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Q11 Healthcare Report

The document summarizes a report from Hyde Park Capital Advisors on healthcare mergers and acquisitions (M&A) activity in the fourth quarter of 2011. It provides contact information for several senior directors and associates at the firm. It then reviews capital market performance in Q4 2011 and lists several healthcare-related initial public offerings (IPOs) and secondary offerings. The rest of the document analyzes trends in annual and quarterly middle market M&A activity and transaction pricing in the healthcare industry for 2011.

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HYDE PARK CAPITAL Investment Banking | Mergers & Acquisitions | Capital Raising John Hill Senior Managing Director hill@hydeparkcapital.com Healthcare (813) 383-0205 John McDonald M&A Report Senior Managing Director mcdonald@hydeparkcapital.com Q4 2011 (813) 383-0206 Keith Hodgdon Senior Vice President hodgdon@hydeparkcapital.com (813) 383-0208 Jeffrey Bridge Vice President bridge@hydeparkcapital.com (813) 383-0204 Michael Mariani Associate mariani@hydeparkcapital.com (813) 597-2649 Hyde Park Capital Advisors, LLC 701 N. Franklin Street Tampa, FL 33602 Tel: 813-383-0202 www.hydeparkcapital.com Member FINRA/SIPC
Capital Markets Overview Commentary Select Public Offerings – Healthcare (Q4 2011) ($ in millions)  As of December 31, 2011, major market indices including the S&P Offer Date Issuer Industry Sector IPO / Secondary Offering Size 500, Nasdaq and S&P Global Healthcare indices shown below, 11/16/11 Cigna Corp. Managed Healthcare Secondary $650 rallied during the recently completed 4th quarter. However, when 11/15/11 Clovis Oncology, Inc. Biotechnology IPO $130 compared to prior year levels the S&P 500 and Nasdaq remained relatively flat, while the S&P Global Healthcare index increased 8%. 10/18/11 ZELTIQ Aesthetics, Inc. Healthcare Equipment & Supplies IPO $91 11/14/11 Cadence Pharmaceuticals, Inc. Pharmaceuticals IPO $71  As detailed in the table on the right, the equity markets displayed overall strength and investor demand across the Healthcare 12/15/11 Acadia Healthcare Company, Inc. Healthcare Facilities Secondary $63 industry as several initial public offerings were announced and 11/16/11 Idenix Pharmaceuticals, Inc. Biotechnology Secondary $61 successfully completed during the 4th quarter. 11/17/11 Healthstream, Inc. Healthcare Technology Secondary $53  In Q4 2011, the Healthcare industry’s strongest performing sector Pending Cancer Genetics, Inc. Healthcare Equipment & Supplies IPO $50 was Managed Healthcare, which climbed 19% during the quarter 11/10/11 NewLink Genetics Corp. Biotechnology IPO $43 and gained 33% for the full year 2011. 12/15/11 MELA Sciences, Inc. Healthcare Equipment & Supplies Secondary $16 Public Market Performance (LTM) Public Company Market Performance by Sector 120% Median Change in Stock Price Enterprise Value / LTM 8.3% Industry Sector 3 Months 12 months Revenue EBITDA 110% Healthcare Facilities 9.5% (19.5%) 1.0x 6.5x 0% Healthcare Services 20.1% 3.5% 1.6x 7.5x 100% Managed Healthcare 18.5% 32.6% 0.4x 5.2x 1.8% Healthcare Technology (2.0%) 7.5% 3.3x 13.3x 90% Healthcare Equipment and Supplies 9.5% (4.0%) 2.5x 8.4x Healthcare Distribution 8.5% 8.6% 0.3x 7.9x 80% Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 S&P 500 Nasdaq S&P Global Healthcare Index Source: Capital IQ HYDE PARK CAPITAL 2 Investment Banking | Mergers & Acquisitions | Capital Raising
Annual Middle Market M&A Activity – Healthcare Commentary Middle Market Purchase Multiples – Enterprise Value / EBITDA  As detailed in the annual charts below, overall U.S. middle market M&A activity, or deal volume, in the Healthcare industry was at a three-year high in 2011 with 317 closed transactions, up nearly 5% from 2010 and on par with 2007 activity.  In addition to increased deal activity, the total value of completed M&A transactions for 2011 climbed approximately 5% to $46 billion, up from $44 billion in the prior year period. In terms of total transaction value, 2011 equaled 2007 levels and ranks as the top performing year over the past decade.  In 2011, middle market transaction pricing, defined as Enterprise Value over EBITDA, declined slightly from a historical perspective to an average of 11.5x for completed middle market transactions across the entire Healthcare industry. U.S. Middle Market M&A Activity – Annual Trends: VOLUME U.S. Middle Market M&A Activity – Annual Trends: VALUE Total Transaction Value ($ in billions) Total Transaction Volume Less than $100M $100 - $499M $500 - $1,000M Less than $100M $100 - $499M $500 - $1,000M Source: Capital IQ (middle market includes all closed deals with disclosed deal value between $10 million and $1 billion) HYDE PARK CAPITAL 3 Investment Banking | Mergers & Acquisitions | Capital Raising
