Emerging Med Tech Market Update May 9 2011

Emerging Med Tech Market Update May 9, 2011 CONFIDENTIAL

Agenda 1. M&A Market Overview 2. IPO Market Overview CONFIDENTIAL 1

1. M&A Market Overview

Med Tech M&A Environment: Increasingly Bifurcated World CONFIDENTIAL 3

Selected Med Tech M&A Transactions: 2009 – 2011 YTD A fraction of Med Tech companies wishing to sell were able to consummate M&A transactions since 2008 market meltdown (1) (2) (3) Bio. Control and Cardio. MEMS were staged deals, which included an option to acquire the company. Large-cap companies include those with over $10 billion in market cap. Mid-cap companies includes those with market caps less than $10 billion but greater than $1 billion. CONFIDENTIAL 4

Private Med Tech Companies: “Buying Time” CONFIDENTIAL 5

2. IPO Market Overview

Med Tech IPO Market Evolution PRE-MARKET MELTDOWN POST-MARKET MELTDOWN $200 mm Revenue $100 mm Revenue $50 mm Revenue $30 mm Revenue FDA Approval $0 mm Revenue Pre-Approval 18 month gap 1995 -1997 2000 -2002 CONFIDENTIAL 18 month gap 2004 -2008 16 month gap 2009 2011 Q 4 ’ 11 – 1 H ’ 12? 7

Med Tech IPO Market Trends n We anticipate a very orderly reopening of the Med Tech IPO market with more mature companies leading the pack n First wave of IPOs post-market meltdown l l Profitable (in most cases) l Opportunistic issuers driven by shareholder liquidity objectives l Often financial sponsor-backed vs. venture-backed l n Mature businesses with $100 -400 million revenue Typically some selling shareholder component as part of IPO to add size Gradually expect lowering of “stage of development” bar to allow for return of “Traditional Med Tech IPO” defined as: l l Modest profitability or unprofitable l Venture-backed l n Single product or technology platform company $75 -100 million IPOs with post-money IPO valuations of $275 million+ Keys to reopening of broader emerging growth Med Tech IPO market: l Positive investor experiences with recent Med Tech IPOs l Track record of IPO price being lowest cost point of entry to mitigate “we can buy it later cheaper” mentality l Existing public Med Tech companies trading at richer valuations, so relative risk / return assessment makes IPO comparison attractive l Valuations of public Med Tech companies returning to historical levels to support earlier stage IPOs CONFIDENTIAL 8

Stage Set for Improved Valuations of Public Med Tech The lack of an IPO market to replenish the existing pool of public emerging growth Med Tech companies combined with steady M&A volume (reducing that pool of companies) will lead to same investment dollars chasing fewer companies… NORMAL Existing Public Med Tech Companies Privates 15+ IPOs / year Acquisitions Steady M&A Volum e RECENTLY Shrinking Pool of Existing Public Med Tech Companies RECENT ACQUISITIONS I-Flow AMS AGA Medical Micrus Osteotech Aspect Medical NO IPOs AMO Seno. Rx ATS Medical Bio. Sphere Medical ev 3 Health. Tronics Privates Somanetics Synthes Tomo. Therapy VNUS Medical …which should lead to existing public Med Tech universe appreciating in volume due to supply / demand dynamics, making those companies look more expensive and opening door for appropriately priced IPOs Source: Fact. Set. CONFIDENTIAL 9

Existing Med Tech Universe Starting to Run ATRICURE CARDIOVASCULAR SYSTEMS INC ATRC +167% (Since 6/1/10) Market Cap: $201 mm Market Cap: $175 mm CSII +126% (Since 6/1/10) NASDAQ +27% (Since 6/1/10) MAKO SURGICAL Market Cap: $827 mm MAKO +153% (Since 10/1/10) NASDAQ +19% (Since 10/1/10) Source: Fact. Set. CONFIDENTIAL 10