UDG Healthcare plc · EvaluatePharma –World Preview 2017, Outlook to 2022, June 2017 Global Pharma Market Growth - ... 2017 was 14,872 –an 8.4% increase vs 2016 MOLECULES IN …

UDG Healthcare plcGroup Overview & Interim Results FY18

6 months to 31st March 2018

2 : UDG Healthcare plc

Forward Looking Statements

This Presentation has been prepared by UDG Healthcare plc and contains certain forward-looking statements, beliefs or opinions, including statements with respect to the Group's business, financial condition and results of operations.

They represent expectations for the Group’s business, including statements that relate to the Group’s future prospects, developments and strategies, and involve risks and uncertainties both general and specific. The Group has based these forward-looking statements on assumptions regarding present and future strategies of the Group and the environment in which it will operate in the future. However, because they involve known and unknown risks, uncertainties and other factors including but not limited to general economic, political, financial and business factors, which in some cases are beyond the Group’s control, actual

results, performance, operations or achievements expressed or implied by such forward looking statements may differ materially from those expressed or implied by such forward-looking statements and accordingly you should not rely on these forward looking statements in making investment decisions. Except as required by applicable law or regulation, neither the Group nor any other party intends to update or revise these forward looking statements after the date these statements are published, whether as a result of new information, future events or otherwise.


Page No.

UDG Healthcare Overview 4-12

Divisional Overview 13-20

Capital Allocation & Deployment 21-27

H1 2018 Overview 28-40

Financial Appendices 41-45

Contents

UDG Healthcare

Overview


UDG Healthcare OverviewUDG Healthcare is a leading international partner of choice delivering advisory, communication, commercial, clinical and packaging services to the healthcare industry.

9,000EMPLOYEES

TOP 30PHARMA COMPANIES AS CLIENTS

30 YEAR+ DIVIDEND GROWTH

FTSE 250LISTED

24COUNTRIES

3 OPERATING DIVISIONS


Business Overview & Outlook

A global leader in advisory, communication, commercial and clinical services for the

pharmaceutical and healthcare industries

A global leader in contract packaging and clinical trial supply services to the pharmaceutical and

healthcare industries

A leading expert and provider of outsourced services to the medical and scientific sector

68% 28% 4%of H1 2018Operating Profit

of H1 2018 Operating Profit

of H1 2018 Operating Profit

Advisory – Healthcare brand advisory, consulting and commercial audit services

Communications – Scientific communication content, behavioural change strategies, digital and creative patient-centre services

Commercial & Clinical – Commercialisation and clinical services including sales representatives, nursing services, contact centres and meetings and events

Commercial contract packaging services in multiple formats including biotech, bottling, blistering and specialty

Clinical trial services from pre-clinical through to commercialisation including clinical contract packaging services and Interactive Response Technology (IRT)

Packaging design, labelling, printing and industry-leading serialisation solutions

Medical and scientific device sales, marketing, engineering and distribution in areas such as endoscopy, cardiology, radiology and surgical.


Capabilities to support clients at all stages of the product life cycle

PHASE 1-3 PRELAUNCH LAUNCH IN MARKET

ASHFIELD HEALTHCARE COMMUNICATIONS

ASHFIELD COMMERCIAL & CLINICAL SOLUTIONS

SHARP COMMERCIAL

SHARP CLINICAL

AQUILANT

ASHFIELD ADVISORY


Market Dynamics

Sources:Medicines Use and Spending in the US, A Review of 2017 and Outlook to 2022, QuintilesIMS Institute, April 2018EvaluatePharma – World Preview 2017, Outlook to 2022, June 2017

Global Pharma Market Growth -forecasted to increase by a CAGR

of 6-7% to 2022 to $1.1tn

GLOBAL MARKET GROWTH

Continued increase in the number of molecules under development. At the end of 2017 was 14,872 – an 8.4% increase vs 2016

MOLECULES IN DEVELOPMENT

FDA approvals increased by 84% in 2017 vs 2016, with 46 new drugs approved

FDA APPROVALSIncreased complexity from growth of specialty and biotech. By 2021, 35% of global spending expected to be on specialty medicines

SPECIALTY & ORPHAN GROWTH

Growing trend of healthcare outsourcing.Increasing trend to outsource to larger, more global partners

INCREASED OUTSOURCING


Executing Our Strategy

Geographic & Services Expansion

Client Focus & Commercial Excellence

Capital Deployment

Margin Expansion

Operational Excellence

Talent &Leadership

Quality &Compliance

ValuesBased

Culture

OUR STRATEGY IMPLEMENTING OUR STRATEGY

Develop & expand market leading positions

Lead through people

Drive productivity

Supplementary Sources of Growth

Our strategy is to capitalise on the

increasing trend among pharmaceutical, biotech and medtech companies to outsource specialist

and non-core activities on an international basis.


Diversification (H1 2018)

Business Unit Operating Profit Split

42%

26%

28%

4%

Geographic Revenue Split

57%24%

19%

Customer Concentration (net revenue)

7%

25%

68%

Ashfield Advisory & CommunicationsAshfield Commercial & Clinical

Sharp Aquilant

North AmericaUK

Rest of World / Other

# 1 Customer# 2 -10 CustomersOther Customers


Growth & Guidance

* Underlying

+18-21%FY18 EPS

Constant Currency Guidance

5–10% >10% 0–5%Medium term operating profit growth outlook*

Medium term operating profit growth outlook*

Medium term operating profit growth outlook*

The Group reiterates its full year guidance for constant currency adjusted diluted earnings per share (EPS) growth for the year to 30 September 2018 to be between 18% and 21% ahead of last year’s EPS of 37.1 $ cent.

This strong EPS growth reflects the contribution from acquisitions, along with lower interest and taxation expenses.


Investment Proposition

Partner of choice to pharma companies

Positive market

dynamics

Trend towards increased healthcare

outsourcing

Global presence and strong market

positions across all divisions

Diversified by geography, services

and customers

Not directly linked to drug pricing, fee for service model

Clear medium term growth

guidance

Underlying growth supplemented by

M&A

Investments to support

sustainable growth

1

2

3

4

5

6

7

8

9

Divisional

Overview


Ashfield Overview

68%

41.7

57.5

68.3 70.6

FY12 FY13 FY14 FY15 FY16 FY17

*Adjusted for amortisation of acquired intangible assets, transaction costs, and exceptional items

Operating profit* ($m)

81.6

26.7

A global leader in advisory, communication, commercial and clinical services

7,000+People across 23 countries

Delivering services in

more than 50 COUNTRIES

Partnering with the top

30 GLOBAL PHARMA COMPANIES

SUPPORTED8 out of the top 10 product launches in the US in 2017

COMPLETED 5 ACQUISTIONS In FY17, deployedover $250m on acquisitions

TRANSFORMEDCommercial & Clinicalnow accounts for <40% of operating profits (was 80%+ in 2012)


Ashfield Market Dynamics

Key growth drivers:

Outsourcing levels expected to continue to increase

Changing and increasingly complex healthcare market dynamics

Pricing a growing pressure point

Market access and life cycle product management increasingly important

Source: UDG and BCG analysis

Key growth drivers:

Continued incremental growth in outsourcing

Increasing number of molecules being developed and approved

Migration to digital and patient engagement services

Growth in orphan drug and rare diseases

Key growth drivers:

Outsourcing levels expected to continue to increase

Increasing demand for innovative models, multi-channel offerings and multi-country solutions

Growth of specialty care resulting in increased complexity and required support levels

Increasing importance of patient adherence

ADVISORY COMMUNICATIONS COMMERCIAL & CLINICAL

MARKET SIZE $2.9BN $6.1BN $7.3BN

MARGIN PROFILE 15% - 30% 15% - 25% 7% - 15%

• Outsourcing levels expected to continue to increase

• Changing and increasingly complex healthcare market dynamics

• Medicine pricing a growing pressure point

• Market access and life cycle product management increasingly important

• Continued incremental growth in outsourcing

• Increasing number of molecules being developed and approved

• Migration to digital and patient engagement services

• Growth in orphan drug and rare diseases

• Outsourcing levels expected to continue to increase

• Increasing demand for innovative models, multi-channel offerings and multi-country solutions

• Growth of specialty care resulting in increased complexity and required support levels

• Increasing importance of patient adherence

KEY GROWTH DRIVERS


Sharp Overview


20.6

25.9

34.0

38.241.3


28% Operating profit* ($m)

18.8

Sharp US

Sharp EU

Sharp Clinical

A global leader in contract packaging and clinical trial supply services

1,800Employees

Operations in

4 COUNTRIESBelgium, Netherlands

USA, UK

9 GMP & FDAApproved facilities


Sharp Market Overview

Outsourced Clinical Services

OutsourcedCommercial Packaging

$10 billion$7 billion

Today 2022

$8 billion$6 billion

Today 2022

• Continued demand for outsourcing solutions driven by a lack of in-house capabilities, the opportunity for efficiency gains and growth of specialty drugs

• Increasing requirement to access specialist technology solutions and capabilities

• Clients increasingly seeking strategic partnerships

• Continued growth in outsourcing

• Demand for end to end proposition and integrated services

• Growth of digital solutions including IRT services

Source: UDG and Deloitte analysis


Aquilant

7.6 8.0 8.3

6.96.4


*Adjusted for amortisation of acquired intangible assets, transaction costs, and exceptional items^ Flat excluding the impact of translational fx

Medical and scientific device sales, marketing, engineering

and distribution in areas such as endoscopy, cardiology, radiology and surgical

A leading expert and provider of outsourced services to the medical and scientific sector

Operating profit* ($m) 4%

7.5

Capital Allocation & Deployment


Capital Allocation Priorities

Strong balance sheet to support

continued investment

priorities

Acquisitions in line with strategic priorities

ROCE of 15%+ within 3 years

Reinvestment to support continued sustainable growth

Future Fit (HR, Finance and IT) and Sharp capacity investments

Capex expected to reduce from FY19

Progressive dividend policy

30 year+ history of consistent dividend growth


1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Historic dividends translated at FY16 fx rate from € to $

13.3

Progressive Dividend Policy


Acquisitions completed since the United Drug disposal

ADVISORY

Total acquisition consideration of up to $135m

Acquisition of pharmaceutical

packaging facility


COMMUNICATIONS

COMMERCIAL & CLINICAL


Total acquisition consideration of $14m


Ashfield - Acquisitions In Line With Strategy

ASHFIELD KEY FOCUS AREAS INCLUDE:

ROCE 15%+ within 3 years People & Cultural FitStrategic Fit / Capabilities

M&A REMAINS A KEY PRIORITY FOR THE GROUP:

ASHFIELD ADVISORY

• Strategic consulting

• Brand consulting & advisory

• Market access, Health Economics and Outcomes Research

• Patient, commercial & marketing audits

ASHFIELD COMMUNICATIONS

• Extension of communications capabilities incorporating:

– Scientific health comms– Commercial / Creative comms– Patient engagement & behaviour – Public relations– Digital, data & analytics solutions

ASHFIELD COMMERCIAL & CLINICAL

• Strengthen contract sales capabilities

• Extend clinical / nurse services

• Expand medical information and commercial call centres


Sharp –Acquisitions & Investments In Line With Strategy

SHARP KEY FOCUS AREAS INCLUDE:

ROCE 15%+ within 3 years People & Cultural FitStrategic Fit / Capabilities

M&A REMAINS A KEY PRIORITY FOR THE GROUP:

SHARP COMMERCIAL

• Continued investment in facilities and equipment to provide additional capacity

• Bolt on acquisitions of other commercial packaging businesses and facilities

• Expand niche manufacturing capabilities, focused on biotech / injectables / finished dose formulation

SHARP CLINICAL

• Expand clinical services offering to provide an integrated offering

• Focus on formulation development, analytical testing and manufacturing

• Expand geographical reach

H1 2018 Overview


H1 2018 Financial Highlights

+24% +17% +15% 11.8% +19% +19%

EPS NET REVENUE

OPERATING PROFIT

NET OPERATINGMARGIN

PROFIT BEFORE TAX

DIVIDEND

+21% on a constant

currency basis

+11% on a constant

currency basis

Ashfield +25% Sharp -2%

Declined marginally from

12.0%

+16% on a constant

currency basis

Continueddividend growth


H1 2018 Operational Updates

Nigel Clerkin

Appointed as CFO of UDG on 1st May 2018

Doug Burcin

Appointed as President of Ashfield Healthcare

Communications in February 2018

Rob Wood

Appointed as Global President of Ashfield Advisory Services &

Business Development in April 2018

INVESTMENTS

Reinvestment to support sustainable growth

including:

Future Fit (HR, Finance, IT) due to complete by

December 2018

Sharp facility investments across the Commercial and Clinical businesses

LEADERSHIP TRANSITIONS


H1 2018 Financial SummaryH1 2017 H1 2018 Increase Constant FX Increase

Net Revenue $488.0m $568.7m ↑17% ↑11%

Operating profit* $58.8m $67.4m ↑15% ↑11%

PBT* $52.9m $63.2m ↑19% ↑16%

EPS (C)* 16.23 20.19 ↑24% ↑21%

DPS (C) 3.58 4.25 ↑19% ↑19%

ROCE% 12.8%^ 12.9% N/A N/A

Net debt to EBITDA (0.32x)^ (0.28x) N/A N/AThe average H1 2018 exchange rates were $1:€0.8310 and $1:£0.7357 (H1 2017 $1:€0.9330 and $1:£0.8066)* Before amortisation of acquired intangible assets, transaction costs and exceptional items ^ At 30th September 2017


36.4

19.2

3.2

45.6

18.9

2.90

10

20

30

40

50

Ashfield Sharp Aquilant

+25% ↗

-2% ↘

-11% ↘

H1 2018 Divisional Operating Profit

^ Throughout this presentation, references to underlying growth are financial metrics adjusted for the impact of currency translation movements and any acquisition or disposal activity. * Net operating margin adjusts for pass-through revenues upon which no margin is earned

• Reported operating profit growth +25%.

• Underlying^ operating profit growth -1% after additional Future Fit operating costs (+6% pre-Future Fit costs)

• Net operating margin of 12.3%

● H1 2017 ● H1 2018

• Reported operating profit growth -2%. Underlying^ operating profit growth -2%

• Good Q2 performance did not fully offset Q1 performance

• Net operating margin of 13.3%

• Underlying^ operating profit growth -19%

• Decline driven primarily by the exit of contracts with VSI & Link

OPERATING PROFIT ($M)

NET OPERATING MARGIN*

12.6% 12.3% 12.6% 13.3% 7.0% 5.3%

UNDERLYING GROWTH RATE^

-1% -2% -19%


+25% ↗

19.1 17.3

36.428.3

17.3

45.6

0.0

10.0

20.0

30.0

40.0

50.0

Communications (including Advisory) Commercial & Clinical Totals

+48% ↗

Ashfield H1 2018 Overview

+0%

● H1 2017 ● H1 2018OPERATING PROFIT ($M)

* Net operating margin adjusts for pass-through revenues. Pass through revenues of $90.9m in H1 2017 and $106.6m in H1 2018

NET OPERATING MARGIN*

23.6% 20.7% 8.3% 7.3% 12.6% 12.3%

UNDERLYING GROWTH RATE

+5% -7% -1%

Communications (including Advisory) now accounts for 62% of Ashfield’s operating profit

Division operating profit growth +25% to $45.6m. Underlying operating profit growth -1% after Future Fit operating costs (+6% pre-Future Fit costs). Net operating margin of 12.3% (acquisition benefits offset by increased Future Fit operating costs impact)


Sharp H1 2018 Overview

● H1 2017 ● H1 2018

-3% ↘ -2% ↘

OPERATING PROFIT ($M)

Underlying operating profit -2% driven by higher churn in the US commercial business during the second half of FY17 which impacted the first half of FY18 Improving momentum in Q2 FY18 vs Q1 FY18

0.2 0.5

OPERATING MARGIN

15.3% 15.5% 0.6% 1.9% 12.6% 13.3%

19.0

0.2

19.218.4 18.9

0.0

5.0

10.0

15.0

20.0

US EUR Totals


-4% +261% -2%

+191% ↗


Sharp Division Update & Outlook

Q1 FY18 behind prior year (as per Q1 IMS)

Q2 FY18 double-digit growth vs prior year

Experienced higher churn in H2 FY17 & Q1 FY18 but has since reduced

Project timing and ramp up delays due to FDA approvals and client timing issues

Pipeline continues to improve including significant single large wins coming through

--

OUTLOOK

Double digit-growth expected in H2 FY18 vs prior year

However, due to slower project ramp up, mid-single digit underlying operating profit growth expected for FY18

Well positioned to deliver strong underlying operating profit growth in FY19

Reiterate medium term guidance of 10%+ underlying operating profit growth

SUMMARY UPDATE


Aquilant H1 2018 Overview OPERATING PROFIT ($M) Division operating profit -11% to $2.9m

Underlying operating profit -19% due to the exit from higher margin contracts (VSI & Link)

Contract exit payments from two clients, VSI and Link. $13.5m of $14.5m received in H1 FY18 (remainder due in H2 FY18), leading to a $8.9m exceptional gain in H1 FY18

3.22.9

0

2

4

Aquilant

OPERATING MARGIN

7.0% 5.3%

● H1 2017 ● H1 2018

-11% ↘


-19%


H1 2018 Profit Before Tax*GROUP PBT ($M) +19%(+16% CONSTANT CURRENCY)

1.4

52.9

7.01.9

63.2


+4% +13%

+3%


H1 2018 Exceptional Items

Category Description $m H1 FY 2018

Impairment of Goodwill Net charge in relation to the impairment of goodwill on Aquilant, in part offset by one-off payments received relating to the exit of contracts with VSI and Link in the period, for which contract termination payments were received (total contract net exit payments of $14.5m)

($49.7m)

Deferred Tax Credit Gain reflecting a one-off benefit from a reduction in the Group’s deferred tax liabilities following US tax changes

$9.7m

Deferred Contingent Consideration Release in respect of Cambridge BioMarketing following a review of performance against expected earn-out targets

$3.5m

Net exceptional items after tax ($36.6m)

The total cash inflow during H1 FY18 in respect of exceptional items was $13.5m


Cash Flow ($m)

* Includes deferred consideration payments

EBITDA/NET DEBT 0.28x (SEPTEMBER 2017 EBITDA/NET DEBT: 0.32x);

83

13

(19)(24)

(3)

(12)

(23)(9) (47)

(24)

(53)


H1 2018 Summary

Strong EPS growth of 24% (21% on a constant currency

basis)

Reiterating guidance for full year FY18 constant

currency adjusted diluted EPS growth of between 18%

and 21%

Net debt of $46.6 million at 31 March

2018 (0.28x) providing

significant capacity for strategic M&A

19% increase in interim dividend to 4.25 $ per

share

Financial

Appendices


Segmental Overview

6 mths to March 2018 Change

Net^ Revenue $m Op Profit* $m Net^ Margin Net^ RevenueNet^ Revenue

UnderlyingOp Profit*reported

Op Profit*Underlying

Net^ Margin

Ashfield $372.3 $45.6 12.3% 29% 4% 25% (1%)** (33bp)

Sharp $142.5 $18.9 13.3% (7%) (10%) (2%) (2%) +69bp

Aquilant $53.9 $2.9 5.3% 17% 5% (11%) (19%) (165bp)

Total $568.7 $67.4 11.8% 17% (0%) 15% (2%)** (20bp)

^ Adjusted for pass-through revenues. Pass through revenues of $106.6m in H1 2018 *Operating profit before amortisation of acquired intangible assets, acquisition costs and exceptional items** Without additional Future Fit costs, Ashfield underlying operating profit growth would have been 6% and Group underlying operating profit growth would have been 2%


Ashfield Segmental Summary

6 mths to March 2017 2017 2017 2018 2018 2018%

Change%

Change%

Change%

Change

Net^ Revenue $m Op Profit* $m Net^ MarginNet^ Revenue

$mOp Profit* $m

Net^ Margin

Net^ RevenueNet^ Revenue

Underlying Op Profit*

Op Profit* Underlying

Commercial & Clinical

$208.1 $17.3 8.3% $235.6 $17.3 7.3% 13% 1% 0% (7%)

Communications (inc Advisory)

$80.9 $19.1 23.6% $136.7 $28.3 20.7% 69% 11% 48% 5%

Total $289.0 $36.4 12.6% $372.3 $45.6 12.3% 29% 4% 25% (1%)

^ Adjusted for pass-through revenues. Pass through revenues of $90.9m in H1 2017 and $106.6m in H1 2018

*Operating profit before amortisation of acquired intangible assets, acquisition costs and exceptional items


Sharp Segmental Summary

6 mths to March 2017 2017 2017 2018 2018 2018%

Change%

Change%

Change%

Change

Revenue $mOp Profit*

$mMargin Revenue $m

Op Profit* $m

Margin RevenueRevenue

UnderlyingOp Profit*


US $124.1 $19.0 15.3% $118.6 $18.4 15.5% (4%) (6%) (3%) (4%)

Europe $28.6 $0.2 0.6% $23.9 $0.5 1.9% (16%) (26%) 191% 261%

Total $152.7 $19.2 12.6% $142.5 $18.9 13.3% (7%) (10%) (2%) (2%)



Aquilant Segmental Summary

6 mths to March 2017 2017 2017 2018 2018 2018%

Change%

Change%

Change%

Change

Revenue $mOp Profit*

$mMargin Revenue $m

Op Profit* $m

Margin RevenueRevenue

UnderlyingOp Profit*


Aquilant $46.3 $3.2 7.0% $53.9 $2.9 5.3% 17% 5% (11%) (19%)


UDG HEALTHCARE PLC20 RiverwalkCitywest Business CampusCitywestDublin 24 Ireland

[email protected]+353 1 468 9000

Documents

UDG Healthcare plc · EvaluatePharma –World Preview 2017, Outlook to 2022, June 2017 Global Pharma Market Growth - ... 2017 was 14,872 –an 8.4% increase vs 2016 MOLECULES IN …