Presentation: "Siemens Healthineers – Teach-in call for analysts and investors"

Siemens Healthineers

Bernd Montag, Siemens Healthineers CEO Erlangen, May 15, 2017

Unrestricted © Siemens Healthcare GmbH, 2017

Notes and forward looking statements

This document contains statements related to our future business and financial performance and future events or developments involving Siemens that may constitute forward‐looking statements. These statements may be identified by words such as "expect," "look forward to," "anticipate" "intend," "plan," "believe," "seek," "estimate," "will," "project" or words of similar meaning. We may also make forward‐looking statements in other reports, in presentations, in material delivered to shareholders and in press releases. In addition, our representatives may from time to time make oral forward‐ looking statements. Such statements are based on the current expectations and certain assumptions of Siemens' management, of which many are beyond Siemens' control. These are subject to a number of risks, uncertainties and factors, including, but not limited to those described in disclosures, in particular in the chapter Risks in the Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results, performance or achievements of Siemens may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward‐looking statement. Siemens neither intends, nor assumes any obligation, to update or revise these forward‐looking statements in light of developments which differ from those anticipated.

This document includes - in IFRS not clearly defined - supplemental financial measures that are or may be non‐GAAP financial measures. These supplemental financial measures should not be viewed in isolation or as alternatives to measures of Siemens' net assets and financial positions or results of operations as presented in accordance with IFRS in its Consolidated Financial Statements. Other companies that report or describe similarly titled financial measures may calculate them differently.

Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

Bernd Montag, Siemens Healthineers CEO Page 2 | Unrestricted © Siemens Healthcare GmbH, 2017

Agenda

A global leader in Healthcare …

… uniquely positioned in

an attractive yet transforming market …

… with clear strategic priorities and execution levers

Who we are today

Where we go

How we will win

Bernd Montag, Siemens Healthineers CEO Page 3 | Unrestricted © Siemens Healthcare GmbH, 2017

A global leader in Healthcare

€13.5bn

Revenue1) with

4%

growth p.a.2)

17.6%

Profit margin3)

Market leader

in majority of

businesses

75

developed and

emerging countries with direct presence

>46,000

~210,000

patient

touch points every hour

>70%

of critical clinical

decisions are influenced by the type of technology we provide4)

Access to care for

~1.1bn people

in developing Countries

highly skilled employees

12,500+

patents

IP base

~600,000

installed base

>90%

of global top 100

providers partner with us

1) FY 2016

3) Profit margin in FY 2016 excl. severance charges

2) FY 2014 - FY 2016 CAGR comparable (portfolio and FX)

4) AdvaMedDX, "A Policy Primer on Diagnostics", June 2011, p. 3

Bernd Montag, Siemens Healthineers CEO Page 4 | Unrestricted © Siemens Healthcare GmbH, 2017

Continuously delivering attractive margins and growth … while transforming for the future

€bn

+2.5%2)

+2.0%2)

+2.9%2)

12.9

+4.8%2)

13.5

Revenue as reported

Profit/ Margin1)

Free Cash Flow

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Driving performance

Vision 2020: Company in the company

Setting the direction

Start execution

Note: All data excl. Health Services and Audiology

1. Profit excl. severance charges and other one‐time effects

2. Change % vs. PY comparable (portfolio and FX)

Bernd Montag, Siemens Healthineers CEO Page 5 | Unrestricted © Siemens Healthcare GmbH, 2017

Leading market positions and balanced geographical presence with 55% recurring business

2016 Revenue €13.5bn

2016 Revenue split by region

#1 Diagnostic Imaging and

#5 Ultrasound

~58%

~30%

~12%

#2 Laboratory and Point of Care Diagnostics

#1 Advanced Therapies

Asia, Australia

(therein 11% China)

Europe, Africa, CIS, Middle East (therein 6% Germany)

27%

32%

41%

Americas

(therein 34% U.S.)

# Siemens Healthineers' global market position

2016 Profit €2.4bn (profit margin 17.6%1))

2016 Revenue split by type

Diagnostic Imaging and Ultrasound

Laboratory and Point of Care Diagnostics

Equipment

~45%

~28%

Reagents and consumables (recurring)

Advanced Therapies

~27%

Value‐added services (recurring)

Note: Revenue and profit split not indicative of potential future segment reporting

1. Profit margin excl. severance charges

   Bernd Montag, Siemens Healthineers CEO Page 6 | Unrestricted © Siemens Healthcare GmbH, 2017

