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INDUSTRY UPDATE

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HEALTHCARE & LIFE SCIENCES GROUP │ JANUARY 2015


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WHATWE’RE READING

1

CONTENTS

PUBLIC MARKETS OVERVIEW

EQUITY MARKETS OVERVIEW

M&A OVERVIEW

DEBT CAPITAL MARKETS OVERVIEW

HEALTHCARE & LIFE SCIENCES TRADING STATISTICS

M&A ACTIVITY

CONTACTS

UNITED STATES

Turner BredrupManaging [email protected]+1 (804) 915-0110

James ClarkManaging [email protected]+1 (804) 915-0119

Todd MorrisManaging [email protected]+1 (415) 217-3412

Cheairs PorterManaging [email protected]+1 (804) 915-0130

Andy [email protected]+1 (415) 217-3419

Geoff [email protected]+1 (804) 915-0195

Paul HepperVice [email protected]+1 (804) 932-1326

Andy HewlettVice [email protected]+1 (415) 217-3427

Bill KayserVice [email protected]+1 (804) 915-0180

Whit KnierVice [email protected]+1 (804) 932-1321

HEALTHCARE & LIFE SCIENCES

According to Modern Healthcare, the Medicare Payment Advisory Commission(“MedPAC”) will be making a series of recommendations to Congress to freezereimbursements or make them site-neutral, potentially saving Medicare severalbillion dollars. The reimbursement freeze recommendations will impactambulatory surgical centers, dialysis, hospice, and long-term care hospitals.The move to make reimbursement for certain services site-neutral has beenexpected for some time, and specifically targets the practice of hospitalsconverting physician offices to outpatient departments in order to receivehigher reimbursement rates. In addition, MedPAC is recommending that thebonus payment created by the Primary Care Incentive Program of the ACA berestructured to be paid per beneficiary, as opposed to per visit as is the casecurrently. These recommendations will be included in MedPAC’s March 2015annual report. Additional details can be found in the piece here.

On January 16, Marilyn Tavenner announced that she will resign asAdministrator of CMS at the end of February. She will be replaced by currentCMS Deputy Administrator, Andy Slavitt. Reasons for the resignation were notspecified in the announcement itself, but speculations following theannouncement have been plentiful across multiple media outlets. Most ofthese center on Tavenner role as one of the key officials inside the Obamaadministration responsible for the rollout of the online healthcare exchangesand HealthCare.gov, the challenges with which have been well-publicized.Articles related to the announcement from The Washington Post and The WallStreet Journal can be found here and here, respectively.

HEALTHCARE & LIFE SCIENCES

INDUSTRY UPDATE │ JANUARY 2015

HW&CO. HCLS GROUP INSIGHT

Vision Industry Overview

http://www.harriswilliams.com/

mailto:[email protected]










http://www.modernhealthcare.com/article/20150116/NEWS/301169959/medpac-seeks-reimbursement-rate-freeze

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/16/cms-administrator-marilyn-tavenner-is-stepping-down/

http://www.wsj.com/articles/top-u-s-health-official-marilyn-tavenner-to-step-down-1421419787?KEYWORDS=tavenner

http://www.harriswilliams.com/sites/default/files/content/hwco_hcls_vision_industry_updatev2.pdf

http://www.harriswilliams.com/sites/default/files/content/hwco_hcls_vision_industry_updatev2.pdf

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PUBLICMARKETS OVERVIEW

2

INDUSTRY UPDATE


Key Trading Statistics (detail begins on page 6)

Public Company Sector Performance(12-month % change in stock price)

Acute-Care Hospitals

HMO - Medical

Home Care, Hospice, and Home Infusion

Health Care Staffing

Clinical Laboratories

Contract Research Organizations

Medical / Surgical / Dental Supplies &

Distribution

Assisted Living

Surgicenters / Rehabilitation

Medical Devices and Products

Disease Management

Dental Products

Specialty Pharmacy Management

Contract Pharma Manufacturing

Behavioral Health / Management

HW&Co. HCLS Composite Index

Life Sciences Tools

Dialysis Services

S&P 500

Diagnostic Imaging

Durable Medical Equipment

Long-Term Care

Information Services

Specialty Managed Care

Physician Practice Management

Emergency Services

(30.0%) (20.0%) (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

Change in Stock Price

3 mos. 12 mos. Revenue EBITDA Revenue EBITDA

Clinical Laboratories 3 $8,649 10.5% 25.3% 1.8x 9.5x 1.8x 9.4x

Contract Pharma Manufacturing 4 2,379 7.8% 14.9% 2.4x 12.5x 2.7x 13.6x

Contract Research Organizations 8 3,216 (1.9%) 21.5% 2.3x 13.3x 2.2x 12.4x

Disease Management 2 4,045 11.0% 17.2% 1.9x 20.3x 1.9x 12.7x

Emergency Serv ices 1 2,380 (20.7%) (24.4%) 2.4x 9.7x 2.4x 9.3x

Health Care Staffing 4 2,101 24.2% 25.7% 1.1x 14.8x 1.1x 13.8x

HMO - Medical 9 23,967 16.1% 34.2% 0.4x 10.0x 0.3x 8.3x

Information Serv ices 11 3,750 5.7% 0.0% 3.1x 14.8x 3.1x 11.8x

Specialty Managed Care 3 2,230 9.3% 0.0% 1.5x 10.5x 1.5x 29.4x

Specialty Pharmacy Management 4 24,348 18.5% 14.9% 0.7x 12.0x 0.7x 12.0x

Dental Products 3 40,855 16.0% 17.2% 3.4x 15.1x 3.4x 13.0x

Durable Medical Equipment 3 3,621 13.8% 10.4% 1.8x 13.1x 1.6x 10.0x

Life Sciences Tools 5 13,921 2.9% 12.5% 1.9x 13.0x 3.2x 15.1x

Medical Devices and Products 14 45,829 12.5% 18.5% 3.4x 13.2x 3.5x 11.8x

Medical / Surgical / Dental Supplies & Distribution 6 20,835 11.9% 20.0% 0.3x 13.5x 0.3x 11.2x

Acute-Care Hospitals 5 24,420 3.9% 36.9% 1.4x 9.7x 1.3x 8.5x

Assisted Liv ing 4 3,812 15.6% 19.4% 2.3x 17.8x 2.1x 14.5x

Diagnostic Imaging 3 3,301 8.0% 11.4% 1.7x 8.0x 2.0x 9.9x

Dialysis Serv ices 2 27,843 5.2% 11.9% 2.0x 10.5x 2.0x 10.4x

Home Care, Hospice, and Home Infusion 7 987 13.5% 29.7% 0.9x 12.0x 0.9x 10.9x

Long-Term Care 3 1,501 13.2% 0.3% 1.0x 8.7x 0.9x 7.9x

Physician Practice Management 3 2,574 2.5% (14.0%) 1.2x 11.7x 2.0x 12.0x

Behavioral Health / Management 6 3,914 7.7% 14.8% 1.4x 10.4x 1.3x 9.2x

Surgicenters / Rehabilitation 5 3,138 18.6% 19.1% 2.1x 11.4x 2.1x 11.3x

Payer, Provider, & Pharmacy Support Serv ices 49 $7,707 8.0% 12.9% 1.8x 12.7x 1.8x 13.3x

Products & Devices 31 $25,012 11.4% 15.7% 2.2x 13.6x 2.4x 12.2x

Provider-Based Serv ices 38 $7,943 9.8% 14.4% 1.6x 11.1x 1.6x 10.5x

HW&Co. HCLS Composite Index 118 $11,401 9.4% 14.0% 1.8x 12.3x 1.8x 12.0x

S&P 500 4.4% 11.4%

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EQUITYMARKETS OVERVIEW

3

INDUSTRY UPDATE


Healthcare & Life Sciences Industry Stock Performance

Top 25 Equity Offerings(by proceeds)

201.7%

163.7%

173.5%

40

60

80

100

120

140

160

180

200

220

Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14

S&P 500 Dow Jones U.S. Health Care Index HW&Co. HCLS Index

Closing Date Issuer Ticker Transaction Type

Gross Proceeds

($mm)

