8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)
November 1, 2007

HEALTHTRONICS, INC.

(Exact name of registrant as specified in its charter)

Georgia	000-30406	58-2210668
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1301 Capital of Texas Highway, Suite 200B
Austin, Texas 78746
(Address of principal executive offices including Zip Code)

(512) 328-2892

(Registrant’s telephone number, including area code)

N.A.

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On November 1, 2007, HealthTronics , Inc. issued a press release entitled “ HEALTHTRONICS, INC. ANNOUNCES THIRD QUARTER 2007 RESULTS; Achieves Adjusted EBITDA Growth over Second Quarter 2007 ”. The text of the press release, which is attached as Exhibit 99.1, is incorporated by reference in its entirety.

Item 7.01. Regulation FD Disclosure.

On November 2, 2007, our management held a quarterly-earnings call to discuss our third quarter 2007 financial results, the transcript of which is attached to this Form 8-K as Exhibit 99.2. We are furnishing the text of this call pursuant to the Securities and Exchange Commission’s Regulation FD. This information is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless we specifically incorporate it by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. By filing this report on Form 8-K and furnishing this information, we make no admission as to the materiality of any information in this report that we choose to disclose solely because of Regulation FD.

We undertake no duty or obligation to publicly update or revise the information contained in this report, although we may do so from time to time as our management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.

Certain expectations and projections regarding our future performance referenced in this transcript are forward-looking statements. These expectations and projections are based on currently available competitive, financial, and economic data, along with our operating plans, and are subject to future events and uncertainties. Among the events and uncertainties which could adversely affect future periods are inability to establish or maintain relationships with physicians and hospitals, healthcare regulatory developments that prevent certain transactions with healthcare professionals or facilities, inability of healthcare providers to obtain reimbursement for use of our current or future products, inability to effectively or efficiently integrate HealthTronics and Prime Medical, competition or technological change that impacts the market for our products, difficulty in managing our growth and other factors described in our periodic reports filed with the SEC. We caution readers that in addition to the above cautionary statements, all forward-looking statements contained herein should be read in conjunction with our SEC filings, including the risk factors described therein, and other public announcements.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
99.1	Press release dated November 1, 2007.
99.2	Transcript.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HEALTHTRONICS, INC. (Registrant)
Date: November 6, 2007	By:	/s/ Richard Rusk
	Name: Title:	Richard Rusk Vice President & Controller

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
99.1	Press release dated November 1, 2007.
99.2	Transcript.

EX-99

EXHIBIT 99.1

HEALTHTRONICS, INC. ANNOUNCES THIRD QUARTER 2007 RESULTS
Achieves Adjusted EBITDA Growth over Second Quarter 2007

AUSTIN, Texas -- (BUSINESS WIRE) – November 1, 2007 -- HealthTronics, Inc. (NASDAQ: HTRN), a leading provider of Urology services and products, today announced its financial results for the third quarter ended September 30, 2007.

Third Quarter Financial Review

Revenue from continuing operations for the third quarter 2007 totaled $36.0 million, compared to $35.9 million in the same period in 2006 and $35.6 million in the second quarter of 2007. The Company’s income from continuing operations for the third quarter of 2007, in accordance with generally accepted accounting principles (“GAAP”), was $0.6 million or $0.02 per diluted share. The Company’s non-GAAP income from continuing operations per diluted share for the third quarter 2007 was also $0.02, which excludes non-cash stock-based compensation expense. The non-GAAP income compares to a $0.01 per diluted share loss from continuing operations in the third quarter of 2006.

During the quarter, the Company recorded adjusted EBITDA of $4.4 million, or 12% of revenue, which compares to adjusted EBITDA in the second quarter of 2007 of $4.2 million for an increase of 5%. The adjusted EBITDA recorded in the third quarter of 2006 was $4.8 million, or 13% of revenue. The increase in revenue from the third quarter of 2006 was due to revenue from the Keystone acquisition that closed in the second quarter of 2007, offset by a decrease in revenue from sales of medical products and decreases in lithotripsy procedure volume primarily within partnerships that the company has strategically exited within the last year.

The Company had cash and cash equivalents totaling $23.3 million as of September 30, 2007 and cash flows from operations of $45.6 million for the nine months ended September 30, 2007, which compares to cash flow from operations of $36.8 million for the nine months ended September 30, 2006.

Urology Services

Urology Services division revenue for the third quarter of 2007 was $31.6 million compared to $31.1 million for the same period in 2006, an increase of 2%. The increase in quarterly revenue from the third quarter of 2006 was due to revenue from the Keystone acquisition, offset by decreases in lithotripsy procedure volume primarily within partnerships that the company has strategically exited within the last year. Same partnership lithotripsy procedures increased 1% compared to the third quarter of 2006 and revenue per procedure was up 2% from the third quarter of 2006 as well. The Urology Services division adjusted EBITDA for the third quarter of 2007 was $5.0 million or 15.7% of revenue compared to $5.8 million or 18.8% of revenue recorded in the third quarter of 2006.

