healthcare providers & facilities...05/01/14 american caresource holdings, inc. correctmed, llc...

1 HEALTHCARE

PROVIDERS & FACILITIES

M A R K E T M O N I T O R

S U M M E R 2 0 1 4

Healthcare Providers & Facilities

2 HEALTHCARE


Contents

INDUSTRY UPDATE 3

M&A ACTIVITY & VALUATIONS 4

EQUITY-RELATED CAPITAL RAISES 8

PUBLIC STOCK PERFORMANCE & VALUATIONS 11

MOSS ADAMS CAPITAL OVERVIEW 16

SELECTED MOSS ADAMS CAPITAL TRANSACTIONS 18

CONTACT INFORMATION 19

3 HEALTHCARE


Notable directional proof of payor mix shifts for the acute care hospitals

Both Medicaid and managed Medicaid are up significantly.

Despite showing strong increases in recent years, both Self-Pay and Other are down.

Volumes shifting from Fee-for-Service Medicare to Medicare Advantage.

Volume trends have remained extraordinarily weak

Some of the volume weakness explained by severe weather and a weak flu season.

Additionally pressure due to the shift of one-day (in-patient) admissions to outpatient care.

Much of the trend can also be attributed to larger structural changes that continue.

Independent clinical labs continue to lose market share

Hospitals are eating into the market share as outreach labs increase work flow from acquired physician groups.

With the decreasing percentage of independent physician groups, this will continue to be a headwind for the clinical labs.

Sources: Accenture, Wall Street Journal, Company 10-Q filings, Moss Adams Capital analysis.

Focus Remains on the Impact of Affordable Care Act

57% 55% 53% 52% 50% 49% 47% 46% 44% 43% 42% 41% 39% 36%

0%

10%

20%

30%

40%

50%

60%

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13

Percentage of Physician Practices that are Independent

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U.S. middle market M&A transaction volume in Q1 2014 rose 28% from one year ago but stayed flat compared to the prior quarter.

In deal value terms, U.S. middle market M&A activity in Q1 2014 grew 25% from a year earlier but dropped 22% compared to the prior quarter.

Q1 2014 EBITDA multiples of middle market transactions fell slightly from the prior quarter but increased significantly from year ago levels.

EBITDA valuation levels of middle market deals remain at high levels last seen in Q4’10.

Q1’14 EBITDA margins of reportable transactions showed higher levels vs both last year and quarter.

Middle Market M&A: Continued Flat Volumes, High Deal Valuations

U.S. Middle Market M&A 1 U.S. Middle Market M&A Valuations 2

1) Middle market M&A includes transactions with undisclosed values, and disclosed values where EV < $500 million. 2) Middle market M&A includes transactions with disclosed EBITDA, where EV < $500 million and EV/EBITDA < 10x. Note: transactions with disclosed EBITDA represent <5% of all transactions. Source: S&P Capital IQ.

1,828 1,895

2,011

2,281

2,855 2,953 2,927

3,080 2,984

3,682 3,681

3,852

3,539 3,453

3,622

3,986

3,134

3,319

4,092 4,054 3,997

$21$25

$28

$36$32

$43

$56 $55

$47

$71 $72$70

$52$56

$52

$66

$44

$50

$65

$71

$55

$0

$20

$40

$60

$80

$100

$120

$140

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2009 2010 2011 2012 2013 2014

Tran

saction

Valu

e ($b

n)N

um

ber

of

Tra

nsa

ctio

ns

Number Value

5.7x 5.6x 5.7x

6.4x

4.8x

6.7x

6.4x

7.0x6.7x 6.8x 6.8x 6.9x

5.9x

6.4x6.2x 6.2x 6.4x

6.0x6.2x

7.2x7.0x

18.1%

10.7%11.3%

16.7%

15.0%14.2%

15.3%14.5%

16.7%16.6%16.9%

15.0%

12.4%13.0%

14.6%

16.7%

15.3%14.8%13.7%

10.6%

17.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0.0 x

1.0 x

2.0 x

3.0 x

4.0 x

5.0 x

6.0 x

7.0 x

8.0 x

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2009 2010 2011 2012 2013 2014

EB

ITD

A M

argin

EV

/Tra

ilin

g E

BIT

DA

Mu

ltip

le

EV/EBITDA EBITDA Margin

5 HEALTHCARE


Sources: S&P Capital IQ. Public Companies in bold.

Recent Healthcare Providers & Facilities M&A Transactions $ in millions

Transaction

Announced Acquirer/Investor Target Target Description Value

05/30/14 SFMP, Inc. Memphis Surgery Associates, PC Provides surgical care services to patients and their families. --

05/30/14 Baptist Health South Florida, Inc. MaxCare Urgent Treatment Center Provides healthcare services. --

05/29/14 IPC The Hospitalist Company, Inc. Eastside Medical Consultants, LLC Provides hospitalist services. --

05/29/14 Lifecare Hospitals, LLC Kindred Hospital-Pittsburgh-North Shore, L.L.C. A community hospital. --

05/25/14 Summit Behavioral Healthcare, LLC Valley Recovery Center of California Offers alcohol and drug addiction treatment services. --

05/22/14 The Peebles Corporation; The Witkoff Group LLC Long Island College Hospital Inc. Operates as community hospital and medical school. $260.0

05/21/14 Silver Point Capital L.P. Specialty Hospitals of America, LLC Manages, operates, and develops acute care hospitals and nursing facilities. --

05/21/14 Silver Point Capital L.P. Specialty Hospital of Washington LLC Provides long-term intensive medical care services. $15.0

05/21/14 Private Investor Riverchase Village ADK, LLC Owns and operates a senior living community. --

05/20/14 Concordia Lutheran Ministries Cedars of Monroeville Offers personal care and skilled nursing care. $3.8

05/19/14 CHP Partners LP HealthSouth Rehabilitation Hospital of Desert Canyon, LLCOperates an inpatient rehabilitation hospital. $22.3

05/19/14 CHP Partners LP Victory Medical Center Beaumont, LP A surgical hospital. $33.6

05/19/14 CHP Partners LP Southwest Surgical Hospital Provides surgical and emergency services. $29.5

05/14/14 Hospice of Chesterfield County, Inc., Endowment ArmSpringhill Assisted Living Retirement Community, Inc.Operates a 32-bed assisted living facility. --

05/13/14 Senior Care Centers of America, Inc. Senior Care of Clifton Heights An adult day health service center. --

05/13/14 Signature Hospice, Home Health and Home Care XL Hospice, Inc. Provides hospice and end-of-life care services. --

05/13/14 Alecto Healthcare Services LLC Fairmont General Hospital, Inc. A community hospital. $15.3

05/09/14 Maxim Management Group, LLC Leesville Rehabilitation Hospital LLC Operates rehabilitation hospital. --

05/08/14 IPC The Hospitalist Company, Inc. Total InPatient Services, P.A. Operates acute care and post-acute facilities. --

05/07/14 The Ensign Group, Inc. Washington Heights Healthcare, Inc. Health and Rehab Center. --

05/01/14 American Caresource Holdings, Inc. CorrectMed, LLC Owns and operates urgent and primary care centers. $2.7

04/29/14 University Wisconsin Health SwedishAmerican Health System Corporation Operates hospitals, clinics, and a home health care agency. --

04/28/14 Private Investor Envoy Group Corp. Focuses on the operation of adult day care centers. --

04/27/14 Private Investor El Viaje Retreat LLC Operates retirement facility. --

04/17/14 TRU Community Care Hospice of Northern Colorado, Inc. N non-profit community based hospice care provider. --

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M&A Transactions in the table above include those with EV above $5 million and reported metrics. Sources: S&P Capital IQ. Public companies in bold.

Notable Healthcare Providers & Facilities M&A Transactions $ in millions

Transaction

Announced Acquirer/Investor Target Target Description Value Metric

05/15/14 Kindred Healthcare Inc. (NYSE:KND) Gentiva Health Services Inc. Provides home health, hospice, and community care services. $1,685.3 0.9x Rev; 12.6x EBITDA

02/20/14 Brookdale Senior Living Inc. Emeritus Corp. Operates senior living communities. $5,446.6 2.8x Rev; 15.6x EBITDA

02/17/14 TPG Capital Chindex International Inc. Provides healthcare services. $384.9 2.5x Rev; 37.2x EBITDA

02/13/14 PhotoMedex, Inc. LCA-Vision Inc. Provides fixed-site laser vision correction services. $105.2 0.8x Rev

12/30/13 Banner Health Casa Grande Community Hospital Community healthcare system. $87.0 0.6x Rev

