34th Annual J.P. Morgan Healthcare Conferences1.q4cdn.com/008680097/files/doc_presentations/...Jan...

The world leader in serving science Proprietary & Confidential

Marc N. Casper President and Chief Executive Officer January 12, 2016

34th Annual J.P. Morgan Healthcare Conference

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Safe Harbor / Non-GAAP Measures Various remarks that we may make in this presentation about the company’s future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including those discussed in our Form 10-Q for the quarter ended September 26, 2015, under the caption “Risk Factors,” which is on file with the Securities and Exchange Commission and available in the “Investors” section of our Website under the heading “SEC Filings.” Important factors that could cause actual results to differ materially from those indicated by forward-looking statements include risks and uncertainties relating to: the need to develop new products and adapt to significant technological change; implementation of strategies for improving internal growth; general economic conditions and related uncertainties; dependence on customers' capital spending policies and government funding policies; the effect of exchange rate fluctuations on international operations; the effect of healthcare reform legislation; use and protection of intellectual property; the effect of changes in governmental regulations; the effect of laws and regulations governing government contracts, as well as the possibility that expected benefits related to our acquisition of Life Technologies and our proposed acquisition of Affymetrix, Inc. may not materialize as expected; the Affymetrix transaction not being timely completed, if completed at all; prior to the completion of the transaction, Affymetrix’ business experiencing disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, licensees, other business partners or governmental entities; difficulty retaining key employees; and the parties being unable to successfully implement integration strategies or to achieve expected synergies and operating efficiencies within the expected time-frames or at all. Additional important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are set forth in Affymetrix’ Form 10-K for the year ended December 31, 2014 and subsequent Form 10-Qs, including its Form 10-Q for the quarter ended September 30, 2015. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change and, therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

During this presentation, we will be referring to certain financial measures not prepared in accordance with generally accepted accounting principles, or GAAP, including adjusted EPS and adjusted operating margin. Definitions of these non-GAAP financial measures and, for historical periods, a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available under the heading “GAAP/Non-GAAP Reconciliation & Financial Information” in the “Investors” section of our website, www.thermofisher.com. All prior results have been adjusted to present the results of the Laboratory Workstations business as discontinued operations.

http://www.thermofisher.com/





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We enable our customers to make the world healthier, cleaner and safer

Unmatched Depth • Leading innovative technologies

• Deep applications expertise

• Premier laboratory productivity partner

Global Scale • 50,000 employees in 50 countries

• $17 billion in annual revenue

• Unparalleled commercial reach

We Are the World Leader in Serving Science

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Four Complementary Reporting Segments

Life Sciences Solutions

25%

Specialty Diagnostics

19%

Analytical Instruments

18%

Laboratory Products and Services

38%

• Clinical Assays

• Immunodiagnostics

• Microbiology

• Anatomical Pathology

• Transplant Diagnostics

• Healthcare Market Channel

• Biosciences

• Genetic Sciences

• Bioproduction

• Chromatography and Mass Spectrometry

• Chemical Analysis Instruments

• Environmental and Process Instruments

• Research and Safety Market Channels

• Laboratory Products

• BioPharma Services

* Estimates based on unaudited LTM combined revenues of Thermo Fisher through Q3 2015; Percentages calculated are based on estimates for intercompany eliminations and other accounting policy adjustments

Total revenues

~$17B

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Attractive End Markets, Product Mix and Geographic Reach

End Markets Products Geographies

62% Consumables

25% Europe

25%

Instruments Equipment &

Software

Services 13%

53% North America 18%

Asia- Pacific

ROW 4%

25%

Academic & Government

21%

Industrial & Applied

Diagnostics & Healthcare

25% 29%

Pharma & Biotech

Balanced and diverse customer base

Growing presence in emerging markets

Strong recurring revenue mix

Note: Percentage estimates based on unaudited LTM combined revenues of Thermo Fisher Scientific through Q3 2015

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2015 Goals (as presented on January 13, 2015)

• Capture Life Technologies Synergies • Deliver year two cost synergies and begin to recognize revenue synergies

• Revenue • Drive incremental growth by innovating at a rate faster than our competition • Capitalize on our strength in emerging markets through leveraging commercial reach • Seize opportunities in developed markets • Enhance our unique customer value proposition by cross selling our total portfolio

• Margin • Continue to drive cost management through: utilization of global sourcing, expansion to low-

cost regions, rationalization of facilities, and leveraging our PPI business system

• Capital Deployment • Conduct shareholder friendly capital deployment through strategic M&A, share buybacks and

dividends • Achieve targeted debt leverage ratio through debt pay down

• ROIC • Continue to drive returns from our acquisitions and investments

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Initial 2015 Guidance a/o 01/22/15

$115M

$60M

3-4%

Capturing Synergies and Realizing Stronger Growth

Cost Synergies

Revenue Synergies

Life Sciences Solutions Pro Forma Organic Revenue Growth Rate

Currently Tracking

$130M

>$60M

4% YTD (thru Q3’15)

Life Sciences Solutions well positioned for 2016

Life Technologies Acquisition (Year 2)

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$700M Annual

R&D Spend

Laboratory Products

& Services 7%

Analytical Instruments

30%

Life Sciences Solutions

45%

Specialty Diagnostics

18%

Creating the next exciting growth opportunities

Enhancing our market leadership

Delivered High-Impact Innovation Across the Portfolio

Attune NxT acoustic focusing cytometer

PDM 3700 personal dust monitor

One Lambda HLA Kit with Ion PGM NGS

Q Exactive Focus mass spectrometer and Vanquish UHPLC system

Orbitrap Fusion Tribrid mass spectrometer

Gemini handheld chemical analyzer

QuantStudio 3 and 5 Cloud-enabled real-time qPCR systems

Ion Reporter monitor with Oncomine Panel

Ion S5/S5 XL NGS

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Continued to Build on our Leadership Emerging Markets

