Koninklijke Philips N.V. (PHIA) Earnings Call Transcript & Summary

Good morning, good afternoon and good evening, ladies and gentlemen. Welcome to Philips Capital Markets Day 2020. We have exciting sessions ahead of us, where we'll go through our strategy, our performance and our value creation journey. Before I go to the agenda of the day, I want to draw your attention to our safe harbor statement on screen. You will also find the statement in the presentation published on our Investor Relations website. Going through the agenda, we will start the webcast with the presentation of our CEO, Frans van Houten, who will talk about our transformation journey, our strategy and how we will deliver on that. Then our CFO, Abhijit Bhattacharya, will talk about driving performance and value creation. After that, both Frans and Abhijit will take your questions. We will follow with a panel on how we're raising the bar in ESG. After a short break, we'll reconvene to talk about our businesses and about our markets. These sessions will be followed by Q&A as well, and we will have another short break in between them. You see on screen some instructions on how the Q&A will work, very important for today. This is for participants who accepted to join our CMD via Microsoft Teams. If you have a question for a presenter, please raise your hand in the Teams meeting. You can do it during the presentations. You don't need to wait for the Q&A's lots to do that. When it is your turn, our technical team will be in touch via an individual chat box for further instructions. So please check your individual chat box if you want to be in the queue for questions as well. Your video will be visible in the webcast. So please clearly state your name and your firm. We will now see an opening video and welcome our CEO, Frans van Houten, to the stage after that. [Presentation]

Ladies and gentlemen, welcome to the Philips Capital Markets Day, this time fully virtual. It's a great pleasure to have you here among us so that we can engage and share with you our excitement about the transformation journey that Philips is on. We are very excited about all the opportunities that we have ahead of us, and we are very confident in our ability to further unlock value and impact the world. I'd like to share with you the key messages for today, which, of course, we are going to unpack in quite a lot of detail together with my colleagues from the Executive Committee. As you know, several years ago, we decided to change Philips and to focus entirely on health technology, and this is paying off well for us. We love our purpose to improve people's lives through technology, improve their health and well-being, and it also attracts great talent to join us on that journey. And our customers very much resonate with the way we position ourselves. We have a clear strategy to be successful and beat competition and win more market share. And the strategic imperatives tell us that we will make further impact by going deeper with customer, increasing their experience and optimize our efficiency at the same time. We know that we can boost growth in our core businesses through innovation, geographic expansion and through these deeper customer partnerships. And you know that growth in the core means operational leverage, which is, of course, what we are after. And our strategy to win with solutions to really help our customers achieve what is called in the health care world the quadruple aim, better outcomes, better productivity and a better patient and staff experience, is embraced and sets us apart from the competition. The combination of executing on these strategic imperatives will help us accelerate our growth profile from what used to be around 4.5% to be in the 5% to 6% record. 2021 is going to be an adjustment year given the very complex comparison to 2020 as a COVID year. But we are confident that, structurally, that growth rate will be in the 5% to 6% bracket. We will continue to improve our profitability by about 60 to 80 basis points on average per year until we are well into the high teens. That's our goal. And while we do that, we will increase our cash flow. We'll increase our ROIC. At this time, I would like to remind you that our new targets are without Domestic Appliances. We are well on track with the separation and starting the process to divest this unit, and therefore, looking ahead, we are focusing on the portfolio of Philips without DA. Let me now go deeper into our story. I have 3 chapters for you: the transformation, the strategy and how we execute. Let's first look and remind ourselves of the transformation journey that Philips is on. For those of you who have been investing in Philips for a while, you know it. But hopefully, there are also new investors and analysts. And then I would like to remind you that 9 years ago, we decided to turn away from being a diversified industrial holding and to put our focus on health technology, a market with great promise. This bold move helped us raise our growth profile and drastically improve profitability. This journey, we are going to continue, and we see ahead of ourselves a 5% to 6% growth and a steady improvement of profitability so that we can reach the high teens and, of course, also be in the better quartile of our peer group. We know that this story is working, that the strategy is working, and that's also being recognized. We have been delivering strong shareholder returns over the last several years, and we think that we can continue to do so over the next 5 years. It's definitely our commitment to you all. However, besides the return to shareholders, let's focus on the recognition that we are getting from our customers. Our customers give us feedback that the strategy is spot on and that our execution is improving, and that's being rewarded by an increased Net Promoter Score that is rising every year, and we see further opportunities to raise it. Similarly, in the consumer world, the Philips brand stands for excellence. And we have been dramatically increasing the so-called ratings and reviews that you all see on the Amazons and the Alibabas and all -- on the online platforms, and we have set ourselves apart from the competition with our high ratings and reviews. But we also get external recognition from several bodies. And you see here just a sampling of some of the accolades that have been bestowed upon us. It's very rewarding to see that we are the most innovative med tech company and that we are best in class in several of our categories. While we go about our journey to win customers and create value for shareholders, and we see that we are building further leadership positions. For us, this is important because we know that if you have #1 or #2 positions in the market, then you have the mind share of your customers. You also attract the best talent, and these are the most profitable franchises that we have. A few years ago, 60% of sales came from leadership positions. In the meantime, because we are gaining market share, we are over 70% -- 65% of sales that comes from leadership positions. As we continue to innovate and conquer market share and create value, we want to do so in a responsible way and sustainably. Philips has a long history of embracing the environment in how we operate, and recently, we brought all our efforts together in the ESG framework. And we set ourselves bold goals for 2025 on all 3 dimensions. And also here, we win accolades for our approach. Just to name a few, most recently, we were awarded by the Wall Street Journal. This is integral to our way of working. We do not see this as a chore but rather as something that comes natural to the way we innovate and operate. Later today, my colleagues will tell you much more about it. In moving to the second chapter, our strategy to win in a changing health care world, I first want to take you to the market that we serve. It's a big market and it's a market that is steadily growing by around 4%. Of course, this year, in 2020, we saw a big boost in Connected Care. But over the next years, we see growth in all the parts of our market, particularly driven by the market trends that will make the use of technology even more profound in the future. Of course, we see the natural growth drivers of growing population and aging and chronic disease, emerging markets spending more money on health care, but what we find very appealing is that digitalization leads to personalization, leads to higher precision in health care. Moreover, we see that we can innovate procedures to be more productive with better health outcomes. Through the adoption of telehealth, we will see that doctors and patients will engage also in other care settings outside of the traditional hospital. And we know that one of the top priorities of CEOs of IDNs and health care providers is productivity, because how do you support more patients with less money? We have a strong conviction that technology, and especially when you create compelling solutions, that you can actually drive massive productivity and unlock a lot of value and make the staff happier at the same time. And we are also embracing outcome-oriented payment models because we believe that, that is how to partner with our customers. All of these trends play into our strategy. Let me summarize our strategy for you. We innovate to impact health and health care. Therefore, we take the health continuum as our conceptual framework that we look at pathways and at the patient journey. We have embraced the quadruple aim of health care because we need to create impact on health outcomes, on productivity and on the patient and staff experience. We do so by smartly combining systems, devices, informatics, data and services because we know if we come with a comprehensive platform solution, that we can impact care much better than our competitors. So we consciously seek to build this together in order to have a stronger impact in the market. Part of our approach is the consultative partnership, where we consult customers. We help them change their game. We help them change and achieve their goals. It leads to deeper and longer-term relationships, a higher degree of recurring revenues, superior customer service and, therefore, stronger customer loyalty. We are very conscious and careful about the assets and the fields that we play in. As I mentioned to you, we strive for leadership positions, and we are very convinced that we can still grow a lot in the core. And as we go more in solutions and go into adjacencies, we will selectively decide on organic growth versus synergistic M&A. Through the Philips business system, we anchor all our best practices and raise the bar on performance all the time. The Philips business system is how we work at Philips, and it drives quality. It drives productivity and it drives excellence in what we deliver to our customers. Ladies and gentlemen, we have 4 pillars that we build our business on. In Personal Health, we deliver solutions that enable a healthier lifestyles, personal hygiene, support people to live with chronic disease. In the Diagnosis & Treatment segment, our precision diagnosis businesses support better workflows, integrated diagnostics so that doctors can choose the best pathway for care that leads to the best predictable outcomes. We innovate operative procedures through image guidance. And we know that minimally invasive procedures can be applied to more therapeutic areas and all the time drive better outcomes and drive better productivity. Connected Care, as a platform approach, drives efficiency and effectiveness throughout the care cycle. It helps doctors take better decisions. It help patients and doctors to be connected in different ways and, increasingly, through telehealth, also outside of the hospital setting. This year, we already saw a big boost in the adoption of telehealth and Connected Care propositions, and we think that, that will continue. The portfolio overall is well set up to promote and impact health and health care and help us grow. We are happy with this portfolio. Of course, you may challenge us and say, "Recent developments, does that change your strategy?" Actually, I can tell you that the recent developments have reaffirmed our strategy, and we feel that we're absolutely on the right path to respond to these developments. And whether those are the developments that affect providers in their COVID response or in taking elective procedures out of the hospitals into ambulatory care centers or help providers drive up productivity and resilience of their operation, we have a portfolio that can help them achieve that through cloud-enabled telehealth, through informatics optimizing workflows, by partnering with our customers to unlock and take out the waste of their operation. And when it comes to consumers, we have recognized a shift in the way consumers buy and give their preference, and we think that our shift and adoption of online and digital and new business models of direct-to-consumers resonate and respond well to this trend. Our market share in online is actually higher than our market share in the traditional off-line channels. The last category of developments that I want to mention are, of course, the geopolitics, something we are consciously aware of, but also where we believe we are increasingly robust in the light of these changes because we have a regional final assembly strategy. We have hubs in the United States, in Europe and in China and Asia. We can localize our solutions such as, for example, in China, and that includes the regional hosting of health data. So in a nutshell, strategy reaffirmed, Philips is well prepared to navigate, let's say, these turbulent times. Now I would agree with you that strategy is one thing, but execution is even better. So let's talk about how we deliver on our strategy. We have clearly defined, for the entire Philips organization, what are the drivers that we need to deliver on in order to unlock the value that we see in our strategy. These drivers can be grouped in 3 imperatives: continue to raise the bar on how we serve customers, raise the bar on quality and productivity; secondly, relentlessly drive growth in the core of our business through innovation, through geographic expansion and by capturing a bigger share of wallet of our customers through consultative partnerships. As we grow, we get operational leverage, we get depth. It's great. And then the third leg of this execution strategy is how we win with solutions, developing solutions that have demonstrable clinical evidence and health economic benefits so that customers say, "Ah, we must have that." As we do that, we leverage data and data science at scale because we believe that, that complements our systems and devices very well. And we are selective and determined to add some M&A and partnerships to complement our organic growth. Together, these drivers deliver on the goals that we have set, the balanced scorecard on shareholder value as well as the benefits to our other stakeholders. I'd like to take you in a bit more depth through each of these imperatives, starting with improving the customer experience and driving up productivity. We have a slate of programs that work on customer experience and upping our customer service and a first-time-right response. We have a comprehensive framework on how to drive first-time-right quality and doing so with a smaller set of products and taking the waste out of our processes. We are preparing Philips to be a digital enterprise that is always connected to its customers, whether in the marketing and sales process, but also all our products in the field are connected to the Philips backbone so that we can be predictive in our response to customers. And all the time, we are relentlessly focused on driving productivity. Abhijit Bhattacharya will give you much more detail, but I can tell you already that for the next 5 years, every year, we will drive productivity savings of around EUR 400 million per year. In growing the core, I mentioned that we have 3 ways of doing that. We have a huge innovation engine that spews out very compelling innovations to extend category leadership across the entire portfolio. And you will hear from my colleagues in the Executive Committee many examples today. I'd like to mention just a few to give color to this point. In China, some of you may challenge us to say, "How do you deal with local competition?" Well, the S1000 targeted a young consumer group in China, takes competition head on, and we are gaining market share. In precision diagnosis, the helium-free MR Ambition, unique in its kind, has a much lower cost of operation versus any of the competition. And many hospitals are waking up to the fact that now they don't have to have a chimney in their hospital and that the uptime is better and that it gives them a lot of benefits. And we see customers shift to the Philips brand. In image guided therapy, you will hear a lot about it, our innovations are embraced as they innovate the procedure. In Connected Care, the IntelliVue 750 and 850 create remote patient monitoring, which, in the time of COVID, is very, very welcome. And you see whole departments, whole wards being now monitored through this fantastic innovation. All of these are new innovations that will generate a lot of growth next year. The second driver of boosting growth in the core is the geographic expansion. We still see a lot of opportunities to take innovations that are very successful in one market, to take them to more markets. This is very much the case in health care informatics, which we pioneered more in the western market and that we are taking, for example, to the Middle East, to Asia, to other markets. And you see several examples here of our cloud-based EMR, our PACS, our ICU, telehealth, et cetera. Our IGT devices business, originating out of several acquisitions, mostly U.S.-based, we can accelerate growth going global and expanding the penetration of all the markets where Philips is already present. And we have talked to you already in the past that there are millions of patients that are not yet diagnosed on sleep apnea, and we are driving that market hard and expanding the cake, so to speak, and that fuels growth as well. The third driver of growth in the core has to do with the intimacy with our customers. And whether those are the health systems on the professional side or the retail partners on the consumer side, by collaborating, we go deeper, we gain share of wallet. All 3 proven strategies enabling us to up the growth rate of Philips. And then I want to talk to you about our solution strategy, something we started some 5, 6 years ago. And in the meantime, the sales percentage of -- the solutions percentage of total sales has been growing steadily. In fact, solutions are growing almost twice as fast as the average of Philips, and it just demonstrate how compelling it is when you solve customers' problems. So rather than having them figure out how you combine AI systems, services and devices, we do that for them, leveraging the deep insights clinically, operationally, offering an open platform approach. Coupling it with different business models, we are able to help our customers impact -- get results on the quadruple aim. I brought along a couple of examples to bring this to life, even though several of my colleagues today will give you a lot of examples, but just to immediately give credibility to the strategy. We are applying our solutions approach even to the consumer space. Here in the oral care world, we have teamed up with dental insurers -- payers, with dentists and, together, we have made a very compelling offer for the consumers with a novel business model. It's a win-win-win. Everybody is very enthusiastic about it, and it's growing very much. And my colleague, Michael, later today, will explain to you more in detail how this works. In precision diagnosis, in the world of radiology and pathology, there is a lot of opportunity to drive a better, precise diagnosis while at the same time increasing productivity. We have several solutions in this space where we can greatly optimize workflows, come with a much more integrated diagnostics so that the doctors can choose a pathway that fits that individual patient. There are a lot of results that have been clinically proven through our hospital partners. You can see them here at the bottom of the page, very compelling, and it will help us gain market share in the diagnostic field. In image guided therapy, several years ago, we realized that to push the envelope on clinical outcomes and productivity, it would be great to combine devices, systems, software and services. And as we have done that, we have demonstrated that doctors can treat 20% more patients in a day. They can save cost. And patients are treated better, first time right, so better clinical outcomes. Again, at the bottom of the page, you see just the sampling of the benefits that we have documented with our customers and that are now driving the adoption at a larger scale. In Connected Care, our solutions also help drive the efficiency and effectiveness of the care pathways. Whether that's in emergency response, connecting ambulances to hospitals, or in the hospital itself, where we can increase the patient-staff ratio and be predictive about what a patient needs, our algorithms will guide the doctors to the patient that needs the care most while other patients, they can go home and be remotely monitored, and that is the more efficient for the hospital but also better for the patient. Again, you see here at the bottom of the page, a lot of evidence on how this drives impact for the caregivers, for the patients. It's a win-win, and obviously, this is helping us to step up our growth. Now you may ask me, "Is this a U.S. game or a European game?" Actually, this strategy works all over the world. And I brought here an example of China, where our team in China, led by Andy Ho, is pioneering the solutions approach in China. And we teamed up with the Xiamen Cardiac hospital. We helped design the entire cardiovascular pathway, including how to get workflows that are optimal, a patient experience that is the best, with clinical knowledge where we support the hospital. And it is no wonder that this Xiamen Cardiac Hospital was awarded prizes for the way it is set up. And it is now being copied around China as an inspiration on actually how to improve care, and we are at the middle of it. I'm going to round off my strategy execution story because, obviously, you're interested in how do we fund our strategy and how do we drive this return. It brings me to the topic of capital allocation. At Philips, we have always taken a balanced approach between reinvesting in growth, using capital to expand the portfolio, also deciding what business are we in and what business are we not in. I shared with you that we have sold businesses that we felt were not strategic, and at the same time, we have added a few businesses that we think are strategic and helping our future. We have maintained dividend stability, paying out 40% to 50% of net recurring income. And we have also done share buybacks, and that's something we will evaluate periodically. I would like to round off with our associates. Philips employs some 80,000 people. It's a great workforce, very talented, but of course, you need to lead it. And at Philips, we have invested in what we call the leadership development journey as we decided to be an operating company, and we want everybody to pull on the rope from the same side so that we gain agility, we gain speed and we raise our performance. We have taken the leadership group along, and here, you see just one such occasion where everybody rallies behind the Philips journey. We are locking in that journey all the time by taking the best practices and formulating them in what we call the Philips Business System, with the 6 interlocking tenets of strategy, governance, processes, people, culture and performance management. We have a strong belief that these 6 tenets all need to reinforce each other, and as they do, it creates clarity. It creates clarity for the 80,000 associates, and it gets people to be faster, more productive, also more happy. We give everybody a development path in this company, and the culture in which we do that is very important to us. Finally, I'd like to introduce you to our experienced and very passionate executive team, many of which you will hear speaking today, many of which you can also ask questions and challenge. And I hope that today, and I know that today, you will have a very exciting and engaging day, and beyond today, we're always prepared to engage with you, analysts and investors, because we want to tell you our story. We believe in it, and we're going to do it. Rounding off the takeaways, the Philips journey continues. We aim for leadership in health technology. We aim to impact the world through our innovations, and we know how to do it. We'll do it by executing on the 3 strategic imperatives. And as we go about our game, we raise the growth profile of Philips to 5% to 6%. We raise the adjusted EBITDA margin to the high teens. We'll generate more cash. We up the organic ROIC. And ladies and gentlemen, we hope very much that you are going to be part of that journey. With that, I'd like to invite my teammate here, Abhijit Bhattacharya, the CFO of Philips and a long friend.

