HealthcareJohn Hill M&A Report - · PDF file02/29/12 VIVUS, Inc. Pharmaceuticals Secondary...

Healthcare M&A Report

Q1 2012

HYDE PARK CAPITAL

Member FINRA/SIPC

Investment Banking | Mergers & Acquisitions | Capital Raising

Hyde Park Capital Advisors, LLC 701 N. Franklin Street

Tampa, FL 33602 Tel: 813-383-0202

www.hydeparkcapital.com

John Hill Senior Managing Director [email protected] (813) 383-0205 John McDonald Senior Managing Director [email protected] (813) 383-0206 Keith Hodgdon Senior Vice President [email protected] (813) 383-0208 Jeffrey Bridge Vice President [email protected] (813) 383-0204 Michael Mariani Associate [email protected] (813) 597-2649

HYDE PARK CAPITAL Investment Banking | Mergers & Acquisitions | Capital Raising

70%

80%

90%

100%

110%

120%

130%

Mar-11 Jun-11 Sep-11 Dec-11 Mar-12

Nasdaq S&P 500 S&P Global Healthcare Index

Public Market Performance (LTM)

Select Public Offerings – Healthcare (Q1 2012)

Public Company Market Performance by Sector

Source: Capital IQ

2

Capital Markets Overview

($ in millions)

As of March 31, 2012, major market indices including the Nasdaq, S&P 500 and S&P Global Healthcare indices shown below, increased approximately 19%, 12% and 7%, respectively, during the recently completed 1st quarter. When compared to prior year levels, the S&P Global Healthcare Index finished in line with the S&P 500, up 11%, and outperformed the Nasdaq by nearly double.

As detailed in the table on the right, the equity markets displayed overall strength and investor demand, primarily in the Biotechnology and Pharmaceutical sectors, as several initial public offerings were successfully completed during Q1 2012.

From a valuation perspective, the high-growth, Healthcare Technology sector continued to trade at relatively strong multiples of revenue (3.3x) and EBITDA (14.1x).

Commentary

11.1%

11.2%

6.2%

Offer Date Issuer Industry Sector IPO / Secondary Offering Size

03/28/12 Merrimack Pharmaceuticals, Inc. Biotechnology IPO $100

03/27/12 Vocera Communications, Inc. Healthcare Technology IPO $94

03/07/12 Amylin Pharmaceuticals, Inc. Biotechnology Secondary $200

02/29/12 VIVUS, Inc. Pharmaceuticals Secondary $203

02/09/12 Rockwell Medical Technologies, Inc. Healthcare Equipment & Supplies Secondary $18

02/08/12 ChemoCentryx, Inc. Biotechnology IPO $45

02/03/12 Cempra, Inc. Pharmaceuticals IPO $50

02/01/12 Ardea Biosciences, Inc. Biotechnology Secondary $145

02/01/12 Greenway Medical Technologies, Inc. Healthcare Equipment & Supplies IPO $67

01/26/12 Verastem, Inc. Biotechnology IPO $55

Industry Sector 3 Months 12 months Revenue EBITDA

Healthcare Facilities 10.3% (25.3%) 1.0x 6.6x

Healthcare Services 9.2% 3.8% 1.8x 8.5x

Managed Healthcare 13.5% 22.2% 0.4x 5.9x

Healthcare Technology 13.6% 9.9% 3.3x 14.1x

Healthcare Equipment and Supplies 9.1% (0.5%) 2.9x 9.5x

Healthcare Distribution 7.3% 6.4% 0.3x 8.1x

Median

Change in Stock Price Enterprise Value / LTM


Middle Market Purchase Multiples – Enterprise Value / EBITDA

U.S. Middle Market M&A Activity – Annual Trends: VOLUME U.S. Middle Market M&A Activity – Annual Trends: VALUE

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Annual Middle Market M&A Activity – Healthcare

Less than $100M $100 - $499M $500 - $1,000MLess than $100M $100 - $499M $500 - $1,000M

3

Commentary

Source: Capital IQ (middle market includes all closed deals with disclosed deal value between $10 million and $1 billion)

As detailed in the annual charts below, 2011 ranks as the top performing year over the past decade for overall U.S. middle market M&A transaction volume and value in the Healthcare industry.