11/05/13 National Health Industries, Inc. SunCrest Healthcare, Inc. Provides home health care services. $75.5 0.5x Rev

11/04/13 Kindred Healthcare Inc. Senior Home Care, Inc. Provides home health care services. $95.0 0.7x Rev

10/09/13 QuadMed, LLC Novia CareClinics, LLC Creates and manages employer sponsored on-site clinics. $13.5 0.9x Rev

09/30/13 Physicians Realty L.P. Crescent City Surgical Centre, L.L.C Operates a hospital. $37.5 16.4x Rev

09/19/13 Gentiva Health Services Inc. Harden Healthcare, LLC Owns and operates senior care facilities. $408.8 0.9x Rev

11/12/13 Senior Living Residences, LLC Standish Village Operates as a retirement community. $19.4 3.8x Rev; 14.3x EBITDA

07/29/13 Community Health Systems, Inc. Health Management Associates Inc. Operates general acute care hospitals and other health care facilities. $7,715.9 1.3x Rev; 8.7x EBITDA

07/23/13 DLP Healthcare, LLC Wilson Medical Center, Inc. Provides healthcare services. $56.0 0.5x Rev

07/17/13 Almost Family Inc. Indiana HomeCare Network LLC Provides home health care services for patients. $12.5 0.9x Rev

06/24/13 Tenet Healthcare Corp. Vanguard Health Systems Inc. Operates hospitals and outpatient facilities. $4,818.4 0.7x Rev; 8.2x EBITDA

06/20/13 Acadia Healthcare Company, Inc. The Refuge, A Healing Place, LLC Provides PTSD, trauma, depression and addiction. $14.1 1.4x Rev

06/14/13 Radiation Therapy Services Inc. OnCure Holdings, Inc. Operates radiation oncology treatment centers. $132.3 1.2x Rev; 4.6x EBITDA

03/07/13 Charlotte-Mecklenburg Hospital Cleveland County Healthcare System Owns and operates hospitals. $100.0 0.4x Rev

02/26/13 TPG Capital Assisted Living Concepts Inc. Operates senior living residences. $460.5 2.0x Rev; 11.1x EBITDA

12/11/12 Private Investor LifeCare Holdings, Inc. Operates acute long-term acute care hospitals. $801.4 1.6x Rev; 12.9x EBITDA

Deal Revenue EBITDA

Size Multiple Multiple

Transactions Represented 20 20 9

High $7,630.0 16.4x 37.2x

Median $97.5 0.9x 12.6x

Low $12.5 0.4x 4.6x

Mean $1,085.7 2.0x 13.9x

7 HEALTHCARE


Sources: Company press releases, S&P Capital IQ.

Kindred Healthcare Inc. bids for Gentiva Health Services Inc. May 13, 2014

Kindred Healthcare Inc. (KND), made an unsolicited offer to buy Gentiva Health Services Inc. (GTIV) for $533 million in a cash-and-stock deal that would expand services for an aging U.S. population. Gentiva turned down the $14-a-share offer on May 13, as well as an earlier bid of $13 a share.

The combined company would have annual revenue of about $7.2 billion, serve 127,000 patients per day, operate in 47 states and employ about 110,000 people.

Kindred views the deal as a highly compelling proposal that would create considerable value” for shareholders of both companies. Gentiva executives continue to believe that their long-term strategy as a stand-alone company will generate substantially more value to our shareholders and that they would be denied the value they deserve and can expect to receive.

Kindred Healthcare Inc. says it will continue with its attempt to acquire Atlanta-based Gentiva Health Services Inc., despite actions Gentiva has taken to prevent the acquisition.

Brookdale Senior Living, Inc. (NYSE:BKD) to merge with Emeritus Corp. (NYSE:ESC) February 20, 2014

On February 20, 2014, Brookdale Senior Living, Inc. (NYSE:BKD) signed a definitive merger agreement to acquire Emeritus Corp. (NYSE:ESC) for $1.4 billion.

Brookdale Senior Living has signed a definitive agreement to merge with Emeritus Corporation, effectively creating the first national senior-living company. The transaction value totals $2.8 billion, with the inclusion of $1.4 billion of Emeritus mortgage debt, and is expected to close in the third quarter of 2014.

