healthcare & life sciences industry update · 12/18/12 02/17/12 galena biopharma inc gale follow-on...

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Healthcare & Life Sciences

Industry Update January 2013

This past year marked a number of watershed moments for the U.S. healthcare system. The Patient Protection and Affordable Care Act (“ACA”) was largely upheld by the Supreme Court in the summer. The end of 2012 saw Congress’ failure to deliver a “Grand Bargain,” that is a fiscal cliff deal that addressed spending cuts in programs such as healthcare in addition to changes to the tax system. Throughout, innovation in healthcare technology marched on. As we ring in the new year, we have chosen to highlight a few pieces discussing the major developments of 2012 and also look forward to 2013.

• MedCity News published an article discussing the seven trends that will drive the healthcare industry in 2013 and beyond as presented by Paul Keckley, Executive Director of the Deloitte Center for Health Solutions. These include demanding demographics, strategic globalizations, unconstrained connectivity, constrained resources, accelerated consolidation, big data, and consumer discontent. A link to the video of Keckley’s presentation can also be viewed here.

• An editorial by Sherman Frederick in the Las Vegas Review-Journal, “2012 - The Year Health Care Died,” discusses the ACA and the shifts that are already occurring in the legislation as the policies are implemented. Frederick cites a number of measures whose impacts will be larger than originally projected including the number of patients forced into health insurance exchanges and the amount of tax revenue that will be required to pay for the bill. The article also goes on to discuss two measures of the legislation that will hit in 2013: the activation of the state health insurance exchanges and the implementation of the employer mandate.

• A piece in Healthcare IT News by John Halamka, CIO of the CareGroup Health System and Dean for Technology at Harvard Medical School, discusses the major developments in the advancement of healthcare IT in 2012. According to Halamka, 2012 was a key year in meeting change and laying the ground work for 2013, which will largely be a year of execution. Among others, Halamamka highlights EHR adoption momentum and development of the framework for exchanging healthcare information as key transformations for the industry.

What We’ve Been Reading

January 2013

1

http://medcitynews.com/2013/01/what-are-the-seven-megatrends-that-will-redefinethe-healthcare-industry-in-2013-and-beyond/http://www.youtube.com/v/uEF9GcYnKGo?version=3&hl=en_US&rel=0">http://www.lvrj.com/opinion/2012-the-year-health-care-died-185206612.htmlhttp://www.lvrj.com/opinion/2012-the-year-health-care-died-185206612.htmlhttp://www.healthcareitnews.com/blog/2012-review?single-page=true

HW&Co. HCLS Group Insights

January 2013

Durable Medical Equipment

Contract Manufacturing

2

Home Health

http://www.harriswilliams.com/sites/default/files/industry_reports/DME Industry Update.pdfhttp://medcitynews.com/2013/01/what-are-the-seven-megatrends-that-will-redefinethe-healthcare-industry-in-2013-and-beyond/http://www.harriswilliams.com/sites/default/files/industry_reports/Contract Manufacturing Industry Overview.pdfhttp://medcitynews.com/2013/01/what-are-the-seven-megatrends-that-will-redefinethe-healthcare-industry-in-2013-and-beyond/http://www.harriswilliams.com/sites/default/files/industry_reports/Home Health Industry Update.pdfhttp://medcitynews.com/2013/01/what-are-the-seven-megatrends-that-will-redefinethe-healthcare-industry-in-2013-and-beyond/

3

Key Trading Statistics

(detail begins on page 6)

Equity Trading Overview

January 2013

Public Company Sector

Performance (12-month %

change in stock price)

Contract Pharma Manufacturing

Health Care Staffing

Assisted Living

Contract Research Organizations

Home Care / Hospice

Acute-Care Hospitals

Emergency Services

Psychiatric Hospitals / Management

Dialysis Services

HW&Co. HCLS Composite Index

Disease Management

Surgicenters / Rehabilitation

Life Sciences Tools

Medical / Surgical / Dental Supplies

Medical Devices and Products

Dental Products

S&P 500

Specialty Pharmacy Management

Long-Term Care

Physician Practice Management


HMO - Medical

Diagnostic Imaging

Clinical Laboratories

Information Services

Specialty Managed Care

(30.0%) (20.0%) (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%

Change in Stock Price3 mos. 12 mos. Revenue EBITDA Revenue EBITDA

Clinical Laboratories 3 $7,941 (6.3%) 0.8% 1.7x 8.0x 1.7x 8.0xContract Pharma Manufacturing 5 909 1.1% 58.5% 1.4x 9.7x 1.5x 9.7xContract Research Organizations 5 1,774 13.9% 42.7% 1.4x 10.1x 1.4x 9.0xDisease Management 2 3,030 (6.9%) 18.0% 1.5x 7.8x 1.5x 8.5xEmergency Services 1 1,956 (7.2%) 31.1% 2.4x 7.8x 2.3x 7.8xHealth Care Staffing 4 1,204 3.9% 55.9% 1.0x 13.6x 0.9x 11.9xHMO - Medical 10 15,125 7.6% 5.3% 0.4x 6.0x 0.4x 6.5xInformation Services 11 2,220 (6.3%) (1.5%) 3.0x 13.5x 2.9x 10.9xSpecialty Managed Care 2 1,604 (3.4%) (14.4%) 0.7x 5.6x 0.7x NA Specialty Pharmacy Management 5 16,681 9.4% 12.8% 0.6x 10.3x 0.8x 9.3xDental Products 3 25,665 3.9% 13.6% 2.6x 14.0x 2.6x 12.0xDurable Medical Equipment 5 1,728 2.7% 6.5% 1.1x 6.9x 1.1x 6.6xLife Sciences Tools 3 14,050 0.4% 17.2% 2.2x 8.6x 2.2x 8.1xMedical Devices and Products 14 37,870 (1.2%) 14.3% 2.5x 9.4x 2.5x 9.0xMedical / Surgical / Dental Supplies 6 10,413 3.6% 16.0% 0.2x 7.8x 0.2x 7.6xAcute-Care Hospitals 6 13,386 5.6% 31.7% 0.9x 6.5x 0.9x 6.6xAssisted Living 6 1,840 13.5% 43.4% 2.0x 10.9x 1.9x 11.4xDiagnostic Imaging 3 2,797 (9.0%) 4.6% 1.4x 5.5x 1.7x 8.1xDialysis Services 2 23,772 0.2% 23.4% 2.2x 10.6x 2.2x 10.3xHome Care / Hospice 6 605 (2.9%) 41.4% 0.5x 6.2x 0.5x 6.4xLong-Term Care 3 1,179 (4.9%) 10.8% 0.9x 6.1x 0.9x 5.4xPhysician Practice Management 3 1,701 1.7% 6.9% 1.7x 8.8x 1.7x 10.2xPsychiatric Hospitals / Management 3 2,458 5.7% 23.5% 0.3x 6.1x 0.3x 7.0xSurgicenters / Rehabilitation 4 2,047 (6.3%) 17.4% 1.5x 6.8x 1.5x 6.9x

Payer, Provider, & Pharmacy Support Services 48 $5,244 0.6% 20.9% 1.4x 9.2x 1.4x 9.1x

Products & Devices 31 $17,945 1.9% 13.5% 1.7x 9.3x 1.7x 8.7x

Provider-Based Services 36 $5,532 0.4% 22.6% 1.3x 7.5x 1.3x 8.0x

HW&Co. HCLS Composite Index 115 $7,998 0.8% 20.0% 1.4x 8.6x 1.4x 8.6x

S&P 500 (1.0%) 13.4%

Paye

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Supp

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Prod

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Prov

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Median TEV/Forward MulitplesSector

Number of Companies

Average Enterprise

Value ($ mm)

Median TEV/LTM Multiples

4

Healthcare & Life Sciences

Industry Stock Performance

Top 25 Equity Offerings

(by proceeds)

Equity Markets Overview

January 2013

27.9% 31.0%

21.7%

40

60

80

100

120

140

160

Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12

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

Closing Date Filing Date Issuer Ticker Transaction TypeGross Proceeds

($mm)