   Engineering Success with broad and deep portfolio

   Diagnostic Imaging	Ultrasound	Advanced Therapies	Laboratory Diagnostics	Point of Care Diagnostics
   Market leader	Versatility and functionality	Empowering innovative	Delivering clinical and	Lab‐accurate, actionable and
   in diagnostic imaging	across clinical questions	therapy concepts	workflow excellence	timely results at point of care
   Key offerings	Key offerings	Key offerings	Key offerings	Key offerings
   consumables	Diabetes, Coagulation
   Clinical specialties	Clinical specialties	Clinical specialties	Clinical specialties	Clinical specialties

   • Computed Tomography

   • Cart‐based Systems

   • Angio Suites

   • Instruments, reagents and

   • Chronic Disease Urinalysis,

   • Magnetic Resonance

   • Molecular Imaging

   • Compact Systems

   • Catheters

   • Cathlabs

   • (Robotic) C‐Arms

   • Automation and IT Systems

   • Critical Care Blood Gas, Cardiac

   • X‐Ray

   • Imaging Solutions for Therapy

   • Consulting and Project Mgmt.

   • POC informatics

   • Mammography Systems

   • syngo Software

   • Radiology

   • General Imaging

   • Interventional Radiology

   • Laboratory Diagnostics

   • Cardiology

   • Nuclear Medicine

   • Cardiology

   • Cardiology

   • Molecular Diagnostics

   • Critical Care

   • Cardiac Surgery

   • Radiotherapy

   • Diabetology

   • Point of Care

   • Surgery

   • Urology

   Value‐

   added services

   Transformative

   services to maximize opportunities and minimize risks

   Customer Services

   • Product‐related Services

   • Remote Services

   • Education and Skills Management

   Enterprise Services

   • Asset Management and MES

   • Transformation and Advisory Services

   • Managed Departmental Services

   • Staffing and Capacity Solutions

   Digital Health Services

   • Population Health Management

   • Digital Ecosystem

   • Teleradiology Services

   • Imaging IT

   Note: The products displayed in the pictures are not commercially available in all countries. Due to regulatory reasons, their future availability cannot be guaranteed.

   Bernd Montag, Siemens Healthineers CEO Page 7 | Unrestricted © Siemens Healthcare GmbH, 2017

   Imaging with strong portfolio and market position - Lab Diagnostics and Ultrasound with upside

   Diagnostics Imaging

   Market Position

   1

   Strategy

   Expand market and innovation leadership

   Priorities

   • Capitalize on recent product launches

   • Outstanding innovation pipeline

   • Clinical decision support, artificial intelligence applications and fleet management (Digital Ecosystem)

Ultrasound

5 Increase portfolio and sales focus

• Become a market leader in Cardiology and General Imaging

• Introduce NextGen "best‐in‐class" technology platforms

• Enhance Go‐to‐market and drive operational excellence

  Value‐added services

  Advanced Therapies

  1 Grow rapidly into therapy

  • Drive integration of imaging systems and therapy

  • Grow partnership network

Laboratory Diagnostics

2 Gain lead in lab diagnostics

• Roll out of game‐changing Atellica™ solution

• Expand global reagent manufacturing

PoC Diagnostics

2 Grow market share in near patient IVD

• End to end strategy with Lab Diagnostics in acute care and chronic diseases

• PoC ecosystem providing connectivity and control throughout networks

Bernd Montag, Siemens Healthineers CEO Page 8 | Unrestricted © Siemens Healthcare GmbH, 2017

Ultrasound: Turnaround on track - Aspiration to become a leader in Cardiology and General Imaging

+

Significant future product platform projects on track

+ Several product releases completed addressing portfolio gaps and performance issues

+

+

Further improving our leading ICE‐catheter portfolio

Joint R&D projects with Advanced Therapies (e.g. for cardiac interventions)

Innovations and products

+ Systematic improvement of go‐to‐market in all regions

! Sales channels in China in revamping phase

Sales Channels

+ Reduced complexity and significant improvements in process and product quality

+ New leadership and management with relevant industry expertise

Business Fundamentals

Abbreviation: ICE = Intra‐Cardiac Echo

Bernd Montag, Siemens Healthineers CEO Page 9 | Unrestricted © Siemens Healthcare GmbH, 2017

€46bn+ Siemens Healthineers core market

is fundamentally attractive with high growth potential

Strong drivers in place for sustained above GDP growth

Ageing demographics and population growth Growing access in emerging markets Increase in chronic diseases

Strong resilience to economic cycles

Healthineers market 2016 (€bn)

New opportunities

Highly fragmented market

CAGR 2016 - 20211)

Value‐added services

(Enterprise Services, Digital Services)

