Jefferies Healthcare Conference June 7, 2017 Medical... · Jefferies Healthcare Conference June 7,...

1 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017

Jefferies Healthcare Conference

June 7, 2017


THIS PRESENTATION IS INTENDED EXCLUSIVELY FOR INVESTORS. IT IS NOT INTENDED FOR USE IN SALES OR MARKETING.

FORWARD LOOKING STATEMENTS

Except for historical information, this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform

Act of 1995. Statements concerning industry outlook, including growth drivers, future trends in cancer incidence and trends in cancer treatment

needs, demand, innovation and growth opportunities; Varian Medical System, Inc.’s (“Varian” or the “company”) future orders, revenues, backlog, or

earnings growth; future financial results; market acceptance of or transition to new products or technology such as our Edge™ radiosurgery system,

TrueBeam®, HyperArc™, 360 Oncology™, HALCYON™, image-guided radiation therapy, stereotactic radiosurgery and proton therapy, and any

statements using the terms “could,” “believe,” “expect,” “outlook,” “anticipate”, “vision”, “estimate”, “future”, “horizon”, “aiming”, “driving”, “target” or

similar statements are forward-looking statements that involve risks and uncertainties that could cause the company’s actual results to differ

materially from those anticipated. Such risks and uncertainties include global economic conditions and changes to trends for cancer treatment

regionally; the impact of changes to the Affordable Health Care for America Act (including excise taxes on medical devices) and any further

healthcare reforms (including changes to Medicare and Medicaid), and/or changes in third-party reimbursement levels; currency exchange rates

and tax rates; demand for the company’s products; the company’s ability to develop, commercialize, and deploy new products; the company’s ability

to meet Food and Drug Administration (FDA) and other regulatory requirements for product clearances or to comply with FDA and other regulatory

regulations or procedures; changes in the regulatory environment, including with respect to FDA requirements; the company’s assessment of the

goodwill associated with its particle therapy business, challenges associated with the successful commercialization of the company’s particle

therapy business; the effect of adverse publicity; the company’s reliance on sole or limited-source suppliers; the company’s ability to maintain or

increase margins; the impact of competitive products and pricing; the potential loss of key distributors or key personnel; challenges to public tender

awards and the loss of such awards or other orders; and the other risks listed from time to time in the company’s filings with the Securities and

Exchange Commission, which by this reference are incorporated herein. The company assumes no obligation to update or revise the forward-

looking statements in this presentation because of new information, future events, or otherwise.

Medical Advice Disclaimer

Varian as a medical device manufacturer cannot and does not recommend specific treatment approaches. Individual treatment results may vary.


AGENDA

New Product Launch: HALCYONTM

TrueBeam® / Edge® HyperArcTM

Software Growth

1

2

3

4

1st Half FY2017 Summary


Oncology Momentum; Proton Challenges

• Imaging Components Spin Complete

• Solid growth in Oncology orders, revenues, margins

• Proton San Diego setback; Delray ProBeam order, healthy sales

funnel

• Strong cancer management product portfolio

– HALCYON

– HyperArc

– RapidPlan

– 360 Oncology

1H FY2017 Summary


HALCYON: A new high quality radiation therapy paradigm


Goals for a Transformative Device

Innovative best in class technology

Achieve highest quality image-guided IMRT treatment

Simplify and automate user experience. Treat in 9 steps.

