MicroCapClub Invitational: Misonix (MSON)

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CORPORATE PRESENTATION January 2013

MISONIX, INC. (NASDAQ: MSON)

ADVANCING ULTRASONIC SURGERY

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Forward Looking Statements

With the excep�on of historical informa�on contained in this presenta�on, content herein may contain "forward looking statements" that are made pursuant to the Safe Harbor Provisions of the Private Securi�es Li�ga�on Reform Act of 1995. These statements are based on management's current expecta�ons and are subject to uncertainty and changes in circumstances. Investors are cau�oned that forward-‐looking statements involve risks and uncertain�es that could cause actual results to differ materially from the statements made. These factors include general economic condi�ons, delays and risks associated with the performance of contracts, risks associated with interna�onal sales and currency fluctua�ons, uncertain�es as a result of research and development, acceptable results from clinical studies, including publica�on of results and pa�ent/procedure data with varying levels of sta�s�cal relevancy, risks involved in introducing and marke�ng new products, poten�al acquisi�ons, consumer and industry acceptance, li�ga�on and/or court proceedings, including the �ming and monetary requirements of such ac�vi�es, the �ming of finding strategic partners and implemen�ng such rela�onships, regulatory risks including approval of pending and/or contemplated 510(k) filings, the ability to achieve and maintain profitability in the Company's business lines, and other factors discussed in the Company's Annual Report on Form 10-‐K, subsequent Quarterly Reports on Form 10-‐Q and Current Reports on Form 8-‐K. The Company disclaims any obliga�on to update its forward-‐looking rela�onships.

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Company Overview

  Misonix, Inc. (Nasdaq: MSON) develops ultrasonic surgical devices for use in a wide variety of procedures

  Focused medical device company; divested non-core businesses in 2008 - 2012

  Operates in a recurring razor / razorblade model –  39.2% of revenues recurring – FY 2012 –  40.0% of revenues recurring – 1st Quarter FY

2013   Misonix’s products are protected by strong patent

portfolio –  Over 40 patents

  Large worldwide revenue generating installed base; consistently growing

  Products aimed at large and rapidly growing aging demographic

Revenues

$8.1 $9.7 $8.7 $10.7 $12.4 $15.7

$4.6 $0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013

Total Medical Revenue Total Other Revenue

$42.4 $45.5

$39.8

$13.4 $14.4

$ m

illio

ns

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Company Highlights

  Substantial Recurring Revenue Component –  40.0 % of revenues recurring – First Quarter 2013 –  39.2% of revenues recurring – FY 2012 –  48% of revenues recurring – FY 2011

  Strong Balance Sheet –  $6.7 million cash (approximately 20% of current market value) –  ZERO long-term debt

  Revenue Growth – FY 2013 - First Quarter –  42% growth –First Quarter 2013 vs. 2012 –  BoneScalpel TM – 220% growth - First Quarter 2013 vs. 2012 –  SonaStar® – 21% growth - First Quarter 2013 vs. 2012 –  SonicOne™ - 97% growth - First Quarter 2013 vs. 2012

  Improving Gross Margins –  59.7% GM – First Quarter 2013 –  59.0% GM – FY 2012 –  58.0% GM – FY 2011

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Addressable Market H

ard

Tiss

ue

Market Segment Surgical Specialties

Competition Market size Worldwide

BoneScalpel™ Spine

Orthopedics Neuro

High-speed Burr $ 300 M *

Small bone Maxillofacial Reconstructive ENT Hand, Foot & Ankle

Micro saw $ 300 M *

Total $ 600 M *

* Millennium Research Group 2010 ** Misonix Estimates

Soft

Tiss

ue

Market Segment Surgical Specialties

Competition Market size worldwide

SonicOne® Surgical Debridement Plastic Reconstructive General Vascular

Waterjet Scalpel, Curette

$ 300 M **

Ambulatory Debridement

Podiatric General Vascular

Ultrasonic Debridement Scalpel, Curette

$ 100 M **

Total $ 400 M **

Soft

Tiss

ue Market

Segment Surgical Specialties

Competition Market size worldwide

SonaStar® Tumor Resection

Neurosurgical General

Ultrasonic Aspirators Waterjet

$ 100 M **

Total $ 100 M **

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Sales & Distribution

Domestic – Hybrid Sales Organization

  2 Direct Neuro/Spinel Sales Territories

  28 Contract Neuro/Spinel Sales Agencies with over 100 salespeople

  9 Contract Wound Sales Agencies with over 40 salespeople

  Supported by Misonix Sales directors (2) and regional Business Development Managers (10)

