sectorwatch: healthcare it...healthcare it q4 2018 sector dashboard [4] public basket performance...

Sectorwatch: Healthcare IT Q4 2018

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Healthcare IT Q4 2018

Sector Dashboard [4]

Public Basket Performance [5]

Operational Metrics [7]

Valuation Comparison [10]

Recent Deals [12]

7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to be delivered only in conjunction with a verbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice & Disclaimer at the end of the document. All data cited in this document was believed to be accurate at the time of authorship and came from publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations as to the accuracy or completeness of third-party data contained herein. This document should be treated as confidential and for the use of the intended recipient only. Please notify 7 Mile Advisors if it was distributed in error.

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Overview

7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A and private capital transactions, and provide market assessments and benchmarking. As a close knit team with a long history together and a laser focus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets. We publish our sectorwatch, a review of M&A and operational trends in the industries we focus.

Dashboard • Summary metrics on the sector • Commentary on market momentum by

comparing the most recent 12-month performance against the last 3-year averages.

Public Basket Performance

• Summary valuation and operating metrics for a basket of comparable public companies

Valuation Comparison • Graphical, detailed comparison of valuation

multiples for the public basket Recent Deals

• The most recently announced deals in the sector

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Dashboard

Operating Metrics

Valuation

14.6%

15.8%

56.0%

0% 20% 40% 60%

Median LTM EBITDA Margin %

Median LTM Revenue Growth %

Median LTM Gross Profit Margin %

4.5x

23.1x

30.7x

63.1x

0x 20x 40x 60x 80x

Median TEV / LTM Revenue

Median TEV / LTM EBIT

Median TEV / LTM EBITDA

Median Price / LTM Earnings

Revenue Growth Momentum

-2.5% One year revenue growth percentage compared

to revenue growth average percentage for last

3 years.

Pricing / Gross Margin Momentum

0.4% One year gross profit percentage compared to

gross profit percentage average for last 3

years.

Profitability Momentum

1.6% One year EBITDA percentage compared to

EBITDA percentage average for last 3 years.

Current revenue growth rate is less than the average of the last 3

years, indicating that the market may be flattening, but the average

growth rate is still 22%.

Current gross profit margin slightly exceeds the average of the last 3

years gross profit margin by this amount so companies are

maintaining margins.

Current EBITDA margin exceeds the average of the last 3 years

EBITDA margin by this amount.

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Public Basket Company TEV $m

LTM Rev $m

Rev Growth

YoY GP % EBITDA

% TEV / Rev X

TEV / EBITDA

X # FTEs Rev /

FTE $k

Cerner Corporation 20,450 5,149 4% 84% 25% 4.0 15.8 26,000 198

M3, Inc. 12,355 898 21% 57% 29% 14.0 48.8 5,165 174

Veeva Systems Inc. 11,881 763 23% 70% 24% 15.6 64.2 2,171 352

HealthEquity, Inc. 5,042 258 28% 61% 32% 19.5 61.6 1,027 251

athenahealth, Inc. 4,967 1,287 12% 54% 19% 3.9 20.5 5,156 250

Teladoc Health, Inc. 4,942 330 110% 72% -11% 15.0 0.0 1,231 268

Allscripts Healthcare Solutions, Inc. 4,311 2,006 21% 49% 5% 2.1 40.6 8,900 225

Medidata Solutions, Inc. 4,103 611 16% 76% 15% 6.7 45.8 1,680 364

Winning Health Technology Group Co., Ltd. 3,174 201 32% 51% 21% 16.6 77.9 3,613 56

