J.P. MORGAN HEALTHCARE CONFERENCEJPM... · Addressable Market Product Portfolio >$4B Interventional Pain >$4B Acute Pain 100M >20M Target U.S. surgical procedures Americans in chronic

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J.P. MORGAN HEALTHCARE CONFERENCE

JOE WOODYCHIEF EXECUTIVE OFFICER

JANUARY 2020

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FORWARD-LOOKING INFORMATION

NON-GAAP FINANCIAL MEASURES

Certain matters in this presentation and webcast, including our expectations and planning assumptions, and any estimates, projections, and statements relating to our business plans, objectives, acquisitions and transformation initiatives, constitute forward-looking statements and are based upon management’s expectations and beliefs concerning future events impacting the Company.

These statements are subject to risks and uncertainties, including currency exchange risks, cost savings and reductions, raw material, energy and other input costs, competition, market demand, economic conditions, S&IP separation execution and IT implementation, availability of drugs used in our Acute Pain products, other supply chain disruptions, and legislative and regulatory actions. There can be no assurance that these future events will occur as anticipated or that the Company’s results will be as estimated. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update them. For a more complete listing and description of other factors that could cause the Company’s future results to differ materially from those expressed in any forward-looking statements, see the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Management believes that non-GAAP financial measures enhance investors’ understanding and analysis of the Company’s performance. As such, results and outlook have been adjusted to exclude certain items for relevant time periods as indicated in the non-GAAP reconciliations to the comparable GAAP financial measures included in this presentation and posted on our website (www.avanos.com/investors).

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$650M+Global Revenue*

WHO WE ARE

Pain Management

Chronic Care

Diversified portfolio with 8 market-leading

products in the U.S.

International

Business operations in 90+ countries

U.S.

CreatingShareholder Value

~$10BAddressable

Market

Optimized cost structure

M&A execution and integration

Organic growth acceleration

Our Vision: To be the best at getting patients back to what matters

*2018 figure

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CHRONIC CARELeading market positions enhanced by recent bolt-on acquisitions

Addressable Market Product Portfolio

~$400M Respiratory

Health

~$1B Digestive

Health

Long-term Feeding Nasogastric Feeding Neonatal Feeding Closed Suction

Continued market leadership with launch

of MIC-KEY* SF in 2020

Demonstrated capability with leading position in

nasogastric feeding

Avanos enters into the neonatal market, a

leading organic growth opportunity

Enhances Respiratory Health portfolio and

leverages existing sales and marketing infrastructure

Mic-Key (legacy) Corpak (2016) NeoMed (2019) endOclear (2019)

Digestive Health Respiratory Health

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PAIN MANAGEMENTOpportunity to deliver much-needed non-opioid pain relief therapies

Addressable Market Product Portfolio

>$4B Interventional Pain

>$4B Acute Pain

100M >20MTarget U.S. surgical

proceduresAmericans in chronic pain

ON-Q (Legacy) GameReady (2018) Summit Medical (2019)

Clinically proven non-opioid therapy to reduce post-surgical pain

Market-leading provider of cold and compression therapy

systemsElectronic ambulatory pumps

COOLIEF* (Legacy) COOLIEF* Technology Innovation

Only FDA-cleared RF treatment for OA knee pain

Cooled and standard radiofrequency generator

Next generation COOLIEF* probe

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REMOVING OBSTACLES FOR VALUE CREATION

2019 CHALLENGES 2020 PRIORITIES

Top line impacted by industry-wide drug shortage and pump filler shutdown

IT implementation caused 3Q 2019 disruption

Increased cash cost for transformation

Build momentum in Acute Pain

into 2021 to return Avanos to MSD growth

IT stabilization

M&A integration

Positive free cash flow

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CATALYSTS FOR LONG-TERM VALUE CREATION

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INVESTING FOR THE FUTURE

▪ Continue educating private payors on clinical evidence and economic advantages of COOLIEF*

▪ Roll out new COOLIEF* products, including a next generation RF generator and probes

