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 |

Legal Disclaimer This presentation contains forward-looking information and statements about GRIFOLS based on current assumptions and forecast made by GRIFOLS management, including pro forma figures, estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to capital expenditures, synergies, products and services, and statements regarding future performance. Forward-looking statements are statements that are not historical facts and are generally ident ...

Financial Data and Key Metrics Changes - Revenues for Q4 2022 increased by 20.9% at constant currency, reaching EUR1.7 billion, and represented a 34.7% increase on a reported basis [1] - Full year revenues increased by EUR1 billion, reaching EUR6 billion, representing a 23% increase compared to the prior year [1] - Reported EBITDA grew to EUR1.2 billion, reflecting a 16.5% growth at constant currency with a 20.6% adjusted margin [121] Business Line Data and Key Metrics Changes - Biopharma's total revenues grew by 12.4% at constant currency and 23% on a reported basis, reaching EUR6.1 billion, driven by strong performance in immunoglobulin and other products [23] - Diagnostic performance declined by 4.6% at constant currency in 2022, impacted by non-recurring sales of COVID-19 testing technology [54] - Bio Supplies increased by 13% at constant currency and 26% on a reported basis, positively impacted by the acquisition of Access Biologicals [55] Market Data and Key Metrics Changes - Plasma collections increased by 25% in 2022, returning to pre-pandemic levels, with a notable increase in the U.S. following the lifting of border restrictions [49] - The company reported a 10% reduction in cost per liter due to a 20% drop in donor compensation [20][26] - The U.S. and Mexico markets showed robust double-digit growth in blood typing solutions, gaining market share globally [31] Company Strategy and Development Direction - The company is focused on operational improvement plans aimed at generating EUR400 million in annualized cash cost savings, with EUR100 million expected to be recognized in 2023 [39][111] - A commitment to invest in talent and improve organizational efficiency is emphasized, with a focus on creating a performance culture [15][16] - The integration of Biotest is seen as a transformational opportunity to enhance the product pipeline and drive future growth [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's recovery and future growth, highlighting the importance of operational efficiency and cost control [13][14] - The leadership team acknowledged the challenges ahead but remains committed to executing the announced plans and measures [6][14] - The company expects strong sales growth and further margin expansion in 2023, driven by plasma supply and underlying demand [114] Other Important Information - The company plans to close or consolidate underperforming donor centers, with 18 centers already closed in Q4 2022 [124] - A one-time charge of approximately EUR140 million will be required to deliver cost savings initiatives, which will be booked in Q1 2023 [125] - The company aims for a leverage target of 4 times by the end of 2024, with reported leverage declining to 7 times at year-end 2022 [122][120] Q&A Session Summary Question: When does the company expect to reach EBITDA margins exceeding 30%? - Management indicated that reaching this target could be possible by 2025 or later, depending on operational execution and product launches [59] Question: What is the expected leverage at the end of this year? - Management reiterated the target of 4 times leverage for 2024, with further declines expected in 2023 based on higher EBITDA and potential transactions [66][120] Question: How much of the EUR400 million savings will come from lower donor fees? - Management stated that 50% of the savings will come from optimized donor fees, with the other half from restructuring and operational improvements [80] Question: What is the company's strategy regarding plasma collection centers? - The company plans to manage plasma collection through existing centers and improve productivity rather than expanding the number of centers [95] Question: Is the company considering divestments or capital raises? - Management confirmed that all options are on the table, but emphasized that a capital raise is not a preferred option at current valuations [103][118]

Introductory Remarks [Strengthening Our Mission](index=6&type=section&id=Strengthening%20Our%20Mission) Grifols reinforces its mission to improve patient lives through sustainable innovation and organizational restructuring - Grifols employs **25,000 people** and reinforces its mission through a sustainable approach centered on innovation and reorganization[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk) [Reinforcement of Plasma Supply](index=8&type=section&id=Reinforcement%20of%20Plasma%20Supply) Grifols significantly expanded its plasma network to over 400 centers and fractionation capacity to 22 million liters annually Plasma Network and Capacity Expansion (2020 vs. Today) | Metric | 2020 (before pandemic) | Today (June 30, 2022) | Progress in 2 years | | :--- | :--- | :--- | :--- | | **Global Plasma Centers** | 264 | 312 (Grifols) + 31 (Biotest) + 41 (SRAAS) = 400+ | +89 centers (Grifols + Biotest) | | **Fractionation Capacity (ML/year)** | 15 | 22 | +7 | [Innovation and Organizational Structure](index=10&type=section&id=Innovation%20and%20Organizational%20Structure) Grifols strengthens its innovation ecosystem via Biotest acquisition and streamlines its organizational model into distinct Business Units for enhanced efficiency - The Biotest acquisition strengthens Grifols' innovation pipeline, focusing on **7 therapeutic areas** with key projects like Fibrinogen, Trimodulin, and Cytotect® expected to drive revenue growth and margin expansion[22](index=22&type=chunk) - The new organizational structure creates distinct Business Units (Plasma Procurement, Biopharma, Diagnostic, Bio Supplies) to improve operational efficiency, governance, and speed to market[25](index=25&type=chunk) [Sustainable Approach and ESG](index=13&type=section&id=Sustainable%20Approach%20and%20ESG) Grifols emphasizes a sustainable operating model with 30 goals for 2030, focusing on donors, patients, human rights, talent, and environmental responsibility - Grifols has established **30 sustainability goals for 2030**, including achieving **50% women in Senior Management** and donating **240 million international units** of clotting factor medicines[27](index=27&type=chunk) - The company's operations created **141,500 jobs** and had a **€7,700 million economic impact**, with **40-60%** stemming