Exhibit 99.1
Exhibit 99.1
Presentation of the New HealthTronics
December 14, 2004
Brad A. Hummel
President & CEO
Statements in this presentation that are not strictly historical, including statements regarding plans, objective and future financial performance, are “forward-looking” statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although HealthTronics believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that the expectations will prove to be correct. Factors that could cause actual results to differ materially from HealthTronics’ expectations include, among others, the existence of demand for and acceptance of HealthTronics’ services, the integration of Prime’s and HealthTronics’ businesses, regulatory approvals, economic conditions, the impact of competition and pricing, financing efforts and other factors described from time to time in HealthTronics’ periodic filings with the Securities and Exchange Commission.
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Agenda
Introduction of Management Team
Merger Highlights
2005 Highlights
Operating Groups
2005 Financial Forecast
Summary
Q&A
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Management Team
Brad A. Hummel – CEO & President
John Q. Barnidge – CFO & Senior VP
Joseph M. Jenkins, M.D. – President, Urology
Klaas F. Vlietstra – Interim President, AKSV
A. Michael Stolarski – President, Orthopaedics
Robert W. Bachman – Sr. VP, AKSV
Christopher B. Schneider – Sr. VP, Device Sales & Service
W. Price Dunaway – Sr. VP, Urology
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Merger Highlights
Creates Broad Based Urology Platform
Provides for More Focused Enterprise
Strengthens Balance Sheet
Yields Substantial Synergy
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2005 Highlights
Urology Group:
Revenues Increase 10%
Operating Income Increases 10%
Solid Traction in Prostate Therapies
Medical Device:
Revenues Grow 20% to $27mm
Litho Production Rationalized
Introducing New Cysto Table
Orthotripsy
Revenues Increase 20%
Contributing Earnings
Improving Payors Outlook
Specialty Vehicles
Operating Income Increases 20%
Efficiencies in Place
Strong Upside in Homeland Security
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2005 Highlights: Consolidated Operations Summary of Income Statement (1)
($ in millions) 2005 Forecast
Revenues $300 (1)
Adjusted EBITDA $50 (1)
Net Income $17 (1)
EPS $0.48—$0.53
(1) Represents Midpoint of Estimates Range
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UROLOGY SERVICES
Joseph M. Jenkins, M.D.
President, Urology
W. Price Dunaway
Senior VP, Urology
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Leading Competitive Position
Partnering with 1/3 of Nation’s Urologists
Veteran Management Team
Bringing Cutting-edge Therapies to Market
Successful Partnership Model
Proven Execution
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Core Objectives
Leverage Urology Channel
Trusted Advisor to our Partners
Value-added Products and Services
Facilitate Marketplace Consolidation
Growing Revenue & Taking Share
Expanding Platform
Expand Margins
HOPPS Rate Increase: Pricing Stability
Wholesale Pricing Power
Operating Efficiencies
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Market Scope
Drivers:
Aging “Boomers”
Fast Growing Segment – 50+ Year Old Male
First Baby Boomer not yet 60 Years Old
Increasingly Informed Patient
New Technologies
Delivery System Shift – “Following the Patient”
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Lithotripsy
Cost Effective, Non-invasive, Efficacious
Fractional Cost of Surgical Alternatives
Market Scope
250,000 Cases per Year
$2,000 per Case Revenue
$500M Revenue Market
Physician-driven Therapy
No Alternative Therapy
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Lithotripsy PARTNERSHIP ECONOMICS
Doctors (LPs)
HealthTronics (GP)
Sale of
Equipment
Equipment
&
Consumables
$
$
Reimbursement
for
Procedure
Maintenance
Lithotripsy
Partnership
Management
65%
35%
Partnership
Distributions
Long Term Partnerships
Non-Competes
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Prostate Therapy – BPH
Benign Prostatic Hyperplasia
Non-cancerous Enlargement of the Prostate
Market Scope
Affects 50% of Men Over Age 60
13 Million American Men in 2004
Growth Rate
From 40,000 to 360,000 Minimally Invasive Treatments
$650 Million—$700 Million Market
Multiple Treatment Methodologies
TUMT – Transurethral Microwave Therapy
PVP GreenLight
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Prostate Therapy – BPH
TUMT
Microwave of the Prostate
In-office Procedure
Wholesale Provider
$3,600 Medicare / $1,700 Wholesale
GreenLight Laser
Photoselective Vaporization of the Prostate (PVP)
Hospital Outpatient Procedure
Partnership Delivered
$3,700 Medicare / $1,900 Wholesale
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Prostate Therapy – Prostate Cancer
Market Scope
Second Most Common Cancer in American Males
230,000 New Cases per Year in the U.S.
Baby Boomer Impact
$5B market
Dramatic Increase in Public Awareness
Participating in the Diagnosis
PSA Testing
Anatomical Path
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Prostate Therapy – Prostate Cancer
Treatment Alternatives
Total Ablation
Radical Surgery
Radiation
Cryotherapy
HIFU
Focal Ablation
Cryotherapy
HIFU
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Prostate Therapy – Prostate Cancer
Cryotherapy
Partnership Model
Specialized MD
Hospital Environment
$4,500 per Case
HIFU Project
FDA Clinical Trials Underway
High Efficacy / Patient Satisfaction
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Other Developments
Delivering into our Network
Treating Andropause
Testosterone Testing
Qualigen Marketing Agreement
Scientifically Validated Nutritional Supplements
Formulated by Urologists
Anatomical Pathology
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Uropathology Market
Market is Approximately $500 Million
7,500 Private Practice Urologists
Approximately 10 Prostate Biopsies / Month
Each Patient = Approximately $600 Revenue
60% of Patients are Medicare
Medicare Reimbursement is Excellent
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Overview of Prostate Biopsy Process
Patient Presents w/ Elevated PSA
Qwest
Physician Needle Biopsies Prostate
Lab Corp
Physician Staff Determines
Where to Send Biopsy
Local Pathologist
Others
Courier Transports Biopsies to Lab
HTRN
Lab Processes Biopsies
Physician Receives Results and
Determines Appropriate Treatment
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HealthTronics Uropath Advantage –
Big Lab Technology, Small Lab Service
Timeliness & Accuracy – Turnaround Within 48 Hours
Technology – Electronic Reporting
Customer Service – Physician Oriented Pathologists
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Development Strategy
Beta Users
HTRN Physician Partners
Beta Sites
Georgia, Louisiana & Mississippi
Investment
2005 CapEx $2 Million
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DEVICE SALES & SERVICE
Christopher B. Schneider
Senior VP, Device Sales & Service
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Strategic Imperatives
Launch Urology Imaging Table 2Q 2005
Drive Growth via Comprehensive Distribution Channel
Establish Sales & Marketing Culture
Capitalize on Manufacturing & Engineering Platform
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Devices:
Lithotripters
Market Scope:
Total US Installed Base of 650 Units
Average Selling Price of $390,000
35% of US Market is Spark Gap Technology
US HTRN Manufactured Installed Base of 220 Units
Opportunities:
Dual Branding Strategy to Expand Spark Gap Market
New Model with Multi-Functional Capability Enjoys Premium Price
R&D for More Efficient Shock Source
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Devices (cont.):
Urology Imaging System
Market Scope:
Total US Installed Base of 4,500 Units
200 - 250 Units Purchased in US Annually at $300,000 ASP
Urologist Influential in Equipment Decision
Market Moving Toward Multi-Specialty Surgical Units
Opportunities:
Finalizing Leapfrog Design with 2Q 2005 Clinical Launch
Design has Unparalleled Flexibility & Image Quality
Superior Cost Position and Optimal Pricing Upside
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HTRN New Urology Imaging System
Multifunctional Surgical Procedures
Traditional Urology Procedures
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Devices (cont.):
Other Products
Patient Management Tables:
US Installed Base of 4000 Units, HTRN 450 Units Installed
Comprehensive Dealer Network, OEM Supplier
PSA Testing:
6 Million PSA Tests Performed Annually, $200 Million Market
In-Office Testing Approved and now Reimbursed by All Payors
Signed Marketing Agreement with Qualigen, Inc.
Only In-Office Test System On the Market – Patented
Significant Profit Driver for Physicians
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Service Engineering:
Installed Base/Network:
Currently Service 38% of US Lithotripter Installed Base
180 of 250 Total HTRN Service Base is Within Partnerships
36 Field Engineers Trained in Lithotripsy and X-Ray
530 Units Generating Consumable Revenue
Opportunities:
ISO Certification in Atlanta Manufacturing Facility
Deeper Penetration of Urology Market via Litho and Imaging
Leverage Applied Engineering Platform and Hospital Relationships
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Summary:
Promote Products & Services via Network of 3,000 MDs:
12 Business Development Personnel
250 Clinical Technologists
36 Field Service Engineers
Grow Presence In Urology and Patient Management Market:
7 Direct Sales Personnel, 15 Dealer Organizations
Marketing and Distribution Agreements
Innovative Product Offerings
Maximize Service Revenue $ per Employee By:
Increasing Contracts within Lithotripsy Installed Base
Expansion of Service Engineering Outside of Urology
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ORTHOPAEDIC LITHOTRIPSY
A. Michael Stolarski
President, Orthopaedics
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Overview
Shock Wave Surgery for Musculoskeletal Injuries
Applications:
Plantar Fasciitis (Heel Spur)
Lateral Epicondilitis (Tennis Elbow)
Other
Leading Edge Position
Patented Technology: OssaTron™
FDA Approvals
OssaTron®
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Plantar Fasciitis Market Opportunity
Drivers:
250,000 New Chronic Cases Per Year
Accelerating Payor Acceptance
Insurance Covered Population: Approx. 36 Million
Reimbursement: $2,000—$2,500 per Case
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Market Opportunity
Estimated # of Estimated
Condition Cases per Year Market Size
*Heel Spurs 250,000 $500 million
*Tennis Elbow 250,000 $500 million
Non-Union Fractures 75,000 $300 million
Achilles Tendonitis 100,000 $250 million
Patellar Tendonitis 100,000 $250 million
Shoulder Tendonitis 100,000 $250 million
AVN of the Femoral Head 25,000 $100 million
Total $2.15 BILLION
*FDA approved indications
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Economic Thesis
Large Untapped Market
Current Surgery (Plantar Fasciotomy)
Less Efficacious than ESWS
Crutches
Open Wound
Recurring Revenue Partnership Model
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Delivery
Active with 49 Partnerships in 47 States
Over 4,200 Trained Physicians
Average Location Treating 150 Cases per Year
Average Partnership Stake: 50-60%
Outcomes Appear to be Better than Surgery
HealthTronics Re-treat Rate of <10%
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Challenges
Payor Acceptance
Floodgate Resistance
Building a Patient Constituency
Device Differentiation
High Energy vs. Low Energy
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Orthopaedic Lithotripsy: Growth
Increase Number of Contracted Payors
Increase Worker’s Compensation Cases
Leads to Greater Utilization in Field
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SPECIALTY VEHICLE MANUFACTURING
Robert W. Bachman
Senior VP, AKSV
Klaas F. Vlietstra
Interim President, AKSV
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SPECIALTY VEHICLE MANUFACTURING
AK Specialty Vehicles is Global Leader in the Design,
Engineering and Construction of Specialty Vehicles.
Medical Imaging
Broadcast & Communications
Command/Homeland Security
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Medical Imaging
MRI
PET/CT
PET
CT
Cardiac
Lithotripsy
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Leadership Position in Mobile Medical Worldwide
Manufacturing Facilities in U.S. and Europe
Strategic Relationships for all Modalities
GE Healthcare Technologies
Philips Medical Systems
Siemens Medical Solutions
Extraordinary Market Breadth
Australia
• Finland
Korea
• Norway
Italy
• United Kingdom
Germany
• France
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Leadership Position in Mobile Medical Worldwide
Strong Customer Base
Alliance Imaging
DMSI
Insight Health Services Corp.
Alliance Medical Ltd. (UK)
94 Unique Customers in 2003-2004
Significant Barriers to Entry
OEM Certification
Technology and Experience
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Leadership Position in Mobile Medical Worldwide
Market Opportunities
Expand Global Presence
Pan Asia
Australia
Canada
Educate Market to Stimulate Organic Growth
OEM Sponsored Product
Macro-Economics Encourages Shared Services
Technology Initiatives
Develop 3T Delivery Platform
MRI/Ultrasound Product Development
OEM Driven Technology Shifts
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Broadcast & Communications
ENG
DSNG
SNV
EFP
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Broadcast & Communications
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Market Leader in Broadcast & Communications
Unique Competency
Systems Design/Integration
Consult
Design
Procure
Integrate
Train
Leverage Broadcast Systems Capabilities to
Command/Homeland Security Market
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Leadership Position in Broadcast & Communications Vehicles Worldwide
Strong Customer Base
Major Networks - ABC, CBS, FOX, NBC
Cable Networks - CNN, Time Warner
Satellite Uplink Service Market
Relay House, PSSI, Calhoun, Arctek, Coastal, STS
Export Market
Canada, Morocco, Vietnam, Hong Kong
Barriers to Entry
Existing Customer Relationships
Sophisticated Systems Integration
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Market Leader in Broadcast & Communications
Market Opportunity
Expand US Market Share
Penetrate Asian Market
Nextel
FCC Frequency Reallocation Plan
2005 to 2007
New Products
LT ENG Van
COFDM Microwave
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Homeland Security
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Homeland Security
Market Breadth:
Mobile Communications Centers
First Responder Units
Mobile Emergency Ops Units
Military Training Simulators
Tactical transport
Mobile Command Center
Mobile Command Center
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Homeland Security
Federal Funding Programs
$2.6B In Federal Funds are Allocated for 2005:
Urban Area Security Initiative Grant
Earmarked for Top 50 Metropolitan Areas
State Homeland Security Grant
States/Municipalities Response Capabilities
2005 Programs Initiated by DOHS Include:
National Protection Initiatives
Biohazard Detection
Port Security
Container Scanning
Cargo Inspection
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Homeland Security
Strategic Relationships
Boeing
Raytheon
Titan
Lockheed Martin
Datapath
Strong Customer Base
FEMA
FBI
Florida Emergency Management
Massachusetts State Police
Federal Protection Service
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Homeland Security
Market Opportunities
Strengthen our Position
FEMA
NASA
Local/State Emergency Management
Port Security Programs
Development of Industry Alliances
Joint Sales and Marketing
Increased Market Presence
Mobile Command Center
Mobile Command Center
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Conclusion
Market Dominator
Hi Barriers to Entry
“Debt-Free” Segment
Focused, Stand Alone Business Unit
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2005 FINANCIAL FORECAST
John Q. Barnidge
Senior VP & CFO
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Segment Summary Income Statement 2005 Forecast
($ in millions)
Urology Medical Devices
Orthopaedics Specialty Vehicles
Revenues $145 $27 $21 $110
EBITDA $85 $7 $5 $13
Adjusted EBITDA(1) $36 $7 $2 $13
(1) EBITDA less minority interest
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Consolidated Summary Balance Sheet at 12/31/05
($ in millions) 2005 Forecast
Current Assets $134
Total Assets $507
Current Liabilities $71
Long-Term Debt $123
Stockholders’ Equity $241
Total Liabilities & Equity $507
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Key Financial Statistics
($ in millions) 2005 Forecast
(Projected 12/31/05)
Total Debt $124
Cash (30)
Net Debt $94
Ratios:
Funded Debt to EBITDA
2.47x
A/R Days Sales Outstanding
36.4
Interest Coverage
(Adjusted EBITDA/Interest Expense)
6.05x
Net Debt Leverage
(Net Debt/LTM Adjusted EBITDA)
1.87x
Net Working Capital $63
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2005 Forecast Pro Forma Free-Cash Flow
Modified Cash Basis
GAAP
Adjusted EBITDA $50 $50
Interest Expense (8) (8)
Income Tax Expense --- (11)
Cap X, Net (6) (6)
$36 $25
(1) Represents mid-point of estimates range.
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Consolidated Summary Income Statement (1)
($ in millions) 2005 Forecast
Revenues $303
Adjusted EBITDA $50
EPS Range $0.48—$0.53
(1) Represents mid-point of estimates range.
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Q&A SESSION
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