Q3: % from Q3: % from Q3:13

Transcription

1 Q3:14 was a very active quarter for Healthcare M&A with 322 deals announced representing $60.8 billion of deal value. Healthcare services contributed 53% of the deal volume, but only 20% of the combined deal value. The Pharmaceutical sector contributed 21% of deal volume, but with a few mega-mergers in the sector, pharmaceuticals represented 57% of the quarter s overall spending with total deal value of $34.7 billion. Biotech, ehealth, and Medical Devices accounted for the remaining 26% of the deal volume and 23% of the overall spending. Q3:14 Deal Volume 322 transactions in Q3:14. Deal Value $60.8 billion in Q3:14. Healthcare M&A Quarterly KPMG Corporate Finance LLC Long-Term Care The Long-Term Care sector, which is set to have its biggest year ever in M&A, contributed 46% (77 deals) to the healthcare services deal volume in the quarter. The sector has seen heavy M&A activity since Q4:13. Up 17.1 % from Q3:13 Mega Deal: Up 21.0 % from Q3:13 $17.0 Billion acquisition of Sigma-Aldrich Corporation (NasdaqGS:SIAL) by Germany s Merck KGaA (DB:MRK) announced in September The mega deal demonstrated the continued consolidation of laboratory testing materials manufacturers a reaction to pharmaceutical companies cutting costs by limiting the number of suppliers they use. Chapter 11 Filings remain high in Health Care Services: On a trailing four-quarter average, the percentage of healthcare services Chapter 11 filings has risen from 1.1% to 2.7% between 2010 and 2014, resulting in market consolidation due to distressed investing. Hospital sector Number of reported transactions remained low, with only 9 deals each announced in the second and third quarter of this year. Note: All Q3:14 deal volume and deal value figures exclude the failed acquisition of Shire (NASDAQ:SHPG by AbbVie (NYSE:ABBV). Source: Irving Levin Associates, Inc.

2 Healthcare Deal Volume Trends Healthcare Services M&A Volume Other Healthcare M&A Volume Long-Term Care 46% Lab, MRI & Dialysis 5% Medical Devices 16% Other Services 21% Managed Care 3% Biotechnology 18% Home Health 8% Rehabilitation 3% E-Health 21% Physician Groups 8% Behavioral Health Care 1% Pharmaceuticals 45% Hospitals 5% Subsector Activity Comparison Healthcare Services Deal Volume Long-term care Physician Groups Home Health Hospitals Lab. MRI & Dialysis Managed Care Rehabilitation Behavioral Health Other services Healthcare Medtech, Pharma and Life Sciences 50 Deal Volume Q3 14 Q E-Health Pharmaceuticals Biotechnology Medical Devices Note: All Q3:14 deal volume and deal value figures exclude the failed acquisition of Shire (NASDAQ:SHPG by AbbVie (NYSE:ABBV).

3 Selected M&A Activity and Public Comparables Selected US Healthcare M&A Transactions - Q3:14 (US$ in millions) Date Announced Target Target Country/Region Buyer Subsector Implied Value (TEV) 9/23/2014 Springfield Service Corporation United States Conifer Health Solutions, LLC. Healthcare Services TEV / TEV / Revenue EBITDA /17/2014 Community Care Health Network, Inc. United States Providence Service Corp. Healthcare Services x 9.2x 9/15/2014 Alere Inc. United States Company Insiders Healthcare Supplies 7, x 13.8x 9/14/2014 TriZetto Corporation United States Cognizant Technology Solutions Corporation 8/25/2014 Allegro Portfolio United States American Realty Capital Healthcare Trust II Operating Partnership, LP Health Care Technology Healthcare Facilities 2, /4/2014 Symmetry Medical, Inc. United States Tecomet, Inc. Healthcare Equipment 8/1/2014 Avalon Laboratories, LLC United States Nordson Medical Corporation Healthcare Supplies 7/18/2014 Fourteen Skilled Nursing Facilities in the Mid-Atlantic Region United States Formation Capital, L.L.C.; SAFANAD Limited Healthcare Facilities 7/17/2014 Gentiva Health Services Inc. United States Kindred Healthcare (NYSE: KND) Healthcare Services 7/14/2014 NeuroTherm, Inc. United States St. Jude Medical Inc. Healthcare Equipment x 8.7x , x 11.6x Selected Public Healthcare Companies (US$ in millions, except per share amounts) Insert Company CIQ Company Name Market Cap Latest Twelve Months (LTM) Value (1) Share Price (2) % of 52- Wk High Revenue 1yr Rev. EBITDA Grow th EBITDA (3) Margin Value LTM LTM Revenue EBITDA Ambulatory Surgery AMSG Am Surg Corp. 2,412 4, % 1, % % 3.5x 19.8x Ambulatory Surgery Mean 2,412 4, % 1, % % 3.5x 19.8x Ambulatory Surgery Median 2,412 4, % 1, % % 3.5x 19.8x Assisted / Senior Living BKD Brookdale Senior Living Inc. 6,203 12, % 2, % % 4.2x 23.7x CSU Capital Senior Living Corp , % % % 3.6x 23.3x FVE Five Star Quality Care Inc % 1, % % 0.2x 6.0x Assisted / Senior Living Mean 2,362 4, % 1, % % 2.7x 17.7x Assisted / Senior Living Median 685 1, % 1, % % 3.6x 23.3x Behavioral Health ACHC Acadia Healthcare Company, Inc. 3,730 4, % % % 5.2x 26.2x PRSC Providence Service Corp % 1, % % 0.5x 9.6x Behavioral Health Mean 2,136 2, % 1, % % 2.9x 17.9x Behavioral Health Median 2,136 2, % 1, % % 2.9x 17.9x Dental Practice Management BDMS Birner Dental Management Services Inc % % 4 5.6% 0.6x 10.6x Dental Practice Management Mean % % 4 5.6% 0.6x 10.6x Dental Practice Management Median % % 4 5.6% 0.6x 10.6x Diagnostic Imaging AIQ Alliance Healthcare Services, Inc % % % 1.6x 6.2x RDNT RadNet, Inc % % % 1.4x 8.4x Diagnostic Imaging Mean % % % 1.5x 7.3x Diagnostic Imaging Median % % % 1.5x 7.3x

4 Selected Public Comparables Selected Public Healthcare Companies (US$ in millions, except per share amounts) Insert Company CIQ Company Name Market Cap Latest Twelve Months (LTM) Value (1) Share Price (2) % of 52- Wk High Revenue 1yr Rev. EBITDA Grow th EBITDA (3) Margin Value LTM LTM Revenue EBITDA Dialysis DVA DaVita HealthCare Partners Inc. 16,227 23, % 12, % 2, % 1.8x 10.1x DB:FME Fresenius Medical Care AG & Co. KGAA 22,262 30, % 15, % 2, % 2.0x 11.3x Dialysis Mean 19,244 26, % 14, % 2, % 1.9x 10.7x Dialysis Median 19,244 26, % 14, % 2, % 1.9x 10.7x Distribution ABC AmerisourceBergen Corporation 19,972 20, % 119, % 1, % nm 14.7x CAH Cardinal Health, Inc. 26,596 28, % 90, % 2, % 0.3x 11.8x HSIC Henry Schein, Inc. 11,027 11, % 10, % % 1.2x 14.6x MCK McKesson Corporation 47,392 54, % 161, % 3, % 0.3x 15.3x MWIV MWI Veterinary Supply, Inc. 2,026 2, % 2, % % 0.7x 15.8x OCR Omnicare Inc. 6,907 8, % 6, % % 1.4x 12.1x OMI Owens & Minor Inc. 2,105 2, % 9, % % 0.2x 9.5x PDCO Patterson Companies, Inc. 4,696 5, % 4, % % 1.2x 12.8x PMC PharMerica Corporation 766 1, % 1, % % 0.6x 9.7x Distribution Mean 13,499 14, % 45, % 1, % 0.7x 12.9x Distribution Median 6,907 8, % 9, % % 0.7x 12.8x Healthcare IT MDRX Allscripts Healthcare Solutions, Inc. 2,217 2, % 1, % % 2.0x nm ATHN athenahealth, Inc. 4,708 4, % % % nm nm CERN Cerner Corporation 21,900 20, % 3, % % nm 24.6x CPSI Computer Programs & Systems Inc % % % 3.1x 11.0x HMSY HMS Holdings Corp. 1,834 1, % % % 4.2x 18.4x MDAS MedAssets, Inc. 1,181 2, % % % 3.0x 10.0x QSII Quality Systems Inc % % % 1.7x 18.5x Healthcare IT Mean 4,774 4, % 1, % % 2.8x 16.5x Healthcare IT Median 1,834 2, % % % 3.0x 18.4x Home Health ADUS Addus HomeCare Corporation % % % 0.7x 11.1x AFAM Almost Family Inc % % % 0.6x 13.7x AMED Amedisys Inc % 1, % % 0.8x 18.1x GTIV Gentiva Health Services Inc , % 1, % % 0.9x 11.4x LHCG LHC Group, Inc % % % 0.7x 9.7x Home Health Mean % % % 0.7x 12.8x Home Health Median % % % 0.7x 11.4x Hospice CHE Chemed Corp. 1,830 1, % 1, % % 1.4x 10.8x Hospice Mean 1,830 1, % 1, % % 1.4x 10.8x Hospice Median 1,830 1, % 1, % % 1.4x 10.8x General Acute Care CYH Community Health Systems, Inc. 5,407 22, % 17, % 2, % 1.3x 10.4x HCA HCA Holdings, Inc. 28,498 56, % 36, % 6, % 1.6x 8.5x LPNT Lifepoint Hospitals Inc. 3,006 4, % 4, % % 1.2x 9.2x THC Tenet Healthcare Corp. 4,664 16, % 16, % 1, % 1.0x 9.4x UHS Universal Health Services Inc. 9,989 13, % 7, % 1, % 1.7x 10.0x General Acute Care Mean 10,313 22, % 16, % 2, % 1.4x 9.5x General Acute Care Median 5,407 16, % 16, % 1, % 1.3x 9.4x

5 Selected Public Comparables Selected Public Healthcare Companies (US$ in millions, except per share amounts) Latest Twelve Months (LTM) Value Insert Company CIQ Company Name Market Cap Value (1) Share Price (2) % of 52- Wk High Revenue 1yr Rev. Grow th EBITDA (3) EBITDA Margin LTM Revenue LTM EBITDA Laboratory BRLI Bio-Reference Laboratories Inc % % % 1.0x 8.5x LH Laboratory Corp. of America Holdings 8,457 10, % 5, % 1, % 1.8x 9.6x DGX Quest Diagnostics Inc. 9,111 12, % 7, % 1, % 1.8x 9.4x Laboratory Mean 6,117 8, % 4, % % 1.5x 9.2x Laboratory Median 8,457 10, % 5, % 1, % 1.8x 9.4x LTC/SNF DVCR Diversicare Healthcare Services Inc % % % 0.3x 7.1x ENSG The Ensign Group, Inc % % % 0.8x 7.5x KND Kindred Healthcare Inc. 1,254 2, % 5, % % 0.5x 9.4x NHC National Healthcare Corp % % % 1.0x 8.5x SKH Skilled Healthcare Group, Inc % % % 0.8x 10.2x LTC/SNF Mean 667 1, % 1, % % 0.7x 8.5x LTC/SNF Median % % % 0.8x 8.5x Managed Care AET Aetna Inc. 30,324 37, % 56, % 4, % 0.7x 7.7x CI Cigna Corp. 26,927 30, % 34, % 3, % 0.9x 10.0x HNT Health Net, Inc. 3,981 3, % 12, % % 0.3x 9.2x HUM Humana Inc. 21,079 22, % 46, % 2, % 0.5x 10.2x MGLN Magellan Health, Inc. 1,674 1, % 3, % % 0.4x 7.8x UNH UnitedHealth Group Incorporated 92, , % 128, % 10, % 0.8x 9.4x WCG WellCare Health Plans, Inc. 3,075 2, % 11, % % 0.2x 9.0x WLP WellPoint Inc. 34,355 49, % 72, % 5, % 0.7x 9.6x Managed Care Mean 26,751 31, % 45, % 3, % 0.6x 9.1x Managed Care Median 24,003 26, % 40, % 2, % 0.6x 9.3x PBM / Specialty Pharmacy BIOS BioScrip Inc % 1, % % 0.8x nm ESRX Express Scripts Holding Company 58,023 71, % 100, % 6, % 0.7x 11.1x PBM / Specialty Pharmacy Mean 29,210 36, % 50, % 3, % 0.8x 11.1x PBM / Specialty Pharmacy Median 29,210 36, % 50, % 3, % 0.8x 11.1x Physical Rehab HLS HEALTHSOUTH Corp. 3,373 4, % 2, % % 2.1x 9.2x SEM Select Medical Holdings Corporation 1,782 3, % 2, % % 1.1x 9.4x USPH US Physical Therapy Inc % % % 1.7x 12.0x Physical Rehab Mean 1,873 2, % 1, % % 1.6x 10.2x Physical Rehab Median 1,782 3, % 2, % % 1.7x 9.4x Physician Practice Management MD MEDNAX, Inc. 6,465 6, % 2, % % 2.8x 12.4x Phys. Practice Management Mean 6,465 6, % 2, % % 2.8x 12.4x Phys. Practice Management Median 6,465 6, % 2, % % 2.8x 12.4x Staffing AHS AMN Healthcare Services Inc % 1, % % 0.9x 10.4x CCRN Cross Country Healthcare, Inc % % % 0.7x nm ASGN On Assignment Inc. 1,599 1, % 1, % % 1.1x 11.0x TMH Team Health Holdings, Inc. 3,899 4, % 2, % % 1.7x 16.3x Staffing Mean 1,633 1, % 1, % % 1.1x 12.6x Staffing Median 1,167 1, % 1, % % 1.0x 11.0x Source: Company filings. All figures in US$; where applicable, converted at rates as of November 18, (1) As shown, Value defined as Market Capitalization plus Preferred Stock and Net Debt. (2) Closing share prices as of November 18, (3) EBITDA reduced to account for minority interest expense.

6 Selected recent transactions November 2014 A portfolio company of Jemison Investment Co., Inc. and Stonehenge Growth Capital July 2014 has been recapitalized by September 2014 May 2014 Global Coverage. Industry Knowledge. Middle- Market Focus. The Corporate Finance practices of KPMG International s network of independent member firms (KPMG) have been ranked collectively as a leading global mid-market advisor based on total deal volume announced in 2013, according to Thomson Reuters SDC. KPMG firms operate in 156 countries with over 2,600 professionals who are able to meet the needs of clients across the globe. KPMG Corporate FinanceLLC KPMG Corporate Finance LLC (KPMG CF) provides a broad range of investment banking and advisory services to its domestic and international clients. Our professionals have the experience and depth of knowledge in global M&A and project finance to advise clients on mergers and acquisitions, sales and divestitures, buyouts, financings, debt restructurings, equity recapitalizations, infrastructure projectfinance,capital advisory, real estate, portfolio solutions, and other advisory initiatives. Formore information onkpmg CF, please visit A portfolio company of March 2014 December 2013 Healthcare Investment Banking Contacts Christopher Mercier Managing Director Chicago T: E: [email protected] Maureen Spivack Managing Director NewYork T: E: [email protected] Adam Heller Vice President Chicago T: E: [email protected] kpmgcorporatefinance.com