Industry Focus: ICD-10 Compliance Date Slips, but Demand for Solutions Persists

Transcription

1 Healthcare IT Insights First Analysis Investment Banking June 2012 Industry Focus: ICD-10 Compliance Slips, but Demand for Solutions Persists On April 9, the Department of Health and Human Services (HHS) announced a proposed rule that would delay the compliance date of ICD-10 to October 1, The new proposed deadline is the second official delay of ICD-10. Recall that in 2008, a proposed rule stated the ICD-10 compliance date would be October 1, 2011 and then in January, 2009, HHS issued a final rule that pushed the date back to October 1, Earlier this year, HHS had indicated that the 2013 deadline would be extended but offered no specifics at that time. ICD-10 Compliance October X X Some provider groups had expressed serious concerns about their ability to meet the October 1, 2013 compliance date. CMS and HHS believe the change in the compliance date for ICD-10 would give providers and other covered entities more time to prepare and fully test their systems to ensure a smooth and coordinated transition among all industry segments. The proposed rule cites three issues that led CMS to consider extending the compliance date: (i) a difficult transition to Version 5010; (ii) limited resources for providers constrained by other statutory initiatives such as the EHR Incentive Program; and (iii) a lack of readiness for the transition as indicated by industry surveys. As observed in a First Analysis research note published at the time of the HHS announcement, research analyst Frank Sparacino viewed a one year ICD-10 delay as unlikely to have a major short-term negative impact on vendors as large providers continue to move forward. This most recent delay of ICD-10 compliance emboldens those who argue that ICD-10 should be permanently scrapped and that it would be less time-consuming and more cost-efficient to jump from ICD-9 to ICD-11, which is planned for However, some industry observers note that the nation should not expect to move to ICD-11 until well after 2020 given the required planning and inevitable delays that would accompany that transition. As a result, companies that address training and technology solutions to ICD-10 challenges should see appreciable growth heading through Impact for Computer Assisted Coding (CAC) Vendors With the change to ICD-10, there is a general consensus that coding and documentation will drive reimbursement to where accuracy in coding and documentation becomes inevitable. The increased complexity associated with ICD-10 will dramatically increase the ROI that healthcare providers can derive from CAC solutions. CAC has already demonstrated significant adoption as a result of advances in natural language processing and informatics, adoption of EHRs, compliance issues, and a mandate for reducing labor-intensive administrative reporting processes. Compliance with ICD-10 will make these automated tools for coding even more valuable, especially with improved functionality. While hospital officials anticipate a loss of productivity when they move to the more complex diagnostic coding system, many also hope that CAC applications will be needed to alleviate that productivity drop. Ultimately, a delay in the deadline for ICD-10 compliance may impact the timing of outlays for CAC solutions by some providers, but total investment in CAC will remain strong. Chicago, IL 60 One South Wacker Suite 3900 Chicago, IL

2 Healthcare IT Insights June 2012 U.S. EHR Adoption Update EHR adoption within U.S. hospitals continues to expand, with the average HIMSS adoption score increasing to 3.3 in 1Q In addition, 73. 9% of monitored U.S. hospitals have achieved Stage 3 or better adoption as of 1Q Q 2012 EMR Adoption Score by Hospital Size 1Q 2012 U.S. All-Hospital EMR Adoption Distribution Max Min Mean 43.9% % 5.5% 12.1% 13.2% 9.4% 6.2% 1.2% All Hospitals Stage 0 Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Source: HIMSS Analytics. N = 5,318 Source: HIMSS Analytics. N = 5,318 EHR Incentive Program Update The Medicare and Medicaidd EHR Incentive Programs provide incentive payments to eligiblee professionals, eligible hospitals and critical accesss hospitals (CAHs) as they adopt, implement, upgrade or demonstrate meaningful use of certified EHR technology. The Centers for Medicaree & Medicaid Services (CMS) began making payments under the EHR Inventive Program in 2011, and 2012 year-to-date payments through April have totaled $2.3 billion. Monthly Medicare and Medicaid Incentive Payments (June to April 2012) $ ,172 Incentive Program Active Registrationss (Program-to- April 2012) $ Payments # Providers Paid $ $561.6 $617.2 $657.7 $474.7 $276.0 $235.7 $ ,010 17,913 15,391 16,219 78,398 9,331 $80.3 $ ,394 4,511 2,972 3,467 1,161 1,777 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 Medicare Eligible Professional Medicaid Eligible Professional 198 Medicare-Only Hospital 79 Medicaid-Only Hospital 3,292 Medicare / Medicaid Hospital Source: Centers for Medicare and Medicaid Services, April Source: Centers for Medicare and Medicaid Services, April Page 2 of 12

3 Industry Stock Market Performance Over the past five years, the First Analysis HCIT Index outperformed the broader market indices. The HCIT index increased 95.3% compared to an increase of 8.6% for the NASDAQ and a decrease of 14.4% for the S&P 500 over the same period. Over the nearer term (one year) the HCIT index slightly outperformed the broader indices, increasing 1.2% compared to a decrease of 0.3% for the NASDAQ and a decrease of 2.6% for the S&P Year Indexed Performance (05/31/2007 to 05/31/2012) 1 Year Indexed Performance (05/31/2011 to 05/31/2012) 150% 120% 90% HCIT Index S&P 500 NASDAQ 95.3% 20% 10% HCIT Index S&P 500 NASDAQ 60% 30% 0% (30%) 8.6% (14.4%) 0% (10%) 1.2% (0.3%) (2.6%) (60%) May-07 May-08 May-09 May-10 May-11 May-12 (20%) May-11 Aug-11 Nov-11 Feb-12 May-12 Source: Capital IQ. First Analysis HCIT Index includes: AH, ABCO, ATHN, CERN, CPSI, EPOC, HMSY, HSTM, MDAS, MDRX, MDSO, MEDW, MRGE, NRCI and QSII. Public Market Trading Multiples As of May 31, 2012, median public market valuations for companies within the First Analysis HCIT Index was 2.95x consensus 2012 revenue estimates and 10.9x consensus 2012 EBITDA estimates. First Analysis HCIT Index Trading Multiples Enterprise Value / 2012E Revenue 5.69x 4.96x 4.70x 4.52x 3.65x 3.38x 3.12x 2.86x 2.67x 2.64x Median Metrics EV / Revenue: 2.95x 1.63x 1.39x 1.17x 0.91x 0.91x Revenue Growth: 16.6% ATHN HMSY CERN HSTM ABCO NRCI QSII CPSI MDSO MDAS MRGE MDRX MEDW AH EPOC 2012E Revenue Growth Rate 32.5% 39.3% 21.1% 23.3% 21.5% 14.4% 17.3% 12.3% 16.6% 5.3% 9.8% 4.8% 11.9% 17.8% (3.6%) 28.9x Enterprise Value / 2012E EBITDA 21.8x 19.3x 15.3x 15.1x Median Metrics EV / EBITDA: 10.9x 10.9x 10.5x 11.3x 11.3x 8.3x 8.8x 6.2x 4.4x 10.9x 9.6x EBITDA Margin: 24.8% ATHN HMSY CERN HSTM ABCO NRCI QSII CPSI MDSO MDAS MRGE MDRX MEDW AH EPOC 2012E EBITDA Margin 20.1% 32.8% 31.8% 21.1% 19.4% 31.5% 30.2% 26.2% 24.8% 32.5% 19.0% 23.0% 25.9% 9.0% 10.0% Source: Capital IQ. Data as of May 31, Page 3 of 12

4 The current HCIT median forward EBITDA multiple of 10.9x as of May 31, 2012 is below its five year average forward median multiple of 13.4x and is also below its one year average forward median multiple of 14.7x. 20.0x 18.0x 16.0x 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x First Analysis HCIT Index 5 Year Historical Median Forward EBITDA Multiples Average = 13.4x 0.0x May-07 May-08 May-09 May-10 May-11 May x 18.0x 16.0x 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x First Analysis HCIT Index 1 Year Historical Median Forward EBITDA Multiples Average = 14.7x 0.0x May-11 Aug-11 Nov-11 Feb-12 May-12 Source: Capital IQ. Note that forward estimates may not be available for all companies within the index for all periods. First Analysis HCIT Index includes: AH, ABCO, ATHN, CERN, CPSI, EPOC, HMSY, HSTM, MDAS, MDRX, MDSO, MEDW, MRGE, NRCI and QSII. Recent Industry Merger & Acquisition Activity M&A activity across the HCIT sector remains robust with both strategic and financial buyers actively seeking acquisitions. Select strategic buyers continue to acquire targets that enhance their overall suite of solutions as they try to develop a more fulsome product suite, address meaningful use requirements, and capitalize on structural changes throughout the healthcare industry that are driving demand for technology-enabled solutions that increase efficiency and improve care. For financial buyers, transformations underway throughout the healthcare sector provide a backdrop for investment theses around delivering technology solutions to facilitate change. 