www.harriswilliams.com 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 private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.
WHAT WE RE READING INSURANCE REGULATIONS AND FAILED MERGERS SHAPED 2017 The health insurance industry in 2017 was defined as much by events that didn't take place as those that did. Two megamergers between four of the largest insurance companies were ultimately abandoned at the start of the year, sparing hospitals from the possibility of lower reimbursement and consumers from higher prices. Months later, in December, CVS Health and insurer Aetna announced a deal that could ultimately spark change in the way Americans access care, if their merger is greenlighted by regulators. Congressional Republicans failed repeatedly to repeal the Affordable Care Act, former President Barack Obama's signature healthcare law under which some 20 million people gained coverage. Yet, the Trump administration succeeded in undermining the law in part by ending the cost-sharing reduction subsidies that lower out-of-pocket costs for certain exchange enrollees, and through actions that ensured fewer Americans signed up for coverage during open enrollment. Instead of merging to become bigger health plans, "insurers are now moving into vertical integration, which is sort of a different way to go," Dr. Mario Molina said. "It remains to be seen if (the CVS-Aetna merger) will create synergies and lower costs. The federal administration also shortened the fifth open-enrollment period that began Nov. 1 from three months to 45 days. At the same time, it slashed the budget for marketing the exchanges from $100 million to $10 million, and gutted the funding that goes to "navigators" who help educate and enroll customers in exchange coverage. Despite those obstacles, more than 8.8 million people enrolled in 2018 coverage through the federally run marketplace before open enrollment ended Dec. 15. "Figuring out how the legislation and the regulatory framework will evolve in a new administration that cannot legislatively accomplish what it set out to accomplish is what we will find out as we move into '18 and '19," said Ron Williams, former CEO of Aetna and now chairman of value-based care company Agilon. A link to the original article can be found here. M&A TWO FUTURES FOR HEALTHCARE VC ACQUISITIONS Big Venture Capital exits are on the rise in healthcare. There were nine VC acquisitions worth $100 million or more in the healthcare industry in the second half of 2017, compared with six in the first half, according to Dow Jones VentureSource. Healthcare was the largest growing industry. The median amount of time for VC-backed healthcare companies to reach liquidity through an acquisition was more than seven years in 2017 - longer than any previous year and longer than any other industry. Yet, in 2017 the median healthcare company raised ~$21 million before being acquired. The median healthcare business for acquisitions greater than $100 million last year had raised a median of ~$35 million. While tech companies get more headlines and clicks, healthcare companies have been testing out new ways of funding their businesses. From drug platforms to hospital spinoffs to all-in megadeal launches to innovative debt strategies, healthcare is where innovative financing models are emerging. A link to the original article can be found here. CONTENTS PUBLIC MARKETS OVERVIEW EQUITY MARKETS OVERVIEW M&A OVERVIEW DEBT MARKETS OVERVIEW HEALTHCARE & LIFE SCIENCES PUBLIC COMPARABLES M&A TRANSACTIONS CONTACTS Turner Bredrup Managing Director tbredrup@harriswilliams.com +1 (804) 915-0110 James Clark Managing Director jclark@harriswilliams.com +1 (804) 915-0119 Andy Dixon Managing Director adixon@harriswilliams.com +1 (415) 217-3419 Cheairs Porter Managing Director cporter@harriswilliams.com +1 (804) 915-0130 Geoff Smith Managing Director gsmith@harriswilliams.com +1 (804) 915-0195 Paul Hepper Director phepper@harriswilliams.com +1 (804) 932-1326 Whit Knier Director wknier@harriswilliams.com +1 (804) 932-1321 Eugene Bord Vice President ebord@harriswilliams.com +1 (804) 915-0180 Tyler Bradshaw Vice President tbradshaw@harriswilliams.com +1 (804) 887-6121 Mervyn Han Vice President mhan@harriswilliams.com +1 (804) 887-6087 Andy Hewlett Vice President ahewlett@harriswilliams.com +1 (415) 217-3427 Ricky Ng Vice President rng@harriswilliams.com +1 (415) 217-3437 Nick Owens Vice President nowens@harriswilliams.com +1 (804) 887-6027 www.harriswilliams.com PAGE 1
www.harriswilliams.com PAGE 2
PUBLIC MARKETS OVERVIEW (1) Key Trading Statistics (detail begins on page 6) Payor, Provider, & Pharmacy Support Services Products & Devices Provider-Based Services Sector Number of Companies Aggregate Enterprise Value ($ mm) Change in Stock Price 3 mos. 12 mos. Revenue EBITDA Revenue EBITDA Clinical Laboratories 2 $40,692 5.4% 15.8% 2.3x 11.6x 2.2x 10.7x Contract Pharma Manufacturing 2 8,940 (5.1%) 2.7% 3.8x 15.9x 3.5x 13.9x Contract Research Organizations 6 63,285 2.1% 46.6% 3.4x 16.5x 3.1x 13.5x Disease Management 1 1,569 (10.4%) 61.0% 2.9x 12.6x 2.5x 11.3x Healthcare Staffing 4 18,314 (1.3%) 5.3% 1.5x 12.6x 1.3x 11.0x HMO - Medical 8 480,873 11.9% 42.5% 1.0x 12.8x 0.9x 10.5x Information Services 10 44,046 (3.7%) 33.2% 4.4x 16.9x 4.0x 12.6x Retail Pharmacy 3 188,546 (6.0%) (13.0%) 0.5x 7.8x 0.5x 7.4x Specialty Managed Care 3 9,200 (2.8%) 13.3% 1.8x 13.8x 5.3x 25.7x Specialty Pharmacy 1 1,502 (3.1%) 56.1% 0.3x 17.8x 0.3x 9.9x Spec Pharma and Generics 12 261,143 (2.5%) (2.7%) 3.0x 9.1x 3.0x 9.0x Specialty Pharmacy Management 1 54,413 17.9% 7.6% 0.5x 7.5x 0.5x 7.2x Dental Products 2 169,122 11.1% 22.5% 4.6x 19.2x 4.3x 16.4x Durable Medical Equipment 3 20,748 10.0% 35.6% 2.8x 17.5x 2.7x 15.4x Life Sciences Tools 3 170,814 4.3% 34.2% 4.7x 19.3x 4.2x 16.4x Medical Devices and Products 13 912,367 3.8% 21.0% 4.5x 18.1x 4.2x 14.3x Medical / Surgical / Dental Supplies & Distribution 6 109,792 (7.5%) (10.5%) 0.2x 9.5x 0.2x 9.0x Acute-Care Hospitals 4 104,244 (10.9%) (6.1%) 0.9x 8.2x 1.0x 7.6x Assisted Living 2 8,120 (0.5%) (20.2%) 2.2x 13.3x 2.1x 12.0x Diagnostic Imaging 2 11,095 (0.7%) 46.6% 2.5x 14.9x 2.4x 12.0x Dialysis Services 3 66,107 16.2% 7.6% 1.8x 9.5x 1.7x 9.8x Home Care, Hospice, and Home Infusion 6 9,444 6.8% 44.1% 1.8x 15.4x 1.7x 13.1x Long-Term Care 3 6,432 (1.7%) (0.5%) 0.8x 9.9x 0.7x 7.8x Physician Practice Management 1 6,731 23.9% (20.2%) 2.0x 11.2x 1.8x 10.9x Behavioral Health / Management 5 24,955 (7.3%) 6.5% 1.3x 8.8x 1.2x 7.2x Surgicenters / Rehabilitation 4 17,577 4.5% 17.7% 1.9x 11.2x 1.7x 10.1x Payor, Provider, & Pharmacy Support Services 53 $1,172,523 5.5% 21.9% 1.8x 12.4x 1.7x 10.3x Products & Devices 27 $1,382,842 6.0% 25.2% 4.5x 16.8x 4.1x 14.0x Provider-Based Services 30 $254,706 7.8% 13.8% 1.8x 10.8x 1.7x 9.8x HW&Co. HCLS Composite Index 110 $2,810,071 2.1% 17.2% 3.3x 14.7x 3.0x 12.3x S&P 500 6.1% 18.9% Median TEV/ LTM Multiples Median TEV/ Forward Mulitples Public Company Sector Performance (12-month % change in stock price) Disease Management Specialty Pharmacy Diagnostic Imaging Contract Research Organizations Home Care, Hospice, and Home Infusion HMO - Medical Durable Medical Equipment Life Sciences Tools Information Services Dental Products Medical Devices and Products S&P 500 Surgicenters / Rehabilitation HW&Co. HCLS Composite Index Clinical Laboratories Specialty Managed Care Behavioral Health / Management Healthcare Staffing Contract Pharma Manufacturing Long-Term Care Spec Pharma and Generics Acute-Care Hospitals Medical / Surgical / Dental Supplies & Distribution Retail Pharmacy Physician Practice Management Assisted Living (40.0%) (30.0%) (20.0%) (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% PAGE 3
EQUITY MARKETS OVERVIEW Healthcare & Life Sciences Industry Stock Performance (1) 180% 160% 140% 120% 146.2% 132.8% 123.9% 100% 80% 60% 40% Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 S&P 500 Dow Jones U.S. Healthcare Index HW&Co. HCLS Index Top Equity Offerings (2) (by proceeds) Closing Date Issuer Ticker Transaction Type Gross Proceeds ($ mm) 12/08/17 Denali Therapeutics NASDAQ:DNLI Initial Public Offering $250.2 12/14/17 Argenx SE NASDAQ:ARGX Follow-On 230.9 12/07/17 Odonate Therapeutics NASDAQ:ODT Initial Public Offering 151.2 12/18/17 Madrigal Pharmaceuticals, Inc. NASDAQ:MDGL Follow-On 100.0 12/07/17 Quanterix NASDAQ:QTRX Initial Public Offering 64.5 12/13/17 Fate Therapeutics NASDAQ:FATE Follow-On 40.0 12/15/17 Dicerna Pharmaceuticals Inc. NASDAQ:DRNA Follow-On 40.0 12/18/17 Verastem NASDAQ:VSTM Follow-On 32.0 12/11/17 Fennec Pharmaceuticals Inc. NASDAQ:FENC Follow-On 20.0 12/13/17 Proteostasis Therapeutics, Inc. NASDAQ:PTI Follow-On 16.5 12/12/17 Vistagen Therapeutics, Inc. NASDAQ:VSGN Follow-On 15.0 12/07/17 Viking Therapeutics, Inc. NASDAQ:VKTX Follow-On 12.8 12/21/17 Catalyst Biosciences, Inc. NASDAQ:CBIO Follow-On 10.5 12/22/17 Acasti Pharma Inc. NASDAQ:ACST Follow-On 10.0 12/01/17 Myomo Inc. NYSE:MYO Follow-On 10.0 12/20/17 Yield10 Bioscience, Inc. NASDAQ:YTEN Follow-On 8.6 12/08/17 Fibrocell Science NASDAQ:FCSC Follow-On 5.9 12/15/17 Trovagene NASDAQ:TROV Follow-On 4.4 12/20/17 Akers Biosciences, Inc. NASDAQ:AKER Follow-On 2.3 PAGE 4
M&A OVERVIEW (1) HEALTHCARE & LIFE SCIENCES Announced Healthcare & Life Sciences M&A QUARTERLY M&A ACTIVITY HEALTHCARE TRANSACTION HIGHLIGHTS Number of Transactions 400 350 300 250 200 150 100 50 0 15 12 18 21 11 16 48 49 45 58 52 368 34 291 303 313 309 306 53 250 225 182 175 186 152 129 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 PE Buyer Strategic Buyer Announced Target Buyer 12/27/2017 PetVet Care Centers LLC Kohlberg Krav is Roberts & Co. LP 12/20/2017 Autism Learning Partners LLC FFL Partners LLC 12/19/2017 Kindred Healthcare, Inc. Humana, Inc.; TPG Capital LLC; Welsh, Carson, Anderson & Stowe 12/18/2017 Net Health Systems, Inc. The Carlyle Group LP 12/13/2017 Connect Healthcare Spring Mountain Capital LP 12/12/2017 Repros Therapeutics, Inc. Allergan Plc 12/12/2017 Safe Passage Neuromonitoring LLC NuVasiv e, Inc. 12/6/2017 Dav ita Medical Holdings LLC Optum, Inc. 12/4/2017 VMI Nutrition, Inc. Kohlberg & Co. LLC; Nellson Nutraceutical LLC 12/4/2017 Aurora Health Care, Inc. Adv ocate Health Care Network 12/3/2017 Aetna, Inc. CVS Health Corp. 12/1/2017 CBM Pathology Summit Partners LP; KRG Capital LLC; Aurora Diagnostics Holdings LLC LTM DEAL STATISTICS Aggregate Number Median Transaction Multiples Value ($bn) of Deals TEV/Rev TEV/EBITDA $165.8 838 2.9x 13.1x Note: Transactions based on publicly available information Healthcare & Life Sciences M&A Trends ANNOUNCED HEALTHCARE & LIFE SCIENCES TRANSACTIONS MEDIAN HEALTHCARE & LIFE SCIENCES TRANSACTION MULTIPLES Aggregate Transaction Value ($ in billions) $600 $550 $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 $576.0 $277.9 $236.6 $165.8 $101.6 $108.2 2012 2013 2014 2015 2016 2017 1,400 1,200 1,000 800 600 400 200 0 Number of Transactions EV / LTM EBITDA Multiple 18.0x 16.0x 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x 13.6x 14.2x 13.0x 13.1x 10.9x 10.0x 2012 2013 2014 2015 2016 2017 5.0x 4.5x 4.0x 3.5x 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x EV / LTM Sales Multiple Volume Total Deals EBITDA Multiple Revenue Multiple Announced Private Equity M&A Activity PEG INVESTMENTS BY SEGMENT (LAST 3 YEARS) HC&LS Industry Number of Segment Companies Healthcare Facilities 23 Healthcare Serv ices 178 Healthcare Equipment 40 Pharmaceuticals 27 Healthcare Technology 8 Life Sciences Tools & Serv ices 1 Healthcare Supplies 12 Healthcare Distributors 5 Biotechnology 32 Managed Healthcare 9 Number of Transactions 250 200 150 100 50 0 PEG INVESTMENTS 197 163 116 77 68 67 66 61 62 56 44 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 PAGE 5