12/18/14 Juno Therapeutics Inc JUNO IPO $304.2

12/15/14 bluebird bio Inc BLUE Follow-On 259.0

12/10/14 Agios Pharmaceuticals Inc AGIO Follow-On 253.0

12/10/14 Kite Pharma Inc KITE Follow-On 216.4

12/02/14 Quidel Corp QDEL Convertible 172.5

12/17/14 Bellicum Pharmaceuticals Inc BLCM IPO 160.6

12/11/14 IGI Laboratories Inc IG Convertible 143.8

12/04/14 ANI Pharmaceuticals Inc ANIP Convertible 143.8

12/12/14 Flexion Therapeutics Inc FLXN Follow-On 98.5

12/29/14 Carbylan Therapeutics Inc CBYL IPO 86.3

12/30/14 Avinger Inc AVGR IPO 69.0

12/23/14 Entellus Medical Inc ENTL IPO 69.0

12/22/14 AltheaDx Inc IDGX IPO 69.0

12/02/14 Histogenics Corp HSGX IPO 65.0

12/30/14 HTG Molecular Diagnostics Inc HTGM IPO 60.0

12/29/14 Flex Pharma Inc FLKS IPO 60.0

12/29/14 TRACON Pharmaceuticals Inc TCON IPO 57.5

12/22/14 Infraredx Inc REDX IPO 55.0

12/04/14 Trevena Inc TRVN Follow-On 51.4

12/11/14 MEI Pharma Inc MEIP Follow-On 46.0

12/19/14 Asante Solutions Inc PUMP IPO 45.0

12/08/14 XOMA Corp XOMA Follow-On 40.0

12/17/14 Lion Biotechnologies Inc LBIO Follow-On 34.5

12/19/14 Advaxis Inc ADXS Follow-On 16.7

12/04/14 Constellation Healthcare Tech N/A IPO 15.0

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M&A OVERVIEW

4

INDUSTRY UPDATE


Announced Healthcare & Life Sciences M&A

Healthcare & Life Sciences M&A Trends

Announced Private Equity M&A Activity

QUARTERLY M&A ACTIVITY

MIDDLE MARKET HEALTHCARE TRANSACTION HIGHLIGHTS

ANNOUNCED HEALTHCARE & LIFE SCIENCES TRANSACTIONS

MEDIAN HEALTHCARE & LIFE SCIENCES TRANSACTION MULTIPLES

PEG INVESTMENTS BY SEGMENT (LAST 3 YEARS) PEG INVESTMENTS AND EXITS

Note: Transactions based on publicly available information

LTM DEAL STATISTICS

Aggregate Number Median Transaction Multiples

Value ($bn) of Deals TEV/Rev TEV/EBITDA

$266.7 1,227 2.63x 13.6x

HC&LS Industry Number of

Segment Companies

Biotechnology 4

Healthcare Technology 18

Healthcare Distributors 8

Healthcare Equipment 25

Healthcare Facilities 45

Healthcare Serv ices 51

Healthcare Supplies 9

Life Sciences Tools & Serv ices 17

Managed Healthcare 4

Pharmaceuticals 20

$174.6

$110.6

$141.4

$101.6 $108.2

$236.6

0

200

400

600

800

1000

1200

1400

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

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236219 229 221

291

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304

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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Number of Investments Number of Exits

7.7x

12.8x

11.1x 10.9x 10.0x

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Announced Target Buyer

12/22/2014 Av antas, LLC AMN Healthcare Serv ices Inc. (NYSE:AHS)

12/21/2014 Vision-Sciences Inc. (NasdaqCM:VSCI) Uroplasty, Inc. (NasdaqCM:UPI)

12/18/2014 AmSol, LLC NorthStar Anesthesia P.A.

12/16/2014 Acute Care Express Inc. U.S. Healthworks, Inc.

12/15/2014 Recov ery First, Inc. American Addiction Centers, Inc.

12/8/2014 Cubist Pharmaceuticals Inc. (NasdaqGS:CBST) Merck & Co. Inc. (NYSE:MRK)

12/3/2014 Allied 100, LLC Ridgemont Equity Partners

12/2/2014 Ariosa Diagnostics, Inc. Roche Holding AG (SWX:ROG)

12/1/2014 Nurses to Go, LLC Epic Health Serv ices, Inc.

12/1/2014 Eye Care Associates, O.D.P.A. MyEyeDr., Inc.

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DEBT CAPITALMARKETS OVERVIEW

5

INDUSTRY UPDATE


Key Credit Statistics

QUARTERLY HEALTHCARE LOAN VOLUME AVERAGE SPREAD ON HEALTHCARE LOANS

Recent Healthcare & Life Sciences Debt Offerings(by deal amount)

CREDIT STATISTICS AVERAGE SECONDARY SPREAD

Date Effective Borrower Name Description Tranche Amount ($mn) Type Rating Spread

12/19/14 Laboratory Corp of America Holdings Medical laboratories $2,850.00 Bridge Loan BBB+ / NR L+ 125

12/22/14 Brookdale Senior Liv ing Inc Intermediate care facilities 500.00 Revolver/Line >= 1 Yr. NR / NR L+ 425

12/10/14 Adventist Health Systems General medical & surgical hospitals 500.00 Revolver/Line >= 1 Yr. NR / NR L+ 60

12/19/14 Beacon Health Strategies LLC Health and allied serv ices 350.00 Term Loan NR / NR N/A

12/01/14 CT Technologies Intermediate Holdings IncHealth and allied serv ices 325.00 Term Loan B / B L+ 500

12/01/14 HealthPort Health and allied serv ices 325.00 Term Loan B NR / NR L+ 700

12/29/14 HealthSouth Corp Offices & clinics of medical doctors 300.00 Delay Draw Term Loan BB- / NR L+ 175

12/17/14 Acadia Healthcare Psychiatric hospitals 235.00 Revolver/Line >= 1 Yr. B / NR N/A

12/23/14 Hospice Compassus Intermediate care facilities 180.00 Term Loan B NR / NR L+ 475

12/30/14 Axelacare Health Solutions Home health care serv ices 144.50 Term Loan B NR / NR L+ 450

0.0x

2.0x

4.0x

6.0x

Debt/EBITDA Senior

Debt/EBITDA

EBITDA/Cash

Interest

EBITDA -

Capex/Cash

Interest

EB

ITD

A M

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Revolving Credit / Term Loan A Weighted-Average Institutional

$0

$3

$6

$9

$12

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$18

$21

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6

INDUSTRY UPDATE


Payer, Provider, & Pharmacy Support Services

As of December 31, 2014.

Stock Price

% Change 52 Week

12/31/2014 3 mos. 12 mos. High Low Revenue EBITDA EBIT Revenue EBITDA EBIT Revenue EBITDA Revenue EBITDA

Clinical Laboratories

Bio-Reference Laboratories Inc. $32.13 14.5% 25.8% $34.00 $24.13 $891 $55 $18 $929 $832 $108 $83 Oct-14 Oct-14 $942 $126 $100 1.1x 8.6x 1.0x 7.4x

Laboratory Corp. of America Holdings 107.90 6.0% 18.1% 109.84 87.25 9,118 3,015 576 11,575 5,936 1,138 936 Sep-14 Dec-13 5,994 1,178 944 1.9x 10.0x 1.9x 9.8x

Quest Diagnostics Inc. 67.06 10.5% 25.3% 68.51 50.46 9,692 3,893 170 13,443 7,308 1,397 1,090 Sep-14 Dec-13 7,401 1,433 1,112 1.8x 9.5x 1.8x 9.4x

Number of Companies 3 Median: 10.5% 25.3% Total $19,701 $8,649 $14,076 $14,336 1.8x 9.5x 1.8x 9.4x

Mean: 10.4% 23.0% $8,649 1.6x 9.4x 1.6x 8.9x

Contract Pharma Manufacturing

Akorn, Inc. $36.20 (0.2%) 47.0% $45.25 $20.52 $3,903 $1,157 $131 $4,918 $459 $140 $99 Sep-14 Dec-13 $630 $262 $216 10.7x 35.1x 7.8x 18.8x

Cambrex Corporation. 21.62 15.7% 21.3% 24.45 15.20 663 60 27 697 349 71 47 Sep-14 Dec-13 365 77 53 2.0x 10.6x 1.9x 9.1x

Integrated Biopharma Inc. 0.09 (61.9%) (51.7%) 0.34 0.08 2 15 0 16 33 2 1 Sep-14 Jun-14 NA NA NA 0.5x 10.4x NA NA

West Pharmaceutical Serv ices, Inc. 53.24 18.9% 8.5% 55.29 39.11 3,784 347 247 3,884 1,414 267 176 Sep-14 Dec-13 1,425 285 187 2.7x 14.3x 2.7x 13.6x


