Bioventus : and Misonix Announce Definitive Agreement for Bioventus to Acquire Misonix Transcript

Bioventus LLC (Update)

July 29, 2021

Corporate Speakers:

• Thomas Hill; Bioventus LLC; Director, Corporate Communications
• Ken Reali; Bioventus Inc.; CEO & Director
• Stavros Vizirgianakis; Misonix, Inc.; CEO & Director
• Greg Anglum; Bioventus Inc.; Senior VP & CFO

Participants:

• Kyle Rose; Canaccord Genuity Corp.; Senior Analyst
• Drew Ranieri; Morgan Stanley; Equity Analyst
• Unidentified Participant; JPMorgan; Analyst
• Ryan Zimmerman; BTIG, LLC; MD & Medical Technology Analyst
• Unidentified Participant; Goldman Sachs; Analyst

PRESENTATION

Operator: Thank you for standing by. Welcome to the Bioventus business update conference call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Thomas Hill. Please go ahead.

Thomas Hill: Thank you, Norma, and good afternoon, everyone. We appreciate you joining us today to discuss this afternoon's announcement that Bioventus and Misonix have entered into a definitive agreement for Bioventus to acquire Misonix. I'm Tom Hill, Director of Corporate Communications at Bioventus. With me on the call today from Bioventus are Ken Reali, Bioventus Chief Executive Officer; and Greg Anglum, Bioventus' Chief Financial Officer. Joining us from Misonix are Stavros Vazirgianakis, Chief Executive Officer; and Joe Dwyer, Chief Financial Officer.

The agenda for this call includes an overview of the transaction from Ken Reali, comments from Ken and Stavros on the individual companies, the rationale for the transaction and a review of the financial terms for the combination. As well as Bioventus' second quarter preliminary financial results and updated guidance from Greg Anglum.

Following our prepared remarks, management from both Bioventus and Misonix will take your questions, and then Ken will provide some closing comments. First, a few logistical comments. This afternoon, Bioventus and Misonix issued a joint press release and posted a slide presentation describing the transaction, both of which can be accessed on the Investor Relations section of Bioventus' website at bioventus.com and Misonix's website at misonix.com. In a separate press release issued today, Bioventus announced preliminary revenue for the second quarter of 2021. And in another separate release, Misonix announced preliminary fiscal 2021 fourth quarter and full year revenue.

Before I pass it to Ken, I would like to remind you that this presentation includes forward-looking statements about the proposed transaction between Misonix and Bioventus. And Bioventus' preliminary revenue results. Each forward-looking statement contained in this presentation is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding these important factors appears in the slide entitled disclaimer, which contains the cautionary note regarding forward-looking statements.

Information about Bioventus' specific risks can be found under the headline under the heading Risk Factors in Bioventus' annual report for the fiscal year ended December 31, 2020, that is filed with the Securities and Exchange Commission and available at sec.gov. And on our website at bioventus.com.

Information about risks related to Misonix can be found under the heading Risk Factors in Misonix' annual report for the fiscal year ended June 30, 2020, that is filed with the Securities and Exchange Commission, and available on sec.gov and on misonix.com. The forward-looking statements in this presentation speak only as of the original date of this presentation, and neither Bioventus nor Misonix undertakes any obligation to update or revise any of these statements. With that introduction, it is now my pleasure to turn the call over to Ken Reali.

Ken Reali: Thank you, Tom, and thank you, everybody, for joining us this afternoon. I'm very pleased to have Misonix's CEO, Stavros Vizirgianakis; and CFO, Joe Dwyer, with us today. As you know, earlier this afternoon, we announced that Bioventus and Misonix have entered into a definitive agreement under which Bioventus has agreed to acquire Misonix in a cash and stock transaction. For those of you who are new to the Bioventus story, we are a company focused on building a portfolio of clinically differentiated, minimally invasive treatments to help patients heal faster and relieve pain.

Today, we are the #2 player in HA therapy with the fastest-growing single injection therapy, the #1 player in minimally invasive fracture treatment and advanced rehabilitation the fastest-growing participant in bone graft substitutes and the technology leader in peripheral nerve stimulation across a $13 billion addressable market opportunity supported by robust free cash flow conversion and an experienced management team.