Thank you, Frans. Good morning, good afternoon and good evening to all of you, and welcome to the Philips Capital Markets Day. A bit unusual, the setting this year. We miss having the coffee side chats, the lunch, the dinner, but we are going to make up. We are going to have fireside chats in this winter setting during the course of this week. So there's enough time for interacting both with me as well as our colleagues on the Executive Committee so that you get a deeper understanding of the strategy. So Frans presented right now the strategy of Philips, what we've done so far, how we go ahead. What I'm going to do is to give you a translation of that into the financial numbers and how that will play out. So let me start by anchoring you on the key takeaways. One is, looking back, we have significantly improved our earnings, our sales growth, our free cash flow as well as our adjusted EPS. Looking forward, we have decided to step up growth. We used to grow between 4% and 5%. We now want to grow between 5% and 6%, and I will come into some details there as to what are the main drivers. And with that, we want to move the adjusted EBITDA into the high teens so that we then are among the cohort of our peer companies. One of the big levers to take us there is our productivity program, and I will share with you some details there that's going to save us EUR 2 billion by 2025. Our cash conversion, which has been strong over the last 5 years, will continue to be strong. So we will have a cash conversion above the 90% to deliver the EUR 2 billion of free cash flow. And I will also present you a robust financial framework that we have designed in order to give you the belief on how we are going to execute on our strategy. Now my presentation is in 2 parts. In the first part, I'll take you back to how we've performed in the period 2016 to 2020. And then I will anchor the second half of my presentation looking forward between 2021 and 2025. So let me first start by presenting a scorecard which we believe is a balanced scorecard, which shows clearly that we have structurally improved the performance of the company. And you can look at the various parameters, we had planned to grow between the 4% and the 6%. We've done that. We had planned to increase our adjusted EBITDA by 100 basis points a year. We are slightly shy. We will be around the 70 basis points, but still a big step-up from where we were. Our free cash flow, we had targeted to be around the EUR 1.5 billion by 2020. And given the way it has moved so far this year, we have high confidence of hitting that number. We are ahead of plan on our productivity program. And why I say ahead of plan because it's -- runs till the end of the year. But we had planned for EUR 1.8 billion. We believe we will be more EUR 1.9 billion or more. We wanted to deliver a return on invested capital in the mid- to high teens, which we will do by the end of the year, and all this while strengthening our balance sheet, right? So we've maintained an investment-grade rating and been in the leverage bandwidth that we had targeted for. And last but not the least, we had set out ambitious sustainability goals a few years ago and have delivered on all of them, and Frans just mentioned in terms of what we have set out for ourselves going forward. Now as I take you through what we've done in the last 5 years, let me start first with the P&L, right? So if you look at our adjusted gross margin, we have improved that by 200 basis points, and that is despite the headwinds that we have received from additional tariffs, duties, et cetera. This has been fueled by a few important interventions. One is innovation. And if you remember, we've always said that we would fuel and drive innovation because that leads to growth and profit improvement. You see that coming back in the margin and the growth of solutions. And you will hear that as a common theme through the day. Frans mentioned it, I will show you how we've targeted to make solutions almost half the revenue of the company by 2025. We have significantly improved the mix of our portfolio. And of course, the productivity measures that we have been driving, which I will spend a couple of minutes on a bit later, has contributed to this improvement. Similarly, for our nonmanufacturing cost, we have improved that by 100 basis points, and that is, again, through a number of productivity measures which I will take you through. And this improvement in profitability has led us in the last few years to deliver a double-digit growth in adjusted EPS. Now let me -- because I gave you some color on the productivity, I need to take you through a little more detail. Frans spoke about the Philips Business System. It helps us to become more efficient, more effective as well as put a repeatable process whereby we can keep delivering results. And the Philips Business System is the center around which our productivity program revolves because it has also become now part of our culture. I break it up into 3 blocks. If you first look at our supply chain organization, we had committed to reducing our supply -- our factory footprint by 40%, 4-0. We have delivered on that. What I'm very excited about is in the next step of productivity, we have set up a center of excellence for value analysis and value engineering in Pune in India. And I will, in the looking forward section, give you a little more color on that. Our procurement savings have delivered -- driven by the DfX program as well as other programs that we have run. And last but not the least, we have significantly deployed the lean principles and daily management throughout the organization. And you see here on this chart that, that is now embraced by half the company already. The other big part of the productivity and transformation was on our IT. And we've put in what we call the Philips integrated landscape. That is our digital enterprise platform. We do about 270-plus deployments of IT systems a year just so that we can now get onto one common platform that will help us to drive productivity but also make it easier to do business with Philips. Our ERP instances have gone down from 50 to 11 in the last couple of years. We run a massive robotics program, where we are eliminating and automating 1 million hours of manual work. If I read the external reports that we get on this, this is 1 of the 20 largest programs being run by any corporate anywhere in the world, so a big, big part of driving standardization. And what the simplification of the IT landscape has done is it has allowed us now to put in tools that do process mining that can still identify where we have large deviations in the way we do standard work and drive that to further simplification. And we can use that because we have set up our global business services. A couple of years ago, we had no one in global business services. We have now 4,500 employees who run the back office from 6 centers around the world. We've also embarked on our marketing transformation. So we spend about EUR 1.4 billion on marketing, but about EUR 350 million of that was being spent on advertising, and we needed to increase that to drive growth, especially with the move to online. And what we've done is we have driven productivity within that EUR 1.4 billion bucket so that the advertising can go up from EUR 350 million to EUR 600 million over time, and we have already started with those step-ups. We had committed to drive 40 basis points of R&D productivity. I'm very happy to report that we have completed that. So we had -- we were at 9.6% of sales. We are down now to 9.2% while eliminating, let's say, overhead layers and other costs but keeping the engine of innovation running. And last but not the least, we have got all our enabling functions to benchmark cost levels. And that, of course, has given us the operating leverage also to improve our profitability. If I move on from the cost, let me take you to what we've done on the cash front. So you see we have consistently been around 100% in terms of our cash flow -- free cash conversion. And we had targeted during this period cash flow delivery of EUR 1 billion going up to EUR 1.5 billion by 2020. And as I mentioned in my opening, we look well on course to delivering that for this year. This has happened due to a number of actions: first of all, the leaning out of the supply chain, not only the number of sites, but also steps across the supply chain; managing our overdue receivables much better than we had in the past; and also teaming up with our suppliers so that we are able to have credit terms that allow a balanced financing between our suppliers and us. In this period, we have reduced our cost of financing as well as our bank charges by more than 50%. It used to be close to EUR 270 million. That is down by half in this period. And last but not the least, a few years ago, we had massive pension liabilities, about EUR 27 billion. That is now down to around EUR 2 billion. We have a last bid to do in the coming days, and we will be down to even less than EUR 2 billion. So all this has really strengthened our balance sheet significantly and gives us a very, very good platform to go ahead. I will cover a few more things on the balance sheet, our debt profile. So if you look at our repayment profile -- sorry, that -- I come to that later. First, let me talk about how we've dealt with the cash. So if you look at our dividends and share repurchases, we have invested 1 -- EUR 8 billion on that. And then if you look at what we've spent on M&A, it's been EUR 5 billion in that period. And the 2 big ones are Volcano and Spectranetics and a lot of small technology tuck-ins, which all now are delivering the results that we would want, and more results to come in the ongoing period. The next slide talks about our current balance sheet position. So you see on the left of the slide the debt maturity profile. There are no big bullet payments. It's uniformly spread out between now and 2026, and then you have some longer-term debt, which goes all the way out to 2042. In terms of leverage, we had always targeted based on where our peer group was and how we wanted our rating to be between the 1 and 1.5x net debt-to-EBITDA. You see that, after 2015, we have consistently been in that bandwidth, and by the end of the year, we will also be within that bandwidth as planned. So this is how we've set ourselves up for looking at an exciting future where we will drive more growth, more profitability and value creation. So let me now come -- move us to how we see this going forward. Frans, in his part, talked about the 3 imperatives that are going to drive our strategy going forward: better service to customer and improving of quality; boosting growth in the core; and winning with solutions. And what I'm going to take you through is on the right side of the page, which are in the light blue in this slide, talking about how we are going to get the growth, what are the drivers to improve our margins and our return on invested capital as well as our free cash flow. Before I go into all those details, let me tell you how we've done in each of our segments. So if you look at diagnosis and treatment, in 2015, we had an adjusted EBITDA of 6.8%, and we had set ourselves by 2020 to get to a target range of 14% to 16%. We have close to doubled our profitability in the period, and we're well underway to get into that range. Unfortunately, because of the events of this year and COVID and the impact it has had on this business, we have delayed a bit. But going forward, we have high confidence that by 2025, we will be in the 15% to 17% bandwidth and grow at a rate between 5% and 6%. If you look at Connected Care, there, we had set ourselves an ambition to get to 13% to 15%. I think there, we've hit our target already in 2019. In 2020, we will do exceedingly well because the business has responded tremendously well to the requirements from our customers due to the COVID crisis. That will normalize in the coming year. But even then, this business now structurally moves to a profitability in the high teens. And last but not the least, Personal Health. Again, you see a big improvement from 12.5% to 16%. The target range for Personal Health for 2020 was 16% to 18%. So they have hit the range actually a year earlier. And going forward, we want to get into the high teens to 19% to 20% with driving 5% to 6% growth. So across the segments, you will see that we have made significant progress in improving profitability, with more to come. Now I want to touch a bit on what is driving our growth in solutions and how that is developing. When we set out to focus on solutions in 2015, it was 1/4 of the company. We set ourselves targets to get to around 35% by this year. We will probably end at 37%. We were already at 35% last year, and we planned by 2025 to be slightly less than half of the company in terms of solutions sales. And how does that happen? The primary driver of that is innovation, right? So it's solutions that actually solve an issue for our customer base, and therefore, it means putting different modalities together, which actually deal with that problem that a hospital system may have. So this is done by cross-sector, cross-segment innovation, which is being driven throughout the company. Another big opportunity there is globalizing our informatics propositions, which are now strong in the U.S. but could go outside. Later on, Roy and Solange will talk also about other propositions we have in Latin America which we can expand. Expanding our long-term partnership deals. Every quarter, we announce a string of new long-term partnerships. These are sticky customer relationships that binds us with our customers over a long period of time. It also helps to stimulate recurring revenue because it becomes from an OpEx model to -- from a CapEx model, more to an OpEx model where you keep working with the same customer set. This is also facilitated by the models we have put in place with Philips Capital, where we can actually make financial constructions that convert CapEx to OpEx. We, of course, don't carry all this on our balance sheet. We use the balance sheet as a warehousing facility where we may put something on the balance sheet to drive speed in getting a deal done, but then it is offloaded to our financing partners. And what this does is it gets a certain amount of predictability in our revenue as well as solutions that always, for us, are accretive to our margin profile. Now having said this, I'd like to spend a couple of minutes to take you through how we think we will accelerate growth from the current 4.5% to a range between 5% and 6%. So if you look at the left, our current portfolio, about 90% of our current portfolio actually grows above the 5%. So it is 10% of the portfolio which is low growth, which we have to deal with. And there are a few other things that happen as well. We have, within the 90%, a strong part of the portfolio which actually grows high single digit. So if that keeps growing and becomes a bigger part of the mix, that is going to get us 30 basis points, so an increased share from the high growth businesses. The turnaround of the low growth businesses or driving higher growth from the low growth businesses will get us another 20 basis points. Frans talked about the impact on telehealth and informatics with the onset of COVID. Roy Jakobs, who heads the Connected Care business, will tell you more about it during the rest of the day. But there, where growth had stalled over the last few years, where we were actually making investments, seeing that these trends will come, we now expect that really to drive growth in the coming years. We have a strong focus on services as well, be it cybersecurity services, our normal service business and the rest. That's also going to drive another 30 basis points. And then finally, the prior M&A that we have done prior to 2020, a lot of them were smaller technology tuck-ins which take a bit of gestation time before they really get commercial, and we expect that to contribute 20 basis points. And then of course, this is a period from now to 2025, and there will be risks and headwinds. So if you shave off a bit, we believe we will be from 2022 onwards in the 5% to 6% bandwidth of growth. Let me also spend a few minutes on how we will drive productivity in the period between now and 2025. In terms of procurement savings, we are planning to do between EUR 900 million to EUR 1.1 billion. There are 2 big initiatives apart from what we normally drive. That is the center of excellence for value engineering and value analysis which we have set up in Pune in India. This will drive low-cost sourcing and give us significant benefits in terms of reducing our bill of material. The other thing we've done is we have changed the way we handle non-BoM, or bill of material, expenses, where earlier, the procurement team was largely focused on negotiating rates. Now they will work together with the rest of the organization on managing also the actual amounts that we spend. This, we believe, will give us a significant opportunity to drive this saving of about $1 billion. Further simplification of the supply chain will continue, whether -- we will ramp down the number of warehouses by 60%. we will consolidate our service providers. As we finish our factory footprint rationalization, a lot of the double costs will get eliminated and then, of course, through the lower cost of non-quality. And finally, on overhead reduction, we still have a long tail of R&D sites which we want to rationalize. The future of work, which a lot of people have been talking about, be it in lower real estate, using a lot of virtual technologies, whether it is for service, meetings, reducing travel cost, all of that will contribute. A continued expansion of our robotics program, but also our global business services hub. And finally, with this integrated landscape, we give ourselves a unique opportunity now to have a single back office for Europe which will drive a lot of efficiencies going forward, a lot of standardization as well. And this growth and productivity is what is going to help us to get the margins that we have planned. And you see, earlier, we used to get about 100 bps from volume. Because of the higher growth, that moves up to 130 bps. Again, new product introductions, geographic expansion, solutions and prior M&A. You saw that on the bridge. You will hear a lot of that. As my colleagues speak through the rest of the day, they will give you more color on that. Gross margin improvements, driven, again, by innovation, better mix, supply chain productivity as well as procurement savings. And then I just talked to you about what we are doing in terms of overhead cost reduction. Now this is dealing with the P&L going forward. Let me also present to you our financial framework in terms of what -- how we will manage this performance in the coming years. Free cash flow, as I mentioned, high free cash flow conversion above 90%. The adjusted EPS growth will be around the 10% from 2022 onwards. Organic ROIC continues to be in the mid- to high teens. We will have continued with disciplined capital allocation. Frans gave you the detail on that. We will be more active in M&A but still disciplined. We will maintain our current investment-grade in the credit rating. And our effective tax rate will be -- will continue to be in the 24% to 26% range. So we have a great strategy. We have built ourselves a solid foundation. Now we have to accelerate growth and deliver on higher value creation. That's what we've set ourselves up for, and I'd like to welcome Frans back on stage so that we can take a few questions that you may have.