Mean: (6.9%) 6.3% $2,379 4.0x 17.6x 4.1x 13.8x

Contract Research Organizations

Quintiles Transnational Holdings Inc. 58.87 5.5% 27.0% 60.79 45.25 7,273 2,060 645 8,689 4,106 657 570 Sep-14 Dec-13 4,180 703 583 2.1x 13.0x 2.1x 12.4x

Charles River Laboratories International, Inc. 63.64 6.5% 20.0% 66.11 49.60 2,986 787 131 3,656 1,257 281 183 Sep-14 Dec-13 1,289 294 207 2.9x 12.6x 2.8x 12.4x

PAREXEL International Corporation 55.56 (11.9%) 23.0% 64.72 41.79 3,057 367 281 3,142 1,982 295 213 Sep-14 Jun-14 2,082 318 232 1.6x 10.7x 1.5x 9.9x

ICON Public Limited Company 50.99 (10.9%) 26.2% 59.81 35.33 3,140 0 154 2,891 1,458 240 189 Sep-14 Dec-13 1,506 259 208 2.0x 12.1x 1.9x 11.1x

PRA Health Sciences, Inc. 24.22 0.0% 0.0% 26.97 18.47 1,449 1,260 49 2,660 1,242 134 39 Sep-14 Dec-13 1,267 177 155 2.1x 20.1x 2.1x 15.0x

WuXi PharmaTech (Cayman) Inc. 33.67 (3.9%) (12.3%) 40.72 29.84 2,358 137 157 2,113 641 156 109 Sep-14 Dec-13 671 175 125 3.3x 13.5x 3.1x 12.1x

INC Research Holdings, Inc. 25.69 0.0% 0.0% 26.85 19.61 1,542 588 186 1,944 770 139 84 Sep-14 Dec-13 798 147 125 2.5x 14.0x 2.4x 13.3x

Albany Molecular Research Inc. $16.28 (26.2%) 61.5% $23.95 $10.01 $531 $124 $18 $636 $257 $35 $18 Sep-14 Dec-13 $280 $51 $34 2.5x 18.0x 2.3x 12.5x

Number of Companies 8 Median: (1.9%) 21.5% Total $22,334 $3,216 $11,713 $12,074 2.3x 13.3x 2.2x 12.4x

Mean: (5.1%) 18.2% $3,216 2.4x 14.2x 2.3x 12.3x

Disease Management

Alere Inc. $38.00 (2.0%) 5.0% $43.00 $31.94 $3,175 $3,789 $445 $7,130 $2,964 $547 $142 Sep-14 Dec-13 $2,898 $543 $474 2.4x 12.6x 2.5x 13.1x

Healthways Inc. 19.88 24.1% 29.5% 20.20 11.50 704 257 2 959 712 34 7 Sep-14 Dec-13 742 78 22 1.3x 28.1x 1.3x 12.2x


Mean: 11.0% 17.2% $4,045 1.9x 20.3x 1.9x 12.7x

Emergency Services

Air Methods Corp. $44.03 (20.7%) (24.4%) $60.74 $40.48 $1,726 $664 $17 $2,380 $983 $246 $165 Sep-14 Dec-13 $1,006 $255 $173 2.4x 9.7x 2.4x 9.3x

Number of Companies 1 Median: (20.7%) (24.4%) Total $1,726 $2,380 $983 $1,006 2.4x 9.7x 2.4x 9.3x

Mean: (20.7%) (24.4%) $2,380 2.4x 9.7x 2.4x 9.3x

Health Care Staffing

AMN Healthcare Serv ices Inc. $19.60 24.8% 33.3% $20.33 $10.35 $914 $146 $10 $1,051 $1,005 $84 $68 Sep-14 Dec-13 $1,024 $85 $65 1.0x 12.5x 1.0x 12.4x

Cross Country Healthcare, Inc. 12.48 34.3% 25.1% 13.51 5.26 390 65 8 448 539 11 4 Sep-14 Dec-13 620 17 9 0.8x 39.8x 0.7x 25.9x

On Assignment Inc. 33.19 23.6% (5.0%) 39.86 25.97 1,737 404 30 2,111 1,809 179 143 Sep-14 Dec-13 1,855 198 150 1.2x 11.8x 1.1x 10.7x

Team Health Holdings, Inc. 57.53 (0.8%) 26.3% 63.13 41.37 4,091 717 14 4,796 2,651 282 217 Sep-14 Dec-13 2,775 314 220 1.8x 17.0x 1.7x 15.3x


Mean: 20.5% 19.9% $2,101 1.2x 20.3x 1.2x 16.1x

Company NameLTM

Period

Lastest

FYE Date

TEV/ LTM MultiplesEquity

Mkt.

Value

Total DebtCash and

Equiv.

Total Ent.

Value

(TEV)

Lastest Twelve Months

(LTM)TEV/ Fwd MultiplesForward Estimate

PAGE |


7

INDUSTRY UPDATE




Stock Price

% Change 52 Week


HMO - Medical

Commercial:

Aetna Inc. $88.83 9.7% 29.5% $91.87 $64.68 $31,242 $8,784 $1,707 $38,379 $56,415 $4,858 $4,227 Sep-14 Dec-13 $57,697 $4,630 $4,288 0.7x 7.9x 0.7x 8.3x

Cigna Corp. 102.91 13.5% 17.6% 105.73 73.47 26,919 5,147 1,621 30,556 34,098 3,053 2,710 Sep-14 Dec-13 34,632 3,694 3,169 0.9x 10.0x 0.9x 8.3x

Health Net, Inc. 53.53 16.1% 80.4% 55.19 29.23 4,171 499 1,115 3,556 12,993 368 332 Sep-14 Dec-13 14,196 430 404 0.3x 9.7x 0.3x 8.3x

Humana Inc. 143.63 10.2% 39.1% 151.52 91.00 22,024 4,605 2,705 23,924 46,359 2,244 1,977 Sep-14 Dec-13 48,514 2,617 2,221 0.5x 10.7x 0.5x 9.1x

UnitedHealth Group Incorporated 101.09 17.2% 34.2% 104.00 69.57 97,025 17,579 7,233 108,757 128,158 10,997 9,961 Sep-14 Dec-13 130,198 11,646 10,176 0.8x 9.9x 0.8x 9.3x

Anthem, Inc. 0.00 0.0% 0.0% 0.00 0.00 0 16,962 1,718 0 72,792 5,162 4,595 Sep-14 Dec-13 73,174 4,993 4,214 0.0x 0.0x 0.0x 0.0x


Mean: 11.1% 33.5% $34,195 0.5x 8.0x 0.5x 7.2x

Government:

Centene Corp. $103.85 25.6% 76.2% $108.48 $55.11 $6,093 $956 $1,524 $5,674 $14,132 $459 $376 Sep-14 Dec-13 $16,454 $560 $468 0.4x 12.3x 0.3x 10.1x

Molina Healthcare, Inc. 53.53 26.5% 54.0% 54.57 32.41 2,591 909 1,599 1,901 8,324 185 94 Sep-14 Dec-13 9,715 274 186 0.2x 10.3x 0.2x 6.9x

WellCare Health Plans, Inc. 82.06 36.0% 16.5% 84.69 55.16 3,603 900 1,551 2,952 11,984 270 236 Sep-14 Dec-13 13,019 310 250 0.2x 10.9x 0.2x 9.5x


Mean: 29.4% 48.9% $3,509 0.3x 11.2x 0.3x 8.9x

Information Services

Data/Analytics:

National Research Corp. $35.97 (3.0%) 3.6% $44.95 $30.20 $418 $9 $39 $388 $97 $32 $28 Sep-14 Dec-13 $99 $33 $29 4.0x 12.3x 3.9x 11.8x

Castlight Health, Inc. 11.70 (9.6%) 0.0% 41.95 10.05 1,056 0 25 874 36 (85) (86) Sep-14 Dec-13 44 (77) (76) 24.1x NM 19.8x (11.4x)

Number of Companies 2 Median: (6.3%) 1.8% Total $737 $631 $66 $71 14.1x 12.3x 11.8x 0.2x

Mean: (6.3%) 1.8% $631 14.1x 12.3x 11.8x 0.2x

eHealth:

WebMD Health Corp. $39.55 (5.4%) 0.1% $53.30 $34.48 $1,430 $952 $700 $1,682 $564 $108 $90 Sep-14 Dec-13 $577 $156 $93 3.0x 15.6x NA NA

Number of Companies 1 Median: (5.4%) 0.1% Total $1,430 $1,682 $564 $577 3.0x 15.6x NA NA

Mean: (5.4%) 0.1% $1,682 3.0x 15.6x NA NA

Hospital/Physician:

Allscripts Healthcare Solutions, Inc. $12.77 (4.8%) (17.4%) $19.68 $11.00 $2,302 $587 $37 $2,852 $1,388 $46 ($56) Sep-14 Dec-13 $1,399 $203 $106 2.1x NM 2.0x 14.1x

athenahealth, Inc. 145.70 10.6% 8.3% 206.70 97.30 5,550 213 60 5,658 711 59 (2) Sep-14 Dec-13 747 139 75 8.0x NM 7.6x 40.7x

Cerner Corporation 64.66 8.5% 16.0% 66.45 48.39 22,080 147 496 20,895 3,181 841 651 Sep-14 Dec-13 3,381 1,134 847 6.6x 24.8x 6.2x 18.4x

Computer Programs & Systems Inc. 60.75 5.7% (1.7%) 71.89 56.60 681 0 18 652 210 60 56 Sep-14 Dec-13 210 59 55 3.1x 10.9x 3.1x 11.1x

HMS Holdings Corp. 21.14 12.1% (6.9%) 26.60 15.10 1,856 198 120 1,933 453 104 55 Sep-14 Dec-13 447 112 51 4.3x 18.7x 4.3x 17.3x

MedAssets, Inc. 19.76 (4.6%) (0.4%) 26.09 18.15 1,190 909 14 2,085 692 207 104 Sep-14 Dec-13 716 237 102 3.0x 10.1x 2.9x 8.8x

Merge Healthcare Incorporated 3.56 61.8% 53.4% 3.68 1.97 342 228 34 536 212 38 23 Sep-14 Dec-13 215 48 31 2.5x 14.0x 2.5x 11.2x

Quality Systems Inc. 15.59 13.2% (26.0%) 21.07 13.01 940 0 115 816 462 41 29 Sep-14 Mar-14 484 71 40 1.8x 19.7x 1.7x 11.5x

Number of Companies 8 Median: 9.6% (1.0%) Total $1,523 $4,428 $577 $600 3.1x 16.3x 3.0x 12.8x

Mean: 12.8% 3.2% $2,009 3.9x 16.4x 3.8x 16.6x

Forward Estimate TEV/ LTM Multiples TEV/ Fwd Multiples

Company Name

Equity

Mkt.

Value

Total DebtCash and

Equiv.

Total Ent.

Value

(TEV)


(LTM) LTM

Period

Lastest

FYE Date

PAGE |


8

INDUSTRY UPDATE




Stock Price

% Change 52 Week


Specialty Managed Care

HealthEquity, Inc. $25.45 39.0% 0.0% $27.74 $16.11 $1,393 $0 $108 $1,286 $80 $22 $16 Oct-14 Jan-14 $86 $24 $17 16.0x 59.1x 14.9x 54.0x

Assurant Inc. $68.43 6.4% 3.1% $69.94 $59.17 $4,808 $1,267 $1,411 $4,663 $10,160 $1,023 $897 Sep-14 Dec-13 $10,331 $980 $865 0.5x 4.6x 0.5x 4.8x

CorVel Corporation 37.22 9.3% (20.3%) 53.35 28.08 769 0 28 740 489 71 54 Sep-14 Mar-14 502 NA NA 1.5x 10.5x 1.5x NA

Number of Companies 3 Median: 9.3% 0.0% Total $1,393 $2,230 $489 $502 1.5x 10.5x 1.5x 29.4x

Mean: 18.2% (5.7%) $2,230 6.0x 24.7x 5.6x 29.4x

Specialty Pharmacy Management

Express Scripts Holding Company $84.67 19.9% 20.5% $86.27 $64.64 $62,140 $14,687 $835 $76,003 $100,356 $6,496 $4,420 Sep-14 Dec-13 $100,241 $6,770 $6,403 0.8x 11.7x 0.8x 11.2x

Catamaran Corporation 51.91 23.0% 9.3% 52.43 34.99 10,771 1,437 907 11,291 20,371 806 526 Sep-14 Dec-13 21,380 786 595 0.6x 14.5x 0.5x 14.4x

Omnicare Inc. 72.93 17.1% 20.8% 74.42 56.41 7,139 2,216 287 9,068 6,326 730 596 Sep-14 Dec-13 6,403 714 608 1.4x 12.4x 1.4x 12.7x

PharMerica Corporation 20.71 (15.2%) (3.7%) 30.48 19.42 678 361 7 1,032 1,822 115 79 Sep-14 Dec-13 1,861 128 86 0.6x 8.9x 0.6x 8.1x


Mean: 11.2% 11.8% $24,348 0.8x 11.9x 0.8x 11.6x

Company Name

Equity

Mkt.

Value

Total DebtCash and

Equiv.

Total Ent.

Value

(TEV)


(LTM) LTM

Period

Lastest

FYE Date


PAGE |


9

INDUSTRY UPDATE


Products & Devices


Stock Price

% Change 52 Week


Dental Products

3M Company $164.32 16.0% 17.2% $168.16 $123.61 $104,514 $7,355 $1,929 $109,206 $31,671 $8,467 $7,052 Sep-14 Dec-13 $31,881 $8,543 $7,143 3.4x 12.9x 3.4x 12.8x

DENTSPLY International Inc. 53.27 16.8% 9.9% 56.25 42.99 7,539 1,380 98 8,821 2,957 584 452 Sep-14 Dec-13 2,957 616 516 3.0x 15.1x 3.0x 14.3x

Sirona Dental Systems Inc. 87.37 13.9% 24.5% 90.20 67.20 4,838 80 383 4,537 1,171 270 229 Sep-14 Sep-14 1,211 349 294 3.9x 16.8x 3.7x 13.0x


Mean: 15.6% 17.2% $40,855 3.4x 15.0x 3.4x 13.4x

Durable Medical Equipment

Hill-Rom Holdings, Inc. $45.62 10.1% 10.4% $47.32 $34.94 $2,624 $492 $99 $3,017 $1,686 $271 $176 Sep-14 Sep-14 $1,890 $301 $209 1.8x 11.1x 1.6x 10.0x

Invacare Corporation 16.76 41.9% (27.8%) 25.96 11.65 538 25 29 534 1,301 1 (34) Sep-14 Dec-13 1,281 (5) (41) 0.4x NM 0.4x (110.1x)

ResMed Inc. 56.06 13.8% 19.1% 57.57 41.52 7,817 376 882 7,311 1,578 483 409 Sep-14 Jun-14 1,657 511 427 4.6x 15.1x 4.4x 14.3x


Mean: 21.9% 0.5% $3,621 2.3x 13.1x 2.1x (28.6x)

Life Sciences Tools

Agilent Technologies Inc. $40.94 (28.2%) (28.4%) $61.22 $38.09 $13,728 $2,762 $3,028 $13,465 $6,981 $1,279 $895 Oct-14 Oct-14 $4,149 $894 $765 1.9x 10.6x 3.2x 15.1x

Thermo Fisher Scientific, Inc. 125.29 2.9% 12.5% 129.77 107.33 50,119 14,483 534 64,058 15,864 3,641 2,141 Sep-14 Dec-13 16,789 4,017 3,693 4.0x 17.6x 3.8x 15.9x

VWR Corporation 25.87 0.0% 0.0% 27.14 20.60 3,398 2,739 135 6,003 4,333 462 331 Sep-14 Dec-13 4,354 443 367 1.4x 13.0x 1.4x 13.5x

Becton, Dickinson and Company 139.16 22.3% 25.9% 142.56 105.21 26,911 3,971 1,861 28,134 8,432 2,164 1,643 Sep-14 Sep-14 8,628 2,469 1,815 3.3x 13.0x 3.3x 11.4x

LifeWatch AG 0.00 33.0% 45.3% 12.89 7.45 166 5 6 165 96 3 (2) Jun-14 Dec-13 99 4 0 1.9x 62.8x 1.7x 40.2x


Mean: 6.0% 11.1% $22,365 2.5x 23.4x 2.7x 19.2x

Medical Devices and Products

Abbott Laboratories $45.02 8.2% 17.5% $46.50 $35.65 $67,791 $8,301 $3,613 $71,320 $22,162 $4,795 $3,216 Sep-14 Dec-13 $20,723 $5,120 $3,881 3.2x 14.9x 3.4x 13.9x

Baxter International Inc. 73.29 2.1% 5.4% 77.31 66.34 39,722 9,275 2,078 46,941 16,813 4,187 3,190 Sep-14 Dec-13 16,555 4,375 3,478 2.8x 11.1x 2.8x 10.7x

Boston Scientific Corporation 13.25 12.2% 10.2% 14.08 11.10 17,576 4,252 246 21,575 7,331 1,638 921 Sep-14 Dec-13 7,401 1,709 1,054 2.9x 13.2x 2.9x 12.6x

CR Bard Inc. 166.62 16.8% 24.4% 174.46 125.00 12,480 1,403 972 12,911 3,218 922 760 Sep-14 Dec-13 3,303 983 812 4.0x 14.0x 3.9x 13.1x

Danaher Corp. 85.71 12.8% 11.0% 87.49 70.12 60,228 3,036 4,025 59,308 19,763 4,366 3,432 Sep-14 Dec-13 19,903 4,472 3,545 3.0x 13.6x 3.0x 13.3x

Hanger, Inc. 21.90 6.7% (44.3%) 40.71 18.25 753 540 5 1,288 1,061 156 117 Jun-14 Dec-13 1,068 162 115 1.2x 8.2x 1.2x 7.9x

Hologic Inc. 26.74 9.9% 19.6% 27.35 19.91 7,451 4,302 736 11,017 2,509 888 365 Sep-14 Sep-14 2,566 988 833 4.4x 12.4x 4.3x 11.1x

Hospira Inc. 61.25 17.7% 48.4% 63.36 40.41 10,364 1,762 541 11,584 4,422 705 469 Sep-14 Dec-13 4,451 830 630 2.6x 16.0x 2.6x 14.0x

Johnson & Johnson 104.57 (1.9%) 14.2% 109.49 86.09 292,703 15,271 0 274,969 74,331 25,009 21,137 Dec-14 Dec-14 75,646 26,000 21,855 3.7x 10.9x 3.6x 10.6x

Medtronic, Inc. 72.20 16.5% 25.8% 75.66 53.33 71,068 13,708 1,287 70,292 17,255 5,622 4,770 Oct-14 Apr-14 17,559 6,241 5,472 4.1x 12.5x 4.0x 11.3x

Stryker Corporation 94.33 16.8% 25.5% 98.24 74.02 35,687 3,962 1,356 34,972 9,525 1,748 1,384 Sep-14 Dec-13 9,678 2,644 2,264 3.7x 20.0x 3.6x 13.2x

Teleflex Incorporated 114.82 9.3% 22.3% 119.99 90.15 4,755 1,065 286 5,536 1,802 405 295 Sep-14 Dec-13 1,839 445 354 3.1x 13.7x 3.0x 12.4x

K2M Group Holdings, Inc. 20.87 44.6% 0.0% 23.63 12.31 775 0 23 752 178 (15) (52) Sep-14 Dec-13 185 (10) (52) 4.2x NM 4.1x (75.6x)

Zimmer Holdings, Inc. 113.42 12.8% 21.7% 116.14 90.48 19,208 1,676 967 19,139 4,691 1,760 1,393 Sep-14 Dec-13 4,695 1,791 1,428 4.1x 10.9x 4.1x 10.7x


Mean: 13.2% 14.4% $45,829 3.4x 13.2x 3.3x 5.7x

Medical / Surgical / Dental Supplies & Distribution

AmerisourceBergen Corporation $90.16 16.6% 28.2% $92.84 $62.55 $19,717 $1,996 $1,809 $19,904 $119,569 $1,374 $1,185 Sep-14 Sep-14 $128,489 $1,877 $1,694 0.2x 14.5x 0.2x 10.6x

Cardinal Health, Inc. 80.73 7.8% 20.8% 83.40 63.06 26,719 4,007 2,469 28,257 90,631 2,390 1,940 Sep-14 Jun-14 94,880 2,686 2,359 0.3x 11.8x 0.3x 10.5x

Henry Schein, Inc. 136.15 16.9% 19.2% 139.15 109.34 11,466 825 77 12,767 10,196 844 699 Sep-14 Dec-13 10,397 860 710 1.3x 14.9x 1.2x 14.8x

McKesson Corporation 207.58 6.6% 28.6% 214.37 159.45 48,134 10,572 3,804 56,497 161,201 3,557 2,692 Sep-14 Mar-14 177,573 4,808 4,099 0.4x 15.9x 0.3x 11.8x

Owens & Minor Inc. 35.11 7.2% (4.0%) 37.90 31.55 2,215 766 610 2,371 9,267 237 196 Sep-14 Dec-13 9,398 254 197 0.3x 10.0x 0.3x 9.3x

Patterson Companies, Inc. 48.10 16.1% 16.7% 49.50 37.03 4,828 726 285 5,211 4,348 418 366 Oct-14 Apr-14 4,418 432 382 1.2x 12.5x 1.2x 12.1x


Mean: 11.9% 18.3% $20,835 0.6x 13.3x 0.6x 11.5x

TEV/ Fwd MultiplesCash and

Equiv.

Total Ent.

Value

(TEV)


(LTM) LTM

Period

Lastest

FYE DateCompany Name

Equity

Mkt.

Value

Total Debt

TEV/ LTM MultiplesForward Estimate

PAGE |


10

INDUSTRY UPDATE


Provider-Based Services


Stock Price

% Change 52 Week


Acute-Care Hospitals

Community Health Systems, Inc. $53.92 (1.6%) 37.3% $57.72 $34.55 $6,270 $17,069 $221 $23,901 $17,129 $2,241 $1,394 Sep-14 Dec-13 $18,979 $2,817 $1,617 1.4x 10.5x 1.3x 8.5x

HCA Holdings, Inc. 73.39 4.1% 53.8% 75.82 46.02 31,819 28,687 515 61,291 36,118 7,141 5,319 Sep-14 Dec-13 37,044 7,305 5,484 1.7x 8.5x 1.7x 8.4x

Lifepoint Hospitals Inc. 71.91 3.9% 36.1% 76.50 50.18 3,256 2,222 263 5,325 4,173 547 282 Sep-14 Dec-13 4,473 633 369 1.3x 9.7x 1.2x 8.4x

Tenet Healthcare Corp. 50.67 (14.7%) 20.3% 63.61 37.95 4,980 11,553 200 16,860 16,032 1,750 950 Sep-14 Dec-13 17,173 1,924 1,079 1.1x 9.6x 1.0x 8.8x

Universal Health Serv ices Inc. 111.26 6.5% 36.9% 115.64 73.06 11,011 3,466 40 14,723 7,759 1,386 1,020 Sep-14 Dec-13 8,597 1,464 1,088 1.9x 10.6x 1.7x 10.1x


Mean: (0.4%) 36.9% $24,420 1.5x 9.8x 1.4x 8.8x

Assisted Living

Brookdale Senior Liv ing Inc. $36.67 13.8% 34.9% $37.03 $26.11 $6,726 $6,415 $238 $12,903 $2,931 $522 $134 Sep-14 Dec-13 $3,807 $596 $10 4.4x 24.7x 3.4x 21.6x

Capital Senior Liv ing Corp. 24.91 17.3% 3.8% 26.89 20.33 725 666 28 1,363 367 57 11 Sep-14 Dec-13 383 69 13 3.7x 23.9x 3.6x 19.8x

Five Star Quality Care Inc. 4.15 10.1% (24.4%) 6.09 3.23 202 77 25 239 1,103 20 (12) Sep-14 Dec-13 1,362 42 15 0.2x 11.7x 0.2x 5.7x

Skilled Healthcare Group, Inc. 8.57 29.8% 78.2% 9.00 4.08 344 408 11 741 831 67 42 Sep-14 Dec-13 832 81 55 0.9x 10.9x 0.9x 9.2x


Mean: 17.8% 23.1% $3,812 2.3x 17.8x 2.0x 14.1x

Diagnostic Imaging

Alliance Healthcare Serv ices, Inc. $20.99 (7.2%) (15.2%) $35.40 $18.92 $222 $505 $39 $733 $437 $127 $60 Sep-14 Dec-13 NA NA NA 1.7x 5.6x NA NA

RadNet, Inc. 8.54 29.0% 411.4% 10.35 1.50 365 614 0 980 710 116 56 Sep-14 Dec-13 716 125 54 1.4x 8.0x 1.4x 7.9x

Varian Medical Systems, Inc. 86.51 8.0% 11.4% 89.90 76.73 8,667 438 849 8,189 3,050 659 596 Sep-14 Sep-14 3,203 687 623 2.7x 12.4x 2.6x 11.9x


