Elekta Ab Class B · OMXSTO:EKTA_B
Elekta Ab Class B — Investor Day (September 2018)
114 slides from Elekta Ab Class B's investor day presentation, Sep 27, 2018
Slide 1: Thought Leader in Precision Radiation Medicine
Thought Leader in Precision Radiation Medicine Elekta Capital Markets Day September 27, 2018 Dr. Richard Hausmann President and CEO
Slide 2: I am very happy to have you all here at our CMD!
After 2 years and 4 month as CEO… I am very happy to have you all here at our CMD!
Slide 3: Message 1: Elekta is a better company now
Message 1: Elekta is a better company now
Slide 4: We have built a solid foundation for further growth
● Completed transformation ● Delivered process improvements ● Solved working capital issue ● Launched Elekta Unity ● Returned to growth We have built a solid foundation for further growth
Slide 5: Clear turn around
Clear turn around Underlying strong products – better positioning and competitiveness Net sales EBITA-margin Cash flow rolling 12 months rolling 12 months rolling 12 months MSEK % margin MSEK 12 000 20% 3 000 2 500 15% 11 000 2 000 10% 1 500 10 000 1 000 5% 500 9 000 0% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 6: Strong market positions across our regions
Strong market positions across our regions 24% market share 49% market share 44% market share (order intake) (order intake) (order intake) Growing faster No.1 No.1 than overall Home base Strong footprint market
Slide 7: I see opportunity to improve Elekta even further
I see opportunity to improve Elekta even further
Slide 8: Message 2: Our market is there and strong
Message 2: Our market is there and strong
Slide 9: An attractive growing global market
An attractive growing global market $ ~7bn ~7% Global radiotherapy Current market market growth rate
Slide 10: Underlying fundamentals supporting growth
Underlying fundamentals supporting growth Driving investments in new capacity Breakthrough technologies and Demographics Growing cancer Growing need digitalization for cost- efficient in health care incidence cancer care
Slide 11: Message 3: We have a clear strategy forward
Message 3: We have a clear strategy forward
Slide 12: Precision Radiation Medicine
We focus on... Precision Radiation Medicine
Slide 13: Our history is what drives us forward
Our history is what drives us forward Elekta was founded by Lars Leksell more than 46 years ago. We have dedicated ourselves to pioneering precision radiation medicine. Dr. Lars Leksell (1907 – 1986) Professor of Neurosurgery
Slide 14: Focus where it matters
SOFTWARE MOSAIQ MOSAIQ METRIQ/LGK Oncology Oncology SOLUTIONS Information System Analytics Cancer Registries Oncology Informatics Monaco Adaptive Image & Plan Plan of care planning Review SERVICE & SUPPORT Treatment pathway Management New version TREATMENT SOLUTIONS Versa HD Unity Flexitron Icon 14
Slide 15: What if?
What if?
Slide 16: What if this is the first contact of the patient to therapy?
What if this is the first contact of the patient to therapy?
Slide 17: First patient treatment at Royal Marsden Hospital, London
First patient treatment at Royal Marsden Hospital, London!
Slide 18: Our pioneers
Our pioneers NETHERLANDS 3\ CANCER A? insure LEG
Slide 19: This is reality today
This is reality today… …but there is more
Slide 20: Years from now...
10 years from now... No separate planning CT First plan done at Unity!
Slide 21: Instead, 10 years from now...
Instead, 10 years from now... Ultrafast computing of adaptive real-time plans and dosimetry AI supported and totally interactive
Slide 22: Instead, 10 years from now...
Instead, 10 years from now... Based on diagnostic quality MRI, real-time, monitoring response
Slide 23: Increasing the addressable market with Precision Radiation Medicine
With our focus on Precision Radiation Medicine we are increasing the addressable market +25% Expanding the role of RT patient population for indications like: Liver cancer Stomach cancer Cervix/Uterus cancer Pancreas cancer Head & neck cancer 8M 10M Oligo metastatic disease addressable addressable O
Slide 24: Let us listen to what our customers say
Let us listen to what our customers say
Slide 25: What if?
What if?
Slide 26: Repetitive tasks were automated and decision support available anywhere
Repetitive tasks were automated and decision support was available anywhere and anytime – at your fingertip
Slide 27: Each treatment is personalized from a global self-learning ecosystem
Each treatment is personalized based on insights from a global, self-learning ecosystem
Slide 28: Treatment solutions uptime is 100% because of remote service
Treatment solutions uptime is 100% because they were serviced remotely and proactively
Slide 29: AI and big data at the center of healthcare digitization
AI and big data at the center of healthcare digitization Elekta has filed numerous patents within AI in the last years – more to come...
Slide 30: Elekta Digital – guiding tomorrow's solutions
Elekta Digital – guiding tomorrow’s solutions Super accurate AI based contouring will enhance confidence Complete virtual assistant joining patients and family support systems from home to hospital and beyond Genetic profiling means we already know how we will treat the patient… even before they are
Slide 31: MOSAIQ – a strong foundation to expand our future offering
MOSAIQ – a strong foundation to expand our future offering Customer workflow apps (Genesis care) … IBM Watson Whiteboard China workflow Workspace management Palabra Patient voice engagement automation Resource management (MOA)
Slide 32: More than 60% of cancer mortality occurs in emerging markets
Do you know? >60 % of all cancer mortality occurs in emerging markets
Slide 33: What if?
What if?
Slide 34: Everybody around the world has access to precision radiation treatment
Everybody around the world has access to precision radiation treatment
Slide 35: Solutions designed for the needs of growth markets
Solutions are designed for the needs of growth markets ‘Scan-plan-treat’ with remote services and no physicists on site
Slide 36: Emerging markets are significantly underserved
Emerging markets are significantly underserved RT units / million population 15 12 10 Reasonable level should be ~6 linacs 6 per million inhabitants 5 2 2 1 0 US Europe Asia Africa LA A shortage of >10,000 Linacs Source: GLOBOCAN 2012, Cancer Control 2013 , IAEA database (retrieved Feb 2018), Expand
Slide 37: Precision radiation medicine made easy to use and more accessible
Precision radiation medicine made easy to use and more accessible • Turnkey solutions • Ease of installation • Intelligent automation • Affordability • Supported by solid training & education
Slide 38: We are working on a new solution for those needs
We are working on a new solution catering exactly to those needs
Slide 39: Precision Radiation Medicine
Precision Radiation Medicine
Slide 40: Supported by an integrated sustainability agenda
Supported by an integrated sustainability agenda Fight Cancer through an ecosystem of strategic partners Business Ethics and prevent corruption People in Focus based on diversity and inclusion Sustainable Sourcing human rights and environmental focus
Slide 41: The future is Precision Radiation Medicine
The future is Expand addressable Precision patient population Radiation Drive access to Medicine quality treatment ...and it will drive our Growth Unity spearheading into new customers
Slide 42: Addressable market growth
The future is Addressable market Precision Radiation Medicine >10 ...and it will drive our ~7 BUSD Growth BUSD Today
Slide 43: We will capture a larger share of total cancer care market
We will capture a larger share of total cancer care market Today Scenario 2022/23 (illustrative) Base business Informatics MR-linac
Slide 44: We will continue to invest 10-11% of sales in innovation
We will continue to invest 10-11% of sales in innovation for our strategy in precision radiation Innovative digital solutions Precision treatment devices Improved capabilities
Slide 45: In summary - a strategy to capture market potential
In summary - a strategy to capture market potential Focused on precision and growth Grow our business with Elekta digital – improve Delivering quality Grow service and Unity in the lead workflows and treatment for all aftermarket outcomes Supported by strong innovation and R&D
Slide 46: My Promise
My Promise: Drive Elekta into the future as we drove it the last two years!