from its plasma centers[29](index=29&type=chunk) - Grifols is committed to gender equality, with women comprising **60% of the workforce**, **65% of promotions**, and **41% of senior managers**[30](index=30&type=chunk) - Key 2030 environmental goals include reducing GHG emissions per unit by **55%** and sourcing **100% of electricity from renewable energies**[31](index=31&type=chunk) Plasma [Plasma Strategy and Global Footprint](index=20&type=section&id=Plasma%20Strategy%20and%20Global%20Footprint) Grifols' plasma strategy focuses on expanding global collections, leveraging integration, and ensuring donor/employee experience, aiming for over 400 centers by year-end 2022 - The core plasma strategy focuses on expanding collections, leveraging technology and standardization for efficiency, and prioritizing donor/employee experience[38](index=38&type=chunk) - Grifols plans to expand its plasma center network to **over 400 centers by the end of 2022**, up from **264 in 2020**, with significant growth in Europe (from **48 to 89 centers**) and North America (from **264 to 343 centers**)[40](index=40&type=chunk)[42](index=42&type=chunk) [Plasma Collection Trends and Market Position](index=23&type=section&id=Plasma%20Collection%20Trends%20and%20Market%20Position) Plasma collections accelerated significantly in 2022, with Grifols maintaining a strong 28-30% market share despite headwinds Plasma Collection Growth in 2022 | Time Period Comparison | Growth Rate | | :--- | :--- | | Weeks 21-24 vs. Weeks 1-4 | +24% | | YTD (first 25 weeks) vs. PY | +20% | - Growth is driven by a favorable macro-economic context, new centers, and higher talent retention, while headwinds include B1/B2 visa restrictions and persistent inflationary pressures[45](index=45&type=chunk) - Grifols has consistently maintained a plasma volume market share of **28-30%** from 2018 to 2021[48](index=48&type=chunk) [Operational Efficiency and Technology](index=26&type=section&id=Operational%20Efficiency%20and%20Technology) Grifols drives operational efficiency through acquisition integration and new technology deployment, improving donations per employee hour and average yield - The company is standardizing operations and quality systems across all acquired plasma centers, including those from Biotest, GC, Kedrion, and Haema[50](index=50&type=chunk) - Digital transformation includes migrating to a new BECS for paperless records and rolling out new NexSys/Aurora Xi devices to improve donation yield and efficiency, with full implementation expected by year-end 2022[52](index=52&type=chunk)[54](index=54&type=chunk) Key Efficiency Metrics (2022 vs. 2021) | Metric | Change | | :--- | :--- | | Donor Retention Rate | +11% | | Donations per Employee Hour | +4% | | Average Yield | +2% | - Average liters per center showed strong momentum in Q2 2022, increasing by **26%** compared to Q2 2021[62](index=62&type=chunk) [Donor and Employee Experience](index=32&type=section&id=Donor%20and%20Employee%20Experience) Grifols prioritizes superior employee and donor experience through technology, data, and targeted recruitment campaigns to ensure reliable plasma collections - The company's strategy is to improve employee engagement through better tools and training, which in turn enhances the donor experience at every touchpoint[65](index=65&type=chunk)[66](index=66&type=chunk) - A customer data platform is used to collect and analyze data from every touchpoint, creating a 360-degree view of the donor to inform and elevate their experience[68](index=68&type=chunk) - The 2022 U.S. recruitment campaign successfully raised awareness and recruited new donors, achieving **259 million impressions** and **2.6 million website visits**[73](index=73&type=chunk) - In Europe, national recruitment campaigns in 2021 and 2022 have led to a significant increase in new donors, with monthly new donors in Germany in early 2022 surpassing 2021 levels[74](index=74&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk) Canada and Egypt [Global Self-Sufficiency Model](index=42&type=section&id=Global%20Self-Sufficiency%20Model) Grifols partners with countries to build sustainable plasma self-sufficiency models, expanding global fractionation capacity to 26 million liters by 2026 - Grifols is implementing a Self-Sufficiency Program to help countries establish sustainable plasma-collection models, addressing the growing global demand for plasma-derived therapies[86](index=86&type=chunk) - The company is expanding its global fractionation capacity from **22 million liters in 2022 to 26 million liters in 2026**, with new plants in Canada and Egypt contributing to this growth[89](index=89&type=chunk) [Canada Operations and Expansion](index=45&type=section&id=Canada%20Operations%20and%20Expansion) Grifols expands its Montreal facility in phases to enhance Canada's plasma self-sufficiency, adding albumin purification, fractionation, and Gamunex production - Canada is the world's second-largest consumer of IgG per inhabitant, and the government is seeking to increase its self-sufficiency in plasma-derived therapies[91](index=91&type=chunk) - Grifols is expanding its Montreal facility in three phases: Phase I (Albumin Purification, Aug '22), Phase II (Fractionation Expansion, Sep '23), and Phase III (Warehouse & Gamunex Expansion, Nov '24)[102](index=102&type=chunk) [Egypt Project and Milestones](index=51&type=section&id=Egypt%20Project%20and%20Milestones) Grifols established a pioneering public-private joint venture in Egypt to build Africa's first integrated plasma supply platform, achieving key milestones including plasma collection - Grifols is addressing Egypt's need for plasma-derived medicines through a joint venture to establish a self-sufficient plasma infrastructure, including donor centers and manufacturing facilities[107](index=107&type=chunk) - Key milestones achieved include the signature of the Master Joint Venture Agreement (2020), start of plasma collection (2021), and inauguration of the first plasma center (2022)[108](index=108&type=chunk) - The project includes the construction of **20 donor centers** across Cairo and the Canal Zone, with the first **10 in Wave 1**, and a new manufacturing site in Egypt's New Administrative Capital[112](index=112&type=chunk)[114](index=114&type=chunk) Biopharma [Market Overview and Performance](index=59&type=section&id=Market%20Overview%20and%20Performance) The global plasma-derived proteins market is attractive and growing, with Grifols' Bioscience revenues showing strong Q1 2022 recovery driven by core products and key geographies - The global plasma-derived proteins market reached **€25 billion in FY20**, with a CAGR of **7.2%** from 2017-2020[122](index=122&type=chunk) Bioscience Revenue Growth (at constant currency) | Year | Growth Rate | | :--- | :--- | | 2017 | +7.6% | | 2018 | +8.9% | | 2019 | +8.0% | | 2020 | +7.9% | | 2021 | -5.9% | - In Q1 2022, core products showed positive trends: IgG returned to growth, Albumin saw strong sales in China and the U.S., and Alpha-1 sustained growth[124](index=124&type=chunk) [Product Portfolio Highlights](index=62&type=section&id=Product%20Portfolio%20Highlights) Grifols maintains a strong position across therapeutic areas with leading products like Gamunex®-C, Xembify®, Prolastin®, and HyperRAB®, alongside recent successful launches - Gamunex®-C maintained its position as the **1 prescribed IG for CIDP in the U.S.**, with a **31-34% market share** in 2021-Q1 2022[131](index=131&type=chunk) - Xembify® sales volume grew **+141% YoY** (LTM March '22) in the U.S. and is projected to account for **10-15% of global IG sales by 2025** It is being launched in Europe in 2022-2023[133](index=133&type=chunk)[135](index=135&type=chunk) - Prolastin® holds a dominant market share of **over 70%** in the global Alpha-1 antitrypsin market[138](index=138&type=chunk) - HyperRAB® has **over 80% market share** in the U.S. Rabies IG market and has treated over **1 million patients** since launch[144](index=144&type=chunk) - Vistaseal® fibrin sealant showed **double-digit growth** worldwide in FY21 and is undergoing global expansion into new markets through 2023[151](index=151&type=chunk) [Growth Drivers and Market Expansion](index=73&type=section&id=Growth%20Drivers%20and%20Market%20Expansion) Biopharma growth is driven by addressing underdiagnosed conditions, expanding indications for Xembify®, and increasing Albumin use in critical care, adding significant market potential - Grifols is using AI and partnerships to reduce the average **12.4-year diagnosis time** for Primary Immunodeficiency (PI), a largely undiagnosed condition[155](index=155&type=chunk)[158](index=158&type=chunk) - The company is developing Xembify® for Secondary Immunodeficiencies (SID) in oncological patients, a market with a **7.2% CAGR**[161](index=161&type=chunk) - Grifols' worldwide AATD testing program has performed over **950,000 tests** since 2006, diagnosing over **16,000 severe patients**[163](index=163&type=chunk) - There is a potential global market growth of **over €400 million** for Albumin stemming from its regular use as a disease-modifying treatment in hepatology and critical care[168](index=168&type=chunk) Diagnostic [Business Strategy and Performance](index=81&type=section&id=Business%20Strategy%20and%20Performance) The Diagnostic division focuses on strengthening its current business, supporting Biopharma, and driving innovation, achieving €734 million in 2021 revenues with sustained growth - The Diagnostic division's strategy is based on consolidating the current business, supporting Biopharma, and regulatory innovation & digital transformation[175](index=175&type=chunk) Diagnostic Revenue by Segment (2021, EUR millions) | Segment | Revenue (approx. EUR millions) | | :--- | :--- | | NAT Donor Screening | ~350 | | NAT COVID-19 | ~50 | | Blood Typing Solutions | ~200 | | Recombinant Proteins | ~50 | | Clinical Diagnostic & Others | ~84 | | **Total** | **734** | - A strategic alliance with SRAAS in China is set to consolidate current business and drive growth through new assay development for global expansion[181](index=181&type=chunk) - The Blood Typing Solutions business shows constant growth, driven by the DG Gel® System, achieving sales of **50 million gel cards** in 2021[184](index=184&type=chunk)[185](index=185&type=chunk) [Support for Biopharma and Innovation](index=88&type=section&id=Support%20for%20Biopharma%20and%20Innovation) The Diagnostic division supports Biopharma through high-ROI testing programs like Alpha-1, with 'AlphaID™ at Home' submitted for FDA clearance, and plans to expand this model - The Alpha-1 testing program has performed over **950,000 tests**, diagnosed over **205,000 deficient patients**, and identified over **16,000 severe patients** since 2006[187](index=187&type=chunk) - In May 2022, Grifols submitted a 510(k) filing to the FDA for 'AlphaID™ at Home,' an Over-The-Counter (OTC) screening test for Alpha-1 deficiency[190](index=190&type=chunk) - The successful testing model for Alpha-1 will be expanded to support Biopharma growth in other areas, including Primary Immunodeficiency (PI), Secondary Immunodeficiency (SID), and future Biotest projects[192](index=192&type=chunk) [Regulatory Compliance and Digital Transformation](index=92&type=section&id=Regulatory%20Compliance%20and%20Digital%20Transformation) Grifols is ahead of schedule in complying with new European IVDR and is undergoing digital transformation with new software solutions to streamline customer operations - Grifols is on track with the new European IVDR, receiving its first certifications in December 2021, ensuring on-time delivery for all relevant products without needing the additional transition period[193](index=193&type=chunk)[194](index=194&type=chunk) - Digital transformation initiatives include new software like Bloodstream for NAT testing labs and Blood Typing Manager middleware to connect laboratory networks, improving efficiency and minimizing risks[197](index=197&type=chunk) Innovation [Innovation Strategy and Ecosystem](index=97&type=section&id=Innovation%20Strategy%20and%20Ecosystem) Grifols accelerates innovation by evolving its structure, rationalizing its R&D portfolio, and building a 360-degree ecosystem through internal research and strategic alliances - The innovation strategy involves evolving the organization, gaining focus and speed in the pipeline, and building new innovation models[203](index=203&type=chunk) - Grifols is rationalizing its R&D portfolio by discontinuing non-strategic projects and divesting assets like VCN, while launching key new projects[206](index=206&type=chunk) - The company is developing a broad innovation ecosystem through strategic alliances, including an R&D collaboration with Shanghai RAAS and a precision medicine partnership with Endpoint Health for ATIII in sepsis[208](index=208&type=chunk) [Key Development Projects](index=101&type=section&id=Key%20Development%20Projects) Grifols highlighted notable progress in four core R&D projects [AMBAR-Next (Alzheimer's Disease)](index=103&type=section&id=AMBAR-Next%20%28Alzheimer%27s%20Disease%29) AMBAR-Next is a confirmatory Phase 3 trial for mild-to-moderate Alzheimer's Disease using plasma exchange with albumin replacement, enrolling ~600 subjects globally - The AMBAR-Next Phase 3 trial is a confirmatory study for mild-to-moderate Alzheimer's, building on the two-pronged strategy of plasma exchange and albumin replacement to remove toxic moieties and restore albumin's properties[214](index=214&type=chunk)[215](index=215&type=chunk) [Xembify® in CLL](index=106&type=section&id=Xembify%C2%AE%20in%20CLL) Grifols is developing Xembify® to prevent infections in CLL patients with hypogammaglobulinemia, planning a Phase 3 trial targeting the fastest-growing IG therapy segment - The market potential for IG in Secondary Immunodeficiencies (SID), including CLL, is projected to grow from **~€260 million in 2021 to over €1 billion by 2031**[218](index=218&type=chunk) [ATIII in Sepsis](index=108&type=section&id=ATIII%20in%20Sepsis) Grifols, with Endpoint Health, is developing ATIII for severe sepsis using a precision medicine approach, identifying a specific patient sub-population via a rapid IVD test - The collaboration with Endpoint Health aims to develop and commercialize ATIII for severe sepsis by using a rapid, **90-minute IVD test** to identify a targeted patient population of **~139,000 cases per year** in the U.S[222](index=222&type=chunk)[224](index=224&type=chunk) [GigaGen and HBV Therapy](index=111&type=section&id=GigaGen%20and%20HBV%20Therapy) GigaGen is developing a recombinant polyclonal antibody therapy for Hepatitis B (HBV) with over 1,000x greater potency than plasma-derived therapy in pre-clinical models - GigaGen's platform captures and recreates complex antibody repertoires to develop recombinant polyclonal and exceptional monoclonal antibodies[228](index=228&type=chunk) - The lead candidate, a recombinant polyclonal antibody for HBV (rHBIG), has demonstrated a neutralizing potency **over 1,000x** that of plasma-derived therapy in pre-clinical models[231](index=231&type=chunk) Grifols and Biotest [Transaction Rationale](index=117&type=section&id=Transaction%20Rationale) The Biotest acquisition is a transformational transaction maximizing opportunities through strong geographic fit, enhanced commercial reach, increased scalability, and accelerated pipeline - The Biotest acquisition is a transformational deal that offers a strong geographic fit, broader commercial reach, increased scalability, and an accelerated innovation pipeline[237](index=237&type=chunk) [Key Pipeline Assets from Biotest](index=118&type=section&id=Key%20Pipeline%20Assets%20from%20Biotest) Biotest acquisition brings high-potential late-stage assets like Fibrinogen, Trimodulin, and Cytotect® for CMV in pregnancy, expected to boost revenue per liter and expand margins [Fibrinogen](index=119&type=section&id=Fibrinogen) Biotest's Fibrinogen concentrate is being developed for congenital and acquired fibrinogen deficiency, with an ongoing Phase III study for acquired deficiency showing promising interim results - Fibrinogen concentrate is being developed for congenital and acquired deficiencies, with a completed Phase I/III trial for congenital use and an ongoing Phase III trial (ADFIRST) for acquired use[248](index=248&type=chunk) - The market for fibrinogen is expected to grow significantly, driven by improved point-of-care diagnostics and increased awareness Obtaining an acquired deficiency indication could multiply consumption, as seen in markets like Canada[251](index=251&type=chunk)[254](index=254&type=chunk) [Trimodulin](index=125&type=section&id=Trimodulin) Trimodulin, a unique polyvalent immunoglobulin, targets severe community-acquired pneumonia and COVID-19, with two Phase III trials initiated and blockbuster potential - Trimodulin is a unique immunoglobulin containing **~23% IgM** and **~21% IgA**, targeting severe community-acquired pneumonia (sCAP) and severe COVID-19[257](index=257&type=chunk) - Following positive Phase II studies that showed a **50-70% relative reduction in mortality** in the target population, two Phase III trials are starting in 2022[263](index=263&type=chunk) - The initial target market is **over 80,000 sCAP patients per year**, with no direct competitors for an IgM-enriched immunoglobulin on the market[265](index=265&type=chunk)[267](index=267&type=chunk) [Cytotect® for CMV in Pregnancy](index=132&type=section&id=Cytotect%C2%AE%20for%20CMV%20in%20Pregnancy) Cytotect® is being developed to prevent maternal-fetal CMV transmission, with a pivotal Phase III trial underway, showing potential to significantly reduce transmission rates - Cytotect® is being developed to prevent maternal-fetal transmission of CMV, the most common congenital infection, which affects **0.5-1.0% of all newborns**[270](index=270&type=chunk)[280](index=280&type=chunk) - A Phase III trial (PreCyssion) is underway with **80 subjects** Previous observational studies showed a reduction in transmission from **35.2% (no intervention) to 6.5%** with CMVIG treatment[276](index=276&type=chunk)[279](index=279&type=chunk) Financials [Financial Performance Review](index=142&type=section&id=Financial%20Performance%20Review) Grifols' 2021 performance was impacted by COVID-19, resulting in €4,933 million revenues and 19.5% reported EBITDA margin, with an underlying margin of 27.3% excluding one-offs 2021 Key Financials (EUR in millions) | Metric | H1'21 | H2'21 | 2021 Total | | :--- | :--- | :--- | :--- | | **Revenue** | 2,537 | 2,397 | 4,933 | | **Gross Margin (%)** | 43.9% | 35.4% | 39.8% | | **EBITDA Adjusted** | 637 | 377 | 1,014 | | **EBITDA Adjusted (%)** | 25.1% | 15.8% | 20.6% | | **Group Profit** | 267 | (78) | 189 | - The Bioscience division was constrained by plasma supply in 2021, while Diagnostic, Bio Supplies, and Hospital divisions grew[294](index=294&type=chunk)[295](index=295&type=chunk) - COVID-19 had an estimated **€420 million volume-related negative impact** on 2021 EBITDA, comprising **€150 million from donor compensation**, **€183 million from cost under-absorption**, and **€106 million from lower sales volume**[297](index=297&type=chunk) [Strategic Investments and Biotest Acquisition](index=147&type=section&id=Strategic%20Investments%20and%20Biotest%20Acquisition) Grifols invested over €1 billion in capacity and plasma network, notably acquiring Biotest for €1.5 billion, adding European plasma centers and a strong late-stage pipeline - Grifols invested over **€900 million in CAPEX** from 2019-2021 to expand industrial capacity, including new fractionation and purification plants[300](index=300&type=chunk) - The acquisition of Biotest closed on April 25, 2022, with an investment of **€1.5 billion**, giving Grifols **96% of voting rights**[303](index=303&type=chunk) Biotest Financial KPIs (EUR in millions) | Year | Revenues | Adjusted EBITDA | Adjusted EBITDA Margin (%) | | :--- | :--- | :--- | :--- | | 2017 | 378 | 75 | 19.8% | | 2018 | 400 | 92 | 23.0% | | 2019 | 419 | 100 | 23.9% | | 2020 | 484 | 108 | 22.3% | | 2021 | 516 | 101 | 19.5% | [Financial Outlook and Deleveraging Strategy](index=150&type=section&id=Financial%20Outlook%20and%20Deleveraging%20Strategy) Grifols expects H1 2022 revenue growth of c. +5% and 20-22% EBITDA margin, committed to deleveraging through cost savings, divestments, dividend suspension, and lower CAPEX Outlook H1 2022 (Growth vs. PY) | Metric | Growth Rate | | :--- | :--- | | **Revenues (Reported)** | c. +5% | | **Revenues (at cc)** | c. +11% | | **Biopharma (Reported)** | c. +9% | | **EBITDA Margin** | 20-22% | - Performance in 2022 is expected to be driven by accelerating plasma collections, price increases, and robust underlying demand, with a gradual sequential expansion in margins[309](index=309&type=chunk) - The deleveraging plan includes a **€100 million structural cost savings program**, divestment of non-core assets (e.g., VCN, Hospital Software BU), suspension of cash dividends, and reduced CAPEX[311](index=311&type=chunk) [Macro-economic Context](index=154&type=section&id=Macro-economic%20Context) Grifols is prepared for the macro-economic environment, with low exposure to interest rate hikes, a tailwind from EUR/USD exchange rate, and minimal impact from the Ukraine-Russia conflict - The company has low exposure to interest rate hikes, as **c. 65% of its debt is at a fixed rate**[312](index=312&type=chunk)[314](index=314&type=chunk) - The EUR/USD exchange rate is a tailwind in 2022, and sales from Ukraine/Russia represent **less than 0.3% of the total**[312](index=312&type=chunk) Final Remarks [Delivering on Commitments](index=157&type=section&id=Delivering%20on%20Commitments) Grifols delivered on commitments by strengthening its core business, accelerating innovation, and streamlining its organization, achieving significant savings and positioning for growth - Grifols has re-prioritized its R&D portfolio, discontinuing some projects to achieve **€30 million in savings**, while accelerating priority projects like Xembify in CLL and ATIII in Sepsis[321](index=321&type=chunk) Market Potential of Key Pipeline Assets | Project | Company | Market Potential | | :--- | :--- | :--- | | Xembify® in SID (CLL) | Grifols | ~USD 1Bn | | ATIII in Sepsis | Grifols | ~USD 1Bn | | AMBAR-Next | Grifols | USD 1Bn+ | | GigaGen Platform | Grifols | USD 1Bn+ | | Fibrinogen® | Biotest | USD 400-800M | | Trimodulin | Biotest | USD 1Bn+ | | CMV IG Hyper | Biotest | USD 200-300M | - The company is optimizing its business through divestments (Hemostasis, VCN, Blood Bags, Hospital Software BU) and a cost optimization plan to achieve **over €100 million in annualized savings**[330](index=330&type=chunk) - The new organizational structure splits the former Bioscience Division into Biopharma and Plasma Procurement, creating full-fledged, value-driven business units for enhanced effectiveness and accountability[332](index=332&type=chunk)

Table of Contents SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ◻ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-35193 | GRIFOLS, S.A. | | | --- | --- | | (Exact name of Registrant as specified in its charter) | | | Kingdom of Spain | | | (Jurisdiction of incorporation) | | | Avinguda de la Generalitat, 152-158 | | | Parc de Negocis Can Sant Joan | | | Sant Cugat del Vallès 08174 Barcelona, Spain | | ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month June 2021 (Commission File No. 001-35193) Grifols, S.A. (Translation of registrant's name into English) Avinguda de la Generalitat, 152-158 Parc de Negocis Can Sant Joan Sant Cugat del Valles 08174 Barcelona, Spain (Address of registrant's principal executive office) Indicate by check mark whether the registrant files ...

2021 Investor and Analyst Day June 3, 2021 GRIFOLS جريفولز 基立福 2006-2021 2021 Disclaimer Investor & Analyst Day June 21 This document has been prepared by GRIFOLS, S.A. (GRIFOLS or the "Company") exclusively for use during the 2021 Investor and Analyst Day on June 3, 2021. Therefore it cannot be disclosed or made public by any person or entity with an aim other than the one expressed above, without the prior written consent of the Company. The Company does not assume any liability for the content of this do ...

PART I [Item 3. KEY INFORMATION](index=7&type=section&id=Item%203.%20KEY%20INFORMATION) This section summarizes Grifols' historical financial data (2018-2020) and outlines key risks impacting its operations and financial health [Selected Financial Data](index=7&type=section&id=A.%20Selected%20Financial%20Data) This section presents Grifols' historical consolidated financial data for 2018-2020, including key balance sheet and profit and loss figures Consolidated Balance Sheet Data (2018-2020) | Indicator | 2020 (in € thousands) | 2019 (in € thousands) | 2018 (in € thousands) | | :--- | :--- | :--- | :--- | | **Total non-current assets** | 12,109,822 | 10,180,427 | 8,993,795 | | **Total current assets** | 3,164,954 | 5,362,184 | 3,483,251 | | **Total Assets** | 15,274,776 | 15,542,611 | 12,477,046 | | **Total Equity** | 6,720,055 | 6,845,768 | 4,696,604 | | **Total non-current liabilities** | 7,219,583 | 7,330,285 | 6,523,121 | | **Total current liabilities** | 1,335,138 | 1,366,558 | 1,257,321 | | **Total Liabilities** | 8,554,721 | 8,696,843 | 7,780,442 | Consolidated Statement of Profit and Loss Data (2018-2020) | Indicator | 2020 (in € thousands) | 2019 (in € thousands) | 2018 (in € thousands) | | :--- | :--- | :--- | :--- | | **Net revenue** | 5,340,038 | 5,098,691 | 4,486,724 | | **Gross margin** | 2,255,165 | 2,341,232 | 2,049,560 | | **Operating Result** | 996,132 | 1,131,365 | 994,124 | | **Profit attributable to the Parent** | 618,546 | 625,146 | 596,642 | | **Basic earnings per ordinary share (€)** | 0.90 | 0.91 | 0.87 | [Risk Factors](index=10&type=section&id=D.%20Risk%20Factors) This section details the company's primary risks, categorized into structural, business, healthcare industry, and securities-related factors - The company's substantial level of indebtedness, **€7.0 billion** as of December 31, 2020, could adversely affect its financial condition and restrict its ability to react to business changes[36](index=36&type=chunk) - The COVID-19 pandemic has had, and could continue to have, a material adverse impact on operations, including manufacturing, supply chains, and clinical trials[34](index=34&type=chunk)[79](index=79&type=chunk) - A significant portion of net revenue (approximately **47%** in 2020) is derived from immunoglobulin products, making the company vulnerable to adverse market events affecting these products[34](index=34&type=chunk)[81](index=81&type=chunk) - The company faces risks from potential changes to the U.S Patient Protection and Affordable Care Act (ACA) and other government regulations that could affect pharmaceutical pricing and reimbursement[35](index=35&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - The Grifols Family and Scranton Enterprises B.V. own approximately **36%** of Class A shares, giving them significant influence over matters requiring shareholder approval, including the election of the board of directors[35](index=35&type=chunk)[189](index=189&type=chunk) [Item 4. INFORMATION ON THE COMPANY](index=37&type=section&id=Item%204.%20INFORMATION%20ON%20THE%20COMPANY) This section provides a comprehensive overview of Grifols, detailing its history, business structure, global operations, R&D, properties, and regulatory landscape [History of and Development of the Company](index=37&type=section&id=A.%20History%20of%20and%20Development%20of%20the%20Company) Founded in 1940, Grifols has grown into a global, vertically integrated plasma derivatives producer, marked by key acquisitions and significant operational capacity - Grifols is a vertically integrated global producer of plasma derivatives, ranking among the top three in the industry[203](index=203&type=chunk) - As of year-end 2020, the company operated **312 plasma collection centers** in the U.S and Germany with a manufacturing capacity of approximately **15.2 million liters** of plasma per year[203](index=203&type=chunk) - Significant recent acquisitions include a **100%** stake in Alkahest, Inc and plasma facilities from GC Pharma in 2020, expanding its R&D and manufacturing capabilities[210](index=210&type=chunk) [Business Overview](index=38&type=section&id=B.%20Business%20Overview) Grifols operates five divisions, with Bioscience as the largest, maintaining a strong global presence and a vertically integrated business model Net Revenue by Division (2020) | Division | Net Revenue (in € thousands) | % of Total Net Revenue | | :--- | :--- | :--- | | Bioscience | 4,252,502 | 79.5% | | Diagnostic | 775,889 | 14.5% | | Hospital | 118,675 | 2.2% | | Bio Supplies | 224,090 | 4.2% | | Others | 31,989 | 0.6% | | **Total** | **5,340,038** | **100.0%** | Net Revenue by Region (2020) | Region | Net Revenue (in € thousands) | % of Total Net Revenue | | :--- | :--- | :--- | | United States and Canada | 3,599,746 | 67.4% | | European Union | 834,492 | 15.6% | | Rest of the World | 905,800 | 17.0% | | **Total** | **5,340,038** | **100.0%** | - The company is vertically integrated across the entire value chain, from plasma collection through **312 centers** to the marketing and distribution of final products[227](index=227&type=chunk)[228](index=228&type=chunk) - Research and development spending was **€294.2 million** in 2020, with **1,107 employees** dedicated to R&D Key projects include treatments for Alzheimer's disease (AMBAR study) and COVID-19 (ITAC study)[313](index=313&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk) [Organizational Structure](index=62&type=section&id=C.%20Organizational%20Structure) Grifols, S.A. is the parent of a global group comprising 63 consolidated and 12 equity-method companies, reflecting a unified corporate strategy - As of December 31, 2020, the Grifols Group was comprised of **63** fully consolidated companies[386](index=386&type=chunk) - The Group also held interests in **12** companies that were accounted for using the equity method, where its ownership is between 20% and 50%[386](index=386&type=chunk) [Property, Plant and Equipment](index=62&type=section&id=D.%20Property%2C%20Plant%20and%20Equipment) Grifols operates major manufacturing facilities globally, including plasma fractionation plants with a combined capacity of **15.2 million liters** per year, and a global operations center - The company operates **four** plasma fractionation plants located in Parets (Spain), Los Angeles (USA), Clayton (USA), and a newly acquired facility in Montreal (Canada)[388](index=388&type=chunk)[392](index=392&type=chunk)[396](index=396&type=chunk) - The combined fractionation capacity of its facilities is approximately **15.2 million liters** per year, with plans to increase this to **21 million liters** by 2022 and **28 million** by 2026[203](index=203&type=chunk)[392](index=392&type=chunk) - A global operations center in Dublin, Ireland, centralizes key functions for the Bioscience division, including logistics, distribution, and treasury[398](index=398&type=chunk) [Regulatory Matters](index=64&type=section&id=E.%20Regulatory%20Matters) Grifols is subject to extensive government regulation in the U.S., Europe, and other international markets, covering product authorization, anti-fraud, and pricing/reimbursement - In the U.S., Grifols' plasma derivative products are regulated as biologics and require an approved Biologics License Application (BLA) from the FDA to be marketed[401](index=401&type=chunk)[402](index=402&type=chunk) - The company's activities are subject to anti-fraud and abuse regulations in the U.S., such as the Anti-Kickback Law and the False Claims Act (FCA), with potential for severe civil and criminal penalties[417](index=417&type=chunk)[418](index=418&type=chunk)[419](index=419&type=chunk) - In the European Union, medicines are authorized via a centralized procedure through the EMA or through national authorization procedures The withdrawal of the U.K from the EU (Brexit) has introduced new regulatory pathways for the U.K market[427](index=427&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk) - Sales are dependent on reimbursement from third-party payors, including government programs like Medicare and Medicaid in the U.S., which are increasingly challenging prices and examining cost-effectiveness[456](index=456&type=chunk)[457](index=457&type=chunk) [Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=77&type=section&id=Item%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes Grifols' 2020 financial performance, including revenue, margins, liquidity, capital resources, and the impact of COVID-19 and acquisitions [Operating Results](index=77&type=section&id=A.