$3B in revenue today, with many opportunities to grow

Replicating our China strategy in additional high-growth regions

Brazil Southeast

Asia

South Korea

Middle East

Developed Markets 82%

Emerging Markets

18%

$17B Revenue

Q3 2015 YTD Highlights

• China organic sales growth of 13%

• Opened new Customer Experience Centers in Sao Paulo and Dubai

• Acquired two channel partners covering South Korea, Singapore and Malaysia

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Expanding with existing customers 8% CAGR in biopharma last 5 years

• Academic • Small and

medium-sized biotech

• Chemical, petrochemical

• Medical devices

• Clinical reference and contract testing labs

• Large biopharma

2007 2011 2013 2015

Expanded Impact of Our Customer Value Proposition

Adding new customer segments Customer Customer

Solve complex analytical

challenges

Support regulatory

compliance

Utilize strategic

outsourcing

Partner on R&D

projects

Enable technical

innovation

Improve production efficiency

Improve diagnostics

Increase lab productivity

Accelerate research

Optimize supply chain

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PPI Business System Delivered Significant Savings

Note: Savings amount represents 2015 guidance issued at May 2015 analyst day presentation

Global Sourcing

PPI Projects

Facility Rationalization, Restructuring

Low-Cost-Region Manufacturing

48%

31%

16%

5%

$330M of Savings

Quality Productivity

Customer Allegiance

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Q1'15 Q2'15 Q3'15 Q4'152015

Leverage Ratio*

3.2X

3.6X 3.4X

~3.0X (G)

Continued to Actively Manage the Capital Structure

Positioned to take advantage of strong capital deployment capacity in 2016

(G) = Guidance * Leverage ratio is calculated as total gross debt to adjusted TTM EBITDA.

• $500M in share buybacks

• $240M in dividends

• ~$700M in bolt-on M&A

Capital Deployed

Q1 Q2 Q3 Q4

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Completed Value Adding Acquisitions

Advanced Scientifics, Inc • Provider of customized single-use

systems and process equipment for bioprocess production

• Integrated into Life Sciences Solutions segment

• Annual sales run rate of ~$80M

• Completed transaction on 2/4/15 for $300M

• Leading global manufacturer of research chemicals

• Integrated into Laboratory Products and Services segment

• Annual sales run rate of ~$125M • Completed transaction on 9/30/15 for

~$400M

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Improved Adjusted ROIC post Life Technologies Acquisition

* Life Technologies acquisition fully in ROIC calculation by end of Q1’2015

Note: Adjusted return on invested capital is annual adjusted net income excluding net interest expense, net of tax benefit therefrom, divided by trailing five quarters average invested capital. .

2013 Q1 2015

Q2 2015

Q3 2015

8.9%9.1%

9.3%

10.1%Life Technologies Acquisition Investment*

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• Margin • Continue to drive cost management through: utilization of global sourcing, expansion

to low-cost regions, rationalization of facilities, and leveraging our PPI business system

• Capital Deployment • Conduct shareholder friendly capital deployment through strategic M&A, share buybacks and dividends • Achieve targeted debt leverage ratio through debt pay down


Successfully achieved key business goals & delivered solid returns

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2016 Goals

• Capture Year 3 Synergies from Life Technologies Acquisition • Achieve $150M run rate in revenue synergies generating $50M of adjusted operating income

• Revenue • Drive incremental growth by innovating at a rate faster than our competition • Capitalize on our strength in emerging markets through leveraging commercial reach • Seize opportunities in developed markets • Leverage our unique customer value proposition by cross selling our total portfolio




dividends

• ROIC • Continue to deliver on increases in adjusted ROIC

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Capital Deployment: Acquisition of Affymetrix

Business Profile • Leader in cellular and genetic analysis

products used by customers in life sciences and translational research, molecular diagnostics, reproductive health, and agricultural biotechnology

• Headquartered in Santa Clara, CA

• Approx. 1,100 employees

Acquisition Announced January 8, 2016

Financial Profile Approximately $350M annual revenue

Note: Revenue percentages based on 2014 revenues

U.S. 61%Europe

23%

APAC12%

RoW 4%

Consumables84%

Instruments5%

Services/Other11%

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Capital Deployment: Acquisition of Affymetrix

• Strengthens leadership in Biosciences and Genetic Analysis

• Strong fit into Life Sciences Solutions Segment

• Leverage our unique customer value proposition to cross sell our portfolio

Creating Shareholder Value • Accretion:

Expected to be immediately accretive to adjusted EPS and add approximately $0.10 in the first full year

• Synergies:

Expected to generate $70M of synergies by year three

• $55M in cost synergies

• $15M of adjusted operating income benefit from revenue related synergies

• Purchase Price: Approx. $1.3B

• Financing: Cash and short term debt

• Path to Completion: Affymetrix shareholder approval and customary regulatory approvals

• Expected Close: By end of Q2 2016

Transaction Details

Strategic Rationale

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Our Proven Formula for Success

• Productivity

• Quality

• Customer allegiance

• Strategic M&A

• Return of capital

• High-impact innovation

• Unique customer value proposition

• Scale in emerging markets

Consistently Delivering Strong Adjusted EPS Growth

Organic Growth

PPI Business System

Capital Deployment

Driven by….

34th Annual J.P. Morgan Healthcare Conferences1.q4cdn.com/008680097/files/doc_presentations/...Jan...

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