Medical Products

Medical Products division revenue for the third quarter of 2007 was $4.2 million compared to $4.6 million in the same period in 2006 and $4.6 million in the second quarter of 2007. The decreases from the third quarter of 2006 and the second quarter of 2007 were primarily due to a lower number of patient tables and lithotripters sold in the third quarter of 2007 offset by increased revenue from service maintenance contracts, the RevoLix™ laser and the anatomical pathology lab. The laboratory revenue increased 390% from the third quarter of 2006. The adjusted EBITDA for the Medical Products division for the third quarter of 2007 was $0.6 million or 14% of revenue compared to $0.3 million or 5% of revenue recorded in the third quarter of 2006.

Business Outlook

James Whittenburg, President and Chief Executive Officer commented, “The third quarter results reflect another positive step directionally for HealthTronics. We experienced better than expected results within each of our divisions and have now exceeded our internal forecast for the third consecutive quarter. Based on our results through September 30th, we are tracking ahead of our annual guidance and remain on track with our growth initiatives.”

Mr. Whittenburg continued, “Our balance sheet remains strong and our improving financial performance and positive cash flow has us well positioned for future growth. We expect our business to continue to strengthen as we expand our partnerships with physicians, enhance our services, introduce new technology to our urologist partners and execute on other strategic opportunities.”

Conference Call and Webcast: Management of HealthTronics will host a conference call the morning of Friday, November 2, 2007 at 11:00 a.m. EDT. Interested parties may participate in the call by dialing 877-741-4242 (International callers dial 719-325-4785) and ask for the "HealthTronics Q3 2007 Earnings" call (confirmation code: 7045805). Please call in 10 minutes before the call is scheduled to begin. The conference call will also be webcast live via the Investors section of HealthTronics' web site at www.healthtronics.com. If you are unable to listen live, the conference call will be archived on the HealthTronics web site until December 1, 2007.

HealthTronics’ use of Non GAAP Financial Measures:

This press release includes financial measures for net income (loss), net income (loss) from continuing operations, and related per share amounts that exclude certain charges and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding certain charges, these non-GAAP financial measures facilitate management’s internal comparisons to the Company’s historical operating results, to competitors’ operating results, and to estimates made by securities analysts. Management uses these non-GAAP financial measures internally to evaluate its performance. The Company believes these non-GAAP financial measures are useful to decision-making. In addition, the Company has historically reported similar non-GAAP financial measures to its investors and believes that the inclusion of comparative numbers provides consistency in it financial reporting. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measure as provided in the financial statements attached to this press release.

EBITDA and Adjusted EBITDA: HealthTronics has presented EBITDA and Adjusted EBITDA amounts, which are non-GAAP financial measures. In the SEC filings, HealthTronics has reconciled such amounts to their most directly comparable financial measure calculated in accordance with GAAP, which is HealthTronics’ net income. HealthTronics believes that its presentations of EBITDA and Adjusted EBITDA are important supplemental measures of operating performance to its investors.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is a commonly used measure of performance which HealthTronics believes, when considered with measures calculated in accordance with GAAP, gives investors a more complete understanding of HealthTronics’ operating results before the impact of investing and financing transactions and income taxes. HealthTronics does not subtract minority interest expense when calculating EBITDA; however, HealthTronics does adjust for minority interest expense and refers to this measure as “Adjusted EBITDA”. Minority interest is a GAAP measure intended to reflect our partner’s share of our consolidated net income and not our partner’s share of our consolidated EBITDA. For example, calculation of minority interest expense does not include adjustments for depreciation, amortization, taxes or interest. As a result, our partners’ share of consolidated EBITDA may not, in a given reporting period, equal the deduction for minority interest expense used in arriving at Adjusted EBITDA. HealthTronics has historically reported Adjusted EBITDA to its investors and believes that the continued inclusion of Adjusted EBITDA provides consistency in its financial reporting. Adjusted EBITDA is among the more significant factors in management’s internal evaluation of total company performance. Adjusted EBITDA is also widely used by HealthTronics management in the annual budgeting process. HealthTronics believes these measures continue to be used by investors and creditors in their assessment of HealthTronics’ operational performance and the valuation of the company.

EBITDA and Adjusted EBITDA are used in addition to and in conjunction with results presented in accordance with GAAP. EBITDA and Adjusted EBITDA should not be considered as an alternative to net income, operating income, a liquidity measure, or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. EBITDA and Adjusted EBITDA reflect additional ways of viewing HealthTronics’ operations that HealthTronics believes, when viewed with its GAAP results and the reconciliations to the corresponding GAAP financial measures provide a more complete understanding of factors and trends affecting HealthTronics’ business than could be obtained absent this disclosure.

About HealthTronics: HealthTronics, Inc. is a premier urology company providing an exclusive suite of healthcare services and technology including urologist partnership opportunities, surgical and capital imaging equipment, maintenance services offerings, and clinical and anatomical pathology services. For more information, visit www.healthtronics.com.

Cautionary Language: Statements by the Company’s management made in this press release that are not strictly historical, including statements regarding plans, objective and future financial performance, are “forward-looking” statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although HealthTronics believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that the expectations will prove to be correct. Factors that could cause actual results to differ materially from HealthTronics’ expectations include, among others, the existence of demand for and acceptance of HealthTronics’ services, regulatory approvals, economic conditions, the impact of competition and pricing, financing efforts and other factors described from time to time in HealthTronics’ periodic filings with the Securities and Exchange Commission.