%20Operating%20Results) In 2020, net revenue grew **4.7%** to **€5.34 billion**, despite a **€205 million** inventory write-down, with profit before tax increasing **7.5%** due to improved finance results Financial Performance Comparison (2019 vs. 2020) | Indicator | 2020 (in € thousands) | 2019 (in € thousands) | % Change | | :--- | :--- | :--- | :--- | | **Net revenue** | 5,340,038 | 5,098,691 | 4.7% | | **Gross margin** | 2,255,165 | 2,341,232 | (3.7)% | | **Operating result** | 996,132 | 1,131,365 | (12.0)% | | **Profit before income tax** | 878,629 | 817,103 | 7.5% | | **Consolidated profit for the year** | 708,990 | 648,644 | 9.3% | - The COVID-19 pandemic had a net negative impact of **€155 million** on 2020 operating results, which includes a **€205 million** inventory write-down, reduced revenues, offset by a **€112 million** expense containment plan and strong sales of a SARS-CoV-2 diagnostic test[485](index=485&type=chunk) - The Bioscience division's revenue grew **6.2%** to **€4.2 billion**, driven by strong immunoglobulin and albumin sales The Diagnostic division's revenue increased **5.8%** to **€775.9 million**, largely due to its TMA molecular test for SARS-CoV-2[515](index=515&type=chunk)[519](index=519&type=chunk) - Finance costs decreased by **35.3%** to **€177.7 million**, mainly due to debt refinancing in late 2019 and a **€57 million** capital gain from the Shanghai RAAS transaction[535](index=535&type=chunk) [Liquidity and Capital Resources](index=88&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) As of December 31, 2020, Grifols maintained a strong liquidity position, with operating cash flow significantly increasing to **€1.1 billion**, supporting strategic investments and a diversified debt structure - As of December 31, 2020, the company had a liquidity position of approximately **€1.5 billion**, consisting of **€579.6 million** in cash and **€922.5 million** in undrawn credit lines[575](index=575&type=chunk)[484](index=484&type=chunk) Historical Cash Flows (2018-2020) | Cash Flow Activity (in € thousands) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Net cash from operating activities** | 1,110,336 | 568,933 | 737,428 | | **Net cash (used in) investing activities** | (858,115) | (548,789) | (781,867) | | **Net cash from/(used in) financing activities** | (354,401) | (332,356) | 152,503 | - The company is undertaking a **€1.4 billion** investment plan from 2018 through 2022, focusing on expanding manufacturing capacities for the Bioscience division and growing its plasma center network[602](index=602&type=chunk) - Key financing sources include the 2019 Credit Facilities (comprising Senior Term Loans and Revolving Loans), **€1.0 billion** in 3.20% Senior Unsecured Notes due 2025, and **€1.675 billion** in Senior Secured Notes issued in 2019[612](index=612&type=chunk)[619](index=619&type=chunk)[627](index=627&type=chunk) [Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=101&type=section&id=Item%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details Grifols' Board of Directors, senior management, compensation, board practices, and global workforce of **23,655 employees** as of year-end 2020 [Directors and Senior Management](index=101&type=section&id=A.%20Directors%20and%20Senior%20Management) The Board of Directors is led by non-executive Chairman Víctor Grifols Roura, with joint CEOs Víctor Grifols Deu and Raimon Grifols Roura, supported by an experienced senior management team - Víctor Grifols Roura serves as the non-executive Chairman of the Board[657](index=657&type=chunk)[660](index=660&type=chunk) - Víctor Grifols Deu and Raimon Grifols Roura have served as joint and several Chief Executive Officers since January 1, 2017, as part of a planned succession[657](index=657&type=chunk)[663](index=663&type=chunk)[665](index=665&type=chunk) - The senior management team is composed of long-tenured executives with deep industry experience, responsible for global operations across all divisions[690](index=690&type=chunk) [Compensation](index=109&type=section&id=B.%20Compensation) In 2020, total director compensation was **€5 million**, senior management received **€17.2 million**, and an RSU Retention Plan allows employees to receive bonuses in Class B shares - Total compensation paid to the Board of Directors in 2020 was **€5 million**[730](index=730&type=chunk) - Senior management (excluding directors) received aggregate compensation of **€17.2 million** in 2020[733](index=733&type=chunk) - The company maintains a Restricted Share Unit (RSU) Retention Plan where eligible employees can elect to receive up to **50%** of their bonus in Class B shares, which the company matches with an additional **50%** of the elected amount, subject to a two-year vesting period[737](index=737&type=chunk) [Board Practices](index=111&type=section&id=C.%20Board%20Practices) The Board of Directors, comprising **13 members** with three committees, follows Spanish corporate governance practices, which differ from NASDAQ standards - The Board is composed of **13** directors elected for four-year terms[740](index=740&type=chunk)[741](index=741&type=chunk) - The Board has an Audit Committee, an Appointments and Remuneration Committee, and a Sustainability Committee[756](index=756&type=chunk) - The Audit Committee consists of **three** members, all of whom are independent in conformity with Exchange Act and NASDAQ Listing Rules[762](index=762&type=chunk) - A new Sustainability Committee was established on December 11, 2020, to monitor corporate governance, environmental, and social practices[769](index=769&type=chunk)[770](index=770&type=chunk) [Employees](index=116&type=section&id=D.%20Employees) As of December 31, 2020, Grifols had **23,655 employees** globally, with the majority in manufacturing and North America being the largest region Employees by Geographic Region (Year-End) | Geographic Region | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Spain | 4,292 | 4,134 | 3,858 | | North America | 16,756 | 17,479 | 15,330 | | Rest of the World | 2,607 | 2,390 | 2,042 | | **Total** | **23,655** | **24,003** | **21,230** | - The largest department by employee count is Manufacturing, with **19,049 employees** as of year-end 2020[774](index=774&type=chunk) [Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=117&type=section&id=Item%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details Grifols' Class A share ownership, including major shareholders, and significant related party transactions, such as the **$538 million** sale of Haema AG and Biotest US Corporation Major Shareholders of Class A (Voting) Shares as of Dec 31, 2020 | Name of Beneficial Owner | Percentage of Ordinary Shares | | :--- | :--- | | Deria S.A. | 9.16% | | Scranton Enterprises B.V. | 8.13% | | Thorthol Holdings B.V. | 7.09% | | Núria Roura Carreras | 6.15% | | Blackrock, Inc. | 4.47% | - In December 2018, Grifols sold its stakes in Haema AG and Biotest US Corporation to major shareholder Scranton Enterprises B.V for **$538 million** Grifols retains an option to repurchase the shares and has a **30-year** plasma supply agreement with the entities[790](index=790&type=chunk)[791](index=791&type=chunk) - The company contributes annually to the Víctor Grifols i Lucas Foundation and the Probitas Private Foundation, both of which have connections to the Grifols family and directors In 2020, contributions were **€0.4 million** and **€9.9 million**, respectively[792](index=792&type=chunk)[793](index=793&type=chunk)[794](index=794&type=chunk) [Item 8. FINANCIAL INFORMATION](index=120&type=section&id=Item%208.