Researchers from the National Cancer Institute will conduct the Phase 1 trial, as established in a recently signed Cooperative Research and Development Agreement (CRADA) SAN CARLOS, Calif., May 20, 2024 (GLOBE NEWSWIRE) -- GigaGen Inc., a biotechnology company advancing transformative antibody drugs for immune deficiencies, infectious diseases and checkpoint resistant cancers, and a subsidiary of Grifols, announced today that the first patient has been dosed in a Phase 1 clinical trial evaluating the safety ...

BARCELONA, Spain, April 19, 2024 /PRNewswire/ -- Grifols, S.A. ("Grifols") (MCE: GRF, MCE: GRF.P, NASDAQ: GRFS), a global healthcare company and leading manufacturer of plasma-derived medicines, today announces the filing of its Annual Report on Form 20-F for the fiscal year ended December 31, 2023, with the United States Securities and Exchange Commission ("SEC"). Grifols' annual report on Form 20-F provides investors with an overview of the company's governance practices, including information about the B ...

Debt and Financial Exposure - As of December 31, 2023, the company had $2.3 billion and €2.0 billion of senior interest-bearing debt, with 39.0% of this debt bearing interest at variable rates [124]. - The company had approximately $2.8 billion of U.S. dollar-denominated senior debt as of December 31, 2023, increasing its exposure to currency fluctuations [126]. - In 2023, €5.3 billion, or 80.3%, of the company's net revenue of €6.6 billion was denominated in U.S. dollars, exposing it to foreign currency exchange rate risks [125]. Revenue and Operational Risks - A significant portion of the company's revenue is derived from plasma fractionation, and any disruption at its main facilities could materially affect revenue [126]. - The company relies on third parties for the sale, distribution, and delivery of its products, making it vulnerable to breaches or failures in these contracts [133]. - The company may face significant delays in obtaining regulatory approvals for its product candidates, impacting commercialization timelines [140]. - The company’s product development costs may increase due to delays in testing or approvals, affecting its ability to bring products to market [139]. Regulatory and Compliance Challenges - The company is subject to complex and evolving data privacy regulations, which could increase operational costs and require changes to business practices [146]. - The California Privacy Rights Act (CPRA) was enacted in November 2020, effective January 1, 2023, expanding consumer control over personal information and increasing compliance obligations for businesses [148]. - Noncompliance with GDPR can result in penalties of up to €20 million or 4% of global company revenues [149]. - The implementation of GDPR, CCPA, and other data protection requirements is expected to impose additional costs on the company, with potential material adverse effects on business operations [150]. - The company is required to disclose payments to healthcare providers under the Physician Payment Sunshine Act, which imposes additional compliance costs [202]. Cybersecurity and Data Privacy Risks - The company is exposed to risks from cybersecurity incidents that could disrupt operations and lead to data breaches [142]. - Cyber-attacks pose significant risks, including potential loss of sensitive personal information and operational disruptions, which could materially impact the company's financial condition [153]. - The company faces increased exposure to privacy and data breaches as it stores more sensitive personal information, particularly medical records, which are high-value targets for cyber-attacks [154]. Intellectual Property and Patent Risks - The company relies on patents for its technology, but the patent landscape is uncertain, and there is a risk that patents may be challenged or invalidated, limiting competitive advantages [157]. - The company may face substantial costs and management distractions from patent litigation and other intellectual property proceedings, which could adversely affect its market competitiveness [168]. - Employees previously from competitors may inadvertently use proprietary information, leading to potential litigation and associated costs [170]. - The company has in-licensed certain patent rights, and any failure of licensors to enforce their rights could impact the company's competitive position [171]. - Breaching obligations under in-license agreements could lead to termination of licenses, adversely affecting product development and commercialization [172]. Market and Competitive Environment - The company anticipates ongoing pricing and