Exhibit (c)(ii)
Project Puma: Discussion Materials October 19, 2023
2 Topics for Discussion Situation Overview What Are Puma’s Potential Strategic Alternatives? Preliminary Puma Financial Analysis Based on Management Projections Process Considerations & Next Steps
Situation Overview and Assessment of Strategic Alternatives
4 Situation Overview In May 2021, Puma disclosed a claims audit by an insurance company that was its largest third-party payor In September 2021, Puma disclosed that it was the target of a DOJ investigation related to reimbursement claims the company submitted on behalf of its customers covered by federal employee health plans As a consequence of the investigation, Puma withdrew from the insurance market, which represented ~48% of the units shipped in the three months ended September 30, 2021, announced it was unable to file its quarterly reports with the SEC, and fell out of compliance with Nasdaq listing requirements Puma also began to assess strategic alternatives, including a financing, potential sale, or liquidation As a part of that assessment, Puma and its representatives contacted more than ten strategic buyers and more than twenty potential financing partners, with only Patient Square Capital (“PSC”) submitting a proposal On April 29, 2022, Puma entered into a civil settlement with the DOJ including a $34M payment, announced its intent to regain insurance coverage, and announced the need to raise capital to cover ~$20M to $25M of quarterly cash burn through 2022 On June 27, 2022, Puma announced an investment of up to $125M from PSC to backstop a rights offering to shareholders to finance the company – Had all of Puma’s existing shareholders exercised their subscription rights in full, PSC would not own any equity stake in the Company On November 17, 2022, the rights offering expired with PSC becoming majority owner with 76.3%(1) ownership of the Company; only 16% of the rights offering was subscribed(2) Today, Puma has a $40M market cap, and expects its cash balance to drop below $10M in late Q2 2024 Sources: Company Filings Notes: As of 10/18/23; (1) 76.2% ownership today due to share issuance related to share based compensation; (2) Only 58.6M shares of the 375M shares were subscribed
5 - 1 2 3 4 5 6 7 8 9 10 $- $400 $800 $1,200 Oct-20 Feb-21 Jun-21 Oct-21 Feb-22 Jun-22 Oct-22 Feb-23 Jun-23 Oct-23 S&P 500 Change: 23.9% Puma: $1.92 / Return Since IPO: (99.5%) Share Price Performance Since IPO Sources: Company Filings, FactSet Notes: As of 10/18/23; Historical share price adjusted for 1-for-20 reverse stock split enacted on 01/18/23; S&P 500 share price indexed to Puma IPO offer price of $360.00 (adjusted for 1-for-20 reverse stock split); (1) The rights offering expired on 11/17/22, but closed on 11/29/22 06/27/22: Announces up to $125M strategic investment from Patient Square 04/29/22: Announces that it has reached a civil settlement agreement with the U.S. government to resolve the DOJ investigation including a $34M settlement payment 11/29/22: Announces closing of rights offering pursuant to which 58,574,020 shares were subscribed in the rights offering; Patient Square becomes majority owner with 76.3% ownership(1) 01/11/23: Announces 1- for-20 reverse stock split to be effectuated on 01/18/23 Share Price $1,600 Volume (M) 08/16/22: FDA issued a final rule establishing a new category of OTC hearing aids that can be purchased in-store or online without a medical exam, prescription or fitting adjustment by an audiologist 06/27/23: Announced RIF of 32-42% of workforce and resignation of CEO Christian Gormsen 10/15/20: Puma prices IPO at $360.00 