Russell Stanley, CFA, MBA 416.860.8636 rstanley@mackieresearch.com

Douglas Ibbitson 416.860.7618 dibbitson@mackieresearch.com

January 8, 2016

NOBILIS HEALTH CORP. – BUY

NYSE Letter Received ACTION – BUY

We continue to rate NHC as a BUY with 12-month target price of CDN$12.50 per share.

Potential catalysts include the Q3/15 results as well as additional M&A.

DETAILS – NYSE Letter Spells Out Deadlines

NYSE Letter Notes Filing Delay: Last night after the close, NHC announced that it had received a letter the NYSE has determined that the Company is not in compliance with the Exchange’s listing standards due to the delayed filing of its Q3/15 quarterly report (10-Q) with the SEC.

NYSE’s Next Steps: In order to maintain its listing on the Exchange, NHC must submit a plan of compliance by February 5, 2016, and that plan must address how NHC plans to regain compliance by May 23, 2016. If the plan is accepted by the NYSE, but the Company is not in compliance with the Exchange’s listing standards by November 23, 2016, or if NHC fails to make acceptable progress toward its compliance plan, the stock could then be subject to delisting proceedings.

NHC management noted that if it is not able to file its financials by February 5, 2016, it would submit a compliance plan to the NYSE by that date.

IMPACT – Slight Negative

While not a positive news release, we are not surprised that the Exchange has issued the Company such a notice, given the delayed release of financial statements.

However, we are confident that the Company will report its Q3/15 financials well before February 5th, which would bring NHC back into compliance with NYSE’s listing standards.

Thomson Chart – 1 Year

Corporate Profile

Nobilis Health Corp. strategically partners with physicians in the development and management of ambulatory surgical centers (ASCs) with the mission of providing superior medical care, increased patient satisfaction, and lower costs for healthcare delivery.

Upcoming Events

- Final Q3/15 Results

- Q4/15 Results in March 2016

- Additional M&A Activity

This report has been created by analysts who are employed by Mackie Research Capital Corporation, a Canadian Investment Dealer. For further disclosures, please see last page of this report.

NHC - TSX (CDN$) $3.48

TARGET (CDN): $12.50

PROJ. RETURN: 259%

VALUATION: Average of 24.0x P /

E & 12.0x EV /

EBITDA

Share Data

Basic Shares O/S (mm) 70.9

Fully Diluted (mm) 83.7

Market Cap (CDN$mm) 246.7

Enterprise Value ($mm) 198.4

Cash ($mm) 31.7

Debt ($mm) (incl. Plano) 27.8

Dividend ($) -

Yield (%) -

Next Reporting Date January

FYE Dec 31 (US$ unless noted) 2013A Q1/14A Q2/14A Q3/14A Q4/14A 2014A Q1/15A Q2/15A Q3/15E Q4/15E 2015E 2016E

Total Revenue $ million 31.1 12.1 15.1 17.2 39.9 84.3 37.1 48.0 50.1 95.3 230.4 321.5

Adjusted EBITDAS (ex-NCI) $ million 0.3 0.0 0.8 1.9 8.0 10.8 2.7 7.1 9.0 25.2 42.1 69.3

Adj. EBITDAS Margin (ex-NCI) % 1% 0% 5% 11% 20% 13% 7% 15% 18% 26% 18% 22%

Net Earnings (ex-NCI) $ million 1.4 (0.8) 0.2 1.1 6.2 6.7 (1.2) (1.6) 5.1 17.3 19.9 38.4

Diluted EPS (CDN$, ex-NCI) $/sh $0.04 ($0.02) $0.01 $0.03 $0.12 $0.15 ($0.02) ($0.03) $0.07 $0.25 $0.32 $0.54

Operating Cash Flow (CDN$) $/sh $0.16 $0.05 $0.08 $0.10 $0.26 $0.53 $0.14 $0.14 $0.13 $0.33 $0.76 $0.81

Free Cash Flow (CDN$) $/sh $0.07 $0.04 $0.01 $0.06 ($0.05) $0.06 $0.10 $0.06 $0.18 $0.03 $0.36 $0.94

EV / EBITDAS (ex-NCI) multiple 642.1x 1153.5x 60.3x 25.9x 6.2x 18.4x 18.1x 7.0x 5.5x 2.0x 4.7x 2.9x

P / Earnings attrib. to shares multiple 87.0x nmf 87.0x 29.0x 7.3x 23.2x nmf nmf 12.4x 3.5x 10.9x 6.4x

P / Operating Cash Flow multiple 21.8x 17.4x 10.9x 8.7x 3.3x 6.6x 6.2x 6.2x 6.7x 2.6x 4.6x 4.3x

www.mackieresearch.com Update – NOBILIS HEALTH CORP. Page 2

Figure 1: Tear Sheet

Source: Company Reports, Thomson Reuters, Mackie Research

www.mackieresearch.com Update – NOBILIS HEALTH CORP. Page 3

Figure 3: Comparable Table

Source: Company Reports, Bloomberg, Mackie Research

Company Ticker Exchange Last52-Week

High

52-Week

Low

Market

Cap.

($mm)

Cash

($mm)

Debt

($mm)

EV

($mm)

Revenue

($mm)

EBITDA

($mm)

Diluted

EPS

F2016E

EBITDA

Margin

Div

Yield

Net Debt

/ EV

Net Debt

/ F2016E

EBITDA

EV /

EBITDA P / E P / OCF

EV /

EBITDA P / E P / OCF

HCA Holdings Inc HCA New York $64.29 $95.49 $43.91 $26,209 $566 $29,645 $56,855 $39,065 $7,593 $4.78 20% nmf 51% 3.6x 7.3x 12.3x 6.7x 7.0x 11.1x 5.9x

Universal Health Services Inc UHS New York $112.90 $148.57 $101.20 $11,106 $32 $3,300 $14,472 $8,836 $1,654 $6.72 18% 0.4% 23% 1.8x 8.8x 16.4x 10.3x 8.1x 15.2x 9.2x

Acadia Healthcare Co Inc ACHC NASDAQ GS $61.52 $85.62 $54.41 $5,026 $94 $1,096 $7,118 $1,594 $308 $1.51 23% nmf 14% 2.0x 17.7x 28.1x 19.7x 14.4x 22.2x 15.5x

Tenet Healthcare Corp THC New York $25.31 $60.93 $25.18 $2,523 $193 $11,807 $18,725 $18,080 $1,907 $0.18 13% nmf 62% 4.7x 8.2x 12.4x 2.3x 7.5x 11.7x 2.2x

Community Health Systems Inc CYH New York $22.83 $65.00 $22.66 $2,698 $509 $16,916 $20,003 $19,557 $2,840 $2.94 15% nmf 82% 5.5x 6.9x 6.5x 1.7x 6.7x 6.2x 1.5x

HealthSouth Corp HLS New York $33.96 $48.37 $32.55 $3,105 $67 $2,132 $5,402 $2,857 $631 $1.85 22% 2.7% 38% 2.6x 8.0x 16.1x 7.6x 6.9x 13.3x 6.7x

Amsurg Corp AMSG NASDAQ GS $73.59 $87.42 $52.42 $4,375 $630 $2,251 $6,859 $2,444 $650 $2.40 19% nmf 24% 2.8x 14.0x 20.1x 11.0x 12.0x 17.6x 13.6x

Select Medical Holdings Corp SEM New York $10.75 $17.20 $10.07 $1,412 $3 $1,575 $4,070 $3,475 $358 $0.97 12% nmf 39% 3.2x 10.2x 12.2x 5.8x 8.3x 11.0x 6.1x

Kindred Healthcare Inc KND New York $10.53 $24.66 $10.43 $882 $264 $2,877 $4,011 $6,539 $268 ($2.49) 13% 4.6% 65% 2.6x 4.1x 8.7x 4.5x 4.0x 9.9x 4.8x

Surgical Care Affiliates Inc SCAI NASDAQ GS $39.45 $41.33 $27.88 $1,561 $9 $690 $2,671 $993 $299 $3.23 17% nmf 25% 3.5x 15.4x 19.7x 12.9x 13.9x 18.1x 9.9x

Surgery Partners Inc SGRY NASDAQ GS $18.85 $22.32 $16.26 $908 $57 $1,156 $2,250 nmf nmf nmf 18% nmf 49% 5.8x 14.4x 141.7x 7.5x 11.8x 23.3x 5.7x

AAC Holdings Inc AAC New York $18.20 $46.60 $15.09 $408 $49 $29 $515 $191 $27 $0.62 22% nmf (4%) (0.3x) 11.9x 20.1x nmf 8.5x 16.1x nmf

Medical Facilities Corp DR Toronto C$13.86 C$20.04 C$12.93 $307 $51 $78 $352 $310 $100 $0.51 31% 8.1% 8% 0.3x 3.7x 9.9x 8.8x 3.7x 14.2x 9.2x

CRH Medical Corp CRH Toronto C$3.96 C$5.50 C$1.98 $200 $4 $46 $233 $38 $15 $0.05 50% nmf 18% 1.4x 9.8x 20.1x nmf 7.9x 12.9x nmf

21% 3.9% 35% 2.8x 10.0x 24.6x 8.2x 8.6x 14.5x 7.5x

50% 8.1% 82% 5.8x 17.7x 141.7x 19.7x 14.4x 23.3x 15.5x

12% 0.4% (4%) (0.3x) 3.7x 6.5x 1.7x 3.7x 6.2x 1.5x

19% 3.6% 35% 2.8x 9.9x 16.3x 7.7x 8.6x 14.4x 7.3x

22% nmf 14% 0.2x 4.7x 10.9x 4.6x 2.9x 6.4x 4.3x

F2015E F2016EProfitability & Balance Sheet

Average

High

Low

Adjusted Average

Nobilis Health Corp

TTM Results

www.mackieresearch.com Update – NOBILIS HEALTH CORP. Page 4

RISKS TO TARGET

While this is not an exhaustive list, we view the following risks as being particularly noteworthy to investors in NHC.

Integration Risks: The Athas transaction will likely require more integration effort than prior acquisitions. Integration of two companies can be very difficult, with numerous potential challenges that must be addressed in order to realize anticipated benefits.

Regulatory: The U.S. Federal Government has taken steps aimed at extending health care coverage to individuals that previously had no medical benefits. While this should help drive increased patient volumes overall, it will take time. The industry is also attempting to reduce (or at least slow the growth) of healthcare costs. While ASCs represent a cost-effective alternative to the traditional hospital setting, which supports continued case volume growth, both government and private payors have sought ways to minimize reimbursement rates that it pays to facilities, which puts pressure on pricing.

Payor Concentration: We believe that NHC has a somewhat concentrated payor base, with three major private insurance companies and workers’ compensation payors representing approximately 66% of the cases performed in F2013. To the extent these payors seek to limit reimbursement rates, specifically by continuing to pursue in-network contracts with providers, NHC may see downward pressure on its revenue per case.

Model Assumptions: Our estimates and valuation consider not only revenue and margin assumptions, but also contain forecasts for the share of earnings that will be attributable to non-controlling interests. We expect the NCI share of earnings to decline over time, as the most recent acquisitions involve wholly-owned operations.

Personnel: As noted, traditional hospitals have become more aggressive in recruiting/retaining physicians in recent years, either by acquiring their practices or by forming ASCs with them. There is also a significant shortage of nurses in the United States. These personnel challenges are a common problem in the industry.

RELEVANT DISCLOSURES APPLICABLE TO COMPANIES UNDER COVERAGE

Relevant disclosures required under IIROC Rule 3400 applicable to companies under coverage discussed in this research report are available on our web site at www.mackieresearch.com.

ANALYST CERTIFICATION

Each analyst of Mackie Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

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