DEBT MARKETS OVERVIEW Key Credit Statistics (3) QUARTERLY HEALTHCARE LOAN VOLUME AVERAGE SPREAD ON HEALTHCARE LOANS $24 L + 500 Loan Volume by Quarter ($ in billions) $21 $18 $15 $12 $9 $6 $3 $0 4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 2Q17 4Q 17 Pro Rata Institutional CREDIT METRICS Average Spread Over LIBOR L + 400 L + 300 L + 200 L + 100 L + 0 2011 2012 2013 2014 2015 2016 2017 Revolving Credit / Term Loan A Weighted-Average Institutional AVERAGE SECONDARY SPREAD 6.0x L + 600 EBITDA Multiple 4.0x 2.0x Average Spread Over LIBOR L + 400 L + 200 0.0x Debt/EBITDA Senior Debt/EBITDA EBITDA/Cash Interest 2011 2012 2013 2014 2015 2016 2017 EBITDA - Capex/Cash Interest L + 0 4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 2Q17 4Q17 Select Healthcare & Life Sciences Debt Offerings (4) (by deal amount) Date Effective Borrower Name Description Amount ($ mm) Tranche Rating Spread 12/12/17 nthrive [fka Precyse Healthcare] Home health care services $798.0 N/A NR / NR L+ 400 12/21/17 Censeohealth LLC Home health care services 295.0 Term Loan B B2 / B L+ 500 12/20/17 Autism Learning Partners Offices of health practices nec 83.0 Term Loan NR / NR L+ 450 12/07/17 Prelude Fertility Inc Offices/clinics of med'l doctors 63.0 Term Loan NR / NR L+ 450 PAGE 6
PUBLIC COMPARABLES Payor, Provider, & Pharmacy Support Services (1) Clinical Laboratories Company Name Stock Price Equity Total Ent. Latest Twelve Months Forward Twelve Month Cash and LTM Latest TEV/ LTM Multiples TEV/ Fwd Multiples % Change 52 Week Mkt. Total Debt Value (LTM) Estimate Equiv. Period FYE Date 12/31/2017 3 mos. 12 mos. High Low Value (TEV) Revenue EBITDA EBIT Revenue EBITDA EBIT Revenue EBITDA Revenue EBITDA Laboratory Corporation of America Holdings $159.51 5.7% 24.5% $165.18 $127.33 $16,238 $7,218 $409 $23,377 $10,074 $1,965 $1,447 Sep-17 Dec-16 $10,998 $2,177 $1,832 2.3x 11.9x 2.1x 10.7x Quest Diagnostics Incorporated 98.49 5.2% 7.2% 112.97 90.10 13,424 3,764 350 17,315 7,634 1,530 1,270 Sep-17 Dec-16 7,924 1,620 1,338 2.3x 11.3x 2.2x 10.7x Number of Companies 2 Median: 5.4% 15.8% Total $29,662 $40,692 $17,708 $18,922 2.3x 11.6x 2.2x 10.7x Market Cap. Weighted Average: 5.4% 16.6% 2.3x 11.6x 2.2x 10.7x Contract Pharma Manufacturing Cambrex Corporation $48.00 (12.7%) (10.4%) $62.95 $42.55 $1,573 $0 $118 $1,490 $530 $175 $145 Sep-17 Dec-16 $537 $164 $129 2.8x 8.5x 2.8x 9.1x West Pharmaceutical Services, Inc. 98.67 2.5% 15.8% 103.36 77.97 7,327 230 269 7,450 1,567 321 227 Sep-17 Dec-16 1,730 397 288 4.8x 23.2x 4.3x 18.8x Number of Companies 2 Median: (5.1%) 2.7% Total $8,900 $8,940 $2,097 $2,267 3.8x 15.9x 3.5x 13.9x Market Cap. Weighted Average: (0.2%) 11.1% 4.4x 20.6x 4.0x 17.1x Contract Research Organizations Catalent Inc 41.08 2.9% 53.8% 43.39 25.51 5,458 2,107 615 6,741 2,177 421 271 Sep-17 Jun-17 2,505 566 432 3.1x 16.0x 2.7x 11.9x Charles River Laboratories International, Inc. 109.45 1.3% 43.9% 119.05 75.25 5,184 1,183 155 6,344 1,846 435 301 Sep-17 Dec-16 1,982 480 394 3.4x 14.6x 3.2x 13.2x ICON Plc 112.15 (1.5%) 49.4% 124.48 74.30 6,073 349 292 6,197 1,738 396 335 Sep-17 Dec-16 1,885 442 378 3.6x 15.7x 3.3x 14.0x INC Research Holdings, Inc. 43.60 (16.6%) (16.2%) 61.10 33.60 4,549 3,058 306 6,552 2,001 266 154 Sep-17 Dec-16 3,204 600 520 3.3x 24.6x 2.0x 10.9x PRA Health Sciences, Inc. 91.07 19.6% 66.0% 92.00 54.08 5,771 1,350 194 7,161 2,080 317 249 Sep-17 Dec-16 2,317 442 399 3.4x 22.6x 3.1x 16.2x IQVIA Holdings Inc 97.90 3.0% 29.0% 110.67 74.80 20,362 9,754 1,147 30,290 9,508 1,787 864 Sep-17 Dec-16 8,528 2,191 1,432 3.2x 17.0x 3.6x 13.8x Number of Companies 6 Median: 2.1% 46.6% Total $47,397 $63,285 $19,351 $20,422 3.4x 16.5x 3.1x 13.5x Market Cap. Weighted Average: 2.3% 36.3% 3.3x 17.8x 3.2x 13.6x Disease Management Tivity Health, Inc. 36.55 (10.4%) 61.0% 48.50 20.60 1,448 149 171 1,569 543 125 124 Sep-17 Dec-16 616 139 135 2.9x 12.6x 2.5x 11.3x Number of Companies 1 Median: (10.4%) 61.0% Total $1,448 $1,569 $543 $616 2.9x 12.6x 2.5x 11.3x Market Cap. Weighted Average: (10.4%) 61.0% 2.9x 12.6x 2.5x 11.3x Healthcare Staffing AMN Healthcare Services, Inc. $49.25 7.8% 26.8% $51.75 $33.61 $2,353 $320 $20 $2,735 $1,967 $241 $209 Sep-17 Dec-16 $2,081 $271 $226 1.4x 11.4x 1.3x 10.1x Envision Healthcare Holdings, Inc. 34.56 (23.1%) (46.3%) 73.00 23.77 4,181 6,323 381 11,034 7,207 1,144 869 Sep-17 Dec-16 8,264 926 726 1.5x 9.6x 1.3x 11.9x Cross Country Healthcare, Inc. 12.76 (10.3%) (16.2%) 16.38 11.07 465 95 11 545 868 39 30 Sep-17 Dec-16 944 59 45 0.6x 13.9x 0.6x 9.2x On Assignment, Inc. 64.27 19.7% 44.7% 65.73 42.95 3,343 610 28 3,999 2,568 272 213 Sep-17 Dec-16 2,795 335 258 1.6x 14.7x 1.4x 11.9x Number of Companies 4 Median: (1.3%) 5.3% Total $10,343 $18,314 $12,610 $14,083 1.5x 12.6x 1.3x 11.0x Market Cap. Weighted Average: (1.7%) 1.1% 1.5x 11.9x 11.4x PAGE 7