In 2011, overall M&A activity or deal volume in the Healthcare

industry reached 336 closed transactions, up nearly 11% from 2010, while the total value of completed M&A transactions for 2011 climbed approximately 10% to $47.9 billion, up from $43.7 billion in the prior year period.

In Q1 2012, middle market transaction pricing, defined as

Enterprise Value over EBITDA, increased from 2011 to an average of 12.7x for completed middle market transactions across the entire Healthcare industry.

10.3x

12.1x

12.9x

13.4x

17.0x

14.6x14.1x

9.7x

13.1x

11.5x

12.7x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1 2012


Quarterly Middle Market M&A Activity – Healthcare

U.S. Middle Market M&A Activity – Quarterly Trends: VALUE U.S. Middle Market M&A Activity – Quarterly Trends: VOLUME

Middle Market M&A Transactions by Deal Size – Healthcare

($ in billions)

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Commentary

Source: Capital IQ (middle market includes all closed deals with disclosed deal value between $10 million and $1 billion)

Less than $100M $100 - $499M $500 - $1,000MLess than $100M $100 - $499M $500 - $1,000M

As detailed in the table on the right, Healthcare M&A transaction volume and value declined year-over-year across all segments of the middle market during the 1st quarter of 2012.

The number of middle market Healthcare deals declined 47% in Q1

2012 versus the prior year period, while the total value of those transactions decreased 30% to $7.9 billion.

The decline in M&A activity can be attributed primarily to the

decrease in activity in the lower middle market (transactions valued at less than $100 million). Deals in the lower middle represented approximately 51% of the total deal volume in Q1 2012, a significant drop from the prior year period, and accounted for only 8% of the total deal value during the quarter.

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Deal Size Volume Value Volume Value Volume Value

Less than $100M 55 $2.0 21 $0.6 (62%) (70%)

$100 - $499M 18 $5.1 16 $4.2 (11%) (18%)

$500 - $999M 5 $4.2 4 $3.1 (20%) (25%)

Total Middle Market 78 $11.3 41 $7.9 (47%) (30%)

% of Middle Market

Less than $100M 71% 18% 51% 8%

$100 - $499M 23% 45% 39% 53%

$500 - $999M 6% 37% 10% 39%

Total Middle Market 100% 100% 100% 100%

Q1 2011 Q1 2012 % Change


Recent M&A Activity – Healthcare

Select Announced M&A Transactions (Q1 2012)

5

Source: Capital IQ

Announced Date Target Industry Sector Buyer

Enterprise

Value ($mm)

EV /

Revenue

EV /

EBITDA

03/29/2012 Children's Specialists Medical Group of Sacramento Healthcare Services MEDNAX, Inc. NA NA NA

03/28/2012 Physiotherapy Associates, Inc. Healthcare Services Court Square Capital Partners $510.0 1.4x NA

03/28/2012 MedEfficiency, Inc. Healthcare Equipment & Supplies Derma Sciences, Inc. $14.5 2.7x NA

03/28/2012 LifeLabs, Business and Operations in Quebec Healthcare Services Laboratory Corp. of America Holdings NA NA NA

03/27/2012 Christ Hospital, Inc. Healthcare Facilities Hudson Hospital Holdco, LLC $45.3 NA NA

03/26/2012 AirWare Holdings, Inc. Healthcare Equipment & Supplies Crown Dynamics Corp. $54.8 NA NA

03/22/2012 Newport Medical Instruments, Inc. Healthcare Equipment & Supplies Covidien plc $108.0 2.7x NA

03/14/2012 AmMed Direct, LLC Healthcare Distributors Arriva Medical, LLC $23.0 NA NA

03/12/2012 ZOLL Medical Corp. Healthcare Equipment & Supplies Asahi Kasei Corp. $2,138.3 3.9x 26.3x

03/08/2012 Cameron Health, Inc. Healthcare Equipment & Supplies Boston Scientific Corp. NA NA NA

03/07/2012 Transcend Services, Inc. Healthcare Technology Nuance Communications, Inc. $318.1 2.5x 12.2x