06/04/12 Closed Select Industry M&A Transactions (Announced from 01/01/12 to 05/31/12) Status Target Buyer Target Business Description Integrated Physician Systems Inc SuccessEHS, Offers revenue cycle management, business services and strategic advisory and consulting services to healthcare entities Transaction Value 05/22/12 Closed Patient Edu, LLC ExitCare, LLC Develops and markets patient education software programs and educational content for healthcare providers 05/16/12 Closed The Poseidon Group, NextGen Healthcare Information Systems Provides documentation and Web-based EDIS solutions to the healthcare industry $2.5 05/15/12 Closed Medify, Alliance Health Network, Provides medical research and treatment information online 05/15/12 Closed PriceDoc, Health In Reach, Provides an online marketplace connecting healthcare providers with consumers looking for medical and dental procedures 05/15/12 Closed Vendor Credentialing Service LLC The CapStreet Group, LLC A Web based vendor credentialing, vendor compliance and vendor access program to hospitals 05/15/12 Closed National Healthcare Exchange Services Gateway EDI, Operates a healthcare exchange, which provides initiated discounts for all commercial lines of business in healthcare (continued next page) Page 4 of 12

5 05/14/12 Closed Select Industry M&A Transactions (continued) (Announced from 01/01/12 to 05/31/12) Status Target Buyer Target Business Description Source Healthcare Analytics, LLC ImpactRx, Provides information, analytics and consulting services by collecting and analyzing information regarding medicines and other aspects of healthcare Transaction Value 05/10/12 Announced MedSeek Essex Woodlands Health Ventures; Silver Lake Partners Provides patient, physician, and employee portals for healthcare organizations to engage relationships with physicians, patients, employees, and consumers 05/10/12 Closed Gleric Holdings, LLC Spine Pain Management, Develops halo system technology for documenting case treatments and facts during medical procedures through an Internet protocol video enhanced platform $0.2 05/10/12 Closed Accumed Script imedx, 05/07/12 Closed TC³ Health, Emdeon Medical transcription services utilizing the internet-hosted iscribe Platform for outsourced transcription Provides claims management solutions to health care payers and integrates internal claim management systems with external loss control programs 05/04/12 Closed Marathon Multimedia, LLC Coe-Truman Technologies, Provides content management solutions for medical societies and associations, pharmaceutical companies, other healthcare professionals, and journal publishers 04/27/12 Closed KLO Professional Billing, PracticeMax, Offers revenue cycle management services 04/25/12 Closed Matrix Management Solutions LLC Quality Systems Provides various healthcare and revenue cycle management solutions, including training, design, implementation, and support for revenue cycle management solutions $ /24/12 Closed DecisionView, IMS Health Incorporated Develops Web-based clinical optimization solutions for the life sciences industry 04/24/12 Closed Smart Solutions for Health Care, WeiserMazars LLP Health care consulting company that provides information technology (IT), IT outsourcing, and revenue cycle improvement services 04/23/12 Closed Ascentia Health Care Solutions, LLC Healthways Develops programs to support and promote population health management, patient centered programs, payer strategies and provider enhancement programs 04/23/12 Closed Thomson Reuters (Healthcare) Veritas Capital Provides data, analytics and performance benchmarking solutions and services to the healthcare industry $1, /19/12 Closed BlueLibris, LLC Numera, Offers mobile health and safety monitoring with Libri, a personal heath gateway that is connected over the mobile network to a cloud-based architecture 04/17/12 Closed Pinsonault Associates, LLC Decision Resources Group Provides managed markets business and training solutions for pharmaceutical and biotech manufacturers 04/10/12 Closed CodeRyte, 3M Co. Provides natural language processing and computer-assisted coding technologies to the health care industry (continued next page) Page 5 of 12

