Healthcare Services Industry Update. Mergers & Acquisitions Business Valuation Strategic Consulting Corporate Finance

Transcription

1 Healthcare Services Industry Update Mergers & Acquisitions Business Valuation Strategic Consulting Corporate Finance

2 Industry Snapshot: Healthcare Notable M&A Activity Capital Markets 3/12/13. Athenahealth, Inc. acquired Epocrates, Inc., which provides subscriptions for mobile drug reference tools and electronic health records to healthcare professionals, and interactive services to the healthcare industry. Healthcare Medical Devices 4QTR 2012 ($ Millions except EPS) Consensus Revenue ($MM) Consensus EPS % Change 1 Week 4 Weeks YTD 52 Weeks Medical Devices 0.92% 2.45% 11.28% 19.71% Healthcare InfoTechnology -0.55% 4.08% 12.51% 20.76% Healthcare Services 2.80% 7.14% 10.42% 17.62% S&P % 2.69% 6.72% 10.71% 2/28/13. LHC Group, Inc. acquired Addus HealthCare, Inc. s Home Health Business which provides services through Medicare offices, including nursing, vocational healthcare, occupational and speech therapy, and dietary services. 2/22/13. McKesson Corporation acquired PSS World Medical, Inc., which distributes medical products and supplies, diagnostic equipment, healthcare IT, and pharmaceutical products; and provides professional services to physician, longterm care, assisted living, home health care, and hospice markets in the US. 1/15/13. GSI Group, Inc. acquired NDS Surgical Imaging which designs/manufactures medical imaging and informatics systems for operative and interventional suites. It offers such surgical and interventional solutions as visualization and informatics products; radiology solutions, patient and bedside monitoring solutions, and ScaleOR, a video scaling and formatting appliance for the healthcare environment. Actual Revenue ($MM) Actual EPS Difference vs. Estimated Revenue Difference vs. Estimated EPS $17,655.3 $1.16 $17,558.0 $ % -22.2% $4,030.3 $0.91 $4,027.0 $ % 6.7% $2,295.4 $1.13 $2,338.0 $ % -37.0% $1,071.0 $0.21 $1,077.0 $ % -24.9% $1,176.5 $1.49 $1,180.5 $ % -40.8% Source: Capital IQ 3/15/2013 2

3 Industry Snapshot: Healthcare HCIT 4QTR 2012 ($ Millions except EPS) Consensus Revenue ($MM) Consensus EPS Actual Revenue ($MM) Actual EPS Difference vs. Estimated Revenue Difference vs. Estimated EPS $30,909.5 $1.62 $31,187.0 $ % -21.8% $3,325.3 $0.35 $3,329.5 $ % -40.8% $367.6 $0.20 $ $ % % $696.5 $0.64 $696.9 $ % 2.2% N/A N/A $333.6 $0.05 N/A N/A Healthcare Services 4QTR 2012 ($ Millions except EPS) Consensus Revenue ($MM) Consensus EPS Actual Revenue ($MM) Actual EPS Difference vs. Estimated Revenue Difference vs. Estimated EPS $1,577.7 $0.43 $1, $ % $336.9 $0.06 $308.9 $ % $219.7 $0.19 $219.2 $ % $214.4 $0.64 $211.1 $ % N/A (25.6%) N/A (64.3%) Source: Capital IQ 3/15/2013 3

4 Capital Markets: Last 52 Weeks Index Performances 25.00% 15.00% 5.00% -5.00% % % Medical Devices: JNJ, MDT, SYK, SN., 1 more (Market Cap) - Index Value S&P 500 (^SPX) - Index Value HCIT: MCK, CCT, MDRX, SGE, 1 more (Market Cap) - Index Value Healthcare Services: KND, FVE, SKH, ENSG (Market Cap) - Index Value Index Constituents Stock Prices as a % of 52 Week High Medical Devices 99.8% 97.0% 100.0% 99.7% 99.3% HCIT 99.1% 93.9% 67.2% 99.6% 96.1% Healthcare Services 86.4% 95.5% 71.3% 96.9% Source: Capital IQ 3/15/2013 4