per share (price adjusted for 1-for-20 reverse stock split) 01/06/22: Announces that the DOJ investigation on insurance claims has been referred to the civil division and the criminal investigation is no longer active For Reference Only 05/12/21: As part of its 1Q21 10-Q filing, Puma discloses it is currently subject to a routine audit with its largest third-party payor, who accounted for ~57% of gross accounts receivable at end of 1Q21 08/12/21: As part of its 2Q21 earnings press release, Puma discloses it remains subject to a claims audit with its largest third- party payor, who accounted for ~80% of gross accounts receivable at end of 2Q21 09/21/21: Puma discloses it is the target of a criminal investigation by U.S. DOJ with regards to insurance reimbursement claims submitted under federal employee health plans and withdraws guidance for 2021
6 Source: FactSet, Company Filings, Management Notes: Ownership by investor as of most recent public disclosure as of 06/30/23; Total basic shares outstanding and basic shares outstanding owned by Patient Square Capital as of 10/18/23 per management Byrne Asset Management LLC 0.004 0.0% Atlas Capital Advisors LLC 0.001 0.0% Wells Fargo Clearing Services LLC 0.001 0.0% BlackRock Investment Management LLC 0.001 0.0% RBC Dominion Securities, Inc. 0.001 0.0% Group One Trading LP 0.001 0.0% UBS Securities LLC 0.000 0.0% Pennsylvania State Employees' Retirement System 0.000 0.0% Vanguard Global Advisers LLC 0.000 0.0% Morgan Stanley Smith Barney LLC 0.000 0.0% Top 20 Institutional Holders 0.533 2.6% Other Institutional Holders 0.000 0.0% Total Institutional Ownership 0.534 2.6% Short Interest 0.179 0.9% Net Institutional Ownership 0.354 1.7% Institutional 1.7% Patient Square Capital 76.2% Other Insiders 7.6% Retail 14.5% Ownership Overview (Shares in millions) For Reference Only Institutional Ownership Basic Shares Held % of Basic Shares Outstanding Insider Ownership Basic Shares Held % of Basic Shares Outstanding BlackRock Fund Advisors 0.233 1.1% Patient Square Capital 15.821 76.2% The Vanguard Group, Inc. 0.085 0.4% Charles & Helen Schwab Foundation 1.084 5.2% Nantahala Capital Management LLC 0.054 0.3% NEA Management Co. LLC 0.208 1.0% Geode Capital Management LLC 0.052 0.2% Pivotal Bioventure Partners Investment Advisor LLC 0.148 0.7% Renaissance Technologies LLC 0.046 0.2% Gilde Healthcare Partners BV 0.093 0.5% Millennium Management LLC 0.019 0.1% Top 5 Insiders 17.355 83.6% Bank of America, NA 0.012 0.1% Other Insiders 0.048 0.2% BlackRock Advisors LLC 0.009 0.0% Total Insider Ownership 17.403 83.8% CSS LLC 0.009 0.0% Implied Retail 3.005 14.5% Morgan Stanley & Co. LLC 0.005 0.0% Total Shares Outstanding 20.762 100.0%
7 (50%) (488%) (300%) (244%) (92%) (35%) (12%) (1%) 4% (244%) (181%) (142%) (119%) (104%) (94%) ($35) ($112) ($36) ($17) ($2) ($85)($85) ($52)($54) $7 ($52) ($49) ($48) ($47) ($157) 2020A 2021A 2022A 2023E 2024E 2025E 2026E 2027E 2028E Operating Margin 111% (54%) 16% (7%) 61% 84% 39% 24% 15% (7%) (14%) 21% 13% 12% 10% 2020A 2021A 2022A 2023E 2024E 2025E 2026E 2027E 2028E Revenue Growth Rate $69 $32 $37 $56 $103 $143 $178 $35 $35 $204 $30 $36 $41 $46 $50 Financial Performance Management Cases – With and Without Insurance ($ in millions) REVENUE OPERATING LOSS(1) Source: Company Filings, Management Projections (model received 10/18/23) Notes: As of 10/18/23; (1) Net of SBC and net of bad debt expense Management Projections – Without Insurance Management Projections – With Insurance Actuals Management Projections – Without Insurance Management Projections – With Insurance Actuals For Reference Only
