CYNO

Cynosure, Inc. (CYNO)

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Cynosure Inc. (CYNO)

Acquisition of Palomar Medical Technologies Conference Call

March 18, 2013 9:00 am ET

Executives

Scott Solomon – Vice President, Sharon Merrill Associates

Michael R. Davin – Chairman, President and Chief Executive Officer-Cynosure Inc.

Joseph P. Caruso – Chairman, President and Chief Executive Officer-Palomar Medical Technologies, Inc.

Timothy W. Baker – Executive Vice President, Chief Financial Officer and Treasurer-Cynosure Inc.

Analysts

Matthew J. Dodds – Citigroup Global Markets Inc.

Richard Newitter – Leerink Swann LLC

Anthony V. Vendetti – Maxim Group LLC

James Sidoti – Sidoti & Co. LLC

Bill J. Plovanic – Canaccord Genuity, Inc.

Paul T. Nouri – Noble Equity Funds

Stephen Velgot – ICAP Corporates LLC

Presentation

Operator

Good day. And welcome to the Cynosure, Palomar Medical Technologies Investor Call. Today’s call is being recorded. There will be an opportunity for questions at the end of the call. (Operator Instructions)

At this time, I would like to turn the call over to Mr. Scott Solomon, Vice President for Sharon Merrill Associates. Please go ahead, sir.

Scott Solomon

Thank you, Jessie, and good morning, everyone. Thank you for joining us today. With me on this morning’s call are Michael Davin, Cynosure’s Chairman, President and Chief Executive Officer; Tim Baker, Executive Vice President and Chief Financial Officer, and Joe Caruso, Chairman, President and CEO of Palomar Medical Technologies. Michael and Joe will discuss the strategic highlights of today’s announcement. Tim will review the financial terms of the transaction, and then open the line for questions.

Before we begin, please note that various remarks management makes on this conference call about future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

These statements include, but are not limited to, statements of our long-term growth and profitability, the expectation of an accretive transaction to Cynosure in calendar 2014 with the implementation of $8 million to $10 million of synergies, the integration of operations, the tax-free nature of the transaction, and the timing of the closing of the transaction.

These forward-looking statements are neither promises nor guarantees, but involve risk and uncertainties that may individually or mutually impact the matters herein, and cause actual results, events and performance to differ materially from such forward-looking statements. These risk factors are detailed under the Risk Factors heading in both Cynosure Annual Report on Form 10-K for the year-ended December 31, 2012 and the Palomar Annual Report on Form 10-K for the year-ended December 31, 2012.

With that, I’ll turn the call over to Michael Davin.

Michael R. Davin

Thank you, Scott, good morning everyone, and thank you for joining us. I wonder it is a momentous day for Cynosure and Palomar. We are excited to be welcoming Joe and the entire Palomar team, both here in Massachusetts and around the world to our organization. The definitive agreement we announced today will create one of the wold’s premier aesthetic laser and light-based companies; one that blends not only complementary products and technologies, but similar corporate cultures. And that’s incredibly important, because it creates a level of continuity that is key as Cynosure and Palomar combined into one unified organization. Each company has a history of product innovation and a heritage that spans more than 20 years. We have pursued similar growth paths as leaders in aesthetic laser and light-based devices.

As the Cynosure Management Team and Board consider this transaction, we did so with an eye toward one overarching objective; to continue to create shareholder value through industry leadership, technology innovation, and profitable growth. With that as a backdrop, here is why we believe Cynosure’s acquisition of Palomar will be an effective, efficient, value generating transaction for shareholders of both companies.

First, we believe that this transaction creates a company, with the industry’s broadest aesthetic laser capabilities and most comprehensive product portfolio.

Second, the acquisition strengthens our global distribution network, creating a combined field sales force of more than 80 reps in North America, drug distribution in 9 foreign countries and third-party distributors in over 100 countries. The geographic fit between our two companies is a good one. Palomar brings particular expertise in international markets such as Japan and Australia.

Third, the transaction enhances Intellectual Property position of our combined company. We will have a total of more than 80 U.S. patents covering numerous key innovations. We believe that as a device technology company, a broad patent position is an important differentiator in the market and is key to long-term success.

Fourth, our combined installed base of more than 20,000 systems creates a substantial cross-selling opportunity in terms of new workstations, technology enhancements, and services.

And finally, this transaction leverages the efficiencies and economies of scale of the combined company to generate a significant level of synergies, which we estimate will be between $8 million and $10 million in 2014.

With the acquisition of Palomar, our balance sheet will remain strong and debt free. On a pro forma basis, for the transaction as of December 31, 2012, the companies combined had approximately $87 million in cash and no debt. That provides us with a financial flexibility necessary to continue to execute our growth strategy.

Beyond our strategical rationale, we also are excited about the benefits of bringing together two organizations build on a commitment to meaningful innovation. Cynosure has established its reputation with industry leading minimally invasive systems such as Cellulaze and Smartlipo and most recently our promising new PicoSure, picosecond laser for clearing tattoos and benign pigmented lesions.

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