8-K

UNITED STATES
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 5, 2009

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.)

9825 Spectrum Drive,
Building 3
Austin, Texas 78717

(Address of principal executive offices including Zip Code)

(512) 328-2892

(Registrant’s telephone number, including area code)

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 5, 2009, HealthTronics, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2009. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8 K.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)        On November 5, 2009, the Company and James Whittenburg, President and Chief Executive Officer of the Company, amended the Executive Employment Agreement of Mr. Whittenburg to (1) extend the initial term of the employment agreement to November 5, 2012 and (2) make certain changes to the severance provisions to further strengthen such provisions’ compliance with Section 409A of the Internal Revenue Code of 1986. The Company and Mr. Whittenburg entered into an amended and restated executive employment agreement to consolidate these amendments and previous amendments into one agreement. The amended and restated executive employment agreement is included as Exhibit 10.1 to this Current Report on Form 8-K, and such exhibit is incorporated herein by reference.

Item 7.01. Regulation FD Disclosure.

On November 5, 2009, management of the Company held an earnings call to discuss the Company’s financial results for the quarter ended September 30, 2009, the transcript of which is attached to this Current Report on Form 8-K as Exhibit 99.2. The Company is furnishing this transcript 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 the Company specifically incorporates 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, the Company makes no admission as to the materiality of any information in this report that the Company chooses to disclose solely because of Regulation FD.

The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although the Company may do so from time to time as the Company’s 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 the Company’s 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 the Company’s operating plans, and are subject to future events and uncertainties. Among the events and uncertainties that could adversely affect future periods are: the risk that the operations of Endocare, Inc. will not be successfully integrated; the risk that the Company’s expected cost savings and other synergies from the acquisition of Endocare may not be fully realized, realized at all or take longer to realize than anticipated; the Company’s inability to establish or maintain relationships with physicians and hospitals; the impact of healthcare regulatory developments and changes; the inability of healthcare providers to obtain reimbursement for use of the Company’s current or future products or services; competition or technological change that impacts the market for the Company’s products; difficulty in managing the Company’s growth; and other factors described in the Company’s periodic reports filed with the SEC. In addition to the above cautionary statements, all forward-looking statements contained herein should be read in conjunction with the Company’s SEC filings, including the risk factors described therein, and other public announcements.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
10.1	Amended and Restated Executive Employment Agreement, dated as of November 5, 2009, by and between HealthTronics, Inc. and James Whittenburg.
99.1	Press release dated November 5, 2009.
99.2	Transcript.

SIGNATURES

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

	HEALTHTRONICS, INC. (Registrant)
Date: November 12, 2009	By:	/s/ Richard A. Rusk
	Name: Title:	Richard A. Rusk Chief Financial Officer, Vice President and Controller

EXHIBIT INDEX

Exhibit Number	Description
10.1	Amended and Restated Executive Employment Agreement, dated as of November 5, 2009, by and between HealthTronics, Inc. and James Whittenburg.
99.1	Press release dated November 5, 2009.
99.2	Transcript.

EX-10

Exhibit 10.1

AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT

        This Amended and Restated Executive Employment Agreement (this “Agreement”) is by and between HealthTronics, Inc., a Georgia corporation (“Employer”), and James S.B. Whittenburg, an individual (“Executive”), and shall be effective as of November 5, 2009 (the “Effective Date”).

Preliminary Statements

        Executive and Employer previously entered into that certain Executive Employment Agreement, effective as of October 1, 2005, as amended by the First Amendment to Executive Employment Agreement, dated as of August 10, 2007, and the Second Amendment to Executive Employment Agreement, dated as of October 26, 2007 (collectively, the “Original Agreement”).

        Executive and Employer desire to amend the Original Agreement to extend the initial term of the Original Agreement to be three years from the date hereof and to make certain changes to the severance provisions to further strengthen the compliance thereof with Section 409A of the Internal Revenue Code of 1986. Executive and Employer also desire to consolidate such amendments and all prior amendments into one agreement.

        Executive desires to be employed by Employer upon the terms and conditions stated herein, and Employer desires to employ Executive provided that, in so doing, it can protect its confidential information, business, accounts, patronage and goodwill.

        Employer and Executive have specifically determined that the terms of this Agreement are fair and reasonable.

Statement of Agreement

        NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good, valuable and binding consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I
Term; Termination; Prior Agreements

        Section 1.1 Term. Employer hereby hires Executive and Executive accepts such employment for an initial term expiring on November 5, 2012.

        Section 1.2 Termination Upon Expiration. The term of this Agreement shall automatically renew for successive one year periods immediately following the expiration of the initial term and each successive one-year term thereafter. Either Executive or Employer may provide the other party with written notice of non-renewal not less than 60 days prior to the expiration of the then current term, and, as long as neither Executive nor Employer terminates or gives notice of termination of this Agreement pursuant to the other terms and provisions contained herein, then this Agreement shall terminate automatically upon the expiration of the term during which notice of non-renewal is properly given pursuant to this Section. Neither the provision of written notice of non-renewal, nor the termination upon expiration of this Agreement following delivery of written notice of non-renewal, shall itself be deemed a termination of this Agreement by any party pursuant to any other Section of this Agreement.

        Section 1.3 Termination Upon Death or Permanent Disability. This Agreement shall be automatically terminated on the death of Executive or on the permanent disability of Executive if Executive is no longer able to perform in all material respects the usual and customary duties of Executive’s employment hereunder. For purposes hereof, any condition which in reasonable likelihood is expected to impair Executive’s ability to materially perform Executive’s duties hereunder for a period of three months or more shall be considered to be permanent.

        Section 1.4 Termination for Cause. If this Agreement has not been previously terminated, and no party has previously given notice of termination pursuant to Section 1.5, Section 1.6 or Section 1.7, then Employer may terminate this Agreement “for cause” if:

        (a)     In connection with the business of Employer, Executive is convicted of an offense constituting a felony or involving moral turpitude; or

        (b)     in a material and substantial way, (i) Executive (A) violates any written policy of Employer, (B) violates any provision of this Agreement, (C) fails to follow reasonable written instructions or directions from the Board of Directors of Employer (the “Board”), or (D) fails to use good-faith efforts to perform the services required pursuant to this Agreement; and (ii) Executive fails to materially cure such violation or failure within fifteen days after receiving written notice from the Board clearly specifying the act or circumstances that gave rise to such violation or failure.

        A notice of termination pursuant to this Section shall be in writing and shall state the alleged reason for termination. Executive, within not less than fifteen nor more than thirty days after such notice, shall be given the opportunity to appear before the Board, or a committee thereof, to rebut or dispute the alleged reason for termination. If the Board or committee determines, by a majority of the disinterested directors, after having given Executive the opportunity to rebut or dispute the allegations, that such reason is indeed valid, Employer may immediately terminate Executive’s employment under this Agreement for cause. Immediately upon giving the notice contemplated by this paragraph, Employer may elect, during the pendency of such inquiry, to relieve Executive of Executive’s regular duties.

        Section 1.5 Termination for Good Reason or upon Change of Control.

        (a)     Executive is entitled to terminate this Agreement and his employment for “good reason” upon any of the following occurrences:

        (i)     Executive may terminate this Agreement and employment if Executive’s base salary, as provided hereunder, is materially diminished;

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        (ii)     Executive may terminate this Agreement and employment if Employer requires that Executive move to any location further than 30 miles from 9825 Spectrum Drive, Austin, Texas 78717;

        (iii)     Executive may terminate this Agreement and employment if the Board materially and unreasonably interferes with Executive’s ability to fulfill Executive’s job duties; or

        (iv)     Executive may terminate this Agreement and employment if Executive is reassigned to a position with materially diminished responsibilities, or Executive’s job responsibilities are otherwise materially narrowed or diminished.

        Notwithstanding any provision in this Agreement to the contrary, no termination of this Agreement and employment will be considered a termination for Good Reason unless: (1) Executive provides Employer with thirty days prior written notice of such termination, and such notice is provided within ninety days of the initial occurrence of the event constituting Good Reason, (2) such termination is conditioned upon Employer failing to cure the event constituting Good Reason within the thirty-day notice period, and (3) Employer fails to cure such event constituting Good Reason within such thirty-day period.

        (b)     Within two months following any “Change of Control” as defined in Section 1.11, Executive may terminate his employment through termination of this Agreement, for any or no reason, with thirty days prior written notice; provided that notice of termination (1) cannot be given prior to the consummation of the Change of Control and (2) must be given within thirty days following the consummation of the Change of Control.

        (c)     Without limiting the provisions of Section 1.8 hereof, Executive agrees that Employer can relieve Executive of Executive’s duties hereunder prior to the end of the applicable notice period provided for in this Section, and in such event, Executive shall not thereafter be entitled to any of the benefits or salary described in Article III hereof. Furthermore, if the term of this Agreement expires upon notice of non-renewal given pursuant to Section 1.2 prior to the end of any notice period otherwise required under this Section, then the applicable notice period required under this Section does not apply and notice may be given at any time prior to such expiration.

        If Employer does not relieve Executive of Executive’s duties during any applicable notice period under this Section, and the applicable notice period extends beyond the expiration of the term of this Agreement pursuant to Section 1.2, then the terms and provisions of this Agreement shall govern Executive’s employment by Employer until the end of such notice period, and the term of this Agreement shall be deemed automatically extended until the end of such notice period.