03/07/2012 WPI Holdings, Inc. Healthcare Distributors MTS Health Investors NA NA NA

03/06/2012 Marquette General Hospital, Inc. Healthcare Facilities Lifepoint Hospitals, Inc. NA NA NA

03/06/2012 World Courier Management, Inc. Healthcare Distributors AmerisourceBergen Corp. $520.0 NA NA

03/05/2012 Grand Victorian (Sterling, Pekin & Washington) Healthcare Facilities CNL Lifestyle Properties, Inc. $30.8 NA NA

03/05/2012 Infimed, Inc. Healthcare Facilities Varian Medical Systems, Inc. $15.0 1.0x NA

03/05/2012 Superior Vision Services, Inc. Managed Healthcare Nautic Partners NA NA NA

03/02/2012 Aqua Vista, LLC Healthcare Facilities Ventas, Inc. $28.0 NA NA

03/01/2012 Santa Monica AL, LLC Healthcare Facilities Sunrise Senior Living, Inc. $19.1 NA NA

02/29/2012 Barth Orthotic and Prosthetic Services, Inc. Healthcare Facilities Hanger Orthopedic Group, Inc. NA NA NA

02/29/2012 Plattner Orthopedic Company, Inc. Healthcare Facilities Hanger Orthopedic Group, Inc. NA NA NA

02/29/2012 Great Plains Orthotics & Prosthetics, Inc. Healthcare Facilities Hanger Orthopedic Group, Inc. NA NA NA

02/28/2012 eScreen, Inc. Healthcare Technology Alere, Inc. $340.0 2.8x NA

02/28/2012 Medica HealthCare Plans, Inc. Managed Healthcare Unitedhealth Group, Inc. NA NA NA

02/28/2012 Preferred Care Partners, Inc. Managed Healthcare Unitedhealth Group, Inc. NA NA NA

02/27/2012 Access Plans, Inc. Managed Healthcare Affinity Insurance Services, Inc. $55.3 1.1x 4.4x

02/22/2012 Freedom Innovations, LLC Healthcare Equipment Health Evolution Partners NA NA NA

02/21/2012 6 Seniors Housing Communities Healthcare Equipment & Supplies Health Care REIT, Inc. $210.0 NA NA

02/16/2012 Senior Living Community in Missouri and 4 Medical Office Buildings Healthcare Facilities Senior Housing Properties Trust $144.8 NA NA

02/16/2012 NeuroNexus Technologies, Inc. Healthcare Equipment & Supplies QiG Group, LLC $12.0 NA NA

02/14/2012 9 Senior Living Communities Healthcare Facilities Brookdale Senior Living, Inc. $121.3 NA NA

02/14/2012 Crescent Healthcare, Inc. Healthcare Services Walgreen Co. $75.0 NA NA

02/09/2012 Mid America Medical Associates and Garcia, Rosenberg & Associates Managed Healthcare Concentra, Inc. NA NA NA

02/07/2012 17 Skilled Nursing Facilities Healthcare Facilities Omega Healthcare Investors, Inc. $128.0 NA NA

02/06/2012 DMS Health Technologies, Inc. Healthcare Distributors Platinum Equity, LLC $30.0 0.3x NA

02/01/2012 Ostial Solutions, LLC Healthcare Equipment & Supplies Merit Medical Systems, Inc. $30.0 NA NA


Recent M&A Activity – Healthcare

Select Announced M&A Transactions (Q1 2012)

6

Source: Capital IQ

Announced Date Target Industry Sector Buyer

Enterprise

Value ($mm)

EV /

Revenue

EV /

EBITDA

02/01/2012 Galichia Heart Hospital, LLC Healthcare Facilities HCA Holdings, Inc. NA NA NA

02/01/2012 Advanced Dermatology & Cosmetic Surgery, Inc. Healthcare Services Audax Group NA NA NA

01/31/2012 Navilyst Medical, Inc. Healthcare Equipment & Supplies AngioDynamics, Inc. $584.6 3.9x 27.5x

01/31/2012 Ernest Health, Inc. (5 Rehabilitation & 7 Long Term Acute Care Facilities) Healthcare Facilities MPT Operating Partnership, LP $200.0 NA NA