%20FINANCIAL%20INFORMATION) This section presents Grifols' audited financial statements, details legal proceedings including a **$4 million** arbitration award, and outlines the dividend policy targeting **40%** of net consolidated profits - The company is involved in a legal dispute with Abbott Laboratories over unpaid royalties, where an arbitrator awarded **$4 million** to GDS/Ortho in June 2020 The court litigation is ongoing[801](index=801&type=chunk) - The company's dividend policy targets a payout of approximately **40%** of net consolidated profits, subject to debt covenants[809](index=809&type=chunk) - In October 2020, shareholders approved a dividend of **€0.162** per Class A share (totaling **€68.9 million**) and **€0.162** per Class B share (totaling **€41.8 million**), plus a preferred dividend of **€0.01** per Class B share[811](index=811&type=chunk)[813](index=813&type=chunk) [Item 10. ADDITIONAL INFORMATION](index=127&type=section&id=Item%2010.%20ADDITIONAL%20INFORMATION) This section details Grifols' corporate structure, share capital, and governing documents, outlining the rights of Class A and Class B shares, material contracts, and tax considerations - The company's share capital consists of **426,129,798 Class A voting shares** and **261,425,110 Class B non-voting shares**[860](index=860&type=chunk) - Class B shares have a preferred annual dividend of **€0.01** per share, which is paid before any dividend to Class A shareholders They also receive the same ordinary dividends as Class A shares[812](index=812&type=chunk)[908](index=908&type=chunk) - While generally non-voting, Class B shares have voting rights on specific extraordinary matters, such as mergers, dissolution, delisting, or any resolution that adversely affects their rights[904](index=904&type=chunk)[905](index=905&type=chunk)[913](index=913&type=chunk) - Dividends paid by Grifols to non-residents of Spain are generally subject to a **19%** withholding tax, which may be reduced to **15%** for eligible U.S holders under the U.S.-Spain tax treaty[943](index=943&type=chunk)[944](index=944&type=chunk) [Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=145&type=section&id=Item%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details Grifols' exposure to market risks, primarily currency fluctuations (USD/EUR) and interest rate volatility, with mitigation strategies in place - The company's primary market risk exposure is to currency fluctuations, particularly between the U.S dollar and the euro This is mitigated by holding debt denominated in U.S dollars[981](index=981&type=chunk)[982](index=982&type=chunk) - A hypothetical **10%** strengthening of the U.S dollar against the euro at year-end 2020 would have increased equity by **€750.6 million** and profit by **€13.2 million**[983](index=983&type=chunk) - As of December 31, 2020, **46%** of the company's total debt was at a fixed interest rate, mitigating exposure to interest rate volatility[987](index=987&type=chunk) - A hypothetical **100 basis point** increase in interest rates during 2020 would have increased interest expense by **€36.2 million**[989](index=989&type=chunk) PART II [Item 15. CONTROLS AND PROCEDURES](index=153&type=section&id=Item%2015.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of Grifols' disclosure controls and internal control over financial reporting as of December 31, 2020, as assessed by management and audited by KPMG - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[1076](index=1076&type=chunk) - Management assessed the effectiveness of internal control over financial reporting using the criteria from the COSO Internal Control — Integrated Framework (2013) and found it to be effective[1080](index=1080&type=chunk) - The independent registered public accounting firm, KPMG Auditores, S.L., issued an unqualified attestation report on the effectiveness of the company's internal control over financial reporting[1081](index=1081&type=chunk) [Corporate Governance and Other Matters](index=154&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Matters) This section covers corporate governance, including the Audit Committee Financial Expert, Code of Ethics, KPMG fees (**€6.1 million**), a share buy-back program, and differences from NASDAQ standards - The Board has determined that Steven F Mayer is an "audit committee financial expert" and is an independent director[1084](index=1084&type=chunk) Principal Accountant Fees (KPMG) | Service Category | 2020 (in € thousands) | 2019 (in € thousands) | | :--- | :--- | :--- | | Audit fees | 5,567 | 5,080 | | Audit-related fees | 399 | 651 | | Tax fees | 11 | 55 | | All other fees | 105 | 85 | | **Total** | **6,082** | **5,871** | - In March 2021, the Board implemented a share buy-back program to acquire up to **1%** of the company's share capital (**4,261,298 Class A shares** and **2,614,251 Class B shares**) for a maximum investment of **€125 million**, intended for future acquisitions[1095](index=1095&type=chunk)[1097](index=1097&type=chunk)[1098](index=1098&type=chunk) - As a foreign private issuer, Grifols follows Spanish corporate governance practices, which differ from NASDAQ rules for U.S companies regarding board independence, shareholder quorum, and proxy solicitations[1103](index=1103&type=chunk)[1104](index=1104&type=chunk) PART III [Item 18. FINANCIAL STATEMENTS](index=160&type=section&id=Item%2018.%20FINANCIAL%20STATEMENTS) This section presents Grifols' audited consolidated financial statements (2018-2020), prepared under IFRS, along with KPMG's unqualified opinion on both the financials and internal controls - The financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and cash flows for the three-year period ended December 31, 2020, in conformity with IFRS[1140](index=1140&type=chunk) - The independent auditor, KPMG, identified the evaluation of the Diagnostic goodwill impairment analysis as a critical audit matter due to the significant judgment required in evaluating assumptions related to future cash flows, perpetual growth rate, and the discount rate[1149](index=1149&type=chunk)[1151](index=1151&type=chunk) - The company adopted IFRS 16 Leases on January 1, 2019, changing its method of accounting for leases, but did not restate comparative figures for 2018 as permitted by the standard's transitional provisions[1141](index=1141&type=chunk)[1238](index=1238&type=chunk)

Table of Contents SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ☐ Yes ☒ No GRIFOLS, S.A. TABLE OF CONTENTS | PRESENTATIO ...