has an Early and Active Integration Process
Zimmer Has an Early and Active Integration Process . . . Moved to stabilize business and protect sales Executive management team appointed Direct and frequent communication Integration process launched Integration principles established: Retention Communication Control Leadership "Best Athlete" Obse
Slide 30: Integration Objectives
Integration Objectives Seamless customer transition--sales and surgeon Clear leadership and communication to all stakeholders Adopt the best of both cultures--choose "best athlete" Move with speed--make tough decisions early Achieve targeted synergies Reward and recognize contributions
Slide 31: Where Are We in the Process?
Where Are We in the Process? Guiding principles Team appointments Team charters and customized kickoff document Master integration project document (schedule, output by meeting, etc) Customized templates Day One stabilization checklist Chartered, trained teams Starting baselines Financial Operationa
Slide 32: Cultural Survey Participation More Than 50%
Cultural Survey Participation More Than 50% (1) Out of all employees that have been invited 753 271 40 85 43 32 6 613 391 79 111 50 103 44 34 0 200 400 600 800 1000 1200 1400 USA Switz Japan Germany Australasia France Other ROW Italy Iberia Europe oth UK Canada No answer No answer Centerpulse Zimmer
Slide 33: Strong Cultural Common Ground
Strong Cultural Common Ground Performance Disciplines Collective Commitment Capable Workforce Platforms for Collaboration Performance Management Sharp Individual Accountabilitie s Shared vision, values Personal Growth Supportive Environment Recognition Appreciation Empowerment Spoke 1 Spoke 3 Spoke
Slide 34: Sales Integration Plan
Sales Integration Plan US Sales Force Integration Distributor negotiations & re-alignments complete Inventory & asset verifications in progress Combined sales force effective January 1st, 2004 Single billing system to go live April 1st, 2004 US Sales VP appointed but U.S. President resigned 1,000 at
Slide 35: Centerpulse Agent Status
Centerpulse Agent Status Successful completion* Completion is unlikely IMPLANT SOLUTIONS INTERWEST ORTHOPEDICS PROJOINT MEDICAL ORTHO SOURCE H & H GREAT LAKES INNOVATIVE CSA Z-CAROLINA JET STREAM ADVANCED ORTHOPEDICS INLAND ZIMMER ROCKY MTN. CAROLINA SURGICAL WILKINS MEDICAL PRECISION JOINT VENTURE
Slide 36: Key Integration Milestones Going Forward
Key Integration Milestones Going Forward "Challenge sessions" to finalize expected synergies Up-loading into initiative tracking tools To measure progress by accountable individual by region, country and function Synergy translation into revised 2004 plan Implementation work planning and documentati
Slide 37: Implex Acquisition
Implex Acquisition Exclusive strategic alliance - 2000 Acquiring 100% of Implex stock Recon, Spine and Sports Med $108MM plus earn out value $0.01 dilution in 2004 Founded in 1991 ex-Howmedica Anticipated close Qtr. 1, 2004
Slide 38: Zimmer Statement of Earnings - 3rd Quarter 2003
Zimmer Statement of Earnings - 3rd Quarter 2003 ($ in Millions, except EPS) Leveraged earnings through profitable sales growth
Slide 39: Zimmer - 3rd Quarter 2003 Growth At a Glance
Zimmer - 3rd Quarter 2003 Growth At a Glance "Waterfall effect" sales to earnings performance 14% 11%
Slide 40: The Scoreboard
Zimmer (+147.02%) S&P HC Equipment & Supplies (+30.65%) S&P 500 (7.38%) Peer Index (+43.91%) (BMET, SNN & SYK) The Scoreboard Zimmer's share price has increased by 2.5x since the spinoff.
Slide 41: Thank You
Thank You
Zimmer Holdings — 22nd Annual JPMorgan Healthcare Conference (January 2004) on 6ix