Quarterly Middle Market M&A Activity – Healthcare Commentary Middle Market M&A Transactions by Deal Size – Healthcare  Overall, during the 4th quarter Healthcare M&A transaction volume ($ in billions) and value declined year-over-year across most segments of the middle market (deals valued at less than $1 billion). Q4 2010 Q4 2011 % Change Deal Size Volume Value Volume Value Volume Value Less than $100M 74 $2.6 36 $1.6 (51.4%) (39.1%)  The number of completed Healthcare deals valued at less than $500 $100 - $499M 35 $7.0 28 $7.4 (20.0%) 5.9% million declined 41% in Q4 2011 to 64, down from 109 in Q4 2010, $500 - $999M 14 $9.6 3 $2.0 (78.6%) (78.7%) while total deal value for the segment decreased approximately 6% Total Middle Market 123 $19.3 67 $11.1 (45.5%) (42.5%) over the same period to $9 billion. % of Middle Market  Transactions valued at less than $500 million represented slightly Less than $100M 60% 14% 54% 14% more than 95% of the total deal volume in Q4 2011, an increase $100 - $499M 28% 37% 42% 67% $500 - $999M 11% 11% 4% 18% from the prior year, and accounted for approximately 80% of the Total Middle Market 100% 100% 100% 100% total deal value during the quarter. U.S. Middle Market M&A Activity – Quarterly Trends: VOLUME U.S. Middle Market M&A Activity – Quarterly Trends: VALUE Total Transaction Value ($ in billions) Total Transaction Volume Less than $100M $100 - $499M $500 - $1,000M Less than $100M $100 - $499M $500 - $1,000M Source: Capital IQ (middle market includes all closed deals with disclosed deal value between $10 million and $1 billion) HYDE PARK CAPITAL 4 Investment Banking | Mergers & Acquisitions | Capital Raising
M&A Activity by Healthcare Sector U.S. Middle Market M&A Activity by Healthcare Sector: VOLUME % Change 24% 34% 61% 16% 40% 8% 2010 2011 U.S. Middle Market M&A Activity by Healthcare Sector: VALUE % Change ($ in billions) 30% 36% 70% 6% 400% 11% 2010 2011 Source: Capital IQ (includes all closed deals with disclosed deal value between $10 million and $1 billion) HYDE PARK CAPITAL 5 Investment Banking | Mergers & Acquisitions | Capital Raising
Private Equity Activity – Healthcare Commentary Select Private Equity Transactions – Healthcare (Q4 2011) ($ in millions) T  With financing markets cooperating, financial sponsors remained Announced Date Target a Buyer Industry Transaction Value C active across all sectors of the Healthcare industry in the 4th quarter 10/03/11 Pharmaceutical Product e Hellman & Friedman Life Sciences $3,875 Development, Inc. of 2011, as shown in the table on the right. Medtronic Emergency Response p V 11/17/11 a Bain Capital, LLC Healthcare Equipment $487 Systems, Inc. r D  Several notable transactions were announced during the 4th 11/07/11 American Dental Partners, Inc. P JLL Partners Healthcare Services $396 L quarter, including Bain Capital’s buyout of Medtronic Emergency 10/31/11 Legend Healthcare, LLC, Four G r National Health Investors, Inc. Healthcare Facilities $55 Response Systems, Inc., a subsidiary of Medtronic, Inc. (NYSE:MDT) Nursing Facilities a D for nearly $500 million; and JLL Partners proposed acquisition of 10/14/11 Bethesda Health City, Inc. P L Investcorp International, Inc. Healthcare Facilities $37 C American Dental Partners, Inc. (NasdaqGS:ADPI), a provider of 12/14/11 HealthMEDX, Inc. o Spectrum Equity Investors Health Care Technology NA dental practice management services, for approximately $400 n D 12/07/11 Blue Belt Technologies, Inc. P HealthpointCapital Healthcare Equipment NA million (as detailed on this page). L S 12/02/11 SouthernCare, Inc. o Kohlberg & Co. Healthcare Services NA u  During the 4th quarter, financial sponsors represented the buyer in 11/15/11 Den-Mat Holdings, LLC S y Centre Partners Management Healthcare Equipment NA approximately 1 of 7 completed deals. n N 10/21/11 Great Expressions Dental Centers a OMERS Private Equity Healthcare Services NA t Financial Sponsors vs. Strategic Buyers Profiled Healthcare Private Equity Transaction American Dental Partners, Inc. (NasdaqGS:ADPI) to be acquired by JLL Partners Announced Nov. 7, 2011 Total Transaction Value ($ in billions) Financial Profile Transaction Analysis ($ in millions) Total Transaction Volume LTM Income Statement 9/30/11 Purchase Price (Equity) $295.0 Revenue $289.3 Net Assumed Liabilities $76.2 EBITDA $48.9 Total Rights/Warrants/Options $18.8 Net Income $11.3 Implied Enterprise Value $390.0 As of Balance Sheet 9/30/11 Implied Purchase Multiples Cash $5.7 Revenue 1.3x Financial Sponsor Strategic Buyer Financial Sponsor Strategic Buyer Debt $81.4 EBITDA 8.0x Net Debt $75.7 Net Income NM Source: Capital IQ (includes all closed deals with disclosed deal value between $10 million and $1 billion) HYDE PARK CAPITAL 6 Investment Banking | Mergers & Acquisitions | Capital Raising
Industry Sector Overview – Healthcare Facilities Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA HCA Holdings, Inc. HCA $22.03 62.3% $10,830 $37,416 $31,904 $13,645 $5,620 42.8% 17.6% 1.2x 6.7x Community Health Systems, Inc. CYH $17.45 41.1% $1,596 $10,453 $13,901 $6,402 $1,720 46.1% 12.4% 0.8x 6.1x Universal Health Services, Inc. UHS $38.86 68.8% $3,839 $7,537 $7,221 $3,164 $1,153 43.8% 16.0% 1.0x 6.5x Tenet Healthcare Corp. THC $5.13 66.6% $2,636 $6,546 $9,523 $3,918 $1,124 41.1% 11.8% 0.7x 5.8x Health Management Associates, Inc. HMA $7.37 62.8% $1,873 $5,344 $5,592 $2,637 $802 47.2% 14.3% 1.0x 6.7x Lifepoint Hospitals, Inc. LPNT $37.15 85.5% $1,915 $3,306 $3,497 $1,685 $550 48.2% 15.7% 0.9x 6.0x HEALTHSOUTH Corp. HLS $17.67 62.0% $1,924 $3,185 $2,121 $974 $464 45.9% 21.9% 1.5x 6.9x Vanguard Health Systems, Inc. VHS $10.22 55.0% $540 $2,732 $5,552 $1,421 $449 25.6% 8.1% 0.5x 6.1x Select Medical Holdings Corp. SEM $8.48 87.8% $1,305 $2,717 $2,723 $593 $370 21.8% 13.6% 1.0x 7.3x AmSurg Corp. AMSG $26.04 93.0% $809 $1,200 $754 $424 $266 56.2% 35.2% 1.6x 4.5x Hanger Orthopedic Group, Inc. HGR $18.69 65.6% $635 $1,111 $897 $316 $145 35.3% 16.2% 1.2x 7.7x Average 68.2% $2,537 $7,413 $7,608 $3,198 $1,151 41.3% 16.6% 1.0x 6.4x Median 65.6% $1,873 $3,306 $5,552 $1,685 $550 43.8% 15.7% 1.0x 6.5x Stock Price Performance (LTM) Select M&A Transactions – Facilities (Q4 2011) ($ in millions) Closed Enterprise EV / EV / 130% Date Target Buyer / Investor Value Revenue EBITDA Nov-11 American Access Care, LLC Fresenius Medical Care AG & Co. $385 NA NA 120% Oct-11 Saint Vincent Catholic Medical Centers North Shore – Long Island Jewish Health System, Inc. $260 NA NA 110% Dec-11 Palmyra Park Hospital, Inc. Phoebe Putney Memorial Hospital, Inc. $198 NA NA Oct-11 Tomball Regional Medical Center Community Health Systems, Inc. $192 NA NA 100% 0% Pending Health Central, Inc. Orlando Health, Inc. $177 NA NA 90% Pending Southeastern Skilled Nursing Facility Portfolio Grubb & Ellis Healthcare REIT II, Inc. $167 NA NA Nov-11 15 Properties in US Chartwell Seniors Housing REIT $142 NA NA 80% 19.5% Pending Eight Property Seniors-Housing Portfolio Harrison Street Real Estate Capital $125 NA NA Oct-11 Kisco Senior Living, 3 Assisted Living Facilities Clarion Partners Americas, LLC $100 NA NA 70% Nov-11 Hoboken University Medical Center HUMC Holdco, LLC $92 NA NA 60% Nov-11 Edgehill Continuing Care Retirement Benchmark Senior Living, LLC $72 NA NA Community, Inc. Nov-11 Belmont Village Senior Living Facility Health Care REIT, Inc. $69 NA NA 50% Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Oct-11 Seven Senior Living Facilities Sunrise Senior Living Investments, Inc. $65 NA NA Legend Healthcare, LLC, Four Skilled Nursing Oct-11 National Health Investors, Inc. $55 NA NA S&P 500 Healthcare Facilities Index Facilities Oct-11 Woodland Terrace Senior Living Complex Prudential Real Estate Investors $53 NA NA Source: Capital IQ *Highlighted indicates announced transactions during the quarter that have not been completed. HYDE PARK CAPITAL 7 Investment Banking | Mergers & Acquisitions | Capital Raising
Industry Sector Overview – Healthcare Services Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA Quest Diagnostics, Inc. DGX $58.06 94.9% $9,484 $13,577 $7,455 $3,084 $1,558 41.4% 20.9% 1.8x 8.7x DaVita, