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An International High-Growth Platform With a New Approach to - - PowerPoint PPT Presentation

An International High-Growth Platform With a New Approach to Orthopaedics PATIENT WELL-BEING MEDICAL EDUCATION INNOVATION Disclaimer IMPORTANT NOTICE This presentation has been prepared by Medacta Group SA ("Medacta" and together


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PATIENT WELL-BEING INNOVATION MEDICAL EDUCATION

An International High-Growth Platform With a New Approach to Orthopaedics

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Disclaimer

IMPORTANT NOTICE This presentation has been prepared by Medacta Group SA ("Medacta" and together with its subsidiaries, "we", "us" or the "Group") and includes forward-looking

  • information. These statements are based on current expectations, estimates and projections about the factors that may affect our future performance. These expectations,

estimates and projections are generally identifiable by statements containing words such as “expects,” “believes,” “estimates,” “targets,” “plans,” “outlook” or similar expressions. There are numerous risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from the forward- looking information and statements made in this presentation. The important factors that could cause such differences include: changes in the global economic conditions and the economic conditions of the regions and markets in which the Group operates; changes in healthcare regulations (in particular with regard to medical devices); the development of our customer base; the competitive environment in which the Group operates; manufacturing or logistics disruptions; the impact of fluctuations in foreign exchange rates; and such other factors as may be discussed from time to time. Although we believe that our expectations reflected in any such forward-looking statement are based upon reasonable assumptions, we can give no assurance that those expectations will be achieved. [This presentation also contains non-Swiss GAAP measures of performance. Definitions of these measures and reconciliations between these measures and their Swiss GAAP counterparts, if not defined in this presentation, can be found on page 20 of this presentation. THIS PRESENTATION IS NOT AN INVITATION TO PURCHASE SECURITIES OF MEDACTA OR THE GROUP.

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Medacta takes a leadership role with a strong commitment to provide innovative surgical techniques and products that add economic value and sustainability to healthcare systems

Redefining Innovation

Surgeon and Medical Education

…so that the surgeon is never alone while discovering new technologies and treatments…

Patient Well-Being

…through products and services which make surgery and rehabilitation faster, more effective and less painful…

Healthcare System Sustainability

…so that its advanced solutions bring economical benefits to the medical environment…

Vision and Values

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Differentiated Minimally Invasive and Personalized Treatment Options

Unique Profile Combining Teens Growth With High Profitability

High-Growth Orthopaedics Company with International Reach Dedicated Surgeon Education Program Rich Pipeline of Innovation-Led Offerings Experienced and Committed Leadership Team

14%

2016-2018 CC1 Revenue CAGR

32%

2018 Adjusted EBITDA Margin2

1 3 4 2 5

€273m

2018 Revenues

Notes: 1. Constant currency growth rate based on FY2018 average exchange rates 2. Excludes €0.6m of IPO costs and €0.9m of IFRS conversion costs

An International High-Growth Platform With a New Approach to Orthopaedics

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Hip & Knee

Established business with strong momentum for further growth Significantly investing in new product families leveraging the existing business

Shoulder & Sports Med

Through surgeon medical education, Medacta innovation aims to provide better results both for patients and the healthcare system in terms of efficiency and economic savings

Reported Revenues

Direct Market Presence

“Our vision resulted from my own experience: passion, innovation and medical education to create products and services that improve care and return patients to a life free from pain and disability. Our mission today is to continue to excel in all fields the Company has expanded.”

Alberto Siccardi (Founder, President)

Spine

Continued expansion of high growth Spine franchise

Proven Track Record of Growth Built on the Foundations of Long-Term Family Values

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Shoulder & Sports Med Spine Knee Hip

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HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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France 12% Switzerland 12% Germany 6% Italy 5% Austria 5% Rem. Europe 5% USA 29% Australia 14% Japan 7% Rem. APAC 1%

~1,150

Surgeons Attending Educational Activities in 2018 Attractive Business Mix Coupled with… …Strong Geographic Diversification5,6… 2018 Revenue Split Medacta in Numbers …and Presence in Most Attractive Markets

14%

CC Revenue CAGR 2016-20181

32%

Adjusted EBITDA Margin 20182

€273m

Revenue 2018

970+

Employees3

400+

Patents4 2018 Revenue Split

Notes: 1. Constant currency growth rate based on FY2018 average exchange rates 2. Excludes €0.6m of IPO costs and €0.9m of IFRS conversion costs 3. Number of Medacta employees as of 31-Dec-2018 4. 268 Granted, 141 Pending 5. Other includes only distributors not already allocated in the other regions; North America also includes Canada 6. Numbers may not add up due to rounding 7. Medacta is present in target regions of countries that constitute 90% of the global Ortho market. Source: “Orthoworld: The Orthopaedic Industry Annual Report”, May 2018. Content republished with permission from ORTHOWORLD, www.orthoworld.com

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Medacta Branches

90%

  • f Global

Orthopaedic Revenue Covered7 Hip 56% Knee 35% New Business Lines 1% Shoulder & Sports Med Spine 7%

Significant ramp-up expected in 2019

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Countries with Distribution Agreements

APAC 21% North America 29% Europe 46% Other 3%

High-Growth Orthopaedics Company with Attractive Business Mix and International Reach

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HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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0% 10% 20% 30% 40% 0% 10% 20% Segment breakdown1

Global Market Size 2017 Market Growth 18E-22E Market Share of Big-4 Ortho Players

Market Statistics1

L2Y Constant Currency Revenue CAGR3 (Ortho Only - 2016-18 for Medacta, 2015-17 for Peers)

14% 3% Big 4 Players (Ortho only)4

Notes: 1. Source: “Orthoworld: The Orthopaedic Industry Annual Report”, published in May 2018. Content republished with permission from ORTHOWORLD, www.orthoworld.com 2. Includes Trauma, Orthobiologics, craniomaxillofacial, bone growth stimulation and miscellaneous items 3. Constant Currency based on FY2018 average exchange rates for Medacta 4. Includes S&N (includes Knee and Hip Implants, Trauma and Extremities, Sports Medicine), Stryker (includes Orthopaedics and Spine), J&J (Orthopaedics), Zimmer pro forma for the acquisition of Biomet 5. FY2018 EBITDA margin for peers based on information from publicly available sources (Capital IQ, as of 31-Jan-2019) 6. Low to mid teens Medacta medium term revenue growth guidance, FY2018E-2021E revenue growth calculated for other companies based on information from publicly available sources (Capital IQ, as of 31-Jan-2019)

Next 3Y Revenue Growth6 EBITDA Margin (2018)5

$49bn +3.9% >50%

High Growth, High Margin Territory 15% 18% 4% 18% 11% 34% Hip Spine Sports Med

Other2

Knee Extremities Segments in which Medacta is present

Medacta Stands Out in Broader Ortho Peer Universe Global Ortho Market is Growing at ~4%... …While Medacta is Outgrowing the Market and Key Competitors

Proven Track Record of Differentiated Growth, Outperforming Key Competitors

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HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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15+

Years of Experience

330,000+1

Procedures performed worldwide

70%2

Conversion Rate

Notes: 1. As of 31-Dec-2018 2. Illustrative conversion rate calculated on the basis of 195 new learning centre participants between 1-Jan-2016 and 30-Jun-2016 who became active customers within 24 months after attending a course. Refers to all Medacta customers

SURGICAL TECHNIQUE AMIS is an evolution of the anterior approach: simpler, more reproducible and less invasive DEDICATED IMPLANTS Specifically designed to facilitate implantation through the anterior approach. Success evidenced by clinical

  • utcomes and customer satisfaction

ADVANCED INSTRUMENTATION Developed specifically to make the AMIS technique easier and more reproducible MEDICAL EDUCATION M.O.R.E. AMIS Education Programme is a highly effective teaching programmes for the anterior approach SERVICES & TOOLS Assist surgeons in the promotion of their practice and patient education

Surgical Technique AMIS Friendly Implant AMIS Mobile Leg Positioner

AMIS ecosystem

Shorter hospitalization Decreased post-operative pain Immediate post-operative muscle tone preservation Reduced risk of dislocations Shorter rehabilitation and faster return to daily activities

1 2 3 4 5 Anterior Minimally Invasive Surgery (AMIS) for Hip Replacement Typical Benefits for the Patient, Surgeon and Healthcare System

Pioneer in Minimally Invasive Solutions for Hip Replacement

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HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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Many patients are not satisfied with current knee implants, experiencing functional deficits after surgery despite the longevity of total knee arthroplasty surgical technique

~20%

TKR Patients are Not Satisfied1

Medacta Ecosystem to Address Issues of Total Knee Arthroplasty Leading to Superior Patient Outcomes

Inability to bend Instability Swelling during exercise Limited range of motion MyKnee accounting for ~48% of Medacta TKR procedures in 2018 (60,000+ since 2009)

Source: 1. National Joint Registry for England and Wales; BAKER P.N., VAN DER MEULEN J.H., LEWSEY J., GREGG P.J. - J Bone Joint Surg Br. 2007 Jul; 89(7):893-900

Superior and Innovative Implant Design Single Use Instrumentation Patient Matched Technology

Medacta Addresses an Unmet Need in the Total Knee Replacement (TKR) Market

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HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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Tailored Solutions for a Value-Based Healthcare Environment

Medacta Provides High Efficiency at Manageable Cost

Competitors VS.

Traditional hip replacement Minimally invasive technique Complex instrument logistics Single use instrumentation offering Robotic systems at high upfront cost, expensive consumables and long procedure times Tailored surgical guides to support navigation at lower cost Focus on implant only Personalised solutions with focus

  • n the whole spectrum of care

Modular Approach to Product Offering Focused on Value-Added Technologies

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HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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15% 40% 50% 85% 60% 50% 2016 2022E 2024E Outpatient Inpatient

Case Study: Medacta is Perfectly Positioned to Capture the Outpatient Market Growth

Notes: 1. Source: Content republished with permission from ORTHOWORLD, www.orthoworld.com

Medacta Platform Resonates in the Outpatient / ASC Setting Products & Services Education – “Implanting the Implant” ✓ Minimally Invasive ✓ Shorter rehabilitation Focus on the US, the Key Outpatient Market USA France ✓ No sterilisation required ✓ Minimises processing cost ✓ Patient matched technology ✓ Patient Optimized Pathway App ✓ Propel Same Day Surgery Initiative in the USA Medacta customers are trained in markets with strong outpatient growth (USA and France are early adopter markets)

Outpatient market is set to grow

US Market Forecast(1) Significant Benefits for the Patient and Overall Healthcare System Patient Benefits

Shorter wait times

Early mobilisation

Reduced risk of complications

Improved outcomes

Reduced risk of hospital acquired infections Surgery Economics

✓ Outpatient surgery has the potential

to cut joint replacement healthcare costs nearly in half, mainly due to reduced “hotel costs” of patients

✓ Surgeons enjoy higher revenues and

profits from the outpatient setting

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HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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12 ~5% of 2018 revenue invested in education 387 reference centres (surgeons to assist in a surgery)4 80+ learning centres (surgeons to

  • perate on cadavers) 4

~1,150 Surgeons attending educational activities in 2018 850+ global surgeon to surgeon visits in 20183 M.O.R.E network R & D Selected Surgeons Better products

Aggregated feedback ✓ Strong partnership between Medacta and customers builds loyalty as surgeons are introduced at Medacta HQ, meet management and tour the European facilities ✓ Product specific social clubs for surgeons promotes loyalty and pride among the Medacta surgeon family 16%

Less than 3 years

22%

Surgeons with between 3 and 4 years of tenure

62%

Surgeons with over 5 years

  • f tenure

Revenue 20171

70%

conversion rate2

Acquisition Retention Loyalty

Selected Surgeon Involvement Leads to Better Products…

1

…Fosters Strong Sense of Community and Loyalty…

2

…Which Leads to Commercial Success

3

Notes: 1. Percentages show revenue by surgeon tenure. Calculation based on Joint category ex. distributors, USA and AUS based on surgeon activity, RoW based on hospital activity 2. The illustrative conversion rate is calculated on the basis of 195 new learning centre participants between 1 January 2016 and 30 June 2016 who became active customers within 24 months after attending a course 3. A single surgeon is capable of several surgeon to surgeon visits 4. As of December 2018

Surgeon-Centric Education Program Focused on “Implanting the Implant”

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HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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R&D

Improved Surgical Techniques Better performing Implants & Devices Personalized Solutions Deep Understanding

  • f the Human

Body Mastering Cutting Edge Technology

> >

Successful Development Projects in L3Y1

>95%

From Idea to Launch

1-3Y

Patents2

400+

Close Relationships with Expert Surgeons

Notes: 1. Defined as L3Y impairment vs development investment 2. 268 granted, 141 pending

…Resulting in R&D Excellence Core Competencies and Focus Areas…

At the Forefront of Innovation with Strong In-House R&D Capabilities

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HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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14 Hip Knee Shoulder Spine Sports Med

‘99 ‘99 ’16 ’10 ’17 xx First Product Launched

2018A Sales (€m)

Established Established Ramp-up Ramp-up Limited Market Release 153 96 4 20

  • Patient Matched

Technology Education Program Portfolio Scope Status

Revision Hip portfolio to be finalised

Medacta Product Range at a Glance

Medacta’s Extensive Product and Service Portfolio 4

HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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Feedback System Supporting the Development of Next Generation Technology and Products

Clinical Follow-Up Surgery Execution Tools Personalized 3D Planning Implants Selection