Mean: 9.9% 135.9% $3,301 1.9x 8.7x 2.0x 9.9x

Dialysis Services

DaVita HealthCare Partners Inc. $75.74 3.6% 19.5% $78.52 $62.52 $16,277 $8,504 $1,527 $24,047 $12,519 $2,413 $1,837 Sep-14 Dec-13 $12,737 $2,414 $1,832 1.9x 9.9x 1.9x 10.0x

Fresenius Medical Care AG & Co. KGAA 0.00 6.9% 4.2% 74.95 56.64 22,507 9,073 588 31,639 15,666 2,902 2,220 Sep-14 Dec-13 15,719 2,941 2,257 2.1x 11.2x 2.0x 10.8x


Mean: 5.2% 11.9% $27,843 2.0x 10.5x 2.0x 10.4x

Home Care, Hospice, and Home Infusion

Home Care / Hospice:

Addus HomeCare Corporation $24.27 23.8% 8.1% $29.45 $17.02 $264 $4 $14 $254 $300 $20 $17 Sep-14 Dec-13 $313 $23 $19 0.8x 12.7x 0.8x 10.9x

Almost Family Inc. 28.95 6.6% (10.5%) 33.50 19.74 274 53 5 325 466 22 18 Sep-14 Dec-13 493 36 30 0.7x 14.9x 0.7x 9.1x

Amedisys Inc. 29.35 45.5% 100.6% 30.48 12.86 980 114 6 1,088 1,191 52 21 Sep-14 Dec-13 1,206 74 38 0.9x 20.0x 0.9x 14.7x

Gentiva Health Serv ices Inc. 19.05 13.5% 53.5% 19.90 7.35 713 1,157 114 1,759 1,970 154 123 Sep-14 Dec-13 1,985 191 162 0.9x 11.4x 0.9x 9.2x

LHC Group, Inc. 31.18 34.4% 29.7% 31.95 19.69 555 65 5 629 690 56 47 Sep-14 Dec-13 731 56 46 0.9x 11.3x 0.9x 11.2x

Chemed Corp. 105.67 2.7% 37.9% 111.98 72.50 1,797 174 19 1,952 1,425 184 158 Sep-14 Dec-13 1,449 207 169 1.4x 10.6x 1.3x 9.4x


Mean: 21.1% 36.6% $1,001 0.9x 13.5x 0.9x 10.8x

Home Infusion:

BioScrip Inc. $6.99 1.2% (5.5%) $9.05 $5.44 $480 $423 $0 $903 $1,029 ($3) ($25) Sep-14 Dec-13 $987 $46 $31 0.9x NM 0.9x 19.6x

Number of Companies 1 Median: 1.2% (5.5%) Total $480 $903 $1,029 $987 0.9x NM 0.9x 19.6x

Mean: 1.2% (5.5%) $903 0.9x NM 0.9x 19.6x

TEV/ LTM Multiples TEV/ Fwd Multiples

Company Name

Equity

Mkt.

Value

Total DebtCash and

Equiv.

Total Ent.

Value

(TEV)


(LTM) LTM

Period

Lastest

FYE Date

Forward Estimate

PAGE |


11

INDUSTRY UPDATE


Provider-Based Services

As of December 31, 2014.(1) EBITDA, EBIT, and Enterprise Value figures are adjusted for minority interest.

Stock Price

% Change 52 Week


Long-Term Care

The Ensign Group, Inc. $44.39 27.6% 0.3% $47.78 $26.02 $998 $3 $39 $956 $988 $110 $80 Sep-14 Dec-13 $1,013 $111 $85 1.0x 8.7x 0.9x 8.6x

Kindred Healthcare Inc. 18.18 (6.3%) (7.9%) 26.81 17.59 1,266 1,497 82 2,628 5,081 291 132 Sep-14 Dec-13 5,085 368 207 0.5x 9.0x 0.5x 7.1x

National Healthcare Corp. 62.84 13.2% 16.6% 64.66 49.06 886 47 77 918 855 105 72 Sep-14 Dec-13 872 NA NA 1.1x 8.2x 1.1x NA


Mean: 11.5% 3.0% $1,501 0.9x 8.6x 0.8x 7.9x

Physician Practice Management

Multispecialty / Primary Care:

IPC Healthcare, Inc. $45.89 2.5% (22.7%) $59.35 $36.12 $790 $70 $25 $835 $676 $71 $66 Sep-14 Dec-13 $694 $72 $66 1.2x 11.7x 1.2x 11.6x

Number of Companies 1 Median: 2.5% (22.7%) Total $790 $835 $676 $694 1.2x 11.7x 1.2x 11.6x

Mean: 2.5% (22.7%) $835 1.2x 11.7x 1.2x 11.6x

Specialty:

MEDNAX, Inc. $66.11 20.6% 23.8% $67.64 $49.82 $6,638 $289 $72 $6,849 $2,356 $538 $496 Sep-14 Dec-13 $2,425 $553 $510 2.9x 12.7x 2.8x 12.4x


Mean: 20.6% 23.8% $6,849 2.9x 12.7x 2.8x 12.4x

Dental:

Birner Dental Management Serv ices Inc. $16.36 (11.7%) (14.0%) $22.40 $12.05 $28 $10 $0 $38 $65 $4 ($1) Sep-14 Dec-13 NA NA NA 0.6x 10.5x NA NA

Number of Companies 1 Median: (11.7%) (14.0%) Total $28 $38 $65 $0 0.6x 10.5x NA NA

Mean: (11.7%) (14.0%) $38 0.6x 10.5x NA NA

Behavioral Health / Management

Magellan Health, Inc. $60.03 9.7% 0.2% $63.81 $52.37 $1,638 $274 $368 $1,529 $3,786 $196 $143 Sep-14 Dec-13 $3,758 $247 $127 0.4x 7.8x 0.4x 6.2x

Prov idence Serv ice Corp. 36.44 (24.7%) 41.7% 49.41 23.91 578 192 137 632 1,304 62 42 Sep-14 Dec-13 1,444 83 45 0.5x 10.1x 0.4x 7.7x

AAC Holdings, Inc. 30.92 0.0% 0.0% 33.32 17.91 652 47 5 701 112 9 5 Sep-14 Dec-13 132 20 11 6.2x 76.9x 5.3x 34.6x

Acadia Healthcare Company, Inc. 61.21 26.2% 29.3% 66.88 38.76 3,668 1,029 42 4,655 900 180 153 Sep-14 Dec-13 1,006 212 174 5.2x 25.9x 4.6x 22.0x

Civ itas Solutions, Inc. 17.03 9.0% 0.0% 17.50 11.88 629 810 196 1,243 1,256 126 60 Sep-14 Sep-14 1,368 148 74 1.0x 9.8x 0.9x 8.4x

Universal Health Serv ices Inc. 111.26 6.5% 36.9% 115.64 73.06 11,011 3,466 40 14,723 7,759 1,386 1,020 Sep-14 Dec-13 8,597 1,464 1,088 1.9x 10.6x 1.7x 10.1x


Mean: 4.5% 18.0% $3,914 2.5x 23.5x 2.2x 14.8x

Surgicenters / Rehabilitation

Surgery Centers1:

AmSurg Corp. $54.73 9.4% 19.2% $55.65 $40.00 $2,634 $2,249 $194 $4,855 $1,342 $234 $188 Sep-14 Dec-13 $1,611 $254 NA 4.1x 20.7x 3.0x 19.1x

Surgical Care Affiliates, Inc. 33.65 25.9% NA 37.69 26.55 1,203 683 109 1,776 833 98 51 Sep-14 Dec-13 866 NA NA 2.7x 18.2x 2.1x NA


Mean: 17.6% 19.2% $3,316 3.4x 19.4x 2.5x 19.1x

Rehabilitation:

HEALTHSOUTH Corp. $38.46 4.2% 15.4% $42.41 $29.82 $3,375 $1,650 $272 $5,001 $2,336 $584 $479 Sep-14 Dec-13 $2,402 $582 $471 2.1x 8.4x 2.1x 8.6x

Select Medical Holdings Corporation 14.40 19.7% 24.0% 16.17 10.15 1,885 1,558 11 3,479 2,997 362 295 Sep-14 Dec-13 3,062 370 293 1.2x 9.5x 1.1x 9.4x

US Physical Therapy Inc. 41.96 18.6% 19.0% 44.00 29.56 515 48 16 576 290 51 45 Sep-14 Dec-13 302 44 NA 2.0x 11.4x 1.9x 13.1x


Mean: 14.2% 19.5% $3,019 1.8x 9.7x 1.7x 10.4x

Company Name

Equity

Mkt.

