2020 annual meeting of stockholders · 2 2020 annual meeting of stockholders introductions and...
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2020 Annual
Meeting of
Stockholders
May 5, 2020
2
2020 Annual Meeting of Stockholders
Introductions
and Meeting
Procedures
2020 Annual
Meeting
Proposals
Baxter
Overview
Voting
Results
Questions
and
Answers
Adjournment
2020 Annual
Meeting of
Stockholders
May 5, 2020
4
Baxter’s Board of Directors
All Directors up for reelection at the 2020 Annual Meeting
José (Joe) E. Almeida
Michael F. Mahoney
Thomas T. Stallkamp
Patricia B. Morrison
Thomas F. Chen
Stephen N. Oesterle,
M.D.
John D. Forsyth
Cathy R. Smith
James R. Gavin III,
M.D., Ph.D.
Albert P.L. Stroucken
Peter S. Hellman
Amy A. Wendell
5
Baxter’s Senior Leadership Team
Giuseppe Accogli
SVP and President, Americas
Laura Angelini
GM, Renal Care
Alex Blanco
SVP, Global Supply Chain Officer
Wil Boren
President, Advanced Surgery
Dennis Crowley
SVP, Business Development & Licensing
Stacey Eisen
SVP, Global Communications
David Ferguson, Ph.D.
GM, Medication Delivery
Cristiano Franzi
SVP and President, Europe, Middle East, Africa
Andrew (Andy) Frye
SVP and President, Asia Pacific
Heather Knight
GM, U.S. Hospital Products
Jacqueline (Jackie) Kunzler, Ph.D.
SVP and Chief Quality Officer
Karen Leets
SVP and Treasurer
Paul Martin
SVP and Chief Information Officer
Sean Martin
SVP and General Counsel
Jeanne Mason, Ph.D.
SVP, Human Resources
Ellen McIntosh
SVP and Corporate Secretary
Sumant Ramachandra, M.D., Ph.D.
President, Pharmaceuticals, and SVP, Chief Science and Technology Officer
Reaz Rasul
GM, Acute Therapies
Philippe Reale
VP, Planning & Fulfillment
David Roman
VP, Strategy, Financial Planning and Analysis
James (Jay) Saccaro
EVP and Chief Financial Officer
Cathy Skala
VP, Business Transformation Office
Brian Stevens
SVP, Chief Accounting Officer and Controller
Clare Trachtman
VP, Investor Relations
Jorge Vasseur
GM, Clincal Nutrition
6
Safe Harbor Statement
This presentation includes forward-looking statements concerning Baxter’s financial results, business development activities, capital structure, cost savings initiatives,
R&D pipeline, including results of clinical trials and planned product launches. These forward-looking statements are based on assumptions about many important
factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: demand for and market acceptance of
risks for new and existing products; product development risks; product quality or patient safety concerns; continuity, availability and pricing of acceptable raw materials
and component supply; inability to create additional production capacity in a timely manner or the occurrence of other manufacturing or supply difficulties (including as
a result of a natural disaster, public health crises and epidemics/pandemics, regulatory actions or otherwise); the impact of global economic conditions (including
potential trade wars) and public health crises and epidemics, such as the novel strain of coronavirus (COVID-19), on us and our customers and suppliers, including
foreign governments in countries in which we operate; breaches or failures of the company’s information technology systems or products, including by cyberattack,
unauthorized access or theft; the adequacy of the company’s cash flows from operations (which may be negatively impacted by collectability concerns as a result of the
COVID-19 pandemic or otherwise) and other sources of liquidity to meet its ongoing cash obligations and fund its investment program; loss of key employees or inability
to identify and recruit new employees; future actions of regulatory bodies and other governmental authorities, including the FDA, the Department of Justice, the SEC, the
New York Attorney General and foreign regulatory agencies, including the continued delay in lifting the warning letter at our Ahmedabad facility or proceedings related to
the investigation related to foreign exchange gains and losses; the outcome of pending or future litigation, including the opioid litigation and litigation related to our
