hill-rom...q4 2016 fy2016 $1.18 latest guidance(2) original guidance(1) latest guidance(2) $1.12 -...
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Hill-RomFourth Quarter 2016 Financial Results
November 3, 2016
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Certain statements in this presentation contain forward-looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995, regarding the Company’s future plans,
objectives, beliefs, expectations, representations and projections. It is important to note that
forward-looking statements are not guarantees of future performance, and the Company’s actual
results could differ materially from those set forth in any forward-looking statements. For a more in
depth discussion of factors that could cause actual results to differ from those contained in forward-
looking statements, see the discussions under the heading “Risk Factors” in the Company’s
previously filed most recent Annual Report on Form 10-K and subsequent Quarterly Reports on
Form 10-Q. The Company assumes no obligation to update or revise any forward-looking
statements.
Certain financial figures presented herein have been presented on an adjusted basis (non-GAAP).
Reconciliations between non-GAAP financial measures and reported US GAAP measures are
included in the appendices to this slide deck.
Forward Looking Statements
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Table of Contents
2016 Highlights
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Hill-Rom: Trusted Medical Technology Innovator
North America PSS
Int'l PSS
Surgical Solutions Front Line
Care
$2.7B+3% cc*
InnovationLeveraging global scale &brand equity whileenhancing outcomes
Leadership$2.7B global medical technology leader with market-leading positions
ValueTransforming to drive sustainable profitable growth
2016 Revenue By BusinessUS$ Billions
2016 Revenue By GeographyUS$ Billions
Europe
Asia-Pac
Canada
Middle East
Latin America
$2.7B+3% cc*
PSS = Patient Support Systems
*Pro-forma growth including Welch Allyn in both 2015 and 2016
U.S.
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
2016 Highlights: A Successful Year
Executing on our strategic priorities while …
• Building sustainable and profitable businesses with attractive growth prospects
• Successfully integrating Welch Allyn and driving expected synergies
• Investing in R&D capabilities resulting in multiple new product launches
• Optimizing global footprint; announcing five facility closures and in-sourcing key supply
• Enhancing product portfolio by divesting non-core products and businesses
… Enhancing shareholder value with disciplined financial management
• +3% pro-forma constant currency revenue growth
• +350 bps adjusted operating margin expansion
• +28% adjusted EPS growth and adjusted EPS of $3.38 per diluted share
• Operating Cash Flow of $281 million (+32% increase over prior year)
Establishing a solid foundation for driving future growth and value
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Exceeding Guidance With Disciplined Financial Management
Pro Forma Revenue Growth% Growth at Constant Currency
Establishing a solid foundation for driving future growth and value
Adjusted EPS$ per Diluted Share
3%
FY2016Q4 2016
1%
Latest Guidance(2)
Original Guidance(1)
Latest Guidance(2)
FlatLow-to-mid single digits
2% - 3%
$3.38
FY2016Q4 2016
$1.18
Latest Guidance(2)
Original Guidance(1)
Latest Guidance(2)
$1.12 - $1.14 $3.08 - $3.14 $3.32 - $3.34
(1) Original guidance provided on Q4 2015 earnings call on November 5, 2015(2) Latest guidance provided on Q3 2016 earnings call on August 4, 2016
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Momentum of
Key Product
Launches
350 bps2016 Operating Margin
Expansion
+3%2016 Pro Forma Revenue Growth
(constant currency)
Strong Execution Validates Company’s Commitment To Enhancing Shareholder Value
FY 2016
Patient Support Systems
FY 2016
SurgicalSolutions
FY 2016
Front Line Care
FY 2016
Gross Margin
ConnexSpot Monitor
Integrated Table Motion
RetinaVueTM
NetworkSpot
Vision Screener
FY 2016
North America International
Note: All revenue growth rates are constant currency
* On a pro forma basis
Driving SG&A
Leverage
Increased R&D
Investment
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Significant revenue diversification over the past five years
• Specialty Frames & Surfaces: High acuity hospital beds
• MedSurg Frames & Surfaces: Lower acuity hospital beds
• Service & Rental: Acute care capital rentals on-demand, recurring maintenance and support services
• Clinical Workflow Solutions & Patient Handling: Connectivity solutions and patient lift products
• Other PSS: Includes both complementary acute care capital offerings and other non-core assets
PSS
SSFL
C
2016 Revenue By Product LineUS$ Billions
Product Portfolio Overview
• Vital Signs Monitoring & Physical Assessment
• Blood Pressure Monitoring & Thermometry
• Respiratory Care
• Operating Room Equipment: Tables, lights, booms
• Patient Positioning: Surgical site access equipment
• Surgical Consumables: Blades, scalpels, accessories
MedSurg Frames & SurfacesSpecialty
Frames & Surfaces
Service & Rental
CWS & Patient Handling
Other PSS
Surgical Solutions
Front Line Care
$2.7B+3% cc*
Stronger, More Diversified Business Profile…
*Pro-forma constant currency growth including Welch Allyn in both 2015 and 2016
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
… with More Predictable Revenue Streams
Capital Sales
Non-Capital
2016 Revenue By TypeUS$ Billions
$2.7B+3% cc*
• Specialty Frames & Surfaces: High acuity hospital beds
• MedSurg Frames & Surfaces: Lower acuity hospital beds
• Operating Room Equipment: Tables, lights, boomsCap
ital
Product Portfolio Overview
• Service & Rental: Acute care capital rentals on-demand, recurring maintenance and support services
• Clinical Workflow Solutions & Patient Handling: Connectivity solutions and patient lift products
• Other PSS: Complementary acute care capital offerings
• Vital Signs Monitoring & Physical Assessment
• Blood Pressure Monitoring & Thermometry
• Respiratory Care
• Patient Positioning: Surgical site access equipment
• Surgical Consumables: Blades, scalpels, accessories
No
n-
Cap
ital
Over 60% of revenues are not dependent on hospital capital expenditure spending
*Pro-forma constant currency growth including Welch Allyn in both 2015 and 2016
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Well-Positioned to Deliver on Long-Range Financial Objectives
1 Includes Welch Allyn financial results since September 8, 2015 transaction completion, including interest associated with new borrowings, but excludes one-time costs associated with the transaction and the impact of a non-cash stock compensation charge. Operating cash flow includes one time Welch Allyn related transaction costs of $21M.
2 2016 operating Cash Flow includes $30M funding to U.S. pension plan and $4M incurred to refinance credit facility. Adjusting for these outflows, Operating Cash Flow was $315M
3 Revenue CAGR relative to full-year 2015 pro-forma revenue of ~$2.6B. All other metrics are relative to 2015 results, which includes contribution from Welch Allyn only during the period since the transaction completion.
4 Assumes no capital deployment for M&A transactions.
Key Metric20151
Results2016
Results2015-20183
Long-Range Plan
Revenue $2B $2.7B CAGR 3% - 5%
Adjusted GM% 45.3% 48.1% +350-450 bps
Adj. Operating Margin %
11.8% 15.3% +450-550 bps
Adjusted EPS $2.64 $3.38 Mid-to-high teens CAGR
Operating Cash Flow
$214M $281M2 $1B+ cumulative (FY 16-18)
Leverage 4.5x 3.9x Below 3.0x4
Enhancing shareholder value through sustainable growth
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Hill-Rom: A Compelling Investment Opportunity
We are successfully transforming to drive sustainable profitable growth
We are expanding our leading market positions through our innovative solutions, leveraging our brand equity
We are driving solid operational execution and significant operating margin expansion
1
2
3
Financial Summary
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Building Sustainable & Profitable Businesses
Stable U.S. capital environment
Driving growth in higher-margin products (CWS, Patient Handling, ICU)
Orders +5% and Backlog +11% in Q4 2016
10%+ Asia-Pacific growth curbs declines in Middle East and Latin America
Strong growth in core markets (US, Europe, Asia-Pacific)
Accelerating Integrated Table Motion revenue
Investing in innovation to drive future growth
Macro environment impacting Middle East and Latin America
Successfully integrating Welch Allyn
Leveraging HRC brand and customer relationships
New products driving growth in Vital Signs and Physical Assessment
Diagnostic screening launches (RetinaVue, Spot Vision Screener)
Patient Support Systems
Q4 2016 FY 2016
Surgical Solutions
Q4 2016 FY 2016
Front Line Care*
Q4 2016 FY 2016Q4 2016 FY 2016
North America International
Note: All revenue growth rates are constant currency* Represents pro forma (adjusted for Welch Allyn transaction closed 9/8/2015) constant currency growth
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Delivering Strong Financial Performance
Actual Results FY2016 Guidance
Q4 2016 FY 2016 Original1 Latest2
Revenue $706M $2.7B $2.66-$2.70B $2.65B
Revenue Growth (pro forma cc)
1% 3%Low-to-midsingle digit
2%-3%
Adj. Gross Margin 49.2% 48.1% 47%-48% 48%
Adj. Operating Margin 18.6% 15.3% n/a 15%+
Adj. Tax Rate 28.2% 29.2% 30%-31% 30%
Adj. EPS per Diluted Share $1.18 $3.38 $3.08-$3.14 $3.32-$3.34
Operating Cash Flow $76M $281M3 $300M $320M
Executing strategic priorities to create shareholder value
(1) Original guidance provided on Q4 2015 earnings call on November 5, 2015(2) Latest guidance provided on Q3 2016 earnings call on August 4, 2016(3) Includes $30M pension funding and $4M debt refinancing cost.
Excluding one-time cash flow impact, Operating Cash Flow would have been $315M
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Adjusted Gross Margin and Operating Margin
Growth and cost discipline leading to significant operating leverage
11.8%15.3%
FY2015Actual
GMExpansion
SG&ALeverage
R&DInvestment
FY2016Actual
45.3%
48.1%
FY2015Actual
Welch Allyn OrganicExpansion
FY2016Actual
Adjusted Gross Margin Adjusted Operating Margin
280 bpsFY2016 Gross Margin Expansion
350 bpsFY2016 Operating Margin Expansion
+170 bps
+110 bps+280 bps
+110 bps
-40 bps
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Adjusted Earnings per Share
Q4 2016 Adjusted EPS
• Driving diversified revenue growth
• Expanding gross margin with improved mix (business, product, and geographic)
• Creating operating leverage with disciplined cost management while investing in R&D
• Exceeding guidance of $1.12 - $1.14 per diluted share
Consistent track record of double-digit earnings growth
$1.18Q4 2016 Adjusted EPS
FY 2016 Adjusted EPSUS$
$2.25$2.64
$3.38
$0.00
$1.00
$2.00
$3.00
$4.00
FY2014Actual
FY2015Actual
FY2016Actual
+28% growth
+17% growth
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Cash Flow and Capital Allocation Priorities
Capital Allocation Priorities
• Reducing debt levels
• Maintaining current dividend policy
• Re-investing in business (R&D and CapEx)
• Executing disciplined M&A strategy emphasizing:
Accelerated growth with diversified revenue streams and accretive P&L profile
Products and services that strengthen clinical and economic value with customers
Enhancing financial flexibility with strong cash flow generation
FY 2016 Operating Cash FlowUS$ Millions
$210 $214
$281
$100
$150
$200
$250
$300
FY2014Actual
FY2015Actual
FY2016Actual
<3.0xTarget Leverage by 2018
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Unparalleled care setting expertise enables enhanced market leadership
Investing in innovation to enhance outcomes for patients and caregivers
Leveraging brand equity, customer relationships and channels to accelerate innovative solutions
Proven track record of operational execution with top-tier management team
Strengthening portfolio through M&A and business development initiatives
Committed to achieving long-term financial objectives with disciplined financial management
Executing on Strategic Priorities
Serve as a trusted partner for healthcare providers
Deliver innovative
solutions for patient care
Leverage world-class sales and
marketing capabilities
Drive operational excellence
Continue transforming
through acquisitions
Customers Capabilities
Business Review
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Patient Support Systems
• Leveraging relationships and broad, differentiated portfolio across installed base
• Placing commercial focus on higher growth and margin opportunities (CWS, patient handling, ICU, Service)
• Diversifying revenue while creating operational flexibility to address capital volatility
• Innovating to provide caregivers predictive insights that result in lower costs and efficiencies
Growth Drivers
Diversified portfolio drives stable long-term growth and reduces volatility
MedSurg Frames & Surfaces
Specialty Frames & Surfaces
Rental &
Service CWS & Patient Handling
Other PSS$1.4B+2% cc
US$M2015
Revenue2016
RevenueReported Growth
CC Growth
US $959 $1,037 +8% +8%
OUS $468 $400 (15%) (11%)
Total $1,427 $1,437 +1% +2%
Frames & Surfaces Clinical Workflow Solutions Patient Handling
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Front Line Care
• Providing solutions that improve clinical outcomes and patient safety
• Leveraging HRC global reach, brand and commercial capabilities
• Combining Welch Allyn technological leadership to further advance sensing and connectivity solutions
• Expanding portfolio leadership in ambulatory care with new diagnostic screening products (RetinaVue, Spot Vision Screener)
Growth Drivers
Significant opportunity to drive commercial value and innovation
Respiratory
Thermometry & Blood Pressure
Physical Assessment
Vital Signs
Other$810M+6% PF cc
US$MPF 2015Revenue
2016Revenue
Reported Growth
PF CC Growth
US $543 $585 +8% +8%
OUS $231 $225 (3%) +2%
Total $774 $810 +5% +6%
Physical Assessment Vital Signs Respiratory Care
Note: Revenue and growth reflects full-year Welch Allyn results in each period
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Surgical Solutions
• Optimizing position with key customers while leveraging commercial presence in targeted geographic markets
• Capitalizing on comprehensive service infrastructure to support critical surgical equipment
• Focusing on patient safety and efficiency in the OR and peri-operative environment
• Expanding portfolio for minimally invasive surgical access with launch of Integrated Table Motion
Growth Drivers
Accelerating long-term growth of strong, innovative portfolio across global footprint
OR Tables & Lights
OR Booms, Pendants &
Other
Other OR Consumables
Patient Positioning
Blades & Scalpels
$408M(1%) cc
US$M2015
Revenue2016
RevenueReported Growth
CC Growth
US $197 $207 +5% +5%
OUS $226 $201 (11%) (7%)
Total $423 $408 (3%) (1%)
Operating Tables Operating Lights Consumables
2017 Financial Outlook
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
2017 Financial Guidance
10% - 13% Growth in
Adjusted EPS
16%+Operating Margin
~3%Revenue Growth
(constant currency)
FY 2017 Guidance
Revenue Growth (constant currency)
~3%
Gross Margin 50 - 75 bps expansion
Operating Margin ~100 bps expansion
Tax Rate ~30%
Adj. Earnings per Diluted Share $3.74 - $3.82
Operating Cash Flow $330M - $340M
Capital Expenditures $120M - $130M
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
2017 Financial Guidance (Revenue by Business)
Assuming stability in U.S. capital environment
Driving growth of higher margin platforms
Divesting non-core assets with lower growth and margin profile
Flat to declininginternational revenue
Assuming modest growth in surgical procedures
Accelerating revenue of Integrated Table Motion
Launching new products in patient positioning
Driving OUS growth following recent commercial realignment
Leveraging Hill-Rom global commercial platform
Continuing momentum in U.S. Vital Signs portfolio
Driving adoption of new diagnostic screening portfolio
Expanding recurring revenue streams in Respiratory Care
Patient Support Systems
FY 2017(constant currency growth)
Surgical Solutions
FY 2017(constant currency growth)
Front Line Care
FY 2017(constant currency growth)
Note: All revenue growth rates are constant currency
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Q1 2017 Financial Guidance
Q1 2017 Guidance
Revenue Growth(constant currency)
ApproximatelyFlat
Diluted EPS $0.75 to $0.77
Q1 2017 Guidance Reflects…
• Solid underlying market fundamentals and operational leverage
• Year-over-year revenue comparison impacted by:
- Large PSS customer order in 2016
- December quarter in 2016 was Welch Allyn’s fiscal year end
• EPS growth of 10% to 13% in line with full-year guidance
Revenue Reclassification
2015 and 2016 by New Reporting Segment
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Reported Revenue - Reconciliation of Segments
Note: Segment revenue by U.S. and International for Fiscal Year Ended 9/30/2015 and 9/30/2016 in US$ million
United States International Total United States International Total United States International Total United States International Total
Patient Support Systems 241$ 100$ 342$ 219$ 119$ 338$ 10% -16% 1% 10% -7% 4%
Front Line Care 155 65 220 21 1 22 N/M N/M N/M N/M N/M N/M
Surgical Solutions 47 53 99 45 60 105 5% -13% -5% 5% -3% 0%
Total Hill-Rom 443$ 218$ 661$ 284$ 181$ 465$ 56% 21% 42% 56% 34% 47%
United States International Total United States International Total United States International Total United States International Total
Patient Support Systems 258$ 94$ 352$ 232$ 121$ 353$ 11% -22% 0% 11% -20% 1%
Front Line Care 132 53 185 21 2 22 N/M N/M N/M N/M N/M N/M
Surgical Solutions 48 48 95 44 55 99 8% -14% -4% 8% -12% -3%
Total Hill-Rom 438$ 194$ 633$ 297$ 178$ 475$ 48% 9% 33% 48% 13% 35%
United States International Total United States International Total United States International Total United States International Total
Patient Support Systems 259$ 102$ 361$ 240$ 114$ 354$ 8% -10% 2% 8% -10% 2%
Front Line Care 139 54 193 21 1 22 N/M N/M N/M N/M N/M N/M
Surgical Solutions 53 49 102 47 52 99 13% -6% 3% 13% -6% 3%
Total Hill-Rom 451$ 204$ 655$ 308$ 167$ 475$ 47% 23% 38% 47% 24% 39%
United States International Total United States International Total United States International Total United States International Total
Patient Support Systems 279$ 103$ 382$ 269$ 113$ 382$ 4% -8% 0% 4% -8% 0%
Front Line Care 158 53 212 54 18 72 N/M N/M N/M N/M N/M N/M
Surgical Solutions 60 53 112 61 59 120 -2% -10% -6% -2% -8% -5%
Total Hill-Rom 497$ 209$ 706$ 384$ 190$ 574$ 29% 10% 23% 29% 12% 24%
United States International Total United States International Total United States International Total United States International Total
Patient Support Systems 1,037$ 400$ 1,437$ 959$ 468$ 1,427$ 8% -15% 1% 8% -11% 2%
Front Line Care 585 225 810 117 22 139 N/M N/M N/M N/M N/M N/M
Surgical Solutions 207 201 408 197 226 423 5% -11% -3% 5% -7% -1%
Total Hill-Rom 1,829$ 826$ 2,655$ 1,273$ 715$ 1,988$ 44% 15% 34% 44% 20% 35%
Q2 2016 Q2 2015 % Growth @ Actual Rates % Growth @ Constant Rates
Q1 2016 Q1 2015 % Growth @ Actual Rates % Growth @ Constant Rates
YTD 2016 YTD 2015 % Growth @ Actual Rates % Growth @ Constant Rates
Q3 2016 Q3 2015 % Growth @ Actual Rates % Growth @ Constant Rates
Q4 2016 Q4 2015 % Growth @ Actual Rates % Growth @ Constant Rates
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© 2014 Hill-Rom Services, Inc. ALL RIGHTS RESERVED
Pro Forma Revenue* - Reconciliation of Segments
Note: Segment revenue by U.S. and International for Fiscal Year Ended 9/30/2015 and 9/30/2016 in US$ million* Pro Forma includes Welch Allyn in both periods
United States International Total United States International Total United States International Total United States International Total
Patient Support Systems 241$ 100$ 342$ 219$ 119$ 338$ 10% -16% 1% 10% -7% 4%
Front Line Care Pro Forma 155 65 220 140 69 208 11% -5% 6% 11% 4% 9%
Surgical Solutions 47 53 99 45 60 105 5% -13% -5% 5% -3% 0%
Total Hill-Rom 443$ 218$ 661$ 403$ 248$ 651$ 10% -12% 2% 10% -3% 5%
United States International Total United States International Total United States International Total United States International Total
Patient Support Systems 258$ 94$ 352$ 232$ 121$ 353$ 11% -22% 0% 11% -20% 1%
Front Line Care Pro Forma 132 53 185 120 55 176 10% -4% 5% 10% 1% 7%
Surgical Solutions 48 48 95 44 55 99 8% -14% -4% 8% -12% -3%
Total Hill-Rom 438$ 194$ 633$ 397$ 232$ 628$ 10% -16% 1% 11% -13% 2%
United States International Total United States International Total United States International Total United States International Total
Patient Support Systems 259$ 102$ 361$ 240$ 114$ 354$ 8% -10% 2% 8% -10% 2%
Front Line Care Pro Forma 139 54 193 141 50 190 -1% 8% 1% -1% 10% 2%
Surgical Solutions 53 49 102 47 52 99 13% -6% 3% 13% -6% 3%
Total Hill-Rom 451$ 204$ 655$ 427$ 216$ 643$ 6% -5% 2% 6% -4% 2%
United States International Total United States International Total United States International Total United States International Total
Patient Support Systems 279$ 103$ 382$ 269$ 113$ 382$ 4% -8% 0% 4% -8% 0%
Front Line Care Pro Forma 158 53 212 142 57 200 11% -7% 6% 11% -7% 6%
Surgical Solutions 60 53 112 61 59 120 -2% -10% -6% -2% -8% -5%
Total Hill-Rom 497$ 209$ 706$ 472$ 229$ 701$ 5% -9% 1% 5% -8% 1%
United States International Total United States International Total United States International Total United States International Total
Patient Support Systems 1,037$ 400$ 1,437$ 959$ 468$ 1,427$ 8% -14% 1% 8% -11% 2%
Front Line Care Pro Forma 585 225 810 543 231 774 8% -3% 5% 8% 2% 6%
Surgical Solutions 207 201 408 197 226 423 5% -11% -3% 5% -7% -1%
Total Hill-Rom 1,829$ 826$ 2,655$ 1,699$ 924$ 2,623$ 8% -11% 1% 8% -7% 3%
Q2 2016 Q2 2015 % Growth @ Actual Rates % Growth @ Constant Rates
Q1 2016 Q1 2015 % Growth @ Actual Rates % Growth @ Constant Rates
YTD 2016 YTD 2015 % Growth @ Actual Rates % Growth @ Constant Rates
Q3 2016 Q3 2015 % Growth @ Actual Rates % Growth @ Constant Rates
Q4 2016 Q4 2015 % Growth @ Actual Rates % Growth @ Constant Rates
Appendix
Reconciliation of Non-GAAP Disclosures
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Reconciliation: Constant Currency Revenue (by Segment)
2016 Foreign Exchange 2016 2015 Constant Currency
