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1 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
Jefferies Healthcare Conference
June 7, 2017
2 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES 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.
3 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
AGENDA
New Product Launch: HALCYONTM
TrueBeam® / Edge® HyperArcTM
Software Growth
1
2
3
4
1st Half FY2017 Summary
4 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
5 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
HALCYON: A new high quality radiation therapy paradigm
6 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
7 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
8 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
HALCYON: New Technology Value Proposition
HIGH QUALITY
OF CARE
OPERATIONAL
EXCELLENCE
HUMAN CENTERED
DESIGN
9 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
Technology Highlights
RING GANTRY
SYSTEM
WATER
COOLED
SYSTEM
BEAM STOPPER
MAGNETRON
LINEAR ACCELERATOR
DUAL LAYER
MULTI-LEAF
COLLIMATORSOLID STATE
MODULATOR
LARGE FORMAT
IMAGING PANEL
10 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
11 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
12 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
13 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
14 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
$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
15 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
16 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
17 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
18 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
19 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 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
20 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
Software Growth Strategy
21 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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%
22 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
Building $1B Software Business
23 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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%
24 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
25 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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
26 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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.
27 | VARIAN CONFIDENTIAL – INTERNAL USE ONLYJEFFERIES HEALTHCARE CONFERENCE — JUNE 7, 2017
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