5 Capital Markets: Stock Performance Data as of Market Close Friday, March 15, 2013 Last 4 Weeks Last 52 Weeks Medtronic -3.6% Allscripts Healthcare -23.1% Catamaran Corp. -2.9% Skilled Healthcare -9.8% Kindred Healthcare -2.6% Kindred Healthcare 10.4% Zimmer Holdings -2.5% S&P % Sage Group 1.2% Sage Group 14.2% S&P % Medtronic 14.5% Stryker 3.3% Zimmer Holdings 15.4% Johnson & Johnson 4.0% Smith & Nephew 18.3% Cerner Corp. 5.5% Stryker 20.1% Ensign Group 5.7% Cerner Corp. 20.6% Smith & Nephew 6.5% Ensign Group 21.3% McKesson Corp. 6.8% Johnson & Johnson 21.6% Five Star Quality Care 21.3% McKesson Corp. 26.2% Skilled Healthcare 22.9% Catamaran Corp. 47.1% Allscripts Healthcare 23.5% Five Star Quality Care 95.8% (10%) (5%) 0% 5% 10% 15% 20% 25% 30% (40%) (20%) 0% 20% 40% 60% 80% 100% Index HCIT Medical Devices Healthcare Services 5

6 Capital Markets: Market Movers (Medical Devices) Top 3 Gainers Company Market Close 4 Weeks Change Recent News $ % $ % $ % Smith & Nephew announced a final 2012 dividend of $0.162 per ordinary share payable on May 8, 2013 pending S/H approval. Johnson & Johnson completed its acquisition of Flexible Stenting Solutions, Inc., a developer of peripheral arterial, venous and biliary stents, and announced a $100 million charge to net income related to a Venezuelan currency devaluation. Stryker declared a $0.265 per share quarterly dividend payable on April 30, 2013, to S/Hs of record on March 28, Top 3 Losers Company Market Close 4 Weeks Change Recent News N/A $ % $ % Medtronic reaffirmed 3% to 4% revenue growth for FY2013 and reported $ billion in FY2012 revenues. It announced a $0.26 per common share cash dividend payable April 26, 2013 to S/Hs of record on April 5, Zimmer announced that it expects FY2013 revenues to increase by 2.5% to 4.5% vs. FY 2012 on a constant currency basis. The Company also announced Board approval of an increased quarterly cash dividend: $0.20 per share to be paid on April 26, 2013 to S/Hs of record as of March 29, Source: Capital IQ 3/15/2013 6

7 Capital Markets: Market Movers (HCIT) Top 3 Gainers Company Market Close 4 Weeks Change Recent News $ % $ % $ % Resolute Health, a New Braunfels, TX, health and wellness provider, selected Allscripts Sunrise Clinical Manager Electronic Health Record (EHR). McKesson announced that it had completed its previously announced acquisition of Pss World Medical, Inc., for $2.1 billion. It also lowered FY2013 EPS per diluted share to $7.10 from the $7.30 pegged by analysts consensus. WellPoint selected Cerner to collaborate on a project to test ICD-10 business continuity. Cerner will be a selected electronic medical records (EMR) and revenue management supplier when the project launches in late Top 3 Losers Company Market Close 4 Weeks Change Recent News N/A $ % Catamaran announced FY2013 revenue expectations of $14.2 billion to $14.6 billion with $660 million to $670 million in EBITDA. Analysts consensus expectations were for $15.05 billion plus $620 million in EBITDA. N/A Source: Capital IQ 3/15/2013 7

8 Capital Markets: Market Movers (Healthcare Services) Top 3 Gainers Company Market Close 4 Weeks Change Recent News $ % $ % $ % The US Department of Housing and Urban Development will resume processing Skilled Healthcare s pending application for approval of up to $460 million in HUD-insured loans. Five Star s 4QTR 2012 revenues increased 14.4% to $359.1 million vs. 4QTR 2011 s $314 million while EBITDA increased to $12.0 million vs. $8.4 million for the prior year. Ensign acquired Legacy Rehabilitation and Living, a 150-bed skilled nursing facility in Amarillo, TX. It also declared a $0.65 per share quarterly cash dividend payable on or before April 30, 2013 to S/Hs of record as of March 31, Top 3 Losers Company Market Close 4 Weeks Change Recent News N/A $ % Kindred reaffirmed FY2013 financial guidance to included $5.9 billion in consolidated revenues and $794 million to $810 million in operating income. N/A Source: Capital IQ 3/15/2013 8