Absolutely. My pleasure. Well, ladies and gentlemen, I think we are getting ready for the questions. So let's check in with Leandro? Is it all working Leandro?

Correct. So we really like to interact with you today. So we're trying to get investors and analysts on screen via Microsoft Teams. So if you have a question, raise your hand. Our technical team will be in touch, and then we'll put you on screen. We do have Veronika Dubajova, so Veronika from Goldman Sachs. I think you go first. Let's see if we get it to work. If not, I have Veronika's question by e-mail as well. So let's try it. It will take a minute to try to get Veronika on screen. Let's see.

Okay. Seems to work. There you are. Hi, Veronika. I think you have to unmute. Can you try to speak once more, Veronika?

No, it doesn't work.

Okay. We can't hear you, but let's hear what you have to say from Leandro then.

Yes, I'll read Veronika's question. So can you elaborate on the parts of the portfolio or business that are absolutely crucial to accelerating the organic revenue growth into this 5% to 6% target range and whether we should be thinking of that acceleration as gradual or a run rate already achievable in 2022? And related to this, can you still deliver the 60 to 80 bps of adjusted EBITDA margin improvement even if your growth rate continues to track in the 4% to 5% range as it has done historically?

Yes, Veronika, great question. So you heard Abhijit say that, in fact, some 90% of the portfolio is already mid- to high growth. And we are actually not that far away from the 5% to 6% in that part. There's about 10% that has low growth and we have the measures in place to boost that. So boosting the high and mid growth up, getting the lower growth business to no longer be a detraction but a contributor, that gets us easily in that 5% to 6% range. Now already next year, Diagnosis & Treatment and Personal Health are expected to be in that range. As I said in the beginning, Connected Care is a different case because of this incredible journey that we have gone through in 2020. From that peak, we will see a decline and actually still going to be above 2019 for Connected Care, but of course, it is a decline versus 2020. And then in 2022, all businesses are expected to be in the 5% to 6% bandwidth. That generates, of course, a lot of profit growth and leverage. Now in the circumstance that because of the global economy or whatever other reason the growth is lower, we remain committed to the 60% to 80% basis points profit improvement guidance. So we're not betting on only the growth, of course. We also have other irons in the fire, as is a Dutch saying, and we work that in parallel. But of course, our prime motive is to get the growth. Abhijit, perhaps you have something to add?

Well, I think you were very comprehensive, Frans. So the growth is a little bit less, which we hope is not, we will still get being the 60 to 80 bps bandwidth, Veronika.

And perhaps a question that is on your mind, if I may project. We do expect Connected Care, even if you take this effect of the terrible pandemic out of the way, we expect Connected Care from -- to be on a structurally higher growth part -- path going forward, right? And that is a very rewarding consequence of the strategy of investing in the informatics, in the telehealth. We see a boost of growth in that area, and that is something that I think all of you and us, we have all been waiting for.

Okay. Very good. So let's try the next question. We'll try one more time on screen. I have several questions on my e-mail as well. So if you have questions and you're not -- your Microsoft Teams is not working, you can e-mail at leandro.mazzoni@philips.com or read them live here for Frans and Abhijit. So let's try the next one. I think it was Julien, right? Hi, Julien. We can see you.

Can you hear me?

Yes.

We hear you.

6 months into that, it's always a miracle when those IT things work. So that's great. I think we're limited to one question. So I was quite excited to see in your slide, Frans, that you are quoting, on the M&A side, a more disciplined but more active approach going forward. This is quite exciting for the future, especially looking at what you've been delivering over the -- over the 4 to 5 years. You -- are you looking for more deals from a quantitative perspective or larger ones, more transforming ones? And how do you articulate that with the leverage that you have? You've shown this slide where you've been consistently within the 1 to 1.5x bandwidth over the past few years. So are you ready to be a bit more aggressive in terms of leverage? And how should we read into that M&A appetite?

Yes. Thanks. We have evaluated the kind of 25 M&A deals that we have done over the last 5 to 6 years. And sometimes you do a small deal because of a technology component that you'd love to have, and then you integrate that, even though the level of work for a small acquisition is not always commensurate with the benefit that you are getting out of it. So and the bigger deals, like a Volcano and Spectranetics, have -- or have worked actually very well for us. Also Carestream, a very nice deal. So I would say, ideally, the deals that we do have a bit more substance than those very small ones. So we are not after quantity. We are after quality. And if we can do fewer and more medium-sized, I think that would be better than doing again 25. So we are not predestined on a size. It really has to fit the strategy, link up well with the existing core business so that we get synergy, both on cost and technology and revenue side as we have been proving in the past. So this year, we have only done smaller ones. Sometimes you reject opportunities because they are too expensive or otherwise. So we are not going to pursue something that doesn't match up from a financial point of view. Abhijit?

Yes. No. And I think you questioned on the leverage. We will also get quite some inflow of cash once we've completed the Domestic Appliances transaction, so that gives us some bandwidth. And if we find a great opportunity, and for a short time, we need to step out of that range, but with a clear path to get back into the -- to around the 1.5, we won't hesitate to do that. But the deal has to be good, as Frans said, should be value accretive, growth accretive, and then it makes sense for us to do.

Who do we have next?

Okay. So we see just the initials there. Can you state your name and your firm?

It's Max Yates from Credit Suisse. My question would be on telehealth. And obviously, it's an exciting area that becomes more relevant in the pandemic. And I'd love to hear sort of the progress you've made in that business and perhaps some numbers around how big it is? Where you think you sit in terms of market shares? And what really the runway for growth is for that business over the next few years? That would be great.

Yes. Max, I think what we have learned is that the field of connected care is very broad, very wide. And also the world of telehealth has many different forms. Some years ago, I think we were more optimistic that so-called value-based health care and population health would quickly materialize. I think there, we have seen that while everybody believes it's the future, it takes a more slow realization path. While the telehealth related to taking care of more acute and chronic patients remotely has been accelerated also by the COVID situation and where it has proven that both doctors and patients are quite ready to embrace these ways, and that it drives productivity, it drives outcomes and the hurdles of acceptance are actually quite low. So this has put telehealth, as an extension of the hospital, to the home or other care settings, high on the priority list of the C-suite. Also as a way to kind of insulate perhaps the elective procedures and the recurring revenue stream from chronic patients vis-a-vis the acute care response that was needed. So as hospital networks go about implementing telehealth, they look at it as an extension of their architecture. And there, where it is possible to leverage their existing ways of working, pathways, but also their IT. And I can guarantee you, the CIOs of hospitals are quite concerned with the fragmentation of their landscape, they would like to reduce it. Then you can extend the Philips monitoring market share leadership, our eICU command center technology and scale that to more care settings, and that's exactly what is happening right now. For example, the VA, the Veterans Administration, awarding us, over the summer, this large $100 million deal to basically connect all VA centers through the virtual command center of the eICU and getting more patients signed up into that franchise. So we expect strong growth, double-digit growth in that area. By the way, it's not just limited to Connected Care. I could have an equally passionate story around how teleradiology is being adopted, how, for example, hospitals are leveraging pathologists that are remote so telehealth is also between professionals. Also there, we are well set up with our cloud technology. Also there, we expect an accelerated growth rate of the informatics businesses, double-digit growth. Now we have not detailed out exactly the size of all these businesses. I can look at my friend here, whether we are prepared to do that. You alluded to it in the bridge.

Yes. But I think that's going to give us about 30 basis points of additional growth next year 20. But in terms of sizing it because it runs across segments, I think we probably should do that on another occasion.

Yes. And sometimes, as we say, go about these solutions, we also bundle, right? And as that bundle, it's not always wise to break out the individual components. But I'm very pleased that the investments that we have been making in informatics, which were substantial and that was sometimes challenged by the audience, that they are now seeing an accelerated growth rate. And I don't really need to remind you that gross margins in informatics are very high. And so it's all about operational leverage. So now, as we accelerate growth, we're going to get a very nice return. I hope that answers your question, Max.

Great. Next question. I think we got Lisa.

Maybe you have the question?

I can read her question. You mentioned an impressive 40% reduction in manufacturing footprint. How much further can that go? That was the first question. Second question was any long-term strategy changes given the U.S. and China tariffs? And the general move towards a more protectionist agenda in the U.S., particularly for health care.

So let's first talk about the manufacturing footprint. The rationale of reducing the footprint is actually that you get more scale in fewer locations with higher core competence, therefore, better excellence. And as we go about fewer hubs that are multi-business, we optimize the entire value chain. The 40% relates to the 50 factories that we had originally. Now we are about around the 30. Sophie Bechu, our operations leader, has plans to further optimize that. We are not detailing out exactly where and when. But there is certainly opportunity to further scale up a bit. And let's also not -- be realistic that as we do acquisitions, sometimes new small factories come in that we then also leverage back into this hub strategy. So quite a good strategy. Now we -- as we go about this, we also take the geopolitical reality into account. And previously, we have explained to you that we are actually having a strong manufacturing footprint in the United States and in China and in Europe. In fact, we are a net exporter from the United States. So with any government, we can also look them straight in the face and say, "Yes, we have sales in your country, but we also contribute to the employment in your country." Having said that, I am concerned around the geopolitics, especially U.S. and China. And we need to be even more resilient and avoid that we have too many good flows, especially finished goods flows between there. And so we are -- we were already manufacturing many products in China, but we are bringing a few more to China, so to make sure that we can respond to the local preference in China. You will hear my colleague Andy Ho, speak later today. And it's something that we -- where we are focused on to make sure that the government in China sees us as a company that is locally vested in the country. And that we are in line with the China 2020-'25 manufacturing strategy.

Okay. Next one, I will read from my e-mail. Hassan from Barclays. On free cash flow, could you talk about your expectations for the Domestic Appliances contribution for this year as part of the EUR 1.5 billion, the EUR 2 billion in 2025 seems conservative.

Yes, that's always the challenge, Hassan. We get about a couple of hundred million from Domestic Appliances. So if we do the EUR 1.5 billion this year, you should scale that back to EUR 1.3 billion. What we say is above the EUR 2 billion. So clearly, we will do more. The question was, do we put EUR 2.5 billion. We will probably be short of the EUR 2.5 billion, so it will be between the EUR 2 billion and the EUR 2.5 billion, that's why we say above EUR 2 billion. So I think we have work to do to get another EUR 700 million to EUR 800 million out of our operations in the coming years.

Okay. I think now we try Daniel on video. One second, Daniel. We can see you, but cannot hear you. That seems to be the issue today. One more second, Daniel. I have your question here anyway, so let's try and then I read it. A few questions on the consumer-oriented business, please. Where are you with regards to online versus off-line sales? And where do you see this in 2025? How does the assumed shift to more online sales contribute to your margin development, if at all? How does the corona pandemic impact your assumptions here?

Daniel, we have seen a rapid acceleration of online versus off-line in the first half of this year. In China, that led to 80%, 90% online; in Europe, around 50%; remarkably, in North America, still quite low. And so currently, as we speak in November, we are globally, on average, around 40%, with China a lot higher and North America lower. We expect this trend to be permanent and that we will continue to see the online sales going to edge up further. I mentioned in passing that our market share online is a little bit higher than our market share in the traditional channels, so that is a good thing. In terms of margin, we are becoming steadily better at margin management online. It's not without challenges because you have all these festivals like Prime Day and 11.11 and so on. It's, of course, always important to avoid that you be -- that you only count on these promotional events. We don't want that. This is also why we are stepping up advertising so that we are creating more a consumer pool. We are stepping up the direct-to-consumer, dialoguing through digital media, so that we get consumers to prefer our brand and not just react of a spur of the moment on a promotion. Abhijit explained how a larger portion of our marketing budget is now directed towards, let's say, getting the consumer to be excited about Philips, and we think we can drive that even further. Also our direct sales to consumers is rising, and that's important when you think about these recurring revenue models for toothbrushes and others where the consumer gets serviced directly from Philips. So overall, online is margin accretive to the mix, right? Even though we are working hard to make sure that it stays like that, and we are confident that we can do that.

Okay. I think we still have a couple of minutes for last question. From an investor now, Nathalie Casali from MFS. Between 2016 and 2020, gross margins increased, in total, 200 basis points which is quite a bit less than your original targets and what you are targeting for the next 4 years. Could you please walk us through the factors that prohibited Philips from achieving its gross margin ambition over the last 4 years, including tariffs? And what do you think will be different over the next 4 years?

Yes. So Nathalie, a couple of things, right? So one, I said we improved it 200 basis point despite the tariff headwinds; that was about EUR 120 million that hit us. We are slowly working our way towards mitigating a lot of that. That is not what we expect as another headwind in the period going forward. The other thing that hit us was this year, right, because with COVID, we had a huge drop in demand in the first half, and we had to keep a lot of our factories shut, so that we were able to manage our costs accordingly. And those under-coverage costs, which are impacting us for this year will not be something that will be there going forward. So we -- I think the confidence in -- and we have significant amount of double cost, right? As we were winding down 40% of our manufacturing footprint, we had the cost incurred to transfer the production from one site to the other, while the other site was not yet shut. So all of these things should go out of the profit and loss in the coming 5 years, which will then give us more room to improve our margins going forward.

Okay. I think I hear we have 1 more question. So let's try Scott. And we seem to have his audio.

Two questions, please. One to Frans, one to Abhijit. So Frans, I think you have very successfully implemented a shrink-to-grow strategy for Philips. Have we reached the right foundation now to expand to grow potentially considering maybe even a fourth leg to your business? And to Abhijit, procurement and supply chain rationale -- rationalization appears to be one of the bigger drivers for your net savings plan. Is there higher implementation risk here as compared to overhead reduction? And perhaps you can share with us how important procurement and supply chain savings were in your previous productivity plan?

Great questions, Scott. So let me first make the statement that I'm happy with the portfolio that we have now in health technology, and that portfolio has plenty of room for growth and margin expansion. I mentioned that M&A plays an active role, especially when it comes to strengthening the activities that we have. So ideally, M&A should fit within the frame of Connected Care, Precision Diagnosis, the minimally invasive therapies and Personal Health. You will not see us go completely wild in another sport that we don't know how to play in, right? So it needs to be synergistic to what we are doing. Abhijit?

Yes. On the question on supply chain, there are a few things. So in the past, it was largely focused on our procurement savings on BoM. We are doing 2 things slightly different. I told you we've set up a center of excellence in Pune in India to drive low-cost country sourcing as well as value analysis and value engineering. That has a few tens of people this year, maybe 70 as of today. We will ramp that up to 300 next year and further going forward. That should be a big contributor to especially the amount of savings we generate on life cycle management as well as it being a lower cost center. The other thing I mentioned as an answer to the earlier question was less double cost as we unwind. And the third most important part is the introduction of spend management. That is new that we are kicking off now. I explained that a bit during my presentation. But our procurement organization from focusing just when you buy something, it's priced into quantity P times Q. And we were so far focused largely on the P. But now we have central teams, which are working to benchmarks to manage the P and the Q together with the businesses, and that should drive overall spend down, so I think these are a few things. And then simplification of our distribution network, bringing down 60% of the warehouses, consolidating the warehouse and transport suppliers by 80%, 90%, these things are expected to generate quite some savings in the period going forward.

Very good. I think that's all the time we have for this Q&A session. So now we watch the ESG panel.

Good. Thanks. You'll soon see you back. Please watch the ESG film.

Thank you. [Presentation]

Good morning, good afternoon, everybody. My name is Marnix van Ginneken. I am the Chief Legal Officer at Philips. In this panel discussion, we will focus on how Philips has been integrating environmental, social and governance value drivers into the way we operate and do business. Now first, let me introduce our panelists. We have here, first of all, in Amsterdam, Sophie Bechu, our Chief Operations Officer, who will be talking about how we embed ESG in our supply chain and operations. Then we have joining us remotely Robert Metzke, our Head of Sustainability, who will be talking about how we embed sustainability in basically everything that we do. And also joining us remotely from the United States, a very special welcome to Brian Moynihan, as CEO and Chairman of the Board of Bank of America, and also Chairman of the International Business Council of the World Economic Forum, in which he plays a true leadership role in the areas of corporate purpose, responsible leadership and ESG. So a very warm welcome to you all. Before we go to the panel discussion, let me make a few introductory remarks. First of all, I think it's fair to say that if you look at the challenges the world is facing today, the expectation society has from multinational companies is significantly increasing all the time. And we think rightly so. At Philips, we have always taken the interests of all stakeholders at heart, and we have been a leader in this area for many years. And I'm proud to say that we are continuously raising the bar. We have a long track record of sustainability, and we have been at the forefront of this already for many years. And our efforts are also recognized externally. For example, we are consistently ranked very highly in the Dow Jones Sustainability Index. And very recently, we were proud to be ranked #2 in the world by The Wall Street Journal in their global ranking of most sustainably managed companies. Now, as our sustainability program and targets will be completed at the end of this year, we started thinking about our new sustainability program and new targets for the upcoming years. And we decided to take a broader perspective and to integrate our sustainability program and targets into a broader ESG approach. So in September of this year, we announced our ESG commitments, and again, our sustainability targets are fully integrated into these commitments. And with these commitments, we set ourselves challenging environmental and social targets, and we also commit to living up to the highest standards of governance. And as a truly purpose-driven company, we have an ambition to be a leader also in this area of ESG. Now let's be very clear. These are not just statements of intent. These are commitments that are deployed and integrated throughout the organization, top-to-bottom, end-to-end. And we believe that with this approach, linking our ESG commitments to our strategy and our financial and operational results, these commitments will contribute to creating long-term value for our shareholders and all our stakeholders. Now before I pass the floor to the panelists, let me say a few words about governance. The panel, Sophie and Robert will focus on environmental and social commitments, but we also have an ambition to live up to high standards of governance, as I said. First of all, our Supervisory Board plays a very important role in our governance. So the composition of our Board is very important to us. And we are very proud that we have a very experienced and diverse Board, and all members are fully independent by all applicable governance standards. Secondly, our remuneration policy. We have a balanced remuneration policy that was adopted by the General Meeting of Shareholders earlier this year in 2020, after an extensive dialogue with our shareholders and other stakeholders, so it was adopted with broad support. And part of that remuneration policy is our long-term incentive plan, and 10% of that plan is linked to clearly clear and measurable sustainability targets. Now a final example is our transparency on tax payments. As of this year, we aim to be fully transparent on the taxes we pay, disclosing this on a country-by-country basis. So these are just a few examples of what we mean when we say we try to live up to the highest standards of governance. Now with that, let's go to the panel. And Brian, let me start with you. Thank you so much again for joining us. You are at the forefront of these discussions. And as I said in the introduction, you play a true leadership role in the World Economic Forum. Maybe you can share your perspectives on the global ESG developments with us?

Well, first, thank you for having me. Second, it's clear Philips is a company who's committed to this across the board, so to speak. And Frans and his leadership, I've appreciated working with him on these initiatives. But just in the world of ESG, what you've seen in the -- over the course of last year or so, is really an effort by a group of business leaders, International Business Council, which is 150 or so large companies in the world, who commissioned a group of, including the big 4 accounting firms, to define stakeholder capitals and that you mentioned earlier, Marnix. And how do you define it? Well, we had to think about what the definition would be. And the obvious definition is to think about what the world wants from capitalism. And that is the sustainable development goals of UN. So the team set out to develop a set of metrics that would measure a company's performance against those goals across all the SDGs, 21 metrics, 24 back-up metrics, and then syndicated those metrics through companies like ours, through the standard centers, the different people have disclosure of metrics and other aspects of whether it's the environment or other things. And you mentioned some that you've got -- been rewarded by, the idea of conversion these standards to standards that we can measure multiple disciplines in an industry and judge them against each other. And so what does that all do? That gives really a scorecard to say companies are making progress to the SDGs, which is number one. Number two, gives a way for the investment community to measure that progress on a consistent basis. Number three, it gives a way for customers to look at those companies and see who's contributing to making the progress we need to make to drive stakeholder capitalism to make the environmental transition and other things. And number four, it gives employees who work for those companies a way to judge those companies. And so those metrics, which accompany the best practices we could find out there are doable by companies. And now we're in the process of getting companies to sign up to disclose those, and your company being a leader is obviously helping us lead that. But this really comes back to the responsible leadership pact that we all signed in 2017 with France leading it with a group of us. And now it's time to measure that. And now we can, with these new IDC metrics.

Thank you, Brian. Now Robert, over to you. I know sustainability has been top of mind for us at Philips already for many years, and I spoke about the track record in the introduction. Can you say a few words about our track record?

Thanks, Marnix. With pleasure. Well, as you said, we have been embedding sustainability in our business practices for many years. I think we launched our first EcoVision program in the late 1990s. And we have been setting sustainability targets ever since. And I'm proud to say that we have a track record of actually meeting these targets. So if you ask me, that really shows that sustainability has become a part of the DNA of what Philips is and stands for. We believe sustainability not only drives innovation. It's also a great way of engaging with our employees, and it really creates superior value for our customers, for our stakeholders, including our shareholders. So about our latest program that we launched in 2016, our Healthy people, sustainable planet, will come to an end at the end of this year. And I'm proud to say that we are also on track to meet the targets of this program. As you can see, as an example here on the chart, we have been able to lower our carbon footprint substantially over the last years, but this is just an example. And of course, there's still much more to do.

Thank you. Thanks, Robert, very much. It's quite impressive results indeed. So this was looking back on our track record. Now looking forward, please tell us something about the new environmental targets that we announced in September.

Indeed. Yes. So following our transition about programs and targets, we have put forward targets also for the next 5 years, which are another step up on the environmental side, but also on the social impact areas. But let me zoom really in on the environmental side here. We focused on the main impact areas for us which is the sustainable use of materials and the sustainable use of energy. When we talk about energy, then we have a very strong climate action program. Actually, we have been the first health technology company that committed to science-based targets in line with The Paris Agreement. Now on the materials side, we really focused on circular economy, which means creating more value for our customers, using less raw materials and less waste. So that also means adopting new business models to really maximize the lifetime value of our products and solutions across the lifespan of our products. What you can see on the chart here is that by the end of this year, 15% of our revenues will come from circular products and solutions, and we want to drive that up to 25% towards 2025. At the same time, we are going to expand our take-back and payback policies to all professional medical equipment. And that's not all. We are also going to extend our circle economy practices across our operations, including sending zero waste to landfill. So both elements, the energy and the material side, really require a strong commitment towards eco design and sustainable innovation. And these are topics that are close to our heart, as you can imagine. So one of the examples, to give a little bit more flesh to the bone here, is, for instance, the Philips BlueSeal technology, which is a micro cooling technology for MRI scanners. That allows us to cool an MRI scanner with just 7 liters of helium, instead of the 1,500 liters that are used for conventional magnets. So the magnet is filled at the production and after that, sealed. So during operation, you do not need to refill it. It's magnificent in terms of saving precious resources, but it also allows us to operate such a magnet in a totally different way. I think it's a brilliant example for innovation with the purpose in mind and our sustainability target. Now going forward, we really want to create specific category also. Philips products called our EcoHeroes that should contribute to 25% of our total revenues by 2025. And every single product of Philips will go through our EcoDesign standards and pipeline.