▪ Publish study on COOLIEF* vs. hyaluronic acid

▪ Expanded direct-to-patient advertising

▪ Significantly grew sales force

▪ CMS reimbursement decision finalized

▪ Published 6 studies that demonstrate the efficacy of COOLIEF*

▪ Publish study on COOLIEF* vs. standard RF

▪ Work with CMS to improve reimbursement levels for procedures performed in ASC settings

CLINICAL AWARENESS COVERAGE EXPERTISE Investments that generate breakthrough growth

2019

2020

2021 & Beyond

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Summit Medical

Legacy PortfolioLeiters

Partnership BioQInternal Project

ON-Q Fixed Flow Rate

Pump (Low Cost Option)

ON-Q SAF+ (Middle Tier

Option)

Electronic Pump (High

Functionality Option)

“Short” Shots (STRATEGIC)

Drug + Pump Combination Device (High Ease of Use

Option)

Electronic Nerve Block (Non-Drug

Option:

ID & Therapy)

Internal

ProjectSummit

Medical

Low ASP

Low MarginHigh ASP

High Margin

High ASP

Low Margin

Low ASP

Low MarginHigh ASP

High Margin

High ASP

Developing

Margin Profile

Leiters

PartnershipBioQCurrent Portfolio




Option)





Option)


Option:

ID & Therapy)

Internal

ProjectSummit

Medical

Low ASP

Low MarginHigh ASP

High Margin

High ASP

Low Margin

Low ASP

Low MarginHigh ASP

High Margin

High ASP

Developing

Margin Profile

Leiters





Option)





Option)


Option:

ID & Therapy)

Internal

ProjectSummit

Medical

Low ASP

Low MarginHigh ASP

High Margin

High ASP

Low Margin

Low ASP

Low MarginHigh ASP

High Margin

High ASP

Developing

Margin Profile

Leiters


SURGICAL PAIN: SETTING THE STAGE FOR RETURN TO GROWTH

Taking action to bolster portfolio, win back sales and simplify the process for customers and patients


Pump

ON-QSelect-a-Flow

Electronic Pump

Drug + Pump Combination Device

Electronic Nerve BlockON-Q Fixed

Flow Rate Pump (Low

Cost Option)


Option)





Option)


Option:

ID & Therapy)

Internal

ProjectSummit

Medical

Low ASP

Low MarginHigh ASP

High Margin

High ASP

Low Margin

Low ASP

Low MarginHigh ASP

High Margin

High ASP

Developing

Margin Profile

Leiters





Option)





Option)


Option:

ID & Therapy)

Internal

ProjectSummit

Medical

Low ASP

Low MarginHigh ASP

High Margin

High ASP

Low Margin

Low ASP

Low MarginHigh ASP

High Margin

High ASP

Developing

Margin Profile

Leiters


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DRIVING INTERNATIONAL GROWTH

Geographic Expansion

Go-to-Market Execution

Market Development

▪ Improve distributor management capability

▪ Targeted go-direct sales model

▪ Developed markets

▪ Emerging markets

▪ Incorporate recently acquired acquisitions

▪ Disease state awareness & referral pathway

▪ Physician education

▪ Reimbursement and healthcare economics

▪ Define Standard of Care

Enhanced leadership and focus on commercial excellence

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DELIVERING POSITIVE CASH FLOW IN 2020

Repeatable free cash flow

acceleration

Return to normal capital spending

Recapture prior year working

capital inefficiencies

Fewer unusual or non-recurring

expenses

Bolsters already strong balance sheet

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FRAMEWORK FOR VALUE CREATION

Bring innovation to market via M&A

and organic pipeline

Accelerate sales internationally and

stabilize ON-Q

Disciplined pursuit of complementary

M&A

Gain earnings leverage to accelerate margins

Continue to right-size cost

structure and M&A integration

Invested in priority areas to enhance

growth

2019

2020

2021 & Beyond

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The best at getting patients back to the things that matter

Documents

J.P. MORGAN HEALTHCARE CONFERENCEJPM... · Addressable Market Product Portfolio >$4B Interventional Pain >$4B Acute Pain 100M >20M Target U.S. surgical procedures Americans in chronic