cost containment pressures in 2024 and beyond, which may affect reimbursement rates for products [186]. - The company expects greater competition from biosimilars, which could lead to increased patent challenges and negatively impact financial performance [192]. - The company faces pressures from U.S. healthcare reforms, including the ACA, which could significantly impact operations and financial performance [181]. - Trends in the healthcare industry, such as managed care and cost containment, may adversely affect reimbursement rates and overall financial performance [184]. - The 340B Program requires discounts for eligible entities, and changes to this program could negatively impact financial performance [185]. Legal and Financial Liabilities - The company’s insurance may be insufficient to cover losses from accidents or force majeure events, potentially impacting financial stability [129]. - The 340B Program under the Public Health Service Act imposes penalties of up to $5,000 for each instance of overcharging covered entities, which could adversely affect revenues [197]. - The company must report detailed pricing information to CMS, and inaccuracies could lead to fines and sanctions [200]. - The company may incur significant expenses defending against lawsuits resulting from negative publicity, which could materially affect financial condition and results of operations [229]. Shareholder and Market Dynamics - The Grifols Family and Scranton Enterprises B.V. own approximately 36% of Class A shares, exercising 100% voting control, which may lead to conflicts of interest with other shareholders [221]. - The market price of Class B ADSs has fluctuated between a high of $13.28 on May 24, 2022, and a low of $5.95 on September 29, 2022, closing at $6.78 on April 16, 2024 [224]. - Negative publicity from short sellers has previously impacted the company's market price and may lead to increased scrutiny from regulators [226]. - Ineffective internal controls could result in material weaknesses affecting the reliability of financial reporting, potentially harming the company's reputation and market price [218]. - The market price of shares may be volatile due to various factors, including market expectations and actual fluctuations in financial performance [222]. Environmental and Operational Risks - Climate change poses risks such as extreme weather events and water scarcity, which could disrupt operations and increase costs [176]. - Regulatory changes related to biometric information privacy may require significant resources for compliance, potentially leading to increased costs and legal liabilities [178]. - The company faces risks from changing regulatory requirements that could necessitate operational adjustments and incur unforeseen costs [213]. Future Considerations - The company has acquired plasma collection centers from Canadian Plasma Resources Corporation in 2023, Biotest AG in 2022, and BPL Plasma Inc. in 2021, among others, but there is no assurance of success from this plasma acquisition strategy [173]. - A cost savings plan has been implemented to reduce headcount and improve efficiency in plasma procurement, but unexpected charges and expenses may negatively impact financial results [173]. - The company intends to evaluate costs and liabilities associated with registration requirements for any future rights offerings [235]. - Subscription rights may be unavailable to U.S. holders of shares or ADSs, potentially leading to dilution of their holdings [233]. - ADS holders may face limitations on the transfer of their ADSs due to legal or regulatory requirements [238].

The addition of the Clayton site in 2011 marked a new milestone for Grifols, turning the company into a top-three plasma industry leader and setting the stage for sustained business growth The flagship Grifols campus is a touchstone of Grifols' leadership in plasma therapeutics, producing about 40% of the company's total medicinal output globally and helping enhance the quality of life of patients all over the worldAn engineering masterwork, the Clayton site is a model for new Grifols plants while its envir ...

Grifols' in vitro nucleic acid test detects four types of arboviruses, helping mitigate the risk of transfusion-transmitted infections Arboviruses are a growing emerging threat, with changes in climate and increasing global connectivity making the geographic spread more prevalent CE mark for Grifols' Procleix ArboPlex Assay reinforces the company's leadership in transfusion medicine and commitment to ensuring the safety of the world's blood supply BARCELONA, Spain, April 04, 2024 (GLOBE NEWSWIRE) -- Grifols ...

Financial Data and Key Metrics Changes - In Q3 2023, the company achieved a revenue growth of 11.7% at constant currency, totaling over €4.8 billion for the first nine months of the year [6][34] - Adjusted EBITDA margin improved to 25.1%, a significant increase of 480 basis points compared to Q4 2022 [4][34] - Gross margin reached 41% in Q3, reflecting a 400 basis point improvement year-over-year, driven by Biopharma performance and a 22% decline in cost per liter [10][34] Business Line Data and Key Metrics Changes - The Biopharma segment saw a remarkable performance with immunoglobulin sales growing 17.4% in Q3 and nearly 15% year-to-date at constant currency [11][34] - Albumin revenue increased by close to 18% year-to-date, supported by higher demand in China and solid price increases in key markets [7][34] - Diagnostic revenues declined by 3.1% in Q3, attributed to pricing concessions and lower sales of GelCards in China, although strong instrument sales in Japan and Indonesia partially offset this decline [33][34] Market Data and Key Metrics Changes - Plasma supply growth remained solid at 10% year-to-date, positioning the company to meet growing demand for its products [12][34] - The company is focused on expanding its immunoglobulin franchise in the U.S. and selected countries, particularly in the immune deficiency market [31][34] Company Strategy and Development Direction - The company aims to strengthen its core strengths and competitive advantages while accelerating innovation in select therapeutic areas [12][34] - A collaboration agreement was signed with the National Cancer Institute for the GIGA564 project, marking a strategic move into oncology [8][34] - The company is committed to achieving a leverage ratio of 4x by 2024, with a focus on organic deleveraging and a planned transaction to generate at least €1.5 billion in cash [28][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, particularly regarding the Fibrinogen and Trimodulin products, which are expected to drive growth [5][34] - The company is confident in achieving the high end of its adjusted EBITDA guidance for 2023, with total revenue growth expected to be between 10% to 12% at constant currency [35][34] - Management acknowledged the challenges in the operating environment but emphasized the strong fundamentals and progress made in the first nine months of the year [36][34] Other Important Information - The company has completed nine out of twelve innovation milestones set for 2023, indicating strong progress in its R&D efforts [137] - The operational improvement plan is expected to yield €450 million in savings, contributing to margin expansion and improved profitability [10][34] Q&A Session Summary Question: Can you provide details on the evolution of alpha-1 sales? - Management noted that alpha-1 sales have been relatively flat due to lower demand for plasma-derived factor VIII, but improvements are expected as the commercial model stabilizes [22][34] Question: What is the guidance on cash flow and working capital investments? - Management indicated that high working capital investments are necessary due to increased sales activity, but positive cash flow is anticipated by year-end [23][34] Question: What is the strategy for the new IVIg product Yimmugo? - The company plans to position Yimmugo against existing brands like Gamunex and Xembify, aiming to switch from Flebogamma to Yimmugo as it gains approval in various countries [38][34] Question: Can you confirm the timeline for the Shanghai RAAS transaction? - Management expressed confidence in signing the transaction by year-end 2023, with regulatory approvals expected in the first half of 2024 [133][34] Question: What are the expectations for the Alzheimer's vaccine development? - The company is open to out-licensing the Alzheimer's vaccine for Phase III trials, indicating a strategic approach to funding and development [100][34]

Victor Grifols Deu Okay. Thank you. We have now on the line Tom Jones from Berenberg. Hi, Tom. Alfredo Arroyo Nuria Pascual Nuria Pascual Victor Grifols Deu Thank you. And next question coming from Alvaro Lenze from Alantra Equities. Alvaro? Victor Grifols Deu Okay. We have a question from - coming from JoaquÃn GarcÃa-Quirós from JB Capital. Hi, JoaquÃn. Victor Grifols Deu Great. We have a couple of follow-up questions. First from - he was the first to be again nonetheless Tom, I think you have something el ...

Solid start to the year, while advancing on the turnaround plan backed by a new performance culture | --- | --- | --- | --- | --- | |-------|--------------------------------------------------------|-------------------------------------------------------------------------------|-------|------------------------------------------------------------------| | | Governance | Operational Improvement Plan | | Accelerating deleverage | | • | Formalized roles and responsibilities within SELT | • Deployed 80%+ of the E ...

PART I [KEY INFORMATION](index=7&type=section&id=Item%203.%20KEY%20INFORMATION) This section outlines the most critical information for investors, focusing on the significant risks that could impact the company's business, financial condition, and the value of its securities, categorizing them into structural, business-related, and industry-specific factors [Risk Factors](index=7&type=section&id=D.%20Risk%20Factors) The company faces substantial risks related to its financial structure, primarily its high level of indebtedness, alongside business and operational risks including dependency on plasma supply, complex manufacturing processes, competition, and regulatory adherence, with industry-wide risks stemming from healthcare reforms and pricing pressures, and share-related risks from market volatility and founding family influence - The company's substantial level of indebtedness is a key structural risk, with total current and non-current financial liabilities amounting to **€10.76 billion** as of December 31, 2022[35](index=35&type=chunk) - A significant portion of revenue is derived from immunoglobulin (IG) products, accounting for approximately **43% of net revenue in 2022**, making the company vulnerable to adverse market events affecting these products[85](index=85&type=chunk) - The COVID-19 pandemic negatively impacted plasma collection volumes due to mobility restrictions and other factors, leading to increased donor fees and higher costs per liter[82](index=82&type=chunk) - The Grifols Family and Scranton Enterprises B.V. collectively own approximately **36% of Class A shares**, giving them significant influence over matters requiring shareholder approval, including the election of the board[211](index=211&type=chunk) [INFORMATION ON THE COMPANY](index=41&type=section&id=Item%204.%20INFORMATION%20ON%20THE%20COMPANY) This section provides a comprehensive overview of Grifols, detailing its history, business operations, organizational structure, physical assets, and the regulatory landscape it navigates, highlighting the company's vertical integration in the plasma derivatives market, its global presence, and its strategic acquisitions [History of and Development of the Company](index=41&type=section&id=A.%20History%20of%20and%20Development%20of%20the%20Company) Founded in 1940, Grifols has evolved from a Spanish domestic company into a global, vertically integrated producer of plasma derivatives, with growth driven by organic expansion and significant acquisitions, including Talecris (2011), Novartis's diagnostic business (2014), and Biotest AG (2022), operating 392 plasma collection centers with an annual manufacturing capacity of approximately 22 million liters as of year-end 2022 - As of December 31, 2022, Grifols operated **392 plasma collection centers** and had an annual manufacturing capacity of approximately **22 million liters of plasma**[226](index=226&type=chunk) - Key strategic acquisitions include Talecris Biotherapeutics in 2011 for **$3.7 billion**, Novartis's diagnostic business in 2014 for **$1.7 billion**, and Biotest AG in 2022 for a total consideration of **€1.09 billion**[232](index=232&type=chunk)[240](index=240&type=chunk) [Business Overview](index=43&type=section&id=B.%20Business%20Overview) Grifols operates through five business units: Plasma Procurement, Biopharma, Diagnostic, Bio Supplies, and Others, with the Biopharma unit being the largest, generating 82.5% of total net revenue in 2022, and a strong global presence where the United States and Canada account for 63.6% of its revenue, all within a vertically integrated business model covering the entire value chain from plasma collection to product distribution Net Revenue by Business Unit (2020-2022) | Business Unit | 2022 Revenue (€M) | % of Total 2022 | 2021 Revenue (€M) | 2020 Revenue (€M) | |---|---|---|---|---| | Biopharma | 5,005.4 | 82.5% | 3,815.0 | 4,242.5 | | Diagnostic | 671.3 | 11.1% | 779.1 | 775.9 | | Bio Supplies | 146.1 | 2.4% | 115.8 | 133.2 | | Others | 250.2 | 4.1% | 266.5 | 222.5 | | **Total** | **6,064.0** | **100.0%** | **4,933.1** | **5,340.0** | Net Revenue by Geographic Region (2020-2022) | Region | 2022 Revenue (€M) | % of Total 2022 | 2021 Revenue (€M) | 2020 Revenue (€M) | |---|---|---|---|---| | United States and Canada | 3,855.6 | 63.6% | 3,154.5 | 3,599.7 | | European Union | 1,032.2 | 17.0% | 906.4 | 834.5 | | Rest of the World | 1,176.2 | 19.4% | 872.1 | 905.8 | | **Total** | **6,064.0** | **100.0%** | **4,933.1** | **5,340.0** | - The company holds a leading market position in several product categories, including an estimated **71% global sales market share for Alpha-1 Antitrypsin (AAT)** as of December 2021 and an estimated **25.6% market share in immunoglobulin (IG) volume in the United States** as of November 2022[283](index=283&type=chunk)[286](index=286&type=chunk) Research & Development Expenditure (2020-2022) | Year | R&D Spending (€M) | |---|---| | 2022 | 361.1 | | 2021 | 354.9 | | 2020 | 294.2 | [Organizational Structure](index=70&type=section&id=C.%20Organizational%20Structure) Grifols, S.A. is the parent company of the Grifols Group, which comprised 87 companies as of December 31, 2022, with subsidiaries where Grifols holds a majority of equity or voting rights being fully consolidated, and an additional five companies accounted for using the equity method, reflecting ownership between 20% and 50% - As of December 31, 2022, the Grifols Group consisted of **87 companies**, with an additional **five companies** accounted for using the equity method[419](index=419&type=chunk) [Property, Plant and Equipment](index=71&type=section&id=D.%20Property,%20Plant%20and%20Equipment) The company owns or leases principal facilities across seven countries, including five plasma fractionation plants in Spain, the U.S., and Germany, with these facilities having a combined fractionation capacity of approximately 22 million liters per year as of December 31, 2022, and key manufacturing sites located in Parets (Spain), Los Angeles (USA), Clayton (USA), and Dreieich (Germany) - The company's plasma derivative products are manufactured at facilities in Parets (Spain), Los Angeles (USA), Clayton (USA), and Dreieich (Germany), with a total fractionation capacity of approximately **22 million liters per year** as of year-end 2022[426](index=426&type=chunk) - The Clayton, North Carolina facility is one of the world's largest integrated protein manufacturing sites, with a fractionation capacity of **11.8 million liters per year**[429](index=429&type=chunk) [Regulatory Matters](index=73&type=section&id=E.%20Regulatory%20Matters) Grifols operates in a highly regulated industry, subject to extensive oversight from authorities like the FDA in the U.S. and the EMA in Europe, with the regulatory framework governing all aspects of the business from plasma collection and manufacturing (cGMP) to product approval (BLA), marketing, and post-approval surveillance, and the company also navigates complex pharmaceutical pricing and reimbursement systems, including Medicare, Medicaid, and the 340B Program in the U.S., as well as price controls in the E.U - The company's products, such as plasma derivatives, are regulated as biologics in the U.S. and require an approved Biologics License Application (BLA) from the FDA to be marketed[436](index=436&type=chunk) - Plasma collection centers must be licensed and are subject to periodic inspections by regulatory authorities like the FDA and EMA to ensure compliance with cGMP[448](index=448&type=chunk) - In the U.S., the company is subject to multiple government pricing and reimbursement programs, including Medicaid rebates, Medicare Part B (based on Average Sales Price), and the 340B Drug Pricing Program, which requires providing discounts to eligible healthcare entities[495](index=495&type=chunk)[496](index=496&type=chunk)[505](index=505&type=chunk) [OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=87&type=section&id=Item%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes Grifols' financial performance and condition for the fiscal year 2022 compared to previous years, covering operating results, liquidity, capital resources, research and development activities, and key trends affecting the business, highlighting revenue growth driven by the Biopharma segment, margin pressures from high plasma costs, and strategic initiatives such as acquisitions and a new operational improvement plan [Operating Results](index=88&type=section&id=A.%20Operating%20Results) In 2022, net revenue grew 22.9% to **€6.1 billion**, driven by a 31.2% increase in the Biopharma segment due to strong demand and higher plasma collections, though gross margin declined from 39.8% to 36.8% due to high plasma costs from H1 2022 and the non-recurrence of COVID-19 test sales, while operating profit increased by 35.4% to **€805.7 million**, and the company announced an operational improvement plan in February 2023 to achieve **€400 million** in annualized cost savings Consolidated Statement of Profit and Loss (2021 vs. 2022) | Metric | 2022 (€M) | 2021 (€M) | Change (%) | |---|---|---|---| | Net revenue | 6,064.0 | 4,933.1 | 22.9% | | Gross margin | 2,231.5 | 1,962.6 | 13.7% | | Operating result | 805.7 | 595.1 | 35.4% | | Profit before income tax | 361.3 | 350.5 | 3.1% | | Consolidated profit for the year | 271.1 | 265.3 | 2.2% | - Biopharma revenue increased by **31.2% in 2022**, driven by higher plasma collections, strong demand for key proteins, and price increases[566](index=566&type=chunk)[567](index=567&type=chunk) - Gross margin fell to **36.8% in 2022** from **39.8% in 2021**, primarily due to the high cost per liter of plasma collected in H1 2022 and the impact of lower sales of high-margin COVID-19 tests[573](index=573&type=chunk) - In February 2023, Grifols announced an operational improvement plan targeting approximately **€400 million in annualized cost savings**, with a one-time restructuring charge of **€140 million** recorded in Q1 2023[518](index=518&type=chunk)[555](index=555&type=chunk) [Liquidity and Capital Resources](index=100&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily sourced from operating cash flows and debt financing, with cash and cash equivalents of **€548.0 million** and an additional **€1.05 billion** available under debt agreements as of December 31, 2022, though net cash from operating activities was negative **€10.9 million** in 2022, a significant decrease from a positive **€597.0 million** in 2021, largely due to an increase in inventory, and the company is committed to deleveraging and has suspended dividends until its leverage ratio is below 4.0x Historical Cash Flows (2020-2022) | Cash Flow Activity (€M) | 2022 | 2021 | 2020 | |---|---|---|---| | Net cash from operating activities | (10.9) | 597.0 | 1,110.3 | | Net cash (used in) investing activities | (1,978.8) | (854.1) | (858.1) | | Net cash from/(used in) financing activities | (173.5) | 2,297.7 | (354.4) | - As of December 31, 2022, the company had **€548.0 million in cash and cash equivalents** and **€1.048 billion available under its debt agreements**[602](index=602&type=chunk) - The company's principal debt includes the First Lien Credit Facilities (**€1.26 billion** and **$2.31 billion** outstanding), 2017 Notes (**€1.0 billion**), 2019 Notes (**€1.58 billion**), and 2021 Notes (**€1.4 billion** and **$705 million**)[655](index=655&type=chunk)[656](index=656&type=chunk)[663](index=663&type=chunk)[674](index=674&type=chunk) - Working capital was negatively impacted in 2022 by a **€600.3 million increase in inventory levels**, driven by higher plasma costs and increased donation volumes, causing inventory turnover to rise to **296 days** from **278 days in 2021**[610](index=610&type=chunk)[611](index=611&type=chunk)[618](index=618&type=chunk) [Research and Development, Patents and Licenses](index=113&type=section&id=C.%20Research%20and%20Development,%20Patents%20and%20Licenses) This section references Item 4.B for detailed information on the company's research and development activities, patents, and licenses - For detailed information on Research and Development, refer to Item 4.B of the report[687](index=687&type=chunk) [Trend Information](index=113&type=section&id=D.%20Trend%20Information) The global market for plasma-derived products is expected to continue growing, driven by population growth, new therapeutic applications, and increased patient diagnosis, with the industry having high barriers to entry due to significant regulation and capital investment, and plasma collection levels, which were impacted by COVID-19, increased by 25% in 2022 compared to 2021, surpassing 2019 levels - The worldwide plasma proteins market reached **$29.2 billion in 2021**, showing a compound annual growth rate of **7.3% from 2018**[688](index=688&type=chunk) - Plasma collections improved significantly in 2022, increasing by **25% compared to 2021** and surpassing pre-pandemic levels from 2019[692](index=692&type=chunk) - The company has an operational improvement plan in place to enhance competitiveness and achieve cost efficiencies across the organization[696](index=696&type=chunk) [Critical Accounting Estimates](index=114&type=section&id=E.%20Critical%20Accounting%20Estimates) The preparation of financial statements under IFRS requires management to make significant estimates and judgments, with key areas involving critical accounting policies including the valuation of goodwill, impairment testing, and the capitalization of development costs, and these policies are periodically reviewed by the Audit Committee - The company's critical accounting policies involve significant management judgment, particularly in areas such as goodwill impairment, depreciation, and amortization[699](index=699&type=chunk) [DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=115&type=section&id=Item%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section provides information on the company's leadership and workforce, detailing the composition of the Board of Directors and senior management, their compensation, board practices including committee structures, and employee statistics, noting that as of year-end 2022, the company had 26,314 employees [Directors and Senior Management](index=115&type=section&id=A.