CONTACT:
HealthTronics, Inc.
Ross Goolsby, Senior Vice President and Chief Financial Officer

ross.goolsby@healthtronics.com
(512) 314-4554
www.healthtronics.com

HEALTHTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

($ in thousands, except per share data)	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2006			2007			2006
Revenue:
Urology Services	$	31,625		$	31,108		$	90,846		$	92,975
Medical Products		4,176			4,640			13,002			16,050
Other		154			115			421			418
Total revenue		35,955			35,863			104,269			109,443
Cost of services and general and administrative expenses:
Salaries, wages and benefits		10,224			11,481			32,479			32,580
Other costs of services		4,700			4,793			14,249			13,282
General and administrative		1,863			2,250			5,663			6,439
Legal and professional		1,069			1,703			2,162			3,640
Manufacturing costs		1,750			1,980			5,598			8,424
Advertising		237			140			793			947
Other		203			39			218			259
Depreciation and amortization		2,747			2,888			8,339			8,332
		22,793			25,274			69,501			73,903
Operating income		13,162			10,589			34,768			35,540
Other income (expenses):
Interest and dividends		247			253			835			496
Interest expense		(196	)		(249	)		(644	)		(895	)
		51			4			191			(399	)
Income from continuing operations before provision
for income taxes and minority interest		13,213			10,593			34,959			35,141
Minority interest in consolidated income		12,214			11,381			32,998			33,030
Provision (benefit) for income taxes		389			(10	)		956			1,262
Income (loss) from continuing operations		610			(778	)		1,005			849
Income (loss) from discontinued operations, net of tax		135			31,955			(111	)		32,969
Net income	$	745		$	31,177		$	894		$	33,818
Basic earnings per share:
Income (loss) from continuing operations	$	0.02		$	(0.02	)	$	0.03		$	0.02
Income (loss) from discontinued operations	$	--		$	0.90		$	--		$	0.94
Net income	$	0.02		$	0.88		$	0.03		$	0.96
Weighted average shares outstanding		35,425			35,286			35,419			35,084
Diluted earnings per share:
Income (loss) from continuing operations	$	0.02		$	(0.02	)	$	0.03		$	0.02
Income (loss) from discontinued operations	$	--		$	0.90		$	--		$	0.94
Net income	$	0.02		$	0.88		$	0.03		$	0.96
Weighted average shares outstanding		35,425			35,370			35,423			35,329

HealthTronics, Inc.
Consolidated Balance Sheets
(Unaudited)

($ in thousands)	September 30, 2007		December 31, 2006
ASSETS
Total current assets	$	70,926	$	71,825
Property and equipment, net		33,138		34,270
Assets held for sale		--		1,258
Goodwill		234,648		229,261
Other assets		11,402		10,119
	$	350,114	$	346,733
LIABILITIES
Total current liabilities	$	17,958	$	30,123
Long-term debt, net of current portion		4,824		5,673
Liabilities held for sale		--		258
Other long-term liabilities		33,722		25,058
Total liabilities		56,504		61,112
Minority interest		35,995		30,104
Total stockholders' equity		257,615		255,517
	$	350,114	$	346,733

HealthTronics, Inc.
Supplemental Financial Information
Continuing Operations
For the Periods Ended September 30, 2007 and 2006
Unaudited
In thousands, except per share data

	3rd Quarter						Year to Date
	2007			2006			2007			2006
Summary of Results from Operations
Revenues	$	35,955		$	35,863		$	104,269		$	109,443
EBITDA(a)	$	16,583		$	16,177		$	45,120		$	48,246
Adjusted EBITDA(a)	$	4,369		$	4,796		$	12,122		$	15,216
Net Income (loss) from Continuing Operations	$	610		$	(778	)	$	1,005		$	849
Net Income	$	745		$	31,177		$	894		$	33,818
EPS from Continuing Operations	$	0.02		$	(0.02	)	$	0.03		$	0.02
EPS	$	0.02		$	0.88		$	0.03		$	0.96
Number of Shares		35,425			35,370			35,423			35,329
Segment Information
Revenues:
Urology Services	$	31,625		$	31,108		$	90,846		$	92,975
Medical Products	$	4,176		$	4,640		$	13,002		$	16,050
Adjusted EBITDA(a):
Urology Services	$	4,980		$	5,839		$	13,944		$	18,862
Medical Products	$	585		$	250		$	1,722		$	351
Other Information:
Cashflow from Operations	$	18,466		$	11,920		$	45,564		$	36,846
Net Draws (Payments) on Senior Credit Facility	$	--		$	(123,312	)	$	--		$	(124,063	)
Net Debt	$	(13,589	)	$	(12,794	)	$	(13,589	)	$	(12,794	)

(a) See accompanying reconciliation of EBITDA and Adjusted EBITDA

HealthTronics, Inc.
Non-GAAP Financial Measures
Reconciliation of EBITDA and Adjusted EBITDA
Continuing Operations
For the Periods Ended September 30, 2007 and 2006
Unaudited
In thousands

