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Executives

Zack Kubow – Investor Relations, The Ruth Group

Dr. Shimon Eckhouse – Chairman and Chief Executive Officer

Louis P. Scafuri – Former Chief Executive Officer

Hugo Goldman – Chief Financial Officer

Analysts

Richard Newitter – Leerink Swann LLC

Jeremy Feffer – Cantor Fitzgerald

Anthony V. Vendetti – Maxim Group LLC

Bill J. Plovanic – Canaccord Genuity Inc.

Syneron Medical Ltd. (ELOS) Management Transition Conference Call April 17, 2013 6:00 AM ET

Operator

Good day ladies and gentleman, and welcome to the Syneron Medical management transition conference call. At this time all participants are in a listen-only mode. Later we’ll conduct a question and answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference may be recorded.

I will now turn the call our to your host Zack Kubow. Please go ahead.

Zack Kubow

Thank you, operator. I’d like to welcome you to Syneron Medical’s conference call to discuss its management transition announced this morning. Statements on this call may be forward-looking within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 relating to the company’s future events or future performance, including statements with respect to Syneron’s expectations regarding, but not limited to the financial forecast for 2013, the launch of new products and the maintenance of a leadership position in core and non-core markets.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in any forward-looking statements.

These risks may include, but are not limited to the risk factors set forth under the heading Risk Factors in Syneron’s Annual Report on Form 20-F, filed with the SEC. These factors are updated from time to time through the filing of reports and registration statements with the SEC. These statements are only predictions and Syneron cannot guarantee that they will, in fact, occur. The company does not assume any obligation to update the forward-looking statements discussed in today’s conference call.

Speaking on the call today are Syneron’s Chairman and CEO, Shimon Eckhouse, and Syneron’s previous CEO Louis Scafuri. Syneron’s CFO, Hugo Goldman is also on the call and will be available for questions during the Q&A portion at the conclusion of the prepared remarks.

Now, I’d like to turn the call over to Shimon.

Dr. Shimon Eckhouse

Thank you, Zack. Good morning everybody, and thank you for joining the Syneron conference call today. This morning, we announced that the Board of Directors has appointed me to the additional position of Chief Executive Officer effective immediately. I am excited to take on this position, and the company has my full commitment and time dedication.

Louis Scafuri has stepped down from the position of the CEO, and he will remain available to the company and to me through the second quarter to ensure a smooth transition. Lou, myself, the board, and our executive management team are all committed to ensure a smooth leadership transition, and we are confident in the outlook of our business. I will now turn the call over to Lou for some brief comments. Lou?

Louis P. Scafuri

Thank you, Shimon and good morning everyone. I’d like to begin by thanking Shimon and the board for allowing me the opportunity to lead a world-class company like Syneron. I’ve enjoyed my time as CEO of this company leading the best team in the business. We have accomplished a great deal since I joined in 2009, and I had been considering this transition with Shimon for some time. We’ve been working closely together, and I believe it's an appropriate time to transition to new leadership that can extend the solid foundation we have built and take the company to the next phase of its development.

Shimon has been an active Chairman throughout my tenure as CEO, and is ideally positioned to leave the company. He has strong background in the industry, and has a unparalleled understanding of our core technologies many of which he invented or are based upon his work. He has experience serving as CEO of many companies, and has established track record of success including playing a key role in the development of Syneron’s strategy.

I remain confident in Syneron’s leadership position in the market, and believe the company is poised for continued growth, and improved profitability. We’ve assembled an unmatched combination of people, technology, and customer relationships that will be instrumental in the Company’s continued success. I wish the entire team the best as they continue to grow the business.

I will now turn it back over to Shimon. Shimon?

Dr. Shimon Eckhouse

Thank you, Lou. I would like to begin my comments on the CEO transition by thanking Lou for the strong work ethics, dedications and energy he brought to the leadership of Syneron. When we recruited Lou to join the company back in 2009, we were facing a challenging macroeconomic environment that significantly impacted our business and forced us to rethink our strategy.

Over the past four plus years, I had worked closely with Lou to transform Syneron into a more diverse, stable, and lean business with several significant near-term growth opportunities. We are the global leader in the aesthetic device industry business, with a broad range of products and technology, excellent core and non-core customer relationships and are well positioned to continue driving growth and enhancing our profitability profile.

Our significant accomplishments over this time included the successful merger with Candela, which expanded our global face network, enhance our core physician customer relationship, and increase the size and scale of our business. We entered the fat disruption market with the position of UltraShape, which gave Syneron, a leading technology that is complementary to our existing body controlling products.

We require a few additional key technologies that will enhance our technology position, and ability to serve the market. We pioneered new treatment categories such as our Sublative and Sublime treatments. We launched our first topical product the elure. We created Syneron Beauty to manage our home-use initiative, which offers significant growth opportunities beyond our professional market technology, and we transitioned our professional device business model to focus on the customer, and expand our recurring revenue stream. Because of these accomplishments and excellent operational execution delivered by Lou and his team, Syneron remains now in a much stronger position than when Lou took leadership as CEO in 2009.

We have a more diverse and broader customer base, leading products and technologies in all major aesthetic device categories, and several high growth opportunities as UltraShape as well in our home-use business. In addition to our growth initiative under Lou’s leadership, we have also carefully managed operating expenses and expanded our operating leverages positioning the company to deliver enhanced profitability.

I look forward to working closer with Hugo Goldman, and the rest of our management team. As one of the company’s co-founder I have always been very engaged in Syneron’s operations in the aesthetic industry as a whole. Together, I believe we will successfully take the company to the next phase of its development with the focus on innovation and continued leadership of the aesthetics market.

Before turning the call over to operator for questions, I would like to take the opportunity to thank Syneron’s until he is around the world. We thank you for your unwavering commitment to serving our customers, and providing them in the patients they serve with innovative science based aesthetic products. I would like now to open the call for questions. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator instructions) Our first question comes from Rich Newitter from Leerink Swann. Your line is open.

Richard Newitter – Leerink Swann LLC

Hi, thanks for taking the question. Maybe Lou, can you maybe just tell us a little about why, why now, why the timing now, it seems like you guys operationally are going to moving forward a long time your key kind of execution goals in previous abilities and new growth opportunities? Why this decision now?

Louis P. Scafuri

Well Rich, it’s never a great time to resign. I have been discussing this with Shimon for some time. We accomplished the original mission as we started out in 2009 by creating the aesthetic leader, diversifying our revenues. We finished our 2013 as the year of three or four quarters of record growth. We ended the year with 15% overall growth. We set the plans to the year. The team is in place to execute the plan, and I think it’s really appropriate to hand it over to Shimon at this point in time for the next phase of growth and innovation.

I have nothing, no immediate plans, for the future I’ll be here to help Shimon’s transition during the quarter and these are the reasons.

Richard Newitter – Leerink Swann LLC

Okay. And, maybe Shimon, can you maybe just tell us what is the current strategy would you say, what are the top priorities? And, is there any change in your view to the strategy, the direction you are going to take the company, if you could just outline what do you see as the kind of under your kind of more direct leadership now. What are the key things you are going to look to drive over the next – of the coming quarters?

Dr. Shimon Eckhouse

The basic strategy of the company remains the same. We look at the core of what we do on our PAD business and identify and are working on the opportunities that exists there. We believe there is a change in the market that we would like to really exploit further. We are now in the situation where a significant portion of the non-core markets which we’re on, where Syneron had its biggest success in the year of 2005 to 2008. The non-core market is coming back and we would like to take advantage of this. We have the right combination of product, technology and cost structure to do that. So, this one very important strategic initiative that we started working on, but we will want to emphasize further.

As you know and both Lou and I discussed it with you many times, we see a great opportunity in the body shaping market. What we have there, of course, is our existing product line as well as new products that we plan to introduce into the market this year, and, of course, the UltraShape technology which really gives us we believe a very unique way of the doing body shaping by fat disruption. As you know, we are in the process of working very closely with the FDA to get the device cleared or the technology cleared. So, that’s another strategic direction, which is very important to us.

The third one, which is again something we are already doing, but I believe we need to do more on is really on streamlining our operations, and enhancing their efficiencies. The growth that we have been through over the last few years created areas where we need to focus better and take more advantage of our potential efficiency. As you know, Syneron finished last year with more than $250 million in revenue, and more than a $140 million in gross profit. There is a lot we can do with that and we want to be more effective on that.

So that’s really in our PAD business where at the end of the day, and as you know, this is always an ongoing job. The most important part of what we do is to continue working very closely with our customers, which includes both the doctors and other professionals that buy our equipment, as well as the distributors that we sell to. This is a very important continuing effort that we have to do, which is critical again to a large extent, because of a quite significant integration that we went through successfully over the last few years.

So that’s all in our PAD business. On our EBU, which is a combination of a few businesses, our most important business there in terms of its revenue and its future potential with our Syneron Beauty business, we went through a transition there at the end of last year by streamlining the operations with a goal of reaching break-even this year. We believe we’ll be able to do it and we are also looking there at potential other initiatives which will enable us to one, broaden what we can do there. But together with that also take away some of the financial burden that Syneron Beauty is representing.

And last but not least we have in our EBU a few other initiatives, the most important one being our elure business which represents a breakthrough in Skin Lightening or Skin Whitening Technology mainly addressing the far east market and we are in the process of working hard to make sure that we put together all the regulatory clearances that are needed in order to bring this great product to the market. Then together with our internal efforts we are looking and discussing potential strategic partnership and we are doing it of course in a very careful manner. And one area there which we are extremely happy with that we established very clearly the clinical value of the product we have a well stabilized supply line. So this business is ready to really grow once we have a clear path or clear regulatory clearances in the key agent markets in which we are.

So, this is what we are doing, this is what we are focused on. A lot of it are our initiatives that we started over the last few quarters, but I think we will probably enhance and try and really look more on some areas such as efficiency, focus on customers, and what we can do with our body shaping position as well as really taking advantage of what we have in the EBU in making it more efficient for Syneron.

Richard Newitter – Leerink Swann LLC

Okay, and thanks for that, but just to making sure I am understanding correct. I mean, a lot of those initiatives, they sound like they were initiatives that had been in place. Is the fundamental strategy, it sounds like improved profitability, and the commitment to the EBU breaking even and rationalizing kind of some of the product areas within that division, that remains intact?

Dr. Shimon Eckhouse

Yes.

Richard Newitter – Leerink Swann LLC

Okay, and then just one last one and let others jump in. Is there anything related to the quarter here or the timing of this is, look likely – I don’t think you put on your press release, but you’ll be reporting in a couple of weeks I would imagine, is there anything there Hugo?

Dr. Shimon Eckhouse

No. Hugo?

Hugo Goldman

Rich, today we are announcing actually the CEO transition. It’s premature for us to provide guidance for the quarter. We are now working currently on finalizing the Q1 numbers, and we plan to announce the results on May 22. The fundamentals of the business have not changed, Rich. Our strategy is intact. We remain confident in the outlook for our business.

Richard Newitter – Leerink Swann LLC

Thank you.

Hugo Goldman

You are welcome.

Dr. Shimon Eckhouse

Thank you, Rich.

Operator

(Operator Instructions) Our next question comes from Jeremy Feffer from Cantor Fitzgerald. Your line is open.

Jeremy Feffer – Cantor Fitzgerald

Hi, good morning. Thanks for taking my question. A lot of it I think was covered in your last response to Rich’s question. But, first I just want to be clear in I think the press release was written clearly, but this is not on an interim basis, Shimon, correct? This is a permanent position?

Dr. Shimon Eckhouse

This is a permanent position yes. It’s not a position which …

Jeremy Feffer – Cantor Fitzgerald

Okay. And then, yeah, I mean, I guess just following up on that last point. So this was more, I guess, Lou maybe you can speak to this. Lou, this was more just your decision to move on from this, and not represent, it doesn’t represent necessarily a difference of opinion in managerial philosophy?

Louis P. Scafuri

I wouldn’t read too much into this. I was retired twice before. Shimon convinced me to come back in 2009. We shared a vision and in Q4 of last year we had a tremendous record shattering quarter for the industry. I traveled 90,000 air miles, and so this whole thing has been upon my shoulders for a while. Like any two human beings with some days we have our difference, but we really view this as a partnership all along, and we are parting on the very best of terms, and I would say the company is in the most appropriate hands. One of the most important things was confidence. Confidence that I was handing this to the person that I think everyone can trust and believe that he is going to carry forward with the growth and innovation strategy which is Shimon.

Jeremy Feffer – Cantor Fitzgerald

Okay, fair enough, Lou. Thank you for them. Thank you for your help over the years, and I wish you all the best.

Louis P. Scafuri

Thank you.

Operator

Our next question comes from Anthony Vendetti from Maxim Group. Your line is open.

Anthony V. Vendetti – Maxim Group LLC

Thanks. Thank you. Just a couple of other questions. There’s been a lot of management changes over the years. It seems like, Shimon and Lou, you put up a really good team in place. Is there any other change in your senior level, changes expected, or is the team that’s in place, the team going forward? And then, just a follow-up on specifically in terms of streamlining operations, Shimon you mentioned, a continued focus on that. I was just wondering if there was anything specific that you were targeting.

Dr. Shimon Eckhouse

Regarding the first question, there are no additional management changes, that’s our plan. We have a strong team, and we believe we can execute very effectively with it. I will not go into specifics on streamlining, but just to give you an example, we just are completing the process of physical integration of our UltraShape subsidiary into Syneron. And, we believe this can help us with efficiency both on in terms of product development, clinical work, R&D in general and some other things of that type. So, this is the type of strategy we are looking at. We probably want to look at more than that, and really take advantage of the fact that we have many sides which we can make more effective in the coming quarters.

Anthony V. Vendetti – Maxim Group LLC

Okay, and then lastly on UltraShape as you are integrating that into your operation. I know you are working with the FDA. Is there a timeline, is the timeline still maybe by the end of 2013, is it hard to say, could it get pushed into 2014 depending on what the – what’s going on with the FDA or any update on that?

Dr. Shimon Eckhouse

Yes, we are well into execution of our multi-site clinical trials with very close control of what we do there, and plan to have the whole thing completed over the next few months with submission which have come a little bit after that. If the FDA responds as it is supposed to we could get clearing before the end of 2013.

Anthony V. Vendetti – Maxim Group LLC

Okay, great, great. Well, I just like to say, Lou, thanks for everything and certainly the best of luck going forward.

Louis P. Scafuri

I appreciate that very much Anthony. Thank you.

Operator

Our final question comes from Bill Plovanic from Canaccord. Your line is open.

Bill J. Plovanic – Canaccord Genuity Inc.

Great. Thanks, good morning. Just a question you still have a very good balance sheet. You laid out the strategy, Shimon. And I’m just curious your thoughts on M&A at this point, as you take the CEO role over again.

Dr. Shimon Eckhouse

We are as you know, as everybody knows with ears on the ground over the time on opportunity that we would like to take advantage of, but somehow there that exists as you keep on looking for them. Having said that we try to be very careful with the way we manage our cash and with the way we integrate potential opportunities into Syneron. So, we will keep on looking at it, and if there is something that comes up there that adds strategic value to Syneron we will look at that very carefully. But, there is nothing out there that we do today where we are going to use a significant portion of our cash to make an acquisition.

Bill J. Plovanic – Canaccord Genuity Inc.

Okay, great. That's all I had. Thank you very much.

Hugo Goldman

Thank you.

Dr. Shimon Eckhouse

Thank you.

Operator

There are no further questions. At this time, I would turn the call back over to Shimon Eckhouse for closing remarks.

Dr. Shimon Eckhouse

Well, I would like to thank everybody again for joining us on this conference call. I would like to reiterate that the entire team is committed to a smooth transition, and there is no material change in the outlook of strategy of the company.

We are convinced that we have an excellent opportunity to expand our leadership position in the aesthetic device industry, and we remain focused on our key goals for the year including reaching EBU break even. Hugo and I will be available later today and tomorrow, and of course, next week if you have any additional questions. Thank you very much again.

Hugo Goldman

Thank you very much.

Operator

Ladies and gentlemen that does conclude today’s conference. You may all disconnect and have a wonderful day.

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