        Section 1.6 Termination of Agreement by Employer Without Cause. Employer has the right to terminate this Agreement and Executive’s employment, other than “for cause,” on 30 days prior written notice. Any termination of this Agreement and Executive’s employment by Employer other than pursuant to the express terms of Section 1.2, Section 1.3 or Section 1.4 shall be deemed a termination pursuant to this Section, irrespective of whether the notice required under this Section is properly given.

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        Section 1.7 Termination of Agreement by Executive Without Good Reason. Executive may terminate Executive’s employment, other than for “good reason,” upon 30 days prior written notice stating that this Agreement is terminated other than for “good reason”. Executive agrees that Employer can relieve Executive of Executive’s duties hereunder prior to the end of such 30 day notice period, and in such event, Executive shall not thereafter be entitled to any of the benefits or salary described in Article III hereof.

        Section 1.8 Executive’s Rights Upon Termination. Upon termination of this Agreement, Executive shall be entitled to the following:

        (a)     If this Agreement is terminated pursuant to Section 1.2, Section 1.3, Section 1.4, or Section 1.7 then Employer shall pay Executive or Executive’s representative, as the case may be, Executive’s then-current base salary (excluding any bonuses and non-cash benefits) through the effective date of such termination (which, in the case of Section 1.7, shall follow any portion of the applicable notice period during which Executive has not been relieved of Executive’s duties hereunder), and Employer shall have no further obligations hereunder.

        (b)     If Employer terminates this Agreement without cause pursuant to Section 1.6 or otherwise, or Executive terminates this Agreement pursuant to Section 1.5, then, in addition to receiving Executive’s then current base salary through the effective date of such termination, Executive (i) shall receive within 15 days of the effective date of termination a lump-sum payment equal to (A) 200% of Executive’s then-current annualized base salary, and (B) cash bonuses, if any, paid by Employer to Executive during the two years preceding such termination, and (ii) shall be released from the provisions of Section 4.2, notwithstanding that the provisions of such Section would otherwise survive termination of this Agreement pursuant to Section 1.9. In addition, all outstanding stock options and restricted stock awards then held by Executive will fully vest to the extent not already vested and all such options shall remain exercisable until the earlier of the end of the option term or one year after the date of termination (and if any agreements governing such stock options and restricted stock awards conflict with this provision, this provision shall control and shall be deemed to be incorporated into such agreements). Executive and Employer agree that the effective date of any termination pursuant to Section 1.5 shall be the earlier of the end of the applicable notice period, if any, or the date on which Employer relieves Executive of Executive’s duties hereunder. Executive and Employer agree that the effective date of any termination pursuant to Section 1.6 hereof shall be only upon the expiration of the 30 day notice period described in Section 1.6, regardless of whether Employer earlier relieves Executive of Executive’s duties hereunder. As a condition to receiving the severance payments provided in this Section 1.8(b), Executive must execute a full release and waiver of all claims against Employer in a form reasonably acceptable to Employer (excluding claims for amounts required under this Agreement to be paid upon severance and existing indemnification obligations to Executive).

        Section 1.9 Survival. Any termination of this Agreement and Executive’s employment as a result thereof shall not release either Employer or Executive from their respective obligations to the date of termination nor from the provisions of this Agreement which, by necessary or reasonable implication, are intended to apply after termination of this Agreement, including, without limitation, the provisions of Article IV. Furthermore, neither the termination of this Agreement nor the termination of Executive’s employment under this Agreement shall affect, limit or modify in any manner the existence or enforceability of any other written agreement between Executive and Employer, even if such other agreements provide employment related benefits to Executive.

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        Section 1.10 Termination of Existing Agreements. Any previous employment agreement between Executive on the one hand and Employer or any of Employer’s Affiliates (as hereinafter defined) on the other hand is hereby terminated.

        Section 1.11 “Change of Control.” As used in this Agreement, “Change of Control” shall mean the occurrence of any of the following:

        (a)     Any person, entity or “group” within the meaning of § 13(d) or 14(d) of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of the Board, but only if such event results in a change in Board composition such that the directors immediately preceding such event do not comprise a majority of the Board following such event;

        (b)     a merger, reorganization or consolidation whereby Employer’s equity holders existing immediately prior to such merger, reorganization or consolidation do not, immediately after consummation of such reorganization, merger or consolidation, own more than 50% of the combined voting power of the surviving entity’s then outstanding voting securities entitled to vote generally in the election of directors, but only if such event results in a change in Board composition such that the directors immediately preceding such event do not comprise a majority of the board of directors of such surviving entity following such event;

        (c)     the sale of all or substantially all of Employer’s assets to an entity in which Employer, any subsidiary of Employer, or Employer’s equity holders existing immediately prior to such sale beneficially own less than 50% of the combined voting power of such acquiring entity’s then outstanding voting securities entitled to vote generally in the election of directors, but only if such event results in a change in Board composition such that the directors immediately preceding such event do not comprise a majority of the board of directors of such acquiring entity following such event; or

        (d)     any change in the identity of directors constituting a majority of the Board within a twenty-four month period unless the change was approved by a majority of the Incumbent Directors, where “Incumbent Director” means a member of the Board at the beginning of the period in question, including any director who was not a member of the Board at the beginning of such period but was elected or nominated to the Board by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors.

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        Section 1.12 Excise Tax Limitation.

        (a)     Notwithstanding anything contained in this Agreement to the contrary, to the extent that the payments and benefits provided under this Agreement and benefits provided to, or for the benefit of, Executive under any other Employer plan or agreement (such payments or benefits are collectively referred to as the “Payments”) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the Payments shall be reduced (but not below zero) if and to the extent necessary so that no Payment to be made or benefit to be provided to Executive shall be subject to the Excise Tax (such reduced amount is hereinafter referred to as the “Limited Payment Amount”). Unless Executive shall have given prior written notice specifying a different order to Employer to effectuate the foregoing, Employer shall reduce or eliminate the Payments, by first reducing or eliminating the portion of the Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice given by Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Executive’s rights and entitlements to any benefits or compensation.

        (b)     The determination of whether the Payments shall be reduced to the Limited Payment Amount pursuant to this Agreement and the amount of such Limited Payment Amount shall be made, at Employer’s expense, by a reputable accounting firm selected by Executive and reasonably acceptable to Employer (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation to Employer and Executive within ten (10) days of the date of termination, if applicable, or such other time as specified by mutual agreement of Employer and Executive, and if the Accounting Firm determines that no Excise Tax is payable by Executive with respect to the Payments, it shall furnish Executive with an opinion reasonably acceptable to Executive that no Excise Tax will be imposed with respect to any such Payments. The Determination shall be binding, final and conclusive upon Employer and Executive.

        Section 1.13 409A.

        (a)     The parties intend that this Agreement will be administered in accordance with Section 409A of the Code (“Section 409A”). To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

        (b)     Notwithstanding any provision in the Agreement to the contrary, if at the time of Executive’s “separation from service” within the meaning of Section 409A Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then if Employer and Executive mutually determine that any payment or benefit that Executive becomes entitled to under this Agreement on account of Executive’s separation from service would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after Executive’s separation from service, or (B) Executive’s death. The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).

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ARTICLE II
Duties of Executive

        Subject to the approvals by and the ultimate supervision of the Board, Executive during the term hereof shall serve as the President and Chief Executive Officer. Subject to the control of the Board, Executive shall have the responsibilities commensurate with Executive’s title and as otherwise provided in Employer’s bylaws and other governing documents.

        During the period of employment hereunder, Executive shall devote all of Executive’s working time, attention, energies and best efforts to the business of Employer for the profit, benefit and advantage of Employer, and shall perform such other services as shall be designated, from time to time, by the Board. The foregoing shall not be construed as preventing Executive from making personal investments in such form or manner as will require Executive’s services in the operation or affairs of the companies or enterprises in which such investments are made; provided that it does not interfere with Executive’s duties hereunder. Further, the Executive may not during the period of employment hereunder invest Executive’s personal assets in business ventures that compete with Employer or Employer’s Affiliates. Executive shall use Executive’s best efforts to promote the interests of Employer and Employer’s Affiliates, and to preserve their goodwill with respect to their employees, customers, suppliers and other persons having business relations with Employer. Executive agrees to accept and hold all such offices and/or directorships with Employer and Employer’s Affiliates as to which Executive may, from time to time, be elected. For purposes of this Agreement, Employer’s subsidiaries, parent companies and other affiliates are collectively referred to as “Affiliates.”

ARTICLE III
Salary; Expense Reimbursements

        Section 3.1 Salary. As compensation for Executive’s service under and during the term of this Agreement (or until terminated pursuant to the provisions hereof) Employer shall pay Executive a salary of $32,500.00 per calendar month (prorated for partial months), payable in accordance with the regular payroll practices of Employer, as in effect from time to time, which such salary may be increased from time to time by the Board in its sole discretion. Such salary shall be subject to withholding for the prescribed federal income tax, social security and other items as required by law and for other items consistent with Employer’s policy with respect to health insurance and other benefit plans for similarly situated employees of Employer in which Executive may elect to participate.

        Section 3.2 Other Benefits. During the term of this Agreement, Executive also shall be entitled to the same amount of paid vacation per year as was available to Executive and other senior management executives of Employer under the policy of Employer in effect on the Effective Date. Executive will not be paid for unused vacation, and unused vacation cannot be carried forward to subsequent years. Without limiting the foregoing, Executive shall also receive such paid sick leave, insurance and other fringe benefits as are generally made available to other personnel of Employer in comparable positions, with comparable service credit and with comparable duties and responsibilities. Any benefits in excess of those granted other salaried employees of Employer shall be subject to the prior approval of the Board. Notwithstanding the foregoing, (a) Executive shall be entitled to participate in Employer’s annual Executive Incentive Compensation Pool which is allocated to participants based on individual and company wide goal attainment, as determined in the sole discretion of the Board; and (b) Executive shall be eligible for participation in Employer’s Equity Incentive Plan (if any), but all equity awards thereunder shall be subject to the sole discretion of the Board.