12/10/12 07/26/11 HCA Holdings Inc HCA Follow-On $1,059.212/05/12 12/03/12 Volcano Corp VOLC Convertible 460.012/21/12 12/21/12 Sagent Pharmaceuticals Inc SGNT Follow-On 388.112/06/12 10/17/12 Acadia Healthcare Co Inc ACHC Follow-On 273.612/13/12 11/06/12 Infinity Pharmaceuticals Inc INFI Follow-On 172.512/14/12 11/07/12 Sarepta Therapeutics Inc SRPT Follow-On 125.012/21/12 12/21/12 Acadia Pharmaceuticals ACAD Follow-On 176.712/28/12 12/28/12 Peregrine Pharmaceuticals Inc PPHM Follow-On 75.012/12/12 08/04/11 Synta Pharmaceuticals Corp SNTA Follow-On 60.212/14/12 12/14/12 Omeros Corp OMER Follow-On 60.012/06/12 11/20/12 AcelRx Pharmaceuticals Inc ACRX Follow-On 41.412/13/12 12/13/12 Fibrocell Science Inc FCSC Follow-On 40.012/06/12 05/03/11 Derma Sciences Inc DSCI Follow-On 36.412/05/12 12/05/12 Delcath Systems Inc DCTH Follow-On 35.012/28/12 12/28/12 StemCells Inc STEM Follow-On 30.012/28/12 11/16/12 Patheon Inc PTI Follow-On 30.012/18/12 02/17/12 Galena Biopharma Inc GALE Follow-On 24.312/14/12 03/11/11 Cytori Therapeutics Inc CYTX Follow-On 20.012/11/12 12/11/12 Harvard Apparatus Regenerative HART IPO 20.012/11/12 12/11/12 Computer Vision Systems CVSL Convertible 20.012/18/12 12/18/12 Arno Therapeutics Inc LRRI Convertible 14.912/05/12 05/04/12 DURECT Corp DRRX Follow-On 12.612/06/12 06/29/12 Northwest Biotherapeutics Inc NWBO Follow-On 12.012/14/12 11/02/12 Lpath Inc LPTN Follow-On 11.812/04/12 09/25/12 CEL SCI Corp CVM Follow-On 10.5

5

Announced Healthcare & Life Sciences

M&A

Announced Healthcare & Life Sciences Transactions Median Healthcare & Life Sciences Transaction Multiples

PEG Investments and Exits PEG Investments by Segment (Last 3 Years)

Healthcare & Life Sciences M&A Trends

Announced Private Equity M&A Activity

Middle Market Healthcare Transaction Highlights Quarterly M&A Activity

LTM Deal Statistics

Note: Transactions based on publicly available information

M&A Overview

January 2013

$389.4

$194.1 $174.6

$110.6 $141.4

$101.6

0

200

400

600

800

1000

1200

1400

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

2007 2008 2009 2010 2011 2012

Num

ber of Transactions__

Agg

rega

te T

rans

actio

n V

alue

($ in

bill

ions

)

Aggregate Deal Value # of deals

278 279255

225242

256 267 245 236219 229 221

291

17 18

19

1713

1816

13 18

1120

12

22

0

50

100

150

200

250

300

350

4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12

Num

ber

of T

rans

actio

ns__

PEG Acquirer Strategic Acquirer

15.5x 15.2x

7.7x

12.8x 11.1x

10.9x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

0x

3x

6x

9x

12x

15x

18x

21x

2007 2008 2009 2010 2011 2012

EV

/ LT

M R

evenue Multiple__E

V /

LT

M E

BIT

DA

Mul

tiple

__

TEV / LTM EBITDA TEV / LTM Sales

3140

58

69

94

113

79

42

7165 65

2327

40

60 62

95

49 50

80

120

139

0

20

40

60

80

100

120

140

160

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Tra

nsac

tion

Vol

ume'

Number of Investments Number of Exits

Aggregate Number Median Transaction MultiplesValue ($bn) of Deals TEV/Rev TEV/EBITDA

$111.9 1,025 2.15x 10.9x

HC&LS Industry Number ofSegment Companies

Biotechnology 5Healthcare Technology 17Healthcare Distributors 9Healthcare Equipment 25Healthcare Facilit ies 36Healthcare Services 63Healthcare Supplies 8Life Sciences Tools & Services 10Managed Healthcare 6Pharmaceuticals 20

Announced Target Buyer

12/31/2012 JHP Pharmaceuticals, LLC Warburg Pincus LLC12/28/2012 Correctional Healthcare Companies, Inc. GTCR, LLC12/27/2012 Cambridge Major Laboratories, Inc. American Capital, Ltd. 12/21/2012 Liquent, Inc. PAREXEL International Corporation12/21/2012 The Garretson Firm Resolution Group, Inc. Harvest Partners, LLC12/21/2012 ATI Holdings, LLC KRG Capital Partners12/19/2012 Santé Pediatric Services Epic Health Services, Inc.12/17/2012 Vital Decisions, LLC MTS Health Investors, LLC12/13/2012 Amerita, Inc. PharMerica Corporation12/3/2012 Young Innovations Inc. Linden LLC

Key Credit Statistics

Top 20 Recent Healthcare & Life Sciences

Debt Offerings (by deal amount)

Average Secondary Spread

Average Spread on Healthcare Loans

Credit Statistics

Quarterly Healthcare Loan Volume

Debt Markets Overview

January 2013

6

Date Effective Borrower Name Description Tranche Amount ($mn) Type Rating Spread12/19/12 Baxter International Inc Surgical and medical instruments $3,100 Bridge Loan NR / A3 N/A12/17/12 Medtronic Inc, Medtronic Inc Electromedical equipment 2,250 Revolver/Line >= 1 Yr. NR / A1 L+ 7512/21/12 Pfizer Inc Pharmaceutical preparations 1,000 Revolver/Line >= 1 Yr. NR / A1 N/A12/20/12 Zoetis Inc Pharmaceutical preparations 1,000 Revolver/Line >= 1 Yr. NR / NR L+ 19312/20/12 Heartland Dental Care Inc Dental laboratories 100 Revolver/Line >= 1 Yr. B+ / B1 L+ 37512/20/12 Heartland Dental Care Inc Dental laboratories 400 Term Loan B B+ / B1 L+ 50012/20/12 Heartland Dental Care Inc Dental laboratories 250 Term Loan CCC+ / B1 L+ 85012/04/12 Forest Laboratories Inc Pharmaceutical preparations 750 Revolver/Line >= 1 Yr. NR / NR L+ 12512/13/12 Sage Products Inc Pharmaceutical preparations 60 Revolver/Line >= 1 Yr. B / NR L+ 40012/13/12 Sage Products Inc Pharmaceutical preparations 380 Term Loan B B / NR L+ 40012/13/12 Sage Products Inc Pharmaceutical preparations 200 Term Loan CCC+ / NR L+ 80012/10/12 Pharmaceutical Research Associates Inc Medical laboratories 40 Revolver/Line >= 1 Yr. B / B1 L+ 52512/10/12 Pharmaceutical Research Associates Inc Medical laboratories 335 Term Loan B B / B1 L+ 52512/10/12 Pharmaceutical Research Associates Inc Medical laboratories 135 Term Loan B- / B1 L+ 92512/20/12 Acadia Healthcare Home health care services 100 Revolver/Line >= 1 Yr. NR / NR L+ 32512/20/12 Acadia Healthcare Home health care services 300 Term Loan A NR / NR L+ 32512/10/12 MAT Holdings Inc Ophthalmic goods 300 Revolver/Line >= 1 Yr. NR / NR L+ 20012/10/12 MAT Holdings Inc Ophthalmic goods 100 Term Loan A NR / NR L+ 20012/14/12 Air Methods Corp, Skilled nursing care facilities 100 Revolver/Line >= 1 Yr. NR / NR L+ 17512/14/12 Air Methods Corp, Skilled nursing care facilities 100 Term Loan NR / NR L+ 175

$0

$3

$6

$9

$12

$15

$18

$21

$24

4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12

Loa

n V

olum

e by

Qua

rter

($ in

bill

ions

)___

Pro Rata Institutional

L + 0

L + 100

L + 200

L + 300

L + 400

L + 500

2006 2007 2008 2009 2010 2011 2012

Ave

rage

Spr

ead

Ove

r LIB

OR

__

Revolving Credit / Term Loan A Weighted-Average Institutional

L + 0

L + 200

L + 400

L + 600

L + 800

L + 1000

Ave

rage

Spr

ead

Ove

r L

IBO

R__

0.0x

2.0x

4.0x

6.0x

Debt/EBITDA Senior Debt/EBITDA EBITDA/Cash Interest EBITDA - Capex/Cash Interest

EB

ITD

A M

ultip

le__

2006 2007 2008 2009 2010 2011 2012

Healthcare & Life Sciences Trading Statistics

January 2013

As of December 31, 2012 7

Payer, Provider, & Pharmacy Support Services

Stock Price

% Change 52 Week

12/31/2012 3 mos. 12 mos. High Low Revenue EBITDA EBIT Revenue EBITDA EBIT Revenue EBITDA Revenue EBITDA

Clinical Laboratories

Bio-Reference Laboratories Inc. $28.63 0.2% 76.0% $32.86 $16.02 $793 $18 $25 $786 $662 $92 $76 Oct-12 Oct-12 $758 $104 $88 1.2x 8.5x 1.0x 7.6x

Laboratory Corp. of America Holdings 86.62 (6.3%) 0.8% 95.30 81.56 8,194 2,660 466 10,409 5,632 1,275 1,081 Sep-12 Dec-11 5,662 1,306 1,074 1.8x 8.0x 1.8x 8.0x

Quest Diagnostics Inc. 58.27 (8.1%) 0.4% 64.87 53.25 9,263 3,532 192 12,629 7,574 1,649 1,362 Sep-12 Dec-11 7,533 1,584 1,322 1.7x 7.5x 1.7x 8.0x

Number of Companies 3 Median: (6.3%) 0.8% Total $18,250 $7,941 $13,868 $13,953 1.7x 8.0x 1.7x 8.0x

Mean: (4.8%) 25.7% $7,941 1.6x 8.0x 1.5x 7.8x

Contract Pharma Manufacturing

Akorn, Inc. $13.36 1.1% 20.1% $16.87 $10.52 $1,275 $104 $38 $1,340 $227 $79 $69 Sep-12 Dec-11 $254 $92 $83 5.9x 17.0x 5.3x 14.6x

Cambrex Corporation. 11.38 (3.0%) 58.5% 14.33 5.87 337 69 34 373 274 56 34 Sep-12 Dec-11 275 NA 35 1.4x 6.9x 1.4x NA

Integrated Biopharma Inc. 0.16 (36.0%) 384.8% 0.33 0.02 3 14 0 17 34 (0) (1) Sep-12 Jun-12 NA NA NA 0.5x NM NA NA

Patheon Inc. 3.35 3.5% 166.1% 3.97 1.25 433 313 39 708 749 72 31 Oct-12 Oct-12 1,026 127 74 0.9x 9.9x 0.7x 5.6x

West Pharmaceutical Services, Inc. 54.75 3.2% 44.3% 56.02 37.35 1,868 401 143 2,105 1,240 215 140 Sep-12 Dec-11 1,257 216 136 1.7x 9.5x 1.7x 9.7x

Number of Companies 5 Median: 1.1% 58.5% Total $3,917 $909 $2,525 $2,812 1.4x 9.7x 1.5x 9.7x

Mean: (6.3%) 134.8% $909 2.1x 10.8x 2.3x 10.0x

Contract Research Organizations

Albany Molecular Research Inc. $5.28 52.2% 80.2% $5.59 $2.25 $163 $8 $16 $156 $206 $18 $0 Sep-12 Dec-11 $216 $29 $12 0.8x 8.6x 0.7x 5.3x

Charles River Laboratories International, Inc. 37.47 (5.4%) 37.1% 41.64 27.02 1,819 669 83 2,401 1,140 274 193 Sep-12 Dec-11 1,131 266 196 2.1x 8.7x 2.1x 9.0x

Covance Inc. 57.77 23.7% 26.4% 59.32 42.02 3,162 340 441 3,060 2,151 298 187 Sep-12 Dec-11 2,163 305 196 1.4x 10.3x 1.4x 10.0x

ICON Public Limited Company 27.76 13.9% 62.2% 28.93 16.73 1,667 0 119 1,487 1,057 99 56 Sep-12 Dec-11 1,100 115 72 1.4x 15.0x 1.4x 12.9x

PAREXEL International Corporation 29.59 (3.8%) 42.7% 33.13 20.11 1,741 274 223 1,765 1,477 175 109 Sep-12 Jun-12 1,684 205 138 1.2x 10.1x 1.0x 8.6x

Number of Companies 5 Median: 13.9% 42.7% Total $8,552 $1,774 $6,031 $6,294 1.4x 10.1x 1.4x 9.0x

Mean: 16.1% 49.7% $1,774 1.4x 10.5x 1.3x 9.2x

Disease Management

Alere Inc. $18.50 (5.1%) (19.9%) $27.22 $17.13 $1,496 $3,600 $302 $5,402 $2,714 $607 $167 Sep-12 Dec-11 $2,782 $601 $491 2.0x 8.7x 1.9x 9.0x

Healthways Inc. 10.70 (8.6%) 56.0% 11.96 6.12 363 297 3 658 682 94 43 Sep-12 Dec-11 677 82 31 1.0x 7.0x 1.0x 8.0x


Mean: (6.9%) 18.0% $3,030 1.5x 7.8x 1.5x 8.5x

Emergency Services

Air Methods Corp. $36.91 (7.2%) 31.1% $41.40 $26.37 $1,429 $530 $4 $1,956 $828 $251 $168 Sep-12 Dec-11 $840 $249 $166 2.4x 7.8x 2.3x 7.8x

Number of Companies 1 Median: (7.2%) 31.1% Total $1,429 $1,956 $828 $840 2.4x 7.8x 2.3x 7.8x

Mean: (7.2%) 31.1% $1,956 2.4x 7.8x 2.3x 7.8x

Health Care Staffing

AMN Healthcare Services Inc. $11.55 14.8% 160.7% $12.17 $3.86 $513 $174 $4 $705 $928 $64 $49 Sep-12 Dec-11 $947 $67 $52 0.8x 11.1x 0.7x 10.6x

Cross Country Healthcare, Inc. 4.80 1.5% (13.5%) 6.73 3.80 148 35 5 175 507 10 1 Sep-12 Dec-11 510 9 (2) 0.3x 17.0x 0.3x 18.6x

On Assignment Inc. 20.28 1.8% 81.4% 20.93 10.65 1,065 440 14 1,491 1,000 103 89 Sep-12 Dec-11 1,226 124 106 1.5x 14.5x 1.2x 12.0x

Team Health Holdings, Inc. 28.77 6.0% 30.4% 30.75 19.73 1,942 511 7 2,445 1,986 192 151 Sep-12 Dec-11 2,198 205 146 1.2x 12.7x 1.1x 11.9x


Mean: 6.0% 64.7% $1,204 1.0x 13.8x 0.9x 13.3x

Company NameLTM

Period

Lastest

FYE Date

TEV/ LTM MultiplesEquity

Mkt. ValueTotal Debt

Cash and

Equiv.

Total

Ent.

Value

(TEV)

Lastest Twelve Months

(LTM)TEV/ Fwd MultiplesForward Estimate


January 2013



Stock Price

% Change 52 Week


HMO - Medical

Commercial:

Aetna Inc. $46.31 16.9% 9.8% $51.14 $34.58 $15,495 $4,686 $638 $19,542 $35,240 $3,607 $3,148 Sep-12 Dec-11 $35,426 $3,303 $2,737 0.6x 5.4x 0.6x 5.9x

Cigna Corp. 53.46 13.3% 27.3% 54.53 39.01 15,284 5,224 2,236 18,272 27,073 3,009 2,697 Sep-12 Dec-11 29,062 3,141 2,642 0.7x 6.1x 0.6x 5.8x

Coventry Health Care Inc. 44.83 7.5% 47.6% 44.97 27.72 6,030 1,585 1,262 6,353 13,830 893 771 Sep-12 Dec-11 14,132 820 670 0.5x 7.1x 0.4x 7.7x

Health Net, Inc. 24.30 8.0% (20.1%) 41.22 16.65 1,975 499 313 2,161 11,645 176 145 Sep-12 Dec-11 11,188 174 151 0.2x 12.3x 0.2x 12.4x

Humana Inc. 68.63 (2.2%) (21.7%) 96.46 59.92 10,859 1,893 1,363 11,389 38,625 2,363 2,047 Sep-12 Dec-11 38,614 2,342 2,067 0.3x 4.8x 0.3x 4.9x

UnitedHealth Group Incorporated 54.24 (2.1%) 7.0% 60.75 49.82 55,406 12,998 8,916 59,488 107,765 10,079 9,227 Sep-12 Dec-11 109,886 10,312 9,047 0.6x 5.9x 0.5x 5.8x

WellPoint Inc. 60.92 5.0% (8.0%) 74.73 52.52 18,499 14,289 2,442 30,345 61,493 5,110 4,383 Sep-12 Dec-11 60,839 4,340 3,953 0.5x 5.9x 0.5x 7.0x


Mean: 6.6% 6.0% $21,079 0.5x 6.8x 0.5x 7.1x

Government:

Centene Corp. 41.00 9.6% 3.6% 50.98 24.26 2,117 395 797 1,709 7,815 127 72 Sep-12 Dec-11 8,559 149 81 0.2x 13.5x 0.2x 11.5x