Slide 47: This is what we go for!
This is what we go for! Mid term scenario 2022/2023 8-10% Net sales CAGR over the period (based on constant exchange rates) Mid term margin view: EBITA >20% with expansion of up to 200 BPS by the end of the period
Slide 48: Precision Radiation Medicine
We do it as thought leader in: Precision Radiation Medicine
Slide 49: Financial impact of mid-term scenario
Financial impact of mid-term scenario Elekta Capital Markets Day September 27, 2018 Gustaf Salford CFO
Slide 50: Elekta – an attractive value creation model
Elekta – an attractive value creation model Strong market position Limited Innovation fixed leader assets Negative High working growth capital Margin expansion
Slide 51: Reduction of risk from geographic diversification and recurring revenue
Reduction of risk from geographic diversification and high share of recurring revenue Emerging and mature market mix Mature Emerging Geographic diversification -9% 1% -19% 17% 34% • Back to growth in FY17/18 • Emerging markets high -7% -5% 0% 4% 64% potential but volatile 28% 34% 13/14 14/15 15/16 1
Slide 52: Current focus: growth and innovation
Current focus: growth and innovation Last years’ focus - Transformation Cost saving of SEK 700 M Current Focus: Growth and Innovation EBITA margin target of Drive growth and market share gain 20% Net working capital Continue to invest in innovation and market expansion <5% of net sales Get back to g
Slide 53: Growth focus going forward
Growth focus going forward Precision Radiation Medicine
Slide 54: Delivering on our strategy will drive strong mid-term growth
Delivering on our strategy will result in Elekta driving strong growth in the mid-term scenario Elekta digital – improve Grow our business with Delivering quality Grow service and workflows and Unity in the lead treatment for all aftermarket outcomes
Slide 55: Unity commercialization in three main phases
Unity commercialization will happen in three main phases and allow for faster growth and margin expansion Third Phase 2022-onwards Second Phase Volume driven by clinical 2020-2022 evidence and new reimbursement First Phase Until - H1 2020 Growth phase from broad based market and gradual reimbursemen
Slide 56: Market expansion in emerging markets provides high growth opportunities
Market expansion in emerging markets provides high growth opportunities Key focus areas New products customized to Delivering quality emerging market need treatment for all 34% Distributors Go direct in high growth markets 1/3 Continue to invest in 66% Education and Training Financial solutions Matu
Slide 57: Growing service and aftermarket increases stable revenue streams
Growing service and aftermarket increases the share of stable revenue streams Installed base Key focus areas Number of units Grow service and 3 785 4 006 Growth in emerging markets – 3 512 aftermarket 3 061 3 301 greenfield sites drive the installed 7% base 13/14 14/15 15/16 16/17 17/18 Service reve
Slide 58: Our revenue scenario supports strong mid-term growth
Our revenue scenario supports a strong mid-term growth Strategic agenda Revenue scenario until 2022/23 Elekta digital – improve Grow our business with workflows and Unity in the lead outcomes 8-10% Net Sales CAGR over period Delivering quality Grow service and (based on constant exchange rates) trea
Slide 59: Continued margin improvement and continued investment in innovation
Continued margin improvement and continued investment in innovation
Slide 60: Continued margin improvement
Continued margin improvement Current Q1 R12 Drivers until 2022/23 (SEK M) Gross Margin drivers • Top-line growth from base business, Unity and Elekta Digital Net sales 11,887 • Price pressure on existing platforms COGS -58% • Reduced material cost – Total cost and value sourcing focus Gross margin (
Slide 61: Elekta will increase its spend on R&D
Elekta will increase its spend on R&D – continuing at 10-11% of net sales % of Sales 14% 13% 12% Investing in innovation to Scenario drive future growth e.g. Elekta Digital 11% 10-11% 10% 9% Protecting/improving price levels on 8% existing portfolio through new functionality 7% 6% 13/14 14/15 15/16
Slide 62: Supply chain positioned to mitigate trade wars and tariffs
Elekta’s supply chain well positioned to mitigate ongoing trade wars and tariffs Main competitors Elekta Trade tariffs Two main hubs Crawley (UK) and Beijing (China) to serve global markets
Slide 63: EBITA margin expansion expected in the mid-term scenario
EBITA margin expansion is expected in the mid-term scenario 25% ~20% 20% 15% Unity commercialization Base business and Service COGS and SG&A leverage Precision Radiation Medicine 10% Unity Reimbursement Price Pressure Elekta Digital 5% Investment in innovation Geographic expansion 0% FY15/16 FY16/17
Slide 64: Cash flow and capital allocation
Cash flow and capital allocation
Slide 65: Cash flow will continue to improve mid term
Cash flow will continue to improve mid term primarily from higher EBITDA Mid FY18/19 Main driver for mid-term scenario Term Improvement from topline growth and EBITDA (mSEK) margin expansion Build-up from Working Capital Change last year’s low levels e.g. Continued negative Working Capital as % of s
Slide 66: Cash conversion >70% and negative working capital
Cash conversion >70% and continued negative working capital levels in the mid term scenario Operational cash conversion % Net working capital as % of net sales MSEK 20% 150% 15% 14% 10% 4 000 8% 100% 5% >70% 3% 0% 13/14 14/15 15/16 16/17 17/18 Q1 18/19 19/20 20/21 21/22 22/23 2 000 IFRS15 50% -5% -6
Slide 67: Balanced view on capital allocation
Balanced view on capital allocation • Technology Selective Geographic • New markets • Innovation • Service acquistions Expansion • According to maturity Maturing • Dividend policy schedule Dividend >30% of net profit* debt * Dividend - BoD decision
Slide 68: Net Debt/EBITDA will continue to decrease
Net Debt/EBITDA will continue to decrease Leverage profile Maturity profile MSEK Net debt / EBITDA and equity 2000 1,6 1800 1,4 1600 1,430 1,2 1400 1,296 1,0 1200 958 1000 0,8 1000 0,6 0.4x 800 600 0,4 0,2 0.2x 400 215 200 0,0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 18/19 19/20 20/21 21/22 22/23 2017/18 2018/1
Slide 69: Elekta has a history of acquisitions in innovation and market expansion
Elekta has a history of acquisitions in innovation and market expansion 2006 2008 2011 2014 2018 Beijing Medical CMS Nucletron Distribution in Acumyn Equipment Turkey Palabra investment Institute (Mesi Medikal) 2005 IMPAC Medical 2007 3D Line 2010 Resonant 2012 Radon 2015 Distribution in Poland Futu
Slide 70: Summary: FY18/19 guidance and mid-term scenario
Summary FY18/19 Guidance Mid Term Scenario* Until FY22/23 8-10% Net Sales ~7% Net Sales CAGR over period (based on constant exchange rates) EBITA >20% EBITA ~20% with expansion of up to 200 BPS in the end of the period * Replaces Elekta’s current long-term financial ambitions
Slide 71: Thought Leader in Precision Radiation Medicine
Thought Leader in Precision Radiation Medicine Elekta Capital Markets Day September 27, 2018 Dr. Ioannis Panagiotelis Chief Marketing & Sales Officer
Slide 72: A strong market position and the right team
A strong market position and the right team
Slide 73: Strong market positions across regions
Strong market positions across regions 24% 49% 44% market share of linear market share of linear market share of linear accelerator orders accelerator orders accelerator orders
Slide 74: Strengthened competence and management team
Strengthened competence and management team North America
Slide 75: Growing our market share in North America
Growing our market share in North America 24% market share of linear accelerator orders
Slide 76: Market leader in Europe
Market leader in Europe 49% market share of linear accelerator orders • Largest installed base and • Need for replacement leader in new orders investments and modernization of the installed base • Predominately public markets, with a steadily growing • Increasing demand for service private sector an
Slide 77: China leading the way in Asia
China leading the way in Asia 44% market share of linear accelerator orders
Slide 78: Driving operational excellence
Driving operational excellence Organizational Efficiency & costs Leadership and Process People structure governance improvement Digitizing & technology for efficiency
Slide 79: Introducing guided selling tools
Introducing guided selling tools Quote in 4 easy steps
Slide 80: Easy to sell – easy to buy
Easy to sell – easy to buy Step 1 - Customer input Step 2 - Recommendation Step 3 - Packages Step 4 – Finalize options and Output
Slide 81: Commercializing Unity
Commercializing Unity
Slide 82: Patient-centric
Patient-centric Lighting + New user interface bonnet light ring control – set up patient / easy to manipulate Patient focused design of tunnel for RT Soft couch Specially designed coil for RT Low table, adaptable to Long table, fits all patient all patients heights Elekta Unity has a CE Mark but is
Slide 83: Reaching the hard to treat cancers
Reaching the hard to treat cancers Nodal Diseases Preoperative Breast Pancreatic Cancer Liver Metastases Renal Cell Carcinoma Biliary Cancers Adrenal metastasis (Oligo-metastasic disease) Potential for multiple additional cases to be treated
Slide 84: Improving patient throughput with hypofractionation
Improving patient throughput with hypofractionation Reducing total treatment time per patient 450 min Standard fractionation on linac Increased 225 min Increased dose to target SBRT on MR-linac New precision and and accuracy treatment reduced dose in dose placement to healthy regimes tissue Increasi
Slide 85: Happening as we speak
Happening as we speak Courtesy UMC, Utrecht Metastatic pelvic lymph node Metastatic axilla lymph node T2w, TE 140ms, 3.5 mm sl., 1.1 x 1.1 mm res. 3D T2w STIR, 1.5 mm sl., 1.5 x 1.5 mm res.
Slide 86: Happening as we speak
Happening as we speak Courtesy University of Tubingen Treatment of metastatic pelvic lymph node Pre-irradiated area (bowel, bone) with the need for maximum precision T2w, TE 140ms, 3.5 mm sl., 1.1 x 1.1 mm res.
Slide 87: Happening as we speak
Happening as we speak Courtesy University of Tubingen Treatment plan for 35 Gy in 5 fractions (Left) Live MRI - 5 frames/s (right)
Slide 88: Compelling value proposition
Compelling value proposition From CBCT to quantitative MR CBCT1 0.35T MR1 1.5T MR2 *Quantitative MR3 Morphology: Pathology: Sub-structure: Functionality: Anatomy location Tumor location Tumor segmentation Tumor characterization *Quantitative MR is WIP and not available with Elekta Unity 1Doemer et.