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        Section 3.3 Bonuses. In the discretion of the Board, and without implying any obligation on Employer ever to award a bonus to Executive, Executive may from time to time be awarded a cash bonus or bonuses for services rendered to Employer during the term of Executive’s employment under this Agreement. If and to the extent a bonus is ever considered for Executive, it is expected that any such bonus will be based not only on Executive’s individual performance and Executive’s relative position and responsibilities with Employer, but also on the performance and profitability of the entire business of Employer.

        Section 3.4 Expenses. Employer shall reimburse all reasonable out-of-pocket travel and business expenses incurred by Executive in connection with the performance of Executive’s duties pursuant to this Agreement. Executive shall provide Employer with documentation of Executive’s expenses, in a form acceptable to Employer and which satisfies applicable federal income tax reporting and record keeping requirements.

        Section 3.5 Location of Employment. The parties acknowledge and agree that Executive’s employment duties hereunder are performable in Austin, Texas, subject to business travel commensurate with Executive’s duties hereunder and as otherwise requested by Employer.

ARTICLE IV
Executive’s Restrictive Covenants

        Section 4.1 Confidentiality Agreement. Executive acknowledges that Executive has been and will be exposed to confidential information and trade secrets (“Proprietary Information”) pertaining to, or arising from, the business of Employer and/or Employer’s Affiliates, that such Proprietary Information is unique and valuable and that Employer and/or Employer’s Affiliates would suffer irreparable injury if this information were divulged to those in competition with Employer or Employer’s Affiliates. Therefore, Executive agrees to keep in strict secrecy and confidence, both during and after the period of Executive’s employment, any and all information which Executive acquires, or to which Executive has access, during Executive’s employment by Employer, that has not been publicly disclosed by Employer or Employer’s Affiliates, that is not a matter of common knowledge by their respective competitors or that is not required to be disclosed through legal process. The Proprietary Information covered by this Agreement shall include, but shall not be limited to, information relating to any inventions, processes, software, formulae, plans, devices, compilations of information, technical data, mailing lists, management strategies, business distribution methods, names of suppliers (of both goods and services) and customers, names of employees and terms of employment, arrangements entered into with suppliers and customers, including, but not limited to, proposed expansion plans of Employer, marketing and other business and pricing strategies, and trade secrets of Employer and/or Employer’s Affiliates.

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        Except with prior approval of the Board, Executive will not, either during or after Executive’s employment hereunder: (a) directly or indirectly disclose any Proprietary Information to any person or entity except authorized personnel of Employer; nor, (b) use Proprietary Information in any manner other than in furtherance of the business of Employer. Upon termination of employment, whether voluntary or involuntary, within forty-eight hours of termination, Executive will deliver to Employer (without retaining copies thereof) all documents, records or other memorializations including copies of documents and any notes which Executive has prepared and any documents in electronic or digital form, that contain Proprietary Information or relate to Employer’s or Employer’s Affiliates’ business, all other tangible Proprietary Information in Executive’s possession or control, and all of Employer’s and the Affiliates’ credit cards, keys, equipment, vehicles, supplies and other materials that are in possession or under Executive’s control.

        Section 4.2 Nonsolicitation Agreement. During Executive’s employment hereunder and for a period of two years after Executive ceases to be employed by Employer, Executive shall not, directly or indirectly, for Executive’s own account or otherwise (i) solicit business from, divert business from, or attempt to convert to other methods of using the same or similar products or services as provided by Employer or Employer’s Affiliates, any client, account or location of Employer or Employer’s Affiliates with which Executive has had any contact as a result of Executive’s employment hereunder; or (ii) solicit for employment or employ any employee or former employee of Employer or Employer’s Affiliates.

        Section 4.3 Remedies. Executive understands and acknowledges damages at law alone will be an insufficient remedy for Employer and Employer will suffer irreparable injury if Executive violates the terms of this Agreement. Accordingly, Employer, upon application to a court of competent jurisdiction, shall be entitled to injunctive relief to enforce the provisions of this Agreement in the event of any breach, or threatened breach, of its terms. Executive hereby waives any requirement that Employer post bond or other security prior to obtaining such injunctive relief. Injunctive relief may be sought in addition to any other available rights or remedies at law. Employer shall additionally be entitled to reasonable attorneys’ fees incurred in enforcing the provisions of this Agreement.

ARTICLE V
Miscellaneous

        Section 5.1 Assignment. No party to this Agreement may assign this Agreement or any or all of its rights or obligations hereunder without first obtaining the written consent of all other parties hereto. Any assignment in violation of the foregoing shall be null and void. Subject to the preceding sentences of this Section, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. This Agreement shall not be deemed to confer upon any person or entity not a party to this Agreement any rights or remedies hereunder. The provisions of this Section do not preclude the sale, transfer or assignment of the ownership interests of any entity that is a party to this Agreement, although such a sale, transfer or assignment may be expressly prohibited or conditioned pursuant to other provisions of this Agreement.

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        Section 5.2 Amendments. This Agreement cannot be modified or amended except by a written agreement executed by all parties hereto.

        Section 5.3 Waiver of Provisions; Remedies Cumulative. Any waiver of any term or condition of this Agreement must be in writing, and signed by all of the parties hereto. The waiver of any term or condition hereof shall not be construed as either a continuing waiver with respect to the term or condition waived, or a waiver of any other term or condition hereof. No party hereto shall by any act (except by written instrument pursuant to this Section), delay, indulgence, omission or otherwise be deemed to have waived any right, power, privilege or remedy hereunder or to have acquiesced in any default in or breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any party hereto, any right, power, privilege or remedy hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power, privilege or remedy hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power, privilege or remedy. No remedy set forth in this Agreement or otherwise conferred upon or reserved to any party shall be considered exclusive of any other remedy available to any party, but the same shall be distinct, separate and cumulative and may be exercised from time to time as often as occasion may arise or as may be deemed expedient.

        Section 5.4 Further Assurances. At and from time to time after the date hereof, each party shall, at the request of another party hereto, but without further consideration, execute and deliver such other instruments and take such other actions as the requesting party may reasonably request in order to more effectively evidence or consummate the transactions or activities contemplated hereunder.

        Section 5.5 Entire Agreement. This Agreement and the agreements contemplated hereby or executed in connection herewith (a) constitute the entire agreement of the parties hereto regarding the subject matter hereof, and (b) supersede all prior employment agreements, both written and oral, among the parties hereto, or any of them.

        Section 5.6 Severability; Illegality. In the event any state or federal laws or regulations, now existing or enacted or promulgated after the date hereof, are interpreted by judicial decision, a regulatory agency or legal counsel in such a manner as to indicate that any provision hereof may be illegal, invalid or unenforceable, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision that (a) preserves the underlying economic and financial arrangements between the parties hereto without substantial economic detriment to any particular party and (b) is as similar in effect to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. No party to this Agreement shall claim or assert illegality as a defense to the enforcement of this Agreement or any provision hereof; instead, any such purported illegality shall be resolved pursuant to the terms of this Section.

10

        Section 5.7 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS OF LAWS) OF THE STATE OF TEXAS.

        Section 5.8 Language Construction. This Agreement shall be construed, in all cases, according to its fair meaning, and without regard to the identity of the person who drafted the various provisions contained herein. The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof. As used in this Agreement, “day” or “days” refers to calendar days unless otherwise expressly stated in each instance. The captions in this Agreement are for convenience of reference only and shall not limit or otherwise affect any of the terms or provisions hereof. When the context requires, the gender of all words used herein shall include the masculine, feminine and neuter and the number of all words shall include the singular and plural. Use of the words “herein”, “hereof”, “hereto”, “hereunder” and the like in this Agreement shall be construed as references to this Agreement as a whole and not to any particular Article, Section or provision of this Agreement, unless otherwise expressly noted.

        Section 5.9 Notice. Whenever this Agreement requires or permits any notice, request, or demand from one party to another, the notice, request, or demand must be in writing to be effective and shall be deemed to be delivered and received (a) if personally delivered or if delivered by facsimile or courier service, when actually received by the party to whom notice is sent or (b) if delivered by mail (whether actually received or not), at the close of business on the third business day next following the day when placed in the mail, postage prepaid, certified or registered, addressed to the appropriate party or parties, at the address of such party set forth below (or at such other address as such party may designate by written notice to all other parties in accordance herewith):

If to Employer:
                                       
                                       
                                       
                                       


If to Executive:
                                       
                                       
                                        HealthTronics, Inc.
 9825 Spectrum Drive
 Building 3
 Austin, TX 78717
 Attention: Board of Directors
 Facsimile Transmission: (512) 314-4503

 James S.B. Whittenburg
 13406 Tierra Drive
 Austin, TX 78727

        Section 5.10 CHOICE OF FORUM; ATTORNEYS’ FEES. THE PARTIES HERETO AGREE THAT THIS AGREEMENT IS PERFORMABLE IN WHOLE AND IN PART IN TRAVIS COUNTY, TEXAS, AND SHOULD ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT BE INSTITUTED BY ANY PARTY HERETO (OTHER THAN A SUIT, ACTION OR PROCEEDING TO ENFORCE OR REALIZE UPON ANY FINAL COURT JUDGMENT ARISING OUT OF THIS AGREEMENT), SUCH SUIT, ACTION OR PROCEEDING SHALL BE INSTITUTED ONLY IN A STATE OR FEDERAL COURT IN TRAVIS COUNTY, TEXAS. EACH OF THE PARTIES HERETO CONSENTS TO THE IN PERSONAM JURISDICTION OF ANY STATE OR FEDERAL COURT IN TRAVIS COUNTY, TEXAS AND WAIVES ANY OBJECTION TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING. THE PARTIES HERETO RECOGNIZE THAT COURTS OUTSIDE TRAVIS COUNTY, TEXAS MAY ALSO HAVE JURISDICTION OVER SUITS, ACTIONS OR PROCEEDINGS ARISING OUT OF THIS AGREEMENT, AND IN THE EVENT THAT ANY PARTY HERETO SHALL INSTITUTE A PROCEEDING INVOLVING THIS AGREEMENT IN A JURISDICTION OUTSIDE TRAVIS COUNTY, TEXAS, THE PARTY INSTITUTING SUCH PROCEEDING SHALL INDEMNIFY ANY OTHER PARTY HERETO FOR ANY LOSSES AND EXPENSES THAT MAY RESULT FROM THE BREACH OF THE FOREGOING COVENANT TO INSTITUTE SUCH PROCEEDING ONLY IN A STATE OR FEDERAL COURT IN TRAVIS COUNTY, TEXAS, INCLUDING WITHOUT LIMITATION ANY ADDITIONAL EXPENSES INCURRED AS A RESULT OF LITIGATING IN ANOTHER JURISDICTION, SUCH AS REASONABLE FEES AND EXPENSES OF LOCAL COUNSEL AND TRAVEL AND LODGING EXPENSES FOR PARTIES, WITNESSES, EXPERTS AND SUPPORT PERSONNEL. THE PREVAILING PARTY IN ANY ACTION TO ENFORCE OR DEFEND RIGHTS UNDER THIS AGREEMENT SHALL BE ENTITLED TO RECOVER ITS COSTS AND REASONABLE ATTORNEYS’ FEES IN ADDITION TO ANY OTHER RELIEF GRANTED.

11

        Section 5.11 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

[Signature page follows]

12

SIGNATURE PAGE TO
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT

        EXECUTED by Employer and Executive to be effective for all purposes as of the Effective Date provided above.

EMPLOYER:

                                                 
                                                 
                                                 


EXECUTIVE: HEALTHTRONICS, INC.

By: /s/ R. Steven Hicks    
         R. Steven Hicks
         Nonexecutive Chairman of the Board


/s/ James S.B. Whittenburg                 
James S.B. Whittenburg

S-1

EX-99

EXHIBIT 99.1

HealthTronics, Inc. Announces Third Quarter Results, Positive Contribution from
Endocare; Richard Rusk Appointed Chief Financial Officer

AUSTIN, Texas, November 5, 2009 (GLOBE NEWSWIRE) -- HealthTronics, Inc. (Nasdaq:HTRN), a leading provider of Urology services and products, today announced its financial results for the quarter ended September 30, 2009.

Third Quarter 2009

Revenue from continuing operations for the third quarter of 2009 totaled $47.3 million, up from $44.8 million in the third quarter of 2008. The Company's net loss for the third quarter of 2009, in accordance with generally accepted accounting principles ("GAAP"), totaled $2.3 million or $0.06 per diluted share. The Company's non-GAAP net income, which excludes stock based compensation and costs related to the Endocare transaction, totaled $0.05 per share in the quarter. This compares to non-GAAP net income of $0.04 per share in the third quarter of 2008.

The Company's Adjusted EBITDA from continuing operations for the third quarter of 2009 was $7.1 million, which compares to $6.2 million in the third quarter of 2008. In addition, After Tax Cash Flow (cash flow from operations less distributions to non-controlling interests) excluding acquisition related costs was $4.1 million.

Endocare Results

After excluding one-time transaction costs, the acquisition of Endocare contributed $0.9 million in EBITDA in the third quarter. Revenue contributed by Endocare after intercompany eliminations totaled $2.7 million and, before eliminating intercompany sales, totaled $4.6 million for the quarter.

Executive Commentary

James Whittenburg, President and Chief Executive Officer, commented, "Our diversified business is performing well, thanks in large part to our recent acquisitions. The integration has been a smooth process resulting in business synergies far ahead of our preliminary projections. The Endocare and laboratory businesses, in particular, are both creating additional financial value as we introduce innovative technologies and services throughout our platform and physician partnerships.”

Appointment of Richard Rusk to Chief Financial Officer

“I am also very pleased to announce that today the Board of Directors has appointed Richard Rusk Chief Financial Officer. Richard joined HealthTronics in August 2000 as Corporate Controller and has been serving as Interim Chief Financial Officer since September 2008. The Board and I are fortunate to have Richard assume the full duties of CFO,” Mr. James Whittenburg stated.

R. Steven Hicks, Chairman of the Board, added, “We expect Richard to do exceptionally well as Chief Financial Officer. Richard’s understanding of HealthTronics is very deep, and we believe his skills and leadership will continue to create additional value for our shareholders.”

Conference Call and Webcast: Management of HealthTronics will host a conference call the afternoon of Thursday, November 5, 2009 at 5:00 pm EST. Interested parties may participate in the call by dialing 1-888-437-9364 (International callers dial 1-719-457-2647) and ask for the "HealthTronics Q3 2009 Earnings Call" (confirmation code: 2141758). Please call in 10 minutes before the call is scheduled to begin. The conference call will also be web cast live via the Investors section of HealthTronics' web site at www.healthtronics.com. To listen to the live web cast, go to the web site at least 10 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call will be archived on the HealthTronics web site.

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

The HealthTronics, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5894

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 its 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.

After Tax Cash Flow: HealthTronics has presented After Tax Cash Flow, a non-GAAP financial measure. HealthTronics believes its presentation of After Tax Cash Flow is an important supplemental measure of its operating performance to its investors.

After Tax Cash Flow is intended to give investors a clear picture of the cash being generated by HealthTronics at the corporate level. After Tax Cash Flow is calculated using Net Cash Provided by Operating Activities and subtracting Distributions to Non-controlling Interests. HealthTronics believes that After Tax Cash Flow highlights the value of the Company’s tax assets as well as other benefits beyond those reflected in the Company’s GAAP Net Income. For example, After Tax Cash Flow includes the impact of changes in working capital and thereby provides better insight into the Company’s ability to manage payables, receivables and inventory.

To convert from After Tax Cash Flow to what is typically referred to as Free Cash Flow, one would subtract capital expenditures made at the corporate level. It is important to note that the “Purchases of equipment and leasehold improvements” reflected on the Company’s cash flow statements includes capital expenditures at both the corporate and partnership level and a significant portion of expenditures are made in equipment at the partnerships. Thus, a break out of capital expenditures at the corporate and physician partnership level is included herein.

Prior to 2009, distributions to our partners were made on an irregular quarterly basis that was based on the tax calendar. We now make distributions on a monthly basis. At the time we made the switch, we anticipated the investor community would benefit from the increased transparency into operating cash flows. Thus, by highlighting After Tax Cash Flow in our quarterly releases, HealthTronics will be leveraging this increased transparency. However, it is important to note that given the irregular distribution schedule in prior years, HealthTronics will not be able to make year-over-year comparisons until the second quarter of 2010.

EBITDA and Adjusted EBITDA: HealthTronics has presented EBITDA and Adjusted EBITDA amounts, which are non-GAAP financial measures. In the financial statements attached to this press release, 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 useful 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.” “Adjusted EBITDA” also excludes stock-based compensation expense. 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 used in management’s internal evaluation of total company performance. Adjusted EBITDA is also 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.

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, the availability and terms of financing and other factors described from time to time in HealthTronics' periodic filings with the Securities and Exchange Commission.

CONTACT: HealthTronics, Inc.
           Richard Rusk, Chief Financial Officer
           (512) 314-4508
           www.healthtronics.com

(C) Copyright 2009 GlobeNewswire, Inc. All rights reserved.

Healthtronics, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
($ in thousands, except per share data)	2009			2008			2009			2008
Revenues	$	47,283		$	44,771		$	135,051		$	121,305
Cost of revenues (exclusive of depreciation and
amortization shown separately below)		22,452			19,954			65,015			54,257
Gross profit		24,831			24,817			70,036			67,048
Operating expenses
Selling, general and administrative		7,290			4,600			16,706			14,186
Depreciation and amortization		3,737			3,073			10,613			8,770
Total operating expenses		11,027			7,673			27,319			22,956
Operating income		13,804			17,144			42,717			44,092
Other income (expenses):
Interest and dividends		13			806			95			1,098
Interest expense		(299	)		(182	)		(887	)		(591	)
		(286	)		624			(792	)		507
Income from operations before provision
for income taxes		13,518			17,768			41,925			44,599
Provision for income taxes		1,348			889			1,967			1,730
Consolidated net income		12,170			16,879			39,958			42,869
Less: Net income attributable to noncontrolling interest		(14,472	)		(15,552	)		(41,541	)		(40,380	)
Net income (loss) attributable to HealthTronics, Inc.	$	(2,302	)	$	1,327		$	(1,583	)	$	2,489
Basic earnings per share attributable to HealthTronics, Inc.:
Net income (loss) attributable to HealthTronics, Inc.	$	(0.06	)	$	0.04		$	(0.04	)	$	0.07
Weighted average shares outstanding		41,043			37,503			37,666			36,666
Diluted earnings per share attributable to HealthTronics, Inc.:
Net income (loss) attributable to HealthTronics, Inc.	$	(0.06	)	$	0.04		$	(0.04	)	$	0.07
Weighted average shares outstanding		41,043			37,604			37,666			36,734

HealthTronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

($ in thousands)	September 30, 2009			December 31, 2008
ASSETS
Total current assets	$	60,423		$	63,689
Property and equipment, net		30,952			32,769
Goodwill		103,000			93,620
Other assets		57,290			44,308
	$	251,665		$	234,386
LIABILITIES
Total current liabilities	$	65,628	*	$	18,274
Long-term debt, net of current portion		2,069			43,897
Other long-term liabilities		8,283			5,120
Total liabilities		75,980			67,291
Total HealthTronics, Inc. shareholders' equity		132,310			119,372
Noncontrolling interest		43,375			47,723
	$	251,665		$	234,386

* Includes $44 million outstanding on our credit facility due in March 2010.

HealthTronics, Inc. and Subsidiaries
Supplemental Financial Information
Continuing Operations
For the Periods Ended September 30, 2009 and 2008
(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except per share data)	2009			2008			2009			2008
Summary of results from operations
Revenues	$	47,283		$	44,771		$	135,051		$	121,305
EBITDA(a)	$	21,555		$	21,782		$	59,625		$	56,590
Adjusted EBITDA(a)	$	7,083		$	6,230		$	18,084		$	16,210
Net income (loss)	$	(2,302	)	$	1,327		$	(1,583	)	$	2,489
EPS	$	(0.06	)	$	0.04		$	(0.04	)	$	0.07
Number of shares		41,043			37,604			37,666			36,734
Other information:
After Tax Cash Flow(a)	$	4,089			(b)			(b)			(b)
Net draws (payments) on senior credit facility	$	9,000		$	6,000		$	3,000		$	6,000
Net debt	$	37,873		$	(6,322	)	$	37,873		$	(6,322	)
Capital expenditures:
Corporate level	$	568		$	2,053		$	1,687		$	5,900
Partnership level		718			1,094			4,025			2,862
Total	$	1,286		$	3,147		$	5,712		$	8,762

(a) See accompanying reconciliation of EBITDA, Adjusted EBITDA, and After Tax Cash Flow.

(b) See accompanying discussion of After Tax Cash Flow.

HealthTronics, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Continuing Operations
For the Periods Ended September 30, 2009 and 2008
(Unaudited)

(In thousands)
ADJUSTED EBITDA
	Three Months Ended September 30,					Nine Months Ended September 30,
Consolidated	2009			2008		2009			2008
Income (loss) from continuing operations	$	(2,302	)	$	1,327	$	(1,583	)	$	2,489
Add Back (deduct):
Provision for income taxes		1,348			889		1,967			1,730
Interest expense		299			182		887			591
Depreciation and amortization		3,737			3,073		10,613			8,770
Restructuring costs		3,196			198		3,886			160
Sharebased compensation costs		805			561		2,314			2,470
Adjusted EBITDA		7,083			6,230		18,084			16,210
Add Back:
Noncontrolling interest expense		14,472			15,552		41,541			40,380
EBITDA	$	21,555		$	21,782	$	59,625		$	56,590

AFTER TAX CASH FLOW
	Three Months Ended September 30, 2009
Cash provided by operating activities	$	9,884
Add Back (deduct):
Cash paid for acquisition related costs		9,232
Distributions to noncontrolling interests		(15,027	)
After Tax Cash Flow	$	4,089

NON GAAP NET INCOME
	Three Months Ended September 30,
	2009			2008
Income (loss) from continuing operations	$	(2,302	)	$	1,327
Add Back (deduct):
Provision for income taxes		1,348			889
Restructuring costs		3,196			198
Sharebased compensation costs		805			561
IRS interest income		--			(700	)
		3,047			2,275
Provision for income taxes at a
normalized rate of 38.5%		(1,173	)		(876	)
Non - GAAP net income	$	1,874		$	1,399
Non - GAAP net income per share	$	0.05		$	0.04

EBITDA - Endocare
	Three Months Ended September 30, 2009
Loss from continuing operations - Endocare	$	(1,985	)
Add Back (deduct):
Depreciation and amortization - Endocare		312
Restructuring costs - Endocare		2,598
EBITDA - Endocare	$	925

EX-99

Exhibit 99.2

HEALTHTRONICS, INC.

Moderator: James Whittenburg

11-05-09/4:00 pm CT

Confirmation # 2141758

Page 1

HEALTHTRONICS, INC.

Moderator: James Whittenburg

November 5, 2009

4:00 pm CT

Operator:

Good day and welcome to the HealthTronics third quarter 2009 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Tina Macaluso. Please go ahead, ma'am.

Tina Macaluso:

Thank you. I'm Tina Macaluso. James Whittenburg, our President and Chief Executive Officer, and Richard Rusk, our Chief Financial Officer, are also on the call. Before we begin I remind everyone that this call will contain forward-looking statements regarding HealthTronics and our subsidiaries and the services we provide. Investors are cautioned that all such statements involve risk and uncertainty. Investors are also cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this presentation. HealthTronics takes no obligation to publicly revise these forward-looking statements. Please refer to our press release as well as our SEC filings for discussion of the risk related to your forward-looking statement. Now I'd like to turn the call over to James.

HEALTHTRONICS, INC.

Moderator: James Whittenburg

11-05-09/4:00 pm CT

Confirmation # 2141758

Page 2

James Whittenburg

Thank you, Tina. Let me start by announcing publicly the appointment of Richard Rusk to the Chief Financial Officer role. Richard joined HealthTronics in August 2000 and has served exceptionally well in numerous financial positions at the company. The Board and I are very fortunate to have Richard assume the full duties of CFO. His skills and leadership will continue to create additional value for our shareholders. Now a brief financial summary. The revenue is in line with expectations and we are very encouraged by the results of the third quarter. As stated in today's press release, HealthTronics business is performing well thanks in large part to our core lithotripsy business as well as recent acquisitions. The integration of these businesses has been a smooth and rapid process resulting in business synergy surpassing our preliminary projections. The Endocare and laboratory businesses, in particular, are both creating additional financial value as we introduce innovative technologies and services throughout our platform and physician partnerships. In addition, we're excited about our integrated and cross-trained sales force. With this infrastructure in place, we believe there is significant potential to fully leverage the entire suite of HealthTronics products and services throughout the existing channels as well as the personnel resources to cultivate new markets. Lastly, we introduced an additional financial metric in today's release, after-tax cash flow. I will explain this metric in detail at the end of the call. But now, Richard will review the financial results from the quarter. Richard?

Richard Rusk:

Thank you, James and I look forward to serving as CFO.

HEALTHTRONICS, INC.

Moderator: James Whittenburg

11-05-09/4:00 pm CT

Confirmation # 2141758

Page 3

As their practice, we've included attachments to our press release which provides certain details, supplemental financial tables, and schedules. These schedules provide detailed earnings data for the results of operations through September 30, 2009. I direct you to those tables for comparisons.

Total revenues for the third quarter of 2009 were $47.3 million compared to $44.8 million in the third quarter of 2008. This 5.6% growth, year of year was driven primarily by our anatomical pathology, and IGRT operations as well as our new Endocare acquisition. Our total cost of revenue was $22.5 million in the third quarter and as a percent of revenue was 48%. Our selling, general, and administrative costs were $7.3 million. Our adjusted EBITDA for the third quarter was $7.1 million.

Lastly, our operating cash flow excluding cash paid for acquisition related costs was $19.1 million for the quarter. Now, let's look at (more to tell) at our performance in the third quarter. Our revenues on a same store, partnership basis declined slightly from the third quarter of 2008 but increased sequentially over the second quarter of 2009. Overall litho revenues decreased approximately 1% in the third quarter of 2009 from the same quarter in 2008.

Our prostate revenues decreased approximately $700,000 in the quarter as to compared to the third quarter of 2008. Revenues from our prior operations have been consistent for the last three quarters and our actual pre-tax contribution from these operations was approximately $600,000 more in the third quarter of 2009 as to compared to the third quarter of 2008.

Revenues from our lab operations increased $650,000 over the same period in 2008. This increase was primarily driven by revenues from our Europath acquisition in July of 2008. Adjusted EBITDA was $7.1 million in the third quarter of 2009 which was up approximately $850,000 from the third quarter of 2008 and an increase of $1.5 million sequentially. At September 30, our balance sheet position remained strong. Currently we have $60 million capacity on our credit facility and have $44 million of that amount drawn at September 30, 2009. We will refinance the facility before its maturity date in March of next year.

HEALTHTRONICS, INC.

Moderator: James Whittenburg

11-05-09/4:00 pm CT

Confirmation # 2141758

Page 4

As we've discussed on previous calls we have two financial covenants. One is an interest coverage ratio. The other is a total debt ratio. We are well within both of these ratios. Our cash balance decreased $7.3 million as compared to the same period a year ago. This variance reflects our move to monthly partnership distributions versus distributions four times a year as was done in prior years. We believe a strong balance sheet as well as our strong cash flows from our core businesses will continue to provide us with strategic growth opportunities. Now, I would like to provide a brief update on our Endocare acquisition. The acquisition was successfully completed July 27th. Our third quarter legal, integration, severance, and other deal related costs totaled $3.8 million, $2.6 million of which are non-cash in nature, and represent incremental costs of goods sold due to our write-up of Endocare's inventory to fair value as part of our purchase accounting. We expect to expense an additional $2 million of merger related cost in the fourth quarter which will consist primarily of incremental cost of goods sold from this inventory write-up. Lastly, manufacturing operations will be relocated in the first quarter of 2010. Now, I'll turn it back over to James.

James Whittenburg:

Thank you, Richard. As stated earlier, the financial results for the third quarter were better than expected. I'll now highlight many of the benefits Endocare's contributing to our company. As you know, we closed the acquisition on July 27 and since that time the integration has been surprisingly smooth with strong, though admittedly early indicators that are very positive for HealthTronics.

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For simplicity sake, I will address our integration plan focusing on three primary areas: sales and marketing, manufacturing, and corporate and general and administrative.

Beginning with sales and marketing, it is important to recall that prior to the acquisition roughly 60% of Endocare's domestic sales were to HealthTronics affiliated entities. This background is important as we look at the potential strategic impact of Endocare's existing sales infrastructure in the context of our much larger platform. A platform which offers a diverse mix of products and services to the urology community.

Clearly, a substantial portion of the HealthTronics sales force can be redirected toward introducing the entire HealthTronics platform including our cryo partnerships while also maintaining the relationships with those physicians who have historically used Endocare's product. Accordingly, one of our first priorities has been to capitalize on the capacity that exists within the Endocare's cell structure by cross-training those sales people to promote the full range of our products and services.

The bulk of this cross-training occurred during the third quarter. In connection with the integration of our entire sales force. We hope to take advantage of the existing relationships of the Endocare sales force, which share the same call point for many of our services. The integrated sales force now sells across the entire HealthTronics platform. A significant impact of cross-training is a more consultative sales force that can address several different products and services with urologists.

With the majority of training behind us, we have begun to see early indications that a more robust sales effort will create significant shareholder value for HealthTronics. And we should quickly begin to see positive results in a program as our sales force introduces new products, modalities, and services within our channels.

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A priority in integrating the sales force was to reset the compensation framework and we will continue to evaluate our expenditure of resources in that context to ensure that it bears a rational relationship to the organic growth opportunities that exist.

Lastly, it is important to note that any positive revenue line impact outside of cryo has not been included in our previously issued financial guidance surrounding the Endocare acquisition. With respect to the manufacturing operations at Endocare, our goal is to complete the goal is to complete the relocation to Austin prior to March 1, 2010. And we believe we are on or ahead of schedule. The current Irvine, California lease ends March 31, and we have not renewed that commitment.

We are also confident that we have successfully secured the continue cooperation and support of those individuals who are needed to ensure a successful knowledge transfer and to the degree that employees in California were not able to relocation to Austin, we have successfully hired and begun training their replacements in the Austin market.

Finally, in terms of the corporate, and general and administrative costs, the integration has moved very quickly in many areas. First, we have successfully eliminated the costs most traditionally associated with public company infrastructure. Second, we have relocated all financial operations to Austin. Third, we've relocated all human resources and information technology functions to Austin with the exception of limited resources to provide support for manufacturing operations in Irvine until we complete the manufacturing relocation to Austin during Q1. Importantly, very little of the wage-related costs have fallen off the income statement during the third quarter when taken as a percentage of head-count because of the notice periods related to terminations.

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Moderator: James Whittenburg

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Now, I would like to address certain financial details related to the Endocare acquisition. We are pleased to report that in our third quarter results, Endocare added just over $900,000 in EBITDA for the 2-month period of August and September, significantly exceeding internal as well as the public expectations we discussed on our last call.

Before eliminating intercompany sales, Endocare contributed $4.6 million of revenue and after intercompany eliminations, Endocare contributed $2.7 million to the quarter. Because of these intercompany eliminations, the impact of Endocare going forward will be more pronounced on our net income line and accordingly will have a positive impact on our margin.

We also believe that both lease and labor costs will compare favorably once our integration is completed. Finally, the unique impact of Endocare to our results of operations also reflects the absence of any non-controlling interest expense related to its revenue contribution.

To summarize, Endocare's contribution to HealthTronics, the logical question many of you have may be how these results changed prior guidance. For now they don't but we do expect a meaningful impact in future results over August and September as wage-related costs fall more significantly and we are able to lower lease costs through the integration process.

However, it is safe to say that the third quarter results specific to Endocare may give our investors a higher confidence level in our earlier projections. In terms of the Endocare workforce, a significant majority of head count reduction did not impact Q3 results. And while head-count reductions did not substantially impact Q3, the Endocare reduction and workforce was from 109 at acquisition close to 81 beginning in the fourth quarter. This includes a reduction in the sales force from 39 to 31 positions.

We project that when fully integrated we’ll retain approximately 70 total positions with minimal additional reductions in sales and marketing. If however, the efforts of the sale force do not yield revenue growth in other segments of the business, the reductions in this area may be greater. Next, our anatomical pathology business.

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As Richard discussed the pathology laboratory's business continues to demonstrate strong growth. This business is one in which we remain very optimistic as an emerging business segment and one which grew 32% over the third quarter of 2008.

To give you some background on the market opportunity, we are pursuing the non-hospital prostate and bladder cancer screening segments that is typically diagnosed by Urologists, a market valued at over $1.8 billion. The drivers of this segment include an again population, along with an increased risk of cancer and medical advancement allowing for earlier diagnosis and treatment of disease. The opportunity exists principally because the anatomic pathology market is highly fragmented with the top ten national companies holding a 23% market share with independent labs pathology groups and hospital groups owning the balance. We obviously have only a very small percentage of this business today but believe our pathology laboratory solution is compelling as it offers the most advanced and broadest range of compliant business models for physician partners.

Through cutting edge technology and expert europathology staff, we are able to provide clarity, convenience, and accuracy at every level. As you may guess, the Europath acquisition of 2008 provided significant momentum to this initiative.

To attain significant market share HealthTronics pathology laboratories has and will continue to deliver quality diagnostics and business partnerships to the urologists nationally. We have a number of business models that can be tailored to each individual physician practice with each solution backed by HealthTronics legal, financial, regulatory, and compliance expertise, a unique strength within the laboratory industry.

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Our current financial models include our TCPC program which is centered around our slide preparation services. This offering provides urologists with the financial opportunity to engage a local pathologist to work on-site in their practice and provide professional pathology interpretation of their specimens while receiving from HealthTronics the most advanced technical preparation of patient tissue and urine specimens for their in-house evaluation.

An example of TCPC is a client that has decided HealthTronics can perform a superior quality of urine cytology than they can afford to invest in. So they send the technical processing to HealthTronics and internalize the professional interpretation of this test with their pathologists.

A second model involves a remote physician office lab, or our POL model. This model provides physician's the advantage of owning a lab for in-office preparation and interpretation of specimens along with a guidance and administration of industry leading europathology professionals. Partners enjoy the benefits of an in-house lab without the stress of managing the operation in its entirety.

To give you an example, as the innovators of and the sole source in the market for the remote POL lab management model, we have established more than 18 such partnerships nationwide serving over 239 physicians and 100 urology practice locations.

A third model is our customized laboratory build-out and management consultation with an internalized physician office laboratory. This is a unique consultative offering created to meet the demands of large practices looking to fully internalize their anatomic pathology and other laboratory services. Each model is designed as a custom fit for the individual practice to include aspects of project management of build-out, capital acquisition consultation, billing assistance, lab information technology and technical supervision.

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Ongoing management of the laboratory is also offered to include regulatory and compliance responsibilities. It is intended to satisfy the most discerning practices striving for a long-term practice ownership solution. An example of this model is an agreement we recently signed with a 100-plus urologist group where HealthTronics is building a new laboratory and will manage the lab business for the partners. This will be the largest urology onsite physician-owned laboratory in the country.

In summary, HealthTronics pathology laboratories provide the industry's broadest and most advanced range of in-office lab management solutions ensuring unmatched expertise, sustained compliance and maximum profitability for our partners. We are excited about this segment of our business.

I'd like to address aspects of our sales force. I'll now give you some additional detail on the sales force and the subsequent optimism we hold for this group. To begin, each individual sales person now has the resources to sell across our entire platform of modalities. Pathology, cryosurgery, lithotripsy, laser for BPH and lead generation for our radiation therapy initiative. As we deploy our sales resources in the pathology space, we expect there to be significant growth and rather quickly within our lab business.

Finally it is important to note that we successfully completed the cross-training of the sales force in Q3 and given the timing we have not yet had a chance to realize top-on impact from the expanded sales efforts though we should begin to see strong results from this multi-trained sales force beginning in Q1 of 2010.

The balance of our business is producing as expected. Our radiation therapy center initiative remains on-track and, in fact, we've signed another LOI this past quarter. The lithotripsy business continues to be the foundation of our company contributing over $27 million in revenue this past quarter. With respect to our BPH laser business we continue to evaluate new laser technologies and our preliminary review and analysis is very positive on one technology in particular. We hope to update you on this technology on the next call.

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Moderator: James Whittenburg

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Lastly, cryotherapy. With our Endocare acquisition completed we are now seeing a return to previous revenue levels in this business. Now a brief update on our credit facility.

We currently have a $60 million credit facility with $44 million drawn. As always, we strive to maintain flexibility in managing our capital structure and in pursuing strategic opportunities. But in terms of additional acquisitions and given the integration process underway with Endocare, only extremely attractive acquisitions like Endocare will be considered during 2010.

In terms of healthcare reform, as many know, there are many moving parts market participants and partisan views in the current debate surrounding healthcare policy taking shape throughout the country. We covered this at length on our last call and I will only briefly summarize again today that we believe our diversified and uniquely structured business effectively addresses the current regulatory environment and that we are well positioned to respond to any potential regulatory or legislative changes.