The merger will expand Brookdale's unit capacity by two-thirds, pushing the company into 10 new states. In total, the combined company will have operating capacity of approximately 112,700 units in 1,161 communities in 46 states. The deal is also expected to achieve economies of scale across the company in purchasing insurance, food and benefits and improve leverage of general and administrative expenses.

Emeritus Senior Living operates more than 500 communities across 45 states, with capacity to serve 54,000 residents. The company has 31,000 employees.

Providers & Facilities Mid-Market M&A*

Overview of Selected M&A Transactions

* YTD figures represent total year-to-date M&A as of

May 31, 2013 & 2014. Middle market M&A includes

transactions with EV < $500mm, and transactions with

undisclosed EV.

201

149 147

252

284 285

242

87

100

0

50

100

150

200

250

300

2007 2008 2009 2010 2011 2012 2013 2013YTD*

2014YTD*

Nu

mb

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f An

no

un

ced

Tra

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U.S. Public equity offerings of at least $5 million the last three years. Sources: S&P Capital IQ and PitchBook Data Inc.

Healthcare Providers & Facilities – Public Company Equity Offerings $ in millions

Transaction

Date Company Funding Type Target Description Value

05/27/14 Brookdale Senior Living Inc. Follow-on Equity Offering Owns and operates senior living communities. $640.9

05/19/14 HCA Holdings, Inc. Follow-on Equity Offering Provides health care services. $773.0

03/28/14 AdCare Health Systems Inc. PIPE Owns and manages skilled nursing facilities and assisted living facilities. $6.5

09/04/13 Surgical Care Affiliates, Inc. IPO Owns and operates multi-specialty ASCs and surgical hospitals. $234.7

08/13/13 BioScrip Inc. Follow-on Equity Offering Provides home care services and pharmacy benefit management services. $94.1

06/26/13 Orion HealthCorp Inc. PIPE Offers medical billing, coding, collection, and financial and practice management services. $17.5

04/16/13 BioScrip Inc. Follow-on Equity Offering Provides home care services and pharmacy benefit management services. $150.0

03/15/13 American Addiction Centers, Inc. PIPE Provides behavioral healthcare services. $6.5

03/11/13 Emeritus Corp. Follow-on Equity Offering Operates senior living communities. $215.3

02/11/13 HCA Holdings, Inc. Follow-on Equity Offering Provides health care services. $1,793.5


12/04/12 Acadia Healthcare Company, Inc. Follow-on Equity Offering Operates psychiatric facilities, group homes, and substance abuse facilities. $238.0




06/28/11 Surgical Care Affiliates, Inc. Venture Capital Owns and operates multi-specialty ASCs and surgical hospitals. $25.8

06/08/11 Five Star Quality Care Inc. Follow-on Equity Offering Operates and manages senior living communities. $50.0

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Equity capital raises of $5 million for U.S. private companies in the last six months. Sources: S&P Capital IQ and PitchBook Data Inc.

Healthcare Providers & Facilities – Private Company Capital Raises $ in millions

Transaction

Announced Company Funding Type Target Description Value

05/23/14 IASIS Healthcare Holdings, Inc. Growth Capital/Private Equity Operates as a general partner and owns and operates hospitals. $5.2

05/15/14 Crown Bioscience Venture Capital Operator of a biology contract research organization. $26.6

05/14/14 One Medical Group Venture Capital Provider of primary care physician services for employers. $40.5

05/12/14 Urgent Team Holdings, Inc. Venture Capital Operates urgent care centers. $5.3

05/08/14 Counsyl Venture Capital Provides genetic screenings to determine inherited risk for diseases. $28.0

05/02/14 JourneyPure LLC Venture Capital Focuses on developing and operating addiction treatment centers. $7.0

04/30/14 ConvenientMD LLC Venture Capital Provides urgent care centers. $8.0

04/23/14 RegionalCare Hospital Partners Growth Capital/Private Equity Provider of healthcare services in non-urban markets. $270.7

04/08/14 Galichia Heart Hospital, LLC Growth Capital/Private Equity Provides heart care, surgical care, and emergency services. $8.5

04/03/14 Pure Life Renal Growth Capital/Private Equity Provider of kidney dialysis centers. $20.0

03/18/14 AbilTo Venture Capital Provider of a platform for fixed-duration programs on behavioral health. $6.0

03/10/14 Specialists On Call Growth Capital/Private Equity Provider of specialty physician consultations to acute-care hospitals via telemedicine. $32.0

02/13/14 MD Revolution Venture Capital Provider of personalized medicine practice management and advisory services. $7.0

02/11/14 PM Pediatrics Management Group Growth Capital/Private Equity Provider of pediatric healthcare services. $14.0

01/22/14 SUN Behavioral HoldCo, LLC Venture Capital Operates healthcare facilities. $31.0

12/31/13 Covenant Surgical Partners, Inc. Growth Capital/Private Equity Owns and operates ambulatory surgery centers. $17.5

12/23/13 Accelecare Wound Centers, Inc. Growth Capital/Private Equity Operates as a wound care and disease management company. $70.0

10 HEALTHCARE


Sources: Company press releases, S&P Capital IQ.

One Medical Grop (San Francisco, CA) May 14, 2014

Disruptive primary care medical practice One Medical Group, announced $40 million in growth capital led by Redmile Group, with participation from current institutional investors. The company previously raised $77 million in funding from Benchmark, DAG Ventures, Maverick Capital, Oak Investment Partners, Google Ventures and others.

One Medical was founded as a way to reinvent the traditional experience of visiting a doctor. Instead of waiting for hours on the phone or in an office, patients can schedule appointments online, request prescriptions, get lab results digitally, and see their personal health summary online and doctors can access medical records electronically.

Counsyl (San Francisco, CA) May 8, 2014

Genetic testing company, Counsyl, raised $28 million from Rosemont Seneca Technology Partners and Goldman Sachs Asset Management. The company will use the funds to continue to invest in product development.

Counsyl offers genetic tests that look for more than 400 mutations and at least 100 genetic disorders for parents who are planning children. At $599 total, or $99 with insurance, their tests cost a fraction of standard ones, which often only look for a single condition like cystic fibrosis, and run anywhere from $100 to $500.

Pure Life Renal (Hollywood, FL) April 3, 2014

Pure Life Renal closed on $10.5 million of a planned $21 million of development capital. The Company plans a rapid expansion hybrid strategy through acquisitions and de novo development opportunities across the US.

Pure Life Renal is an independent provider of dialysis services and renal care providing a full spectrum of renal services including in-center, home-based and acute dialysis, as well as drug provisions.

Providers & Facilities Mid-Market Capital Raises*

Overview of Selected Capital Raises

* YTD figures represent total year-to-date capital raises as of

May 30, 2013 & 2014. Middle market Public Offerings &

Capital Raises includes transactions <$500mm, and

transactions with undisclosed value.

32 31

45

80

97100

124

46 46

0

20

40

60

80

100

120

140

2007 2008 2009 2010 2011 2012 2013 2013YTD*

2014YTD*

Nu

mb

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of T

ra

ns

ac

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Over the past three years, only two of the six Healthcare Providers & Facilities industry niches have outperformed the S&P 500. Healthcare Distributors and Acute Care Hospitals have posted gains of 81.3% and 55.1%, respectively.

The remaining four industry niches, Senior/Assisted Living, Post-Acute Care/Rehab, Healthcare Service and Home Care have underperformed the S&P 500, posting gains of 31.5%, 30.2%, 11.2% and 0.1% respectively.

Note: The Healthcare Providers & Facilities indices are composed of the public companies included on pages 12-14. Source: S&P Capital IQ.

3-Year Indexed Stock Price Performance

Healthcare Providers & Facilities – Recent Stock Market Performance

Healthcare Distributors

81.3%

Acute Care Hospitals

55.1%

S&P 500

46.3%

Senior / Assisted Living

31.5%

Post-Acute Care / Rehab

30.2%

Healthcare Services

11.2%

Home Care / Home

Health / Hospice

0.1%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

Mar

ket

Per

form

ance

12 HEALTHCARE


Note: Not meaningful (NM) if EV/Revenue is greater than 5x, or EV/EBITDA is greater than 20x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts. Source: S&P Capital IQ.

Public Healthcare Providers & Facilities: Valuation Metrics ($US in millions, except per share amounts)

6/10/14 TTM Data EV Multiple

Company Name

Share

Price

52 Week

High - Low

Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA


HCA Holdings, Inc. $55.38 $56.71 - $35.20 $23,794 $53,430 $34,574 $6,607 19.1% 16.3% 4.4% 1.5x 8.1x 1.3x 7.7x

Universal Health Services Inc. 94.00 96.12 - 63.51 9,286 12,783 7,372 1,393 18.9% 21.9% 1.3% 1.7x 9.2x 1.4x 9.1x

Community Health Systems, Inc. 45.08 51.29 - 34.55 5,196 22,427 13,919 1,709 12.3% 44.2% 77.4% 1.6x 13.1x 1.1x 7.4x

Tenet Healthcare Corp. 49.15 50.25 - 36.87 4,800 16,286 12,641 1,455 11.5% 37.3% 30.8% 1.3x 11.2x 0.9x 8.6x

Lifepoint Hospitals Inc. 64.50 64.80 - 43.97 2,869 4,815 3,754 490 13.0% 30.1% 21.1% 1.3x 9.8x 1.0x 8.1x

Acadia Healthcare Company, Inc. 46.44 53.87 - 30.70 2,358 3,014 754 148 19.6% 17.8% 24.7% 4.0x 20.4x 3.4x 16.4x

Median $14,534 $10,007 $1,424 16.0% 26.0% 22.9% 1.6x 10.5x 1.2x 8.3x

Average $18,792 $12,169 $1,967 15.7% 27.9% 26.6% 1.9x 12.0x 1.5x 9.5x

Post-acute Care/Rehab

HEALTHSOUTH Corp. $37.05 $37.68 - $27.51 $3,264 $4,947 $2,266 $557 24.6% 6.3% 3.6% 2.2x 8.9x 2.1x 8.6x

Select Medical Holdings Corporation 15.47 15.61 - 7.77 2,024 3,694 2,949 362 12.3% 5.4% 4.7% 1.3x 10.2x 1.2x 9.7x

Kindred Healthcare Inc. 26.66 26.75 - 12.50 1,461 3,027 4,924 296 6.0% 5.5% 33.3% 0.6x 10.2x 0.6x 7.7x

National Healthcare Corp. 56.60 58.15 - 45.30 804 826 807 111 13.7% 5.5% NA 1.0x 7.5x 1.0x NA

US Physical Therapy Inc. 33.15 37.25 - 26.91 405 461 267 46 17.1% 11.4% (5.0%) 1.7x 10.1x 1.6x 10.6x

Median $3,027 $2,266 $296 13.7% 5.5% 4.1% 1.3x 10.1x 1.2x 9.2x

Average $2,591 $2,243 $274 14.7% 6.8% 9.1% 1.4x 9.4x 1.3x 9.2x

NTM Est. Growth

13 HEALTHCARE


Public Healthcare Providers & Facilities: Valuation Metrics


($US in millions, except per share amounts)


Company Name

Share

Price

52 Week

High - Low

Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

Senior/Assisted Living

Brookdale Senior Living Inc. $33.91 $34.80 - $24.42 $4,360 $6,949 $2,572 $436 17.0% 18.9% 10.8% 2.7x 15.9x 2.3x 14.4x

Emeritus Corp. 32.12 32.57 - 18.15 1,575 5,504 1,981 347 17.5% 7.4% 14.5% 2.8x 15.8x 2.6x 13.8x

Capital Senior Living Corp. 24.02 26.89 - 19.87 697 1,213 349 53 15.3% 11.7% 41.4% 3.5x 22.7x 3.1x 16.1x

Skilled Healthcare Group, Inc. 6.65 7.22 - 4.08 263 678 835 64 7.7% 1.0% 15.7% 0.8x 10.5x 0.8x 9.1x

Five Star Quality Care Inc. 5.21 6.20 - 4.41 253 268 1,087 42 3.9% 21.2% 15.4% 0.2x 6.4x 0.2x 5.5x

Median $1,213 $1,087 $64 15.3% 11.7% 15.4% 2.7x 15.8x 2.3x 13.8x

Average $2,922 $1,365 $189 12.3% 12.0% 19.5% 2.0x 14.3x 1.8x 11.8x

Homecare/Home Health/Hospice

Chemed Corp. $90.89 $92.43 - $64.16 $1,594 $1,740 $1,405 $183 13.0% 5.1% 16.1% 1.2x 9.5x 1.2x 8.2x

The Ensign Group, Inc. 30.17 47.78 - 26.02 670 868 926 130 14.0% 10.2% 18.8% 0.9x 6.7x 0.9x 5.6x

Gentiva Health Services Inc. 14.21 14.50 - 7.35 524 1,630 1,799 129 7.2% 10.5% 41.1% 0.9x 12.7x 0.8x 9.0x

Amedisys Inc. 14.47 18.70 - 9.51 475 515 1,203 31 2.6% (2.0%) 28.3% 0.4x 16.6x 0.4x 12.9x

LHC Group, Inc. 20.70 26.90 - 19.06 368 449 647 52 8.0% 11.0% 1.9% 0.7x 8.7x 0.6x 8.5x

Addus HomeCare Corporation 23.81 32.40 - 16.62 259 242 275 18 6.4% 14.7% 30.2% 0.9x 13.8x 0.8x 10.6x

Almost Family Inc. 21.83 33.97 - 17.66 206 254 392 15 3.8% 25.3% 95.0% 0.6x 17.0x 0.5x 8.7x

Median $515 $926 $52 7.2% 10.5% 28.3% 0.9x 12.7x 0.8x 8.7x

Average $814 $949 $80 7.9% 10.7% 33.1% 0.8x 12.1x 0.7x 9.1x

NTM Est. Growth

14 HEALTHCARE


Public Healthcare Providers & Facilities: Valuation Metrics


($US in millions, except per share amounts)


Company Name

Share

Price

52 Week

High - Low

Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

Healthcare Services

Quest Diagnostics Inc. $61.70 $64.10 - $50.46 $8,915 $12,777 $7,105 $1,402 19.7% 4.5% 3.9% 1.8x 9.1x 1.7x 8.8x

Laboratory Corp. of America Holdings 103.02 108.00 - 87.01 8,736 11,424 5,798 1,150 19.8% 2.6% 2.7% 2.0x 9.9x 1.9x 9.7x

Team Health Holdings, Inc. 51.70 52.18 - 36.41 3,631 4,074 2,449 248 10.1% 12.5% 19.6% 1.7x 16.4x 1.5x 13.7x

IPC The Hospitalist Company, Inc. 42.24 63.70 - 39.66 724 785 629 67 10.7% 16.9% 17.1% 1.2x 11.7x 1.1x 10.0x

Healthways Inc. 17.12 22.20 - 9.59 604 865 675 30 4.4% 11.9% 196.7% 1.3x 29.2x 1.1x 9.9x

Median $4,074 $2,449 $248 10.7% 11.9% 17.1% 1.7x 11.7x 1.5x 9.9x

Average $5,985 $3,331 $579 13.0% 9.7% 48.0% 1.6x 15.3x 1.5x 10.4x


McKesson Corporation $186.69 $192.03 - $109.82 $43,046 $51,369 $137,609 $3,176 2.3% 21.6% 44.8% 0.4x 16.2x 0.3x 11.2x

Cardinal Health, Inc. 70.71 74.40 - 46.32 24,056 24,935 93,610 2,538 2.7% (3.9%) 2.2% 0.3x 9.8x 0.3x 9.6x

AmerisourceBergen Corporation 72.34 73.81 - 52.97 16,337 17,037 104,008 1,092 1.0% 14.7% 57.9% 0.2x 15.6x 0.1x 9.9x

Henry Schein, Inc. 119.98 120.99 - 92.89 10,242 11,390 9,697 812 8.4% 6.9% 7.1% 1.2x 14.0x 1.1x 13.1x

Patterson Companies, Inc. 39.60 44.39 - 36.59 4,115 4,535 4,064 396 9.7% 6.8% 8.9% 1.1x 11.5x 1.0x 10.5x

Owens & Minor Inc. 35.40 38.55 - 31.71 2,233 2,267 9,082 243 2.7% 1.9% 8.6% 0.2x 9.3x 0.2x 8.6x

MWI Veterinary Supply, Inc. 142.52 188.40 - 116.81 1,833 1,943 2,620 120 4.6% 18.7% 15.7% 0.7x 16.1x 0.6x 13.9x

PharMerica Corporation 29.79 30.48 - 11.84 893 1,112 1,770 115 6.5% (1.8%) 6.4% 0.6x 9.7x 0.6x 9.1x

Chindex International Inc. 23.77 23.99 - 14.48 422 423 183 13 6.9% NA NA 2.3x 33.4x NA NA

Median $4,535 $9,082 $396 4.6% 6.8% 8.7% 0.6x 14.0x 0.5x 10.2x

Average $12,779 $40,294 $945 5.0% 8.1% 19.0% 0.8x 15.1x 0.5x 10.7x

NTM Est. Growth

15 HEALTHCARE


EV/EBITDA multiples have rebounded with the

Senior/Assisted Living index leading the pack at 15.1x,

followed closely by Healthcare Distributors at 13.6x.

The Home Health and Healthcare Services indices are trading

inline with the S&P 500 Index, while Acute Care and Post-

acute Care continue to lag behind the broader market, trading

at 9.2x and 9.0x EBITDA, respectively.

Note: The Healthcare Providers & Facilities indices are composed of the public companies included on pages 12-14. Estimated growth is based on the median estimates of Wall Street analysts. Source: S&P Capital IQ.

Healthcare Providers & Facilities vs S&P Next 12 Months: Estimated Sales Growth

Valuations Rebound with Favorable Growth Expectations

The outlook for the overall industry group remains positive,

with five of the six niches expected to outpace the S&P 500

over the next 12 months.

Expectations for the Acute Care Hospitals niche continues to

be the most promising of the group with 26.0% revenue

growth expected over the next 12 months.

Senior / Assisted Living

15.1x


13.6x

Home Care / Home

Health / Hospice

10.7x

S&P 500

10.2x

Healthcare Services

10.1x


9.2x

Post-Acute Care / Rehab

9.0x 4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

Mar

ket

Per

form

ance


26.0%

Post-acute Care/Rehab

5.5%

Senior/Assisted

Living11.7%

Homecare/Home Health/Hospice

10.5%

HealthcareServices11.9%


6.8% S&P 5004.8%

0%

5%

10%

15%

20%

25%

30%

35%

16 HEALTHCARE


Moss Adams Capital LLC

Full service investment bank and strategic advisor

Dedicated industry specialties

Mergers and acquisitions; sell-side and buy-side

Recapitalizations and institutional capital raises

Key Attributes

Middle market experts: independent, thoughtful client centered advice

Direct and constant senior level attention

Deep and longstanding relationships with debt and equity capital providers and corporate investors/buyers

Industry specific knowledge enhanced by proprietary access and insight from the Moss Adams LLP client base

Moss Adams LLP

Fully integrated accounting, tax and business advisory firm

100 years old

Dominant in Western US

1,800 employees in 22 offices

16,000 nationwide mid market clients

Consulting and Tax Services include financial due diligence, valuation advisory, international tax planning and compliance, transaction structuring and IT consulting and integration

Approximately 2,000 Healthcare Clients

U.S. and International Presence

Affiliates in 80+ countries globally

Firm Overview

17 HEALTHCARE


Direct international relationships

Moss Adams Capital has a strategic alliance with Mazars Corporate Finance, an international investment bank with 25 offices, to identify cross-border strategic buyers and private equity investors

As a founding member of Praxity, AISBL, a global alliance of independent accounting firms, Moss Adams provides access to trusted expertise in 80+ countries worldwide

Latin America and Caribbean Argentina, Brazil, Cayman islands, Chile, Colombia, Mexico, Puerto Rico, Uruguay, Venezuela

Europe Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Ireland, Italy, Jersey, Latvia, Lithuania, Luxembourg, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovakia, Spain, Sweden, Switzerland, Turkey, United Kingdom , Ukraine

Asia China, Indonesia, Japan, South Korea, Malaysia, Singapore, Taiwan, Thailand, Vietnam

Africa Algeria, Angola, Benin, Botswana, Cameroon, Cape Verde, Djibouti, Egypt, Ghana, Ivory Coast, Lesotho, Madagascar, Mauritius, Morocco, Senegal, South Africa, Tunisia, Zambia

Middle East and Indian Subcontinent India, Israel, Lebanon, Pakistan, United Arab Emirates

Australasia Australia, New Zealand

North America United States, Canada

Global Reach

18 HEALTHCARE


Selected Healthcare Related Transactions

* Services for the foregoing provided by Moss Adams, and/or its principals.

19 HEALTHCARE


Contact Us 999 Third Avenue Suite 2800 Seattle, Washington 98104 Harman K. Wales Managing Director Wiley P. Kitchell Managing Director

2040 Main St Suite 900 Irvine, California 92614 Richard M. Anderson Managing Director Burr J. Dalton Director Tyler Dale Vice President Geoffrey B. Haydon Vice President

healthcare providers & facilities...05/01/14 american caresource holdings, inc. correctmed, llc...

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