Smallest high technology footprint

Accelerate time to first patient treatment

Human centered design. Achieve highest patient

comfort

Addressing the global need for a high quality radiation therapy solution in

a value based healthcare world


HALCYON: New Technology Value Proposition

HIGH QUALITY

OF CARE

OPERATIONAL

EXCELLENCE

HUMAN CENTERED

DESIGN


Technology Highlights

RING GANTRY

SYSTEM

WATER

COOLED

SYSTEM

BEAM STOPPER

MAGNETRON

LINEAR ACCELERATOR

DUAL LAYER

MULTI-LEAF

COLLIMATORSOLID STATE

MODULATOR

LARGE FORMAT

IMAGING PANEL


Human Centered DesignEnhanced Patient Experience

Integrated Ambient

Lighting

Large 100cm Bore

Short Time

on Couch

Quietest

Accelerator

Smooth

Motions

Low Couch

HeightHalcyon is

designed to

enhance patient

comfort


Operational ExcellenceFast Install – Accelerating Field Replacements

Fast

Commissioning

Self

ShieldedIntegrated

Subsystems

2-Crate

Shipment

Fast Machine

Assembly

Easy

TransportationHalcyon is

designed to

shorten time to first

clinical use


Preliminary Plan Quality Assessment

0%

20%

40%

60%

80%

100%

Co

nte

stan

ts’ S

core

s

Scoring ( ) vs other HW+SW systems in

International Plan Challenge Competitions

Hippocampal Sparing Whole

Brain with Simultaneous In

Field Boost


HALCYON Total Value of OwnershipOperational and Capital Efficiency

FINANCE

MGMT HR

SERVICE PRODUCT

INFRA-

STRUCTURE

Connected SystemMachine Self-check

Integrated Design

High ThroughputFast Installation

IT SecuredPatient Centric

Safety Features

Latest TechnologyFast RapidArc & IMRTUltrafast 100% IGRT

Small Vault DesignEmbedded AccessoriesLow Electrical Usage

Simple, Fast TrainingEase of OperationReduced Physics QA


$2M - $4M Configuration dependent

CE Mark Received

510(k) Clearance Pending

Launch EU, USA, Emerging Markets

~ 2,500 Varian linacs >10 years old

>3,500 Competitive Units >10 years old


Halcyon Launch Mobbed at ESTRO

Halcyon Highlights

• 5 orders!

• Major web, media impact

• Lots of leads

Also Featured

• HyperArc, RapidPlan,

360 Oncology

• OncoSummit – 700 Customers


High-definition Radiotherapy

HyperArc High-Definition Radiotherapy is 510(k) pending. Not available for sale.

STREAMLINED RADIOSURGERY

Goals

• Make best-in-class radiosurgery accessible to more

clinics worldwide

• Introduce new benchmarks for dose compactness,

conformality and treatment fidelity

• Enhance patient safety and user experience


Establishing a New Benchmark

for Compact Dose, Treatment Speed

Eclipse planning for HyperArc HD Radiotherapy is works-in-progress. Not available for sale.

Comparing V12 of HDRT to

Sphere-Packing Technique

Comparing V12 of HDRT to

Dose Painting Technique

HyperArcHyperArc

Sphere-Packing Dose-Painting


New options:

• HDRT Treatment Mode

• HDRT Planning Module**

• HDRT Virtual Dry Run**

• HDRT Patient Immobilization

Pre-requisites:

• TrueBeam or EDGE

• PerfectPitch™ Couch

• Eclipse IMRT

**Eclipse planning for HyperArc HD Radiotherapy is works-in-progress. Not available for sale.

Aiming for

>$500M Orders/10 yrs

High-definition Radiotherapy

First patient treatment

Summer 2017


Complementary Technologies

Multiple energies

Electrons

HyperArc

Small field SRS

Motion management

Operational efficiency

Simple workflow

Small footprint

Lower shielding

Fast installation and

commissioning

Human Centered Design

RapidArc

High quality IMRT/IGRT

High quality SBRT


Software Growth Strategy


Software – Installed Base Growth

# Customer Sites

2016

+8%

2012

8% CAGR Customer Site Growth

Robust Upgrade Opportunity

<50% of sites with RapidArc

<15% of sites with RapidPlan

10% CAGR SSA Growth

Customer purchasing practice shifting

from large CapEx to evergreen Service

Support Agreements (SSA)

20162012

Svc Agreements

(Orders, $)

+10%


Building $1B Software Business


RapidPlanTM

>900 License Orders, >450 Installed

# L

icen

ses

“RapidPlan … allows for better

consistency and efficiency in the

treatment planning process and

has therefore been adopted

clinically within our institute with

over 100 patients treated.”

- Hussein M, Royal Surrey County Hospital,

Guildford, UK0

50

100

150

200

250

300

350

400

FY14 FY15 FY16 FY17 YTD

87%


360 ONCOLOGYTM

ENGAGE PATIENTSMEANINGFULLY

MAKE DECISIONSCONFIDENTLY

DELIVER TEAM BASED CARE EFFICIENTLY

First successful go-live at GenesisCare UK

“360 Oncology is more than

a tool; it’s a game changer

in patient care that will

revolutionize how we deliver

patient care”

- Tim Ochran, Sr. VP, Chief Administrative

Officer, Hospital & Clinics, Tyler Texas University

of Texas Health


Oncology Growth Drivers

• Global Demographics

• Winning Innovation Strategy

• Emerging Markets Opportunity

• Services Business Expansion

• Software Momentum

• Aging Installed BaseLong Term Goal• 6M Patients treated annually

• 10,000+ Installed Base


5-Year Growth Targets*

Organic Revenues** 5-6%

Non-GAAP ROS 18-22%

Service Revenues*** $1.5B

Software Revenues*** $1B

* These are targets/opportunity and not meant to be guidance.

** Targets high-single-digit software, mid-single-digit service, and low-single-digit hardware growth

*** Software revenues consist of software service and software product revenues (about equal of both). So

the projected 2022 service revenues also includes the software service revenue.


THANK YOU

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