8 Capitalization Summary Source: Company Filings, Management Projections (model received 10/18/23) Notes: As of 10/18/23; Free cash flow figures treat SBC as non-cash expense; Excludes impact of potential financing to fund cash shortfall; (1) $70M equity issuance sized based on negative $56M 2026E cash balance before financing and required minimum cash of $10M net of 6% underwriting fee Beginning Balance Change in Cash $46 (12) $34 (16) $18 (11) $7 (11) ($3) (10) Ending Balance $34 $18 $7 ($3) ($13) Beginning Balance Change in Cash $46 (12) $34 (16) $18 (11) $7 (12) ($5) (11) Ending Balance $34 $18 $7 ($5) ($16) Beginning Balance Change in Cash $34 (48) ($13) (32) ($45) (11) ($56) 4 ($52) 13 Ending Balance ($13) ($45) ($39) ($12) ($12) ($16) ($16) ($11) ($11) ($11) ($12) ($10) ($11) 4Q23E 1Q24E 2Q24E 3Q24E 4Q24E ($48) ($32) ($11) $4 $13 ($51) ($46) ($43) ($42) ($42) 2024E 2025E 2026E 2027E 2028E With Insurance Without Insurance Reflects Free Cash Flow Per Management Cases – With and Without Insurance ($ in millions) QUARTERLY FREE CASH FLOW (4Q24E AND 2024E) ANNUAL FREE CASH FLOW (2024E – 2028E) With Insurance With Insurance Without Insurance Without Insurance ($56) ($52) Assuming $10M minimum cash balance, $70M raise needed(1) Beginning Balance $34 ($16) ($63) ($106) ($148) Change in Cash (51) (46) (43) (42) (42) Ending Balance ($16) ($63) ($106) ($148) ($189) Without insurance, the business is not anticipated to generate positive free cash flow With Insurance Without Insurance For Reference Only
9 Key Financial Assumptions & Sensitivities Sources: Management Projections (model and sensitivities received 10/18/23) Note: Current share price as of 10/18/23; (1) $70M equity issuance sized based on negative $56M 2026E cash balance before financing and required minimum cash of $10M net of 6% underwriting fee With Insurance Case Insurance Penetration Assumes 0.095% penetration rate of 87.3M covered lives resulting in 82,688 units sold through insurance channel – Assumes 131,688 total units sold across all channels in 2028 We have sensitized penetration between 0.046% and 0.180% penetration in 2028 based on Management Guidance Insurance Pricing Tiers Assumes 60% / 20% / 20% of insurance volume occurs at Premium / Mid / Value pricing We have sensitized ASP tiers from 20% / 20% / 60% to 60% / 20% / 20% Premium / Mid / Value pricing Financing Projections imply lowest cash balance of negative $56M in 2026, with first year of positive cash flow in 2027 Assumes $10M required minimum cash, implying $70M required financing(1) at $1.44 (a 25% discount to current share price of $1.92) We have sensitized the financing price from $0.96 to $1.92 (a 50% to 0% discount to the current share price of $1.92) Without additional financing, the Company expects cash balance to drop below $10M in late Q2 2024 However, securing this amount of financing may be challenging at any price given the Company’s current valuation, market conditions and limited liquidity Without Insurance Case Assumes only 5,000 units sold through insurance channel and 43,000 total units sold across all channels in 2028 Cash balance reaches negative $189M in 2028 with the Company generating negative $42M of free cash flow in 2028 The management team does not believe that cash flow profile of the business would change materially after 2028, suggesting the business would have not have a positive value as a going concern