As Reported Impact Adjusted As Reported Change
North America Patient Support Systems $290.4 $0.1 $290.3 $277.5 5%
International Patient Support Systems 91.9 (1.1) 93.0 104.4 -11%
Front Line Care 211.5 (0.3) 211.8 72.4 N/M
Surgical Solutions 112.2 (1.3) 113.5 119.6 -5%
Total $706.0 ($2.6) $708.6 $573.9 24%
2016 Foreign Exchange 2016 2015 Constant Currency
As Reported Impact Adjusted As Reported Change
North America Patient Support Systems $1,076.9 ($2.7) $1,079.6 $1,002.0 8%
International Patient Support Systems 360.3 (13.0) 373.3 424.6 -12%
Front Line Care 809.7 (10.4) 820.1 139.0 N/M
Surgical Solutions 408.3 (8.4) 416.7 422.6 -1%
Total $2,655.2 ($34.5) $2,689.7 $1,988.2 35%
N/M - Not Meaningful
Quarter Ended September 30
Year Ended September 30
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Reconciliation: Operating Expenses
2016 2015 2016 2015
Selling and Administrative Expenses (As Reported) $212.8 $208.7 $853.3 $664.2
Acquisition and integration costs (4.7) (31.9) (18.9) (46.6)
Acquisition-related intangible asset amortization (23.8) (10.7) (95.9) (34.1)
Supplemental stock compensation charge - (6.1) - (6.1)
Litigation settlements and expenses - - - 0.6
FDA remediation expenses - (0.8) - (3.8)
Selling and Administrative Expenses (Adjusted) $184.3 $159.2 $738.5 $574.2
Selling and Administrative Expenses As Percent of Total Revenue Adjusted 26.1% 27.7% 27.8% 28.9%
Year Over Year % Change 15.8% 28.6%
Year Over Year Change (160) bps (110) bps
Quarter Ended September 30 Year Ended September 30
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Reconciliation: Gross Margin, Operating Margin and Earnings Per Share
Gross
Margin
Operating
Margin1
Income
Before
Income
Taxes
Income
Tax
Expense
Diluted
EPS1
Gross
Margin
Operating
Margin
(Loss)
Income
Before
Income
Taxes
Income
Tax
(Benefit)
Expense
Diluted
EPS
GAAP Basis 49.1% 13.2% 69.1$ 17.7$ 0.77$ 44.7% -1.0% (16.5)$ (6.4)$ (0.16)$
Adjustments:
Acquisition and integration costs 0.1% 0.7% 5.2 1.6 0.05 2.0% 7.5% 43.3 11.7 0.53
Acquisition-related intangible asset amortization - 3.4% 23.8 7.0 0.25 - 1.9% 10.7 3.3 0.12
FDA remediation expenses - - - - - - 0.1% 0.8 0.2 0.01
Field corrective actions - - 0.1 - - -0.1% -0.1% (0.4) (0.1) -
Special charges - 1.2% 8.4 2.9 0.08 - 5.1% 29.3 9.5 0.33
Supplemental stock compensation charge - - - - - - 1.1% 6.1 2.2 0.06
Foreign valuation allowance - - - 0.7 (0.01) - - - - -
Debt refinancing - - 12.9 4.7 0.12 - - - - -
Gain on disposition - - (10.1) (3.7) (0.10) - - - - -
Adjusted Basis 49.2% 18.6% 109.4$ 30.9$ 1.18$ 46.6% 14.6% 73.3$ 20.4$ 0.89$
Gross
Margin
Operating
Margin1
Income
Before
Income
Taxes
Income
Tax
Expense
Diluted
EPS1
Gross
Margin
Operating
Margin1
Income
Before
Income
Taxes
Income
Tax
Expense
Diluted
EPS
GAAP Basis 47.3% 8.7% 138.3$ 15.5$ 1.86$ 44.3% 4.2% 65.1$ 18.3$ 0.82$
Adjustments:
Acquisition and integration costs 0.8% 1.5% 38.9 11.3 0.41 0.8% 3.2% 62.8 18.0 0.76
Acquisition-related intangible asset amortization - 3.6% 95.9 31.7 0.96 - 1.7% 34.1 9.8 0.42
FDA remediation expenses - - - - - - 0.2% 3.8 1.2 0.04
Field corrective actions - - 0.2 (0.1) - 0.2% 0.2% 4.5 1.4 0.05
Litigation settlements and expenses - - - - - - - (0.6) (0.2) (0.01)
Special charges - 1.5% 39.9 13.4 0.40 - 2.1% 41.2 10.7 0.52
Supplemental stock compensation charge - - - - - - 0.3% 6.1 2.2 0.07
Foreign valuation allowance - - - 19.5 (0.29) - - - 1.9 (0.03)
Debt refinancing - - 12.9 4.7 0.12 - - - - -
Gain on disposition - - (10.1) (3.7) (0.10) - - - - -
Adjusted Basis 48.1% 15.3% 316.0$ 92.3$ 3.38$ 45.3% 11.8% 217.0$ 63.3$ 2.64$
1 Total does not add due to rounding.
Year Ended September 30, 2015
Quarter Ended September 30, 2016 Quarter Ended September 30, 2015
Year Ended September 30, 2016