6 04/03/12 Announced Select Industry M&A Transactions (continued) (Announced from 01/01/12 to 05/31/12) Status Target Buyer Target Business Description Health Information Kiosks of Merge Healthcare Solutions Higi LLC The Health Information Kiosks of Merge Healthcare provide point-of-use health information to customers including vitals, weight and blood pressure Transaction Value $2.8 04/02/12 Closed GlobalNet Solutions, Medical Transcription Billing, Corp. Develops and provides electronic health practice and revenue cycle management solutions 03/29/12 Announced ClearTrial, LLC Oracle Provides SaaS-based Clinical Trial Operations software for planning, forecasting, and tracking clinical project and financial performance 03/22/12 Closed Talon IP Communications, Knowledge Anywhere, Develops software applications, including an e-health solution that allows physicians to provide health education and clinical information to patients through and over the Web 03/22/12 Closed LaBelle Strategic Resources, Knowledge Anywhere, Provides IT and services to healthcare organizations, including project management, implementation, training, support and help desk, staff augmentation and permanent placements 03/20/12 Closed Artemetrx LLC Pharmaceutical Strategies Group, LLC A healthcare analytics and solutions company that develops and implements blueprints for healthy cost savings 03/19/12 Closed MD Technologies MD On-Line, Provides SaaS and healthcare revenue cycle management and solutions to physicians and other healthcare providers 03/13/12 Closed 4G Biometrics, LLC ActiveCare, Offers real-time information regarding the current glycemic index status of enrolled diabetics and telemedicine intervention, which includes physician contact and lifestyle coaching $0.5 03/12/12 Closed STAT Technologies, Passport Health Communications, Develops and delivers HCIT solutions, including enterprise outpatient scheduling solutions, a surgery information system; enterprise inpatient flow management, and physician portal 03/12/12 Closed RealAge, Sharecare, Provides personalized health information and health management tools 03/07/12 Closed Transcend Services, Nuance Communications, Provides transcription and clinical documentation services to the healthcare industry $ /06/12 Closed WellApps, Medivo Develops and distributes symptom tracking applications for patients with chronic illnesses 03/06/12 Closed Phacts, LLC CareFusion Provides HCIT services, including software and equipment to create, print and apply barcodes to non-oral solid medications and an inventory management and workflow administration software 03/05/12 Closed Medical Transcription Assets of Inner Office imedx, Provides medical transcription services 02/29/12 Closed OptiMed, MediGain, Provides revenue cycle management, business consulting and software hosting solutions for physicians and hospitals (continued next page) Page 6 of 12

7 Select Industry M&A Transactions (continued) (Announced from 01/01/12 to 05/31/12) Status Target Buyer Target Business Description 02/29/12 Closed DermSEO.com TastyPlacement Provides search engine optimization (SEO) and Web design services for dermatologists Transaction Value 02/28/12 Closed escreen, Alere A technology-enabled TPA that provides Web-based employment screening applications for hiring and maintaining workforces $ /28/12 Closed BOSTON LIFE LABs, LLC NantWorks LLC Offers telehealth systems, including a hub that transmits data from patient to clinician, caregiver, and/or family member via GSM/GPRS and/or WiFi 02/28/12 Closed Clinical Coding Solutions, T-System, Provides medical charge management and auditing services to hospital emergency departments 02/24/12 Effective Intuitive Medical Software, LLC and meridianemr, HealthTronics, Provide urology specific electronic medical record software (EMR) and solutions 02/23/12 Closed PatientWorks SalePoint, Sells, markets and services an enterprise document automation software solution for the healthcare market 02/23/12 Closed SweetSpot Diabetes Care, DexCom, Provides a range of diabetes technology services that enable endocrinology clinics to download patients device data and generate reports $9.8 02/21/12 Closed PatientPoint, Healthy Advice Networks, LLC fka Greatwater Software, develops and deploys self-service applications for the healthcare industry 02/16/12 Closed Intego Systems Critical Alert Systems, LLC fka Intego Systems, develops and manufactures nurse call systems and integrated software products for hospitals 02/14/12 Closed NaviNet, Three Blues plans and Lumeris, fka NaviMedix, provides healthcare communications network solutions 02/09/12 Closed Parses Sunera LLC Provides E/M audits solutions for healthcare customers, including an online solution that audits medical records to assess the correctness of physician billing and payment 02/09/12 Effective Benchmark Revenue Management, Avadyne Health Provides Web-based single platform revenue cycle workflow and reporting solutions for hospitals 02/08/12 Closed Concerro, Incorporated API Healthcare SaaS company providing healthcare workforce and emergency response and incident management systems for hospitals 02/08/12 Closed peervue, McKesson Provides workflow and communication solutions for the healthcare industry 02/08/12 Closed SeniorMetrix Navihealth, Provides predictive modeling, analytical, benchmarking and case management services to health plans 02/07/12 Closed Trilogi, Recondo Technology, Provides revenue cycle management and recovery services for the health care industry 02/02/12 Closed CDS Oncology Assets of Proventys McKesson The assets consist of a web based clinical decision support system for cancer patients which offers a guide for diagnostic and therapeutic decisions (continued next page) Page 7 of 12

8 01/31/12 Closed Select Industry M&A Transactions (continued) (Announced from 01/01/12 to 05/31/12) Status Target Buyer Target Business Description PhyLogic Healthcare, LLC ADP AdvancedMD Provides Web-based medical billing and revenue cycle management services Transaction Value 01/20/12 Closed OptiLink Kronos Incorporated Engages in the development and distribution of patient classification and staffing computer software used in the health care industry to measure organizational performance $8.9 01/20/12 Closed Jbytes LLC Adaptive Software LLC Develops web applications and customized software for the pharmacy benefits management market 01/17/12 Closed SDI Health LLC, Health Promotional and Medical Audit Units Campbell Alliance Group, Promotional and medical audit businesses of SDI Health, which IMS committed to divest in connection with its acquisition of SDI 01/12/12 Announced Kocsis Consulting Group, The TriZetto Group, Services include end user training, business process improvements, and 5010 and ICD-10 preparedness 01/11/12 Closed MedDirect, MedData, A healthcare payment services management company 01/09/12 Closed Evolvent Technologies, ManTech International Provides HCIT services to the federal government, offering clinical information technology services and clinical business intelligence services $ /09/12 Closed Advanced Informatics, LLC Ascend Learning, LLC Offers online evaluations for medical and health professional organizations 01/06/12 Closed Practice Management Associates, LLC T-System, Provides coding, billing, and collection services to physician groups 01/05/12 Closed Medical Data Express, LLC The TriZetto Group, Technology consulting and solutions to the healthcare market, including an encounter management software to work with claims processing systems 01/05/12 Closed ALMSA Yardi Systems, Provides Web-based assisted living, LTC, group, and retirement community management software 01/04/12 Closed Cumberland Consulting Group, LLC Tailwind Capital Provides health IT consulting services for ambulatory, acute and postacute healthcare providers 01/04/12 Closed Vigilan Incorporated RealPage, Provides SaaS assisted and senior living, assisted living programs, and care plan software $5.0 01/04/12 Closed Transtem, LLC Source: Capital IQ and public announcements. Mediware Information Systems Operates as a custom software development and professional consulting company and offers a stem cell management software solution with a patient and program management focus $0.7 Page 8 of 12

