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Executive Summary: Alphaeon is uniquely positioned to meet the needs of the cash-pay segment & engage specialty physicians

Cash-Pay Segment

• Healthcare market is composed of two segments:– Reimbursed segment, defined by medical need– Cash-pay segment, offering lifestyle enhancement

• Global cash-pay segment offers a $18bn opportunity and is poised to grow at 10% CAGR– Medical Aesthetics and Ophthalmic are the most attractive

sectors within the segment

Market Landscape

• Cash-pay segment dominated by Big Strategics (Pharma & Medical Device)– Entered the market to hedge against decline in

reimbursement• Big Strategics have low expertise in office-based sales &

DTC marketing• These players “disintegrate” targets following acquisition,

stunting innovator culture• Big Strategics also extend regulations around physician

interaction and promotions to cash-pay businesses following acquisition, resulting in negative synergy– Big Strategics today cannot outbid smaller companies

during acquisitions due to negative impact of regulations

Alphaeon Overview

• Alphaeon will transform the market by establishing a de-regulated cash-pay only business that directly engages customers as shareholders– Physician input will drive Alphaeon strategy

• Alphaeon will be exempt from regulations limiting marketing & sales and physician financial participation in healthcare companies

• Alphaeon will acquire platforms within Medical Aesthetics and Ophthalmic & expand via “bolt-on” acquisitions

• Acquisition targets will operate independently while leveraging a combined practice management force

• Alphaeon will adopt a customer-centric model delivering practice management to customers– Generalist practice partners will compose the majority of

Alphaeon sales force

• Alphaeon is well-positioned to enter the market today due to historic lows in valuation of cash-pay businesses and low deal flow

• Alphaeon will provide >30% IRR Returns to investors and plans to IPO within two to three years of first platform acquisition

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Current State of Healthcare Market

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Current market is composed of healthcare reimbursed based on medical need & cash-pay lifestyle enhancement healthcare

1 23

1. Reimbursed Healthcare

3. Cross-over

• Government reimbursed healthcare sectors address “medical need” of patients

• Includes “covered services”

• Currently, products are automatically entered into review for reimbursement

• Government non-reimbursed healthcare includes products that offer life enhancements to the patient rather than addressing “medical need”

• Patients pay out-of-pocket (i.e. cash-pay)

• Includes “non-covered” products and services• Some products & services fall

into both categories• Medical need assessed on a

case-by-case basis

The global healthcare market size valued at $1.2 trillion in 2011 (Pharma: $880Bn & Medical Device: $312Bn)

Sources: “Medical Device Revenue to Top $300Bn This Year,” Kalorama Information, Jan 2011; Global Pharma Market Forecasts, IMS Health, Dec 2010

Medical Need Lifestyle Enhancement

Medical Need with Lifestyle Benefit

2. Cash-pay Healthcare

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Current State of Cash-Pay Market Segment

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The cash-pay healthcare sector is composed of segments focused on improving the quality of life of the consumer

• Cash-pay segments offer consumers quality of life enhancements and are differentiated by lack of reimbursement (i.e. patients pay out-of-pocket) and medical need

• While segments below are typically cash-pay, certain procedures/products may be reimbursed when medical need is established (for instance, breast reconstruction under Medical Aesthetics)

• Similarly, some lifestyle enhancement procedures outside of the listed segments fall into cash-pay bucket

Cash-Pay Sector Definition

Illustrative examples throughout this presentation

will focus on the Medical Aesthetics and Ophthalmic

segments

Cash-Pay Sector Dentistry

OphthalmicMedical Aesthetics

Weight Loss

ENT & Sleep Enhancement

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The global cash-pay market presents an ~$18Bn opportunity and is slated to grow to ~$29Bn in 2016 (10% CAGR)

Global Cash-Pay Market Revenue & Growth

Total

Med

ical A

esth

etics

Dentistr

y

Ophthalm

ic

ENT &

Slee

p Enhan

cemen

t

Weig

ht Loss

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%$17.5

$5.0 $4.6 $4.1 $3.4

$0.5

10%

13%

7%9% 9%

17%

2011 Revenue CAGR to 2016

$Bn

CAG

R %

Sources: Global Cash-Pay Market, Medical Insights, April 2012

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The cash-pay segments are currently composed of the following products & therapy sub-segments:

Incentives

Medical Aesthetics$5.0Bn

Ophthalmic$4.1Bn

ENT & Sleep Enhancement

$3.4Bn

Dentistry$4.6Bn

Weight Loss$0.5Bn

Refractive Surgery (incl. LASIK)Premium IOLs

Surgical Equipment (incl. femtosecond lasers)Diagnostic Equipment

NeuromodulatorsFillersBreast ImplantsPhototherapy

Body ShapingCosmeceuticals Chemical PeelsEyelash Products

Liposuction

Weight Loss Devices

Weight Loss Pharmaceuticals

ImplantsGum LiftDental BridgesBondingDiagnosticsBraces4D ImagingVeneersTeeth Whitening

Injection SnoreplastyRadiosurgery

Pillar ProcedureLaser Surgery(Snoring & Septoplasty)

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27%

21%20%

19%

14%

The Baby boomers demand and are more willing to pay for quality of life enhancements than previous generationsDrive for Quality of Life• Desire for improved quality of life from aging baby

boomers drives growth in cash-pay market– As baby boomers reach 65+ age bracket, approval of

cosmetic surgery in the age group has skyrocketed

• Baby boomer generation is wealthier than previous generations and more willing to pay out-of-pocket for better care and results– Baby boomers control ~50% of US discretionary income

• Baby boomers accounted for over a third of cosmetic procedures in 2011

Premium Lens (PC-IOL) Cash-Pay Market

2008 2009 2010 2011 2012 2013

$118M

$241M$305M

$416M$490M

$612M

CAGR 31.6%

% of 65+ Population Indicating Approval of Cosmetic Surgery (ASAPS Survey)

Cosmetic Procedures by Age Group (2011)

1%20%

43%

28%

8%18 and under

19-34

35-50

51-64

65+

% of US Population

% Cosmetic Procedures

2000 2010

40%

77%

Sources: Presbyopia Devices Report, Market Scope, 2009; Attitudes on Cosmetic Surgery Survey, American Society of Aesthetic Plastic Surgery; 2011 Statistics on Cosmetic Surgery American Society for Aesthetic Plastic Surgery

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Proposed Medicare cut

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$958 $929

$795 $773 $748 $743$669 $671 $684 $684 $684

$610 $626$549 $550 $550 $550

$435

Decline in physician reimbursement and regulatory pressure are driving physicians to perform more cash-pay procedures

Decline in Cataract Reimbursement• Diminishing reimbursement in surgical procedures challenges traditional practice economics and physicians’ commitment to

prescribing the best products for their patients irrespective of cost– Medicare reimbursement has fallen dramatically over the last decade– 27% cut in reimbursements scheduled for March 1 delayed until 2013 but continues to threaten physicians

• Heightened regulations bar physicians from directly engaging with pharma manufacturers in the drug discovery and development process

• Physicians face an all or nothing choice to opt-in/opt-out of Medicare and must accept all Medicare patients if opted-in• Due to regulatory restrictions and poor practice economics, physicians are increasingly marginalized within the healthcare field

and less satisfied within their profession

Impact on Physicians

US Reimbursement Rate for Cataract Procedures(CPT Code 66984)

1 Projection based on expected cut in reimbursement rates of 27% in 2013Source: Reimbursement schedule, Centers for Medicare & Medicaid Services

54.6% Decrease

1