Molina Healthcare, Inc. 27.06 7.6% 21.2% 36.83 17.63 1,261 262 715 807 5,757 79 30 Sep-12 Dec-11 6,019 61 (4) 0.1x 10.2x 0.1x 13.2x

WellCare Health Plans, Inc. 48.69 (13.9%) (7.3%) 74.41 45.29 2,103 139 1,062 1,180 7,021 362 344 Sep-12 Dec-11 7,295 380 349 0.2x 3.3x 0.2x 3.1x


Mean: 1.1% 5.8% $1,232 0.2x 9.0x 0.2x 9.3x

Information Services

Data/Analytics:

Accelrys Inc. $9.05 4.5% 34.7% $9.59 $6.43 $504 $0 $93 $363 $158 $15 ($8) Sep-12 Dec-11 $167 $34 $24 2.3x 24.4x 2.2x 10.8x

National Research Corp. 54.20 7.8% 39.7% 58.23 36.58 371 13 15 370 84 27 22 Sep-12 Dec-11 87 28 23 4.4x 13.6x 4.3x 13.4x

Number of Companies 2 Median: 6.2% 37.2% Total $875 $366 $242 $253 3.4x 19.0x 3.2x 12.1x

Mean: 6.2% 37.2% $366 3.4x 19.0x 3.2x 12.1x

eHealth:

WebMD Health Corp. 14.34 2.2% (61.8%) 40.24 13.13 703 800 969 534 488 40 24 Sep-12 Dec-11 $462 $64 ($9) 1.1x 13.5x NA NA

Number of Companies 1 Median: 2.2% (61.8%) Total $703 $534 $488 $462 1.1x 13.5x NA NA

Mean: 2.2% (61.8%) $534 1.1x 13.5x NA NA

Hospital/Physician:

Allscripts Healthcare Solutions, Inc. $9.42 (24.2%) (50.3%) $21.66 $8.84 $1,615 $462 $94 $1,983 $1,484 $227 $133 Sep-12 Dec-11 $1,464 $298 $197 1.3x 8.7x 1.4x 6.7x

athenahealth, Inc. 73.29 (20.1%) 49.2% 97.37 48.75 2,658 0 112 2,478 398 50 28 Sep-12 Dec-11 423 88 64 6.2x 49.6x 5.9x 28.1x

Cerner Corporation 77.51 0.2% 26.5% 88.32 59.36 13,298 197 288 12,456 2,518 687 549 Sep-12 Dec-11 2,647 821 573 4.9x 18.1x 4.7x 15.2x

Computer Programs & Systems Inc. 50.34 (9.4%) (1.5%) 64.00 44.95 558 0 6 534 178 43 39 Sep-12 Dec-11 187 48 44 3.0x 12.6x 2.9x 11.1x

HMS Holdings Corp. 25.92 (22.4%) (18.9%) 37.19 18.50 2,253 337 128 2,462 440 134 85 Sep-12 Dec-11 475 154 93 5.6x 18.4x 5.2x 16.0x

MedAssets, Inc. 16.77 (5.8%) 81.3% 18.68 9.28 990 916 8 1,898 633 193 90 Sep-12 Dec-11 636 204 85 3.0x 9.8x 3.0x 9.3x

Merge Healthcare Incorporated 2.47 (35.3%) (49.1%) 6.90 2.20 230 250 41 436 248 46 27 Sep-12 Dec-11 250 52 42 1.8x 9.6x 1.7x 8.5x

Quality Systems Inc. 17.36 (6.3%) (53.1%) 45.00 15.04 1,031 0 117 909 456 116 104 Sep-12 Mar-12 476 127 103 2.0x 7.8x 1.9x 7.2x

Number of Companies 8 Median: (14.8%) (10.2%) Total $1,323 $2,895 $448 $476 3.0x 11.2x 2.9x 10.2x

Mean: (14.8%) (10.2%) $1,941 3.0x 11.2x 2.9x 10.2x

Forward Estimate TEV/ LTM Multiples TEV/ Fwd MultiplesCompany Name

Equity


Cash and

Equiv.

Total

Ent.

Value

(TEV)


(LTM)LTM

Period

Lastest

FYE Date


January 2013



Stock Price

% Change 52 Week


Specialty Managed Care

Assurant Inc. 34.70 (7.0%) (15.5%) 44.54 32.41 2,731 1,066 1,073 2,725 8,455 1,168 1,037 Sep-12 Dec-11 8,444 NA 893 0.3x 2.3x 0.3x NA

CorVel Corporation 44.83 0.2% (13.3%) 54.23 39.46 503 0 20 483 416 55 39 Sep-12 Mar-12 424 NA NA 1.2x 8.8x 1.1x NA

Number of Companies 2 Median: (3.4%) (14.4%) Total $3,234 $1,604 $8,871 $8,868 0.7x 5.6x 0.7x NA

Mean: (3.4%) (14.4%) $1,604 0.7x 5.6x 0.7x NA

Specialty Pharmacy Management

BioScrip Inc. $10.77 18.2% 97.3% $11.06 $5.20 $613 $226 $67 $772 $1,904 $60 $45 Sep-12 Dec-11 $657 $43 $21 0.4x 13.0x 1.2x 18.1x

Express Scripts Holding Company 54.00 (13.8%) 20.8% 66.06 45.66 44,086 17,125 1,248 59,962 78,926 4,450 3,119 Sep-12 Dec-11 94,140 5,530 5,159 0.8x 13.4x 0.6x 10.8x

Catamaran Corporation 46.93 (4.0%) 66.6% 53.47 28.73 9,628 1,272 393 10,494 7,989 307 215 Sep-12 Dec-11 9,938 352 209 1.3x 34.6x 1.1x 29.8x

Omnicare Inc. 36.10 6.3% 4.8% 36.81 29.24 3,990 2,056 647 5,374 6,188 700 563 Sep-12 Dec-11 6,138 685 570 0.9x 7.7x 0.9x 7.8x

PharMerica Corporation 14.24 12.5% (6.2%) 15.54 9.03 420 244 50 614 1,895 104 74 Sep-12 Dec-11 1,831 101 70 0.3x 5.9x 0.3x 6.1x


Mean: 5.8% 29.2% $16,681 0.6x 10.0x 0.8x 10.7x

Company NameEquity


Cash and

Equiv.

Total

Ent.

Value

(TEV)


(LTM)LTM

Period

Lastest

FYE Date

Forward Estimate TEV/ LTM Multiples TEV/ Fwd Multiples


January 2013


Products & Devices Stock Price

% Change 52 Week


Dental Products

3M Company $92.85 0.5% 13.6% $95.46 $81.99 $64,246 $6,358 $3,029 $66,083 $29,606 $7,677 $6,404 Sep-12 Dec-11 $29,737 $7,792 $6,512 2.2x 8.6x 2.2x 8.5x

DENTSPLY International Inc. 39.61 3.9% 13.2% 41.38 34.77 5,622 1,838 56 7,440 2,913 528 410 Sep-12 Dec-11 2,917 600 472 2.6x 14.2x 2.6x 12.4x

Sirona Dental Systems Inc. 64.46 13.2% 46.4% 64.57 40.59 3,544 75 151 3,471 979 249 176 Sep-12 Sep-12 1,068 290 257 3.5x 14.0x 3.3x 12.0x


Mean: 5.8% 24.4% $25,665 2.8x 12.3x 2.7x 10.9x


Hill-Rom Holdings, Inc. 28.50 (1.9%) (15.4%) 36.13 24.69 1,733 353 84 2,001 1,634 294 203 Sep-12 Sep-12 1,753 327 197 1.2x 6.8x 1.1x 6.1x

Invacare Corporation 16.30 15.3% 6.6% 20.66 12.87 521 252 35 737 1,791 107 66 Sep-12 Dec-11 1,781 NA 50 0.4x 6.9x 0.4x NA

Prism Medical Ltd. 5.22 (19.1%) 6.5% 6.67 4.87 44 14 2 56 79 9 6 Aug-12 Nov-11 78 8 NA 0.7x 6.5x 0.7x 7.1x

ResMed Inc. 41.57 2.7% 63.7% 42.94 24.41 5,948 266 891 5,323 1,393 399 315 Sep-12 Jun-12 1,497 440 356 3.8x 13.3x 3.6x 12.1x

Rotech Healthcare Inc. 0.64 23.3% (49.2%) 2.05 0.26 17 525 19 523 466 75 9 Sep-12 Dec-11 470 86 19 1.1x 7.0x 1.1x 6.1x


