Coppersmith Presentation to Alere Inc Stockholders
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COPPERSMITH
We believe the Board and management's poor track record in capital allocation reflects impetuousness and poor risk &
valuation analysis - The result is bad acquisitions, executed at the worst time
Does Alere Do Proper Due Diligence and Risk Assessment?
$4B+ spent since 2007 for over 72 deals, or a pace of more than 1 deal a month ¹6
> This pace is consistent with Alere's 10-year acquisition haul of 107 deals, also roughly 1 deal a month ¹6
▪ From November 2011 to December 2012, Alere made two investments for roughly $120mm ¹6 in mail-order diabetic
testing supply companies (Arriva Medical and Liberty Medical)
> In January 2013, CMS slashed reimbursement for mail-order diabetic supplies by 71%
▪ Alere spent over $1.7B for 3 deals over 3 months to build the vast majority of its HM platform from scratch
> Alere Medical (from which Alere later took its name) was acquired in October 2007 for $302mm or 3.9x revenue from a
private equity firm that had acquired it only 6 months earlier for $175mm or 2.8x revenue¹7
> ParadigmHealth was acquired in November 2007 for $230mm or 3.8x revenue ¹8
> Matria Healthcare was acquired in January 2008 for $1.2B or 3.4x revenue¹⁹
> The closest publicly traded comparable, Healthways, currently trades at 1.2x revenue and we've assumed multiples of
0.5x-0.75x for HM in our analysis yielding an estimated value of $270-$400mm
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On this basis we estimate stockholder wealth destruction from HM of $1.6B to $1.7B, based on $1.8B and $198mm
spent on acquisitions and CapEx, respectively
> Management's impairment tests appear to value HM at ~$400mm, suggesting value destruction of $1.6B16View entire presentation