10 What Are Puma’s Potential Alternatives? CONSIDERATIONS Equity Financing Any Equity Financing Required financing is large relative to current market cap and float, which may result in significant dilution or limit actionability PSC ownership may further limit interest from other investors Public Equity Financing Results of rights offering suggest investor appetite may be limited Likely requires S-1 filing PSC Equity Financing PSC appetite to further increase ownership in public entity may be limited Public company costs and constraints may limit attractiveness relative to a take-private Private Equity Financing Likely to require a shareholder vote that would allow PSC to block an investment PSC may not find loss of control acceptable, while new investor may not wish to invest in a controlled entity Debt Financing Required financing is large relative to current valuation of the assets Cash flow / financial profile may limit investor interest Sale of the Company Limited strategic interest in 2022 process PSC ability to block a sale to a third party due to ownership percentage Without financing, management believes there is no viable path to cash flow breakeven
Preliminary Puma Financial Analysis Based on Management Projections
12 Preliminary Illustrative Puma Financial Analysis Equity Value per Share Sources: Management Projections (model received 10/18/23), Company Filings Notes: As of 10/18/23; Balance sheet data as of 09/30/23; Net diluted shares outstanding calculated based on 20.8M basic shares outstanding as of 10/18/23, 0.1M restricted stock units, 1.7M service- based stock options with a weighted average exercise price of $3.31, 0.3M service-based stock options with a weighted average exercise price of $55.35 and 0.7M market-based stock options outstanding with a weighted average exercise price of $3.31 as of 09/30/23; Reflects $46M in cash and cash equivalents as of 09/30/23; (1) Historical share price adjusted for 1-for-20 reverse stock split enacted on 01/18/23; (2) $70M equity issuance sized based on negative $56M 2026E cash balance before financing and required minimum cash of $10M net of 6% underwriting fee; 48.9M shares issued in the capital raise 52-Week High and Low (Intraday) As of 10/18/23 Last 6 Months High and Low (Intraday) As of 10/18/23 EV / 2024E Revenues (With Insurance) 0.7x-1.4x $56M '24E Revenues EV / 2024E Revenues (Without Insurance) 0.0x-1.0x $30M '24E Revenues With Insurance Without Insurance $1.80 $1.80 $4.01 $2.21 $1.94 $17.60 $5.86 $5.69 $3.61 $2.65 Current Price $1.92 $- $5.00 $10.00 $15.00 $20.00 Selected Public Companies Analysis Discounted Cash Flow Analysis WACC: 13.0%-15.0% Perp. Growth: 3.0%-4.0% Includes dilution from $70M equity issuance; net proceeds assuming 25% discount to current share price and 6% underwriting fee(2) Would result in negative implied share price given unlevered FCFs are negative and not expected to become positive $– For Reference Only Historical Prices (1)
13 EV / '24E Revenues Market Cap $40 $200 $191 $183 $144 $129 $118 $78 $77 '24E Revenue 56 30 43 96 71 18 31 334 69 47 '23E-'25E Rev. CAGR 72% 2% 38% 22% 12% 43% (2) 20% 5% 23% 25% '24E Oper. Loss ($52)(3) ($54)(3) ($15) ($54) ($112) ($48) ($20) ($48) ($13) ($16) Debt / Equity - - - 18% - - 8% - 11% 7% Cash $46(4) $24 $155 $171 $95 $26 $138(5) $18 $15 Cash / '24E Oper. Loss 0.9x 0.9x 1.6x 2.9x 1.5x 2.0x 1.3x 2.9x 1.4x 0.9x Float(6) $6 $105 $108 $121 $89 $108 $106 $68 $61 30-Day ADTV(6) 0.039 0.183 1.316 2.242 0.205 0.440 1.189 0.305 0.129 NM NM 0.7x 0.2x NM 1.0x 4.1x 2.7x 3.6x Median: 1.4x 1.4x Sources: Management Projections (model received 10/18/23), Company Filings, FactSet Notes: As of 10/18/23; Companies ordered by market capitalization; (1) Pro forma for options and RSUs issued in July 2023; (2) Reflects 2023E-2024E revenue CAGR given lack of broker estimates for 2025E; (3) Net of SBC and net of bad debt expense; (4) Balance sheet data as of 09/30/23; (5) Pro forma for acquisition of Physio-Assist; (6) Calculated using each company’s respective share price as of 10/18/23 Preliminary Selected Public Companies Analysis ($ in millions) Mgmt. With Insurance Mgmt. Without Insurance Puma EV / Selected Range '24E Revs Puma - With Insurance 0.7x-1.4x Puma - Without Insurance 0.0x-1.0x (1)
14 Preliminary Discounted Cash Flow Sensitivity: With Insurance Case Equity Value per Share Sources: Management Projections (model and sensitivities received 10/18/23) Notes: As of 10/18/23; All sensitivities assume 14.0% WACC and 3.5% perpetuity growth rate; Assumes $46M in cash and cash equivalents as of 09/30/23 plus net proceeds of equity financing required for minimum cash balance of $10M net of 6% underwriting fee; Net diluted shares outstanding calculated based on 20.8M basic shares outstanding as of 10/18/23, 0.1M restricted stock units, 1.7M service-based stock options with a weighted average exercise price of $3.31, 0.3M service-based stock options with a weighted average exercise price of $55.35 and 0.7M market-based stock options outstanding with a weighted average exercise price of $3.31 as of 09/30/23 plus shares issued in connection with an equity financing at $1.44 per share unless otherwise stated; (1) $70M equity issuance sized based on negative $56M 2026E cash balance before financing and required minimum cash of $10M net of 6% underwriting fee; Reflects 0.095% penetration rate and pricing tier of 60% / 20% / 20% Premium / Mid / Value Insurance Penetration Penetration rate of 87.3M covered lives in 2028 With Insurance Case Assumption: 0.095% $0.11 penetration Range: 0.046% to 0.180% penetration $11.06 Insurance Pricing Tiers Percent of insurance units at Premium / Mid / Value pricing With Insurance Case Assumption: 60% / 20% / $0.2 20% Premium / Mid / Value Range: 20% / 20% / 60% to 60% / 20% / 20% Premium / Mid / Value $2.25 1 Financing(1) Issuance price of $70M equity offering (net proceeds of $66M assuming 6% underwriting fee) With Insurance Case Assumption: $1.44 issuance price (25% discount to current share price of $1.92) Range: $0.96 to $1.92 issuance price (50% to 0% discount to current share price) 2.72 $1.66 $ $- $3.00 $6.00 $9.00 $12.00 With Insurance DCF Midpoint $2.25
15 Equity Premium to Ann. Date Close Date Acquiror Target % Ownership Value Unaffected 1-Day(1) 30-D VWAP 5 2 M 12/12/22 02/21/23 72.4% 2, 339 60%(2 ) 24% 10/23/22 03/10/23 51.8% 2, 903 50%(3 ) 10% 06/20/22 10/07/22 74.7% 825 143% 05/25/22 11/03/22 74.8% 431 6 (4 ) 05/23/22 07/11/22 74.9%(5) 128(6) (7 ) 11/12/20 03/29/21 70.6% 10/05/20 01/26/21 63.7 (8) (8 ) (8) 08/31/20 10/12/20 08/19/20 12/01/20 02/21/20 03/30/20 (9 ) 08/19/19 11/15/19 (10 ) 07/24/19 09/17/19 Sonic Financial Corp. (11 ) 06/19/18 07/ Mean Precedent Minority Squeeze-Out Transactions ($ in millions) Acquiror Sources: Bloomberg, Company Filings, Dealogic, Press Releases Notes: As of 10/18/23, Includes selected announced minority squeeze-outs with publicly listed targets, deal value (value of the remaining ownership stake acquired) greater than $10M, initial stake pre-transaction of >50% and target nationality in the United States; Excludes transactions that do not have a definitive merger agreement executed; (1) 1-day prior to transaction announcement; (2) Based on 10/24/22, the last trading day closing prior to public announcement on 10/25/22 of proposal received 10/24/22; (3) Based on 09/30/22, the last trading day closing prior to public announcement on 10/02/22 of proposal dated 09/30/22; (4) Based on 09/24/21, last