Imaging & Biomechanical Model Hip, Knee, Shoulder, Spine Patient Specific Guides & MyHip Verifier Post Market Surveillance, Clinical Research and Surgeon Feedback

Enabled by MySolution Platform Proprietary web-based integrated solution linking all of the actors

New Surgery Execution Tools Big Data

MyBody Database Robotic Leg Positioner

A C

MyHip Verifier AR Navigation System1

New Optimized Implants

B

Hip Knee Shoulder Spine Optimized Joint Centre Improved Biomechanics & Sizing Improved Fit & Size Improved Fit & Size

A B C

Feedback

Medacta Approach to Personalized Medicine Sustained by Feedback System

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Expected to launch in 2020

Notes: 1. Developed in collaboration with Balgrist University Clinic in Switzerland

Product Validation Phase Industrialization Phase

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 Joined Medacta in 2002; Member

  • f the Board since 2003

 2002 – 2010 in charge of

marketing, product development and business development Executive VP of Medacta since 2010

 Biomedical Engineer from the

Politecnico of Milan

Supported by an Experienced Team

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 Joined Medacta in 2008  Previous experience in

Finance at manufacturing companies (Air Liquide) and management consulting

 Masters of Science in

Business Administration from Bocconi University

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Massimiliano Bernardoni Head of R&D

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Alessandro Siccardi Supply Chain Director

8

Gianluca Olgiati Global Marketing Director

15

xx

Eric Dremel President of Medacta USA

33 11

Tony Pelle Head of Australia Shinichi Kakimoto Head of Japan

27

Giovanni Niccolò Galli Head of Commercial & Europe

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Divisional Leadership Regional Leadership

 Founded Medacta in 1999; former

CEO for nearly twenty years

 President of the Board of

Directors

 MBA from Bocconi University of

Milan and SDA, Bocconi School of Management

 Pharmacy degree from Turin

University

50+

Manrico Subinaghi Technical Director

16

Years in the Ortho Industry Francesco Siccardi (CEO)

  • Dr. Alberto Siccardi (Founder & President)

Corrado Farsetta (CFO)

Experienced and Committed Leadership Team with an Established Track Record

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HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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Best Practice Public Company Governance

Board composition

Notes: 1. Expected Remuneration Committee Chairman after 2020 Annual General Meeting

Victor Balli Member Lead Independent Director Chairman of Audit & Risk Committee, Member of Remuneration Committee

  • Member of the Board of Directors (“BoD”) of Givaudan (Nomination / Audit Committee), CEVA (Chairman of Audit

Committee), KWS (Chairman of Audit Committee) and the Federal Audit Oversight Authority (as of January 2018)

  • Nominated to be elected to the BoD of SIKA AG on 9 April 2019
  • Previously CFO at Barry Callebaut (2007-2018)
  • Masters Degree in Economics from the University of St. Gallen (HSG); Masters Degree in Chemical Engineering

from the Federal Institute of Technology (ETH)

Philippe Weber Member Independent Chairman of Remuneration Committee until 2020

  • Managing Partner at Niederer Kraft Frey (since 2014, Partner since 2002)
  • Specialized in Capital Markets / Stock Exchange Law, M&A and Governance with focus on listed entities and other

large enterprises

  • Doctorate in Law at University of Zurich (1995), LLM at European University Institute

Marco Gadola Member (from 1.1.2020) Independent Member of Audit & Risk Committee and Remuneration Committee1

  • Joining the BoD from 1 January 2020
  • CEO of Straumann since 2013; will retire at the end of 2019 and be nominated to be elected to its BoD in April 2020
  • Nominated as the Chairman of Calida (currently Vice Chairman), Chairman of DKSH and the BoD of Mettler Toledo
  • Previously CFO and Regional CEO Asia Pacific at Panalpina
  • Degree from Basel University in Business Administration and Economics; various programs at LSE and at IMD in

Lausanne

  • Founded Medacta in 1999, President & CEO of Medacta for nearly twenty years
  • Previously owner and CEO of Bieffe Medital, an innovative company operating in the Dialysis and I.V. market,

successfully sold to Baxter in 1997

  • Master of Business Administration at Bocconi University School of Management in Milan;

Pharmacy degree at Turin University

Alberto Siccardi Chairman Non-Independent Member of Remuneration Committee Maria Luisa Siccardi Tonolli Member Non-Independent Member of Audit & Risk Committee

  • Member of the Board of Medacta (2003 – present), Head of Family Office (2002 – present)
  • Former Head of Strategic and Corporate Finance for Medacta (until 2011)
  • Previously at BSI Bank Asset Management (today EFG)
  • Degree in Business Economics at Bocconi University in Milan

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HIGH GROWTH TRACK RECORD DIFFERENTIATED OFFERING SUPERIOR EDUCATION RICH PIPELINE EXPERIENCED MANAGEMENT

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219.1 244.7 272.6 2016A 2017A 2018A 164.6 182.6 204.0 75.1% 74.6% 74.8% 2016A 2017A 2018A 14.1%1 11.3% (€m) (€m)

Notes: 1. Constant currency growth rate based on average exchange rates for FY2017 (AUD/EUR 0.677, CAD/EUR 0.679, CHF/EUR 0.897, GBP/EUR 1.143, JPY/EUR 0.008, NOK/EUR 0.106, USD/EUR 0.881) and for FY2018 (AUD/EUR 0.631, CAD/EUR 0.652, CHF/EUR 0.869, GBP/EUR 1.128, JPY/EUR 0.008, NOK/EUR 0.104, USD/EUR 0.848) respectively. Reported revenue CAGR: 11.6% 2. Includes D&A, Direct manpower, Net purchases, Royalties and Other costs (fixed and variable production costs) 3. Based on Adjusted EBITDA for 2018. EBITDA in 2016 and 2017 not adjusted. Reported EBITDA CAGR of 12.5%; 4. Excludes €0.6m of IPO costs and €0.9m of IFRS conversion costs (reported EBITDA of €86.3m in 2018) 5. Cash flow from operating activities – Cash flow from investing activities

Gross Profit and Gross Profit Margin 2 Revenue

Impressive Track Record of Revenue Growth and Profit Margin Development

Unique Profile Combining Teens Growth With Consistently High Profitability

(€m) (€m) Free Cash Flow (Post Investing Activities)5 EBITDA and EBITDA Margin

Cash flow from investing activities 56.3 22.6 51.6 6.7 64.5 15.3 (33.8) (44.9) (49.2)

2016A 2017A 2018A 68.2 72.0 87.9 31.1% 29.4% 32.3% 2016A 2017A 2018A Adjusted 13.5%3

4

Constant Currency CAGR 2016-2018 % Reported CAGR 2016-2018

%

Cash flow from operating activities Free cash flow (post investing activities)5

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Differentiated Minimally Invasive and Personalized Treatment Options

Unique Profile Combining Teens Growth With High Profitability

High-Growth Orthopaedics Company with International Reach Dedicated Surgeon Education Program Rich Pipeline of Innovation-Led Offerings Experienced and Committed Leadership Team

14%

2016-2018 CC1 Revenue CAGR

32%

2018 Adjusted EBITDA Margin2

1 3 4 2 5

€273m

2018 Revenues

Notes: 1. Constant currency growth rate based on FY2018 average exchange rates 2. Excludes €0.6m of IPO costs and €0.9m of IFRS conversion costs

An International High-Growth Platform With a New Approach to Orthopaedics

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Glossary

Certain metrics in this presentation are non-IFRS financial measures. These non-IFRS measures should each be viewed as a supplement to, not a substitute for, our results

  • f operations presented in accordance with IFRS. They should not be considered as alternatives to other indicators of our operating performance, cash flow or any other

measure of performance derived in accordance with IFRS. We present these financial measures for information purpose only, and we present them since we believe they are widely used by certain investors, securities analyst and other interest parties as a supplemental measure of performance and liquidity. The following provides definitions for key terms and abbreviations used within this presentation: 1.

  • Constant Currency Revenue CAGR, is calculated as the difference between the current and historical period results translated using the current period exchange rates;

2.

  • EBITDA, is calculated as Profit / (Loss) for the period before Net interest expense, income taxes, Depreciation and Amortization;

3.

  • EBITDA margin, is calculated as EBITDA as a percentage of Revenue for the period;

4.

  • Adjusted EBITDA, is calculated as EBITDA, adjusted for certain non-recurring items that management believes are not indicative of operational performance. In the

period under review, these non-recurring items only impact the year ended 31 December 2018 and comprise (i) costs related to the offering and (ii) costs related to the adoption of IFRS; 5.

  • Adjusted EBITDA margin, is calculated as adjusted EBITDA as a percentage of Revenue for the period;

6.

  • Gross Profit margin, is calculated as Gross profit as a percentage of Revenue for the period;

7.

  • Free cash flow (post investing activities) is calculated as cash flow from operating activities plus cash flow from investing activities;

8.

  • Capex, is calculated as purchases of property, plant and equipment (“PPE”) and intangible assets including disposals.