Coppersmith Presentation to Alere Inc Stockholders
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Coppersmith's Leverage Plan: The Future of Toxicology
The Toxicology division has relatively little linkage, strategically or operationally, with the rest of Alere:
Toxicology sells principally to employers, law enforcement and the corrections industry, not doctors and hospitals
Toxicology is only 30% POC testing, the rest is reference labs (40%) and drug testing program management (26%) 8
In his 6/27/13 letter, Chairman and CEO Zwanziger stated that considering a sale of the Toxicology division "makes no
strategic or financial sense"
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COPPERSMITH
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If so, why did Chairman and CEO Zwanziger as recently as 2011 himself suggest selling the Toxicology division:
> "We rarely talk about our Toxicology business because it doesn't quite fit the model of everything I've been talking about,
but it is one of a [sic] healthy business... We have toyed with the idea from time-to-time about selling this business."28
Coppersmith believes all alternatives should be considered. Proper evaluation of Toxicology would consider:
1. Whether Toxicology has anything more than a rhetorical relationship to Alere's stated strategy
2. Whether the recent price cut Alere felt compelled to make for government customers, which severely reduced growth, are
likely to leak into commercial sales as well (which represents ~70% of toxicology revenue)
3. Whether virtually eliminating Alere's leverage would generate the mere 25% closure of P/E valuation gap to peers we
estimate would nullify any stock price impact from reduced earnings2⁹
4. Whether a sale could be structured to retain the 30% of actual POC testing
A Toxicology divestiture could generate proceeds of $2.2B to $2.4B, on the basis of precedent
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