Allergan/BSM Benchmarking Database Update

1. Allergan/BSM Benchmarking Database Update Presented by: Edward Wynne March 10, 2015

2. Key Session Objectives Review database demographics, metrics, and resources Ten year results Current trends Top 10% Open Discussion

3. Review

4. Financial Benchmarking Database We produce database results for the following industries: Medical Aesthetic Medical Dermatology Medical Spa (MediSpa) We report on the following types of results: Demographic Demographic Financial Productivity Procedures Staff Wage Rates • Regional • Practice Type (# of physicians) • Practice Specialty

5. Comparative Summary of DatabasePractices by Region Region 2011 Pct 2012 Pct 2013 Pct East 80 25.5% 76 25.8% 53 23.5% Midwest South 39 104 12.4% 33.1% 96 33 11.2% 32.5% 28 71 12.4% 31.4% West 91 29.0% 90 30.5% 74 32.7% TOTALS 314 100.0% 295 100.0% 226 100.0%

6. Comparative Summary of DatabasePractices by Number of Physicians Practice Type 2011 Pct 2012 Pct 2013 Pct Solo Practitioner 200 63.7% 185 62.7% 146 64.6% More than 3 Physicians 20 6.4% 22 7.5% 15 6.6% Up to 3 Physicians 94 29.9% 88 29.8% 65 28.8% TOTALS 314 100.0% 295 100.0% 226 100.0%

7. Comparative Summary of DatabasePractices by Specialty Specialty 2011 Pct 2012 Pct 2013 Pct Plastic Surgery 176 56.1% 167 56.6% 124 54.9% Cosmetic Dermatology(1) 51 16.2% 45 15.3% 37 16.4% Aesthetics Other(2) 87 27.7% 83 28.1% 65 28.7% TOTALS 314 100.0% 295 100.0% 226 100.0% 1) Cosmetic Dermatology: Dermatology practices where 50% or more of collections are attributable to cosmetic procedures. 2) Aesthetics Other: Represents Facial Plastics, Oculoplastics, and any other specialty other than those identified as plastic surgery or cosmetic dermatology.

8. Financial Productivity

9. Leading Indicators/Metrics • Net Collected Revenue per FTE Physician • Revenue Rate per Hour per FTE Physician • Net Collected Revenue per FTE Non-Physician Provider • Net Collected Revenue per FTE Aesthetician • Revenue Rate per Hour per FTE Aesthetician • Net Collected Revenue per FTE Support Staff • Retail Sales Ratio • Operating Expense Ratio • Operating Income Margin • Non-provider Payroll Ratio • Rent Expense Ratio • Marketing and Advertising Expense Ratio • Number of FTEs per FTE Provider • Gross Payroll per FTE Support Staff Revenue/Production Metrics Expense/Efficiency Metrics Staff Ratios

10. Net Collected Revenue per FTE Physician Benchmark Range: $950,000 – $1,700,000 NOTE: The results include actual net collected revenue of all physicians working in the practice, divided by the number of full-time equivalent physicians (a full-time equivalent physician is assumed to work 1,600 hours or more per year). The cost of goods sold is included in revenue.

11. Operating Expense Ratio Benchmark Range:56% – 74% NOTE: The operating expense ratio is calculated by dividing operating expenses by total practice net collected revenue. Operating expenses exclude physician and non-physician provider compensation, bonuses, retirement contributions, depreciation and automobile expense. The cost of goods sold is included in operating expenses.

12. Examples of Procedures

13. Comparative Summary of Procedures per Physician BSM Database Results Procedure 2011 2012 2013 Neurotoxin Injection 486 550 Eyelid Surgery 21 22 679 22 Facelift 17 16 13 All Filler Injections Filler to Neuro Ratio 53.1% 270 49.9% 280 50.7% 333 Also track: Abdominoplasty, Liposuction, Breast Augmentation, and Nose Reshaping. NOTE: The BSM database results represent the 2013 median procedures per physician from the BSM/Allergan Medical Aesthetics Database. The results may include procedures performed by other providers within each practice.

14. Example of Staff Wage Rate

15. Example of Staff Wage Rate Database Results BSM Database Results DB Staff Count Job Title 2013 Benchmark Range 80 Physician Assistant $45.70 – $66.50 321 $18.00 – $31.70 Licensed Aesthetician Medical Assistant 433 $14.20 – $19.75 723 $12.65 – $18.00 Receptionist Also track: Nurse Practitioner, Cosmetic Provider, RN Injector, Practice Manager, Marketing Director, Cosmetic Care Coordinator, Billing and Insurance Clerk, RN-Support Capacity, Surgical Counselor, and Other

16. Database Resources

17. Benchmarking Database Resources Financial Benchmarking Report APC Database Reference Guide 5 New PowerPoint Presentations Articles

18. Database Results Update

19. Database Results • 10 Year Results • Current Trends • Top 10%

20. Ten Year Database Results

21. Ten Year Database Results

22. Ten Year Database Results What was different 10 years ago?

23. Ten Year Database Results

24. Database Results • Medical Aesthetic • Plastic Surgery • Cosmetic Dermatology • Top 10% Exercise Current Trends

25. Database Results – Medical Aesthetic

26. Database Results – Plastic Surgery

27. Database Results – Cosmetic Dermatology

28. Current Trends Recap Increase in top-line revenue Mainly due to largest YOY increase in Physician Revenue in 10 years (5%) Up 6% in Plastic Surgery Non-Physician Provider Revenue is flat for the 3rd straight year Continues to grow in Cosmetic Dermatology Retail Sales is up 14% Seeing small increases in Overhead Outpaced by revenue growth

29. Database Results – Top 10% • Isolate Largest Demographic • Solo Plastic Surgeons • N>150 • per Year • Evaluate top 10% - based on operating income • N=20

30. Database Results – Top 10%

31. Database Results – Top 10% Highly productive physician with the Revenue per FTE and Revenue Rate per Hour near the 90th percentile of the entire DB. 6 of the top 20 had PA revenue, 8 of the top 20 had cosmetic provider revenue, 8 of the top 20 had aesthetician revenue, and only 5 of the 20 practices didn’t have a non-physician provider, aesthetician, or cosmetic provider. Other providers appear to produce revenue above and beyond reasonable compensation expected for each (contributing to overhead) Overhead and Payroll Ratios above the 75thpercentile of the DB.

32. Conclusion • Open Discussion • Q&A