Mean: 4.1% 2.4% $1,728 1.5x 8.1x 1.4x 7.8x

Life Sciences Tools

Agilent Technologies Inc. $40.94 6.5% 17.2% $46.28 $35.32 $14,244 $2,362 $2,351 $14,247 $6,858 $1,420 $1,134 Oct-12 Oct-12 $7,115 $1,629 $1,374 2.1x 10.0x 2.0x 8.7x

Becton, Dickinson and Company 78.19 (0.5%) 4.6% 80.56 71.56 15,314 4,166 1,671 17,297 7,708 2,072 1,561 Sep-12 Sep-12 7,920 2,124 1,580 2.2x 8.3x 2.2x 8.1x

Life Technologies Corporation 49.03 0.4% 26.0% 51.97 39.73 8,436 2,454 274 10,607 3,810 1,238 828 Sep-12 Dec-11 3,788 1,354 1,108 2.8x 8.6x 2.8x 7.8x


Mean: 2.1% 16.0% $14,050 2.4x 9.0x 2.3x 8.2x

Medical Devices and Products

Abbott Laboratories $65.50 (4.5%) 16.5% $72.47 $53.96 $103,534 $16,280 $7,997 $108,399 $39,414 $11,452 $8,609 Sep-12 Dec-11 $39,709 $12,416 $9,811 2.8x 9.5x 2.7x 8.7x

ArthroCare Corporation 34.59 6.8% 9.2% 34.68 23.54 964 0 203 841 364 25 4 Sep-12 Dec-11 365 93 70 2.3x 33.4x 2.3x 9.0x

Baxter International Inc. 66.66 10.6% 34.7% 68.91 48.98 36,622 5,970 3,191 39,462 14,031 3,844 3,143 Sep-12 Dec-11 14,168 3,962 3,253 2.8x 10.3x 2.8x 10.0x

Boston Scientific Corporation 5.73 (0.2%) 7.3% 6.41 4.79 7,867 4,255 352 11,770 7,276 1,657 981 Sep-12 Dec-11 7,189 1,664 974 1.6x 7.1x 1.6x 7.1x

CR Bard Inc. 97.74 (6.6%) 14.3% 108.31 84.42 8,045 1,293 809 8,529 2,947 948 824 Sep-12 Dec-11 2,956 944 808 2.9x 9.0x 2.9x 9.0x

Danaher Corp. 55.90 1.4% 18.8% 57.15 47.50 38,721 4,714 1,541 41,961 18,002 4,129 3,305 Sep-12 Dec-11 18,032 3,896 3,088 2.3x 10.0x 2.3x 10.8x

Hanger, Inc. 27.36 (4.1%) 46.4% 29.60 17.44 930 509 56 1,383 961 172 139 Sep-12 Dec-11 981 166 130 1.4x 8.0x 1.4x 8.3x

Hologic Inc. 20.01 (1.0%) 14.3% 22.16 16.18 5,338 5,069 560 9,847 2,003 668 322 Sep-12 Sep-12 2,638 1,013 866 4.9x 14.7x 3.7x 9.7x

Hospira Inc. 31.24 (4.8%) 2.9% 38.49 28.62 5,161 1,796 841 6,116 4,007 376 137 Sep-12 Dec-11 4,033 629 456 1.5x 14.9x 1.5x 9.7x

Johnson & Johnson 70.10 1.7% 6.9% 72.74 61.71 194,265 16,851 15,486 191,345 65,921 20,446 16,973 Sep-12 Jan-12 67,349 21,386 17,628 2.9x 9.4x 2.8x 8.9x

Medtronic, Inc. 41.02 (4.9%) 7.2% 44.79 35.67 41,486 11,538 1,759 50,349 16,318 5,447 4,642 Oct-12 Apr-12 16,518 6,038 5,256 3.1x 9.2x 3.0x 8.3x

Stryker Corporation 54.82 (1.5%) 10.3% 57.15 49.43 20,843 1,769 1,423 18,749 8,534 2,488 2,002 Sep-12 Dec-11 8,588 2,537 2,053 2.2x 7.5x 2.2x 7.4x

Thermo Fisher Scientific, Inc. 63.78 8.4% 41.8% 65.54 45.67 22,975 7,472 832 29,610 12,507 2,571 1,592 Sep-12 Dec-11 12,394 2,587 2,330 2.4x 11.5x 2.4x 11.4x

Zimmer Holdings, Inc. 66.66 (1.4%) 24.8% 69.09 52.70 11,566 1,734 802 11,817 4,459 1,499 1,135 Sep-12 Dec-11 4,466 1,682 1,319 2.7x 7.9x 2.6x 7.0x


Mean: (0.0%) 18.2% $37,870 2.6x 11.6x 2.5x 9.0x

Medical / Surgical / Dental Supplies

AmerisourceBergen Corporation $43.18 11.5% 16.1% $44.02 $35.48 $10,168 $1,447 $1,067 $10,548 $79,490 $1,426 $1,284 Sep-12 Sep-12 $85,555 $1,458 $1,293 0.1x 7.4x 0.1x 7.2x

Cardinal Health, Inc. 41.18 5.7% 1.4% 44.49 36.91 13,992 2,879 2,440 14,383 106,649 2,230 1,895 Sep-12 Jun-12 99,370 2,267 1,955 0.1x 6.4x 0.1x 6.3x

Henry Schein, Inc. 80.42 1.5% 24.8% 82.91 64.74 7,076 609 89 7,974 8,872 738 616 Sep-12 Dec-11 8,924 742 617 0.9x 10.6x 0.9x 10.7x

McKesson Corporation 96.96 12.7% 24.5% 100.00 74.89 22,886 3,581 2,831 23,636 123,186 2,960 2,398 Sep-12 Mar-12 123,049 3,143 2,644 0.2x 8.0x 0.2x 7.5x

Owens & Minor Inc. 28.51 (4.6%) 2.6% 31.49 26.97 1,807 215 80 1,944 8,779 251 216 Sep-12 Dec-11 8,870 252 212 0.2x 7.7x 0.2x 7.7x

Patterson Companies, Inc. 34.23 (0.0%) 16.0% 36.42 29.00 3,719 775 500 3,993 3,588 398 353 Oct-12 Apr-12 3,629 405 358 1.1x 10.0x 1.1x 9.9x


Mean: 4.5% 14.2% $10,413 0.4x 8.4x 0.4x 8.2x

TEV/ Fwd MultiplesCash and

Equiv.

Total

Ent.

Value

(TEV)


(LTM)LTM

Period

Lastest

FYE DateCompany Name

Equity


TEV/ LTM MultiplesForward Estimate


January 2013


Provider-Based Services Stock Price

% Change 52 Week


Acute-Care Hospitals

Community Health Systems, Inc. $30.74 5.5% 76.2% $32.70 $16.37 $2,749 $9,781 $241 $12,718 $14,669 $1,899 $1,208 Sep-12 Dec-11 $12,986 $1,929 $1,199 0.9x 6.5x 1.0x 6.6x

Health Management Associates Inc. 9.32 11.1% 26.5% 9.33 4.81 2,389 3,684 35 5,907 6,621 942 603 Sep-12 Dec-11 6,721 969 615 0.9x 6.3x 0.9x 6.1x

HCA Holdings, Inc. 30.17 (9.3%) 36.9% 34.32 20.33 13,363 27,399 472 41,525 35,674 6,545 4,904 Sep-12 Dec-11 36,191 6,434 4,751 1.2x 6.3x 1.1x 6.5x

Lifepoint Hospitals Inc. 37.75 (11.8%) 1.6% 43.87 34.32 1,863 1,664 98 3,481 3,880 537 332 Sep-12 Dec-11 3,968 530 338 0.9x 6.5x 0.9x 6.6x

Tenet Healthcare Corp. 32.47 29.5% 58.2% 33.86 17.24 3,457 4,751 83 8,231 9,939 1,182 753 Sep-12 Dec-11 9,715 1,180 764 0.8x 7.0x 0.8x 7.0x

Universal Health Services Inc. 48.35 5.7% 24.4% 49.75 36.37 4,700 3,489 26 8,452 7,666 1,209 906 Sep-12 Dec-11 7,561 1,182 883 1.1x 7.0x 1.1x 7.2x


Mean: 5.1% 37.3% $13,386 1.0x 6.6x 1.0x 6.6x

Assisted Living

Assisted Living Concepts Inc. $9.75 27.8% (34.5%) $20.33 $6.93 $226 $180 $3 $402 $230 $53 $30 Sep-12 Dec-11 $228 $43 ($31) 1.7x 7.5x 1.8x 9.2x

Brookdale Senior Living Inc. 25.32 9.0% 45.6% 26.11 14.99 3,104 2,577 43 5,638 2,419 376 124 Sep-12 Dec-11 2,692 361 102 2.3x 15.0x 2.1x 15.6x

Capital Senior Living Corp. 18.69 29.2% 135.4% 18.77 7.32 512 333 48 797 294 47 15 Sep-12 Dec-11 308 52 15 2.7x 17.2x 2.6x 15.4x

Emeritus Corp. 24.72 18.1% 41.2% 24.83 14.24 1,116 2,208 97 3,226 1,300 227 90 Sep-12 Dec-11 1,356 239 99 2.5x 14.4x 2.4x 13.5x

Five Star Quality Care Inc. 5.01 (2.0%) 67.0% 5.98 2.92 240 64 14 280 1,294 45 19 Sep-12 Dec-11 1,365 47 20 0.2x 6.2x 0.2x 6.0x

Skilled Healthcare Group, Inc. 6.37 (0.9%) 16.7% 8.41 4.97 246 454 3 696 869 103 78 Sep-12 Dec-11 874 104 78 0.8x 6.7x 0.8x 6.7x


Mean: 13.5% 45.2% $1,840 1.7x 11.2x 1.6x 11.1x

Diagnostic Imaging

Alliance Healthcare Services, Inc. $6.38 (9.5%) 1.3% $10.95 $3.61 $66 $631 $79 $666 $478 $153 $48 Sep-12 Dec-11 NA NA NA 1.4x 4.2x NA NA

RadNet, Inc. 2.53 (9.0%) 18.8% 3.64 1.87 97 552 0 649 681 113 54 Sep-12 Dec-11 655 108 51 1.0x 5.5x 1.0x 6.0x

Varian Medical Systems Inc. 70.24 16.4% 4.6% 72.61 52.90 7,668 161 705 7,075 2,807 658 597 Sep-12 Sep-12 3,044 700 638 2.5x 10.8x 2.3x 10.1x


Mean: (0.7%) 8.2% $2,797 1.6x 6.8x 1.7x 8.1x

Dialysis Services

DaVita HealthCare Partners Inc. $110.53 6.7% 45.8% $116.50 $76.60 $11,581 $5,761 $382 $17,637 $7,789 $1,636 $1,329 Sep-12 Dec-11 $8,183 $1,715 $1,376 2.3x 10.7x 2.2x 10.3x

Fresenius Medical Care AG & Co. KGAA 0.00 (6.2%) 1.0% 79.43 66.68 21,046 8,447 619 29,907 13,624 2,779 2,189 Sep-12 Dec-11 13,746 2,906 2,308 2.1x 10.4x 2.2x 10.3x


Mean: 0.2% 23.4% $23,772 2.2x 10.6x 2.2x 10.3x

Home Care / Hospice

Addus HomeCare Corporation $7.15 33.6% 100.2% $7.64 $3.18 $77 $22 $2 $98 $278 $13 $10 Sep-12 Dec-11 $281 $14 $12 0.4x 7.6x 0.3x 7.0x

Almost Family Inc. 20.26 (4.8%) 22.2% 26.87 16.08 189 1 43 147 351 33 31 Sep-12 Dec-11 348 33 29 0.4x 4.4x 0.4x 4.4x

Amedisys Inc. 11.31 (18.2%) 3.6% 15.95 9.35 350 122 39 450 1,497 105 65 Sep-12 Dec-11 1,498 96 55 0.3x 4.2x 0.3x 4.7x

Gentiva Health Services Inc. 10.05 (11.2%) 48.9% 12.85 5.13 308 938 156 1,091 1,737 183 154 Sep-12 Dec-11 1,720 183 155 0.6x 6.0x 0.6x 6.0x

LHC Group, Inc. 21.30 15.3% 66.0% 22.21 12.53 375 25 0 414 633 64 57 Sep-12 Dec-11 637 61 54 0.7x 6.5x 0.7x 6.8x

Chemed Corp. 68.59 (1.0%) 33.9% 72.10 49.13 1,323 173 69 1,427 1,412 182 158 Sep-12 Dec-11 1,426 198 160 1.0x 7.8x 1.0x 7.2x

Number of Companies 6 Median: (2.9%) 41.4% Total $329 $605 $1,023 $1,032 0.5x 6.2x 0.5x 6.4x

Mean: 2.3% 45.8% $605 0.6x 6.1x 0.6x 6.0x

Long-Term Care

The Ensign Group, Inc. $27.15 (11.3%) 10.8% $31.25 $23.40 $586 $203 $32 $763 $806 $117 $89 Sep-12 Dec-11 $829 $129 $100 0.9x 6.5x 0.9x 5.9x

Kindred Healthcare Inc. 10.82 (4.9%) (8.1%) 13.62 7.60 577 1,622 36 2,119 6,164 395 197 Sep-12 Dec-11 6,222 433 235 0.3x 5.4x 0.3x 4.9x

National Healthcare Corp. 47.02 (1.5%) 12.2% 49.68 40.55 657 10 84 656 741 95 65 Sep-12 Dec-11 744 NA NA 0.9x 6.1x 0.9x NA


Mean: (5.9%) 5.0% $1,179 0.7x 6.0x 0.7x 5.4x

TEV/ LTM Multiples TEV/ Fwd MultiplesCompany Name

Equity


Cash and

Equiv.

Total

Ent.

Value

(TEV)


(LTM)LTM

Period

Lastest

FYE Date

Forward Estimate


January 2013


Provider-Based Services Stock Price

% Change 52 Week


Physician Practice Management

Multispecialty / Primary Care:

IPC The Hospitalist Company, Inc. $39.71 (13.1%) (13.1%) $48.42 $29.70 $662 $0 $25 $637 $504 $55 $51 Sep-12 Dec-11 $520 $56 $52 1.3x 11.6x 1.2x 11.3x

Number of Companies 1 Median: (13.1%) (13.1%) Total $662 $637 $504 $520 1.3x 11.6x 1.2x 11.3x

Mean: (13.1%) (13.1%) $637 1.3x 11.6x 1.2x 11.3x

Specialty:

MEDNAX, Inc. 79.52 6.8% 10.4% 81.73 59.24 3,813 48 66 3,790 1,750 408 378 Sep-12 Dec-11 1,819 422 391 2.2x 9.3x 2.1x 9.0x


Mean: 6.8% 10.4% $3,790 2.2x 9.3x 2.1x 9.0x

Dental:

Birner Dental Management Services Inc. $16.36 1.7% 6.9% $19.49 $15.75 $31 $5 $1 $36 $62 $4 $1 Sep-12 Dec-11 NA NA NA 0.6x 8.4x NA NA

Number of Companies 1 Median: 1.7% 6.9% Total $31 $36 $62 $0 0.6x 8.4x NA NA

Mean: 1.7% 6.9% $36 0.6x 8.4x NA NA

Psychiatric Hospitals / Management

Magellan Health Services Inc. $49.00 (5.1%) (1.0%) $56.58 $40.24 $1,355 $0 $209 $1,077 $3,099 $207 $175 Sep-12 Dec-11 $3,210 $247 $183 0.3x 5.2x 0.3x 4.4x

Providence Service Corp. 16.99 30.8% 23.5% 16.99 9.56 217 141 64 301 1,064 40 26 Sep-12 Dec-11 1,103 43 25 0.3x 7.4x 0.3x 7.0x

Universal Health Services Inc. 48.35 5.7% 24.4% 49.75 36.37 4,700 3,489 26 8,452 7,666 1,209 906 Sep-12 Dec-11 7,561 1,182 883 1.1x 7.0x 1.1x 7.2x


Mean: 10.5% 15.6% $2,458 0.4x 4.9x 0.6x 6.2x

Surgicenters / Rehabilitation

Surgery Centers:

AmSurg Corp. $30.01 5.7% 15.2% $32.17 $24.80 $951 $398 $36 $1,624 $915 $307 $276 Sep-12 Dec-11 $926 $312 $281 1.8x 5.3x 1.8x 5.2x

Number of Companies 1 Median: 5.7% 15.2% Total $951 $1,624 $915 $926 1.8x 5.3x 1.8x 5.2x

Mean: 5.7% 15.2% $1,624 1.8x 5.3x 1.8x 5.2x

Rehabilitation / Long Term Acute Care:

HEALTHSOUTH Corp. $21.11 (12.3%) 19.5% $24.99 $16.55 $2,019 $1,242 $163 $3,552 $2,127 $498 $417 Sep-12 Dec-11 $2,146 $492 $417 1.7x 7.0x 1.7x 7.2x

Select Medical Holdings Corporation 9.43 (16.0%) 11.2% 14.89 6.94 1,325 1,355 50 2,664 2,926 396 330 Sep-12 Dec-11 2,956 405 339 0.9x 6.6x 0.9x 6.6x

US Physical Therapy Inc. 27.54 (0.3%) 39.9% 28.40 18.51 327 17 11 350 250 43 38 Sep-12 Dec-11 252 38 39 1.4x 8.1x 1.4x 9.2x


Mean: (9.5%) 23.5% $2,189 1.3x 7.2x 1.3x 7.7x

Company NameEquity


Cash and

Equiv.

Total

Ent.

Value

(TEV)


(LTM)LTM

Period

Lastest

FYE Date

Forward Estimate TEV/ LTM Multiples TEV/ Fwd Multiples

13

M&A Detail

January 2013

Announced U.S. Healthcare & Life Sciences

M&A

Enterprise Enterprise Value / LTM Private EquityAnnounced Target Seller Buyer Value ($mm) Sales EBITDA EBIT Involvement

12/31/2012 Atlantic Dermatology Associates, P.A. - Dermatology Clinics of Southwest Virginias, PLLC

- - - - No

12/31/2012 Lenox Hill Radiology & Medical Imaging Associates P.C.

- RadNet, Inc. (NasdaqGM:RDNT) $30.3 - - - No

12/31/2012 Michiana Hematology Oncology Medical Office Building

- American Realty Capital Healthcare Trust, Inc.

$21.7 - - - No

12/31/2012 Triarco Industries, LLC - Innophos, Inc. $45.8 1.8x - - No12/31/2012 North Valley Orthopedic Surgery Center,

Phoenix- American Realty Capital Healthcare

Trust, Inc.$9.0 - - - No

12/31/2012 OralDNA Labs, Inc. Quest Diagnostics Inc. (NYSE:DGX) Access Genetics, LLC - - - - No12/31/2012 Prescription Containers, Inc. - MWI Veterinary Supply, Inc.

(NasdaqGS:MWIV)$17.0 0.5x - - No

12/31/2012 JHP Pharmaceuticals, LLC Morgan Stanley Principal Investments, Inc.

Warburg Pincus LLC $195.0 - - - Yes

12/28/2012 Correctional Healthcare Companies, Inc. Enhanced Equity Fund, L.P.; Gemini Investors

GTCR, LLC - - - - Yes

12/28/2012 Acuo Technologies, LLC - Perceptive Software, Inc. $45.0 - - - No12/28/2012 Exos Corporation Enova Medical Technologies, LLC;

Product Innovations Inc.DJO, LLC - - - - No

12/28/2012 148-bed Edison New Jersey Senior Living Campus

National Health Investors Inc. (NYSE:NHI)

Sunrise Senior Living Inc. (NYSE:SRZ)

$23.0 - - - No

12/28/2012 Cobrek Pharmaceuticals, Inc. Pentech Pharmaceuticals, Inc. Perrigo Co. (NasdaqGS:PRGO) $55.2 - - - No12/27/2012 Cambridge Major Laboratories, Inc. Arlington Capital Partners; Palladon

Ventures Ltd. American Capital, Ltd. (NasdaqGS:ACAS)

$212.0 2.1x - - Yes

12/26/2012 Six Skilled Health Care Centers National Health Investors Inc. (NYSE:NHI)

National Healthcare Corp. (AMEX:NHC)

$21.0 - - - No

12/26/2012 CV Ingenuity Corp. New Enterprise Associates; Western Technology Investment

Covidien plc (NYSE:COV) - - - - Yes

12/24/2012 Milestone Retirement Communities, LLC, Three Assisted Living Facilities in Oregon and Idaho

Milestone Retirement Communities, LLC

National Health Investors Inc. (NYSE:NHI)

$9.0 - - - Yes

12/24/2012 North Portland Veterinary Hospital - VCA Antech Inc. (NasdaqGS:WOOF)

- - - - No

12/21/2012 Liquent, Inc. Marlin Equity Partners, LLC PAREXEL International Corporation (NasdaqGS:PRXL)

$72.0 - - - Yes

12/21/2012 South Oakland Anesthesia Associates, PC - American Anesthesiology, Inc. - - - - No12/21/2012 Endo Pharmaceuticals, Inc., Global Rights to

UrocidinEndo Pharmaceuticals, Inc. Bioniche Life Sciences Inc.

(TSX:BNC)- - - - No

12/21/2012 AHI Software, Inc. - RelayHealth Corporation - - - - No12/21/2012 ATI Holdings, LLC GTCR, LLC KRG Capital Partners - - - - Yes12/21/2012 MicroLiter Analytical Supplies, Inc. - Alcan Global Pharmaceutical

Packaging, Inc.- - - - No

12/21/2012 Invacare Supply Group, Inc. Invacare Corporation (NYSE:IVC) AssuraMed Holding, Inc. $150.0 0.5x - 18.8x No12/21/2012 PathCentral Inc., Diagnostic Laboratory

BusinessPathCentral, Inc. Ascend Clinical, LLC - - - - No

12/21/2012 Sneakers Software, Inc. - IDEXX Computer Systems, Inc. - - - - No12/21/2012 The Garretson Firm Resolution Group, Inc. Pfingsten Partners, L.L.C. Harvest Partners, LLC - - - - Yes12/20/2012 B&B Pharmaceuticals, Inc. - Fagron Group BV - - 5.5x - No12/20/2012 King Systems Corporation Consort Medical plc. (LSE:CSRT) Ambu A/S (CPSE:AMBU B) $170.0 1.2x - - No12/20/2012 PhysIOM Group, LLC - ProNerve, LLC - - - - No12/20/2012 AmeriCare Health Services, Inc. - Epic Health Services, Inc. - - - - No

12/20/2012 Midwest Acute Care Consultants, P.C. - IPC The Hospitalist Company, Inc. (NasdaqGS:IPCM)

- - - - No

12/20/2012 Dendreon Corp., Immunotherapy Manufacturing Facility Based in Morris Plains, New Jersey

Dendreon Corp. (NasdaqGS:DNDN) Novartis Pharmaceuticals Corporation $43.0 - - - No

12/20/2012 InQuiry Research, LLC, Clinical Services and Business Development Components

InQuiry Research, LLC DZS Software Solutions, Inc. - - - - No

12/19/2012 93,000-Square-Foot Outpatient Facility and Wellness Center in Knightdale

NexCore Healthcare Capital Corp. (OTCPK:NXHC); Heitman Capital Management LLC

Ventas, Inc. (NYSE:VTR) $24.8 - - - No

12/19/2012 Santé Pediatric Services Petra Capital Partners, LLC; Transition Capital Partners, Ltd.;

Epic Health Services, Inc. - - - - No

12/19/2012 AHCP, P.C. - IPC The Hospitalist Company, Inc. (NasdaqGS:IPCM)

- - - - No

12/19/2012 Merrimack Health Group, Inc, Three Building Merrimack Health Group, Inc. Griffin-American Healthcare REIT II, $24.4 - - - No12/18/2012 MicroSurgical Technology, Inc. - Halma plc (LSE:HLMA) $100.0 4.9x - - No

12/18/2012 MoMelan Technologies, Inc. BioVentures Investors, LLC; Life Science Angels, Inc.; KLP

Kinetic Concepts Inc. - - - - Yes

14

M&A Detail

January 2013


M&A (Continued)


12/18/2012 Juniper Communities, LLC, Real Estates Juniper Communities, LLC LTC Properties Inc. (NYSE:LTC) $94.0 - - - No12/17/2012 Healthcare Productivity Automation, LLC - The TriZetto Group, Inc. - - - - No

12/17/2012 Richland Hills Nursing and Rehabilitation Center - The Ensign Group, Inc. - - - - No12/17/2012 Vital Decisions, LLC - MTS Health Investors, LLC - - - - Yes12/17/2012 Creative Health Concepts Inc. - WeiserMazars LLP, Investment Arm - - - - No

12/17/2012 URL Pharma, Inc., Non-Colcrys (Colchicine, URL Pharma, Inc. Caraco Pharmaceutical Laboratories - - - - No12/17/2012 eHC Solutions, Inc. - Recondo Technology, Inc. - - - - No

12/17/2012 Diagnostic Clinic Medical Group, P.A. - Blue Cross and Blue Shield of Florida, - - - - No12/17/2012 Homecare Advantage, Inc. - Kindred Healthcare Inc. (NYSE:KND) $2.0 0.8x - - No12/17/2012 Greater Houston Anesthesiology, P.A. - U.S. Anesthesia Partners, Inc. - - - - No12/17/2012 St. Mary's Healthcare Center Catholic Health Initiatives Avera Health - - - - No12/17/2012 Central Texas Urgent Care, P.A. - NextCare, Inc. - - - - No

12/17/2012 Eye Health Vision Centers, LLC - First New England Capital, L.P.; Eagle Private Capital; Pine Street Capital

- - - - Yes

12/16/2012 Morphosys AG, AbD Serotec Business Morphosys AG (XTRA:MOR) Bio-Rad Laboratories, Inc. (NYSE:BIO)

$63.1 - - - No

12/15/2012 Cypress Tulsa Realty LLC, 29,886 Square Foot Tulsa Complex

Cypress Tulsa Realty LLC Tulsa OK Care Group LLC $9.5 - - - No

12/15/2012 Cypress OKC Realty LLC, 29,524 Square Foot in Oklahoma City

Cypress OKC Realty LLC Oklahoma City Care Group, LLC $9.5 - - - No

12/15/2012 Mobile Emergency Group, P.C. - Team Health Holdings, Inc. - - - - No12/14/2012 Worldwide Strategies Inc. (OTCBB:WWSG) - Euzkadi Corporation of America, S.A. - - - - No

12/14/2012 Memory Dx LLC, Worldwide License to Develop, Manufacture, Market, Sell and Import

Memory Dx, LLC Amarantus BioScience, Inc. (OTCBB:AMBS)

$1.1 - - - No

12/14/2012 Northeast Anesthesiology, Inc. and Anesthesiology Solution, LLC

- North American Partners In Anesthesia, L.L.P.

- - - - No

12/14/2012 322 Units, Nine Facility Senior Housing - Sabra Health Care REIT, Inc. $49.0 - - - No12/14/2012 Scott and White Hospital and Clinic - Baylor Health Care System Inc. - - - - No12/14/2012 Memphis Primary Care Associates, PLLC - Baptist Medical Group, LLC - - - - No

12/13/2012 Bryce Rx Laboratories, Inc. - Sunpeaks Ventures, Inc. $1.1 - - - No12/13/2012 Amerita, Inc. Ferrer Freeman & Company, LLC PharMerica Corporation (NYSE:PMC) - - - - Yes

12/13/2012 eBioscience, Inc., TrueBlot IP/Western Blot eBioscience, Inc. Rockland Immunochemicals, Inc. - - - - No12/13/2012 Infectious Diseases Associates P.C. - Integrated Health Associates, Inc. - - - - No

12/12/2012 HomeChoice Partners, Inc. DaVita HealthCare Partners Inc. BioScrip Inc. (NasdaqGS:BIOS) $90.0 1.3x - - No12/12/2012 Raj K. Bansal, M.D., P.C. - MEDNAX, Inc. (NYSE:MD) - - - - No

12/12/2012 eCast Corporation, Electronic Medical Record eCast Corporation Global Record Systems, LLC - - - - No12/12/2012 MediServe Information Systems, Inc. - Mediware Information Systems, Inc. - - - - No12/11/2012 Touch Medical Solutions, Inc. Wake Forest University DMH International, Inc. - - - - No12/11/2012 Scisive Consulting, LP - Bionest Partners - - - - No

12/11/2012 Incline Therapeutics, Inc. Adams Street Partners, LLC; Frazier Healthcare Ventures; Technology

The Medicines Company (NasdaqGS:MDCO)

$390.0 - - - Yes

12/11/2012 General Electric Company, Laboratory Filter and Membrane Business

General Electric Company (NYSE:GE)

Maine Manufacturing, LLC - - - - No

12/11/2012 LifeCare Holdings, Inc. The Carlyle Group LP - - - - - Yes12/11/2012 Click4Care, Inc. Psilos Group HealthEdge Software, Inc. - - - - Yes12/11/2012 Marion Regional Cancer Center, LLC - OhioHealth Corporation - - - - No

12/10/2012 Somaxon Pharmaceuticals, Inc. Montreux Equity Partners; MPM Pernix Therapeutics Holdings, Inc. $16.5 1.4x - - Yes12/10/2012 Pfizer Inc., Meningitec Vaccine Pfizer Inc. (NYSE:PFE) Nuron Biotech Inc. - - - - No12/10/2012 Plum Healthcare Group, LLC GI Partners - - - - - Yes12/10/2012 Home Healthcare Connection, Inc. - Encompass Home Health, Inc. - - - - No12/10/2012 The Medical Center of Newark, LLC - Licking Memorial Hospital $26.0 - - - No12/7/2012 Mercy Hospital, Portland, Maine Catholic Health East Eastern Maine Healthcare Systems - - - - No

12/7/2012 Liberty Medical Supply, Inc. Express Scripts Holding Company - - - - - No12/6/2012 Boyd Industries, Inc. - Salt Creek Capital Management, LLC - - - - Yes12/6/2012 Heartland Phone Friends, LLC - Senior Service Concierge, LLC - - - - No12/6/2012 GEO Care, Inc. The GEO Group, Inc. (NYSE:GEO) - $41.0 0.2x - - No

12/6/2012 Houston Surgery Center Property - Carter Validus Mission Critical REIT, $4.7 - - - No12/6/2012 Culpepper Place of Fayetteville Foster Hospitality Group, L.L.C. CNL Lifestyle Properties, Inc. $14.0 - - - No

15

M&A Detail

January 2013

Turner Bredrup Managing Director

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

Cheairs Porter Managing Director


James Clark Managing Director


Todd Morris Managing Director


Geoff Smith Director


Andy Dixon Vice President


Contacts

Whit Knier Vice President


Paul Hepper Vice President


Andy Hewlett Vice President



M&A (Continued)


12/6/2012 NKY Med, LLC - Pinnacle Treatment Centers, Inc. - - - - No12/6/2012 Orthopaedic & Trauma Surgeons, Inc. - Columbus Orthopaedic Group, Inc. - - - - No

12/6/2012 Buffalo General Medical Center, Psych and Rehabilitation/Detoxification Units

Buffalo General Medical Center The Erie County Medical Center - - - - No

12/5/2012 Faith Prosthetic-Orthotic Services Inc and - Hanger, Inc. (NYSE:HGR) - - - - No12/5/2012 New Alliance Pharmaceuticals, Inc. - Sanguine Corp. (OTCPK:SGUI) - - - - No

12/5/2012 Salar, Inc. Transcend Services, Inc. Constellation HomeBuilder Systems, - - - - No12/5/2012 Martin, Fletcher, & Associates, LP Highlander Partners, L.P. Parallon Business Solutions, LLC - - - - No

12/5/2012 Principal Senior Living Group LLC, Benton House of Newnan

Principal Senior Living Group LLC American Realty Capital Healthcare Trust, Inc.

$20.6 - - - No

12/5/2012 East Valley Medical & Diagnostic Center and - SKAGIT County Washington Public - - - - No12/4/2012 Mission Road Pharmacy Inc. - Salveo Specialty Pharmacy, Inc. - - - - No12/4/2012 Venta Medical, LLC - Laserage Technology Corporation - - - - No

12/4/2012 Alta Oakridge Property in North Raleigh and Bell Partners Inc. Capitol Seniors Housing LLC $47.5 - - - No12/3/2012 CHMG Cardiovascular and Thoracic Care - Colorado Health Medical Group, LLC - - - - No12/3/2012 Young Innovations Inc. (NasdaqGS:YDNT) Eaton Vance Management Linden LLC $305.4 2.8x 10.4x 12.0x Yes12/3/2012 Saint Michael's Medical Center, Inc. Catholic Health East Prime Healthcare Services, Inc. - - - - No12/3/2012 DeKalb Anesthesia Associates, P.A. - American Anesthesiology, Inc. - - - - No12/3/2012 NetLearning, Inc. Delmar-Cengage Learning, Inc. Call24, Inc. - - - - No12/3/2012 PeriOptix Inc - Den-Mat Holdings, LLC - - - - No12/3/2012 Sensia Healthcare Inc. - U.S. Healthworks, Inc. - - - - No12/3/2012 Metropolitan ENT Associates Inc. - University of Pittsburgh Medical - - - - No12/3/2012 Solamor Hospice, Inc. Sun Healthcare Group, Inc. National Hospice Holdings, LLC $85.0 - - - No

12/1/2012 Crux Biomedical Inc. Alloy Ventures, Inc.; Three Arch Volcano Corporation $39.0 - - - Yes12/1/2012 StarPlus EMS - Acadian Ambulance Service, Inc. - - - - No

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]

16

Sources: Capital IQ. Thomson Financial. S&P. Reuters. Bloomberg. Irving Levin Associates. 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 Services Authority (FRN #540892). 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 AT +1 (804) 648-0072. 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.

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