International – Specialty Distributor Organization

  45 Specialty Distributors with over 200 salespeople

  Supported by Misonix Sales Directors (2) and Application Specialists (3)

Private Label –

  Aesculap is non-exclusive in the U.S. only for spine and cranial applications of BoneScalpel

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Product Overviews

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BoneScalpel™: Overview

  Ultrasonic Bone Cutting System   Precision cuts with minimal loss of bone   Spares soft tissue structures like delicate nerves*   Improved patient safety*   Relatively bloodless field – US’s hemostatic affect*   Encourages new surgical techniques*   Faster overall procedure time*

  Addressable Market   $300 million current worldwide market for spine.   $300 million maxillofacial, reconstructive and other

small bone procedures

  Hospital Price Points (ASP = Average Sales Price)   $35,000 ASP per capital system sale with $400 ASP for

consumables per use   $500 ASP for consumables with consignment

placement and minimum monthly purchases

  Competition   Medtronic, Anspach, Stryker, Aesculap, Synthes,

Stryker, MicroAire – Power Drills & Saws

$0.0 $0.2

$1.1

$3.3

$2.5

$4.8

$2.1

-‐$0.5

$0.5

$1.5

$2.5

$3.5

$4.5

$5.5

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013

BoneScalpel TM Revenues

* Clinical Study completed at CHC Hospital, Liege, Belgium ** 2009 data from Hospital Discharge Survey & H-CUPnet

$ m

illio

ns

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Drive Unit Placement: BoneScalpel™

13 19 18

29

18

33 30

43

57

0

10

20

30

40

50

60

Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12

# of Units Sold/Placed

498 670 860

4,789 4,374 4,114

6,810 7,188

8,777

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000


# of Consumable Sold

Management Initiatives

  Target teaching hospitals to ensure future users, including the use of ‘hands on’ workshops, cadaver labs and other clinical education programs

  Expand global network of clinical thought leaders

  Expand export network of specialty distributors

  Expand quantity and improve quality of domestic sales agents and direct representatives

  Utilize personal referrals from present users worldwide

  Expand number of using surgeons in each hospital

  Penetrate spine and maxillofacial markets by expanding into additional surgical procedures

Fiscal 2012

Fiscal 2012

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SonicOne®: Overview

  Tissue Selective Wound Debridement for diabetic foot ulcers, venous ulcers, pressure ulcers, burns, trauma wounds and infected bone

  Ultrasound effectively debrides and cleanses soft tissue, eschar, infected bone

  Ultrasound has been shown to shorten healing times1

  Reduces number of debridements required1

  Ultrasound is effective in disrupting, inactivating and removing bacterial organisms2

  Addressable Market   $400 million worldwide

  Hospital Price Points (ASP = Average Sales Price)   $35,000 ASP per capital system sale with $400 ASP for

consumables per use, or, $1,995 per month rental, minimum 1 year + consumables

  $500 ASP for consumables with consignment placement & minimum monthly purchases

  Competition

  Soering, Arobella, Smith & Nephew 1Clinical Study completed at Calvary Hospital, Bronx, NY 2 Study conducted by Brook Army Medical Center, San Antonio, TX

$0.2 $0.3

$0.7 $0.7

$1.1

$1.3

$0.5

$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013

SonicOne®Revenues

$ m

illio

ns

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Drive Unit Placement: SonicOne®

10

5 6

4

7 7

2

10 11

0

2

4

6

8

10

12


# of Units Sold/Placed

1,400

2,922

1,710

1,341

2,417 2,672

2,450 2,798 2,836

0

500

1,000

1,500

2,000

2,500

3,000

3,500


Fiscal 2012

# of Consumable Sold


  Establish market leadership in Ultrasonic Wound Debridement by penetrating the inpatient surgical market segment

