Jefferies LLC October 2014/

Medical Device Market Overview

12

Jefferies LLC October 2014/

MedTech Equity Market PerformanceTop-line growth continues to drive Med Tech share price

Stock Price Performance by Market Capitalization

Source: Capital IQ as of October 17, 2014.

Note: Composites are calculated using the average value of constituents.

25%

100%

175%

250%

325%

400%

475%

Jan-08 Feb-09 Apr-10 May-11 Jul-12 Aug-13 Oct-14

S&P 500 Large Cap Med Tech

Mid Cap Med Tech Small Cap Med Tech

High Growth Med Tech

Financial

Crisis

Recovery

Begins

Macro

Concerns

Healthcare

Reform

Valuations of MedTech Companies with Various 2014 Growth

Expectations

Since

01/02/08 2013

2014

YTD

High

Growth275.3% 78.6% 1.2%

Mid Cap 38.4% 20.1% (1.3)%

S&P 500 28.7% 26.4% 1.7%

Large Cap 18.1% 24.8% (0.8)%

Small Cap 2.3% 31.1% 2.2%

2014E

Sales Growth>10% 7% – 10% 5% – 7% <5%

EV /

Revenue

EV /

EBITDA

Adjusted

P / E

4.9x

4.1x

2013 2014

2.6x 2.6x

2013 2014

4.9x

4.1x

2013 2014

3.6x3.4x

2013 2014

2.5x 2.3x

2013 2014

2.6x 2.6x

2013 2014

15.3x

12.9x

2013 2014

15.1x

12.9x

2013 2014

10.9x

9.7x

2013 2014

11.6x

10.6x

2013 2014

31.2x

25.0x

2013 2014

30.6x

22.5x

2013 2014

26.2x

19.8x

2013 2014

24.8x

19.8x

2013 2014

13

Jefferies LLC October 2014/

Recent Med Tech IPO Benchmarking and Performance($Millions)

Key Takeaways and Implications

The combination of scale and growth as well as supportive markets has been required in Med Tech to excite investors

─ As noted to the left, few transactions have enjoyed this combination

Buy-side is less enthusiastic toward early-stage / pre-revenue opportunities

Highly competitive No competition

Scale & Profitability IPO Performance and After-Market Performance (2)

Company Revenue Gross Margin

Adj.

EBITDA Pricing Date

Prem. / (Disc.) to

Initial Filing

Price(1)

I nsider

Participation Reimbursement Filing Size Actual Size

Post-Money

Valuation

Valuation

Step-Up

TEV / 2014E

Revenue

TEV / 2015E

Revenue

Growth Prem.

2015 TEV /

Rev / Growth

Share Price

Performance

since IPO

$5 29% ($12) 199%

09/12/14 (20%) 8.3%O

$50 $36 $138 0.9x nm 16.9x 8.5x 173%

23 62% (17) 63%O

07/23/14 (8%) - O

60 55 267 1.6x 12.4x 6.8x 10.7x 38%

158 68% (5) 14%O

05/07/14 (12%) -

150 132 585 1.3x 2.7x 2.4x 16.6x (5%)

7 38% (20) 84%O

04/24/14 (33%) 67.1%

60 55 178 1.0x 3.9x 1.8x 2.1x (33%)

- - (30) naO

04/16/14 (14%) 55.6%O

75 54 279 1.7x na na na 58%

20 40% (42) 59%O

04/15/14 (14%) 48.7%

91 78 253 1.1x 7.5x 4.3x 7.2x 21%

265 54% 26 8%

02/26/14 (25%) - O

100 75 444 1.2x 1.0x 0.9x 11.2x (26%)

70 52% 12 15%O

02/13/14 (6%) -

75 71 326 1.2x 3.0x 2.6x 17.4x 30%

21 22% (37) 48%O

11/13/13 0 -

100 120 385 1.7x 4.7x 2.9x 6.2x (13%)

98 84% 2 19%O

10/08/13 0 20.7%

75 75 376 1.3x 5.4x 4.6x 23.6x 102%

Mean $67 45% ($12) 57% (13%) 20% $84 $75 $323 1.3x 5.1x 4.8x 11.5x 34%

Median $22 46% ($15) 48% (13%) 4% $75 $73 $303 1.3x 4.3x 2.9x 10.7x 25%

Revenue CAGR

2014E - 2016E

Competitive

Landscape

Platform

Company

Sources: Company filings, press releases, FactSet and Capital IQ as of October 17, 2014.

(1) Offer to midpoint of initial filing range.

(2) Offer to current.

15

Jefferies LLC October 2014/

Med Tech M&A Market OverviewM&A volume by dollars has been reasonable due to a few sizeable transactions and transaction valuations have remained “sticky” as buyers

aggressively pursue quality assets

Med Tech M&A Volume

($ in billions)

Enterprise Value / NTM Revenue

One-month Premium

$6.0$3.2 $6.9

$9.7 $9.2$7.2

$10.8$7.1

$2.6$10.6 $2.8

$40.6

$2.6

$1.4

$1.5$4.2

$3.8

$4.1

$1.4

$2.8

$2.2

$1.2 $1.6$1.6

$1.0

$2.7

$20.0

$2.3

$8.8$13.4

$4.5

$1.2

$1.3

$1.9

$4.0

$1.5

$43.7

$6.3

$1.5

$6.3

$1.6

$1.2

$1.5

$2.4

$2.2

$14.2

$4.0

$2.1

$5.2

$39.6

$20.2

$9.7

$57.2

$42.9

$17.0

$25.4

$87.7

2007 2008 2009 2010 2011 2012 2013 2014 YTD

All Other

Onex /

Carestream

Consortium /

Mölnlycke

Cardinal /

VIASYS

Warburg /

B&L

HOLX /

Cytyc

ReAble / DJO

TFX / Arrow

MDT / Kyphon

Olympus / Gyrus

Philips / Respironics

NOVN /

Alcon

Consortium / Convatec

GE / Vital SignsJNJ / Mentor

ABT / AMO

Terumo /

Caridian

Endo /

AMMD

JNJ / Synthes

Dentsply / Astra Tech

Apax / Kinetic Concepts

BSX /

Cameron (2)

Asahi / ZOLL

EQT / BSN

BAX /

Gambro

C-Rad /

Cyrpa

Valeant /

B&L

Bayer /

Conceptus

KKR /

PanasonicSYK /

MAKO

Source: Capital IQ as of October 17, 2014.

Notes: Statistics reflect transactions greater than $100 million. Dates reflect transaction announcements. Composites are calculated using the average value of constituents.

(1) Includes transactions less than $1,000 million.

(2) Includes $1,200 million of potential earnout payments.

(3) Excludes 2009.

Total Deals

27 15 20 30 35 32 38 28

(1)

NOVN /

Alcon

SYK / BSX

STJ / AGA

COV / ev3

Honeywell /

Sperian

S&N / ARTC

Carlyle /

Ortho-Clinical

Diagnostics

Zimmer /

Biomet

Medtronic /

Covidien

Cooper /

Sauflon

Danaher /

Nobel Biocare

Mean: 4.1x

Total Deals with Available Metrics Total Deals with Available Metrics

14 7 5 11 7 5 8 9

3.5x

4.6x

2.8x

3.9x

3.0x

4.6x 5.2x

3.0x

2007 2008 2009 2010 2011 2012 2013 2014YTD

Mean: 40%

Total Deals with Available Metrics

15 7 5 11 7 5 10 7

39%

53%90%

37%42%

37%

49%

24%

2007 2008 2009 2010 2011 2012 2013 2014YTD

(3)

BD /

Carefusion

16

Jefferies LLC October 2014/

Ann.

Date Target Acquiror CE Mark

FDA

Approval

Transaction

Value

LTM

Revenues

TEV / NTM

Revenue

%

Up-front

07/14/14 ~200 NA NA 100.0%

06/30/14 375 NA NA 100.0%

05/27/14 ~305 55 NA ~75.0%

04/02/14 320 80 NA 100.0%

12/04/13 193 49 NA 100.0%

05/23/13

Targeted Therapies Business Unit

200 48 3.5 100.0%

10/23/12 165 NA NA 84.8%

04/05/12

321 68 3.6 100.0%

03/19/12 314 30 10.0 84.1%

11/21/11 413 NA NA 81.8%

11/09/11

313 82 2.8 100.0%

07/27/11 293 NA NA 100.0%

07/07/11 452 65 7.0 100.0%

09/20/10 444 0 NA 43.6%

07/12/10 433 94 3.8 100.0%

06/16/10 335 54 5.0 100.0%

05/05/10

210 56 3.0 100.0%

12/16/09 785 100 NA 100.0%

11/09/09 489 117 NA 100.0%

10/26/09 200 NA NA 65.5%

09/28/09 267 100 1.9 100.0%

Mean: $340 $67 4.2x 91.8%

Median: $314 $65 3.5x 100.0%

Med Tech Precedent M&A Transactions

Pre-FDA Approval M&A Transactions

Source: Capital IQ.

(1) $40 million equity investment and has the option to acquire Spinal Modulation for up to $300 million plus certain revenue-based milestones following U.S. commercialization

(2) Includes $150 million potential CVR upon FDA approval. Does not include $1,050 million of potential CVR payments in six years post-approval. Revenue multiples only reflect $150 million in upfront payment.

Pre-FDA approval vs. post-FDA approval: Selling the “dream” has achieved higher valuations and more structure($Millions)

Post-FDA Approval M&A Transactions

17