01/31/2012 Diagnostic Clinic of Longview, P.A. Healthcare Facilities Community Health Systems, Inc. NA NA NA

01/25/2012 Reverse Medical Corp., Neurovascular Guide Catheters Business Healthcare Equipment Covidien plc NA NA NA

01/25/2012 Paradigm Management Services, LLC Healthcare Services Lightyear Capital NA NA NA

01/20/2012 Roxwood Medical, Inc. Healthcare Equipment Volcano Capital NA NA NA

01/18/2012 First Choice Rehabilitation Specialists Healthcare Facilities Select Medical Corp. NA NA NA

01/17/2012 BridgePoint Medical, Inc., Certain Manufacturing Assets Healthcare Equipment Covidien plc NA NA NA

01/16/2012 Cranial Technologies, Inc. Healthcare Facilities Cortec Group NA NA NA

01/12/2012 ModernMed, Inc. Healthcare Services DaVita, Inc. NA NA NA

01/12/2012 Synvasive Technology, Inc. Healthcare Equipment Zimmer Holdings, Inc. NA NA NA

01/11/2012 APS Healthcare, Inc. Managed Healthcare Universal American Corp. $277.5 0.9x NA

01/11/2012 Pharmacy Management Group, Inc. Healthcare Services PharMerica Corp. NA NA NA

01/09/2012 Can-Am Care Corp. Healthcare Distributors Perrigo Co. $36.0 NA NA

01/05/2012 Accord Medical Management, LP Healthcare Facilities Prospect Medical Holdings, Inc. $190.0 NA NA

01/05/2012 Sonora Behavioral Health, Rolling Hills Hospital and Red River Hospital Healthcare Facilities Acadia Healthcare Company, Inc. $91.0 2.1x NA

01/04/2012 Cumberland Consulting Group, LLC Healthcare Technology Tailwind Capital NA NA NA

01/04/2012 Smith & Nephew plc (Biologics and Clinical Therapies Division) Healthcare Equipment & Supplies Essex Woodlands Health Ventures $505.9 2.1x NA

01/04/2012 FrontierMEDEX Group, Ltd. Managed Healthcare Unitedhealth Group, Inc. NA NA NA

01/03/2012 VelQuest Corp. Healthcare Technology Accelrys, Inc. $35.0 NA NA

01/03/2012 AHS S.E.D Medical Laboratories, Inc. Healthcare Services Quest Diagnostics, Inc. NA NA NA

Average $222.3 2.1x 17.6x

Median $91.0 2.1x 19.2x


$2,183

$208

$2,569

$0

$979

$1,997

$4,021

$15

$2,864

$767

$990

$2,626

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500

Pharmaceuticals, Biotechnology & Life Sciences

Healthcare Distribution

Healthcare Equipment & Supplies

Healthcare Technology

Healthcare Services

Healthcare Facilities

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3

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3

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1

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Healthcare Services


M&A Activity by Healthcare Sector

% Change

% Change

U.S. Middle Market M&A Activity by Healthcare Sector: VOLUME

7

Source: Capital IQ (includes all closed deals with disclosed deal value between $10 million and $1 billion)

U.S. Middle Market M&A Activity by Healthcare Sector: VALUE

($ in millions)

26%

63%

NM

64%

NM

23%

24%

1%

NM

46%

NM

10%

8

3

10

0

3

17

22

1

13

11

8

23

0 5 10 15 20 25





Healthcare Services


Q1 2011 Q1 2012

Q1 2011 Q1 2012


Select Private Equity M&A Transactions (Q1 2012)

Financial Sponsors vs. Strategic Buyers Select Private Equity Investments (Q1 2012)

Private Equity Activity – Healthcare

Financial Sponsor Strategic Buyer Financial Sponsor Strategic Buyer

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($ in millions)

Commentary

Source: Capital IQ (includes all closed deals with disclosed deal value between $10 million and $1 billion)

With financing markets cooperating, financial sponsors remained active across all sectors of the Healthcare industry in the 1st quarter of 2012, as shown in the table on the right.

Several notable transactions were announced and successfully completed during the 1st quarter, including Court Square Capital Partners’ buyout of Physiotherapy Associates, Inc., a provider of outpatient rehabilitation services, for over $500 million; Platinum Equity’s proposed acquisition of DMS Health Technologies, a subsidiary of the Otter Tail Corp., for $30 million; and Insight Venture Partners $40 million investment in Kinnser Software, Inc., a creator of innovative, Web-based software solutions that deliver clinical and business results to the home health industry.

During the 1st quarter, financial sponsors participated in approximately 1 of 4 completed deals.

Announced Date Target Buyer Industry Transaction Value

03/28/12 Physiotherapy Associates, Inc. Court Square Capital Partners Healthcare Services $510

03/07/12 WPI Holdings, Inc. MTS Health Investors Healthcare Distributors NA

03/05/12 Superior Vision Services, Inc. Nautic Partners Managed Healthcare NA

02/22/12 Freedom Innovations, LLC Health Evolution Partners Healthcare Equipment NA

02/06/12 DMS Health Technologies, Inc. Platinum Equity Healthcare Distributors $30

02/01/12Advanced Dermatology & Cosmetic

Surgery, Inc.Audax Group Healthcare Services NA

01/25/12 Paradigm Management Services, LLC Lightyear Capital Healthcare Services NA

01/20/12 Roxwood Medical, Inc. Volcano Capital Healthcare Equipment NA

01/16/12 Cranial Technologies, Inc. Cortec Group Healthcare Facilities NA

01/04/12 Cumberland Consulting Group, LLC Tailwind Capital Health Care Technology NA

0

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20

30

40

50

60

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90

Q1 2011 Q1 2012

78

41

19%

81%

27%

73%

$0

$2

$4

$6

$8

$10

$12

$14

Q1 2011 Q1 2012

$11.3

$7.9

82%

23%18%

77%

($ in millions)

Announced Date Target Buyer Industry Transaction Value

03/28/12 Sientra, Inc. Abingworth Healthcare Equipment $65

03/28/12 Relievant Medsystems, Inc. Canaan Partners Healthcare Equipment $30

03/21/12 Myoscience, Inc. De Novo Ventures Healthcare Equipment $45

03/06/12 Sequent Medical, Inc. Delphi Ventures Healthcare Equipment $26

03/05/12 Kinnser Software, Inc. Insight Venture Partners Health Care Technology $40

02/20/12 Osprey Medical, Inc. CM Capital Investments Healthcare Equipment $25

02/06/12 Aragon Pharmaceuticals, Inc. Topspin Partners Healthcare Equipment $48

01/18/12 Halt Medical, Inc. American Capital Healthcare Equipment $50

01/12/12 Mevion Medical Systems, Inc CHL Medical Partners Healthcare Equipment $45

01/04/12 CytoPherx, Inc. Onset Ventures Healthcare Equipment $34


50%

60%

70%

80%

90%

100%

110%

120%


S&P 500 Healthcare Facilities

Industry Sector Overview – Recent Stock Price Performance

Healthcare Services

Commentary

9


Managed Healthcare

Source: Capital IQ

The charts included on the following pages detail the recent stock price performance by sector for the leading public companies within the Healthcare industry for the 12-month period ended March 31, 2012. The shaded section is the most recent 3-month period (Q1).

During Q1, all of the sector indices of the Healthcare industry

increased. The Managed Healthcare and Healthcare Technology sectors delivered the strongest gains for the 3-month period ending March 31st, 2012, both up over 13%. For the 12-month period all of the Healthcare indices increased with the exception of Healthcare Facilities and Healthcare Equipment & Supplies.