Thanks. Thank you, Robert. Now maybe switching to our social commitments, please tell us about the importance of social metrics for our company.

Thanks, Marnix. Social impact metrics are a great way to operationalize our purpose. That has already been mentioned. We want to improve people's lives, people's health and well-being, and we want to specifically improve 2.5 billion people's lives by 2025 through meaningful innovation. Now as a subset of that, we have committed to make health care accessible to 300 million people in underserved communities. That is very powerful and very inspirational. As you know, the lack of accessible and affordable health care is one of the most pressing issues of our time, with half of mankind not having access to health care. And COVID-19 only has intensified the situation, really overwhelming the health care systems globally. So as a leading health technology company, we really have to play a role here. And with digital innovation and strategic partnerships, including our own Philips Foundation, we can make meaningful steps to achieve these targets. Let me just conclude, this is not just only focusing externally. It's internally also. I'm talking about social impact metrics. We want to be the best place to work for people who share our passion. And that includes promoting personal development, inclusion and diversity.

Thank you, Robert. Now Sophie, over to you. To remain in the social dimension, can you please tell us what the impact is of our social commitments in our supply chain?

Thank you, Marnix. As you know, we've embedded the ESG principles in the way we work with our suppliers for quite a long time. But you may remember the days of CSR, audit, find, correct, repeat every 3 years, same outcomes. So in 2016, we really felt that this was in need of a very, very different approach. We started our very own and unique Philips Supplier Sustainability Program, where we really changed the mode of operation, collaborating with our suppliers, visiting them a lot more often and engaging with them on what those social responsibility really meant. We cover health and safety, human rights, ethics and environment. And when you look at the program results just of last year, we have now about 300,000 employees of our suppliers in East Asia that have improved their lives through better labor conditions, less security and safety issues on their workplace. We have improved the metrics by about 19%. And we have also now absolutely 0 tolerance violations. We call those the extreme violations. And we are able to find them and correct them within 3 months with no repeat. And when you look at 2025 in the goals that we've now set for ourselves, we want to expand that to our suppliers globally, which will touch about 1 million people in the supply chain. The last addition to this program has been the use of artificial intelligence because we measure roughly 165 points per supplier, which is quite cumbersome. And so with the use of AI and collaborating with universities in Eindhoven and in Arizona, we're now able to achieve the same confidence with about less -- about half of the points we measure. So really a great program, recognized by the Crystal Prize, which is a transparency prize in the Netherlands; recognized by the Responsible Business Alliance Compass Award in 2018 -- in 2019, sorry; Sustainable Purchasing Leadership Council prize in 2018. And probably the best for me is we're now seeing external companies -- other companies, sorry, wanting to join our program so that they can deploy it with their own suppliers. So let me maybe put a plug here to have others joining this program and really make a difference in the world of ESG.

Thanks so much, Sophie. That is very impressive, indeed. Now switching to our own sites and operations, can you tell us what the impact is of our environmental commitments on our side of the fence in our own operations?

Sure. Well, you heard Robert, right? In 2015, at the Paris conference on climate, we made this pledge of having, by the end of 2020, 100% renewable electricity and becoming carbon neutral in our operations. We tackle this on 3 fronts: our plant, where we are now buying 100% renewable electricity; our business travel, and we did this through gamification, trying to entice people to understand what collaboration is with virtual tools and being rewarded if it could avoid travel; the third point was logistics. How do you avoid air, fast boats, the road from China instead of air. So we will be there at the end of 2020, and that makes me really proud. Because besides the moral obligation of sustainability, I think there is another dimension of business value. Our customers are in the street behind Greta Thunberg. They demand the choice, and they want to know if this vendor has principles behind sustainability. So this is what really, I think, differentiate us. This is this ambition that for 2025, we will be in line in our entire supply chain with the 1.5-degree global warming scenarios. And that ambition is really what differentiates us. And it's not the ambition of you, Robert, or me. It's the ambition of all our people. And to exemplify that, I will give you what is happening in Austria. We have had our people in our site in Austria crowdfund a solar panel on the roof of their building. That is now saving 58% of our CO2 emissions, about 825 flights from Klagenfurt to Amsterdam, 260 tons of CO2. So it is not you, me. It's them. It's us, and that makes me really proud.

Thanks very much, Sophie. That is indeed a great example. Now Brian, back to you. Having heard Robert, Sophie and myself talking about how we approach ESG and how we integrate it within Philips, can you share with us some of your reflections on what you've heard?

Sure. I'd be happy to do that. And let me share them as -- in 3 different roles. My role as a person who stewards $3 trillion, investor, not my role, but my teammates' role in our company as a big investor and a big research plant that advises investors. Our role as a lender and a capital markets participant. And importantly, for this purpose of my role in the IBC. So this is across all those roles. This is exactly what we want to see, a balanced group of initiatives across all the aspects of ESG, environmental, social and governance. We know that companies who do well on this will do better as competitors. We also know companies who don't do well in this will fail, and you guys are way into the category doing very well, and we should support that. And our research shows that, and our clients we invest for want us to invest in companies who are doing the types of things that Philips is doing. The key then is to think about the balance in the integration of compensation and things that you mentioned earlier, Marnix. Those are leading principles, as you've been recognized for by various third parties that you showed on the screen, but they're leading principles which are critically important. So let me back up on the role at the IBC. This is exactly what we're trying to get done. We're trying to get across all the SDGs, all the sustainable development goals, a set of metrics where people can be measured. And then those companies can make internal commitments that go through all their teammates to deliver on them that they can live up to, and the story about the Austria crowdfunding is terrific, that they can live up to and help drive those metrics and complete transparency from your shareholders, from your customers, from public society through everything you do on all the metrics, including the taxes and the things you talked about. This is exactly what the world needs from companies like yours, and you are a leader and so proud to be associated with you. And as a head of IBC, thank you for the depth and quality of your commitment, and that will help us -- Frans and I can then put more of a push on other companies to come along and sign on to the metrics that you've shown how you can make them part of your day-to-day execution.

Thank you so much, Brian. That is really great to hear. Now with that, we will wrap up. I would like to thank our panelists one more time for their great contributions. Thank you for your attention. And please note that the Philips team will be available for Q&A -- in a Q&A session later on in the program. But for now, goodbye, and thank you very much. [Break]

Welcome back. We lost connection towards the last few minutes of our ESG panel, apologies for that. We are recording everything, so we'll make the full panel available in due course in our Investor Relations website. Thank you to Marnix and the other panelists, by the way. We will go now to the business segments' presentations, starting with Diagnosis & Treatment.

Welcome, everyone. It's great to interact today with you, and we're going to talk now about Diagnosis & Treatments. I'm Kees Wesdorp, I'm the Chief Business Leader of Precision Diagnosis. I'm very excited to stand here because I'm really passionate about the ambition and the purpose of Philips to improve the lives of 2 billion people per annum by 2025. And that's because there's so much to gain both from access to care as well as quality of care. I've noticed that in my personal life, but definitely also in my professional life. Now I'm going to talk today about Precision Diagnosis, and Bert, Bert van Meurs, who's Chief Business Leader for Image-Guided Therapy, he will talk about the world of solutions in minimally invasive procedures. Together, Bert and I represent the segment Diagnosis & Treatment. And before jumping into Precision Diagnosis, I would like to walk you through and give you an overview of Diagnosis & Treatment. In Diagnosis & Treatment, we're creating value through unique market-leading portfolio of diagnostic and procedural solutions. And we deliver innovative diagnostic and procedural solutions powered by AI-enabled informatics. In fact, our portfolio has attractive recurring revenues driven by software services and devices. And our ambition is to deliver average annual sales growth of 5% to 6%, reaching 15% to 17% adjusted EBITDA margin by 2025. We deliver solutions within and across our core businesses. And so for instance, our leading positions in ultrasound, diagnostic imaging, enterprise diagnostic informatics, image-guided therapy systems and the image-guided therapy devices set us up to deliver on our mission. Now let me talk about Precision Diagnosis. We're accelerating growth through workflow and care pathway solutions. And let me start off with the key messages in terms of our mission, but also how we're going to deliver our mission. In Precision Diagnosis, we are uniquely positioned in the imaging systems and informatics market to grow in attractive adjacencies with differentiating workflow and care pathway solutions. We do this with solutions that deliver upon the Quadruple Aim through breakthrough innovations in our smart diagnostic systems, through dynamic workflow solutions that transform departmental operations, through industry-leading informatics to provide diagnostic confidence, but also through expanding in attractive adjacencies with care pathway solutions. In parallel, we continue to deliver market share gains and productivity improvements in our core imaging portfolio. And we do that by driving growth such that we have fixed cost leverage to expand our margins, but also with a very comprehensive margin expansion and productivity enhancement program that spans multiyears and that has tangible impacts. And in fact, we deliver margin expansion above the average margin expansion that Philips has demonstrated year-on-year. As such, we're set out for average annual sales growth of mid-single digits and an adjusted EBITDA margin of mid-teens by 2025. Let me talk a little bit on how we're advancing Precision Diagnosis, and the aim towards clear care pathways with predictable outcomes for every patient. What I want you to remember is that we deliver this through 4 stepping stones. And let me start here at the bottom, smart diagnostic systems. We drive meaningful breakthrough innovations in our portfolio, and that provides us access to a sizable market of EUR 27 billion with low to single-digit growth. On top of that, we're growing into adjacencies. Optimized workflows firstly, then integrated diagnostics secondly, and then care pathways, thirdly. And we do this by building on smart diagnostic systems and augmenting that with our leading position in informatics and AI, and that leading position is accelerated by the recent acquisitions that all perform ahead of plan, for instance, with Carestream, Medumo for patient engagement, TomTec but also Reacts, the latter 2 in the Ultrasound portfolio. The basis of smart diagnostic systems as well as the stronghold in informatics, allow us to have access to an attractive market in these 3 adjacencies of EUR 24 billion with high- to single-digit growth. We win there with a unique offering. We're uniquely positioned to win in these attractive adjacencies with differentiating workflow and care pathway solutions. And the offering is really focused on fewer, bigger propositions and solutions that drive profitable growth. Let me start with smart diagnostic systems. There, for instance, we have the imaging acquisition suite. We're delivering a unique and world-class user experience across our products and solutions. Or in optimized workflows with our radiology workflow suite. My colleague, Sham Sokka, who heads marketing for the cluster, will elaborate further on that, but I can tell you, we're driving cross-departmental efficiency and effectiveness through the innovations that we're driving there. In integrated diagnostics, for instance, take telediagnostics, and it was one of the questions that came up earlier, we are definitely moving forward with telediagnostics, to make sure that we address some of the urgent needs that the pandemic has also asked for. And I'll come back a little bit later on what that means. In care pathways, think of collaboration solutions, such as integrated command centers or the oncology collaborator where we significantly speed up the time to treatment for better patient outcomes. We do this by embracing vendor-agnostic, interoperable and scalable platforms. Think of informatics orchestration and AI engines, but also architectures such as cloud architectures and the end application marketplaces. Why do we do this, this way? Because we recognize that we need to commit integral solutions across health systems and not a point solution that only works on certain conditions. I'm going to dive a little bit deeper in each of those 4 stepping stones. And let me start with the first one, which is smart diagnostic systems where we're growing core modalities with continuous breakthrough AI-enabled innovations. And I want to make 1 point really clear. We said in previous Capital Markets Day that we had a significant renewed portfolio. Again, over the period of 2019 to 2020, we have a 60% renewed portfolio. Take for instance, CT, computed tomography. Well, first of all, we embrace AI, and we have AI applications to do faster image reconstruction, but also, for instance, reduce the dose. And we do that now across the entire spectrum from the high end to the low end. In the high end, for instance, we have the first detector-based spectral CT that allows for a confident diagnosis as well as significant workflow improvements. In the mid-end, we have new and novel propositions such as the Tube for Life reliability guarantee that we give as part of our Incisive platform, which results into great total cost of ownership. And then we have a very competitive platform, the Access CT platform to address our low end. On top of that, all the solutions that we drive have deep integration with informatics and AI. And as such, we can confidently say we continue to drive productivity, diagnostic confidence and intelligent workflows with -- and therefore, delivering upon the Quadruple Aim. In optimized workflows, we're expanding into new markets with collaboration platforms. And I've taken the example of ultrasound here. First of all, we have smart imaging and reproducible quantification to make sure that there's a seamless and intuitive workflow. And that has an impact, for instance, the example here with arrhythmia patients of reduced time to diagnosis; in this case, 80% reduction in time for measurement. Now COVID has also learned us something else. And that is that we need increased diagnostic accuracy at the bedside instantaneously and also instantaneous collaboration across care settings. We can deliver that with our tele-ultrasound platform, and that is super critical because COVID has learned us that staff and experience shortage is a real issue, and tele-ultrasound can address that. For integrated diagnostics, we're growing the core of differentiating AI-enabled informatics to generate comprehensive patient insights. And this is a passionate topic of mine. I yet have to enter a care setting where the contextual and the clinical information of a patient is ready available to make a precise diagnosis. What if departmental data analytics could flow freely between hospitals and between departments? That would definitely drive a more definite diagnose with greater outcomes, but also huge efficiencies in the systems. That's exactly what we're delivering with integrated diagnostics, and we do that with 0 disruptions. COVID also taught us the need for telediagnostic and teleradiology. It also learned us that patient exchange is really critical. And therefore, we had launched patient exchange portals that are fully interoperable. So COVID accelerated the digital transformation and has actually brought to the fore the solutions that we're partnering up with our customers in the domain of integrated diagnostics. Then on the fourth stepping stone care pathways, expanding into attractive markets by orchestrating decision-making in the patient's care pathway. The example that I would like to give here is in the oncology informatics domain, where we have tools to dramatically reduce the time from referral to treatment, in this case, 55% shorter time from referral to treatment is quoted. Now how do we do that? In our portfolio, we can offer more precise imaging. We can make sure that the data of a patient is fully available. We can have adaptive treatment pathways. And we can make sure that through analytics and data science, we can embrace the way and we can improve the way patients are guided in their care pathway. We combine that into an integral offering such that we can deliver the claim that we have on this page. Now all of this is made possible by the combination of smart diagnostic systems and our leading position in AI-enabled informatics. And I'm going to hand over to Sham Sokka, who is the marketing leader for the Precision Diagnosis cluster. He's going to deepen how we're innovating and how we're bringing value to our customers with the radiology workflow suite that we're also going to launch shortly at the RSNA. Sham, over to you.

