HEDGEYE 1

HEDGEYE 2

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LEGAL

HEDGEYE 3

HEALTHCARE POSITION MONITOR

DATA SOURCE: FACTSET

Sentiment Investment Ideas - Longs Trade Trend Tail Sentiment Investment Ideas - Shorts Trade Trend Tail

Score1LONG Score1

SHORT

6 ATHN athenahealth, Inc. 93 ZBH Zimmer Biomet Holdings, Inc. --- 90 AHS AMN Healthcare Services, Inc. --- 62 MD MEDNAX, Inc. 45 HOLX Hologic, Inc.

24 MDRX Allscripts Healthcare Solutions, Inc. ---

Sentiment Long Bench Sentiment Short Bench

Score1LONG Score1

SHORT

35 CSLT Castlight Health, Inc. Class B --- --- --- n/a CPHD Cepheid --- --- ---76 EVH Evolent Health Inc Class A --- --- --- 94 MDSO Medidata Solutions, Inc. --- --- ---82 CERN Cerner Corporation --- --- --- 89 ILMN Illumina, Inc. --- --- ---

81 WOOF VCA Inc. --- --- ---72 ICLR ICON Plc --- --- ---69 CYH Community Health Systems, Inc. --- --- ---61 Q Quintiles Transnational Holdings, Inc. --- --- ---56 CRL Charles River Laboratories International, Inc. --- --- ---45 DVA DaVita HealthCare Partners Inc. --- --- ---38 LPNT LifePoint Health, Inc. --- --- ---29 QSII Quality Systems, Inc. --- --- ---24 LH Laboratory Corporation of America Holdings --- --- ---19 HCA HCA Holdings, Inc. --- --- ---17 PRXL PAREXEL International Corporation --- --- ---1 DGX Quest Diagnostics Incorporated --- --- ---1 CPSI Computer Programs and Systems, Inc. --- --- ---

TRACKER UPDATE

HEDGEYE 5

ATHN | CAGR MEDICAL PRACTICES

DATA SOURCE: HEDGEYE TRACKER

0%

5%

10%

15%

20%

25%

30%

35%

CA

GR

# of medical practices on athenaNet

HEDGEYE 6

ATHN | MEDICAL PRACTICE ATTRITION

DATA SOURCE: HEDGEYE TRACKER

-6

-4

-2

0

2

4

6

8

10

12

Pra

cti

ce

Pe

r D

ay

Won Lost Net

HEDGEYE 7

SEEING MORE HOSPITALS...

7 Hospitals 264 Beds 3 Inpatient 4 Clinics

4 FQHC 75 Docs

> 10% Take Rate

12 Urgent Care ~32 Docs

HEDGEYE 8

ATHN | TRACKER MODEL

DATA SOURCE: COMPANY FILINGS AND HEDGEYE TRACKER

Correlation = 0.93

425

-211

1 75

-290

3,006

-2 Std Error 2,338

+2 Std Error 3,603

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500 Variance Net Collector Adds Model - Tracker

HEDGEYE 9

ATHN | 1Q16 DOC ADD COMPOSITION

2,497

20 50

500

300

700

1,333

219

625

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Beth Israel TeamPraxis Ascension NYP Trinity Small-GroupNew

Same-store Attrition Total

Ne

t C

olle

cto

r D

oc

Ad

ds

~3,100 Gross

HEDGEYE 10

ATHN | BALANCED SCORECARD

DATA SOURCE: COMPANY FILINGS

97% 98%

64%

93% 91%

130%

89%

81%

99% 100%

82%

95%

130%

115%

91.00% 88%

0%

20%

40%

60%

80%

100%

120%

140%

Financial Score Balanced Scorecard

Ascension Health

Trinity Health

HEDGEYE 11

ATHN | SHORT INTEREST

DATA SOURCE: FACTSET

10%

15%

20%

25%

30%

35%

40% SI % Float Average +1 Std Dev -1 Std Dev

HEDGEYE 12

ATHN | HISTORICAL EV/EBITDA

DATA SOURCE: FACTSET

10.0x

15.0x

20.0x

25.0x

30.0x

35.0x

40.0x

45.0x

50.0x

55.0x

NT

M E

V/E

BIT

DA

EV/EBITDA NTM Average +1 Std Dev -1 Std Dev

CONFIRMING ATTRITION

HEDGEYE 14

CAN MDRX DEFEND THEIR TURF?

DATA SOURCE: GOOGLE IMAGES, COMPANY WEBSITE, HEDGEYE FIELD NOTES

Inpatient Ambulatory Population Health

EMR

Practice Management

Revenue Cycle

HEDGEYE 15

CERN ANNOUNCED DEAL AT HIMSS...

DATA SOURCE: GOOGLE IMAGES, COMPANY WEBSITE, HEDGEYE FIELD NOTES

Inpatient Ambulatory Population Health

EMR

Practice Management

Revenue Cycle

HEDGEYE 16

RISK AT ASCENSION HEALTH • Ascension Health, the

largest non-profit health system in the United States (+6,000 physicians) signed an agreement with athenahealth in 2013 to implement their practice management /rev cycle offering

• Part of the deal included a hunting license to cross-sell their ambulatory EHR offering to the member health systems

DATA SOURCE: COMPANY FILINGS AND GOOGLE IMAGES

Press Release

Press Release

Press Release

ATHN replaced Touchworks for 300 Employed Physicians

ATHN replaced Allscripts Payerpath and PM for 200

Providers… Uses Touchworks and Followmyhealth

Uses Touchworks and Followmyhealth Patient Portal

HEDGEYE 17

LOSS TO ATHENAHEALTH

DATA SOURCE: HEALTHSYSTEMCIO.COM

HEDGEYE 18

GOING LIVE ON EPIC MID-YEAR 2016 483 BED HOSPITAL

HEDGEYE 19

“LOSING MARKET SHARE RAPIDLY”

DATA SOURCE: GLASSDOOR.COM

HEDGEYE 20

MDRX | BOOKINGS ESTIMATE

DATA SOURCE: COMPANY FILINGS

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

To

tal

Bo

ok

ing

s Y

oY

%

HEDGEYE 21

MDRX | WILD CARD...

CONFIRMING ATTRITION

HEDGEYE 23

ZBH | KNEE GROWTH YOY %

DATA SOURCE: COMPANY FILINGS

JNJ 1Q16 +8%

SYK 1Q16 +9%

ZBH 1Q16:E -0.7%

(10.0%)

(5.0%)

-

5.0%

10.0%

15.0%

Yo

Y %

US

/Am

eri

ca

s K

ne

e G

row

th

Johnson & Johnson Stryker Zimmer-Biomet

HEDGEYE 24

ZBH | HISTORICAL VALUATION

DATA SOURCE: FACTSET

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

20.0x

NT

M P

/E

P/E NTM Average

+1 Std Dev -1 Std Dev

4.0x

5.0x

6.0x

7.0x

8.0x

9.0x

10.0x

11.0x

12.0x

NT

M E

V/E

BIT

DA

EV/EBITDA NTM Average

+1 Std Dev -1 Std Dev

HEDGEYE 25

PENT-UP DEMAND NEWLY INSURED

SOCIETY OF ACTUARIES ANALYSIS OF KS CLAIMS DATA

DATA SOURCE: HTTPS://WWW.SOA.ORG/RESEARCH/RESEARCH-PROJECTS/HEALTH/2015-PENT-UP-DEMAND-HEALTH.ASPX

6.2x

2.5x 2.4x

1.9x 1.7x 1.5x

1.0x 0.9x

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

KneeReplacement

Surgery

Lower BackPain Surgery

UpperEndoscopy

MRI/MRA CT Gallstone KneeArthroscopy

Dermatology

Re

lati

ve

Use

Newly Enrolled Relative Use

HEDGEYE 26

TOTAL ACA ENROLLMENT VS JOLTS

DATA SOURCE: CMS, KAISER AND BLS

0

50

100

150

200

250

300

350

400

450

500

0

5

10

15

20

25

30

JOLT

S (th

ou

san

ds)

AC

A E

nro

llme

nt

(mill

ion

s)

Exchange Enrollment* Medicaid Enrollment** Cumulative HC Job Openings

*Includes a mix of pre-effectuated and effectuated enrollment for 2014/2015 period. February 2016 is pre-effectuated only reflecting OE3. **Cumulative enrollees for expansion states relative to baseline enrollment year

HEDGEYE 27

MEDICAID PER ENROLLEE SPENDING

DATA SOURCE: US TREASURY, CMS

$360.00

$370.00

$380.00

$390.00

$400.00

$410.00

$420.00

$430.00

$440.00 Per Enrollee Spending Per Month (3MAV)

Per Enrollee Spending Baseline July-Sep 2013

HEDGEYE 28

$350

$400

$450

$500

$550

$600

$650

$700

$750

$800

$850 Per Enrollee Spending Per Month Baseline (3-mo Average)

Newly Insured (3-mo Average)

Average Per Enrollee Spend Newly Insured Medicaid

NEWLY INSURED MEDICAID SPEND

DATA SOURCE: CMS AND US TREASURY

Newly Insured Under Medicaid Spend +49% More Than Existing Population

HEDGEYE 29

PEAK HC JOB OPENINGS?

DATA SOURCE: BLS

+2.9x Std Deviation

ACA Impact

400

500

600

700

800

900

1,000

1,100HC Job Openings Average +1 Std Dev -1 Std Dev

HEDGEYE 30

2/2914 0.11%

2/29/15 36.83%

2/29/16 -20.77%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0% JOLTS: HC Job Openings Rolling 3-Mo YoY % ROC

HEALTHCARE JOLTS SLOWING

DATA SOURCE: BLS

MATERNITY TRACKER

HEDGEYE 32

MD | MATERNITY TRACKER UPDATE

DATA SOURCE: HEDGEYE TRACKER

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%Total MD - 1M y/y % Total MD - 3M y/y % United States 3M y/y%

HEDGEYE 33

MD | SAME-UNIT VOLUME MODEL

DATA SOURCE: COMPANY FILINGS AND BLS

(3.0%)

(2.0%)

(1.0%)

-

1.0%

2.0%

3.0%

-2.0x

-1.5x

-1.0x

-0.5x

0.0x

0.5x

1.0x

1.5x

2.0x

Ad

juste

d S

am

e U

nit V

olu

me

Yo

Y %

Z

-Sc

ore

Z-Score Model MD: Adjusted Same-Unit Volume YoY %

Correlation = 0.64

HEDGEYE 34

MATERNITY TRACKER BY COMPANY

DATA SOURCE: CDC, HEDGEYE

3Q15 Oct-15 Nov-15 Dec-15 4Q15 Jan-16 Feb-16 Mar-16 1Q16 Apr-16 (P)Maternity Tracker/CDC Regression (yr/y -1.1% -1.6% 1.4% -6.0% -2.1% -5.2% 0.0% -4.4% -3.2% -3.1%MD - Maternity Tracker (wtd, yr/yr) -1.2% -1.3% 2.0% -7.3% -2.2% -6.1% -0.5% -5.1% -3.9% -2.9%HCA - Maternity Tracker (wtd, yr/yr) 0.1% -0.4% 3.0% -7.0% -1.4% -5.2% -0.4% -4.7% -3.4% -2.5%THC - Maternity Tracker (wtd, yr/yr) -0.8% -1.1% 2.2% -7.3% -2.1% -6.1% -0.9% -5.2% -4.1% -2.4%CYH - Maternity Tracker (wtd, yr/yr) -0.9% -1.7% 3.1% -6.5% -1.7% -5.1% 1.4% -3.9% -2.5% -2.5%LPNT - Maternity Tracker (wtd, yr/yr) -1.7% -0.3% 0.6% -2.3% -0.7% -3.7% -3.9% -2.8% -3.4% -1.0%AHS - Maternity Tracker (wtd, yr/yr) -1.8% -2.3% 0.8% -5.9% -2.5% -4.9% 0.4% -4.7% -3.1% -3.2%

THOUGHTS INTO THE PRINT

HEDGEYE 36

AHS | ORGANIC GROWTH MODEL

DATA SOURCE: COMPANY FILINGS AND BLS

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0% Combined Model AHS: Total Organic Growth YoY %

Correlation = 0.93

HEDGEYE 37

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

-15.0%

-5.0%

5.0%

15.0%

25.0%

35.0%

45.0%

HC

A S

S A

dm

ission

sYoY

%

JOLT

S

YoY

%

JOLTS: Health Care and Social Assistance - Job Openings y/y growth %

HCA SS Admissions (y/y growth %)

HCA | ADMISSIONS VS JOLTS

DATA SOURCE: BLS AND COMPANY FILINGS

Correlation = 0.82

HEDGEYE 38

HOLX | FACILITY PENETRATION BY MSA

DATA SOURCE: HEDGEYE TRACKER

BEGINNING OF THE END?

HEDGEYE 40

ILMN | NGS TEST BY GENE COUNT

DATA SOURCE: GTR