CompuGroup Medical Societas Europaea 2,993 791 16% 39% 21% 3.9 18.5 4,572 173

HMS Holdings Corp. 2,743 562 13% 37% 21% 4.9 23.7 2,500 225

Omnicell, Inc. 2,647 758 12% 47% 9% 3.5 36.9 2,350 322

Inovalon Holdings, Inc. 2,412 476 13% 69% 16% 5.1 30.7 1,758 271

Evolent Health, Inc. 1,790 506 40% 40% -3% 3.5 0.0 2,600 194

Tabula Rasa HealthCare, Inc. 1,646 170 56% 31% 9% 9.7 112.5 536 317

Benefitfocus, Inc. 1,108 267 14% 53% 0% 4.2 0.0 1,450 184

Vocera Communications, Inc. 866 169 16% 61% -1% 5.1 0.0 590 287

Pharmagest Interactive SA 855 182 22% 28% 24% 4.8 20.6 907 200

Agfa-Gevaert NV 833 2,731 -6% 33% 6% 0.3 4.9 9,840 278

NNIT A/S 780 459 3% 18% 14% 1.7 12.0 3,031 152

HealthStream, Inc. 743 260 14% 57% 12% 2.9 24.0 955 272

Pro Medicus Limited 702 27 14% 99% 47% 27.6 58.4 - NA

Computer Programs and Systems, Inc. 495 284 9% 55% 12% 1.7 14.2 2,000 142

Simulations Plus, Inc. 348 29 34% 73% 41% 11.9 29.4 83 352

NantHealth, Inc. 334 88 9% 58% -58% 3.8 0.0 494 179

Castlight Health, Inc. 266 145 26% 60% -36% 1.8 0.0 527 276

Average 3,569 746 22% 55% 11% 7.5 38.1 3,565 238

Median 2,101 395 16% 56% 15% 4.5 30.0 2,000 250

share price as of 24Oct18

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Public Basket Valuation Trends

Public EBITDA Multiples over Time

Public Revenue Multiples over Time

0x

2x

4x

6x

8x

TEV/Revenue - Median TEV/Revenue - Average

0x5x

10x15x20x25x30x35x

TEV/EBITDA - Median TEV/EBITDA - Average

25.7x

5.1x

0x

5x

10x

15x

20x

25x

30x

35x

TEV/EBITDA - Median TEV/Revenue - Median

TEV/EBITDA - Average TEV/Revenue - Average

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Operational Metrics

LTM Revenue Growth % LTM Revenue per

Full Time Employee x 000’s

$- $100 $200 $300 $400

Median

Winning Health Technology…

Computer Programs and…

NNIT A/S

CompuGroup Medical…

M3, Inc.

NantHealth, Inc.

Benefitfocus, Inc.

Evolent Health, Inc.

Cerner Corporation

Pharmagest Interactive SA

HMS Holdings Corp.

Allscripts Healthcare…

athenahealth, Inc.

HealthEquity, Inc.

Teladoc Health, Inc.

Inovalon Holdings, Inc.

HealthStream, Inc.

Castlight Health, Inc.

Agfa-Gevaert NV

Vocera Communications, Inc.

Tabula Rasa HealthCare, Inc.

Omnicell, Inc.

Veeva Systems Inc.

Simulations Plus, Inc.

Medidata Solutions, Inc.

-20% 0% 20% 40% 60% 80% 100%120%

Median

Agfa-Gevaert NV

NNIT A/S

Cerner Corporation

Computer Programs and Systems,…

NantHealth, Inc.

Omnicell, Inc.

athenahealth, Inc.


HMS Holdings Corp.

Pro Medicus Limited

HealthStream, Inc.

Benefitfocus, Inc.



CompuGroup Medical Societas…

Allscripts Healthcare Solutions, Inc.

M3, Inc.


Veeva Systems Inc.


HealthEquity, Inc.

Winning Health Technology Group…





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Operational Metrics

LTM Gross Profit Margin % LTM EBITDA %

-60% -40% -20% 0% 20% 40% 60%

Median

NantHealth, Inc.





Allscripts Healthcare Solutions,…

Agfa-Gevaert NV


Omnicell, Inc.

HealthStream, Inc.


NNIT A/S



athenahealth, Inc.

HMS Holdings Corp.

CompuGroup Medical Societas…



Veeva Systems Inc.

Cerner Corporation

M3, Inc.

HealthEquity, Inc.


Pro Medicus Limited

0% 20% 40% 60% 80% 100%

Median

NNIT A/S



Agfa-Gevaert NV

HMS Holdings Corp.



Omnicell, Inc.



Benefitfocus, Inc.

athenahealth, Inc.


M3, Inc.

HealthStream, Inc.

NantHealth, Inc.


HealthEquity, Inc.



Veeva Systems Inc.




Cerner Corporation

Pro Medicus Limited

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Valuation

TEV / LTM Revenue TEV / LTM EBITDA

0x 10x 20x 30x

Median

Agfa-Gevaert NV

NNIT A/S

Computer Programs…



HealthStream, Inc.