60%

70%

80%

90%

100%

110%

120%

130%


S&P 500 Healthcare Services

60%

70%

80%

90%

100%

110%

120%

130%


S&P 500 Managed Healthcare

6.2%

25.3%

6.2%

3.8% 6.2%

22.2%


60%

70%

80%

90%

100%

110%

120%

130%


S&P 500 Healthcare Equipment & Supplies

60%

70%

80%

90%

100%

110%

120%

130%


S&P 500 Healthcare Distribution

Industry Sector Overview – Recent Stock Price Performance

Healthcare Distributors


10


Source: Capital IQ

6.2%

6.4%

60%

70%

80%

90%

100%

110%

120%

130%


S&P 500 Healthcare Technology

6.2%

9.9% 6.2%

0.5%


Closing Price % of 52 Equity Enterprise

Company Ticker 3/30/12 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA

Quest Diagnostics, Inc. DGX $61.15 99% $9,767 $13,568 $7,625 $3,228 $1,635 42.3% 21.4% 1.8x 8.3x

DaVita, Inc. DVA $90.17 100% $8,704 $13,427 $6,982 $2,301 $1,435 33.0% 20.6% 1.9x 9.4x

Laboratory Corp. of America Holdings LH $91.54 91% $9,225 $11,237 $5,597 $2,282 $1,278 40.8% 22.8% 2.0x 8.8x

MEDNAX, Inc. MD $74.37 98% $3,629 $3,636 $1,588 $572 $381 36.0% 24.0% 2.3x 9.6x

Mmodal, Inc. MODL $10.55 74% $529 $796 $444 $188 $114 42.4% 25.8% 1.8x 7.0x

Alliance Healthcare Services, Inc. AIQ $1.50 32% $80 $728 $494 $214 $144 43.4% 29.2% 1.5x 5.0x

RadNet, Inc. RDNT $3.18 61% $123 $681 $620 $195 $107 31.4% 17.3% 1.1x 6.4x

Bio-Reference Laboratories, Inc. BRLI $23.51 90% $663 $674 $587 $297 $80 50.6% 13.6% 1.1x 8.5x

Average 81% $4,090 $5,593 $2,992 $1,160 $647 40.0% 21.8% 1.7x 7.9x

Median 91% $2,146 $2,216 $1,104 $434 $263 41.6% 22.1% 1.8x 8.4x

Enterprise Value /

LTM LTM Margins LTM



HCA Holdings, Inc. HCA $24.74 70% $12,270 $40,512 $32,506 $13,887 $5,857 42.7% 18.0% 1.2x 6.9x

Community Health Systems, Inc. CYH $22.24 54% $2,016 $11,450 $13,626 $6,214 $1,787 45.6% 13.1% 0.8x 6.4x

Universal Health Services, Inc. UHS $41.91 74% $4,130 $8,055 $7,500 $3,283 $1,193 43.8% 15.9% 1.1x 6.8x

Tenet Healthcare Corp. THC $5.31 69% $2,576 $7,242 $9,584 $3,920 $1,145 40.9% 11.9% 0.8x 6.3x

Health Management Associates, Inc. HMA $6.72 57% $1,714 $5,281 $5,804 $2,725 $838 46.9% 14.4% 0.9x 6.3x

HEALTHSOUTH Corp. HLS $20.48 72% $1,911 $3,607 $2,027 $942 $462 46.5% 22.8% 1.8x 7.8x

Lifepoint Hospitals, Inc. LPNT $39.44 91% $1,992 $3,503 $3,545 $1,630 $529 46.0% 14.9% 1.0x 6.6x

Vanguard Health Systems, Inc. VHS $9.86 53% $597 $2,822 $6,201 $1,666 $499 26.9% 8.0% 0.5x 5.7x

Select Medical Holdings Corp. SEM $7.69 80% $1,159 $2,593 $2,805 $614 $382 21.9% 13.6% 0.9x 6.8x

AmSurg Corp. AMSG $27.98 99% $873 $1,588 $787 $440 $272 55.9% 34.5% 2.0x 5.8x

Hanger Orthopedic Group, Inc. HGR $21.86 77% $748 $1,213 $919 $328 $162 35.7% 17.6% 1.3x 7.5x

Average 72% $2,726 $7,988 $7,755 $3,241 $1,193 41.2% 16.8% 1.1x 6.6x

Median 72% $1,911 $3,607 $5,804 $1,666 $529 43.8% 14.9% 1.0x 6.6x

Enterprise Value /

LTM LTM Margins LTM

Industry Sector Overview – Public Company Analysis


($ in millions, except per share)