internal investigation of foreign exchange gains and losses; the impacts of the material weakness identified as a result of the internal investigation and our remediation
efforts, including the risk that we may experience additional material weaknesses or other deficiencies; proposed regulatory changes of the U.S. Department of Health
and Human Services in kidney health policy and reimbursement, which may substantially change the U.S. end stage renal disease market and demand for our
peritoneal dialysis products, necessitating significant multi-year capital expenditures, which are difficult to estimate in advance; failures with respect to compliance
programs; accurate identification of and execution on business development and R&D opportunities and realization of anticipated benefits (including the acquisitions of
Cheetah Medical and Seprafilm Adhesion Barrier from Sanofi); future actions of third parties, including payers; U.S. healthcare reform and other global austerity
measures; pricing, reimbursement, taxation and rebate policies of government agencies and private payers; the impact of competitive products and pricing, including
generic competition, drug reimportation and disruptive technologies; fluctuations in foreign exchange and interest rates; the ability to enforce owned or in-licensed
patents or the prevention or restriction of the manufacture, sale or use of products or technology affected by patents of third parties; global, trade and tax policies; any
change in laws concerning the taxation of income (including current or future tax reform), including income earned outside the United States and potential taxes
associated with the Base Erosion and Anti-Abuse Tax; actions taken by tax authorities in connection with ongoing tax audits; and other risks identified in Baxter’s most
recent filing on Form 10-K and other SEC filings, all of which are available on Baxter’s website. Baxter does not undertake to update its forward-looking statements
unless otherwise required by the federal securities laws.
2020 Annual
Meeting of
Stockholders
May 5, 2020
8
2020 Annual Meeting Proposals
Election of
Directors
Advisory Vote
to Approve
Named
Executive
Officer
Compensation
Ratification of
Appointment of
Independent
Registered
Public
Accounting
Firm
Independent
Board
Chairman
Right to Act
by Written
Consent
PROPOSAL PROPOSAL PROPOSAL PROPOSAL PROPOSAL
1 2 3 4 5
2020 Annual
Meeting of
Stockholders
May 5, 2020
10
Advancing our Mission
11
Rising to the Challenge of COVID-19
► Maximizing production of critical medical products to support increased patient care levels
► Protecting employee health and safety through enhanced infection control procedures
► Actively recruiting up to 2,000 additional permanent and temporary roles globally
► Donating $2M+ to date to global relief partners through The Baxter International Foundation
12
Baxter Profile: A Diversified Global Portfolio1
Americas 54%
EMEA 26%
Asia Pacific 20%
$11.4B
2019 Global Revenue
~$3.6B ~$2.8B
~$2.2B ~$0.9B
~$0.9B ~$0.5B
1Sales and related figures represent FY 2019; Other sales represent ~$0.5B.
Clinical Nutrition
Renal Care Medication Delivery
Pharmaceuticals
Advanced Surgery Acute Therapies
13
Full Year 2019 Financial Snapshot1
Global Reported Sales
+5% Operational Growth2
Adjusted Operating Margin
+140Basis Points
Adjusted Diluted Earnings per Share
+14%
Free Cash Flow3
FY 2018 FY 2019
$2.91
$3.31
FY 2018 FY 2019
17.3%
18.7%
FY 2018 FY 2019
~$11.1B~$11.4B
as restated as restated as restated FY 2018 FY 2019
$1.4B $1.4B
as restated 1Non-GAAP financial metrics referenced in this slide include operational sales growth, adjusted operating margin, adjusted diluted EPS, and free cash flow. A reconciliation to comparable U.S. GAAP measures is available at
www.baxter.com. 2FY 2019 operational sales growth excludes the impact of foreign currency of approximately 3% and U.S. cyclophosphamide competition of approximately 0%; U.S. GAAP sales growth for the period was
approximately 2% compared to FY 2018. 3Operating cash flows from continuing operations of $2,110 million in 2019 and $2,017 million in 2018 offset by capital expenditures of $696 million in 2019 and $659 million in 2018.