Now some details on our new financial metric. From this point forward we will highlight a metric from our cash flow statement that will provide added insight into our financial health and performance. The intent is to give investors a clear picture of the cash flow being generated by HealthTronics at the corporate level. We feel the best way to do this is using our net cash provided by operating activities and subtracting the distributions to minority interests.

It is important to note that this metric fully account for both interest and taxes paid during the period. For simplicity we will refer to this metric as after tax cash flow. We believe that after tax cash flow highlights company benefits that historically have not been well reflected in our gap earnings.

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For example, after tax cash flow includes the impact of changes in working capital, and thereby provides better insight into our ability to manage payables, receivables and inventory which is something we feel is a strength that has not been previously highlighted. Perhaps more significantly, over the past few years, we have had several non-cash impairments as well as a large differential between actual cash taxes paid and the taxes shown on the gap income statement. As of September 30, we have over $238 million of federal net operating loss carry-forwards which are available to offset federal taxable income through 2028 subject to certain annual limitations under Internal Revenue code sections 382 and 383. Over $131 million of these federal net operating loss carry forwards result from Legacy Endocare.

For illustrative purposes I would like to compare our third quarter EPS for net income to after-tax cash flow. For the third quarter our after-tax cash flow excluding one-time Endocare transaction cost totaled $4.1 million as compared to $1.2 million in net income. Given that this is the first time we have discussed this metric, I will refer you to the cash flow statement and walk through the calculation. In the third quarter, net cash provided by operating activities totaled $19.1 million excluding Endocare cash transaction costs. Subtracting $15 million in distributions to minority interests, yields the after-tax cash flow of $4.1 million. To convert from this metric to what is typically referred to as free cash flow, one would ordinarily subtract capital expenditures made at the corporate level.

It is important to note that purchases of equipment and leasehold improvements reflected on our cash flow statements includes capital expenditures at both the corporate and partnership level. And a significant portion of expenditures are made in equipment at the partnerships. Thus we will also be reporting a break-out of capex at the corporate and physician partnership level during each period.

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Moderator: James Whittenburg

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For the third quarter, capex totaled $1.3 million, $568,000 of which was at corporate and wholly- owned entities and that includes are lab, manufacturing, and device service operations and $718,000 of which was at the partnership level. Please note that capital expenditures at the partnership level are borne by our partners in relation to their ownership, which on average is approximately 80%. You'll recall that earlier this year we changed the schedule by which we make partnership distributions. Prior to 2009, distributions to our partners were made on an irregular, quarterly basis that was based on the tax calendar. They are now done on a more consistent, monthly basis. At the time we made the switch I indicated that one benefits would be increased transparency into operating cash flows for the investor community. Thus, by highlighting after-tax cash flow in our quarterly releases, we'll be leveraging this increased transparency. However, given the irregular distribution schedule in prior years be aware that we will not be able to make year over year comparisons until the first quarter of 2010. At this point, we are not changing our guidance from the last call. In summary, HealthTronics is dedicated to bringing urologists together with effective new diagnostic and therapeutic technologies providing top level expertise and offering comprehensive, day-to-day services that improve patient care and provide physicians with ancillary income opportunities. The third quarter demonstrated solid performance in all areas from the Endocare acquisition and its integration to expanding our lab business to cross training a sales force across our entire platform of services and products. Operator, we are now happy to take questions.

Operator:

Thank you, sir. 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 1 on your touchtone telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again if you would like to ask a question, please press star and the digit 1 on your touchtone telephone. And will take our first question from David MacDonald with SunTrust.

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David MacDonald:

Good afternoon, guys. Couple of questions, James. First, can you give me a sense? What is the total number of sales folks that were currently at right now? And I think you had mentioned that pretty much all of the cross-training is done. Where are some of the areas where you think you'll get the most traction where maybe you were a little light on sales people and now that you've got kind of more horses there's a pretty good opportunity?

James Whittenburg:

Yes, thanks David. Thanks for joining us this afternoon. So the Endocare sales force we have had a handful of departures and we have approximately 40 individuals connected with the sales force today. We did have some individuals that were involved with our lab sales effort prior to the Endocare transaction and that accounts for the differential from the numbers we spoke of earlier in the call specific to Endocare. And we do have a couple of folks that are marketing-specific that I'm including in that number. So as you look at the cross-trained sales force and we have completed that process, the area where I expect to see the most significant impact is in the lab. And that's an area, candidly given the nature of our offering, and the unique aspects of our offering, it did take a substantial amount of effort to educate sales people that did not historically have lab experience but who did share relationships with urologists and the urology space up-to-speed on our offering. And so, it's one of the things we're going to watch closely during the fourth quarter. And we do expect to see a very significant contribution in the first quarter and we have directed most of those efforts at the lab space.

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David MacDonald:	And then, James. I apologize I missed a piece of this. You were talking in your prepared comments about a physician-owned lab that would be the largest physician-owned lab with one of your partnerships. Can you just give me a little more detail on that?
James Whittenburg:	Yeah, I'd be happy to. So one of the alternatives that we offer through our laboratory division is a fairly comprehensive lab management arrangement where we actually provide management of a lab that exists onsite at the urology practices primary office location. And we, I was referring to an agreement that we recently reached with what we believe may be the largest urology practice in the country and has brought laboratory services entirely in-house within their practice and they partnered with us to provide both some management services, procurement, a certain materials related to their lab services, and help in structuring the operations of the lab itself.
David MacDonald:	OK. And I don't know if you can give this level of detail but is this practice in the Northeast?
James Whittenburg:	It is.
David MacDonald:	OK. A couple of other questions just in terms of the IGRT business. Well actually, one more on the lab. Is that nearing kind of 10% of revenues yet? Is there a point where you start breaking that out if that becomes you know starts growing quickly enough to warrant it?
James Whittenburg:	There's always the possibility that we would need to break it out. But it's not at this point nearing 10% of revenues, David. And I don't anticipate that it would anytime before the end of 2010.
David MacDonald:	Couple of other questions, just on the radiation therapy, can you give a quick update on Ocean, kind of how that's doing? And then you know is three a year still a number that we should be thinking about you know assuming that these (doc fixes) continue to get fixed on an annual basis which you know we would assume?

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James Whittenburg:

Yes, I'd be happy to answer those. So Ocean had performed consistently with the prior quarter. I can say that we have seen an uptick in procedures that were done more recently done in October and so we were encouraged by that. You'll recall in the last earnings call that we did indicate that we felt like there was some impact from the general economic conditions in the Florida market in which that center operates. And so we do have some reason to be encouraged. And we've looked at some other creative things in consultation with our partners in that market that could potentially add to the volume at that center. With respect to the number centers that we might open per year, as I indicated on the last call you know we more than anything were impacted by the proposed rate cuts that came out earlier this year. And those had a pretty substantial effect just in delaying the centers that we had under LOI with today, number 5. And then we've got a number of other opportunities that are working on beyond that. But we certainly had five under LOI, in addition to the two operational centers and it really had the effect of stalling all progress on those developments until we had some clarity. We do feel like we're gaining a much greater degree in clarity and we have a much higher comfort level that any reimbursement cuts are something that should not adversely impact that business over the next couple of years. And so we have begun to see progress in moving forward with those centers as of late. But that impact will result in our probably not having a center open until the very end of 2010 or early 2011. At that point, though, I do think three centers a year, at least with visibility out in to 2013 is a reasonable assumption.

David MacDonald:

OK. And then just last question, Richard you know you guys talked about $3.8 million in the quarter of one time and there's $3.2 that shows in the press release. Can you just give us a sense of what the delta is in that $600,000? Is that severance?

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Richard Rusk:	No, actually it's going the other way, David. The $3.8 was cost-related to the transaction of Endocare itself. We also had a $600,000 kind of one time gain in the quarter and so we netted that. I mean if you're going to back out the transaction cost as one-time, we think you back out the one-time gains as well. So the transaction cost actually exceeded the one-time cost we end up pulling out net.
David MacDonald:	OK. Thank you.
Operator:	And as a reminder if you would like to ask a question, please do so by pressing the star key followed by the digit 1 on your touch tone telephone keypad. And we'll take our next question from Mitra Ramgopal with Sidoti & Company.
Mitra Ramgopal:	Yes, hi. Good afternoon, guys. Just a couple of questions. If you had to look at the sort of the four areas you’re in it seem like cryo, we should certainly expect some growth there and also from lab. But looking at litho we saw it was down 1% in the quarter versus the year ago. Asset acquisitions, should we look for any growth in that area?
James Whittenburg:	Mitra, I think the best way to view litho is flat to a very slight growth profile anywhere from 1 to 3%. We will I think over the course of the year have opportunities to add partners in the litho context. That's really what will result in growth and it's just not something given the nature of the maturity of the market, and the nature of – most urologists' participation in existing deals that have covenants that tie them into those deals. It's not something we expect to see a lot of.
Mitra Ramgopal:	OK and again if you can remind me again. I believe prostate was down about 700,000 versus a year ago. The reason for that again was?