  Large, full service hospitals

  Burn hospitals

  Long term acute care (LTAC) hospitals

  Government hospitals

  Leverage full range of customer acquisition models

  Capital purchase, rentals, and fee per use

  Strengthen clinical proof and its communication

  Leverage global network of key opinion leaders and the referral base they can provide

  Target diabetic foot ulcers; 11 million per year worldwide

  Leverage sales of synergistic products to own the wound healing treatment protocol

Fiscal 2012

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SonaStar®: Overview

  Tissue Selective Tumor Removal

  Fragmentation, emulsification and aspiration of targeted tumors or tissue

  Precise bone sculpting for anatomical access

  Neuro and General Surgeries

  Addressable Market

  $120 million worldwide, including:

  5,000 brain tumor surgeries per year

  7,000 liver resection surgeries per year

  Hospital Price Points (ASP = Average Sales Price)

  $85,000 ASP per capital system sale with $500 ASP for consumables per use, or, $4,500 per month rental, minimum 3 months + consumables

  Competition   Integra Life Sciences, Stryker, Soering

$2.3

$3.5

$2.4 $2.1

$4.1

$5.9

$1.6

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013

SonaStar®Revenues

$ m

illio

ns

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Drive Unit Placement: SonaStar®

9 8 9

14

18 18 16

30

21

0

5

10

15

20

25

30

35

Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar 12 Jun12 Sep12

# of Units Sold

1,290 877

2,190

3,869

3,219 3,340

4,182

3,381 3,646

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500


# of Consumables Sold


  Expand network of export specialty distributors

  Expand quantity and improve quality of domestic sales agents and direct representatives

  Emphasize high margin consumables business

  Target teaching hospitals to ensure future users

  Tap into large liver surgery market for aspirators

  Leverage full range of customer acquisition models

  capital purchase, leasing, rentals, and fee per use

Fiscal 2012

Fiscal 2012

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Additional Products

  AutoSonix

  Ultrasonic shears for laparoscopic cutting &

coagulation

  Licensed to Covidien, exclusively, worldwide

  Manufactured pursuant to Misonix patents

  Market size is approaching $ 1.0 billion worldwide,

Covidien’s market share is approximately 5%

  LySonix

  Ultrasound-assisted liposuction

  Distributed by J&J exclusively in the U.S.A., non-

exclusive elsewhere

  Manufactured pursuant to Misonix patents

  Market size is 1.6 million liposuction procedures

worldwide, dominated by U.S., China and Brazil

$5.6 $5.7

$4.5 $4.5 $4.7

$3.7

$0.4

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013

Addi�onal Medical Products Revenues

$ m

illio

ns

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Strategic Direction

1.  Drive unit placements of BoneScalpel, SonicOne and SonaStar via capital sales, rentals, and “no cap” placements that feature high margin consumables and minimum purchase requirements

2.  Focus on high margin consumables for all product platforms

3.  Enhance efficiencies through more effective sales and marketing efforts

4.  Leverage the benefit of growing worldwide distribution

5.  Continue to add distribution agreements for other high margin products synergistic to our base businesses in wound care, neurosurgery and spine surgery

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Financials

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Total Revenues*

$2.7 $2.8 $3.1

$3.8

$3.2

$3.6 $3.6

$5.3

$4.6

Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 $0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

Quarterly Revenues

*As a pure play medical device company

$12.4

$15.7

$4.6

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

FY 2011 FY 2012 Q1 2013

$ m

illio

ns

Revenues

$ m

illio

ns

Fiscal 2012

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Gross Margins*

54.7%

63.4%

55.1%

56.2%

54.8%

63.9%

58.7%

57.7%

59.7%

Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 50%

52%

54%

56%

58%

60%

62%

64%

66%

Quarterly Gross Margins


57.3% 58.8% 59.7%

0%

10%

20%

30%

40%

50%

60%

70%

FY 2011 FY 2012 Q1 2013

Gross Margins

Fiscal 2012

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R&D vs. S&M

$0.46 $0.42 $0.41 $0.42 $0.39

$0.30 $0.33 $0.35

$0.40

$1.0

$1.1 $1.1

$1.3

$1.2 $1.2 $1.2

$1.4

$1.5


$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

R&D S&M

Fiscal 2012

R&D vs. Sales and Marke�ng

$ m

illio

ns

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Enhance Efficiencies: Operating Expense

$2.4 $2.4 $2.5

$2.7 $2.7 $2.6 $2.6

$2.9 $2.9


$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

Fiscal 2012

Operating Expense

Management Initiatives   Focus on surgical market segments, which

feature high margin consumables and satisfactory reimbursement

  Develop and introduce additional disposable line extensions that address new surgical applications

  Endeavor to consistently control and/or reduce manufacturing costs, thus improving margins

  Patent technology whenever possible Management Ac�ons

  Reduced headcount   Increased effectiveness via

multi-tasking

  Lowered operating costs by reducing size of facility and number of personnel

  Streamline operations for efficient production and support functions

$ m

illio

ns

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EPS (from continuing operations)*

($0.12)

($0.08)

($0.06)

($0.09)

($0.12)

$0.03

($0.03)

$0.03

$0.01

Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 ($0.16)

($0.11)

($0.06)

($0.01)

$0.04

$0.09

$0.14

Fiscal 2012

Quarterly EPS


($0.30)

($0.09)

$0.01

($0.35)

($0.25)

($0.15)

($0.05)

$0.05

$0.15

$0.25

$0.35

FY 2011 FY 2012 Q1 2013

EPS

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Selected Balance Sheet

•  Cash and investments: $6.7M •  $0.95 per share

•  Net Working Capital: $12.0M •  $1.71 per share

•  Total Shareholder Equity: $15.7M •  $2.24 per share

•  ZERO Long-‐term debt

•  Shares Outstanding: 7.0M

•  Total NOLs: $7.5 Million •  Expire 2026– 2031

  Misonix (Nasdaq: MSON)

  Stock Price: $4.53*

  Market Cap.: $31.7 M*

*as of November 5, 2012

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Key Takeaways

  Implemen�ng high margin consumables-‐based recurring revenue business model

  60%+ Gross Margins a�ainable

  Strong leverage built into opera�ng model   Products are fully developed and marketable   Focus on opera�ng expenses and efficiencies   R&D and S&M investments posi�on company

for improved opera�onal and financial results

  Strong patent por�olio

  Strong balance sheet   Solid cash posi�on   ZERO long-‐term debt   20% of market cap is cash

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Management Team

Michael A. McManus, Jr. CEO since late 1998. Former President and CEO of New York Bancorp, Inc. before which he held senior positions with Jamcor Pharmaceutical, Pfizer and Revlon. Prior Assistant to President Ronald Reagan.

President, CEO

Richard Zaremba With company since early 1999. Former VP and CFO of Comverse Information Systems, a manufacturer of digital voice recording systems. Prior VP and CFO Miltrope Group, Inc.

Senior VP, CFO Treasurer, Secretary

Michael C. Ryan Joined in 2007. Former Senior VP and General Manager for Nomos Radiation Oncology. Prior Executive VP Business Development for Inter V, Inc. -- a medical device company marketing specialty products for interventional radiology and cardiology.

Senior VP, Sales & Mkt’g.

Dan Voic Approximately 15 years of senior scientific experience at Misonix. Expertise and training in all phases of ultrasound technology. VP, R&D and Engineering

Ronald Manna Present position since 2002. Former VP of R&D and Engineering, VP of Operations and Director of Engineering of the Company. VP, Regulatory Affairs and

Quality

Frank Napoli Joined in 2004. Former VP of Manufacturing for Spellman High Voltage Electronics Corp. Prior Director of Manufacturing for Telephonics Corporation. VP, Operations

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CORPORATE PRESENTATION January 2013

Thank You

ADVANCING ULTRASONIC SURGERY

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MicroCapClub Invitational: Misonix (MSON)