## PRESIDENTS MESSAGE 

Before I start writing a President’s Message, I like to go back and read what I wrote the previous year, particularly as it relates to the guidance that I gave to shareholders for the year ahead. I must admit that it is always a great relief when the stated goals of the year before can be talked about as items accomplished. In fairness, the management and board of directors of Alaris do have a distinct advantage over other companies when it comes to predicting the future as our business model is unique in its simplicity and also in its contractual nature of future revenues. Aside from adding new private company partners throughout the year, we already know within a very small margin what our revenues will be for the coming year. This has been a very nice feature of our business model both for management and for shareholders. 

Looking back, though, I did not foresee one of the largest events in our company’s history; the takeover of our largest partner, LifeMark, by Centric Health in June. LifeMark has been our longest standing partner and still remains our largest source of revenue. After seven years, seven separate capital contributions and 60 acquisitions, the management team of LifeMark came to us looking to crystalize the incredible value that they had created. They had found a partner that they were excited to work with going forward in Centric and we accommodated their request while still protecting the goals of Alaris shareholders. The end result was the reduction of our financial interest in LifeMark and disposition of our interest in MEDIChair for total proceeds of $65 million. This allowed us to stay involved in a very steady cash flowing asset, allowed us to be supported by the combined cash flows of all of Centric’s operations and also allowed us to negotiate a guaranteed 4% annual increase in our distribution from LifeMark. 

Not only was this a very large financial gain for Alaris, it also marked the first time that one of our partner companies has changed hands since we were founded. The benefits from this transaction are numerous. Aside from the $28 million gain, the transaction showcased for future partners how our unique structure can benefit them much more so than traditional private equity. The management of LifeMark were able to continually access capital from us to fund their acquisition strategy all while actually increasing their economic interest in their company. Showing potential new partners these actual results and also showing entrepreneurs that they do have the ability to sell their company with us as a partner has been a positive boost to our efforts of bringing in the top private companies in North America as future partners. 

