HEALTHCARE SERVICES MARKET UPDATE FALL 2017

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1 MERGERS & ACQUISITIONS CAPITAL RAISES FINANCIAL & STRATEGIC ADVISORY HEALTHCARE SERVICES MARKET UPDATE FALL 2017 TRENDS & COMMENTARY 60% of the Time, It Works Every Time The Affordable Care Act has occupied centerstage of the political theater for so long that even its once staunchest critics are growing battle-weary (see Legislative Update). So while the periphery of the Act may eventually give way in subsequent legislative sessions, most constituents agree that the core of the platform, namely Value Based Care, has enough in it (60% or so) that works. As a result, the prevailing investment themes of 2016 around increasing quality of care, driving down costs, engaging patients, and managing populations (all the better if achieved via robust data analytics) have remained intact throughout An Old, Old Wooden Ship Used During the Civil War Era One undeniable consequence of the ACA is the higher payment burden placed on the patient. Whether due to higher deductibles, higher co-pays, or greater scrutiny by commercial payors on out-of-network services, net patient revenue has been trending flat or slightly down for some time now. Providers and their outsourced servicers alike are thus embracing revenue stream Diversity (properly defined) like never before as a means to drive growth and margin expansion. From hospitals acquiring post-acute services businesses to diagnostic labs acquiring CROs to payor services companies buying ASCs, the race is on to control the full care continuum in order to measure performance and demonstrate quality outcomes. Boy, That Escalated Quickly Global demographic and regulatory tailwinds continue to drive robust investment and consolidation in the pharma services market with outlier valuation multiples seemingly becoming the new normal. Following Quintiles merger with IMS Health in 2016 and numerous private CRO recapitalizations in early 2017, the 3 rd quarter alone saw four $1BN+ transactions hit in rapid succession (see next page). Keep your head on a swivel and expect more of the same as public and private market dry powder looks for a home in LEGISLATIVE UPDATE American Health Care Act of 2017 (AHCA) May 2017: Republican Bill (H.R. 1628) to enact partial repeal of ACA / Obamacare passes the House with a vote of Better Care Reconciliation Act (BCRA) July 2017: Senate version of the AHCA fails to pass 3 times the original bill plus two save attempts via compromise amendments Graham-Cassidy Amendment to BCRA Sep 2017: Senate attempt to revive the failed push in July for at least a partial and diluted repeal of the ACA. Ultimately not brought to the floor for a vote due to a lack of Republican support. Appears, therefore, that the ACA will remain intact at least through the calendar year This is the first issue of a new Healthcare Services newsletter which will be published biannually, focusing on trends in our coverage segments as informed by M&A / capital markets activity and legislative developments. We are excited to announce that we have grown to 44 professionals across our 4 offices in the U.S. and have completed 72 transactions since We recently won the Boutique Investment Bank of the Year award in the U.S. by the M&A Advisor. HEALTHCARE SERVICES SEGMENT COVERAGE P ROVIDER S ERVICES Revenue Cycle Mgmt. Equipment Mgmt. Staffing / Recruiting Diagnostic Labs Emergency Transport P HARMA S ERVICES Contract Research Contract Packaging Staffing / Recruiting Clinical Trial Supply Distribution & Logistics PRACTICE MANAGEMENT Emergency Medicine Anesthesiology Radiology Ophthalmology Dermatology OUTPATIENT C ARE Surgery Centers Rehabilitation Behavioral Health Diagnostic Imaging Onsite Health 1

2 NOTABLE HEALTHCARE SERVICES TRANSACTIONS 2017 CHILDS HEALTHCARE SERVICES TRANSACTIONS

3 Deal Volume HEALTHCARE SERVICES M&A ACTIVITY AND TRENDS PUBLIC MARKET INDEXED STOCK PERFORMANCE M&A VALUATIONS EV/EBITDA 16.0x 14.0x 12.7x 15.7x 13.8x 15.7x 12.0x 10.0x 9.1x 8.0x 6.0x 4.0x 2.0x YTD PUBLIC MARKET EV/EBITDA INDEX 18.0x 16.0x 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x PUBLIC MARKET VALUATIONS EV/EBITDA 15.3x 15.8x 14.8x 13.1x 12.7x 13.0x 13.1x 13.1x 13.4x 12.0x 12.3x 12.3x 8.1x 7.8x 8.0x 8.2x Outpatient Care Provider Services Hospitals Pharma Services Q Q Q Q QUARTERLY M&A DEAL VOLUME Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Sources: Capital IQ and CHILDS proprietary database 3

