JPM Healthcare FINAL Danaher

7/29/2019 JPM Healthcare FINAL Danaher

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JPMORGAN HEALTHCARE CONFERENCEJanuary 10, 2012


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Continued evolution of portfol io with >85% ofrevenues in growth platforms

Beckman Coulter & EskoArtwork

Sale of non-core assets - Pacific Scientific, KEO*,Accu-Sort*

Great year at AB SCIEX

Core revenue growth from LSD in 2010 to ~10% in 2011E

Margins up ~500 bps

Q3 2011 first quarter of >$1B in EM revenuesEM revenues now account for ~23% of total sales

Expect to generate >$2B in Free Cash Flow

2011 Highlights

HSD core + 130 bps OMX + BEC/Esko = Outstanding Year

*Pending


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DentalLife Sciences& Diagnostics

Test &Measurement

IndustrialTechnologies

Environmental

Better Segmentation, Strong Brands


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DHR Today

*Includes BEC and Esko for full year 2011

01-11 EPS CAGRDHR 19.0%S&P 7.7%

4X revenue base and continuing to evolve the portfolio while outperforming the market

Environmental15%

Test &Measurement

15%

Tools32%

Motion21%

Niche17%

2001

Revenue: $3.8BGross Margin: 38%

EPS: $0.50

Revenue: $18.2BGross Margin: ~50%EPS: $2.82 (consensus)

Life Sciences& Diagnostics

35%

Dental11%

Environmental16%

Industrial

Technologies12%

Test &Measurement

19%

Adjusted 2011E*


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Danaher Business System


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Growth Initiatives Dynamic Resource Allocation (DRA)

DRA from G&A and operations to customer facing init iatives over last 2 years

Increasing headcount in 2011E driven by:

Sales: AB SCIEX, Arbor Networks, EskoArtwork, Kerr

Marketing: Leica Biosystems, Radiometer, Trojan

R&D: Videojet, FNET, EskoArtwork, Leica Biosystems, AB SCIEX

Sales Marketing R&D G&A/Operations

2010 2011E

YoY Headcount Increases across Growth Platforms

+10% +10%

+6%

+3%

+7%

+13%

+8%

+1%


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Cost actions during last downturn resulted in outstanding coremargin expansion in 2010/11

$100M Q4 2011 restructuring actions should benefit 2012

SG&A ~flat while R&D growing

Margin Expansion

2009 2010 2011E

Core Growth (12%) 12% 6-8%

Gross Margin (ex-Beckman Coulter) 48% 51% ~52%

R&D (as % of sales) 5.5% 6% ~6.5%

Core Margin Expansion (40 bps)* 275 bps ~130 bps

* Excludes $240M called out restructu ringSee attached reconcili ation of Core Margin Expansion

Strong margin expansion with continued growth investments


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#1 / #2

#2

#1

#1

#1 / #2

Life Sciences & Diagnostics Overview

Leading global brand serving attractive microscopy & histopathology markets

~$34B

Market Size

5-7%Long Term Market Growth

$6.4B2011E Sales*

65% Instruments |35% Consumables / Service

HSD2011E Operating Margin

Hospitals

Reference labs

Government/academic research

Food & beverage, pharmaceuticals, forensics

Customers

37% NA

Brand Market Position

32% EU

31% ROW

Geographic Mix(as % of 2011E sales)

*Adjusted for Beckman Coulter


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LS&D 2011 Highlights

New Products deliver share gains

Radiometer AQT placements >350

Regulatory approval in China

Leica Bond III installed base +20%

TripleTof 5600 helping drive ~10% core growth at AB SCIEX

Acquisitions continue to reshape segmentBeckman Coulter

LabIndia

Emerging markets growing >20%

China (LMS +15%; AB Sciex +25%; Radiometer +35%)

India (LMS +15%; Radiometer +30%)

Growth investments and M&A continue to strengthen our portfolio


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2009(Pre-DHR) 2011E

Sales ~$475M ~$600M

Gross Margin % ~50% Mid-50%

Operating Margin % Low teens Mid-teens

Core Growth LSD ~10%

Growth & Margin Expansion @ AB SCIEX

Cost actions enabling accelerated growth investments & yielding ~10% core growth in 2011E

TripleTOF 5600 growing faster thanmarket

Central role in high-growth marketsegments - biopharma, proteomicsand food safety

Reached ~10% of revenue in 18months

Completed lean conversion inmanufacturing

OTD improved ~2,000 bps to 89%

Labor productivi ty +20%

Core OMX driven by:Material cost reduction +130 bps

G&A +290 bps

Volume through innovation / salesexecution +450 bps


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Taking Share with Bond III Advanced Stainer

Growing installed base by >25% in 2011

Break-through ideation

Shorter turn-around t ime (33% faster) and higherthroughput (50% higher)

Innovative multi-robot system leveraging Invetechdesign team

Deploying Value Selling and SFI incommercialization

2X Advanced Staining FOS in NA 2009 to mid-2011

Continued success in large accounts, whiledriving better penetration in mid-size hospitals

Gained ~1 point market share in 2011

High recurring revenue model with eachplacement

ASP for instrument: ~$100K

Consumable sales: $300-400k over 5 years


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Beckman Coulter Update

Integration on schedule

New structure simplifies; provides accountability; focuses on competing to win

Talent

Solid talent foundation at BEC; select industry talent added

~10 full time DHR associates brought in to lead (CFO, Marketing, Service, Operations)

Additional DHR transition team of ~25 FTEs helping to implement DBS

Performance tracking with expectations

Sales in line and OP margin slightly better than expected

>100 bps sequential improvement Q2 Q3 due to faster traction in headcountreductions and lower G&A spend

MolecularDiagnosticsLife SciencesDiagnostics


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Beckman Coulter Update (cont.)

Significantly enhanced customer focus

Relentless focus on quality

Sodium & glucose issues resolved

Troponin expected to be filed with FDA Q1 2012

DBS bringing new level of intensity, rigor and accountability to the QMS process

New products deliver customer

productivity improvementsChemistry

AU5800 Series

Hematology

UniCel DxH Slidemaker Stainer

Lab Automation

5,000 Tube Stockyard

AU680 connectivity

Dx lab/PrepLink 5.0

UniCel DxH

Slidemaker

Stainer


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Beckman Coulter DBS Impact

Mishima, Japan plant: AU Clinical Chemistry Analyzers

90 day lead time

Sales misses, high past due

Significant OT

Capacity constrained

DBSO engaged at close (July)

Halted expansion plans, no FTE adds

Implemented daily management, identi fiedbottlenecks/barriers, supply chain improvements

July Nov output >20% vs. prior 6 months, with sameFTEs and lower OT

Met all customer demand in November

Before

After

DBS delivers immediate customer and cost impact


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Beckman Coulter - Growth

Outstanding franchise in China

>$1.5B Chinese IVD market growing at ~20% CAGR;~5% penetrated

BEC well positioned$300M with #1/#2 share

2011E growth ~20% driven by menu, automationcapability

Flow cytometry is emerging high growth clinical

technology~$1.5B market growing ~10% driven by penetration &new tests

LDD growth in 2011E

Assay menu extension6 new/replacement assays in 2011

Robust pipeline including Vitamin D, AMH andPreeclampsia

Position in China and innovation set stage for growth


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JPM Healthcare FINAL Danaher

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