Slide 89: MR-linac on BBC news
MR-linac on BBC news
Slide 90: Unity commercialization in three main phases
Unity commercialization in three main phases 3rd Phase 2022-onwards 2nd Phase Volume driven by clinical evidence and new 2020-2022 reimbursement 1st Phase Until - H1 2020 Growth phase from broad based market and gradual reimbursement Unity Early Adopters volumes 75 orders ~3,000-4,000 Hospitals 25%
Slide 91: 1st phase – academic institutions
1st phase – academic institutions Akademiska Sjukhuset in Uppsala ~300-400 academic institutions Rationale: • Conduct research publish papers • Institution will be part of new paradigm in radiation therapy • Improved patient outcomes and higher efficiency
Slide 92: 1st phase – high-end cancer centers
1st phase – high-end cancer centers High end cancer centers Hong Kong Sanatorium & Hospital Rationale: • Leading clinical center with best in the world treatment solutions • Reputation, improved outcomes and higher efficiency • Return on investment
Slide 93: 1st phase – global networks
1st phase – global networks High end Global Cancer Care Network Genesis Care Rationale: • Largest private cancer care in Australia, UK and Spain • Reputation, improved outcomes and higher efficiency • Eager to redesign care experience
Slide 94: 2nd phase – clinical evidence through MOMENTUM
2nd phase – clinical evidence through MOMENTUM 5 Sub-programs and deliverables Technical/imaging data repository for Machine Learning Program Disease-specific best-practice patient management manuals for Training and Education Early clinical outcomes for Market Access Mid-term clinical outcomes for
Slide 95: Best-practice patient management manuals
Best-practice patient management manuals For Training and Education of Physicians and Physicists MOMENTUM Partners will develop, test and iterate step by step instructions for managing patients Unity for ≥ 9 diseases • Clinical Technical Profiles (CTPs) • Contouring atlases in DICOM • MR exam cards
Slide 96: Reimbursement strategy – Engaging with key markets
Reimbursement strategy – Engaging with key markets USA Europe China • Medicare reimbursement • Combination of private and • Combination of private and through collaboration with public reimbursement systems public reimbursement systems customers and industry • Private insurance schemes organizations
Slide 97: Indicative timeline for Elekta Unity registration
Indicative timeline for Elekta Unity registration Europe Russia ANZ USA Canada Japan Korea China Brazil Elekta Unity 2018 2019 2020 2021
Slide 98: 3rd phase – exploiting the full potential
3rd phase – exploiting the full potential 3,000 – 4,000 systems as Addressable market adressable market 25% of global installed base 6,000 hospitals world-wide 14,000 - global installed base of lineear accelerators
Slide 99: Driving precision radiation medicine across our portfolio
Driving precision radiation medicine across our portfolio
Slide 100: Driving portfolio growth
Driving portfolio growth 14% Linacs Informatics • Unity and “halo effect” • Drive software penetration • Introduce HD Edition through bundling 8% • Capture upgrade cycles • New functionality and add-ons 65% 13% Neurosurgery Brachytherapy • Capture SRS growth with LGK • Re-establish specialist sales
Slide 101: Meet Elekta's new family of HD Linacs
Meet Elekta’s new family of HD* Linacs Versa HD Infinity HD Synergy HD Push the boundaries of your Flexibility redefined, truly Proven technology for everyone, stereotactic capabilities multifunctional everywhere Note: *Works in progress and not available for distribution
Slide 102: Elekta Family of HD Linacs
Elekta Family of HD Linacs Delivering precision radiation medicine to every clinic & every patient… Competitor Elekta Higher Modulation Combining power & control Tighter Conformity Higher Dose Does not support jaw Only operates accurately Supports Up to 3.5cm/s Sustain high tracking of the Agility w
Slide 103: Elekta Family of HD Linacs
Elekta Family of HD Linacs Delivering precision radiation medicine to every clinic & every patient… Competition Higher Modulation Combining power & control Elekta Tighter Conformity Higher Dose Shorter Delivery Competition Elekta Normal tissue spared with Elekta Disclaimer: This case study is based
Slide 104: In summary
In summary A strong market position and the right team in place Commercializing Elekta Unity Driving precision radiation medicine across our portfolio
Slide 105: Thought Leader in Precision Radiation Medicine
Thought Leader in Precision Radiation Medicine Elekta Capital Markets Day September 27, 2018 Dr. Richard Hausmann President and CEO
Slide 106: We will be #1
We will be #1
Slide 107: Elekta is a better company now
Elekta is a better company now
Slide 108: Our market is there and strong
Our market is there and strong
Slide 109: We have a clear strategy forward
We have a clear strategy forward
Slide 110: We have unique products
We have. unique products © Elekta
Slide 111: It is all about Precision Radiation Medicine
It is all about Precision Radiation Medicine
Slide 112: ...and it is driving our Growth
...and it is driving our Growth
Slide 113: EBITA >20%
8-10% Net sales CAGR EBITA >20% plus upside of 200 BPS
Slide 114: Thank you
Thank you