Coppersmith Presentation to Alere Inc Stockholders
PAGE 25 |
COPPERSMITH
▪ In 2007 Alere, known then as Inverness, stunned its investors by beginning a highly aggressive roll-up strategy in the Health
Management industry
> Coordinated health intervention/communication for populations wherein patient self-care efforts are significant
> Chronic Illness (e.g. diabetes), wellness (e.g. smoking, obesity), self-testing monitoring (e.g. anticoagulation)
> Chairman and CEO Zwanziger's stated thesis was that health management would pull significant diagnostic revenue
▪ From a standing start, acquired three businesses for $1.7B, averaging 3.7x revenue over three months
▪ Since inception, the HM division has been an operational, capital allocation and valuation disaster, in our view
$1.4B of goodwill written-off (but not realized for tax purposes), 92% of HM's $1.5B goodwill total
Negative organic revenue CAGR of -5.4% since 2008
> EBITDA margin down every year, and a total of -70%, since 2008
> Six years of IR poison and valuation overhang:
Health Management: Business Model and Build-up
"For the Health Solutions/Management business, meanwhile, we continue to value the business at $0..." - Greg Simpson,
Wunderlich Securities, Inc., 5/9/13
"Our $25 price target assumes $200 MM for the DM segment..." - Zarak Khurshid, Wedbush Securities, Inc., 5/22/13
Alere's management and Board have resolutely refused to consider exiting Health Management, despite its
chronically disappointing performance, failed strategy and destruction of stockholder wealthView entire presentation