Adding Misonix, Bioventus sees a compelling opportunity to extend our leadership and expand the breadth and depth of our offerings by adding $2 billion to our addressable market. Misonix' platform is expected to add an incremental 100 basis points of additional revenue growth to the combined company on a pro forma basis. We find Misonix' recurring revenue model, highly attractive and believe the complementary nature of the 2 businesses will give the combined company significant diversity and scale across a range of care settings, geographies and therapeutic areas.

These factors will place Bioventus in a unique market position with leading technologies and specialized sales forces serving a $15 billion total addressable market across the hospital, ambulatory surgical center and office care settings. The combined product

portfolio following the closing will serve large market segments across orthopedics and lower extremity as well as neurosurgery.

We believe that the combined sales force can further accelerate the new combined company's growth by leveraging cross-selling opportunities through existing customer relationships and by utilizing increased scale in a combined product portfolio to pursue new customers. The combination of our 2 businesses will create a differentiated growth medical technology company. And we strongly believe these growth opportunities combined with Bioventus' expected $20 million of cost synergies will create strong financial returns for Bioventus shareholders.

I will now briefly review the details of the transaction, which are summarized on Page 1 of the presentation. Under the terms of this agreement, which have been unanimously approved by the Boards of Directors of both companies. Bioventus will acquire 100% of Misonix' common shares in a cash and stock transaction. intended to be a tax-free reorganization for U.S. federal income tax purposes.

The Sonic stockholders will receive aggregate consideration that values Misonix at approximately $518 million on a fully diluted basis based on Bioventus 7-day volume- weighted average stock price, or VWAP, of $16.6284 per share as of July 27, 2021. The -

• In the transaction, Misonix stockholders may elect to receive either 1.6839 shares of Bioventus Class A common stock or $28 in cash without interest for each share of Misonix common stock they sold, subject to proration based on an aggregate maximum cash amount payable by Bioventus equal to $10.50 per share of Misonix common stock outstanding, shortly prior to the completion of the transaction.

Their aggregate per share value for Misonix represents a 25% premium to Misonix is 30- day VWAP as of July 27, 2021. After the transaction, Misonix shareholders will own approximately 25% of the combined company on a fully diluted basis. Bioventus intends to finance the cash portion of the transaction through a combined combination of cash on hand and incremental fully committed debt. We expect pro forma year-end 2021 net leverage of 3.6x which combined with a steady path to deleveraging should give us considerable balance sheet flexibility. Stavros and Patrick Bayer, will both join the Bioventus Board. and significant shareholders of both of our companies have signed agreements to vote in favor of this transaction, which we expect to close later this year.

Let me now invite Stavros to share a few words about Misonix and provide his thoughts on the transaction.

Stavros Vizirgianakis: Thanks, Ken. At Misonix, our vision is to be a disruptive medical ultrasonics company that provides innovative solutions to help yield patients and lower the cost of health care globally. The core of Misonix is an innovative smart technology platform, the Nexus, built around our capabilities in ultrasonic technology and applied to high incident rate disease states. This single platform access -- provides access to an addressable market of 2 million procedures in the U.S. alone, including opportunities in

spine, neuro, CMF, OMF, plastics and wound. And last year alone, our technology was used in more than 70,000 surgical procedures globally.

We believe this technology can sustain double-digit organic sales growth and provide additional organic and inorganic expansion opportunities, such as our acquisition of the -- skin substitutes business in 2019. We think about our business in terms of 2 segments: surgical and wound. On the surgical side, our BoneScalpel device enables improved patient outcomes and reduced operating times through more precise bone resection, and -

• allows for precise tumor removal. On the wind side, the Masonic debriding closure program, MDC, offers a unique ultrasonic debridement solution along with a variety of skin substitutes to provide improved clinical outcomes for patients.

Importantly, each of our core points leverages our Nexus platform and has significant overlap with Bioventus business as well. The Misonix technology is a platform with wound with combined ultrasonics with a skin graft product, enabling a procedural solution. We believe we can enable new proprietary procedural solutions with a Bioventus portfolio. With regards to this afternoon's news, I want to echo Ken's enthusiasm for this combination and what it means for both our companies. As a stand- alone business, Misonix' vision is to use our leadership position in ultrasonic technology to create innovative procedural solutions in high incident rate disease states.

This strategic combination helps us achieve that goal and extend our reach to help more patients. Additionally, I'm highly confident this transaction will provide significant benefits and value to our customers employees and shareholders as well. This transaction will provide Misonix shareholders with a premium while still allowing continued participation in the upside potential of the combined organization. We believe Bioventus is the ideal partner for Misonix given our common desire to improve lives of patients, our mutual recognition of the importance of compliance and high ethical standards in undertaking that mission. And the strong results-orientated culture we've both built.

Bioventus extensive sales network significantly enhances our go-to-market strategy in both surgical and wound settings as well as greatly extending our reach in international markets. Furthermore, the combined scale is expected to help us accelerate our organic growth and product development capabilities and provide additional opportunities to leverage our platform inorganically.

Before I turn the call back to Ken, I want to express my deep appreciation to Misonix's talented and dedicated employees. We believe our employees will benefit from being part of the combined company with a collective resources and shared commitment to delivering innovative solutions to serve physicians and improve patient outcomes. We look forward to working closely with the Bioventus team to plan the integration and ensure a seamless combination. With that, I'll turn the call back over to Ken.

Ken Reali: Thanks, Stavros. One of the key rationales for Bioventus for this acquisition is the addition of a platform technology that can be significantly expanded to therapeutic areas beyond its current footprint. Bioventus commercial scale can now help accelerate

market penetration and growth of this highly differentiated platform Misonix has built. Speaking to the scale that Stavros mentioned on Page 6 of the presentation, you can see how Misonix enhances our scale within restorative therapies and surgical solutions. And provides additional leverage to our already considerable go-to-market capabilities.

To reflect these deeper capabilities upon closing our bone graft substitute vertical will become known as Surgical Solutions, reflecting the broader platform we will have in spine. Bioventus, Misonix and our recent Bioness acquisition together create an even more compelling new company with expected pro forma revenue of nearly $500 million in 2021 and a multiyear growth in the low double digits and a $15 billion addressable market. Similar to our recent acquisition of Bioness, we expect Misonix to be accretive to Bioventus long-term revenue growth profile.

Between now and closing, we will finalize our integration plans. Some of the opportunities we've already included and identified are leveraging the commercial synergies between the Misonix wound business and our Exogen and peripheral nerve stimulation call points. Extending our capabilities across the care continuum to the thousands of customers we already know well in the office setting, which is a key call point for Bioventus with foot and ankle surgeons who are already treating more wound patients in the office due to the COVID pandemic.

Exploiting the commercial strength of our combined hardware agnostic spine business with Bioventus bone graft substitutes, and Misonix's surgical scalpel within the same customer base and often within the same procedures using our enhanced sales force to enable accelerated adoption of the Misonix Nexus platform and leveraging the scale of the Bioventus OUS direct business model in the U.K., Canada and Germany and infrastructure in the Netherlands. To improve Misonix' overall scale and reach.

Lastly, leveraging the Bioventus market access team across the range of Misonix products to improve market and hospital access for their technologies. Our CFO, Greg Anglum, will now walk you through the financial impacts of this transaction.

Greg Anglum: Thanks, Ken.

Bioventus believes that the strong strategic fit between these 2 businesses will unlock $20 million of cost synergies by the end of the second full year following the completion of the transaction, through reduced public company costs and other benefits of our combined scale and infrastructure. While this target is based on our early assessment of the transaction, our teams in concert with the dedicated integration project management office, we'll continue to assess ways in which to execute on these synergy targets and identify others in an efficient manner. While Bioventus has not attempted to quantify, we further believe there are considerable revenue synergy opportunities resulting from our comprehensive combined sales force, complementary products and the opportunities for geographic expansion that Bioventus brings to Misonix.