Omnicell, Inc.


NantHealth, Inc.

athenahealth, Inc.

CompuGroup…

Cerner Corporation

Benefitfocus, Inc.

Pharmagest…

HMS Holdings Corp.

Inovalon Holdings,…

Vocera…

Medidata Solutions,…

Tabula Rasa…


M3, Inc.


Veeva Systems Inc.

Winning Health…

HealthEquity, Inc.

Pro Medicus Limited

0x 20x 40x 60x 80x 100x 120x

Median

NNIT A/S

Computer Programs…

Cerner Corporation


athenahealth, Inc.

Pharmagest…

HMS Holdings Corp.

HealthStream, Inc.


Inovalon Holdings,…

Omnicell, Inc.



M3, Inc.

Pro Medicus Limited

HealthEquity, Inc.

Veeva Systems Inc.

Winning Health…

Tabula Rasa…

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Valuation

Price / LTM Earnings Historical Valuation Multiples versus Revenue Growth Rate

0x 20x 40x 60x 80x 100x

Median

NNIT A/S

Cerner Corporation

Pharmagest…


Agfa-Gevaert NV

athenahealth, Inc.


HealthStream, Inc.

Omnicell, Inc.

M3, Inc.

HMS Holdings Corp.

Pro Medicus Limited


Winning Health…

Veeva Systems Inc.

HealthEquity, Inc.

-10%

0%

10%

20%

30%

40%

50%

60%

0x

20x

40x

60x

80x

100x

120x

LTM

RG

R%

EBIT

DA(x

)

EBITDA(x) LTM RGR%

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RECENT TRANSACTIONS SUMMARY

In the last twelve months there were transactions totaling $23.8b transactions in the healthcare IT sector. 7 Mile Advisors tracked 1,215 transactions in the sector, including 295 M&A transactions.

All Transactions by Region All Transactions by Type M&A Transaction Ranges by Value

Merger & Acquisition Statistics

Valuation Summary

Total Deal Value($mm): $23,825.68

Average Deal Value: $297.82

Average TEV/Revenue: 6.86x

Average TEV/EBITDA: 31.16x

Average Day Prior Premium(%): 284.56%

Average Week Prior Premium(%): 281.18%

Average Month Prior Premium(%): 306.58%

Private Placement,

920

Merger/Acquisition

, 295

Africa /

Middle East,

21

Europe, 218

United

States and

Canada, 785

Asia / Pacific,

185

Latin

America and

Caribbean, 6

Greater than

$1 billion, 6

$500 -

$999.9mm, 1

$100 -

$499.9mm, 13

Less than

$100mm, 60

Undisclosed,

213

Most Active Buyers/Investors by Number of Transactions

Company NameNumber Of

Transactions

Ben Franklin Technology Partners of Southeastern Pennsylvania, Investment Arm 13

Y Combinator M anagement LLC 8

F-Prime Capital Partners 6

M orningside Venture Capital 6

New Enterprise Associates 6

Albion Capital Group LLP 5

Bessemer Venture Partners 5

Bpifrance Investissement 5

GE Ventures 5

GV 5

Most Active Buyers/Investors by Total Transaction Size

Company NameTransaction

Size ($mm)

Ellio tt M anagement Corporation 6,879.97

Verscend Technologies, Inc. 5,118.56

Roche Holding AG (SWX:ROG) 1,900.0

SoftBank Investment Advisers 1,550.0

Inovalon Holdings, Inc. (NasdaqGS:INOV) 1,200.0

SBI Holdings, Inc. (TSE:8473) 1,150.0

SBI Investment Co., Ltd. 1,150.0

Veritas Capital Fund M anagement, LLC 1,050.0

Global Payments Inc. (NYSE:GPN) 700.0

China Investment Corporation 650.8

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Recent Transactions Date Target Buyer / Investor