PUBLIC COMPARABLES Payor, Provider, & Pharmacy Support Services (1) HMO - Medical Company Name Stock Price Equity Total Ent. Latest Twelve Months Forward Twelve Month Cash and LTM Latest TEV/ LTM Multiples TEV/ Fwd Multiples % Change 52 Week Mkt. Total Debt Value (LTM) Estimate Equiv. Period FYE Date 12/31/2017 3 mos. 12 mos. High Low Value (TEV) Revenue EBITDA EBIT Revenue EBITDA EBIT Revenue EBITDA Revenue EBITDA Commercial: Aetna Inc. $180.39 13.4% 44.9% $192.37 $116.04 $58,838 $10,159 $17,996 $64,355 $61,435 $3,948 $3,888 Sep-17 Dec-16 $60,763 $6,365 $5,646 1.0x 16.3x 1.1x 10.1x Anthem, Inc. 225.01 18.5% 55.4% 236.39 140.50 57,774 16,231 4,075 70,211 89,123 5,996 5,322 Sep-17 Dec-16 91,493 6,576 6,466 0.8x 11.7x 0.8x 10.7x Cigna Corporation 203.09 8.6% 49.9% 212.46 133.11 50,072 5,348 3,185 53,209 41,025 4,274 3,880 Sep-17 Dec-16 43,891 5,119 4,504 1.3x 12.4x 1.2x 10.4x Humana Inc. 248.07 1.8% 22.3% 264.56 186.25 35,439 5,101 3,877 31,295 53,456 3,732 2,388 Sep-17 Dec-16 56,409 4,074 3,570 0.6x 8.4x 0.6x 7.7x UnitedHealth Group Incorporated 220.46 12.6% 36.9% 231.77 156.09 213,641 31,692 15,490 235,544 201,159 17,454 15,209 Dec-17 Dec-17 222,609 20,193 18,021 1.2x 13.5x 1.1x 11.7x Number of Companies 5 Median: 12.6% 44.9% Total $415,764 $454,615 $446,197 $475,165 1.0x 12.4x 1.1x 10.4x Market Cap. Weighted Average: 12.1% 40.9% 1.1x 13.1x 1.0x 10.8x Government: Centene Corporation $100.88 4.2% 77.5% $104.65 $55.89 $17,399 $4,721 $4,068 $18,182 $47,487 $2,063 $1,590 Sep-17 Dec-16 $60,414 $2,759 $2,282 0.4x 8.8x 0.3x 6.6x Molina Healthcare, Inc. 76.68 11.5% 40.7% 80.74 42.56 4,378 2,297 2,819 2,734 19,468 (31) 70 Sep-17 Dec-16 20,309 651 506 0.1x NM 0.1x 4.2x WellCare Health Plans, Inc. 201.11 17.1% 46.7% 213.97 133.21 8,954 1,182 4,054 5,342 16,180 707 662 Sep-17 Dec-16 18,896 959 857 0.3x 7.6x 0.3x 5.6x Number of Companies 3 Median: 11.5% 46.7% Total $30,731 $26,258 $83,135 $99,619 0.3x 8.2x 0.3x 5.6x Market Cap. Weighted Average: 9.0% 63.3% 0.3x 8.4x 0.3x 6.0x Information Services Data/Analytics: Castlight Health, Inc. $3.75 (12.8%) (25.7%) $5.10 $3.05 $303 $6 $87 $415 $124 ($53) ($58) Sep-17 Dec-16 $164 ($9) ($13) 3.3x NM 2.5x NM Inovalon Holdings, Inc. 15.00 (12.0%) 47.8% 17.80 10.10 970 244 526 1,844 431 79 28 Sep-17 Dec-16 488 124 77 4.3x 23.3x 3.8x 14.9x National Research Corporation 56.06 3.3% 35.6% 58.16 38.76 978 2 36 1,587 116 39 34 Sep-17 Dec-16 128 43 38 13.7x NM 12.4x NM Number of Companies 3 Median: (12.0%) 35.6% Total $2,251 $1,587 $671 $779 4.3x 23.3x 3.8x 14.9x Market Cap. Weighted Average: (5.5%) 32.6% 8.2x 23.3x 7.4x 14.9x Hospital/Physician: Allscripts Healthcare Solutions, Inc. $14.55 2.2% 39.8% $15.20 $10.19 $2,629 $1,416 $109 $4,397 $1,714 $275 $68 Sep-17 Dec-16 $2,142 $435 $320 2.6x 16.0x 2.1x 10.1x Athenahealth, Inc. 133.04 7.0% 26.4% 158.66 95.01 5,324 276 123 5,568 1,179 200 52 Sep-17 Dec-16 1,344 343 203 4.7x 27.9x 4.1x 16.3x Cerner Corporation 67.39 (5.5%) 40.6% 73.86 47.09 22,401 535 852 22,513 5,086 1,548 989 Sep-17 Dec-16 5,578 1,847 1,273 4.4x 14.5x 4.0x 12.2x Computer Programs and Systems, Inc. 30.05 1.7% 26.3% 36.15 21.60 413 144 1 547 263 30 17 Sep-17 Dec-16 284 53 29 2.1x 18.0x 1.9x 10.4x HMS Holdings Corp. 16.95 (14.7%) (6.8%) 20.90 11.01 1,425 240 79 1,614 501 111 54 Sep-17 Dec-16 563 139 60 3.2x 14.6x 2.9x 11.6x Premier Inc. 29.19 (10.4%) (4.1%) 36.50 27.16 1,670 179 132 6,935 1,532 441 327 Sep-17 Jun-17 1,671 549 369 4.5x 15.7x 4.1x 12.6x Quality Systems, Inc. 13.58 (13.7%) 3.3% 17.74 12.61 865 55 33 885 524 81 43 Sep-17 Mar-17 538 86 35 1.7x 10.9x 1.6x 10.3x Number of Companies 7 Median: (5.5%) 26.3% Total $34,728 $42,459 $10,800 $12,120 3.2x 15.7x 2.9x 11.6x Market Cap. Weighted Average: (3.7%) 33.2% 4.2x 16.7x 3.8x 12.6x PAGE 8
PUBLIC COMPARABLES Payor, Provider, & Pharmacy Support Services (1) Company Name Stock Price Equity Total Ent. Latest Twelve Months Forward Twelve Month Cash and LTM Latest TEV/ LTM Multiples TEV/ Fwd Multiples % Change 52 Week Mkt. Total Debt Value (LTM) Estimate Equiv. Period FYE Date 12/31/2017 3 mos. 12 mos. High Low Value (TEV) Revenue EBITDA EBIT Revenue EBITDA EBIT Revenue EBITDA Revenue EBITDA Specialty Managed Care Assurant, Inc. $100.84 5.6% 8.8% $106.99 $86.00 $5,426 $1,068 $0 $5,573 $6,329 $392 $0 Sep-17 Dec-16 $6,661 NA $706 0.9x 14.2x 0.8x NA CorVel Corporation 52.90 (2.8%) 44.7% 61.20 36.00 997 0 38 965 536 72 51 Sep-17 Mar-17 NA NA NA 1.8x 13.4x NA NA HealthEquity Inc 46.66 (7.8%) 13.3% 55.31 37.62 2,831 0 225 2,662 216 67 52 Oct-17 Jan-17 274 103 70 12.3x NM 9.7x 25.7x Number of Companies 3 Median: (2.8%) 13.3% Total $9,254 $9,200 $7,081 $6,935 1.8x 13.8x 5.3x 25.7x Market Cap. Weighted Average: 0.6% 14.1% 4.5x 14.1x 3.9x 25.7x Retail Pharmacy CVS Health Corporation $72.50 (10.8%) (8.2%) $84.72 $66.45 $73,442 $25,789 $2,560 $97,184 $182,351 $12,390 $9,905 Sep-17 Dec-16 $191,934 $13,070 $10,388 0.5x 7.8x 0.5x 7.4x Walgreens Boots Alliance Inc 72.62 (6.0%) (13.0%) 88.00 63.82 71,920 14,005 1,830 86,428 120,453 7,354 5,702 Nov-17 Aug-17 132,338 9,709 8,252 0.7x 11.8x 0.7x 8.9x Rite Aid Corporation ( * ) 1.97 0.5% (76.1%) 8.77 1.38 2,096 3,038 170 4,933 29,355 678 242 Dec-17 Mar-17 25,761 698 223 0.2x 7.3x 0.2x 7.1x Number of Companies 3 Median: (6.0%) (13.0%) Total $147,458 $188,546 $332,159 $350,033 0.5x 7.8x 0.5x 7.4x Market Cap. Weighted Average: (8.3%) (11.5%) 0.6x 9.7x 0.6x 8.1x Specialty Pharmacy Diplomat Pharmacy, Inc. $20.07 (3.1%) 56.1% $21.99 $12.25 $1,382 $149 $27 $1,502 $4,475 $84 $22 Sep-17 Dec-16 $5,372 $152 $106 0.3x 17.8x 0.3x 9.9x Number of Companies 1 Median: (3.1%) 56.1% Total $1,382 $1,502 $4,475 $5,372 0.3x 17.8x 0.3x 9.9x Market Cap. Weighted Average: (3.1%) 56.1% 0.3x 17.8x 0.3x 9.9x Specialty Pharmacy Management Express Scripts Holding Company $74.64 17.9% 7.6% $75.64 $55.80 $42,274 $14,908 $3,396 $54,413 $99,605 $7,274 $5,386 Sep-17 Dec-16 $100,955 $7,601 $7,318 0.5x 7.5x 0.5x 7.2x Number of Companies 1 Median: 17.9% 7.6% Total $42,274 $54,413 $99,605 $100,955 0.5x 7.5x 0.5x 7.2x Market Cap. Weighted Average: 17.9% 7.6% 0.5x 7.5x 0.5x 7.2x Spec Pharma and Generics Allergan Plc $163.58 (20.2%) (21.1%) $256.80 $160.07 $54,404 $30,336 $5,442 $84,392 $15,479 $5,986 ($1,085) Sep-17 Dec-16 $15,629 $7,438 $7,233 5.5x 14.1x 5.4x 11.3x Eagle Pharmaceuticals, Inc. 53.42 (10.4%) (32.2%) 97.15 45.05 797 49 98 794 271 97 94 Sep-17 Dec-16 212 93 NA 2.9x 8.2x 3.7x 8.5x Endo International Plc 7.75 (9.5%) (50.6%) 17.99 5.77 1,731 8,281 1,100 8,912 3,942 1,674 664 Sep-17 Dec-16 3,109 1,357 1,273 2.3x 5.3x 2.9x 6.6x Horizon Pharma Plc 14.60 15.1% (9.9%) 18.31 9.45 2,393 1,898 631 3,652 1,092 (84) (364) Sep-17 Dec-16 1,132 405 NA 3.3x NM 3.2x 9.0x Impax Laboratories, Inc. 16.65 (18.0%) 29.6% 25.70 7.75 1,234 786 158 1,826 791 86 (24) Sep-17 Dec-16 830 194 129 2.3x 21.2x 2.2x 9.4x Jazz Pharmaceuticals Plc 134.65 (7.9%) 25.2% 163.75 106.85 8,072 1,580 453 9,400 1,579 778 640 Sep-17 Dec-16 1,846 1,052 1,034 6.0x 12.1x 5.1x 8.9x Lannett Company, Inc. 23.20 25.7% 4.5% 30.35 14.90 875 895 116 1,654 627 233 179 Sep-17 Jun-17 700 257 234 2.6x 7.1x 2.4x 6.4x Mallinckrodt Plc 22.56 (39.6%) (54.4%) 55.32 19.00 2,143 5,836 392 7,632 3,317 1,328 533 Sep-17 Sep-16 3,128 1,250 1,122 2.3x 5.7x 2.4x 6.1x Mylan N.V. 42.31 34.9% 13.2% 45.87 29.39 22,690 14,715 954 36,482 11,940 3,234 1,477 Sep-17 Dec-16 12,678 4,189 3,846 3.1x 11.3x 2.9x 8.7x Perrigo Co. Plc 87.16 3.0% 5.9% 91.73 63.68 12,276 3,693 782 15,261 4,993 1,079 627 Sep-17 Dec-16 4,996 1,152 1,051 3.1x 14.1x 3.1x 13.2x Teva Pharmaceutical Industries 18.95 7.7% (47.5%) 38.31 10.85 19,198 34,663 704 58,473 24,071 6,576 4,555 Sep-17 Dec-16 19,584 5,376 4,847 2.4x 8.9x 3.0x 10.9x Valeant Pharmaceuticals International Inc 20.78 45.0% 46.9% 22.81 8.31 7,244 27,141 1,892 32,665 8,964 3,600 854 Sep-17 Dec-16 8,441 3,334 3,071 3.6x 9.1x 3.9x 9.8x Number of Companies 12 Median: (2.5%) (2.7%) Total $133,056 $261,143 $77,066 $72,285 3.0x 9.1x 3.0x 9.0x Market Cap. Weighted Average: 0.5% (10.2%) 4.1x 12.2x 4.1x 10.5x *40% of Rite Aid s stores to be acquired by Walgreens in a $4.4 billion transaction announced June 29 th, 2017 and set to close in Q2 2018. PAGE 9
PUBLIC COMPARABLES Products & Devices (1) Company Name Stock Price Equity Total Ent. Latest Twelve Months Forward Twelve Month Cash and LTM Latest TEV/ LTM Multiples TEV/ Fwd Multiples % Change 52 Week Mkt. Total Debt Value (LTM) Estimate Equiv. Period FYE Date 12/31/2017 3 mos. 12 mos. High Low Value (TEV) Revenue EBITDA EBIT Revenue EBITDA EBIT Revenue EBITDA Revenue EBITDA Dental Products 3M Company $235.37 12.1% 31.9% $244.23 $173.55 $140,188 $11,663 $3,417 $152,513 $30,996 $8,746 $7,167 Sep-17 Dec-16 $33,344 $9,727 $8,215 4.9x 17.4x 4.6x 15.7x DENTSPLY SIRONA, Inc. 65.83 10.1% 13.0% 68.98 52.54 15,120 1,622 370 16,609 3,899 795 486 Sep-17 Dec-16 4,152 972 862 4.3x 20.9x 4.0x 17.1x Number of Companies 2 Median: 11.1% 22.5% Total $155,308 $169,122 $34,895 $37,497 4.6x 19.2x 4.3x 16.4x Market Cap. Weighted Average: 11.9% 30.1% 4.9x 17.8x 4.5x 15.8x Durable Medical Equipment Hill-Rom Holdings, Inc. $84.29 13.9% 49.6% $85.74 $55.04 $5,548 $2,309 $232 $7,751 $2,744 $546 $335 Sep-17 Sep-17 $2,866 $593 $505 2.8x 14.2x 2.7x 13.1x Invacare Corporation 16.85 7.0% 28.1% 17.95 9.90 553 241 157 637 961 (15) (30) Sep-17 Dec-16 983 13 (7) 0.7x NM 0.6x NM ResMed Inc. 84.69 10.0% 35.6% 87.81 61.22 12,018 1,019 811 12,359 2,125 594 480 Sep-17 Jun-17 2,375 695 572 5.8x 20.8x 5.2x 17.8x Number of Companies 3 Median: 10.0% 35.6% Total $18,119 $20,748 $5,830 $6,224 2.8x 17.5x 2.7x 15.4x Market Cap. Weighted Average: 11.1% 39.7% 4.7x 18.7x 4.3x 16.3x Life Sciences Tools Agilent Technologies, Inc. $66.97 4.3% 46.7% $70.93 $45.38 $21,633 $2,011 $2,678 $21,169 $4,472 $1,054 $840 Oct-17 Oct-17 $4,798 $1,183 $1,082 4.7x 20.1x 4.4x 17.9x Becton, Dickinson and Company 214.06 9.2% 28.8% 229.69 161.50 49,107 18,870 14,200 52,531 12,093 3,331 2,243 Sep-17 Sep-17 16,325 5,479 4,347 4.3x 15.8x 3.2x 9.6x Thermo Fisher Scientific Inc. 189.88 0.4% 34.2% 201.20 140.00 76,141 21,993 756 97,113 19,824 5,043 3,110 Sep-17 Dec-16 22,947 5,916 5,433 4.9x 19.3x 4.2x 16.4x Number of Companies 3 Median: 4.3% 34.2% Total $146,881 $170,814 $36,389 $44,069 4.7x 19.3x 4.2x 16.4x Market Cap. Weighted Average: 3.9% 34.3% 4.7x 18.2x 3.9x 14.4x Medical Devices and Products Abbott Laboratories $57.07 7.0% 49.0% $57.77 $38.25 $99,336 $24,025 $11,199 $113,122 $25,134 $4,766 $2,269 Sep-17 Dec-16 $30,167 $7,947 $6,791 4.5x 23.7x 3.7x 14.2x Baxter International Inc. 64.64 3.0% 46.0% 66.18 44.06 35,218 3,498 3,517 35,978 10,432 2,091 1,359 Sep-17 Dec-16 11,086 2,674 1,928 3.4x 17.2x 3.2x 13.5x Boston Scientific Corporation 24.79 (15.0%) 14.2% 29.93 21.56 34,042 5,682 659 39,583 8,830 2,234 1,397 Sep-17 Dec-16 9,580 2,774 1,932 4.5x 17.7x 4.1x 14.3x ConforMIS Inc 2.38 (32.4%) (71.4%) 8.72 2.22 108 30 54 79 79 (54) (57) Sep-17 Dec-16 84 (45) (49) 1.0x NM 0.9x NM C. R. Bard, Inc.(*) 331.24 3.4% 47.8% 337.73 223.02 0 1,643 1,301 25,219 3,875 1,218 1,010 Sep-17 Dec-16 4,194 1,370 1,303 6.5x 20.7x 6.0x 18.4x Danaher Corporation 92.82 8.2% 18.7% 95.16 77.66 64,566 10,909 649 75,759 17,828 4,105 2,880 Sep-17 Dec-16 19,128 4,620 3,369 4.2x 18.5x 4.0x 16.4x Hologic, Inc. 42.75 16.5% 6.7% 46.80 35.76 11,785 3,385 541 15,056 3,059 952 503 Sep-17 Sep-17 3,285 1,113 1,021 4.9x 15.8x 4.6x 13.5x Johnson & Johnson 139.72 7.5% 21.0% 144.35 110.76 375,361 35,166 16,231 401,446 74,413 25,698 20,870 Oct-17 Jan-17 80,632 29,685 25,901 5.4x 15.6x 5.0x 13.5x K2M Group Holdings, Inc. 18.00 (15.1%) (11.4%) 25.99 16.44 779 74 34 814 252 (7) (34) Sep-17 Dec-16 282 14 (18) 3.2x NM 2.9x NM Medtronic plc 80.75 3.8% 12.9% 89.72 69.35 109,295 29,072 13,526 125,943 29,639 9,381 6,619 Oct-17 Apr-17 30,091 9,821 8,833 4.2x 13.4x 4.2x 12.8x Penumbra, Inc. 94.10 4.2% 46.8% 116.35 63.05 3,194 0 219 3,137 311 (1) (4) Sep-17 Dec-16 389 8 3 10.1x NM 8.1x NM Stryker Corporation 154.84 9.0% 28.5% 160.62 116.50 57,947 7,225 2,689 63,406 12,130 3,252 2,628 Sep-17 Dec-16 13,260 3,784 3,429 5.2x 19.5x 4.8x 16.8x Teleflex Incorporated 248.82 2.8% 54.0% 271.23 157.80 11,209 2,250 1,018 12,824 2,065 569 433 Oct-17 Dec-16 2,415 739 648 6.2x 22.5x 5.3x 17.4x Number of Companies 13 Median: 3.8% 21.0% Total $802,840 $912,367 $188,048 $204,596 4.5x 18.1x 4.2x 14.3x Market Cap. Weighted Average: 6.0% 24.8% 4.9x 17.1x 4.5x 14.1x Medical / Surgical / Dental Supplies & Distribution AmerisourceBergen Corporation $91.82 11.0% 15.7% $97.85 $71.90 $20,024 $3,794 $2,435 $21,706 $153,144 $2,441 $2,018 Sep-17 Sep-17 $168,914 $2,450 $2,137 0.1x 8.9x 0.1x 8.9x Cardinal Health, Inc. 61.27 (8.4%) (15.3%) 84.88 54.66 19,276 10,003 1,181 28,335 130,578 3,157 2,384 Sep-17 Jun-17 138,342 3,327 2,907 0.2x 9.0x 0.2x 8.5x Henry Schein, Inc. 69.88 (14.8%) (8.7%) 93.50 65.28 10,968 1,557 80 13,283 12,264 1,033 848 Sep-17 Dec-16 13,192 1,123 928 1.1x 12.9x 1.0x 11.8x McKesson Corporation 155.95 1.5% 10.0% 169.29 133.82 32,512 8,321 2,563 40,150 201,955 4,039 3,125 Sep-17 Mar-17 208,952 4,393 3,821 0.2x 9.9x 0.2x 9.1x Owens & Minor, Inc. 18.88 (35.3%) (47.0%) 37.02 17.75 1,156 917 98 1,949 9,306 243 188 Sep-17 Dec-16 10,267 299 243 0.2x 8.0x 0.2x 6.5x Patterson Companies, Inc. 36.13 (6.5%) (12.2%) 48.30 32.07 3,426 1,098 101 4,369 5,532 391 308 Oct-17 Apr-17 5,647 400 346 0.8x 11.2x 0.8x 10.9x Number of Companies 6 Median: (7.5%) (10.5%) Total $87,362 $109,792 $512,780 $545,314 0.2x 9.5x 0.2x 9.0x Market Cap. Weighted Average: (1.4%) 1.8% 0.3x 9.9x 0.3x 9.3x *To be acquired by Becton Dickinson in deal valued at $24.0 billion, following announcement on August 28 th 2017. PAGE 10
PUBLIC COMPARABLES Provider-Based Services (1) Company Name Stock Price Equity Total Ent. Latest Twelve Months Forward Twelve Month Cash and LTM Latest TEV/ LTM Multiples TEV/ Fwd Multiples % Change 52 Week Mkt. Total Debt Value (LTM) Estimate Equiv. Period FYE Date 12/31/2017 3 mos. 12 mos. High Low Value (TEV) Revenue EBITDA EBIT Revenue EBITDA EBIT Revenue EBITDA Revenue EBITDA Acute-Care Hospitals Community Health Systems, Inc. $4.26 (44.5%) (25.8%) $10.51 $3.85 $489 $13,941 $590 $14,454 $16,765 $1,797 $871 Sep-17 Dec-16 $14,010 $1,611 $801 0.9x 8.0x 1.0x 9.0x HCA Healthcare Inc 87.84 10.4% 18.9% 91.03 71.18 31,100 32,953 771 66,382 42,693 8,029 5,945 Sep-17 Dec-16 45,300 8,450 6,225 1.6x 8.3x 1.5x 7.9x LifePoint Health, Inc. 49.80 (14.0%) (13.3%) 70.95 42.50 1,963 2,904 166 4,941 6,406 749 390 Sep-17 Dec-16 6,490 778 420 0.8x 6.6x 0.8x 6.4x Tenet Healthcare Corporation 15.16 (7.7%) 1.1% 22.72 12.25 1,530 14,881 429 18,467 19,061 2,018 1,138 Sep-17 Dec-16 18,193 2,490 1,661 1.0x 9.2x 1.0x 7.4x Number of Companies 4 Median: (10.9%) (6.1%) Total $35,082 $104,244 $84,925 $83,993 0.9x 8.2x 1.0x 7.6x Market Cap. Weighted Average: 7.4% 15.7% 1.5x 8.2x 1.4x 7.8x Assisted Living Brookdale Senior Living Inc. $9.70 (8.5%) (23.1%) $16.31 $8.78 $1,808 $5,515 $582 $6,740 $4,790 $690 $200 Sep-17 Dec-16 $4,637 $650 $205 1.4x 9.8x 1.5x 10.4x Capital Senior Living Corporation 13.49 7.5% (17.2%) 17.66 11.60 411 1,004 23 1,380 466 82 14 Sep-17 Dec-16 495 102 23 3.0x 16.7x 2.8x 13.6x Number of Companies 2 Median: (0.5%) (20.2%) Total $2,219 $8,120 $5,256 $5,132 2.2x 13.3x 2.1x 12.0x Market Cap. Weighted Average: (5.5%) (22.0%) 1.7x 11.1x 1.7x 11.0x Long-Term Care Kindred Healthcare, Inc.(*) $9.70 42.6% 20.5% $11.90 $5.50 $887 $3,321 $228 $4,169 $6,524 $421 $298 Sep-17 Dec-16 $6,128 $507 $405 0.6x 9.9x 0.7x 8.2x National HealthCare Corporation 60.94 (2.6%) (20.6%) 77.01 57.73 926 148 239 837 959 102 60 Sep-17 Dec-16 NA NA NA 0.9x 8.2x NA NA Ensign Group, Inc. 22.20 (1.7%) (0.5%) 24.78 16.51 1,136 296 49 1,426 1,795 130 88 Sep-17 Dec-16 1,945 193 139 0.8x 10.9x 0.7x 7.4x Number of Companies 3 Median: (1.7%) (0.5%) Total $2,949 $6,432 $9,277 $8,073 0.8x 9.9x 0.7x 7.8x Market Cap. Weighted Average: 11.3% (0.5%) 0.8x 9.8x 0.7x 7.8x Diagnostic Imaging RadNet, Inc. $10.10 (12.6%) 54.2% $11.90 $5.25 $481 $618 $8 $1,098 $912 $117 $50 Sep-17 Dec-16 $932 $152 $64 1.2x 9.4x 1.2x 7.2x Varian Medical Systems, Inc. 111.15 11.1% 39.1% 114.09 76.94 10,183 350 716 9,997 2,668 489 419 Sep-17 Sep-17 2,791 599 517 3.7x 20.4x 3.6x 16.7x Number of Companies 2 Median: (0.7%) 46.6% Total $10,664 $11,095 $3,580 $3,723 2.5x 14.9x 2.4x 12.0x Market Cap. Weighted Average: 10.0% 39.8% 3.6x 19.9x 3.5x 16.3x Dialysis Services American Renal Associates Holdings, Inc. $17.40 16.2% (18.0%) $23.30 $9.91 $547 $559 $68 $1,367 $750 $150 $113 Sep-17 Dec-16 $823 $114 NA 1.8x 9.1x 1.7x 12.0x DaVita Inc.(**) 72.25 21.7% 12.3% 72.93 52.51 13,243 9,099 983 22,973 15,213 2,422 1,640 Sep-17 Dec-16 16,144 2,349 1,634 1.5x 9.5x 1.4x 9.8x Fresenius Medical Care AG & Co. KGaA 105.41 6.1% 7.6% 106.49 78.24 32,470 9,201 876 41,767 20,944 3,857 2,978 Sep-17 Dec-16 22,947 4,243 3,276 2.0x 10.8x 1.8x 9.8x Number of Companies 3 Median: 16.2% 7.6% Total $46,261 $66,107 $36,907 $39,914 1.8x 9.5x 1.7x 9.8x Market Cap. Weighted Average: 10.6% 3.7% 1.9x 10.4x 1.7x 9.9x Home Care, Hospice, and Home Infusion Home Care / Hospice: Addus HomeCare Corporation $34.80 (1.4%) (1.6%) $40.75 $29.90 $404 $44 $46 $403 $417 $33 $27 Sep-17 Dec-16 $450 $41 $32 1.0x 12.1x 0.9x 9.7x Almost Family, Inc.(***) 55.35 3.1% 24.4% 66.15 40.15 773 133 19 922 750 59 53 Sep-17 Dec-16 838 78 70 1.2x 15.6x 1.1x 11.8x Amedisys, Inc. 52.71 (5.8%) 23.8% 65.91 42.05 1,789 90 66 1,836 1,496 146 128 Sep-17 Dec-16 1,634 167 146 1.2x 12.6x 1.1x 11.0x Chemed Corporation 243.02 20.3% 51.4% 251.00 157.56 3,880 83 19 4,116 1,642 247 211 Sep-17 Dec-16 1,724 278 235 2.5x 16.7x 2.4x 14.8x LHC Group, Inc.(***) 61.25 (13.6%) 34.6% 76.14 44.04 1,120 119 17 1,276 1,015 94 81 Sep-17 Dec-16 1,191 103 102 1.3x 13.6x 1.1x 12.4x Number of Companies 5 Median: (1.4%) 24.4% Total $7,965 $8,553 $5,320 $5,836 1.2x 13.6x 1.1x 11.8x Market Cap. Weighted Average: 6.9% 1.7% 1.8x 15.0x 1.7x 13.0x Home Infusion: BioScrip, Inc. $2.91 5.8% 185.3% $3.39 $1.00 $371 $479 $38 $891 $875 $38 $9 Sep-17 Dec-16 $717 $63 $35 1.0x 23.7x 1.2x 14.2x Number of Companies 1 Median: 5.8% 185.3% Total $371 $891 $875 $717 1.0x 23.7x 1.2x 14.2x Market Cap. Weighted Average: 5.8% 185.3% 1.0x 23.7x 1.2x 14.2x *To be acquired by a consortium including Humana, TPG Capital, and Welsh Carson Anderson & Stowe in a $783.2 million deal announced on December 19 th, 2017. **DaVita Medical Group to be acquired by UnitedHealth in a $4.9 billion deal announced on December 6 th, 2017. ***To combine in an all-stock merger and will continue to trade on NASDAQ under the ticker LHCG PAGE 11
PUBLIC COMPARABLES Provider-Based Services (1) Company Name Physician Practice Management Stock Price Equity Total Ent. Latest Twelve Months Forward Twelve Month Cash and LTM Latest TEV/ LTM Multiples TEV/ Fwd Multiples % Change 52 Week Mkt. Total Debt Value (LTM) Estimate Equiv. Period FYE Date 12/31/2017 3 mos. 12 mos. High Low Value (TEV) Revenue EBITDA EBIT Revenue EBITDA EBIT Revenue EBITDA Revenue EBITDA Specialty: MEDNAX, Inc. $53.44 23.9% (20.2%) $72.13 $40.56 $5,005 $1,826 $59 $6,731 $3,378 $599 $497 Sep-17 Dec-16 $3,658 $616 $511 2.0x 11.2x 1.8x 10.9x Number of Companies 1 Median: 23.9% (20.2%) Total $5,005 $6,731 $3,378 $3,658 2.0x 11.2x 1.8x 10.9x Market Cap. Weighted Average: 23.9% (20.2%) 2.0x 11.2x 1.8x 10.9x Behavioral Health / Management AAC Holdings, Inc. $9.00 (9.4%) 31.2% $13.06 $5.99 $217 $227 $16 $409 $304 $32 $11 Sep-17 Dec-16 $341 $66 $34 1.3x 12.9x 1.2x 6.2x Acadia Healthcare Company, Inc. 32.63 (31.7%) (2.9%) 54.34 26.92 2,866 3,269 76 6,056 2,815 574 435 Sep-17 Dec-16 3,008 645 466 2.2x 10.6x 2.0x 9.4x Civitas Solutions, Inc. 17.10 (7.3%) (16.4%) 20.55 15.40 640 631 8 1,265 1,475 147 72 Sep-17 Sep-17 1,602 176 84 0.9x 8.6x 0.8x 7.2x Magellan Health, Inc. 96.55 11.9% 27.8% 99.80 64.05 2,321 765 841 2,300 5,408 271 160 Sep-17 Dec-16 7,588 423 284 0.4x 8.5x 0.3x 5.4x Universal Health Services, Inc. 113.35 2.2% 6.5% 129.74 95.26 9,936 4,040 65 14,926 10,243 1,692 1,250 Sep-17 Dec-16 11,884 1,788 1,346 1.5x 8.8x 1.3x 8.3x Number of Companies 5 Median: (7.3%) 6.5% Total $15,980 $24,955 $20,243 $24,423 1.3x 8.8x 1.2x 7.2x Market Cap. Weighted Average: (3.0%) 7.3% 1.4x 9.1x 1.2x 8.0x Surgicenters / Rehabilitation Surgery Centers (*) : Surgery Partners, Inc. $12.10 16.9% (23.7%) $24.05 $7.10 $590 $2,293 $204 $3,005 $1,187 $204 $160 Sep-17 Dec-16 $1,766 $259 NA 2.5x 14.7x 1.7x 11.6x Number of Companies 1 Median: 16.9% (23.7%) Total $590 $3,005 $1,187 $1,766 2.5x 14.7x 1.7x 11.6x Market Cap. Weighted Average: 16.9% (23.7%) 2.5x 14.7x 1.7x 11.6x Rehabilitation: HealthSouth Corporation $49.41 6.6% 18.9% $50.41 $38.24 $4,878 $2,622 $157 $7,815 $3,844 $825 $644 Sep-17 Dec-16 $4,184 $860 $678 2.0x 9.5x 1.9x 9.1x Select Medical Holdings Corporation 17.65 (8.1%) 31.7% 19.78 12.00 2,362 2,809 107 5,705 4,375 492 335 Sep-17 Dec-16 4,652 587 418 1.3x 11.6x 1.2x 9.7x U.S. Physical Therapy, Inc. 72.20 17.5% 1.9% 78.00 56.50 908 63 17 1,051 396 62 52 Sep-17 Dec-16 439 67 61 2.7x 17.1x 2.4x 15.7x Number of Companies 3 Median: 6.6% 18.9% Total $8,149 $14,571 $8,616 $9,276 2.0x 11.6x 1.9x 9.7x Market Cap. Weighted Average: 3.6% 20.7% 1.9x 10.9x 1.7x 10.0x * Figures are adjusted for minority interest. PAGE 12
M&A TRANSACTIONS Announced U.S. Healthcare & Life Sciences M&A (1) Enterprise Enterprise Value / LTM Private Equity Announced Target Seller Buyer Value ($mm) Sales EBITDA EBIT Involvement 12/1/2017 Paragon Vision Sciences, Inc. Valeant Pharmaceuticals CooperVision, Inc. $170.0 - - - No International, Inc. 12/1/2017 CBM Pathology - Summit Partners LP; KRG Capital LLC; - - - - Yes Aurora Diagnostics Holdings LLC 12/1/2017 Stellis Health P.A. /Albertville Clinic/ Stellis Health P.A. Global Medical REIT, Inc. - - - - No 12/3/2017 Aetna, Inc. - CVS Health Corp. - - - - No 12/4/2017 Reproductive Medicine Associates of - Instituto Valenciano de Infertilidad SL $1,100.0 21.6x - - No Philadelphia PC 12/4/2017 VMI Nutrition, Inc. - Kohlberg & Co. LLC; Nellson - - - - Yes Nutraceutical LLC 12/4/2017 Aurora Health Care, Inc. - Advocate Health Care Network - - - - No 12/4/2017 Aspen Community Living - Dungarvin, Inc.; Dungarvin Ohio, LLC $200.0 - - - No 12/4/2017 Dickinson County Healthcare System - Bellin Health Systems, Inc. - - - - No 12/5/2017 Imthera Medical, Inc. - LivaNova Plc - - - - No 12/5/2017 BPBD LLC - VistaVu Solutions Ltd. $172.0 - - - No 12/5/2017 Bayfront Health Dade City Volunteer Foundation, Inc. Community Health Systems, Inc. Adventist Health System Sunbelt Healthcare Corp. - - - - No 12/5/2017 Rey Medical & Wellness Centers LLC - Cano Health LLC - - - - No 12/6/2017 Davita Medical Holdings LLC DaVita, Inc. Optum, Inc. - - - - No 12/6/2017 Harpoon Medical, Inc. - Edwards Lifesciences Corp. - - - - No 12/7/2017 Entellus Medical, Inc. - Stryker Corp. $130.0 - - - No 12/7/2017 Restorative Health Care - Corpus Christi, Inc. - Noor, Inc. $46.5 1.7x - - No 12/8/2017 The Holland Square Group LLC - WestView Capital Management Co., - - - - Yes Inc.; ALKU LLC 12/12/2017 Repros Therapeutics, Inc. - Allergan Plc - - - - No 12/12/2017 Northeast Veterinary Supply Co., Inc. - MWI Veterinary Supply, Inc.; MWI - - - - No Veterinary Supply Co. 12/12/2017 Arlene E. Haywood M.D. P.A. - MBF Healthcare Advisors LLC; Strategic - - - - Yes Health Services LLC 12/12/2017 Ruggieri Consulting Group LLC - OneDigital Health & Benefits - - - - No 12/12/2017 Jesus B. Menendez-Rivera M.D. P.A. - MBF Healthcare Advisors LLC; Strategic - - - - Yes Health Services LLC 12/12/2017 Safe Passage Neuromonitoring LLC - NuVasive, Inc. $185.0 - - - No 12/12/2017 Peake Software Labs, Inc. - QGenda, Inc. $2.9 - - - No 12/12/2017 Dextera Surgical, Inc. - Sartorius BBI Systems GmbH; Aesculap, - - - - No Inc. 12/12/2017 Angles For Sexual Health Identity & Education, Inc. - Youth Services of Glenview/Northbrook $47.5 - - - No 12/13/2017 Alpha Life Foundation, Inc. - Turbo Global Partners, Inc. $10.5 - - - No 12/13/2017 Connect Healthcare - Spring Mountain Capital LP; StartUp $1.0 - - - Yes Health LLC; Colle Capital Partners; Health Platforms, Inc. 12/15/2017 ClarVista Medical, Inc. - Alcon, Inc. - - - - No 12/18/2017 Net Health Systems, Inc. - The Carlyle Group LP (Corporate Private - - - - Yes Equity); Level Equity Management LLC; Net Health Systems, Inc. /Private Group/ 12/18/2017 SERG Solutions LLC - Henry Schein, Inc. $3,750.0 10.2x - - No 12/19/2017 Kindred Healthcare, Inc. - Humana, Inc.; TPG Capital LLC; Welsh, Carson, Anderson & Stowe; Kindred Healthcare, Inc. /Private Group/ - - - - Yes 12/19/2017 Wolfe Laboratories, Inc. - Pace Analytical Life Sciences LLC - - - - No 12/19/2017 Sports & Orthopedic Leaders, Inc. - GPB Capital Holdings LLC; Alliance $85.0 - - - Yes Physical Therapy Partners LLC 12/20/2017 Medical Simulation Corp. /Endovascular Business/ Medical Simulation Corp. Mentice AB; Priveq Partners Holding AB - - - - No 12/20/2017 Autism Learning Partners LLC - FFL Partners LLC - - - - Yes 12/22/2017 Ignyta, Inc. - Roche Holding AG $750.0 - - - No 12/26/2017 Sucampo Pharmaceuticals, Inc. - Mallinckrodt Plc $75.8 - - - No 12/27/2017 PetVet Care Centers LLC - Kohlberg Kravis Roberts & Co. LP - - - - Yes 12/31/2017 DrugScan, Inc. Toxicology Holdings Corp. ACM Medical Laboratory, Inc. - - - - No PAGE 13
OUR FIRM Harris Williams & Co. has a broad range of industry expertise, which creates powerful opportunities. Our clients benefit from our deep-sector experience, integrated industry intelligence and collaboration across the firm, and our commitment to learning what makes them unique. For more information, visit our website. Aerospace, Defense & Government Services Building Products & Materials Business Services Consumer Energy, Power & Infrastructure Healthcare & Life Sciences Industrials Specialty Distribution Technology, Media & Telecom Transportation & Logistics HARRIS WILLIAMS & CO. OFFICE LOCATIONS Boston One International Place Suite 2620 Boston, Massachusetts 02110 Phone: +1 (617) 482-7501 Cleveland 1900 East 9th Street 20th Floor Cleveland, Ohio 44114 Phone: +1 (216) 689-2400 Minneapolis 222 South 9th Street Suite 3350 Minneapolis, Minnesota 55402 Phone: +1 (612) 359-2700 UNITED STATES Richmond (Headquarters) 1001 Haxall Point 9th Floor Richmond, Virginia 23219 Phone: +1 (804) 648-0072 San Francisco 575 Market Street 31st Floor San Francisco, California 94105 Phone: +1 (415) 288-4260 Washington, D.C. 800 17th St. NW 2nd Floor Washington, D.C. 20006 Phone: +1 (202) 207-2300 EUROPE Frankfurt Bockenheimer Landstrasse 33-35 60325 Frankfurt, Germany Phone: +49 069 3650638 00 London 63 Brook Street London W1K 4HS, England Phone: +44 (0) 20 7518 8900 Beijing Hong Kong Mumbai NETWORK OFFICES New Delhi Shanghai PAGE 14
HARRIS WILLIAMS & CO. HEALTHCARE & LIFE SCIENCES SOURCES 1. FactSet. 2. Company Filings. 3. S&P. 4. PNC Debt Capital Markets. DISCLOSURES 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 a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business. THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US. The information and views contained in this report were prepared by Harris Williams & Co. ( Harris Williams ). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable, but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams judgment and are subject to change without notice. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams prior written consent. Copyright 2018 Harris Williams & Co., all rights reserved. PAGE 15