%20Directors%20and%20Senior%20Management) The Board of Directors consists of 11 members, with Thomas H. Glanzmann appointed Executive Chairperson in February 2023, succeeding Steven Mayer, and Raimon Grifols Roura and Víctor Grifols Deu serving as co-CEOs, while the senior management team was also updated in 2022 to align with the company's strategic plan - As of February 21, 2023, **Thomas H. Glanzmann** serves as the Executive Chairperson of the Board[702](index=702&type=chunk) - **Raimon Grifols Roura** and **Víctor Grifols Deu** are the joint and several Chief Executive Officers of the company[708](index=708&type=chunk)[710](index=710&type=chunk) [Compensation](index=122&type=section&id=B.%20Compensation) In 2022, the total compensation for the Board of Directors was **€5.3 million**, while senior management (excluding board members) received an aggregate compensation of **€13.9 million**, and the co-CEOs voluntarily waived **50%** of their short-term variable remuneration for fiscal year 2021 (payable in 2022) Aggregate Compensation (2021-2022) | Group | 2022 (€) | 2021 (€) | |---|---|---| | Board of Directors | 5,300,000 | N/A | | Senior Management (non-directors) | 13,890,763 | 15,135,947 | - The Co-Chief Executive Officers voluntarily waived **50% of their short-term variable remuneration** for fiscal year 2021, which was payable in March 2022[759](index=759&type=chunk) [Board Practices](index=125&type=section&id=C.%20Board%20Practices) The Board consists of 11 directors elected for four-year terms and has three primary committees: the Audit Committee, the Appointments and Remuneration Committee, and the Sustainability Committee, with the company, as a foreign private issuer, following Spanish corporate governance practices, which differ in some aspects from NASDAQ requirements, such as board composition and quorum rules - The Board has three committees: Audit, Appointments and Remuneration, and Sustainability[797](index=797&type=chunk) - The Audit Committee is composed of **three independent directors**, in compliance with NASDAQ and Spanish requirements[803](index=803&type=chunk) [Employees](index=132&type=section&id=D.%20Employees) As of December 31, 2022, Grifols had a total of **26,314 employees** worldwide, with the majority of the workforce in manufacturing (21,235) and located in North America (16,862), and the company provides various employee benefits, including pension and savings plans Total Employees by Year | Year | Total Employees | |---|---| | 2022 | 26,314 | | 2021 | 23,233 | | 2020 | 23,655 | - In 2022, the largest department was Manufacturing with **21,235 employees**, and the largest geographic region was North America with **16,862 employees**[817](index=817&type=chunk) [MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=133&type=section&id=Item%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the ownership structure and transactions with related parties, noting that the Grifols family and affiliated entities hold a significant portion of the company's voting shares, and key related party transactions include the 2018 sale of Haema AG and Biotest US Corporation to Scranton Plasma B.V. and contributions to charitable foundations Major Shareholders of Class A (Voting) Shares | Shareholder | Voting Rights (%) | |---|---| | Deria S.A. | 9.195% | | Scranton Enterprises B.V. | 8.404% | | Ponder Trade, S.L. | 7.089% | | Ralledor Holding Spain S.L. | 6.154% | | Capital Research and Management Company | 5.659% | | Blackrock, Inc. | 4.142% | - In 2018, the company sold its stakes in Haema AG and Biotest US Corporation to Scranton Plasma B.V., a major shareholder, for **$538 million**, and Grifols retains a **30-year plasma supply agreement** with these entities[838](index=838&type=chunk)[839](index=839&type=chunk) [FINANCIAL INFORMATION](index=136&type=section&id=Item%208.%20FINANCIAL%20INFORMATION) This section covers legal proceedings and the company's dividend policy, noting that Grifols is involved in several legal matters, including a settled class action related to the Illinois Biometric Information Privacy Act (BIPA) and an ongoing request with OFAC regarding Biotest's activities in Iran, and the company's dividend policy targets a 40% payout but is currently suspended to prioritize deleveraging - The company settled a class action lawsuit related to the Illinois Biometric Information Privacy Act (BIPA) for **$16.75 million**, with final court approval pending[851](index=851&type=chunk)[852](index=852&type=chunk) - Grifols has requested guidance or a license from the U.S. Office of Foreign Assets Control (OFAC) regarding Biotest AG's pre-existing product-supply agreements with Iranian entities[848](index=848&type=chunk)[850](index=850&type=chunk) - The company's dividend policy