	3rd QTR						Year to Date
Consolidated	2007			2006			2007			2006
Income (loss) from Continuing Operations	$	610		$	(778	)	$	1,005		$	849
Add Back(deduct):
Provision for income taxes		389			(10	)		956			1,262
Interest expense		196			249			644			895
Depreciation and amortization		2,747			2,888			8,339			8,332
Restructuring costs		400			2,145			400			3,195
Stockbased compensation costs		27			302			778			683
Adjusted EBITDA		4,369			4,796			12,122			15,216
Add Back:
Minority interest expense		12,214			11,381			32,998			33,030
EBITDA	$	16,583		$	16,177		$	45,120		$	48,246
Urology Services Segment
Revenues	$	31,625		$	31,108		$	90,846		$	92,975
Expenses:
Cost of Services		(14,536	)		(13,934	)		(44,214	)		(41,639	)
Other Income (Expenses)		118			75			352			204
EBITDA		17,207			17,249			46,984			51,540
Minority interest expense		(12,227	)		(11,410	)		(33,040	)		(33,078	)
Adjusted EBITDA before add backs:	$	4,980		$	5,839		$	13,944		$	18,462
Add Backs:
Restructuring costs		--			--			--			400
Adjusted EBITDA	$	4,980		$	5,839		$	13,944		$	18,862
Medical Products Segment
Revenues	$	4,176		$	4,640		$	13,002		$	16,050
Expenses:
Cost of Services		(3,612	)		(4,434	)		(11,349	)		(15,790	)
Other Income (Expenses)		7			15			27			43
EBITDA		571			221			1,680			303
Minority interest expense		14			29			42			48
Adjusted EBITDA	$	585		$	250		$	1,722		$	351

EX-99

Exhibit 99.2

HEALTHTRONICS, INCORPORATED

Moderator: James Whittenburg

11-02-07/10:00 am CT

Confirmation #7045805

Page 1

HEALTHTRONICS, INC

Moderator: James Whittenburg

November 2, 2007

10:00 am CT

Operator:

Good day and welcome to the HealthTronics Q3 Quarter Earnings Conference call. Today’s conference is being recorded. This presentation contains forward looking statements regarding HealthTronics Incorporated and its subsidiaries and the services they provide. Investors are cautioned that all such statements involve risks and uncertainties. Investors are cautioned not to place undue reliance on these forward looking statements which speak only as of the date of this presentation. HealthTronics undertakes no obligation to publicly revise these forward looking statements. Please refer to our press release as well as our SEC filings for discussion of risk related forward looking statements. At this time I would like to turn the call over to Mr. James Whittenburg.

James Whittenburg:

Thank you operator. On the call today, we have Ross Goolsby, Senior Vice President of Finance and our Chief Financial Officer and Richard Rusk, Chief Accounting Officer.

HEALTHTRONICS, INCORPORATED

Moderator: James Whittenburg

11-02-07/10:00 am CT

Confirmation #7045805

Page 2

For today’s call, I’ll begin with a brief overview of the third quarter and then Ross will provide detailed information on our financial results. After that, I’ll discuss additional highlights from the quarter and our outlook for the remainder of 2007. We will end with our customary Q&A session.

To begin, we’re pleased with the third quarter and continue to see positive results from the execution of our strategy. Our financial results exceeded our internal forecast for the third quarter in a row. Through nine months, ending September 30th, we’re on a run rate that will exceed our annual revenue and earnings guidance.

Our revenue for the quarter was $36 million, which is up one percent sequentially from the second quarter and our adjusted EBITDA was $4.4 million, up five percent sequentially from the second quarter.

The Keystone acquisition was the key driver for this revenue and earnings growth. We also saw strength in the quarter from same partnership lithotripsy revenues, our service and maintenance business, our RevoLix business and our anatomical pathology lab.

After Ross’ financial review I will provide additional detail and highlight other events of interest from the quarter as well as provide broader insight into other strategic company initiatives.

Despite the positive quarter I would be remiss if I did not discuss the passing of our former CEO Sam Humphries. Sam passed away on August 7th, due to complications from a heart attack he experienced in May. The entire HealthTronics family will miss Sam’s dedication, leadership and the energy he brought to our company.

Shortly after Sam’s passing the board appointed me President and CEO. Similar to Sam, I’m dedicated and committed to HealthTronics growth and success. I look forward to leading HealthTronics.

HEALTHTRONICS, INCORPORATED

Moderator: James Whittenburg

11-02-07/10:00 am CT

Confirmation #7045805

Page 3

I will now hand the call over to Ross to provide a detailed review of the financial results from the third quarter.

Ross Goolsby:

Thanks James and good morning. As it is our practice we have included as an attachment to the press release yesterday certain detailed supplemental financial tables and schedules that provide segment and earnings data for the results of operations for the third quarter ended September 30th. Revenue from continuing operations in the third quarter of 2007 was $36 million, compared to $35.6 million in our second quarter and $35.9 million in the third quarter of 2006. The sequential increase in revenues was one percent and was driven by revenue from the Keystone acquisition, offset by decreases in revenue form the sale of lithotripters and patient tables in the medical products division as well as decreases in lithotripsy procedures, primarily partnerships that the company has strategically exited within the past year in the urology services division. On the cost side out total cost excluding minority interest were $22.8 million in the third quarter and as a percentage of revenue were 63 percent. This compares to $25.3 million in the third quarter of 2006 or 70 percent of revenue and a $23.5 million in the second quarter 2007 or 66 percent of revenue. The downward cost trend is a direct result of operational changes we have made over the last 12 months. Our salaries, wages and benefits for the third quarter of 2007 were down $1.3 million or 11 percent when compared to the third quarter of 2006. This decrease was primarily due to severance payments made in the prior year as well as reduction made in personnel made during the current quarter to further reduce costs in the medical products division. These decreases were offset by operating costs at Keystone and a strategic operating expenses at both of our lab and RevoLix business.

HEALTHTRONICS, INCORPORATED

Moderator: James Whittenburg

11-02-07/10:00 am CT

Confirmation #7045805

Page 4

Our general administrative, legal, manufacturing and other costs of service combined to be $1.3 million lower when compared to the third quarter of 2006. Primarily due to costs associated with the Banes study in the prior year as well as our continued management of overall operating costs in a disciplined way.

Our adjusted EBITDA for the third quarter 2007 was $4.4 million, which compares to $4.2 million in the second quarter of 2007, at $4.8 million in the same period a year ago.

Our GAAP EPS from continuing operations from the quarter was $0.02, which compares to $0.01 in the second quarter and a loss of $0.02 in the third quarter of last year. Excluding non-cash stock based compensation in the third quarter, the earnings per diluted share was also $0.02 which compares to $0.02 in the second quarter and a $0.01 loss in the third quarter of last year.

Now let’s look at each of our divisions. Urology services division revenue was $31.6 million in the quarter, up three percent sequentially from the $30.8 million recorded in the second quarter and up two percent from the $31.1 million recorded in the third quarter of last year. The year over year and sequential increases were primarily due to revenue from the Keystone acquisition, offset by decreases in lithotripsy procedures elsewhere.

If you exclude partnerships that we closed or divested for strategic reasons as well as the recently acquired Keystone business, our revenue and urology services on a same partnership sales basis increased four percent from the third quarter 2006. The rate for lithotripsy procedure also increased when compared to the third quarter of 2006.

Revenues from BPH procedures using both the GreenLight and RevoLix laser were up 12 percent compared to the same period in 2006.

HEALTHTRONICS, INCORPORATED

Moderator: James Whittenburg

11-02-07/10:00 am CT

Confirmation #7045805

Page 5

Divisional adjusted EBITDA was $5 million for urology services or 16 percent of revenue in the third quarter 2007, compared to $5 million or 16 percent of revenue in the second quarter and $5.8 million or 19 percent of revenue in the third quarter of 2006.

Now medical products. Medical products division revenue which includes our ClariPath lab operation has a significant amount of sales to our urology services division. These inner division sales are eliminated under GAAP; however, it is meaningful to review this segment performance prior to eliminations.

Medical products revenue prior to eliminations was $6.3 million for the third quarter 2007, compared to $6.8 million in the second quarter and $6.6 million for the same period in 2006. The decrease from both prior year and the second quarter was due to lower sales of lithotripters and patient tables in the current quarter.

Medical products division revenue on a GAAP basis was $4.2 million in the quarter compared to $4.6 million in the second quarter and $4.6 million in the same period a year ago. Divisional adjusted EBITDA was $585,000 or 14 percent of the revenue in the third quarter of 2007, which compares to $250,000 or five percent of the revenue in the third quarter of 2006. On a sequential basis medical product divisional EBITDA increased approximately $150,000.

Now the balance sheet. As of September 30, we had cash on hand of $23.3 million, which exceeded our long term debt by approximately $13.6 million and we had no monies drawn on our $50 million revolving credit.

Cash flow from operations was $45.6 million for the nine months ended September 30, 2007, compared to $36.8 million for the nine months ended September 30, 2006. The decrease in cash of $4.4 million from the beginning of the year was primarily due to partnership acquisitions and fixed asset purchases totaling $14.8 million, which was offset by improved cash flow from operations.

HEALTHTRONICS, INCORPORATED

Moderator: James Whittenburg

11-02-07/10:00 am CT

Confirmation #7045805

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With a strong balance sheet and available leverage position and improving financial performance sequentially, HealthTronics is poised for growth and will continue to execute it’s strategic initiatives in pursuit of that growth. Finally, we remain optimistic about the remainder of 2007 and beyond and continue to track ahead of our annual guidance. And now, I’ll turn it back over to James. James.

James Whittenburg:

Thanks Ross. As I’ve stated before, HealthTronics is a urology focused company with a strong core lithotripsy business. We partner with physicians to improve both their patient care and practice economics and we use our core lithotripsy business as a platform to introduce new technology, services and strategies. The reorganization and strategic refocus begun in late 2006, combined with the ensuing financial results during the first three quarters of 2007, has positioned HealthTronics for long term growth and sustainable profitability. We’re seeing positive and substantive trends from our efforts within our quarterly financial results. Long term we expect this positive trend to continue as we expand our partnerships with physicians, enhance our services and introduce new technology to our urologist partners. Now for some additional color on the third quarter. In urology services our partnerships to continue to perform well and the urology services division on a same partnership sales basis which excludes 2007 acquisitions our revenues were up four percent compared to the third quarter of 2006. Our lithotripsy revenue on a same partnership sales basis was up three percent.

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Our RevoLix laser technology is one of the best technology serving the BPH market. We are seeing good utilization and deployment of the RevoLix laser across our platform. We have now over 30 units deployed in the market place and are working with the manufacturer, Lisa Laser, and our urologist partners on ways to drive additional volume.

And now the medical products division. In terms of our pathology business, ClariPath, we continue to invest in this area. ClariPath is continuing to grow but was slowed somewhat during the quarter by higher than expected contractual adjustments. Revenues in the third quarter grew five percent from the second quarter of 2007, somewhat lower than expected sequential growth. However, ClariPath’s revenue growth over the third quarter of 2006 was very strong at 390 percent. We have already seen a rebound in lab revenue during the month of October and hope to get back to double digits, sequential quarterly revenue growth in the fourth quarter.

We’ve had some delays in getting into our new lab space in Augusta, Georgia but those delays are behind us and we now expect our move to be completed during the fourth quarter. As you may recall this move will allow us to double the size of our lab and the process over trickle our current throughput capacity. We anticipate this expansion to have an accretive impact by early 2008.

Our service maintenance business remains strong with EBITDA margins exceeding 30 percent. We’re focusing not only on the service maintenance business within our partnerships but also outside our partnerships.

RevoLix also contributed nicely during the quarter. We’re currently experiencing less than expected shipments of our latest lithotripter, the Litho Diamond Ultra. Our contract manufacturer in Europe has struggled to deliver the many technological advances of the Ultra in a high quality repeatable manufacturing process. We’re working diligently with that manufacturer to resolve the issues while at the same time exploring other options. We’re committed to delivering the highest quality products to our partners and this is a good example of HealthTronics not settling for the very best.

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Moderator: James Whittenburg

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I would now like to update you on a key strategic initiative, Total RAD, which is our total radiation therapy initiative. This image guided radiation therapy or IGRT will provide best in class IGRT technology within a turnkey exclusive partnership offering. It will allow urologists to add radiation therapy to their existing practice at a lower cost while minimizing the complexity of changes it will require.

We have an experienced capable executive leading this initiative. In addition, we have established a new strategic relationship with a consulting group that has years of experience in project management and has been instrumental in the development of local market introduction and the operation of over 20 radiation therapy centers in the U.S. This is an affiliation of a highly respected firm and we expect our IGRT offering to be more compelling than anything the urology market has seen to date.

Going forward we are excited about IGRT and our business model that helps urologists deliver IGRT within their practice while also achieving continuity in patient care. We currently expect to have the first HealthTronics initiated prostate focused IGRT to be operational during the second half of 2008, most likely during the fourth quarter.

As you know there are very long lead times in constructing radiation therapy centers and although we’ve made substantial progress and are working on several different opportunities, there is a nine to eleven month construction schedule required to get each center up and running.

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Moderator: James Whittenburg

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On a regulatory note, we have analyzed the proposed regulatory changes by the Center for Medicare and Medicaid services. As a company we have performed and are performing extensive analysis and contingency planning concerning these proposals and we remain confident that there is not a regulatory outcome that would significantly impact our business in an adverse way. There does however remain the possibility that we may have to change how we work with certain partnerships such as our RevoLix laser partnership. Our overall strategy remains intact and unchanged. We’re leveraging our strength in the lithotripsy business to introduce urologists to new technologies, services and strategies to improve both patient care and their practice economics. We also continue to believe that mergers and acquisitions will be an important element in HealthTronics long term strategic plan. In terms of potential acquisitions we have an exhaustive, meticulous and disciplined approach to how we analyze any acquisition. We have no comment on the specific status of any potential deals at this time. To conclude the third quarter results were ahead of our internal forecast and above our second quarter results and last years third quarter results. We also remain on track with our growth initiatives, our market share and new technology solutions, infrastructure support system, as well as our strengthening partnership relationships continue to have a positive impact on our financial results. Now we’re happy to take your questions. Operator.

Operator:

Thank you. The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star key followed by the digit one on your touchtone telephone. If you’re using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, please press star one to ask a question. We’ll pause for a moment to allow everyone an opportunity to signal for questions.

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	Well take our first questions from (David MacDonald) with Centre.
David MacDonald:	Good morning guys. I have a handful of questions for you. Just first of all can you talk a little bit about the radiation therapy initiative. I know you’ve given kind of a time frame here. But should we expect you guys to put kind of one center out there, get your legs underneath you a little bit before you expand more meaningfully in 2009? Or could we see a couple of centers coming out of the gate right away?
James Whittenburg:	(David), thank you. With respect to IGRT, we are not going to pursue one center well in advanced of our overall initiative. So what we’re working with right now are a number of different opportunities. And unfortunately at this point we’re not going to go into a lot of detail in terms of the metrics of our model. I think there’s still some tactical advantage from a competitive stand point in not doing that. We’re also very much still in the process of filling our pipeline of opportunities using our urologist relationships around the country. What I would say is that we’re still very encouraged by the response we’re getting from our partners in terms of the value that our model brings to the table.
David MacDonald:	And you talked about the model would be more compelling than anything in the current urology market. Obviously there’s some public players and some big privates. Would you expect the model also to compare favorably with some of the existing companies that are already out there?