Total Transaction

Value Target

Revenue TEV /

Revenue TEV /

EBITDA

23Oct18 Vendor Credentialing Service LLC Clearlake Capital Group, L.P. - - - -

17Sep18 Healthcare Technologies Business of Aramark TriMedx, LLC 300.00 - - -

17Sep18 Connance, Inc. Waystar, Inc - - - -

16Sep18 Lucro Solutions, Inc. Valify LLC - - - -

14Sep18 DIMEC Limited Co-op Ventures - - - -

13Sep18 Nemaris, Inc. Globus Medical, Inc. - - - -

12Sep18 Wellpass Welltok, Inc. - - - -

11Sep18 Apex Revenue Technologies, LLC RevSpring, Inc. 200.00 - - -

6Sep18 VirMedica, Inc. CareMetx, LLC - - - -

31Aug18 MVI Health Inc. Penumbra, Inc. 20.00 - - -

24Aug18 Herald Technologies Inc. Persistent Systems, Inc. 5.20 - - -

28Aug18 Iatric Systems, Inc. Harris Healthcare Group - - - -

28Aug18 Intellitec Softway Medical SAS - - - -

27Aug18 ClariCare Inc. True Nature Holding, Inc. - - - -

23Aug18 Medical Reservations Technology Co., Ltd. (nka:GMO Medical Reservations Technology Co., Ltd.)

GMO Epsilon, Inc. - - - -

12Aug18 CareX Blockchain Platform Inc. Paragon Blockchain Inc. 0.30 - - -

14Aug18 Mevoked, Inc. WellBrain Inc. - - - -

13Aug18 factis GmbH CompuGroup Medical Societas Europaea - - - -

2Aug18 AdvancedMD, Inc. Global Payments Inc. 700.00 - - -

1Aug18 BlueStrata EHR Mediware Information Systems, Inc. - - - -

30Jul18 Swisstec Health Analytics Ltd Genetic Technologies Limited - - - -

30Jul18 Avalon Health Services, LLC Hcsc Ventures Inc - - - -

27Jul18 Acumyn Inc. Elekta AB (publ) - - - -

24Jul18 Alert Services Corporation HealthLink Dimensions LLC - - - -

17Jul18 Allocate Software Limited HgCapital LLP - - - -

16Jul18 viaDirect Solutions PlayMaker, Inc. (nka:PlayMaker Health) - - - -

11Jul18 RadicaLogic Technologies, Inc. Datix Limited - - - -

10Jul18 Certain assets of Medical Columbus AG GHX Europe GmbH 21.93 - - -

9Jul18 Nuesoft Technologies, Inc. AdvancedMD, Inc. - - - -

2Jul18 ADS Data Systems, Inc. Consolo Services Group, LLC - - - -

22Jun18 AcuStream, Inc./CloudMed Solutions Revint Solutions - - - -

19Jun18 Cotiviti Holdings, Inc. Verscend Technologies, Inc. 5,118.56 737.56 6.7x 16.9x

13Jun18 Caradigm USA LLC Inspirata, Inc. - - - -

13Jun18 Life Account, LLC Alight Solutions LLC - - - -

11Jun18 SHYFT Analytics, Inc. Medidata Solutions, Inc. - - - -

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Contact Information 7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A and private capital transactions, and provide market assessments and benchmarking. As a close-knit team with a long history together and a laser focus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets. Securities offered through 7M Securities LLC.

Leroy Davis, Partner 704.899.5962 [email protected]

Tripp Davis, Partner 704.899.5762 [email protected]

Andy Johnston, Partner 704.899.5961 [email protected]

Ben Lunka, Managing Director 704.496.2995 [email protected]

Jeff Stoecklein, Managing Director 312.796.9330 [email protected]

Kristina Sergueeva, Director 704.899.5149 [email protected]

Neil Churman, Director 281.742.9340 [email protected]

John Cooper, Director 704.973.3996 [email protected]

Tim Frye, Director 704.973.3994 [email protected]

Nicholas Prendergast, Financial Analyst 704.973.3995 [email protected]

Ariail Siggins, Marketing Director 704.981.2908 [email protected]

Sydney Larese, Associate 704.973.3998 [email protected]

Marty Johnson, Associate 704.973.3999 [email protected]

Rory Julyan, Associate 704.981.2520 [email protected]

Garth Martin, Associate 704.973.3997 [email protected]

Chevonese Dacres, Analyst 704.981.2342 [email protected]

sectorwatch: healthcare it...healthcare it q4 2018 sector dashboard [4] public basket performance...

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