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James Whittenburg:	The real reason, I think we had two pieces. One just procedures across our cryo operations were down, Mitra. And also we experienced a decrease in laser and some of that related to the uncertainty and some of it was moving around with the regs that were going into effect October 1.
Mitra Ramgopal:	OK and then coming onto Endocare. Obviously the deal, you had about 2 months in the quarter when the transaction closed but is it still the case we're in the fourth quarter a lot of the cost savings or synergies will become apparent or did we start to see it really in the third quarter?
James Whittenburg:	I think it really is a combination of the two. We will see some synergies in the fourth quarter that we have not yet seen. But we also did see synergies in the third quarter that we recognized more quickly than we had anticipated at the time of the last call.
Mitra Ramgopal:	OK. Thanks again, guys.
James Whittenburg:	You bet.
Operator:	And as a reminder if you'd like to ask a question, please press star and the digit 1 on your telephone keypad. We'll take our next question from Kevin Kotler with Broadfin Capital.
Kevin Kotler:	Hi, good evening.
James Whittenburg:	Hey, Kevin.
Kevin Kotler:	Just on the Endocare, what would have been the number for a full 3 months, in terms of revenues?

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James Whittenburg:	I'm a little reluctant to speculate on that because we'd literally be fabricating them. Now if we took just the 2 months and annualized it you'd be talking about 1.35, something like that in terms of EBITDA.
Kevin Kotler:	Right, OK. I mean it looked like if you just divide, whatever the number, 4.6 divided by 2 and times it by 3 to get like what the quarter would have been. It was around you know around $6.8 million. So I just was curious you know.
Richard Rusk:	I mean, it was consistent month over month for us in those 2 months.
Kevin Kotler:	OK. The other thing is just on the balance sheet, I know there's different people out there with estimates on expenses and maybe you addressed this on the call, I got interrupted. Interest expense, you have a very low interest expense rate now on your debt and you refinanced it. Can you just give us a feel for what that would do for interest expense costs? So that everyone could put in their models kind of going forward, what the right numbers are?
James Whittenburg:	I think given the stage were at in discussion with our existing syndicate, what I can tell you is we feel very good about the timing in terms of our refinancing that facility. And we’re very happy with our syndicate partners. We have very strong relationships with them. And we feel like the rate that we will have moving forward is reasonable under the current market conditions but it has not yet been finalized from a timing stand point. At this point it's something we would expect to happen before the end of the year, so you would have much better clarity by that time.
Kevin Kotler:	But your interest expense costs now relative to what it could be. So is it 2, 300 basis point increase in interest expense or interest?

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James Whittenburg:	Kevin, I really can't respond to that at this point.
Kevin Kotler:	OK. OK. Terrific. And I guess as far as acquisition mode, where are we in terms of you got Endocare, you're going to do this debt refinancing, what should we be expecting as far you know you trying to build the business? Do you have all the pieces now? Just some expectation on that side.
James Whittenburg:	Yes, I think for the first time since I've been sitting in the CEO role, we feel like we have all of the pieces in place to generate significant shareholder value and compelling growth over the next 12 months. And that we're not looking to do an acquisition that's strategic in nature to fulfill that goal. And so it doesn't mean that we would not look at an acquisition if we felt like it were truly compelling. But it's certainly not a priority of ours.
Kevin Kotler:	Got you. And do you have any comments just to share; the stock prices have been terrible. And if I took how bullish you're – the positive feeling you get off the call to what the reality of your stock price, is there any effort on the marketing front for the management team to go tell the story? Or is there some other way to try to drive some shareholder value?
James Whittenburg:	You know I think one of the things that we can do is tell the story more easily once we've been able to demonstrate that a major area of uncertainty, which was the Endocare transaction itself, is panning out the way we expected to if not better. So you have to remember, Kevin, that Endocare is a company that had lost $6 million on an EBITDA basis I believe in the year before our acquisition of it. And so arriving at the kinds of projections that we did on the last call required a great degree of confidence in our ability to execute on the integration. Now we think with even 2 months of contribution from Endocare, we now have a concrete basis to be able to demonstrate that our projections are, in fact, very reasonable and so it something that we can begin to articulate more aggressively.

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Kevin Kotler:	Lastly, I'm just looking at some operating expenses. I guess I look at it and I say SG&A prior to the acquisition was 4.6 in the first quarter, 4.9 in the second quarter. I hope that agrees with what you have or basically. And then it jumps to 7.3. I know you said that Endocare wasn't fully synergized as of yet. Was there one time numbers in that 7.3 that I'm supposed to be pulling out.
James Whittenburg:	There's about $1.2 million related to transaction costs that are now expensed under the current accounting guidance that were not prior to this year related to legal fees, printing costs, investment bankers, and then the other part of the jump is the Endocare sales and marketing effort. That totaled about $1.5 million in the quarter. So really it was base HealthTronics pre-acquisition. It was flat quarter to quarter.
Kevin Kotler:	Got you. So you had five and two, that would make it flat. And I guess if we look at fourth quarter, I should go back to that kind of 4, 4, 9, 5 number for the fourth quarter or I guess does the ...
James Whittenburg:	The Endocare sales will continue.
Kevin Kotler:	What?
James Whittenburg:	The Endocare sales and marketing will continue.
Kevin Kotler:	So it's going to be 4.9 plus, was it the 1.5?
James Whittenburg:	Right, which is only a 2 month number if you remember?

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Kevin Kotler:	OK. Got you. So I have to. So it's like 750 on top of that. So it's 4.9 plus whatever, 2.2. So that's like a 72 number. So there's getting some leverage over there? And then I guess the operating margin, again doing the same math, on gross margin it looked like we're, based on the conversation that you had. You're moving in March so it's really in March where you see the jump up in gross margins or was there something else, maybe?
James Whittenburg:	Once again, if you look at like gross margin for the 3 months, I think it's around 48%, that included you know the non-cash charge of $2.6 million related to writing up the inventory through purchase accounting. So essentially you get very little margin on what you sold related to the Endo care inventory.
Kevin Kotler:	Right.
James Whittenburg:	If you take out that $2.6 million non-cash item that's in the cost, you should get around 42 or 43 in margin, which is actually an improvement or previous quarters. We probably averaged about 48 in previous quarters. I think 45 last year.
Kevin Kotler:	So if I take the 2.2, I think you reported 2.2 ...
James Whittenburg:	$2.6 million of inventory, incremental inventory costs in this quarter needs to come out of that cost of revenue number to tray and get a true margin without the purchase accounting hitting it.
Kevin Kotler:	I was going to ask you. I just did it and I went from $2.245 million less 2.6, that got me cost of sales of $19.9, and that got me gross profit of $27 which got me gross margins of 58. That's obviously a lot higher than what you're saying. Is that math, right?
James Whittenburg:	I don't have a calculator in front of me. I thought it was around 40.

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Moderator: James Whittenburg

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Kevin Kotler:	Yes, on a gross. Because I've got it flipped on the 42 inverted.
James Whittenburg:	OK. I'll take this off-line. OK, I will do that. Thank you, guys.
James Whittenburg:	You bet.
Operator:	And as a final reminder, if you would like to ask a question, please do so by pressing the star key, followed by the digit 1 on your telephone key pad. And we'll take our next question from Craig Pieringer with Wells Capital Management.
Craig Pieringer:	Good afternoon. Congratulations on your appointment, Richard.
James Whittenburg:	Thank you.
Craig Pieringer:	And thanks for adding the after tax cash flow 'cause I think that will be a good metric to gauge cash flow going forward. Appreciate that. Talking about EDAP for a second. They had a release talking about the placement of their sonolith isys machine with you guys in October and it was their first placement. They thought it was a pretty big deal enough to warrant a press release. How many of those machines will HealthTronics eventually buy?
James Whittenburg:	That's not something I think we have visibility into at this time. What I can say about the device is we do like its functionality and we think it will have a reception in the U.S. market and over the next few months there are certain of our partnerships that will have an opportunity to see the technology. And we'll probably have a better feel for ultimately the magnitude of its reception and the opportunity it has in the U.S. market 6 months from now that we do today.

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Craig Pieringer:	Does corporate HealthTronics bear the financing of that or do the partnership?
James Whittenburg:	Partnerships will bear the financing of equipment that's put in place. At this point, the device that's been purchased was purchased by HealthTronics. But we are confident that it will wind up at a single partnership. And one of the reasons we purchased it via HealthTronics is because we do intend to show it to more than one partnership over the next couple of months.
Craig Pieringer:	How much is the average price for one of those machines?
James Whittenburg:	I'd rather not discuss that on this call.
Craig Pieringer:	OK. And you financed that out of cash on hand I presume?
James Whittenburg:	Yes.
Craig Pieringer:	And continuing on the EDAP connection, I was surprised to see (Argil Wheelock) joining their board. Does that mean the two companies are somehow becoming closer, intertwined?
James Whittenburg:	No, it does not. (Argil) had a relationship with EDAP board that extended back probably 10 years. And Argil is a well-recognized urologist in the urology community. And I think he was a good choice for their board. But I don't think investors should read anything into that as it relates to any strategic possibilities between the two companies.
Craig Pieringer:	OK. Good. And then I've asked on prior calls about some STARK discussions. I can't recall the technicalities but it seemed like things were coming to a head as of October of this year and you haven't addressed them so I presume they've all been ironed out. Is that right?

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James Whittenburg:	We didn't address them specifically on this call but I can say that we addressed them in great detail and successfully in advance of October 1. And so we were able to migrate all of our laser BPH and cryo operations into a full compliant model that we believe has economics that are at least as favorable as those we had before their regulations became effective.
Craig Pieringer:	OK, James. Keep up the good work. Thank you.
James Whittenburg:	Thank you, Craig.
Operator:	And that is all the questions we have at this time. I'd like to turn the conference back over to you, sir, for any closing remarks.
James Whittenburg:	Thank you all for joining us this afternoon. Have a good day.
Richard Rusk:	Thank you.
Operator:	And that concludes today's conference. We thank you for your participation. You may now disconnect.

END