9 Recent Industry Private Capital Raising Activities Venture and growth capital providers continue to seek opportunities to deploy capital in the HCIT sector as industry changes create opportunities for new and disruptive technologies to achieve significant growth over the next several years. The sector continues to attract the interest of investors, and larger private companies are likely to pursue future sales and public market options, including potential IPOs. Offer / Close Status Company 05/15/12 05/15/12 Closed Simplificare, 05/03/12 -- Announced Net.Orange, 04/26/12 05/01/12 Closed 04/16/12 -- Announced 04/05/12 -- Announced 04/03/12 -- Effective 03/15/12 05/23/12 Closed Castlight Health, MMRGlobal, (OTCBB:MMRF) Health Intelligence Company, LLC Awarepoint InstaMed Communications, LLC 03/12/12 03/12/12 Closed Jiff, 03/05/12 -- Effective 03/02/12 03/06/12 Closed Kinnser Software, Integrity On Site LLC 02/23/12 02/23/12 Closed Truveris, 02/23/12 02/23/12 Closed Halfpenny Technologies, Select Industry Private Placements (Announced from 01/01/2012 to 05/31/2012) Primary Feature (Details) (Minority Stake Investment) Multiple Tranches; Regulation D) (Foreign Investment; Minority Stake Investment; Regulation D) PIPE (Equity Line; Minority Stake Investment; Multiple Tranches) Multiple Tranches; Regulation D) (Convertible Equity; Mezzanine; Regulation D) (Individual Investors Participated; Minority Stake Investment; Regulation D) (Foreign Investment; Minority Stake Investment) Regulation D) Multiple Tranches; Regulation D) Regulation D) (Minority Stake Investment) Target Business Description Develops and offers online healthcare expense management software that enables medical bill tracking, insurance claim management, billing error detection, and expense analytics Healthcare information management solutions for cardiologists, clinics, health systems, hospitals, imaging centers, and oncologists Offers companies a hosted software tool that provides employees with personalized views of their medical benefits and the costs associated with medical procedures Provides online personal health records and electronic safe deposit box storage solutions that enable individuals to access their medical records and other documents dba Blue Health Intelligence, provides data-driven insights about healthcare trends and best practices Offers real-time location systems that are used by hospitals to track, monitor, and optimize the utilization and workflow of personnel, patients, and equipment Operates as a real-time clearinghouse and payment processor for the healthcare industry Develops HIPAA-compliant social network and digital health apps platform for healthcare industry Healthcare solutions including an administration and billing solution; a platform that focuses on time tracking, order signing, and e-referrals; and a patient care management tool dba DocuTAP, offers electronic medical record and practice management solutions for urgent care facilities Provides management tools to sponsors of and payers of claims under prescription benefit plans Provides healthcare connectivity and integration solutions for heath information exchange (HIE), clinical data exchange, and computerized physician order entry applications (continued next page) Amount Raised $6.0 $6.0 $100.0 $15.0 $13.1 $14.0 $14.0 $7.5 $39.9 $12.0 $10.0 $6.6 Page 9 of 12

10 Offer / Close Status 02/12/12 -- Announced Select Industry Private Placements (continued) (Announced from 01/01/2012 to 05/31/2012) Company LD Healthcare Systems Corp. Primary Feature (Details) (Convertible Debt; Mezzanine; Multiple Tranches; Regulation D) Target Business Description Amount Raised Distributes healthcare technology systems $5.2 02/02/12 02/02/12 Closed PerfectServe, (Minority Stake Investment) Provides clinical communications and clinical information delivery solutions for hospitals $ /25/12 -- Effective MedSeek Regulation D) Provides patient, physician, and employee portals for healthcare organizations to engage relationships with physicians, patients, employees, and consumers $5.5 01/24/12 -- Announced LiveProcess Multiple Tranches; Regulation D) Provides software and professional services to address ongoing compliance issues, and manage an emergency preparedness and response program for hospitals $6.0 01/17/12 01/17/12 Closed Sharecare, (Minority Stake Investment) Provides interactive healthcare platform for consumers to ask, learn and act on the questions of health $ /10/12 -- Effective InTouch Technologies, Regulation D) dba InTouch Health, develops, manufactures, and markets remote presence technology solutions, including RP-7 and RP-7i robots that are remote presence systems $6.0 Source: Capital IQ and public announcements. Recent Industry Public Capital Raising Activity The U.S. IPO market picked up in the early part of More recently, the IPO market is settling into a deep freeze following Facebook's troubled initial public offering in mid-may. A number of companies postponed their IPO plans as the markets reacted poorly to the Facebook IPO, which has temporarily frozen the IPO markets. In addition, poor jobs reports and continued concerns over the economic situation in Europe, if not globally, create an environment that makes it more challenging for companies to test the public markets. Select Announced and Pending Industry Public Offerings (Announced or Closed from 01/01/2012 to 05/31/2012) Initial Filing Offer Status Company Primary Feature (Security Type) Company Description Amount Raised 05/09/12 05/10/12 Closed SXC Health Solutions, Corp. (TSX:SXC) Follow-on Equity Offering (Common Stock) Provides pharmacy benefit management (PBM) services and HCIT solutions to the healthcare benefits management industry $ /01/11 03/27/12 Closed Vocera Communications, (NYSE:VCRA) IPO (Common Stock) Provides mobile communication solutions to healthcare and non-healthcare markets $ /15/11 02/01/12 Closed Greenway Medical Technologies, (NYSE:GWAY) IPO (Common Stock) Provides integrated information technology solutions and managed business services to ambulatory healthcare providers $66.7 Source: Capital IQ and public announcements. Page 10 of 12

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12 About First Analysis Investment Banking Founded in 1981, First Analysis has a 30 year track record of serving emerging growth companies and established industry leaders within its focused areas of domain expertise. Our investment banking practice leverages industry insights developed through our equity research and private equity activities to deliver value to clients across the life cycle of a business. Providing senior level attention to every client, First Analysis offers superior execution across a comprehensive range of investment banking services, including M&A advisory, public equity and debt financing, and private equity placements. First Analysis Securities One South Wacker Drive, Suite 3900 Chicago, IL Matt Nicklin (312) [email protected] Brian Friedman (312) [email protected] Paul Johnson (312) [email protected] This report has been prepared by the Investment Banking Department of First Analysis Securities and is provided for informational purposes only. This report is an overview and analysis of trends and is not intended to provide investment recommendations on any specific industry or company. Neither the information nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities. This is not a complete analysis of every material fact regarding any company, industry, or security. The opinions expressed herein reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. Past performance and any projections herein should not be taken as an indication or guarantee of future performance. First Analysis Securities may act as financial advisor and/or underwriter for companies mentioned in this report. This report may contain information which was previously included in a First Analysis Research Report. A complete listing of all companies covered by First Analysis Equity Research and applicable research disclosures can be obtained by calling or writing to: First Analysis Securities, Equity Research, One South Wacker Drive, Suite 3900, Chicago, IL First Analysis Securities is a registered broker/dealer with FINRA and member SIPC. Page 12 of 12