+5‐6%

High entry hurdles

Deep integration in providers' clinical workflows and large installed base

High R&D investment coupled with large IP base

Global presence providing market access, scale and cost effectiveness

Tight regulatory framework

12 Diagnostic Imaging

5 Ultrasound

Core Market

3 Advanced Therapy

26 Lab Diagnostics/PoC

+3%

+4‐5%

Equipment and reagents

~€46bn

+3‐4%

1) Current internal estimates

Bernd Montag, Siemens Healthineers CEO Page 10 | Unrestricted © Siemens Healthcare GmbH, 2017

Transformation of healthcare is just at the beginning

… and we are uniquely positioned

Healthcare system Healthcare providers

Global need to reshape healthcare ... ... leads to provider transformation ... ... enabled by Siemens Healthineers

From

• Volume‐based incentives

• Patient

  To

• Value‐based incentives

• Consumer

From

• Fragmented

• Experience‐based

• Treating disease

  To

• Consolidated

• Industrialized

• Managing health

  From

  • Product focus

    To

  • Solving provider wide challenges

  • Optimizing departments

    Healthcare

    is transforming

    Providers carry ~50% of global healthcare cost and must transform for better outcomes at lower cost

    Our portfolio uniquely solves providers departmental and system‐wide challenges

    Bernd Montag, Siemens Healthineers CEO Page 11 | Unrestricted © Siemens Healthcare GmbH, 2017

    Siemens Healthineers portfolio uniquely addresses providers departmental and system‐wide challenges

    Optimizing departments Solving system‐wide challenges

    Diagnostic confidence and

    efficient monitoring of therapy in all departments

    Fast triaging in the Emergency Room

    Commer‐

    Affiliated Hospital

    Nuclear

    Affiliated

    HospitalAffiliated

    Hospital

    Broadest set of clinical data for clinical pathway optimization, evidence‐based medicine, and benchmarking

    Population health management for holistic patient management along care continuum

    Clinical and workflow excellence in the lab

    Highest quality and

    efficiency in radiology

    Precise state‐of‐the‐art radiation therapy planning

    cial Lab

    Imaging Center

    Medicine

    Radiology

    ER

    Lab

    Surgery

    Hospital

    Cardio‐ logy

    ICU

    Neurology

    Ward

    Urology

    Radiation Oncology

    Office‐ based special‐ ities

    Imaging IT and teleradiology services to leverage potential of digital revolution

    Remote technology upgrades

    to maximize product performance

    Advisory and enterprise transformation

    services to create efficient systems

    Enabling safe and effective minimally invasive therapies

    Managed departmental services to reduce complexity and standardize procedures across sites

    Bernd Montag, Siemens Healthineers CEO Page 12 | Unrestricted © Siemens Healthcare GmbH, 2017

    Siemens Healthineers with market driven organization and unique capabilities to enable transformation

    Global

    Organization

    Services

    Entrepreneurial

    Solving system‐wide

    Unique set of capabilities

    Verticals

    Diagnostics Imaging

    Digital Services

    Regions

    Western Europe Western Africa

    Central Europe,

    challenges

    2

    Holistic optimization of providers' value chain

    3

    Global advantage in scale and presence

    4

    Rigorous perfor‐ mance framework

    Ultrasound

    Middle East, Africa

    Advanced Therapies

    Laboratory Diagnostics

    PoC Diagnostics

    Enterprise Services

    Product Services

    North America

    Latin America

    Asia Pacific

    North East Asia

    Lab Radiology Cardiology Surgery ER

    Optimizing departments

    1

    Sustainable innovation leadership

    Bernd Montag, Siemens Healthineers CEO Page 13 | Unrestricted © Siemens Healthcare GmbH, 2017

    1

    1

    Sustainable innovation leadership backed by strong capabilities and outstanding pipeline

    Sustainable innovation capabilities

    • R&D spending of >€1bn in FY16; 7,500 R&D employees

    • Strong and growing IP base

    • Partnerships with all of 15 Best US Hospitals1)

    • >4,200 research collaborations

Track record of industry firsts - Examples

• Whole body and open bore MRI

• Dual source CT

• Cinematic rendering

• Bi‐directional magnetic sample transport

  Recent launches - Examples

  SOMATOM go.now New standards in performance and TCO in CT

  ARTIS Pheno Next generation Imaging in the OR

  Atellica™ solution Control.

  Simplicity. Better Outcomes.

  Future Technologies

  • Artificial Intelligence

  • Robotic surgery assistance

  • Novel detector technologies

  • Low cost MR technology

  • Advanced automation solutions

• …

1. U.S. News and World Report

   Bernd Montag, Siemens Healthineers CEO Page 14 | Unrestricted © Siemens Healthcare GmbH, 2017

   1

   1 Example innovation leadership - AtellicaTM solution

   setting new standards in Lab Diagnostics

   Roll‐out

   Fiscal Year

   2017 2018 2019 2020+

   Instruments

   Regulatory clearance

   Ramp‐up of installed base

   Addresses largest, fast growing market segment in Lab Diagnostics

   Control • Bi‐directional magnetic sample transport1)

   • 10x faster than conventional conveyors

     Reagents

     Available menu4)

     Reagents sales

     Efficiency gains

     R&D

     Simplicity • Scalable with >300 customizable configurations

   • Comprehensive assay menu at launch and more to come

SCM

Service

Better outcomes

• Industry's highest immunoassay productivity per sqm2)

• Automates workflow (e.g. redefining integrated STAT3))

Impact

Growth Profitability

  



1. Products are under development. Not available for sale. Any features listed are part of the development design goals. Future availability cannot be guaranteed.

2. Versus leading IVD market competitors

3. Short Turn‐Around Time

4. Launch menu differs by country

Bernd Montag, Siemens Healthineers CEO Page 15 | Unrestricted © Siemens Healthcare GmbH, 2017

2

Our portfolio empowers the growing needs of providers in system‐wide optimization

System‐wide optimization

Joint development of stroke unit

‐33%

Symptom severity at discharge

Provider requirements

Clinical path and workflow optimization

Products: Imaging and lab diagnostic

‐27%

Door‐to‐needle time

Services: Stroke site construction, optimization

of clinical processes, fleet optimization

‐11%

Cost per case

Departmental optimization

Innovative holistic partnership

Triple Aim1)

Goals achieved

Services: Upgrade and manage 190 vendor neutral imaging equipment items,

room renovations and clinical training

98%

€4.3m

1st year savings

worth €110 million for contract life of 15 years

Satisfaction rating

Imaging, IVD and therapy products

Product, enterprise and digital health services

Siemens Healthineers offering

1. Triple Aim: Improving the patient experience of care (including quality and satisfaction), improving the health of populations and reducing the per capita cost of health care.

   Bernd Montag, Siemens Healthineers CEO Page 16 | Unrestricted © Siemens Healthcare GmbH, 2017

   2 Siemens Healthineers leads digitalization with unique capabilities and a strong foundation

   Strategic alliances

   Healthineers Digital Ecosystem

   Digital assets, services and solutions

   LifeNet teamplay eHealth Syngo.Via Medicalis1) and more

   Single Sign‐On Open Platform

   IBM Watson Cerner and more

   Smart solutions enabling the digital transformation of our customers

   Digitalization

   @ Healthineers

   • Broad set of data

   • Insights improving outcomes, easing collaboration, and reducing errors and cost

   • Supporting value‐based transformation

Largest Installed Base and data pool

~600,000

systems

1. Announcement of acquisition of Medicalis April 2017, closing expected for Q3 FY2017

   Bernd Montag, Siemens Healthineers CEO Page 17 | Unrestricted © Siemens Healthcare GmbH, 2017

   3 Integrated global value chain and comprehensive

   Draft for discussion

   worldwide customer relations

   Princeton, Flanders, Glasgow

   Tarrytown Walpole, Norwood

   Issaquah Berkeley

   Getafe

   Dublin Llanberis Oxford Sudbury

   Marburg Rudolstadt Kemnath Erlangen, Forchheim

   SeongNam Gyeongiju

   Global advantage

   Efficient Manufacturing and R&D network

   • Access to cutting edge technologies enables rapid innovation

   • Access to low cost R&D, manufacturing and sourcing enables leading cost position

Mountain View Los Angeles

Buffalo Grove Hoffmann Estates Mishawaka

Plymouth

Malvern Cary Knoxville

Joinville

Goa Bangalore

PoHang

Wuxi Shanghai Shenzhen

Comprehensive customer management

• Extensive access to C‐level

• Deepest and broadest understanding of providers' challenges

  Worldwide best practices

• >4,200 research collaborations

  Major co‐located manufacturing/engineering sites Headquarters

  Bernd Montag, Siemens Healthineers CEO Page 18 | Unrestricted © Siemens Healthcare GmbH, 2017

  4

  Performance framework to achieve €1.5bn productivity

  (FY17‐19) and foster continuous improvement culture

  Siemens Healthineers annual productivity in % of total cost base

  3% 3%

  ~4%>4%

  FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

  Productivity Acceleration Initiative (PAI)

  • COGS: Analytics based sourcing and cost‐value engineering initiative

  • R&D: Design‐to‐cost/ manufacturability levers

  • Go‐to‐market: Optimizing sales setup (direct vs. indirect channels)

  • End‐to end process improvement including function optimization

  • Roll out of one integrated global ERP system

    Pricing excellence project

    Healthineers performance system (HPS) - foster performance culture and agility

  • Execution: Hoshin Kanri strategy deployment

  • Lean: Broad adoption of agile methodologies and lean tools to drive speed & efficiency

  • People: Advanced leadership practices tailored for the needs of the future

  • Outcome: Rigorously drive continuous improvement and business performance with productivity >4% p.a.

Bernd Montag, Siemens Healthineers CEO Page 19 | Unrestricted © Siemens Healthcare GmbH, 2017

Our strategic priorities and execution levers drive profitable growth and stringent capital allocation

Top line growth

Fundamental growth

in existing businesses

Expand market and innovation leadership in Diagnostic Imaging Significantly deepen partnership level with top 20% of accounts by 2020

Market share gains

in existing businesses

Drive integration of imaging systems and therapy

Above market growth in Lab Diagnostics by fully capitalizing on Atellica™ solution market opportunity Market leadership: Achieve above market growth in China

Achieve market leading positions in Cardiology and General Imaging in Ultrasound

New opportunities

from transformation

Margin expansion

Gross Profit margin Operational levers

COGS and SG&A

Accelerate growth in enterprise services: >60 Managed Equipment Service (MES) deals globally by FY21 Expand digital ecosystem and population health offering: Connect 3,500 healthcare providers by FY18 New business revenue growth >10% YoY from Enterprise and Digital Services

Global footprint optimization

Execute on productivity acceleration initiative (PAI - Contribute €1.5bn productivity FY2017 - 19) Systematically implement Healthineers Performance System (HPS - Sustainable >4% productivity p.a.)

Bernd Montag, Siemens Healthineers CEO Page 20 | Unrestricted © Siemens Healthcare GmbH, 2017

Siemens Healthineers is uniquely positioned to win

A global leader in Healthcare …

… uniquely positioned in an attractive yet transforming market …

… with clear strategic priorities and execution levers

Who we are today

Where we go

How we will win

Bernd Montag, Siemens Healthineers CEO Page 21 | Unrestricted © Siemens Healthcare GmbH, 2017

Bernd Montag, Siemens Healthineers CEO Page 22 | Unrestricted © Siemens Healthcare GmbH, 2017

At a glance -

Main Healthineers KPI's

Orders

Revenue

Growth1)

+3.4%1)

+2.3%1)

+2.7%1)

+3.7%1)

Growth1)

+2.5%1)

+2.0%1)

+2.9%1)

+4.8%1)

12.3

12.3

12.1

13.3

13.8

12.0

12.0

11.7

12.9

13.5

€bn

€bn

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

Profit2)

Profit margin

Free Cash Flow

€bn

€bn

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

17.0%

18.7%

17.1%

16.9%

17.6%

2.2

2.4

2.0

2.2

2.0

CCR

0.9 1.0 0.9 0.9 0.9

2.1

2.2

2.0

1.9

1.8

Note: All data excl. Health Services and Audiology

1. Change % vs. PY comparable (portfolio and FX)

2. Profit excl. severance charges and other one‐time effects

Bernd Montag, Siemens Healthineers CEO Page 23 | Unrestricted © Siemens Healthcare GmbH, 2017

No. of IDNs in US further consolidating

+8%

‐29% ‐18%

860

30%

900

200

1994 to 20141)

In‐patient admission

Beds per capita

Length of stay

US Accountable Care Orgs. (ACOs) Q3 20164)

Providers within ACOs by 2019

Today

2020

+2%

‐15% ‐4%

US hospitals consolidating1)

62% 34%

38%66%

Unaffiliated In system

2006 to 20142)

2000 to

Hospital discharges

+468%

Hospital

Beds per capita

+112%

Beds per

Length of stay

‐17%

Length of

CMS Value Based Purchasing Program expected to reach

$1.8bn in 2017

1990

2015

20143)

discharges

capita

stay

Source: AHA hospital statistics

Abbreviations: ACO = Accountable Care Organization I CMS = Centers of Medicare & Medicaid Services I IDN = Integrated Delivery Network

1) American Hospital Association 2) Eurostat (includes only Germany, France, Italy, UK, Sweden, and Norway) 3) OECD

Bernd Montag, Siemens Healthineers CEO Page 25 | Unrestricted © Siemens Healthcare GmbH, 2017

of healthcare

Engineering success. Pioneering healthcare. Together.

Unrestricted © Siemens Healthcare GmbH, 2017