Value

Total DebtCash and

Equiv.

Total Ent.

Value

(TEV)


(LTM) LTM

Period

Lastest

FYE Date


PAGE |

M&A ACTIVITY

12

INDUSTRY UPDATE


Announced U.S. Healthcare & Life Sciences M&A

Enterprise Enterprise Value / LTM Private Equity

Announced Target Seller Buyer Value ($mm) Sales EBITDA EBIT Involvement

hoh18.75

12/31/2014 The Joint RRC Corp., Six Franchises in Los Angeles

County

The Joint RRC Corp. The Joint Corp. (NasdaqCM:JYNT) $0.9 - - - No

12/31/2014 Metropolitan Anesthesia Alliance, PLLC - American Anesthesiology, Inc. - - - - No

12/31/2014 Baxano Surgical, Inc., Substantially All Assets Baxano Surgical, Inc. (OTCPK:BAXS.Q) - $4.0 - - - No

12/30/2014 Zaxis International Inc. (OTCPK:ZXSI) - Emerald Medical Applications Ltd. - - - - No

12/30/2014 Park Bench Group Counseling, LLC - Elements Behavioral Health, Inc. - - - - No

12/30/2014 Physician Management Information Serv ices, Inc. - The Consult, Inc. - - - - No

12/29/2014 STAT Medical Care, P.C. and William and Teresa

Medical Care, Inc.

- American Caresource Holdings, Inc.

(NasdaqCM:ANCI)

$1.4 - - - No

12/24/2014 UNeLAB LLC Prairie Ventures, LLC Abbott Laboratories (NYSE:ABT) - - - - No

12/23/2014 Ubiquity LLC - PopHealthCare L.L.C. - - - - No

12/23/2014 SK3 Group Inc. (OTCPK:SKTO) Healthcare of Today, Inc. Aeris Trading Corp. - - - - No

12/22/2014 Aesyntix Health, Inc. - Modernizing Medicine, Inc. - - - - No

12/22/2014 38 High Quality Senior Liv ing Communities CNL Lifestyle Properties, Inc.

(OTCPK:CLLY)

Senior Housing Properties Trust

(NYSE:SNH)

$790.0 - - - No

12/22/2014 Simply Healthcare Holdings, Inc. MBF Healthcare Partners, L.P. Anthem, Inc. (NYSE:ANTM) - - - - Yes

12/22/2014 BioTechPharma Corporation - Unique Growing Solutions, Inc.

(OTCPK:ALNE)

- - - - No

12/22/2014 End Stage Renal Disease Network of Texas, Inc.

and Southeastern Kidney Council Inc.

- Network 8, Inc. - - - - No

12/22/2014 Certified Anesthesia Serv ices - Team Health Holdings, Inc. (NYSE:TMH) - - - - No

12/22/2014 Avantas, LLC Alegent Creighton Health AMN Healthcare Serv ices Inc.

(NYSE:AHS)

$25.0 - - - No

12/22/2014 Advanced Circulatory Systems, Inc. - ZOLL Medical Corporation - - - - No

12/22/2014 Sacred Cells Research Partners, LLC - Vivo Biosciences Inc. - - - - No

12/21/2014 Vision-Sciences Inc. (NasdaqCM:VSCI) - Uroplasty, Inc. (NasdaqCM:UPI) - - - - No

12/21/2014 Hawthorn Retirement Group LLC, 17-Property

Portfolio of Independent Liv ing Senior Housing

Properties

Hawthorn Retirement Group, LLC New Senior Investment Group Inc.

(NYSE:SNR)

$435.0 - - - No

12/19/2014 Elmcroft Assisted Liv ing LLC Senior Care, Inc. - - - - - No

12/19/2014 48-Unit Private-Pay Memory Care Facility In Castle

Rock, Colorado

- LTC Properties Inc. (NYSE:LTC) $9.8 - - - No

12/19/2014 Prelude Homes & Serv ices, LLC, Prelude at

Woodbury Facility

Prelude Homes & Serv ices, LLC CareTrust REIT, Inc. (NasdaqGS:CTRE) $7.2 - - - No

12/19/2014 Hanley Center, Inc. Richard J. Caron Foundation, Inc.,

Endowment Arm

Origins Behavioral Healthcare, LLC $11.5 - - - No

12/19/2014 St. Joseph Regional Health Network - Penn State Milton S. Hershey Medical

Center

- - - - No

12/18/2014 River Valley Health Partners - Humility of Mary Health Partners, Inc. - - - - No

12/18/2014 AmSol, LLC - NorthStar Anesthesia P.A. - - - - No

12/17/2014 Bayer HealthCare AG, Legend®/Hyonate® And

Marquis®

Bayer HealthCare AG Merial Inc. - - - - No

12/17/2014 Tustin I rv ine Medical Group Inc. - U.S. Healthworks, Inc. - - - - No

12/17/2014 Saint Francis Care, Inc. Catholic Charities, Inc. - Archdiocese

Of Hartford

Trinity Health Corporation - - - - No

12/17/2014 Summit Medical Associates, P.C. - Heritage Medical Associates, P.C. - - - - No

12/16/2014 Volcano Corporation (NasdaqGS:VOLC) T. Rowe Price Associates, Inc.; Camber

Capital Management LLC; Engaged

Capital, LLC

Philips Holding USA Inc. $1,190.7 3.0x 75.7x - No

12/16/2014 Healthcare Facilities in Longview, El Paso, Corpus

Christi and Grand Prairie, Texas

- Global Healthcare REIT, Inc.

(OTCPK:GBCS)

$27.0 - - - No

12/16/2014 Onward Healthcare, Inc. OGH, LLC AMN Healthcare, Inc. $82.5 - - - No

12/16/2014 Complete Case Management, LLC - The Wright Rehabilitation Serv ice, Inc. - - - - No

12/16/2014 Acute Care Express Inc. - U.S. Healthworks, Inc. - - - - No

12/16/2014 G2 Intelligence Kennedy Information, LLC Plain Language Media LLLP - - - - No

12/16/2014 Not-For-Profit Hospital Corporation, Operating

Assets

Not-For-Profit Hospital Corporation Howard University Hospital; Paladin

Healthcare Capital LLC

- - - - No

12/15/2014 Holt Dental Supply, Inc. - Patterson Companies, Inc.

(NasdaqGS:PDCO)

- - - - No

12/15/2014 DiabetesMine.com Alliance Health Network, Inc. Healthline Networks, Inc. - - - - No

12/15/2014 Huebner Medical Center I & I I - 2GR Equity LLC - - - - No

12/15/2014 Recovery First, Inc. - American Addiction Centers, Inc. $13.1 - - - No

12/15/2014 Primus Medical, LLC - Medical Depot, Inc. - - - - No

12/13/2014 GPS, LLC - Veridicus Health LLC - - - - No

PAGE |

M&A ACTIVITY

13

INDUSTRY UPDATE


Announced U.S. Healthcare & Life Sciences M&A cont.



12/13/2014 Opko Health, Inc., Worldwide Licenses Of hGH-

CTP

Opko Health, Inc. (NYSE:OPK) Pfizer Inc. (NYSE:PFE) $570.0 - - - No

12/12/2014 Advanced Pharmacy Concepts, Inc. - PricewaterhouseCoopers LLP - - - - No

12/12/2014 Eight Senior Liv ing Business University General Health System, Inc.

(OTCPK:UGHS)

Cornerstone Healthcare Group Holding,

Inc.

$41.5 - - - No

12/11/2014 Scribe Solutions, Inc. - General Employment Enterprises Inc.

(AMEX:JOB)

- - - - No

12/11/2014 National Healthcare of Newport, Inc. Community Health Systems, Inc.

(NYSE:CYH)

White County Medical Center - - - - No

12/11/2014 North Carolina Elderly Psychiatric Serv ices, PLLC - IPC Healthcare, Inc. (NasdaqGS:IPCM) - - - - No

12/11/2014 Origin Healthcare Solutions LLC Beecken Petty O'Keefe & Company;

Technology Crossover Ventures

Meridian Medical Management - - - - Yes

12/10/2014 AdminiSource Communications, Inc. Alegeus Technologies, LLC Emdeon Inc. $35.0 - - - No

12/10/2014 The Orthopaedic Group, LLC - Connecticut Orthopaedic Specialists,

P.C

- - - - No

12/10/2014 Happtique, Inc. GNYHA Ventures, Inc. WorldDoc, Inc. - - - - No

12/9/2014 Innovative Supplements, Inc., Three Nutritional

Supplement Products

Innovative Supplements, Inc. Therapeutic Solutions International, Inc.

(OTCPK:TSOI)

$0.2 - - - No

12/9/2014 Worldwide Promedica. Inc. - Cello Health $2.5 1.3x - - No

12/9/2014 Digital Assent LLC Advanced Technology Development

Center; Buckhead Investments LLC;

National Research Corp.

(NasdaqGS:NRCI.B)

- - - - No

12/9/2014 Emerge.MD, Inc. - Avizia, Inc. - - - - No

12/9/2014 Mars Symbioscience, Worldwide License Rights to

Develop and Commercialize Arginase Inhibitors

Mars Symbioscience Inc. Calithera Biosciences, Inc.

(NasdaqGS:CALA)

$119.7 - - - No

12/8/2014 Virginia League for Planned Parenthood, Inc. - Planned Parenthood of Southeastern

Virginia, Inc.

- - - - No

12/8/2014 Boston Heart Diagnostics Corporation Launchpad Venture Group, LLC; Bain

Capital Ventures; Cherrystone Angel

Eurofins Scientific SA (ENXTPA:ERF) $200.0 - - - No

12/8/2014 Cubist Pharmaceuticals Inc. (NasdaqGS:CBST) Tekla Life Sciences Investors

(NYSE:HQL); Tekla Healthcare Investors

Merck & Co. Inc. (NYSE:MRK) $8,404.1 7.2x 41.3x 75.5x No

12/8/2014 HealthInterlink, LLC Prairie Ventures, LLC Welch Allyn, Inc. - - - - No

12/8/2014 Care1st Health Plan, Inc. - Blue Shield of California Life & Health

Insurance Company

- - - - No

12/7/2014 AFrame Digital, Inc. - Neos Technologies, Inc. - - - - No

12/5/2014 Vintage, Inc. - Familylinks - - - - No

12/5/2014 Pain Management Of Middle Tennessee PLLC - PhyMed Healthcare Group - - - - No

12/4/2014 Merck & Co. Inc., Merck Manufacturing Facility in

Barceloneta, Puerto Rico

Merck & Co. Inc. (NYSE:MRK) Merial Limited - - - - No

12/4/2014 Quality Life Counseling N.O., LLC - Sinfonía HealthCare Corp - - - - No

12/4/2014 Mendel Biological Solutions - Koch Agronomic Serv ices, LLC - - - - No

12/4/2014 Forest Trace Senior Liv ing Community Forest City Enterprises Inc. (NYSE:FCE.A) Pacifica Companies, LLC $59.5 - - - No

12/3/2014 Fresenius Medical Center in Green, Ohio Professional Center Associates, Limited

Partnership

AEI Fund Management Inc. $2.4 - - - Yes

12/3/2014 PneumRx, Inc. Alta Partners LP; Adams Street

Partners, LLC; KBL Healthcare

BTG International Inc. $475.0 29.7x - - Yes

12/3/2014 Callaway Community Hospital Healthmont Of Missouri LLC Nueterra Holdings LLC; University of

Missouri Health Care

$6.0 - - - No

12/3/2014 Allied 100, LLC Thompson Street Capital Partners Ridgemont Equity Partners - - - - Yes

12/3/2014 Guardian Angel Hospice, Inc. - Cornerstone Healthcare, Inc. - - - - No

12/3/2014 PawsPlus, Inc. H.I .G. Capital, LLC; H.I .G. Growth

Partners, LLC; H.I .G. Europe

Community Veterinary Clinics, LLC - - - - Yes

12/2/2014 Ariosa Diagnostics, Inc. Domain Associates, L.L.C.; MeriTech

Capital Partners; Venrock

Roche Holding AG (SWX:ROG) - - - - Yes

12/2/2014 Waterbury Hospital Greater Waterbury Health Network,

Inc.

Vanguard Health Systems Inc. $45.0 - - - No

12/2/2014 Southeastern Technology, Inc. - Autocam Medical Device Holdings, LLC - - - - No

12/2/2014 Zaxis International Inc. (OTCPK:ZXSI) - ARTsys360 ltd. - - - - No

PAGE |

M&A ACTIVITY

14

INDUSTRY UPDATE


Announced U.S. Healthcare & Life Sciences M&A cont.



12/2/2014 Klingensmith, Inc. - Johns Hopkins Home Care Group, Inc.;

Allegheny Health Network, Inc.

- - - - No

12/2/2014 Annville Family Medicine, P.C. - PinnacleHealth System Inc. - - - - No

12/2/2014 Spring Valley Laboratories, Inc. - Noble Life Sciences, Inc. - - - - No

12/2/2014 Ubiquity Group - The Bawmann Group, Inc. - - - - No

12/2/2014 BEEGHLY OAKS OPERATING, LLC Vrable Healthcare, Inc. CareRite Centers, LLC $2.9 - - - No

12/2/2014 Oasis Center for Rehabilitation and Healing Vrable Healthcare, Inc. CareRite Centers, LLC $2.8 - - - No

12/2/2014 Kaaterskill Care Columbia Memorial Hospital Premier Healthcare Management - - - - No

12/2/2014 TCG Interests, Ltd. - Elm Creek Partners; 747 Capital LLC;

Bowside Capital

- - - - Yes

12/1/2014 Brockton Health Center LLC - Synergy Health Centers LLC - - - - No

12/1/2014 Avanir Pharmaceuticals, Inc. (NasdaqGS:AVNR) SSgA Funds Management, Inc. Otsuka America, Inc. $3,207.4 27.9x - - No

12/1/2014 Gastroenterology Anesthesia Associates, LLC - CRH Medical Corporation (TSX:CRH) $73.2 2.9x 4.6x - No

12/1/2014 Athas Health, LLC - Nobilis Health Corp. (TSX:NHC) $34.6 1.2x 11.5x - No

12/1/2014 Sagent Healthstaff, LLC - Accountable Healthcare Staffing, LLC - - - - No

12/1/2014 Eight Communities Totalling 1,671 Units Senior Liv ing Communities, LLC National Health Investors Inc. (NYSE:NHI) $476.0 - - - No

12/1/2014 Nurses to Go, LLC - Epic Health Serv ices, Inc. - - - - No

12/1/2014 Healthcare Practice Consultants, LLC - Deming Malone Livesay & Ostroff - - - - No

12/1/2014 PIMD International LLC - ScripsAmerica, Inc. (OTCPK:SCRC) - - - - No

12/1/2014 Eye Care Associates, O.D.P.A. CVS Holdings I LLC MyEyeDr., Inc. - - - - No

12/1/2014 Cardiology Associates of Waukesha, S.C. - ProHealth Care, Inc. - - - - No

Energy & Power

IndustrialsHealthcare & Life Sciences

Transportation & Logistics

Aerospace, Defense & Government

Services

Business Services

Building Products & Materials

Technology, Media & Telecom

Specialty Distribution

Consumer

PAGE |

HARRIS WILLIAMS & CO. OFFICE LOCATIONS

Healthcare & Life Sciences

Harris Williams & Co. has a broad range of industry expertise, which creates powerful opportunities.Our clients benefit form our deep-sector experience, integrated industry intelligence andcollaboration across the firm, and our commitment to learning what makes them unique. For moreinformation, visit our website at www.harriswilliams.com/industries

OUR FIRM

INDUSTRY UPDATE


BostonTwo International Place24th FloorBoston, Massachusetts 02110Phone: +1 (617) 482-7501Fax: +1 (617) 482-7503

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UNITED STATES EUROPE

NETWORK OFFICES

Beijing

Hong Kong

Mumbai

New Delhi

Shanghai

15

http://www.harriswilliams.com/industries

PAGE |

HARRIS WILLIAMS & CO.

Capital IQ.

Thomson Financial.

S&P.

Reuters.

Bloomberg.

Irving Levin Associates.

16

SOURCES

INDUSTRY UPDATE


Harris Williams & Co. (www.harriswilliams.com) is a preeminent middle market investment bank focused on the advisory needs of clients worldwide.The firm has deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services.

Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co.Ltd, which is authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC andHarris Williams & Co. Ltd conduct business.

THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATIONPROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUEROR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITYOR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIALINFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRDPARTIES, PLEASE CONTACT US AT THE ABOVE ADDRESSES OR NUMBERS.

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