Thank you, Kees. Hello, I'm Sham Sokka, Head of Marketing for Precision Diagnosis. I'm going to zoom in on how we address the largest customer challenge in radiology, operational efficiency. Radiology and imaging today represents one of the top spends in health care globally as it touches almost every clinical pathway. For example, in the United States, we spend almost $100 billion on radiology and imaging. $18 billion of that are in the systems, the IT and the related services. The rest of the $80 billion plus is on operations. Now an estimated $12 billion of that is waste from inefficiencies. And here on this slide, you see some of the key opportunities. Improving patient preparation and compliance can reduce no-shows and improve diagnostic quality and overall outcomes. Leveraging virtual technologies can improve staff productivity and reduce variability and cost per stud. Maximizing utilization of the imaging equipment can reduce system operating costs and improve access. What's worse, these inefficiencies build on top of each other. For example, poorly prepared patients lead to more work for the staff and increased imaging equipment utilization. So these challenges can't really be addressed independently. So therefore, we have introduced the industry-first vendor-agnostic radiology workflow suite, which are software and services that address these significant inefficiencies in an integrated way. So now let's hear from our customers through video on how we specifically drive better operations in the clinical practice. [Presentation]

Thank you, Sham. And I hope you all were able to get some further insight in one of our most important solutions in optimizing workflows, which is the radiology workflow suite. Let me bring home the key points for the cluster Precision Diagnosis. We are uniquely positioned in the imaging systems and informatics market to grow in attractive adjacencies. We do this with workflow and care pathway solutions by: breakthrough innovation in smart diagnostic systems; by dynamic workflow solutions that transform departmental operations, that was the example that Sham has walked us through; industry-leading informatics to provide diagnostic confidence; and expanding in attractive adjacencies with care pathway solutions. We continue to deliver market share gains and productivity improvements in our core imaging portfolio. And as such, we're on track to deliver annual sales growth of mid-single digits and an adjusted EBITDA margin of mid-teens by 2025. I'm going to hand it over to Bert van Meurs, the Chief Business Leader for Image-Guided Therapy, and he's going to talk about the great solutions for minimally invasive procedures. Bert, over to you.

Yes. Thank you, Kees, and welcome, everyone. It's a true pleasure to be here together with you, although virtual. And it's my honor to present to you the exciting growth story of our Image-Guided Therapy business. Now image-guided therapy remains an attractive and profitable, high-growth market because of the benefits it offers to care providers and patients, really addressing the needs of the Quadruple Aim. And we are successfully executing on a unique strategy, where we have pivoted from focus on modalities to integrated procedural solutions, being part of the global Philips strategy to move to solutions. And we do that along 4 very important and unique growth drivers. First of all, we are accelerating the synergy from the devices business that has been propelled through a number of acquisitions, and we are integrating together with our imaging business. Our strong platform of our imaging systems business will continue to innovate and build a very strong and superior platform. We are expanding into a number of adjacent therapeutic areas, providing further growth. And fourth, we are not only innovating the procedure, we're also innovating the way we interact with our customers through multiple care settings, care settings out of the hospital and through new business models. And with that, we are confident that we can continue on our growth journey, delivering on our targets for midterm, high single-digit growth, and an adjusted EBITDA margin of above 20% by 2025. Now this is our growth journey. And that started basically 6 years ago, when we embarked on a unique strategy to focus on integrated procedural solutions on how can we drive more effective patient care and really treat patients more efficiently and more effectively. And with that, we are combining imaging and devices, which started with the acquisition of Volcano in 2015; followed by the acquisition of Spectranetics in 2017, where we already went deeper into therapeutic devices; acquisition of EPD in 2018; and even this year, we acquired the company Intact Vascular, where we went further into peripheral vascular therapeutic devices. Now that has delivered on a strong growth journey, as you can see here, until 2019, double-digit growth. We have expanded our leadership position, and we are confident that despite the headwinds that we see this year on Image-Guided Therapy, we will be able to continue our growth journey with high single-digit and further expanding on our margins post-COVID in the midterm. Now. And there's tremendous opportunity to grow in Image-Guided Therapy. We have already expanded on our addressable market by growing into new therapeutic areas. Our addressable market, which is roughly EUR 9 billion today, we continue to strengthen our core in many different clinical procedural areas. First of all, in coronary artery disease, where we're innovating the procedure for the treatment of patients with coronary artery disease; peripheral vascular disease for diabetic foot; electrophysiology, patients with heart rhythm disorders; or further in structural heart disease, where now you can treat patients by replacing heart valves; interventional neurovascular, you can treat patients with stroke or aneurysms; and even in interventional oncology for the treatment of liver tumors, kidney tumors or going into the lung; and we even go further into spine surgery for spine fusion. So we have been able to grow in this area in different dimensions. First of all, we have strengthened our share in our core business by combining this unique strategy of imaging and devices, but we're also expanding into new therapeutic areas by procedure innovation. And thirdly, we are expanding our overall market by going deeper into therapeutic devices. Now I already told you that we have built a strong devices business on the basis of a number of acquisitions. And even this year, we acquired the company Intact Vascular, which provides us the Tack Endovascular System, which enables an even more complete treatment of peripheral vascular disease. But we've been also delivering on a number of very strong organic innovations. And that delivers us unique differentiation in this devices portfolio. For instance, the world's first introduction of IntraSight, where, this year, we are combining our devices from IVUS and physiology with our Azurion platform; but also OmniWire, which is the world's first solid core pressure wire, delivering the pressure measurement for iFR measurement, which has the same characteristics as a workhorse wire, and you can use it throughout the whole procedure; or QuickClear, the world's first fully disposable thrombectomy device, eliminating the need for capital investment and initial capital cost. But on top of that, we continue to invest in adoption and through strong clinical and economic evidence by investing in clinical trials. So the clinical proof points and driving physician's preference is extremely important for driving a strong devices business. Now and that would only be possible going into adjacencies based on a very strong -- a position of strength. And the position of strength comes from our systems business, where we have been market leader and a world leader for many, many years. And we continue to innovate and invest in our core business based on our superior Azurion platform. The Azurion platform, you may remember, was introduced already more than 3 years ago, has driven strong share gains by improving workflow. And on top of that, we introduced FlexArm, which offers more freedom with a smaller footprint. But also we have expanded the number of configurations of this platform by addressing multiple customer needs from value all the way to high end. And this year, we introduced the next generation of Azurion for further optimal use experience and offering much more integration during the procedure. IntraSight, already mentioned, now fully integrates the use of IVUS and physiology during the procedure with the same user interface as part of Azurion. IntelliVue X3, which is our standard patient monitoring from our patient monitoring business, bedside patient monitoring that can now travel with the patient into the cath lab and therefore offers uninterrupted workflow. Or SmartCT, which is a novel 3D imaging technology that now can be fully operated with a very intuitive onscreen guidance during the procedure. I mentioned procedure innovation, which helps to further grow into adjacent and new therapeutic areas. And I want to give you just a few examples of what we actually mean with procedure innovation. So let's look at a couple of clinical areas. First of all, atrial fibrillation. Now atrial fibrillation is a disease that's very common. 33 million people worldwide suffer from atrial fibrillation. And it's a very risky disease. Those patients with atrial fibrillation have a 5x more risk of stroke. The treatment of this using ablation is very complex. And therefore you see that up to 40 patients -- 40% of patients with AF ablations must be redone after one year. What we have done is introducing, based on the acquisition of EPD, our KODEX system using dielectric imaging. And KODEX offers through imaging of the tissue, which offers much simpler navigation, but also can assess the treatment result during the procedure, and therefore offers a much more enhanced procedure efficacy. We've introduced this first and it's already introduced in a number of sites on -- specifically for cryoablation in a very strong partnership with Medtronic. This offers a treatment that can reduce the numbers of re-dos, but also have a much stronger and direct feedback during the procedure, and therefore more effective and more efficient which -- with much lower x-ray radiation. Another example, lung cancer. Each year, there's 1.7 million people that worldwide that die from lung cancer. It is the highest mortality in cancer. And today over 60% of the patients are diagnosed at a very late stage because it's very difficult to really diagnose. Small reasons: the diagnostic yield is very poor. So what we have done is we introduced Philips Azurion Lung Edition, which uses the same advanced 3D imaging technology. But now instead of visualizing the vessels, you can visualize the airways in the lungs in 3D. And that helps to guide bronchoscopy, so that you can in an earlier stage already do the diagnosis, but at the same procedure also do the treatment. So you have a faster, minimally invasive diagnosis as well as treatment. And this enables also a new customer group: interventional pulmonologists that normally only will do the endobronchial biopsy and diagnosis, can now diagnose stage and treat lung cancer in the same procedure. And finally, we don't only innovate the procedure. We also innovate the way we engage with our customers, and we're shaping the market with new business models across different care settings. For instance, out-of-hospital care settings, office-based labs and ambulatory surgical centers, where we've introduced Symphony Suite as a leading solution for -- specifically for peripheral vascular disease in the U.S. And this -- that has delivered us over 50% market share. And now we're expanding that into coronary interventions with new reimbursement models in ambulatory surgical centers. But also, we're working together with our customers on enhancing that performance and productivity, offering professional services, like we're doing for instance in Leeds University. And finally, in long-term strategic partnerships, we are supporting our customers through technology as a service. Now with that, I would like to hand over to my colleague, Dr. Atul Gupta, who is the Medical Officer for image-guided therapy. But Atul is also a practicing interventional radiologist. And Atul will guide us on a tour what procedure innovation really means. And he is at the U.S. Memorial Medical Center where he will demonstrate on the patient journey. The patient, Ana Griffin, is not a real patient, it's not her real name, but is made for this demo. So Atul, over to you.

Thanks very much, Bert. I wanted to bring everybody at Philips Capital Markets Day on a tour of the world that image-guided therapy lives in, the world that I work in. My name is Atul Gupta, and I'm the Chief Medical Officer for image-guided therapy at Philips. I'm also an actively practicing interventional radiologist, having performed procedures for 20 years. I'm excited to be able to give you an inside look at a fully integrated interventional suite, a suite that seamlessly integrates our image-guided therapy systems, our devices and our software. Now we're fortunate enough to be standing here in an Azurion room at the UMass Memorial Medical Center just outside of Boston. This is an actual working interventional suite where life-saving procedures get performed every day. And we're going to be following the case study of our patient, Ana Griffin. Ana has long suffered from peripheral artery disease or poor blood circulation in her leg, causing cramping and pain when she walks. This is caused by an arterial blockage. But Ana's symptoms are getting worse, and she's now experiencing pain in her left foot even when she's at rest. She also appears to be developing ulcers or wounds in the foot from lack of blood flow. We call this end-stage of peripheral vascular disease, critical limb ischemia or CLI. Sadly, Ana's story is not that unique. Nearly 0.25 billion people worldwide suffer from peripheral artery disease. 12% of Americans get CLI, and the cost of treating these patients is over USD 21 billion a year. What really bothers me is that nearly 40% of these patients will have to undergo an amputation within 6 months of being diagnosed. And perhaps most troubling, 50% of those patients who undergo an amputation will die within 5 years. So the threat to Ana is very real. In fact, we have an expression in medicine, "If you save a limb, you quite literally save a life." So let's get started as I show you the Philips integrated interventional suite. Now this is not about a single product. Rather, it's bringing together many innovative components into a differentiated, holistic solution. We'll begin right here at the Philips Azurion imaging system where we do an angiogram on Ana. What that means is we insert a catheter not much larger than a strand of spaghetti into the artery of her thigh. And then using the intuitive joystick control of the FlexArm, I'm able to easily move the imaging to various parts of Ana's aorta and her leg arteries. In fact, I can even do these complex x-ray maneuvers without looking at the controls and without special training. It's that intuitive. Now as you can see, Azurion clearly shows me the occlusion or the blockage in the superficial femoral artery of Ana's left leg. And then using this touch screen, I can simply pinch and zoom right on the image of the angiogram, and this makes viewing and interpretation of her images quite intuitive. So now we've made a diagnosis minimally invasively with Philips Azurion. But how do we treat it? Well, let's head over to the supply area just over here, and let's take a look at the many therapeutic options for peripheral artery disease that Philips offers. Each one of these boxes contains a variety of devices that I might need, everything from lasers to drug-coated balloons to thrombectomy devices to atherectomy devices. And to treat Ana's blocked artery, we can use a couple of minimally invasive devices that we thread through her arteries guided by Azurion X-ray imaging. First, the new Philips laser system, which helps us vaporize the atheromatous plaque in the artery with 308-nanometer laser lights. And then followed by angioplasty with the Stellarex drug-coated balloon, which also delivers a drug to prevent her artery from re-narrowing over time. These differentiated devices will be instrumental in opening up Ana's blocked artery. Now let's head over to the control room. Okay. We're now in what we call the control room. You can think of it like a mission control or a command center. And this is where the techs and nurses run the Azurion. Now let's take a closer look at Ana's leg artery now that we've treated it. We can see that her superficial femoral artery is nice and wide and open compared to the occlusion you saw inside before treatment. But data shows that a 2-dimensional x-ray view from the outside in only tells part of the story. In fact, some abnormalities, like things we call dissections, are relatively invisible on x-ray. And often we need to add another source of data to get the whole story. So to get a better view, let's head back inside the angio suite and return to the Azurion where we can put Philips' IntraSight into action. IntraSight is a platform built into Azurion, and it lets me seamlessly integrate our Philips intravascular ultrasound or IVUS device. It's quite literally plug and play. So right here at the table side, I can use a single intuitive touch pad interface to visualize Ana's anatomy, to control Azurion and to control the Philips IVUS device. It makes the workflow frictionless when we use a Philips IVUS device. And by the way, this Azurion touch pad is not just a fancy remote control, it's actually a software platform that even today is already supporting a whole host of other clinical applications besides peripheral artery disease. In fact, it's also plug and play with Philips OmniWire, and it supports PCI or coronary interventions. It's even supporting interventional oncology procedures. So now let's take a look at Ana's artery from the inside out with our IVUS. And as you can see, we now have a much more detailed view. In fact, IVUS was able to detect something invisible on the original angiogram. It's what we call a dissection. Why is that important? Well, dissections are an almost invisible injury or a tear to the innermost lining of an artery. It's wafer-thin, so they can be very difficult to detect with 2-dimensional x-ray. But if left untreated, they can actually stop the blood flow. So if we relied solely on Ana's first angiogram, I probably would have missed it. But now Philips IVUS lets me tailor a better treatment for Ana so that she avoids amputation. And remember, half of those who get an amputation die in 5 years. So thanks to our IVUS, we caught the dissection and we can treat it properly, which is what we're going to do right now using this Philips Tack device. As you may have heard, Philips recently acquired Intact Vascular where Tack was developed. Tack can treat that dissection flap or prop it open, and it does it with minimal metal. And take a look at the small size of this amazing device. The Tack system is threaded via catheter less than 2 millimeters in diameter, again like a strand of spaghetti. And we deploy it using precise x-ray guidance at the point of dissection. And because the artery usually has multiple dissections, not just one, this single deployment system has up to 6 separate Tack implants inside. It lets us spot fix multiple locations very quickly, all with just one device. This is really a breakthrough technology. And having a Tack and IVUS in my back pocket gives me confidence to be more aggressive in pursuing endovascular treatment along with all my other Philips devices. By the way, both Tack and IVUS are well reimbursed in the U.S. This will ultimately save more limbs and more lives. So now let's head over to the Philips FlexVision screen, where I can use Philips SmartPerfusion software to take a closer look at the microvasculature of Ana's foot. Now this software helps confirm that the blood flow in Ana's foot after treatment looks great. And we expect her pain to be gone and her wounds to heal. And again, doctors have access to disease-specific Philips software across many categories of disease that get treated in this interventional suite. So that means software for coronary, for oncology, structural heart disease, neuro and more. It's important to note that these peripheral vascular disease procedures and even coronary procedures are increasingly happening in out-of-hospital settings, what we call office-based labs or ambulatory surgery centers. And that's where Philips is uniquely providing turnkey integrated procedural solutions. These out-of-hospital settings are increasing access to care and reducing overall costs. So there you have it, an integrated interventional suite. I hope this quick tour demonstrated the real clinical value this integrated solution gives to doctors like me and patients like Ana. It's never about a single product, a single device or a single x-ray system. It's about Philips uniquely putting it all together, seamlessly combining powerful software, sophisticated imaging systems and differentiated therapy devices working in harmony. And it's all so we can treat the patient better. Now back to you, Bert.