11

*Excluded from average and median calculation. Source: Capital IQ

Healthcare Services




Cerner Corp. CERN $76.16 97% $13,242 $12,594 $2,203 $1,761 $593 80.0% 26.9% 5.7x 21.2x

Allscripts Healthcare Solutions, Inc. MDRX $16.60 72% $3,171 $3,385 $1,444 $666 $254 46.1% 17.6% 2.3x 13.3x

Athenahealth, Inc. ATHN $74.12 95% $2,672 $2,552 $324 $201 $49 62.1% 15.0% 7.9x 52.6x

Quality Systems, Inc. QSII $43.73 86% $2,572 $2,441 $418 $276 $130 65.9% 31.2% 5.8x 18.7x

MedAssets, Inc. MDAS $13.16 81% $754 $1,611 $578 $457 $170 78.9% 29.4% 2.8x 9.5x

WebMD Health Corp. WBMD $25.58 44% $1,512 $1,191 $559 $357 $130 63.9% 23.3% 2.1x 9.2x

Merge Healthcare, Inc. MRGE $5.86 81% $508 $720 $232 $153 $54 65.9% 23.3% 3.1x 13.3x

Computer Programs & Systems, Inc. CPSI $56.52 71% $624 $600 $173 $79 $44 45.8% 25.2% 3.5x 13.7x

Medidata Solutions, Inc. MDSO $26.64 95% $657 $549 $184 $132 $38 71.6% 20.4% 3.0x 14.6x

Healthstream, Inc. HSTM $23.19 96% $551 $467 $82 $51 $17 62.1% 20.4% 5.7x 27.9x

Average 82% $2,626 $2,611 $620 $413 $148 64.2% 23.3% 4.2x 19.4x

Median 84% $1,133 $1,401 $371 $238 $92 64.9% 23.3% 3.3x 14.1x

Enterprise Value /

LTM LTM Margins LTM


Managed Healthcare


12





Unitedhealth Group, Inc. UNH $58.94 99% $64,068 $63,776 $101,862 $27,530 $9,211 27.0% 9.0% 0.6x 6.9x

Aetna, Inc. AET $50.16 98% $19,071 $20,583 $33,780 $10,250 $3,909 30.3% 11.6% 0.6x 5.3x

WellPoint, Inc. WLP $73.80 90% $26,944 $18,295 $60,711 $13,063 $5,079 21.5% 8.4% 0.3x 3.6x

Cigna Corp. CI $49.25 93% $13,507 $13,683 $21,998 $9,508 $2,328 43.2% 10.6% 0.6x 5.9x

Humana, Inc. HUM $92.48 96% $15,521 $8,366 $36,832 $8,009 $2,647 21.7% 7.2% 0.2x 3.2x

Coventry Health Care, Inc. CVH $35.57 94% $5,220 $5,343 $12,204 $2,879 $841 23.6% 6.9% 0.4x 6.4x

AMERIGROUP Corp. AGP $67.28 89% $3,442 $3,158 $6,318 $1,046 $344 16.6% 5.4% 0.5x 9.2x

Health Net, Inc. HNT $39.72 99% $3,574 $2,317 $11,901 $1,708 $381 14.4% 3.2% 0.2x 6.1x

Centene Corp. CNC $48.97 97% $2,570 $2,218 $5,354 $1,029 $252 19.2% 4.7% 0.4x 8.8x

WellCare Health Plans, Inc. WCG $71.88 98% $3,114 $1,737 $6,107 $1,235 $429 20.2% 7.0% 0.3x 4.0x

Magellan Health Services, Inc. MGLN $48.81 86% $1,516 $1,333 $2,799 $253 $224 9.0% 8.0% 0.5x 5.9x

Molina Healthcare, Inc. MOH $33.63 91% $1,561 $949 $4,770 $910 $190 19.1% 4.0% 0.2x 5.0x

Universal American Corp. UAM $10.78 46% $869 $845 $2,283 $407 $62 17.8% 2.7% 0.4x 13.7x