+4%
15
Patient Safety and Quality: Our Top Priority
Investing in quality systems and
processes
Improving key quality metrics
Strengthening relationships with
global regulators
Six FDA warning letters resolved
since 2014
Sole remaining open letter:
• Ahmedabad, India
16
Best Place to Work: Recognized for Excellence
Baxter’s inclusive culture and diverse workforce help advance our Mission and fuel innovation.
Select recognition highlights:
Baxter drives sustainability throughout its operations, and supports increased access to care, disaster relief, and STEM education, among other efforts.
Select recognition highlights:
17
Growth Through Innovation: Expanding our Impact
Multiple Avenues to Increase Patient Impact, Accelerate Growth
Driving growth through
evidence generation,
physician education, and
targeted market
investments
Market Development
Expanding beyond the
core to unlock new
therapies and markets
EnterAdjacencies
Executing on pipeline
opportunities and
geographic expansion
PortfolioInnovation
18
Growth Through Innovation: Expanding our Impact
Select Recent Highlights Include:
Planning in support of Advancing American Kidney Health Initiative
Acquired Seprafilm Adhesion Barrier
U.S. FDA approval for faster preparation of Floseal Hemostatic Matrix
Launch of Sharesource 2.0 clinical portal
U.S. launch of Myxredlin ready-to-use insulin for IV infusion
U.S. launch of Clinolipid proprietary olive oil-based lipid emulsion
U.S., Canadian launches of PrisMax system for CRRT
Acquired Cheetah Medical, a leader in hemodynamic monitoring technologies
19
Growth Through Innovation: Pipeline Momentum
New products, new indications and geographic expansion driving $1.7B in 2023 Sales1
1All references to “new products” and “launches” in this presentation include new product launches, line extensions and geographic expansions, unless
otherwise noted. New product sales figures reflect guidance provided at May 21, 2018 Investor Conference.
Accelerated pace of incremental and transformative innovation
Culture of innovation with the right organization and talent in place
Focused on successful execution of commercial launches
Resources aligned with high-growth opportunities
2020+ Highlights
Expanded Pump Offerings Sharesource Analytics
PIVA Specialized Monitoring Differentiated Molecules
20
Industry Leading Performance: Operational Excellence
2016 2018 2020 2023
~$0.4B
~$1.0B~$1.1B
~$1.2B
Portfolio Simplification
Strategic Growth
Continued Financial Discipline
Operations Optimization
Realized $1.0B+ Cumulative Annual Savings to Date vs. 2015
Pursuing Further Opportunities for Operational Efficiency
21
Industry Leading Performance: Capital Deployment
Investing in meaningful
innovation and growth
acceleration
opportunities
Increased quarterly
dividend to $0.245 per
share; currently targeting
~35% dividend payout
ratio of adjusted net
income over time
Executing strategic
acquisitions and
collaborations to
generate enhanced
returns
Selective share
repurchases to return
value to shareholders
REINVEST IN BUSINESS
DIVIDENDS M&ASHARE
REPURCHASE1
Strategically Deploying Capital to Create Value for Investors
1As indicated on the April 30, 2020 earnings conference call, Baxter has temporarily suspended share repurchases during the course of the ongoing COVID-19 pandemic.
22
Delivering Significant Value for Investors
~47% S&P HEALTH CARE
~141% BAXTER
~51% S&P 500
~51% DOW
~109% IHI
Total Shareholder Returns, 12/31/2015 – 5/1/20201
708090
100110120130140150160170180190200210220230240250260270
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1Bloomberg data as of 5/1/2020 market close.
23
Continuing Momentum: 2020 and Beyond
► Ensuring responsiveness and agility in an uncertain market
► Increasing innovation to drive accelerated revenue growth
► Maintaining strong cadence of product launches and
geographic expansions
► Realizing ongoing benefits of business transformation
initiatives
► Strategically deploying capital to enhance value and
improve profitability
2020 Annual
Meeting of
Stockholders
May 5, 2020