aims for a **40% payout of net consolidated profits**, but cash dividend distributions are not expected until the debt leverage ratio falls below **4.00:1.00**, and no dividend was paid in 2022[859](index=859&type=chunk)[862](index=862&type=chunk) [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=165&type=section&id=Item%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Grifols is exposed to market risks, primarily from changes in foreign exchange rates (especially USD/EUR) and interest rates, with a significant portion of revenue in U.S. dollars while debt is in both euros and dollars, and as of December 31, 2022, **37%** of the company's debt was at a variable interest rate - A **10% strengthening of the U.S. dollar** against the euro would have increased equity by **€892.8 million** as of December 31, 2022[1051](index=1051&type=chunk) - As of December 31, 2022, **37% of the company's debt** (**€3.4 billion**) was at a variable interest rate, exposing it to cash flow interest rate risk[1053](index=1053&type=chunk) - A **100 basis point increase in interest rates** would have increased the annual interest expense by **€34.7 million** as of December 31, 2022[1055](index=1055&type=chunk) PART II [CONTROLS AND PROCEDURES](index=174&type=section&id=Item%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022, with a material weakness identified in the 2021 audit related to the classification of complex financial instruments successfully remediated during 2022, and the assessment of internal controls for 2022 excluded the recently acquired Biotest AG Group - Management concluded that disclosure controls and procedures were effective as of December 31, 2022[1144](index=1144&type=chunk) - A material weakness related to risk assessment over the classification of complex financial instruments, identified in the 2021 audit, was remediated as of December 31, 2022[1152](index=1152&type=chunk) - The recently acquired Biotest AG Group was excluded from management's assessment of internal control over financial reporting for the year ended December 31, 2022[1150](index=1150&type=chunk) [CORPORATE GOVERNANCE](index=177&type=section&id=Item%2016.G%20CORPORATE%20GOVERNANCE) As a foreign private issuer, Grifols follows its home country (Spain) corporate governance practices in lieu of certain NASDAQ listing rules, with this section outlining the significant differences, particularly concerning board independence, shareholder meeting quorums, and committee composition, while the company complies with Spanish law, which requires an Audit Committee, an Appointments and Remuneration Committee, and a Sustainability Committee with specific compositions of non-executive and independent directors - Grifols follows Spanish corporate governance practices, which differ from NASDAQ rules regarding board independence majority, shareholder meeting quorums, and shareholder approval for certain equity compensation plans[1171](index=1171&type=chunk)[1172](index=1172&type=chunk)[1176](index=1176&type=chunk) - Spanish law requires the Board to have an Audit Committee, an Appointments and Remuneration Committee, and a Sustainability Committee, with specific rules on their composition, including a majority of independent directors for the Audit and Sustainability committees[797](index=797&type=chunk)[800](index=800&type=chunk)[809](index=809&type=chunk)[812](index=812&type=chunk) PART III [FINANCIAL STATEMENTS](index=182&type=section&id=Item%2018.%20FINANCIAL%20STATEMENTS) This section contains the audited consolidated financial statements for Grifols, S.A. and its subsidiaries for the fiscal years ended December 31, 2022, and 2021, prepared in accordance with IFRS, with the independent auditor's report from KPMG identifying two critical audit matters: the impairment analysis of goodwill for the Diagnostic cash-generating unit (CGU) and the impairment assessment of the equity method investment in Shanghai RAAS - The independent auditor, KPMG Auditores, S.L., issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[1220](index=1220&type=chunk) - The audit identified two Critical Audit Matters: 1) Evaluation of the Diagnostic goodwill impairment analysis, due to the subjectivity of assumptions like sales projections and discount rates. 2) Impairment assessment of the Shanghai RAAS equity method investment, due to the high degree of judgment in evaluating perpetual growth and discount rates[1228](index=1228&type=chunk)[1230](index=1230&type=chunk)[1236](index=1236&type=chunk) Consolidated Balance Sheet Summary (as of Dec 31) | Metric (€M) | 2022 | 2021 | |---|---|---| | Total Assets | 21,534.0 | 19,233.8 | | Total Liabilities | 13,076.4 | 11,916.7 | | Total Equity | 8,457.5 | 7,317.1 |

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