Yes. Thank you very much, Atul. So I hope this demonstrates to you that we really are uniquely positioned in delivering this procedure innovation. So let me recap for you. Image-guided therapy is an attractive and profitable high-growth market. And we are uniquely positioned, and we have a strong and solid strategy of integrated procedural solutions where we innovate the procedure. Along a number of very strong growth drivers, we've integrated our devices acquisitions, and we are organically further innovating and building that business based on a very strong platform of our Azurion Systems business, integrating different elements of information and imaging, expanding into adjacent therapeutic areas and also innovating the way we engage with our customers. And we are highly confident that we can continue on our growth trajectory of high single-digit growth and adjusted EBITDA margins of above 20% by 2025. And with that, let me hand it over to Roy Jakobs, the Chief Business leader for Connected Care. Roy, over to you.

Thank you, Bert. And thank you for coming over from the exciting world of IGT into another exciting segment, which is Connected Care. My name is Roy Jakobs, and I'm leading this cluster since the beginning of this year. And actually I feel very privileged to do so. Because in the year of the pandemic, we have been able, with our suite of solutions, to support our customers tremendously in stepping up to this challenge. So the key takeaways from this session about where Connected Care is and where we are going. So in this year of 2020, we saw a huge rise in demand for our solutions, solutions that were ready to fight the pandemic, whether it was in monitoring, whether it was in respiratory or in informatics where we were able to successfully convert the COVID demand into sales and profit. And whilst we know that this COVID demand will taper off, we are very confident that actually the trends that we saw during COVID reaffirmed our strategy and also is the new need that we need to deliver upon moving forward. Because it became very clear that the current health delivery needs to change, and that change needs to be supported by solutions that connect seamless care between patients and providers in a better way. And we have solutions ready today to do so in the area of patient care management where we combine our monitoring, our telehealth and our therapeutic devices supported with informatics and deep clinical insights to deliver upon the needs that the health system has, whether it's increasing productivity to deal with resource scarcity or whether it's driving better clinical patient outcomes. And by doing so, we will deliver 5% to 6% growth and step up to an EBITDA of 17% to 19% by 2025. Now let me tell you how we plan to do this. First of all, we come from a very strong foundation. Over years, we have built up leading positions across the segments that we play, whether it's #1 in patient monitoring in the Monitoring & Analytics space; whether it's leading in sleep therapy, #1, and home ventilation in sleep and respiratory care domain; or whether it's the #1 in eICU solutions in the informatics domain. We do this together with strong customer relationships where we have built a very rich installed base that we actually can extend from. And we do that by offering the solutions that they are asking from us to change their health care delivery model. They don't ask products. They clearly ask for solutions that address their productivity need, their resource capacity need, or their need to engage more and more in and outside the hospital with patients. We have smart devices and systems, like for example our monitors and our respiratory devices that, together with informatics, can deliver a full ICU solution. But we also have then solutions like telehealth where we can enable health across care settings. And that has been, especially during COVID, been a big trend, but we expect that need to continue. Because the increasing needs of getting more access to care but also the cost burden that it takes actually requires that you move to different care settings, more and more outside of ICU and hospital into home. We do this across the globe. We have strong leading positions in different segments in various geographies. We have explicit growth potential in China, Japan, EU, but also still a huge leeway for growth in North America. What we also have heard from customers is that they want new business models, flexible business models in which they can plug and play with the modules of our solutions. For example, we're offering monitoring as a service as the first in the market. We do that on a very strong capability base, a capability base that's built on deep clinical insights and strong customer relations, operational excellence and platforms that are ready to scale, combining data, AI and a strong architecture platform. Let me go a bit further in the individual segments that we play. In monitoring, we see and we saw a huge demand during COVID, because ICU capacity had to be expanded very rapidly. Now we expect that this will continue to -- in the next year, but it will taper off. At the same time, we have seen care moving to different care settings. And in there, wearables like the ones that we have been launching this year that are this small, cloud connected and easy to use, really will enable doctors and health systems to move across the different care settings. They will connect a different care pathway that actually give seamless real-time 24/7 insights into the patient. But it also needs to be supported with a strong care management informatics system. We have the #1 eICU system in the world. And actually it does reduce mortality at the ICU, but also really increase productivity of the nurse-to-patient ratio and of the intensivist to patient ratio. So it really helps the health systems to deal with the increasing demand. By growing this in monitoring, we will expand our growth and profit over the years to come as a very attractive segment to play in. Let me go to sleep care. Sleep care was a segment that was more deprived during COVID, because patients could not go to their doctors to get a prescription for sleep therapy. Whilst we expect that to pick up, it's important to note that it didn't take anything away of the huge potential of the 80% undiagnosed patients that we still have in sleep. But to treat them, they also ask for much more digitized sleep care pathway. So during the crisis, we actually rapidly increased the reach of our Care Orchestrator platform in the Dream Family portfolio to more than 49 countries where it's now available. Secondly, we are also further digitizing diagnosis, like you for example will see when we showcase to you the mask selector. This is a very easy to use tool that actually gets a 90% first-time-right diagnosis of your mask that not only gives a better fit to the patient, it also takes a lot of cost out of the systems and gets it the first time right. Those are innovations that we are actually driving to extend the services in the clinical workflow. We have a remote install also offered at the mean -- at the same time. And by now, we have more than 5 million patients that are cloud-enabled, 24/7 connected to our Care Orchestrator platform. We have many more exciting innovations to come to actually capture the great growth that we foresee in sleep after the COVID depression. Then in respiratory care, we have seen a huge demand increase this year on the back of COVID. The hospitals, especially ICUs, needed much more ventilation capacity. We ramped up 8x the capacity that we needed to have for that. And we were able to do that because of the agility of the Philips business system. That also requires us to now move to the next stage. Because after an immediate huge demand and surge, we expect this to taper off in the hospital, but there is more demand needed because actually this will turn also into chronic care. We see the after-effects of COVID, but we see also that respiratory care in general is really growing as a pain point in health care. It's the #3 cause of death globally. And we are the #1 provider in home ventilation solutions. We have a portable suite so that you actually can support patients on the go as well a very extensive home suite and deep clinical knowledge. That's also why we are the #1 choice of preference of pulmonary physicians. Then let me go to the last but definitely not least exciting part of our segment. And that's the Informatics suite. There we have seen a huge surge in demand as well during COVID. Because in order cope with increasing amount of patients, you really need to have a seamless flow of patients. You need to have a seamless interaction between the patient, the doctor and the different parts of the health system. And you need to have that at different levels to increase productivity of the health system, to do it at a unit level and to do it at a patient level. And therefore we are very happy that we have currently our solutions available and ready to sell and to expand. For example, at enterprise care management level, we have our Tasy EMR. That's very successful in LatAm. And as we speak, we're currently installing in Korea, in DACH, in Australia and expanding further across the globe. On an unit level, our tele-ICU, where we're #1 in North America building on our strong architecture that we have with our customers in the monitoring base, we are also expanding that in the rest of world. Huge growth potential and also a need to satisfy with our customers. And these customers are also, as Frans said, want to simplify. They want to use similar architecture, one platform that they actually can trust and build on. So if we can extend on our installed base, that will really help them to keep it manageable. And then the third area is really telehealth where you take it outside of the hospital. Patient engagement has become a massive theme that we talk about with our customers every day. We have our platform that actually can support hospitals to engage with patients. We did that in extensive form during COVID to keep patients actually out of the hospital, to make sure that actually they were treated where they were needed to be treated, but also when we were able to migrate that now into a broader capacity management into the hospital. But actually I want to give it over to Solange, my head of informatics, who can go much further into informatics. And we'll show you some live examples of how our solutions are delivering services to customers and real people already now. Solange?

Thank you, Roy. Hi. My name is Solange Plebani, and I lead our Connected Care Informatics business. COVID has reinforced the relevance of our strategy to use informatics to connect care along the health continuum for those patients who need it most. Let's take a look at 3 examples on how physicians are leveraging Philips' informatics expertise. Our first example is in tele-ICU. We've mentioned tele-ICU before as one of our growth areas. Now let's deep dive. In acute care settings, these solutions empower health systems to, number one, improve both access and quality of care; number two, manage the shortage of specialists; and number three, optimize the cost of care by centralizing resources. This solution enables physicians to monitor 50, 500 or more ICU beds from a central monitoring facility. One of our customers, Professor Toru Kotani from Showa University Hospital in Japan has recently shared with us their experience on using our tele-ICU solution to manage patients with COVID. In Japan, there are only 5 ICU beds per 100,000 people. They already faced a shortage in 2009 during the swine flu. Now at Showa University Hospital because they had implemented our tele-ICU solution in 2018, they were better prepared to manage the COVID pandemic. They use our tele-ICU solution with its simple one-page patient data profile and the advanced predictive analytics, such as the acuity level of a patient and discharge readiness. Their remote clinicians were supported in executing comprehensive bed control, also in the step down unit while they could steadily admit more patients with COVID and protecting the hospital staff from more infections. Professor Kotani shared this as part of his experience with tele-ICU. We can expect tele-ICU to build the future of intensive care field in education, in medical care and in research. Now let's continue with our second example in remote patient monitoring. Philips has a diverse portfolio of wearables, some created by Philips like our BX 100 which integrates with in-hospital monitoring. Others are ventures like Healthdot, and some are partnerships. By connecting the data from wearables with our software solutions, we make remote patient monitoring a reality. Our sensors and monitors are shown to reduce hospital admissions, mortality and length of stay, synced at the ICU, where each extra day costs at least $3,000. Philips has recently partnered with BioIntelliSense to connect their FDA (sic) [ FDA-cleared ] BioSticker wearable with our software solutions in the cloud to show the clinical data. Our physicians are using this solution to monitor patients at risk, starting in the hospital and continue monitoring the patients when they are discharged home up to 30 days. In a study funded by the U.S. Department of Defense, Philips and BioIntelliSense partnered with University of Colorado Health to answer the following question. Is it possible to predict which patients will get COVID? Let's hear from them by watching the video. [Presentation]

Now let's finish with our third example: managing care in the home. We just heard caring for patients at home, where the cost of care is lower, is the future of health care, especially for those patients in chronic conditions. The ability of caregivers to adapt care based on digital clinical information is making the home an indispensable part of the health system. In the sleep and respiratory space, our patient adherence management service, now integrated with Care Orchestrator, a platform where we have over 10 million of patients connected in the cloud, become an even more efficient and powerful solution to improve care in the home. Added to it, our highly rated patient engagement app creates an ecosystem where physicians, caregivers and patients connect digitally. And this solution is delivering the impressive 82% of CPAP therapy adherence. In respiratory ventilation, our Trilogy line is now also a connected proposition that uses Care Orchestrator. We hold more than 2/3 of share in home ventilation. Let's hear from one of our customers, a home care provider, how Trilogy and Care Orchestrator are helping on his business. [Presentation]

You just saw 3 examples on how we are using informatics to connect the care along the health continuum. Now let me hand it over back to Roy.