9 Capital Markets: Short Interest Short Interest as a % of Shares Outstanding Medical Devices Index Current (02/19/13) 4 Weeks (01/22/13) 52 Weeks (02/21/12) 3.7% 1.1% 1.6% 0.0% 3.7% 3.6% 1.0% 1.6% 0.0% 3.1% 1.4% 1.3% 1.4% 0.0% 4.7% HCIT Index Current (02/19/13) 4 Weeks (01/22/13) 52 Weeks (02/21/12) 1.4% 0.0% 2.4% 5.1% 0.0% 1.4% 0.0% 1.9% 4.9% 0.0% 0.7% 0.0% 2.0% 6.6% 0.0% Healthcare Services Index Current (02/19/13) 4 Weeks (01/22/13) 52 Weeks (02/21/12) 7.8% 1.3% 3.5% 2.6% 7.5% 1.3% 3.2% 2.1% 9.9% 2.7% 3.1% 3.1% Source: Capital IQ 3/15/2013 9

10 Dry Powder Calculations ($ MM) Medical Devices Index 3x LTM EBITDA $63, $16, $6, $3, $5, Plus Cash $14, $1, $1, $ $ Less LT Debt -$11, $7, $1, $ $1, Dry Powder $66, $10, $6, $3, $4, HCIT Index 3x LTM EBITDA $8, $1, $ $2, $1, Plus Cash $2, $ $ $ $93.14 Less LT Debt -$3, $1, $ $ $ Dry Powder $7, $ $ $2, $1, Healthcare Services Index 3x LTM EBITDA $1, $ $ $ Plus Cash $50.01 $24.64 $2.00 $40.92 Less LT Debt -$1, $ $ $ Dry Powder -$ $ $ $ Source: Capital IQ 3/15/

11 About The McLean Group Founded in 1997, The McLean Group is a national, middle market investment bank with deep expertise in a variety of industry verticals. Headquartered in McLean, VA, The McLean Group is among the largest independent middle market investment banks in the region. Our core advisory services include: Mergers & Acquisitions The McLean Group uses its considerable experience and expertise in the aerospace, defense and government services industry to guide its clients through each stage of the mergers & acquisitions (M&A) process and ultimately identify the most probable and suitable candidates to complete transactions under the most favorable terms. Business Valuation & Litigation Support As a core competency and complement to its M&A business, The McLean Group provides business valuation services, including intangible asset and financial security valuations for a variety of transactions, financial reporting and tax purposes. In addition, The McLean Group has the experience and credentials necessary to support litigation proceedings, including quantifying economic damages and valuing a minority interest in a business. Capital Formation The McLean Group arranges private equity, venture capital, senior debt and subordinated debt to support clients expansions, M&A, refinancings, recapitalizations, leveraged buyouts and other shareholder liquidity objectives. Strategic Consulting The McLean Group's Strategic Consulting business provides transaction, financial and interim management services to companies ranging from start-up entities to publicly-held corporations across an assortment of industries. McLean Securities, a wholly-owned affiliate of The McLean Group, is a registered broker/dealer with the Financial Industry Regulatory Authority (FINRA) and a Member, Securities Investor Protection Corporation (SIPC). 11

12 Healthcare Competitive Intelligence Engagements 12

13 Healthcare Valuation Engagements 13

14 Select Recent Healthcare Transactions (US & Canada) Implied EV Implied Announced Closed Target Acquirer ($MM) EV/Revenues (x) 2/26/13 3/15/13 Angel.com Incorporated Genesys Telecommunications Laboratories, Inc. $ /17/12 3/14/13 Complete Genomics, Inc. (NasdaqGM:GNOM) BGI $ /7/13 3/12/13 Epocrates, Inc. Athenahealth, Inc. (NasdaqGS:ATHN) $ /1/13 3/1/13 altosoft corporation Kofax plc (LSE:KFX) $ /7/13 2/28/13 Addus HealthCare, Inc., Home Health Business LHC Group, Inc. (NasdaqGS:LHCG) - - 8/10/12 2/28/13 Ediets.com Inc. As Seen On TV, Inc. (OTCBB:ASTV) $ /25/13 2/22/13 Heska Imaging US, LLC Heska Corporation (NasdaqCM:HSKA) $ /25/12 2/22/13 PSS World Medical Inc. McKesson Corporation (NYSE:MCK) $1, /4/13 2/19/13 ClinForce, LLC and Akos Limited ICON Public Limited Company (NasdaqGS:ICLR) $ /15/13 2/15/13 Leonard Street LLC, E. Leonard Medical Complex MB Real Estate Healthcare Group $ /11/12 2/15/13 TNS Inc. Trident Private Holdings I, LLC $ /14/13 2/12/13 OA Nurse Travel, LLC Medical Solutions L.L.C. $ /13/12 2/4/13 Comverse Technology Inc. Verint Systems Inc. (NasdaqGS:VRNT) $1, /5/13 1/31/13 IP-Winston Salem Health Holdings, LLC Cornerstone Healthcare Partners, LLC $ /4/12 1/31/13 Young Innovations Inc. Linden LLC $ /15/13 1/15/13 NDS Surgical Imaging, LLC GSI Group Inc. (NasdaqGS:GSIG) $ /7/13 1/7/13 TTI Technologies LLC Euromoney Institutional Investor PLC (LSE:ERM) $ /29/12 1/3/13 Dexter Hospital LLC Southeast Missouri Hospital Association $9.84-9/14/12 1/3/13 Teva Animal Health, Inc. Bayer HealthCare, LLC $ /27/12 1/2/13 Medmarc Insurance Group PRA Professional Liability Group, Inc. $ /7/13 12/31/12 Igx Global Corp igambit, Inc. $ /2/13 12/31/12 Nexsan Technologies, Inc. Imation Corp. (NYSE:IMN) $ /2/13 12/31/12 Lenox Hill Radiology & Medical Imaging Associates P.C. RadNet, Inc. (NasdaqGM:RDNT) $ /31/12 12/31/12 JHP Pharmaceuticals, LLC Warburg Pincus LLC $ /6/12 12/31/12 GEO Care, Inc. - $ /27/12 12/31/12 Behavioral Centers of America, LLC Acadia Healthcare Company, Inc. (NasdaqGS:ACHC) $ /2/13 12/28/12 Acuo Technologies, LLC Perceptive Softw are, Inc. $ /28/12 12/28/12 Precision Dynamics Corporation Brady Corp. (NYSE:BRC) $ /19/12 12/28/12 Physician Associates, LLC Orlando Health, Inc. $ /9/13 12/27/12 VTS Medical Systems, Inc. Steris Corp. (NYSE:STE) - - 7/9/12 12/24/12 AMERIGROUP Corporation WellPoint Inc. (NYSE:WLP) $4, /28/12 12/21/12 Pacific Health and Rehabilitation Cornerstone Healthcare Partners, LLC $

15 Select Recent Healthcare Transactions (US & Canada, continued) Implied EV Implied Implied Announced Closed Target Acquirer ($MM) EV/Revenues (x) EV/EBITDA (x) 11/28/12 12/21/12 Healthpoint, Ltd. Smith & Nephew plc (LSE:SN.) $ /21/12 12/21/12 Versant Corp. Actian Corporation $ /9/12 12/21/12 Titanium Metals Corporation Precision Castparts Corp. (NYSE:PCP) $2, /5/12 12/21/12 Metropolitan Health Netw orks Inc. Humana Inc. (NYSE:HUM) $ /30/12 12/18/12 Dufek Massif Hospital Corporation UGHS Dallas Hospitals, Inc. $ /29/12 12/18/12 OPNET Technologies, Inc. Riverbed Technology, Inc. (NasdaqGS:RVBD) $ /11/12 12/14/12 Haw aii Medical Center West Campus Queen's Health Systems $ /10/12 12/4/12 Spectralink Corporation Sun Capital Partners, Inc. $ /3/12 12/3/12 Solamor Hospice, Inc. National Hospice Holdings, LLC $ /1/12 12/3/12 A-Med Health Care Byram Healthcare Centers, Inc. $ /27/12 12/3/12 Kenexa Corp. International Business Machines Corporation (NYSE:IBM) $1, /20/12 12/3/12 Sun Healthcare Group, Inc. Genesis HealthCare LLC $ EV/Revenue EV/EBITDA Mean Median High

16 Healthcare Team Team Members Dennis Roberts Chairman & Managing Principal Charles Andrews Managing Director Stephen Findlay Managing Director Michael LaMancuso Director Shari Overstreet Managing Director George Petrulis Managing Director Brian Sullivan Managing Director Todd Warner Managing Director Stephen Zielinski Managing Director The McLean Group 7900 Westpark Drive, Suite A320 McLean, VA Main: Fax: