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Buffalo Filter Acquisition Overview December 13, 2018
Buffalo Filter Acquisition Overview
December 13, 2018
Forward-Looking Information This presentation contains forward-looking statements based on certain assumptions and contingencies that involve risks
Forward-Looking Information
This presentation contains forward-looking statements based on certain assumptions and contingencies that
involve risks and uncertainties. The forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and relate to the Company's performance on
a going-forward basis. The forward-looking statements in this presentation involve risks and uncertainties
which could cause actual results, performance or trends, to differ materially from those expressed in the
forward-looking statements herein or in previous disclosures. In addition to general industry and economic
conditions, factors that could cause actual results to differ materially from those discussed in the forward-
looking statements in this presentation include, but are not limited to, the risk factors discussed in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and listed under the
heading Forward-Looking Statements in the Company’s most recently filed Form 10-Q.
Management has disclosed adjusted financial measurements in this presentation that present financial
information that is not in accordance with generally accepted accounting principles (GAAP). These adjusted
financial measures are helpful to management in comparing the recurring aspects of the business performance
without the effect of unusual, non-recurring or special revenues or costs. These measurements are not a
substitute for GAAP measurements. Investors should consider adjusted measures in addition to, and not as a
substitute for, or superior to, financial performance measures prepared in accordance with GAAP.
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What is Surgical Smoke? Surgical smoke poses significant health risks to surgical personnel Overview Scope of
What is Surgical Smoke?
Surgical smoke poses significant health risks to surgical personnel
Overview
Scope of the Problem
Surgical smoke is a dangerous by-product generated from the use
of lasers, electro-surgical pencils, ultrasonic devices, and other
surgical energy-based devices.
As these instruments cauterize vessels and destroy (vaporize)
tissue, fluid, and blood, a gaseous material known as surgical
smoke is created.
Over 500K healthcare workers are exposed
to surgical smoke annually in the U.S.
Smoke is created in 95% of all procedures.
Causes respiratory and eye irritations, as
well as nausea in healthcare professionals
Proven to contain toxic gases, live cellular material (including blood
fragments), and viruses, surgical smoke causes significant risks to
both surgical personnel and patients.
Dangers of Surgical Smoke
Hazardous Components
Chemical
Biological
Chemical
40 different carcinogenic
chemicals similar to
cigarette smoke
Known to carry intact
human and viral DNA
Ultra-fine particulate
similar to coal dust
Surgical Smoke = 27-30
Cigarettes / Day*
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*Hill DS, O’Neill JK, Powell RJ, Oliver DW. Surgical smoke— a health hazard in the operating theatre: a study to quantify exposure and a
survey of the use of smoke extractor systems in UK plastic surgery units. J Plast Reconstr Aesthet Surg. 2012; 65(7):911-916.
Surgical Smoke Removal Market Opportunity • There are approximately ~300M surgical procedures performed globally on an
Surgical Smoke Removal Market Opportunity
There are approximately ~300M surgical procedures performed globally on an annual basis; 95% of all surgical procedures utilize energy, which produces
hazardous surgical smoke.
Research and workplace studies conducted over long periods of time confirm that surgical smoke contains hazardous substances including respiratory irritants
and carcinogens that have been linked to asthma, and infectious agents such as human papilloma virus (HPV).
Regulation/legislation will mandate adoption – leading to market sector growth.
Market has seen leading regulation in the following geographies:
• Canadian smoke
regulation initiated in
2009 and was revised
in 2013 by the
Canadian Standards
Association (CSA)
• Smoke removal is now
the standard of care
Denmark:
Australia, New
Zealand and the UK
have also enacted
regulations that
carry the force of law
to protect surgical
workers from
surgical smoke
Rhode Island
legislation (law to
make OR’s smoke
free) becomes
effective Jan. 2019
Colorado and
Massachusetts have
pending legislation
2010 Working
Environment Act -
mandates the
removal of
surgical smoke
Many Nordic
countries have
followed suit
without regulation
California has pending
regulation through
OSHA
In November
(Cal/OSHA) convened
an advisory meeting to
consider development of
a rulemaking proposal to
protect employees from
surgical smoke
“The Association of Operating Room Nurses (AORN), in its “2017 AORN Guideline for Surgical Smoke Safety”, recommended the following:”
“The health care organization should provide a surgical smoke free environment.”
“The perioperative team should evacuate all surgical smoke.”
“The collective evidence, standards, and guidelines from The National Institute for Occupational Safety and Health (NIOSH), the Healthcare Infection Control Practices Advisory Committee,
and professional organizations indicate that evacuating surgical smoke protects patients and health care workers from the hazards of surgical smoke.”
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Buffalo Filter Product Portfolio Buffalo Filter is the #1 player in the surgical smoke evacuation market
Buffalo Filter Product Portfolio
Buffalo Filter is the #1 player in the surgical smoke evacuation market
The current market is ~$100 million
• The market CAGR is 20%
Four main product categories: 1) Surgical Smoke Evacuation Pencils, 2) Surgical Smoke Evacuators
and Filters, 3) Laparoscopic Solutions, and 4) Accessories
CORE COMPETENCIES
ü
Filtration Technologies
ü
Full Equipment Design and Execution
ü
Design for Manufacturability
ü
PC Board Development & Validation
Evacuation Pencils
Smoke Evacuators
ü
85% of Revenue from Consumables
ü
Compact pens provide smoke
evacuation at the surgical site
ü
Advanced evacuators provide turbo
suction power to capture smoke
ü
Flow Dynamics and Management
ü
Regulatory Submissions
ü
Patent Filings
ü
Advanced Research, Design and 3D Printing Capabilities
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Financial Summary ($ in millions) Purchase Price Tax Amortization Benefit Tax Adjusted Purchase Price $ 365
Financial Summary ($ in millions)
Purchase Price
Tax Amortization Benefit
Tax Adjusted Purchase Price
$
365
60
$
305
2018
2019 Est*
Multiple paid on
Next 12 Months
Revenue (net of sales to CONMED)
Gross Margins in the mid-50% range
EBITDA (25%)
$
41.0
$47 to
$50
6.1 to 6.5
$
10.3
Improving after the first year
$3 - $5 million in
1st year synergies
(increasing thereafter)
$15 to
$17
17.9 to
20.3
Adjusted Cash EPS Accretion
Neutral
10 to 15 cents in 2020
*These estimates for 2019 represent a full year (12 months) of impact. The acquisition is estimated to close in the first quarte r of 2019, so the financial impact on
Conmed’s 2019 numbers will be less than the numbers presented here.
Impact on organic growth profile:
Adds approx. 50 bps to revenue growth initially and increases in future years
Adds approx. 100 bps to EBITDA margin profile in 1st year, and an additional 100 bps by year 3
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