Thanks, Solange, for a great presentation of how our solutions are being used on a daily basis. Let me recap. I hope that by now, you are as excited as I am to be in Connected Care. I've told you about how we have been rising to the occasion in 2020 to support the world in dealing with the pandemic, using the agility of our business system and the strength of our portfolio. And whilst we can expect that to taper off, we strongly believe that the trends that are remaining in health care to really seamlessly connect it in a better way with devices, with AI platforms and sensors, we are very well positioned with solutions we can sell now to actually deliver the services they need in the hospital and outside of the hospital. And that will deliver an exciting part of value creation towards 5% to 6% CSG growth and 17% to 19% adjusted EBITDA. Thank you for your attention. And let me now hand over to my valued colleague, Deeptha, who will talk to you about the story of Personal Health.

Thank you, Roy, and good afternoon, everybody. It's really a pleasure to speak with you today. My name is Deeptha Khanna. I'm the newly appointed Chief Business Leader for Philips' personal health portfolio. I have to say when Philips called me earlier this year, it really felt meant to be. This is an iconic brand that I grew up with in India. It's a company that I had tremendous respect for through my years in consumer products and consumer health. And the more we spoke and I recognized how purposeful our commitment is towards improving health across the care continuum through the power of technology and innovation, I knew I wanted to be part of this journey. So it's really a privilege to be here and represent my team in sharing with you the growth agenda for personal health. Now you're going to hear these 5 key messages from me. In personal health, we operate off a terrific foundation of strong growth categories where we have strong leadership positions. Off of this foundation, we have 3 powerful growth accelerators. We are constantly innovating to reach more and more consumers through both products and solutions. We are confident and have invested in great capabilities in accelerating growth through online and digital-first models. And we are constantly expanding our ecosystems through retail partnerships as well as new business models. And when you put all of this together, we are pleased to commit to an average annual sales growth of 5% to 6%, with an adjusted EBITDA of 19% to 20% through 2025. Now first, let me talk to you about the foundation that we have. In personal health, we are focused on these 4 wonderful categories: oral health care, male grooming, beauty, and mother and child care. Now these are all terrific categories that allow consumers to take care of themselves by embracing healthy, positive rituals of daily care. And they allow families to look after their own health and well being as well as those that they love. Now on top of that, what I've really enjoyed discovering is even in our most developed market, there continues to be tremendous opportunity to grow the consumer base and deepen the penetration of these categories. On top of that category foundation, I have to say that the trust and reputation of the Philips brand carries a great advantage. Now think of yourself as a consumer. If you're buying a new breast pump that is going to be vital to the nutrition of your baby, or a power toothbrush that you will use every day, ideally twice a day for years to come, these are high-involvement, high-value decisions. And this is where the trust, leadership and proven pedigree of the Philips brand creates a tremendous foundation for us. Now you might say that's a great foundation, how do we build off that? And I'm very pleased to say that our first and vital growth accelerator is absolutely innovation. As many of you know, innovation is in the very DNA of Philips, but what I'm very proud about is how we have a robust portfolio of innovation that seeks growth opportunities through different dimensions. And I want to talk about 3 of these here. First and foremost, we are constantly innovating to recruit new audiences and to have a new generation of consumers discover Philips. You'll see 2 examples here that are terrific. At the top, in fact here with me, we've just launched in oral health care a platform called Philips One by Sonicare. This has just launched in North America in October of this year and will expand globally soon. And it's priced at just USD 25 apiece. This is a great platform that is actually our first entry into battery-powered toothbrushes. And with its beautiful aesthetics, its digital-first campaign and delightful names like Mango Mint and Midnight, it is creating quite a lot of excitement in the market already. I'm also very proud of our platform in male grooming called OneBlade. It is designed with a great understanding of the importance of versatility and grooming that young men desire. And it is designed with such a simple and intuitive experience that it's a great first shaving experience even for the younger shavers. In fact my 16-year-old son really loves it. It's no wonder that since launch, this platform has been growing at convincing double-digit numbers year-on-year, with tremendous growth opportunity yet to come. What is especially pleasing on top of the products that are wonderful in these segments is that we are also building communities of care and tremendous engagement through our social platforms as well as through our educational apps. So that's some great examples of products and solutions that are innovating and attracting new audiences. Now in the second bucket, Philips takes a lot of pride in the global scale of our innovations, but we also recognize that there are opportunities to go deeper in certain local geographies and to deepen the relevance of our proposition accordingly. And here you see 2 examples from how we innovate local for local for the unique needs of the Chinese consumer. We've launched very successfully in male grooming our S-1000 platform on shavers that was designed to value in terms of both the performance and the price points desired by an 18 to 24 male group and has quickly become their top preferred shaver. We're also very pleased with an online-first launch in oral health care with Montana, where we recognized the additional needs of gum sensitivity for the Chinese consumers and designed it accordingly. So you see there some terrific examples of local innovation. And in the third pillar, I have to say that Philips takes a great deal of pride in being category thought leaders. Many of the categories we compete in, we have helped to create. And a very recent and powerful example for us is in the beauty category with our IPL platform, Intense Plus Light platform, called Philips Lumea, which allows consumers at home to have a permanent hair removal solution that otherwise might have accessible only in a professional setting. And since launch, this is a tremendous platform of growth for us with over 1 million pieces sold. And what's very pleasing is a very important part of our value proposition beyond the product is in fact our engagement app, which educates and allows consumers to embrace a new behavior. So as you can see, that makes for a very strong portfolio of innovation, and I'm sure you're wondering what about 2021. What I can promise you is we have a robust portfolio to come, but you'll have to watch this space. Right, so we spoke about a great foundation of the categories and about our acceleration through innovation. What about how we execute? Here, I'm very pleased with the disciplined investment that Philips has made in our digital-first capabilities, which are now really showing up in our strength, both in terms of our online business models as well as in our consumer engagement. And I will talk to 4 dimensions over here. First and foremost from a media perspective, we are now at a full 75% of our media on digital platforms. And in fact many of our markets are at 100%. Second, this is a year that has seen tremendous growth of course on online platforms. I'm very pleased with how we've risen to the consumer demand in our own D2C channels as well, and we've recorded a 70% growth year-to-date. Third, we continue to build very powerful, engaged communities across our businesses and across our propositions. And we have across our apps over 6 million monthly active users. And as I said, some of the engagement we see on our Lumea platform is a special call-out. But also, we are very, very proud of our Pregnancy Plus platform, which now has over 40 million downloads. And last but not least, in our approach to packaging we are now really online first, which allows us to really embrace e-com readiness and also reduce packaging waste. Last but not least, in terms of growth vectors, I also want to call out how we are constantly expanding our ecosystems through retail partnerships as well as new business models. On the left here, you see an example where some of our innovation in China in particular has really been created through insights of our partner platforms. And also in how we execute, we seek to be very relevant, for instance embracing live stream marketing. And on the right, we continue to see great strength in new business models like subscription that drive repeated revenue. And we're also very pleased with new business model innovation, like the try and buy program on Philips Lumea that we've started up in Europe, where for just EUR 39.95 a month, a consumer is able to bring the product home and try it herself and decide whether she will buy it or not. And this is very powerful when we are creating a new category habit, because it derisks the habit change as well as the expense of the new approach. So as you can see, off of a terrific and fundamental foundation of strong categories where we have leadership positions and our strength across the growth vectors of innovation, digital-first execution and expanding ecosystems, we're very well positioned for growth. Now to give you a deeper example of how this all comes together in one of our priority categories, which is oral healthcare, I'd like to invite my colleague, Michael Khune, who is the Global Business Leader for oral health care. Michael, over to you.

Thank you, Deeptha. Well, good morning or good afternoon from Seattle. My name is Michael Khune, and I lead the oral health care business for Philips. Next slide, please. Let me tell you a bit about oral health care. Within oral health care, we have 3 growth pillars: grow the core, drive consumer to lifetime value, and launching new business models. And let's start with the left. Grow the core. Of course, it's all about innovations. We already make the best toothbrush in the world, and we will continue doing this. But to be and remain the leader in this industry, we need to fuel our core portfolio with innovations to have even better oral health care solutions. On top of that, we're going to address new consumer segments, which we haven't been addressing yet. Philips One is an example of that, and I'll come back to that later. The second growth driver is drive consumer lifetime value. And I think a good example of this is our brush head, which is a consumable, right? And we're making it easy for consumers to replace their brushes by offering them a direct-to-consumer subscription model, where we can assure that every 3 months when you need a new brush head, it gets into your house, nothing to worry about. And last but not least, the third growth pillar is launching new business models. And particularly here, we're focusing on our insurance partnerships so when we offer solutions, we better drive health outcomes and lower cost of care. But I'll come back to that later. Let's go to the next slide. So within the first pillar, grow the core, we are targeting different consumer segments. So on this slide, you see 3 examples of it. Let's start at the left one. This is a new product, the 2100 series of Sonicare, which we launched this year Q3 in China. And it's all about recruiting new users to get them into the Sonicare family. It is a innovation completely targeted at the Chinese consumers, which offers good quality at an affordable price and of course with great cleaning results. And the first results are very promising, because in the first month we already sold 400,000 pieces, so we're at a good pace. If you move to the middle, there you see Philips One, and this is -- we're launching it right now in North America. And this is a battery or a rechargeable toothbrush, so we have 2 models targeting the next-generation users for Sonicare, which are currently only brushing manual. They're younger, they're hip, they're trendy, but I'll come back to that later. And last but not least, to expand our leadership in the premium segment, we're launching early next year Sonicare Prestige 9900. This will be our best toothbrush ever with a newly designed toothbrush and a newly designed brush head, which will deliver superior cleaning versus competition. Very excited about that launch. Next slide. Now let me deep dive into our new Q4 launch, Philips One. The Philips One is a battery and rechargeable, as said, 2 models: entry-level toothbrush starting at $25. We're launched for October, and the rest of the world will follow in Q2, Q3. It's all about reaching a younger, hip, trendy target group, which at this moment brushes only with a manual toothbrush. And it's specifically designed about their needs. It's about sleek design. It has to be portable, where you can take it with you when you need it. And it's all about also convenience. So it comes with a subscription model. And all, of course while you're doing this, you have a better cleaning result than you would have with a manual toothbrush. Also when it comes to communication, it's a more fresh approach. We have a new tonality, a new way of commuting (sic) [ communicating ] to this new target group. Now to summarize, it's a new target group we're going after. We're going to go -- launching in 3 regions. We started this year in North America; Europe and Asia to follow. And we have so much confidence in this product that we will ramp up our production from 0 to 2 million pieces in less than 12 months, on our way to build a more than 100 million business in a few years. Now let's have a look at the short movie of the Philips One. And after that movie, I will come back to you to talk more about our third growth pillar: the new business models, in this case, solutions for insurance partners. Let's start the movie, please. [Presentation]

I have the proof here in my hand. It's a true beauty. There is so much growth potential in this segment, and we're very happy to have it within our portfolio. Next slide, please. Next slide? Because there's more. There's more. We have more growth opportunities. And let me come back to the example Frans already mentioned in his opening. Our solutions which we have here for insurance companies is a win-win. It's a win-win for consumers and insurers. For consumers because they get a better oral care and free or cheaper products. And for insurance companies, of course less cost per patient. So what's it all about? Insurance companies are seeking innovative solutions and are moving to a more preventive care model. To do that, they have to impact consumer behavior. They need to get consumers brushing 2x per day 2 minutes. Because when you have that, you get better health outcomes. And with a better health outcome, you have a lower cost of care. And at this moment, we're partnering with insurance companies like Delta Dental, Blue Cross Blue Shield, ONVZ and more to follow. So how does this work? Now with our connected products, we can track consumer behavior with the data coming out of that. And you have to think about how often people brush, how long they brush, how much pressure they applied, which spots did they miss. So with all that data and in combination with our app, we can -- we have a behavior coaching program to really get consumers to brush 2x 2 minutes per day. And if needed, we have also a teledentistry service, so at the touch of a button, you can reach out to the dentist if you -- in case you have a question. And also to keep you going, there are incentives in the program. So you get 3 brush heads if you indeed brush 2 times per day 2 minutes. And so there's a lot of win-win for the consumers. But for the insurance partner, next to of course lower cost of care, we have this analytics platform, which enable them to have deep health care insights based on all the data. Now based on all the pilots we did, the first results coming out are extremely promising. So we have as an example, consumers love it. They give it a 4.7 star out of 5 of our app, which is great. And 90%, more than 90% of patients in the pilot program had a compliance of 2x per day brushing and 2 minutes, which is great. And in 85% of the cases -- of the patients, there was a reduction of out-of-pocket expenses. As said before, this program is a win-win solution. It's a win-win for consumers, and it's a win-win for insurance companies. We have a great traction at this moment, and now it's all a matter of rolling it out. Thank you for that. Deeptha, back to you.

Thank you, Michael. I'm sure Michael's managed to convince all of you to embrace oral care by Philips, if you haven't already done so. But importantly, I hope it also demonstrates the meaningful role that the personal health portfolio plays in furthering Philips' mission of improving the health and well-being of people around the world. So in closing, I'd like to summarize with the same 5 takeaways that I started with. We operate off in personal health, a terrific foundation of strong growth categories where we have leadership positions. Out of this foundation, we have 3 powerful growth accelerators: We constantly innovate to recruit more and more consumers through products and solutions innovation. We are confident in our digital source capabilities and are accelerating our online growth and digital engagement. And we are expanding our ecosystems through retail partnerships as well as new business models. So when you put all of this together, we are pleased to commit to a 5% to 6% annual sales growth with an adjusted EBITDA of 19% to 20%. With that, let me hand over back to Leandro.

Thanks, Deeptha. We're going to have a short break, and we'll reconvene in 5 minutes to go through Q&A with the business presenters, Frans and Abhijit. See you in 5 minutes. [Break]

Okay, so welcome back. Time for the first question. It's going to be on video. Okay. Let me read the first question then. There we go, David.

Can you hear me?

Yes, we see you and hear you. Welcome back, David.