trading day closing prior to public announcement of letter from Axar describing interest in pursuing strategic alternatives with the company on 09/27/21; (5) As disclosed by Entasis assuming Innoviva exercised all of its warrants; (6) $113M publicly announced equity value excludes 10.1M in-the money convertible-related shares convertible at $1.48 per share and 10.1M convertible related warrants struck at $1.48; (7) Based on 01/31/22, the last trading day closing prior to Innoviva’s original bid becoming public; (8) Equity value and premia based on cash offer price per share of $73.26; (9) Based on 11/26/19, the last trading day closing prior to announcement of Kyocera’s initial proposal on 11/27/19; (10) Based on 06/21/19, the last trading day closing prior to public announcement of formation of Special Committee to evaluate strategic alternatives on 06/24/19; (11) Based on 04/23/19, the last trading day closing before public announcement on 04/24/19 of initial proposal received 04/23/19 For Reference Only (8) (8) (2) (3) (7) (4) (2) (3) (7) (4) (9) (10) (11) (9) (10) (11)
16 Analysis at Various Prices Management Cases – With and Without Insurance ($ in millions, except per share) Sources: Management Projections (model received 10/18/23), Bloomberg, Company Filings Notes: As of 10/18/23; Reflects $46M in cash and cash equivalents as of 09/30/23; Net diluted shares outstanding calculated based on 20.8M basic shares outstanding as of 10/18/23, 0.1M restricted stock units, 1.7M service-based stock options with a weighted average exercise price of $3.31, 0.3M service-based stock options with a weighted average exercise price of $55.35 and 0.7M market-based stock options outstanding with a weighted average exercise price of $3.31 as of 09/30/23; Excludes impact from any potential financing; (1) Historical share price adjusted for 1-for-20 reverse stock split enacted on 01/18/23; (2) Multiples reflected as “NM” if enterprise value is negative Puma Current At Offer Price of Offer Per Share $1.92 $2.20 $2.40 $2.60 $2.80 $3.00 $3.20 $3.40 $3.60 $3.80 $4.00 % Premium / (Discount) to: Current ($1.92) 15% 25% 35% 46% 56% 67% 77% 88% 98% 108% 30-Calendar Day VWAP ($2.06) 7% 16% 26% 36% 45% 55% 65% 75% 84% 94% 90-Calendar Day VWAP ($2.84) (23%) (16%) (8%) (1%) 6% 13% 20% 27% 34% 41% 52-Week Intraday High ($17.60) (1) (88%) (86%) (85%) (84%) (83%) (82%) (81%) (80%) (78%) (77%) Market Capitalization $40 $46 $50 $54 $58 $63 $67 $71 $76 $80 $85 Less: Cash & Investments (46) (46) (46) (46) (46) (46) (46) (46) (46) (46) (46) Enterprise Value ($6) ($0) $4 $8 $12 $17 $21 $25 $30 $34 $39 EV / Revenues With Insurance Metric 2023E 2024E $35 56 NM (2) NM (2) NM (2) NM (2) 0.1x 0.2x 0.4x 0.5x 0.6x 0.7x 0.9x 1.0x 1.1x 0.1x 0.1x 0.2x 0.3x 0.4x 0.4x 0.5x 0.6x 0.7x Without Insurance 2023E 2024E $35 30 NM (2) NM (2) NM (2) NM (2) 0.1x 0.2x 0.4x 0.5x 0.6x 0.7x 0.9x 1.0x 1.1x 0.1x 0.3x 0.4x 0.6x 0.7x 0.8x 1.0x 1.2x 1.3x For Reference Only
Process Considerations & Next Steps
18 Discussion and Potential Next Steps What should we do to prepare for a potential PSC offer? What diligence items are they likely to request? How do we negotiate for the best outcome with PSC? Do financing alternatives provide a viable alternative to a potential offer from PSC? Can pursuit of potential financing alternatives provide competitive tension to PSC regardless of likelihood of success? If so, which alternatives should Puma pursue and when should it begin that pursuit? What would an acceptable PSC offer look like? Offer Price Non-economic terms If PSC is open to a third-party sale, what should a potential process look like?
Appendix
20 Sources: Management Projections (model received 10/18/23), Company Filings Notes: As of 10/18/23; (1) Operating income net of SBC and net of bad debt expense; (2) Assumes SBC is treated as a cash expense for DCF valuation; (3) $70M gross equity issuance (net of 6% financing fee) targeting minimum cash balance of $10M through projected period issued at $1.44 per share (25% discount to current market price of $1.92 as of 10/18/23); (4) Net diluted shares outstanding calculated based on 20.8M basic shares outstanding as of 10/18/23, 0.1M restricted stock units, 1.7M service-based stock options with a weighted average exercise price of $3.31, 0.3M service-based stock options with a weighted average exercise price of $55.35 and 0.7M market-based stock options outstanding with a weighted average exercise price of $3.31 as of 09/30/23 Preliminary Discounted Cash Flow Analysis With Insurance Case | Assumes $70M Equity Issuance at $1.44 per Share (25% Discount to Current) ($ in millions, except per share) Unlevered Free Cash Flows Terminal 4Q23E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2033E Total Revenues % Growth $8 (39.3%) $56 61.1% $103 83.5% $143 39.2% $178 24.1% $204 14.7% $222 9.2% $250 12.7% $273 8.9% $294 7.7% $314 6.7% $314 3.5% ($15) ($52) ($36) ($17) ($2) $7 $13 $24 $32 $39 $46 $46 (196.2%) (92.3%) (34.6%) (11.7%) (0.9%) 3.7% 6.0% 9.6% 11.7% 13.3% 14.6% % Margin Taxes Tax Rate - - - - - - - - - - - - - - - - - - - - - - 14.6% (11) 25.0% NOPAT Depreciation Capex Change in Working Capital ($15) 1 (0) (1) ($52) 5 (2) (3) ($36) 3 (2) (3) ($17) 3 (2) (0) ($2) 3 (2) (0) $7 3 (3) (0) $13 3 (3) (0) $24 3 (3) 0 $32 3 (4) 0 $39 4 (4) (0) $46 4 (4) (0) $34 4 (4) (1) ($15) ($53) ($37) $7 $13 $24 $32 $39 $46 $34 Implied Price Per Share PV Projected Period (14.0% WACC) PV Terminal Value (3.5% Perp. Growth) ($48) 93 Enterprise Value $44 Plus: Cash & Equivalents as of 09/30/23 Plus: Cash from Equity Issuance Equity Value Diluted Shares Outstanding Incremental BSO from Financing Pro Forma Diluted Shares Outstanding Equity Value Per Share $2.25 Current Share Price % Premium to Current $1.92 17.0% 46 66(3) $157 20.8 (4) 48.9 (3) 69.8 ($16) ($2) Implied Equity Value Per Share WACC Perp. Growth 13.0% 14.0% 15.0% 3.0% 3.5% 4.0% $2.48 2.56 2.65 $2.18 2.25 2.32 $1.94 1.99 2.05 Operating Income (Post-SBC) (1) Unlevered Free Cash Flows(2)
21 Total Revenues $8 $30 $36 $41 $46 $50 % Growth (39.3%) (14.1%) 21.4% 13.3% 11.6% 9.9% Operating Income (Post-SBC)(1) ($15) ($54) ($52) ($49) ($48) ($47) % Margin (196.2%) (180.6%) (142.3%) (119.5%) (104.0%) (94.1%) Taxes - - - - - - Tax Rate - - - - - - NOPAT ($15) ($54) ($52) ($49) ($48) ($47) Depreciation 1 4 3 3 3 3 Capex (0) (2) (2) (2) (2) (3) Change in Working Capital (1) (4) (1) 0 0 0 Unlevered Free Cash Flows(2) ($15) ($56) ($51) ($48) ($47) ($47) Unlevered Free Cash Flows 4Q23E 2024E 2025E 2026E 2027E 2028E Preliminary Discounted Cash Flow Analysis Without Insurance Case ($ in millions, except per share) Plus: Cash & Equivalents as of 09/30/23 Plus: Cash from Equity Issuance Equity Value Diluted Shares Outstanding Incremental BSO from Financing Pro Forma Diluted Shares Outstanding Equity Value Per Share Implied Price Per Share (3) PV Projected Period (14.0% WACC) ($195) PV Terminal Value - Enterprise Value ($195) 46 - (4) $- (5) 20.8 (6) - (4) 20.8 $- (5) Implied Equity Value Per Share Perp. Growth WACC 13.0% 14.0% 15.0% NA $-(5) Sources: Management Projections (model received 10/18/23), Company Filings Notes: As of 10/18/23; Assumes terminal year of 2028E with no terminal value thereafter; (1) Operating income net of SBC and net of bad debt expense; (2) Assumes SBC is treated as a cash expense for DCF valuation; (3) Excludes salvage value, if any; (4) Assumes no equity issuance occurs in Without Insurance Case; (5) Assumes equity value cannot be less than zero; (6) Net diluted shares outstanding calculated based on 20.8M basic shares outstanding as of 10/18/23, 0.1M restricted stock units, 1.7M service-based stock options with a weighted average exercise price of $3.31, 0.3M service-based stock options with a weighted average exercise price of $55.35 and 0.7M market-based stock options outstanding with a weighted average exercise price of $3.31 as of 09/30/23
22 Illustrative Weighted Average Cost of Capital Analysis ($ in millions) Sources: Company Filings, Barra, Kroll, FactSet Notes: As of 10/18/23; Companies ordered by market capitalization; (1) Predicted Barra beta; (2) Marginal tax rate for companies without earnings assumed to be 0%; (3) Kroll’s supply-side long-term expected equity risk premium; (4) Last 30 calendar days average of 20-year treasury rate as of 10/18/23; (5) Cost of debt not applicable given 0% debt / capitalization assumption Company Beta & Capital Structure Overview Levered Gross Equity Debt / Debt / Marginal Unlevered Company Beta (1) Debt Value Equity Cap. Tax Rate (2) Beta Puma 1.60 - $40 - - - 1.60 Peer Beta & Capital Structure Overview Company Gross Debt Equity Value Debt / Equity Debt / Cap. Unlevered Beta Levered Beta (1) Marginal Tax Rate (2) Stereotaxis 0.83 - $200 - - - 0.83 Sight Sciences 1.44 $34 191 18% 15% - 1.23 Butterfly Network 1.99 - 183 - - - 1.99 Hyperfine 1.36 - 144 - - - 1.36 ClearPoint Neuro 1.71 $10 129 8% 7% - 1.58 Inogen 1.51 - 118 - - - 1.51 Apyx Medical 1.46 $9 78 11% 10% - 1.31 Cytosorbents 1.27 $5 77 7% 6% - 1.19 Peer Median 1.45 3% 3% - 1.34 Peer Average 1.45 5% 5% - 1.38 Weighted Average Cost of Capital Low High Unlevered Beta Cost of Equity 1.30 1.60 Levered Beta 1.30 1.60 Market Risk Premium (3) 6.35% 6.35% Equity Risk Premium 20-Year Treasury Yield (1M Avg.) (4) 8.26% 4.98% 10.16% 4.98% Cost of Equity Equity / Capitalization 13.23% 100% 15.14% 100% Selected Range 13.00% 15.00% Cost of Debt Cost of Debt (5) NM NM Tax Rate - - After-Tax Cost of Debt Debt / Capitalization NM - NM - WACC 13.23% 15.14% Implied Debt / Equity - - Implied Equity Value ($M) $40 $40
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