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James Whittenburg:	Absolutely. What I would say is that our model really is unique. We have not yet seen our model surface in any other context. And I think we have a fair amount of familiarity with all of the other models that are out there.
David MacDonald:	OK. A couple of other questions guys on the medical products division, more specifically on the Ultra, what is the time frame in order to kind of buff that up a little bit. Either get it fixed with your current vendor or pull the plug and go to a different vendor?
Ross Goolsby:	That’s a good question. I think the best way to answer that is that we are getting some products from our vendor, it’s just they’re not in the volumes – in the quality we like and so to get it to the quality we like it takes a longer time and it has taken a longer period of time. So I think you’re probably looking at first quarter of ’08 before, you know, we think the manufacturing line is able to crank out product at the kind of levels we need and would like to meet demands.
David MacDonald:	OK. But the demand is there?
Ross Goolsby:	Yes.
David MacDonald:	OK.
James Whittenburg:	The one thing that I would add to that though, (David), is with the proposed CMS regs that are currently out there, it has had some impact on the overall demand level. And so when you look at the softer revenues on our medical products side I really believe that part of the impact there is the uncertainty that the proposed CMS regs create and it’s difficult for partnerships and our partners to want to invest in a new technology and make that capital outlay in a context where there’s some certainty.

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David MacDonald:	OK. Couple, first a housekeeping question. Ross the legal and professional line looked like it almost doubled sequentially. I guess why and would we expect that to kind of come back to the half a million to $600,000 rate on a go forward basis?
James Whittenburg:	We would. There are a couple of things that hit over the last quarter. One is the proposed CMS regs, which the final regs, were published just last night and we’re still in the process of digesting those. But it looks like the provisions in the original proposed regs that might have impacted our business were not addressed in final form in the regs last night. We do expect some additional regs may be published sometime in 2008 that would address those issues. And so given the timing on the proposed regs we had some significant legal expenditures related to that. We have also had more legal expenditures that relate to our IGRT initiative as we move projects forward. And then there were a couple of non-recurring I think items that really took some significant effort as it relates to ongoing litigation that we do not think would impact our company in any material way going forward.
David MacDonald:	OK, but it sounds like at least some spend at least on the IGRT side will stick with you so maybe split the different between historical $500,000 and roughly the million you had in the quarter?
James Whittenburg:	Yes, it may not be quite split the different, probably a little less than that.
David MacDonald:	OK.
James Whittenburg:	But certainly it will be higher than what we’ve seen historically as we have the spend on IGRT.

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David MacDonald:	And then can you guys talk a little bit about the lab expansion. Give me a sense of, you know, demand. Give me a sense also of – it sounded like the revenues grew a little bit less sequentially that you would expected and just a little more color on exactly what that was. And, you know, are you guys were kind of half way or a month into 4Q are you guys in this facility now or is, you know, it sounds like it’s in 4Q but a little bit more color on the timing of that?
Ross Goolsby:	First of all, it will probably be at the end of Q4.
David MacDonald:	All right.
Ross Goolsby:	We’ve been working with the Medical College of Georgia and there’s been a few fits and starts but we’re through all that and we’re excited about the space and the expansion and it should happen we hope in advance of the holidays and we’re working toward that. With regards to the revenues we did see some softness in September. It has snapped back some what in the month of October. So we’re encouraged by that, you know, obviously you get concerned in September with the trend and now you hope October is a trend. We think it’s probably a little of both and revenues will get back on track in the fourth quarter from a growth perspective. We also as a start up lab, are aggressively taking urologists practice specimens and taking market share aggressively and our initiative from a contracts perspective with regards to the insurance company hasn’t quite caught up. So, we’re not getting paid for all of our work right now from the insurance carriers and we would expect that to improve in the future and we are taking more share than is reflected in our revenue. And as we ink the contracts with the insurance carriers and start to get paid for all the business we’re taking from a practice, well see revenue continue to get back on track from a growth perspective.

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David MacDonald:	So Ross, it’s fair to say this is a near term contractual allowance issue that should work it’s way through as you guys get bigger and more sophisticated on the billing side?
Ross Goolsby:	I would say, yes and no. I think that’s absolutely true and it has affected us in the third quarter. But I think we’re in such growth mode and we’re going to be adding sales infrastructure, we’re going to be expanding our geography, I think we’ll continue to be entering new markets and having new contractual arrangements on an ongoing basis. So, I think yes, near term and it should flatten somewhat but it will continue into the future.
David MacDonald:	OK, thanks guys.
Ross Goolsby:	You bet. Thank you.
Operator:	As a reminder if you would like to ask a question or if you have a follow up question, please press star one to signal. We’ll take our next question from (Mitra Ramgopal) from Sidoti.
Mitra Ramgopal:	Yes, hi. Good morning guys. Just a couple of questions. I don’t know if you could elaborate a little given the Keystone acquisition seems to be a nice fit for you. If that is similar transactions or something that you’ve actively be looking at?
James Whittenburg:	Yes it is. When we look at the overall landscape as it relates to urology services, there are larger service providers out there and Keystone really falls on the smaller end of the types of providers that are out there. However, Keystone did have significant infrastructure that was in place and that allows us an opportunity to really come in and look at whether our infrastructure and our platform allows us to save a partnership like that significant dollars which increases the distribution to the physicians.

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	And in instances like that, there certainly are attractive opportunities. We also look at with respect to opportunities in urology services whether or not they have already deployed other technology levers like the levers that we’ve deployed historically. For example, the RevoLix laser or our IGRT initiative. And in the case of Keystone they had not begun providing laser BPH services through that partnership. So that’s a potential top line synergy where it makes an acquisition more attractive. And we absolutely are consistently looking at opportunities to improve the overall delivery of patient care and improve the economics for both our partners and ourselves through market consolidation where it makes sense.
Mitra Ramgopal:	Thanks and again your billing cash generates nice cash flow. What would sort of be the primary uses right now for that?
James Whittenburg:	From a, use of cash standpoint we would really look at both the anticipated activity we see as a possibility on the M&A front and then also with IGRT, we think that having a strong balance sheet and available cash will help us significantly in that context. I also believe that while there’s a lot of uncertainty regarding how the proposed CMS regs could impact our laser business. If it turns out that we need cash to go in and acquire a physician interest in those partnerships, that would certainly be I think a very valuable use of that cash.
Mitra Ramgopal:	OK. Thanks again.
Ross Goolsby:	Thank you.
Operator:	Once again, please press star one to ask a question. We’ll take our next question from (David MacDonald) from Centre.

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David MacDonald:	Just one follow up. On the balance sheet just a follow up on that. What type of leverage would you guys be comfortable putting on the company. I mean, is a three times EBITDA a fair number that you’d be comfortable with? And also when I’m thinking about EBITDA should we be thinking about the adjusted EBITDA number after minority interest, I assume?
Ross Goolsby:	On the leverage it’s really tough to answer. It depends on the nature of the driver of that leverage. So in M&A context, you might be willing to take on a little more leverage versus sustainable EBITDA earnings, sustainable earnings. From an IGRT investment perspective you might not be willing to take on the same amount of leverage. But it’s tough to answer. I think in the past the company’s looked at two to three times in terms of leverage and that would be somewhere you could look for us to be relatively comfortable.
James Whittenburg:	And (David) to your second question. When you start looking from a leverage standpoint how the banks view our cash flow.
David MacDonald:	Yes.
James Whittenburg:	We have historically incorporated an adjusted EBITDA into our prior credit facilities. So that is the metric that we use.
David MacDonald:	OK, thank you.
Operator:	We’ll take our next questions from (Greg Eissen) with ICM Asset Management.
Greg Eissen:	Good morning. Regarding the partnerships, you exited some this quarter. Do you anticipate exiting any more partnerships in the foreseeable future in the next few quarters based upon the same lines of reasoning that you exited partnerships this past quarter?

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James Whittenburg:	No we do not have any current plans or anticipate any current partnerships that we would exit.
Greg Eissen:	OK. Because I guess, you know, that’s, you know, we’re not really seeing – you know on the top line we’re not seeing real traction in revenue growth of a meaningful amount in the business. Yet underneath it all it sounds like once you get that behind you, that you could start getting some revenue growth coming out of these partnerships now that, you know, your adding without doing any subtracting. Is that a fair assessment?
James Whittenburg:	Well I think partly. I certainly think it will lend a greater degree of stability to the core business. But I also think it’s important to point out that lithotripsy is a very mature market and the incidence of kidney stones is not going to change in any particular market. So with respect to a particular partnership we would not expect the top line to change (subsequentially) absent a significant transaction in the market in which the partnership operates. And so really the revenue growth in urology services is going to be driven by a renewed focus on forming new partnerships with partners in markets that are either very complimentary to the markets that we’re already in or in markets that we’re not currently in. But there’s a significant number of urologists who are looking to take advantage of the value that HealthTronics brings to the table in terms of our overall platform and the technologies that we have exclusive access to and can provide them to improve their practice economics.
Greg Eissen:	OK, OK. And turning to the RevoLix, I believe you said you had 30 units in the field at the end of the quarter. I’m looking at my notes; I don’t see the number from last quarter. Can you tell me how many you placed during the quarter?

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Ross Goolsby:	I think last quarter we said it was in the low 30’s and this quarter it’s actually in the high. So we’re seeing additional units placed. I will say that you know, last year when we launched this initiative we went after the low hanging fruit within our urologists relationships and I think at this point I think you’re going to see a little more lumpiness on that front. And again as James pointed out earlier, with the proposed CMS regs, I think there’s been a bit of market hesitation with regards to, you know, biting off new technology and making new capital investments.
James Whittenburg:	And I would add that, you know, when we identify a new technology lever that fulfills our mission, which is bringing new technologies to our partners to improve practice economics and to improve patient care, obviously the first step in the deployment of that technology is to go to our existing partners and deploy it through our existing channel. With RevoLix we’re at a point where we can continue to focus on our existing channel and there’s certainly opportunities. But we’re also now looking at opportunities to bring RevoLix to physicians who are not currently partners of ours that are interested in partnering with us to provide this improved service to their patients. And so it does take a little more time and a little more effort, but we have seen some success and we think we’ll continue to see success as we pursue that avenue for deploying the technology.
Greg Eissen:	Ok, thanks.
Ross Goolsby:	Thank you.

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Operator:	As a reminder if you would like to ask a question or you have a follow up question, please press star one. If you’re using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. It appears that there are no further questions at this time. I’d like to turn the conference over to management for any additional or closing remarks.
Ross Goolsby:	Thank you for joining us this morning. I guess this now concludes the HealthTronics Third Quarter Earnings Conference call. Thank you.
James Whittenburg:	Thanks.
Operator:	Thank you for your participation. This concludes today’s conference. You may now disconnect.

END