Average 90% $12,383 $10,969 $23,609 $5,987 $1,992 21.8% 6.8% 0.4x 6.5x

Median 94% $3,574 $3,158 $11,901 $1,708 $429 20.2% 7.0% 0.4x 5.9x

LTM Margins LTMLTM

Enterprise Value /





13





McKesson Corp. MCK $87.77 99% $22,294 $22,090 $119,888 $6,499 $2,731 5.4% 2.3% 0.2x 8.1x

Cardinal Health, Inc. CAH $43.11 92% $15,149 $15,600 $106,705 $4,404 $2,042 4.1% 1.9% 0.1x 7.6x

AmerisourceBergen Corp. ABC $39.66 91% $10,840 $10,398 $80,690 $2,550 $1,369 3.2% 1.7% 0.1x 7.6x

Henry Schein, Inc. HSIC $75.68 98% $7,009 $7,707 $8,530 $2,418 $698 28.3% 8.2% 0.9x 11.0x

Omnicare, Inc. OCR $35.57 98% $4,083 $5,497 $6,183 $1,377 $638 22.3% 10.3% 0.9x 8.6x

Patterson Companies, Inc. PDCO $33.40 90% $3,799 $4,111 $3,483 $1,153 $400 33.1% 11.5% 1.2x 10.3x

Owens & Minor, Inc. OMI $30.41 85% $1,914 $1,993 $8,628 $858 $248 9.9% 2.9% 0.2x 8.0x

PSS World Medical, Inc. PSSI $25.34 86% $1,397 $1,688 $2,113 $671 $171 31.8% 8.1% 0.8x 9.9x

PharMerica Corp. PMC $12.43 76% $366 $649 $2,081 $291 $99 14.0% 4.7% 0.3x 6.6x

Average 91% $7,428 $7,748 $37,589 $2,247 $933 16.9% 5.7% 0.5x 8.6x

Median 91% $4,083 $5,497 $8,530 $1,377 $638 14.0% 4.7% 0.3x 8.1x

LTM Margins

Enterprise Value /

LTM LTM



Medtronic, Inc. MDT $39.19 90% $41,822 $49,740 $16,479 $12,429 $5,528 75.4% 33.5% 3.0x 9.0x

Covidien plc COV $54.68 95% $27,012 $29,680 $11,703 $6,729 $3,268 57.5% 27.9% 2.5x 9.1x

Stryker Corp. SYK $55.48 86% $21,609 $19,959 $8,307 $5,639 $2,452 67.9% 29.5% 2.4x 8.1x

Zimmer Holdings, Inc. ZMH $64.28 92% $12,130 $12,633 $4,452 $3,341 $1,471 75.1% 33.0% 2.8x 8.6x

CR Bard, Inc. BCR $98.72 87% $8,618 $9,235 $2,896 $1,799 $935 62.1% 32.3% 3.2x 9.9x

DENTSPLY International, Inc. XRAY $40.13 99% $5,761 $7,685 $2,538 $1,273 $422 50.2% 16.6% 3.0x 18.2x

Varian Medical Systems, Inc. VAR $68.96 96% $8,070 $7,626 $2,642 $1,138 $635 43.1% 24.0% 2.9x 12.0x

Alere, Inc. ALR $26.01 63% $2,162 $5,827 $2,387 $1,255 $560 52.6% 23.5% 2.4x 10.4x

The Cooper Companies, Inc. COO $81.71 97% $3,976 $4,379 $1,364 $839 $342 61.5% 25.1% 3.2x 12.8x

Sirona Dental Systems, Inc. SIRO $51.54 89% $2,956 $2,983 $936 $492 $232 52.5% 24.7% 3.2x 12.9x

Lincare Holdings, Inc. LNCR $25.88 81% $2,319 $2,977 $1,917 $857 $457 44.7% 23.9% 1.6x 6.5x

Steris Corp. STE $31.62 86% $1,880 $1,947 $1,394 $560 $249 40.2% 17.9% 1.4x 7.8x

Average 88% $11,526 $12,889 $4,751 $3,029 $1,379 56.9% 26.0% 2.6x 10.4x

Median 90% $6,915 $7,655 $2,590 $1,264 $597 55.0% 24.9% 2.9x 9.5x

Enterprise Value /

LTM LTM Margins LTM


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