4 HEALTHCARE PUBLIC TRADING STATISTICS HOSPITALS Value Revenue EBITDA % Margin Revenue EBITDA Revenue EBITDA Growth Rev CAGR HCA Healthcare, Inc. $ % $28,415.9 $61,040.9 $42,267.0 $8, % 1.44x 7.4x 1.34x 7.0x 4.7% 6.1% LifePoint Health, Inc % 2, , , % 0.82x 6.9x 0.80x 6.4x 1.1% 18.0% Tenet Healthcare Corp % 1, , , , % 0.98x 8.5x 0.98x 7.5x (2.3%) 10.7% Universal Health Services, Inc % 10, , , , % 1.43x 8.5x 1.35x 8.0x 7.6% 9.9% Community Health Systems, Inc % , , , % 0.89x 8.6x 1.06x 8.5x (13.0%) 4.5% Kindred Healthcare, Inc % , , % 0.57x 8.6x 0.65x 4.9x (15.9%) 13.4% Mean 74.3% $17,112.8 $2, % 1.02x 8.1x 1.03x 7.0x (3.0%) 10.4% Median 75.4% $13,794.4 $1, % 0.93x 8.5x 1.02x 7.2x (0.6%) 10.3% PROVIDER SERVICES Value Revenue EBITDA % Margin Revenue EBITDA Revenue EBITDA Growth Rev CAGR Envision Healthcare Corporation $ % $6,250.6 $13,007.6 $6,038.4 $ % 2.15x 13.0x 1.38x 10.5x 118.0% 77.6% MEDNAX, Inc % 4, , , % 1.76x 9.3x 1.61x 9.6x 7.0% 13.5% Laboratory Corporation of America Holdings % 15, , , , % 2.26x 11.7x 1.96x 9.7x 7.3% 18.2% Quest Diagnostics Incorporated % 14, , , , % 2.42x 12.4x 2.07x 10.0x 2.5% 1.8% Healthcare Services Group, Inc % 3, , , % 2.21x 28.4x 1.91x 23.2x 18.5% 10.5% PharMerica Corporation % , , % 0.60x 10.0x 0.51x 8.5x 14.4% 7.2% RadNet, Inc % , % 1.22x 8.7x 1.20x 7.6x 4.0% 9.0% Mean 87.6% $4,487.3 $ % 1.80x 13.4x 1.52x 11.3x 24.5% 19.7% Median 95.1% $3,337.3 $ % 2.15x 11.7x 1.61x 9.7x 7.3% 10.5% PHARMA SERVICES Value Revenue EBITDA % Margin Revenue EBITDA Revenue EBITDA Growth Rev CAGR Charles River Laboratories International, Inc. $ % $5,178.2 $6,200.0 $1,807.4 $ % 3.43x 13.9x 3.15x 12.8x 9.8% 13.9% Catalent, Inc % 5, , , % 3.34x 17.0x 3.19x 14.4x 15.1% 4.3% Cardinal Health, Inc % 21, , , , % 0.19x 8.2x 0.18x 7.5x 4.3% 12.6% ICON Public Limited Company % 6, , , % 3.59x 15.7x 3.31x 14.2x 5.0% 6.8% PRA Health Sciences, Inc % 4, , , % 3.28x 22.2x 2.51x 13.2x 19.3% 15.2% Quintiles IMS Holdings, Inc % 20, , , , % 4.17x 19.3x 3.37x 13.2x 49.4% 20.6% Thermo Fisher Scientific Inc % 74, , , , % 4.75x 18.9x 4.11x 15.9x 0.0% 8.9% Mean 95.7% $23,349.1 $1, % 3.25x 16.5x 2.83x 13.0x 14.7% 11.8% Median 99.2% $2,075.4 $ % 3.43x 17.0x 3.19x 13.2x 9.8% 12.6% OUTPATIENT CARE Value Revenue EBITDA % Margin Revenue EBITDA Revenue EBITDA Growth Rev CAGR U.S. Physical Therapy, Inc. $ % $753.6 $905.8 $377.2 $ % 2.40x 15.0x 2.18x 14.6x 16.2% 10.7% HealthSouth Corporation % 4, , , % 2.00x 9.1x 1.81x 8.8x 6.4% 17.9% Amedisys, Inc % 1, , , % 1.24x 15.9x 1.15x 11.4x 6.0% 6.9% LHC Group, Inc % 1, , % 1.36x 14.3x 1.25x 13.1x 14.5% 12.9% Surgery Partners, Inc % , , % 2.40x 11.5x 1.53x 9.6x 17.2% 0.0% DaVita Inc % 11, , , , % 1.37x 8.3x 1.32x 8.2x 3.5% 7.0% Acadia Healthcare Company, Inc % 4, , , % 2.59x 12.8x 2.39x 10.7x 1.8% 53.1% Mean 78.9% $3,649.8 $ % 1.91x 12.4x 1.66x 10.9x 9.4% 15.5% Median 83.5% $1,454.9 $ % 2.00x 12.8x 1.53x 10.7x 6.4% 10.7% Source: Capital IQ 4

5 EXTENSIVE HEALTHCARE SERVICES EXPERIENCE Sell-side advisor to Accountable Healthcare Staffing on its recapitalization with Mitsui & Co. Healthcare staffing services to hospitals and other outpatient facilities Sell-side advisor to Gwinnett Emergency Specialists on its sale to Envision Healthcare Emergency medicine practice serving 150,000 annual visits in greater Atlanta market Sell-side advisor to Trinity Healthcare Staffing Group on its sale to Travel Nurse Across America Travel nurse staffing and workforce management services Sell-side advisor to PharmaLogics Recruiting on its recapitalization with Webster Capital Recruitment Process Outsourced services to global life sciences market Sell-side advisor to Travel Nurse Across America on its recapitalization with Gridiron Capital Travel nurse staffing services, including training & testing, to US hospitals Sell-side advisor to HMS Consulting Group on its sale to HCTec Workforce management solutions for the healthcare industry Sell-side advisor to InterMed on its recapitalization with Wafra Partners Medical equipment management services to US hospitals Sell-side advisor to McKinnis on its sale to Navigant Revenue cycle management consulting services to US healthcare organizations Sell-side advisor to Advanced Medical on its recapitalization with Clearview Capital Occupational, physical, and speech therapy staffing solutions Sell-side advisor to aspen advisors on its sale to The Chartis Group HCIT consulting, implementation and optimization services Sell-side advisor to ScribeAmerica on its recapitalization with Chicago Growth Partners Medical scribe education, training, and managed services to hospitals Sell-side advisor to locum leaders on its sale to Onward Healthcare Physician staffing services to US healthcare systems and practice management organizations Sell-side advisor to Sharp Packaging on its sale to UDG Healthcare Outsourced pharmaceutical primary and secondary packaging services Sell-side advisor to Nursefinders on its recapitalization with Goldman Sachs UIG Travel and per diem healthcare staffing services to US hospitals Sell-side advisor to NLS Animal Health on its sale to Henry Schein National distributor of veterinary medicine pharmaceuticals Sell-side advisor to Almedica on its sale to Aptuit Global clinical trial packaging and logistics services 5

6 FIRM OVERVIEW QUICK FACTS 44 professionals across four offices in the U.S. with headquarters in Atlanta 72 Closed Transactions Since Beginning of 2014 Over 450 Middle Market Transactions Completed (EV less than $1B) 60% financial / 40% strategic buyer mix Market-leading close rate ACCOLADES 2016 US Boutique Investment Bank of the Year Winner 2014 Cross-Border Transaction of the Year Finalist 2014 Professional Services Transaction of the Year Finalist 2013 Strategic Acquisition of the Year Winner CORE COVERAGE SERVICES B U S I N E S S S E R V I CE S H E A L T H CARE T E CHNOLOGY Human Capital Services Professional Svcs MERGERS & ACQUISITIONS CAPITAL RAISES MERGERS & ACQUISITIONS Industrial Services Technology Software HEALTHCARE SERVICES TEAM Ross DeDeyn Cooper Mills Jason Wallace Dave Phillips Former healthcare investment banker with UBS and Piper Jaffray 15 years of investment banking experience JD from University of Georgia School of Law and MBA from Columbia Business School Founded and led Robinson- Humphrey s Business Services practice starting in 1992 Executed over 100 Professional Services transactions MBA from Darden School of Business at University of Virginia Former for Blackstone Advisory Partners, the M&A advisory arm of Blackstone 20 years of investment banking experience, executing $40B+ of M&A transactions MBA, Harvard Business School Former executive at MPS Group and Volt Information Sciences Sourced and executed over 50 Professional Services transactions Focuses on corporate and business development strategy Steve Dyott Vice President Ryan Sugrue Vice President Robert Womble Associate Kenny Osakwe Associate Prior corporate finance and restructuring experience with FTI Consulting Over 9 years of investment banking experience BS in Economics from Vanderbilt University, summa cum laude Prior M&A experience with Piper Jaffray JD from University of Georgia School of Law and MBA from Terry College of Business at the University of Georgia Prior M&A experience with FMI Capital Advisors Over 5 years of investment banking experience BS in Business Administration from Washington & Lee University Prior investment banking and capital markets experience with Wells Fargo Securities and Goldman Sachs BA from Duke University 3438 Peachtree Road, Suite 1400 Phipps Tower Atlanta, GA