Urgent Care Industry Overview

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Elisabeth Crawford
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1 Urgent Care Industry Overview September 2013 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 authorized and regulated by the Financial Conduct Authority (FRN #540892). Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.

Ltd, which is authorized and regulated by the Financial Conduct Authority (FRN #540892).

2 Attractive Industry Dynamics The $14.5 billion urgent care industry is expected to grow 5.8% annually through 2018P. The U.S. healthcare system is facing numerous systemic challenges, positioning urgent care for growth. Aging U.S. Population Industry Challenges Urgent Care as a Solution Aging U.S. population Expansion of insured population Rising cost Lack of access to primary care Trend towards accountable care High-quality, cost-effective medical care Provides primary care capacity Lower cost Scheduling flexibility Urgent Care Market For the Years Ended and Ending December 31, P ($ in billions) $ E CAGR: 5.4% 2013E-2018P CAGR: 5.8% $25 $20 $15 $10 $5 v $11.1 $11.9 $12.3 $13.0 $13.7 $14.5 $15.3 $16.2 $17.0 $18.2 $18.8 $ E 2014P 2015P 2016P 2017P 2018P Source: IBISWorld. 1

Population Industry Challenges Urgent Care as a So

3 Competitive Landscape The urgent care industry is heavily fragmented with the large urgent care chains comprising less than 1% of the total market. The industry consists of approximately 9,900 total urgent care centers. Traditionally competes with: Primary care Hospital and free-standing emergency rooms Pure-play occupational health clinics Retail medical clinics After-hour pediatrics For the Year Ended December 31, 2011 Urgent Care Ownership Non- Physician Individuals 8% Corporation 14% Franchises 1% Physician(s) 50% Hospitals 28% Sources: CapitalIQ, IBISWorld, and Urgent Care Association of America. 2

Traditionally competes with: Primary care Hospital and free-standing emergency rooms Pure-play occupational health clinics Retail medical clinics

4 Aging U.S. Population Growth in urgent care patient volume will be driven by favorable demographic trends. From 2005 to 2025, the population of individuals over age 65 will double to approximately 80 million. Increases utilization of healthcare services Seniors 65 years and older represent 13% of the U.S. population, but account for: 26% of physician hospital visits 3 of hospital stays 38% of emergency medical responses For the Years Ended and Ending 2010 and 2030P Percent of Population Aged 65 and Over 20% 19% % of the Total Population 1 10% 13% 0% P Age Age Age 85 and older Sources: Department of Health and Human Services and the National Ambulatory Medical Care Survey. 3

Increases utilization of healthcare services Se

5 Expansion of Government-Sponsored Private Insurance Coverage The expansion of private insurance coverage in the U.S. presents a sustainable tailwind for growth in the urgent care industry. Approximately 5 of urgent care revenue is currently reimbursed by private insurance. Individuals with private insurance are more likely to seek medical treatment at an urgent care center than a hospital setting. Private insurance companies are more likely to contract with urgent care providers to: Drive cost savings Maintain high-quality medical care The Patient Protection and Affordable Care Act is expected to add 32 million individuals with private health insurance beginning in 2014, which will drive demand for urgent care services. Private Insurance Market For the Years Ending December 31, 2013E 2018P (in millions) 2013E-2018P 230 CAGR: 2.3% Number of Individuals Source: IBISWorld E 2014P 2015P 2016P 2017P 2018P 4

Individuals with private insurance are more likely to seek medical treatment at an urgent care center than a hospital setting.

6 Low Cost Setting As the cost of healthcare treatment continues to rise, urgent care offers a compelling low cost alternative for delivering care outside the hospital. Total U.S. spend on healthcare is expected to grow 6.2% annually, with 32% occurring in hospital settings. 2013E $2.9 trillion 18% of GDP 6.2% growth per annum 2021P $4.8 trillion 20% of GDP $18 billion in potential savings by transitioning unnecessary emergency department visits to urgent care. U.S. Healthcare Expenditures For the Year Ending December 31, 2013E Urgent Care Cost Savings vs. Emergency Department For the Year Ended December 31, 2012 ($ in actuals) Other 18% Hospital Care 32% $800 $600 $650 ~80% Savings = $18 billion $400 $200 $130 Prescriptions 10% Nursing Care 6% Home Health 3% Clinical Services 23% $0 Emergency Department Urgent Care Sources: Centers for Medicare and Medicaid Services and Aetna. 5

8 trillion 20% of GDP $18 billion in potential savings by transitioning unnecessary emergency department visits to urgent care. U.S.

7 Lack of Access to Primary Care The growing lack of access to primary care in the U.S. is driving the heightened demand for urgent care utilization. Approximately 60 million individuals in the U.S. lack access to primary care, an increase from 56 million in The lack of access is driven by a number of factors including: Inconvenient hours Stringent scheduling requirements Overcapacity at primary care physician offices Change in General Physicians vs. Adult Patient Population For the Years Ending December 31, P (% change relative to 2005) Patient visits are projected to grow 30% while the supply of 3 30% generalist physicians will only grow 12%. 30% 2 20% 1 10% 7% 7% 1 13% 14% 22% 12% 0% P 2020P 2025P Total Generalists Adult Visits Source: Bureau of Health Professionals. 6

Adult Patient Population For the Years Ending December 31, 2005 2025P (% change relative to 2005) Patient visits are projected to grow 30% while the supply of 3 30% generalist physicians will only

8 Trend Towards Accountable Care The urgent care industry is well positioned to embrace the trend towards accountable care. Healthcare industry is evolving to a value-based reimbursement system. Urgent care will receive increased patient volume from health systems Health systems are becoming more involved in patient management and care delivery. Drives collaboration between pre- and post-acute providers such as urgent care Hospitals are financially incentivized to reduce admissions Payors are networking with providers that can provide high-quality, cost-effective care. ACO Challenges Urgent Care is the Solution Prevent readmissions Reduce costs across a patient population over time Ensure access to care Provide alternative to E.R. visits Allow primary care physicians to focus on chronic care management Hospital avoidances More flexible operating times and ease of access 7

Drives collaboration between pre- and post-acute providers such as urgent care Hospitals are financially incentivized to reduce admissions Payors are networking with providers that can provide

9 Overview of Reimbursement in Urgent Care The urgent care industry benefits from an attractive payor mix. Private insurance is the largest payor for urgent care services. Accounts for approximately 5 of urgent care revenue Medicare and Medicaid account for 17% and, respectively, of reimbursement for urgent care. Approximately 10% of the industry s payor mix is self-pay. Payors have shifted a greater percent of the cost burden to individuals, increasing demand for lower-cost urgent care services Urgent Care Payor Mix For the Year Ending December 31, 2013E Out-of-Pocket Payments 10% Other Medicaid Workers' Compensation Other Government 4% Medicare 17% Private Insurance 5 Source: IBISWorld. 8

Approximately 10% of the industry s payor mix is self-pay.

DENTAL PRACTICE MANAGEMENT OVERVIEW

DENTAL PRACTICE MANAGEMENT OVERVIEW November 2014 Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd,