NovaMed (NOVA)

Product Sales

        We own and operate an optical laboratory business that specializes in surfacing, finishing and distributing corrective lenses and eyeglass lenses. Our laboratories have in excess of 275 active customers, including ophthalmologists, optometrists, opticians and optical retail chains. Our optical products purchasing organization allows eye care professionals to purchase optical products through us from more than 250 suppliers. We expanded our purchasing organization in December 2007 when we acquired an optical products purchasing organization based in Minneapolis, Minnesota. With this acquisition, we now process consolidated monthly billing for over 2,500 customers. Customers of these businesses include our former affiliated doctors who are parties to two remaining multi-year optical supply agreements with us pursuant to which our group purchasing organization and optical laboratories are the primary providers of optical products and supplies to these doctors. Generally, unless the parties agree on extensions, one of these supply agreements will expire in May 2009 with the other expiring in December 2012. The product sales revenue generated from these customers in 2008 constituted seven percent of our total product sales revenue.

        In addition, our marketing products and services business provides eye care professionals and vendors with a range of products and services including brochures, videos, advertising and website design, education and training programs, and consulting services.

        In August 2008 we acquired MDnetSolutions, a call center and marketing solutions company serving primarily the bariatric market. Bariatrics is a growing surgical specialty in light of the current obesity and diabetes epidemics in the United States. MDnetSolutions provides a broad range of services and products to the bariatric community, including call center services, websites and a software program that tracks and manages patient leads for providers. MDnetSolutions' customers include bariatric practices, ASCs and hospitals.

        We also have a long-term service agreement with an optometric practice located in Illinois. The optometric practice also has a retail optical outlet that sells eyeglasses and other products to patients. We provide all of the services, facilities and equipment necessary to operate this optometric practice under a 25-year service agreement. The services include:

•

billing, collection and cash management services



•

procuring and maintaining all office space, equipment and supplies



•

subject to federal and state law, recruiting, employing, supervising and training all non-professional personnel



•

assisting in recruiting additional doctors



•

all administrative and support services



•

information technology services

Product Sales

        We own and operate an optical laboratory business that specializes in surfacing, finishing and distributing corrective lenses and
eyeglass lenses. Our laboratories have in excess of 275 active customers, including ophthalmologists, optometrists, opticians and optical retail chains. Our optical products purchasing organization
allows eye care professionals to purchase optical products through us from more than 250 suppliers. We expanded our purchasing organization in December 2007 when we acquired an optical products
purchasing organization based in Minneapolis, Minnesota. With this acquisition, we now process consolidated monthly billing for over 2,500 customers. Customers of these businesses include our former
affiliated doctors who are parties to two remaining multi-year optical supply agreements with us pursuant to which our group purchasing organization and optical laboratories are the
primary providers of optical products and supplies to these doctors. Generally, unless the parties agree on extensions, one of these supply agreements will expire in May 2009 with the other expiring
in December 2012. The product sales revenue generated from these customers in 2008 constituted seven percent of our total product sales revenue.

        In
addition, our marketing products and services business provides eye care professionals and vendors with a range of products and services including brochures, videos, advertising and
website design, education and training programs, and consulting services.

        In
August 2008 we acquired MDnetSolutions, a call center and marketing solutions company serving primarily the bariatric market. Bariatrics is a growing surgical specialty in light of
the current obesity and diabetes epidemics in the United States. MDnetSolutions provides a broad range of services and products to the bariatric community, including call center services, websites and
a software program that tracks and manages patient leads for providers. MDnetSolutions' customers include bariatric practices, ASCs and hospitals.

        We
also have a long-term service agreement with an optometric practice located in Illinois. The optometric practice also has a retail optical outlet that sells eyeglasses and
other products to patients. We provide all of the services, facilities and equipment necessary to operate this optometric practice under a 25-year service agreement. The services
include:

•

billing, collection and cash management services




•

procuring and maintaining all office space, equipment and supplies




•

subject to federal and state law, recruiting, employing, supervising and training all non-professional
personnel




•

assisting in recruiting additional doctors




•

all administrative and support services




•

information technology services

Product Sales

        We believe there are opportunities to grow our products sales business by adding customers, as well as offering a broader range of products and services. In December 2007, we added to our optical products group purchasing organization by purchasing another purchasing organization based in Minneapolis, Minnesota. In August 2008, we supplemented our marketing products and services business by acquiring MDnetSolutions, a call center and marketing solutions company serving primarily the bariatric market.

Product Sales

        Our two optical laboratories face a variety of national, regional and local competitors. We compete in the optical laboratory market on the bases of quality and breadth of service, reputation and price.

        In the market for providing optical group purchasing services, we primarily compete with national and regional buying groups, as well as large vendors. Competition in this market is based upon service, price and the strength of the purchasing organization, including the ability to negotiate discounts with suppliers.

        Our marketing products and services businesses, Patient Education Concepts and MDnetSolutions, compete in a fragmented market, with no dominant competitors that have significant market share.

Product Sales

        We believe there are opportunities to grow our products sales business by adding customers, as well as offering a broader range of
products and services. In December 2007, we added to our optical products group purchasing organization by purchasing another purchasing organization based in Minneapolis, Minnesota. In August 2008,
we supplemented our marketing products and services business by acquiring MDnetSolutions, a call center and marketing solutions company serving primarily the bariatric market.

Product Sales

        Our two optical laboratories face a variety of national, regional and local competitors. We compete in the optical laboratory market on
the bases of quality and breadth of service, reputation and price.

        In
the market for providing optical group purchasing services, we primarily compete with national and regional buying groups, as well as large vendors. Competition in this market is
based upon service, price and the strength of the purchasing organization, including the ability to negotiate discounts with suppliers.

        Our
marketing products and services businesses, Patient Education Concepts and MDnetSolutions, compete in a fragmented market, with no dominant competitors that have significant market
share.

Product Sales

        Our two optical laboratories face a variety of national, regional and local competitors. We compete in the optical laboratory market on the bases of quality and breadth of service, reputation and price.

        In the market for providing optical group purchasing services, we primarily compete with national and regional buying groups, as well as large vendors. Competition in this market is based upon service, price and the strength of the purchasing organization, including the ability to negotiate discounts with suppliers.

Product Sales

        Our two optical laboratories face a variety of national, regional and local competitors. We compete in the optical laboratory market on the bases of quality and
breadth of service, reputation and price.

        In
the market for providing optical group purchasing services, we primarily compete with national and regional buying groups, as well as large vendors. Competition in this market is
based upon service, price and the strength of the purchasing organization, including the ability to negotiate discounts with suppliers.

Product Sales

     Our two optical laboratories face a variety of national, regional and local competitors. We compete in the optical laboratory market on the bases of quality and breadth of service, reputation and price.

     In the market for providing optical group purchasing services, we primarily compete with national and regional buying groups, as well as large vendors. Competition in this market is based upon service, price and the strength of the purchasing organization, including the ability to negotiate discounts with suppliers.

Product Sales

     Our two optical laboratories face a variety of national, regional and local competitors. We compete in the optical laboratory market on the bases of quality of service, breadth of services, reputation and price.

     In the market for providing optical group purchasing services, we primarily compete with national and regional buying groups, as well as large vendors. Competition in this market is based upon service, price and the strength of the purchasing organization, including the ability to negotiate discounts with suppliers.

Product Sales

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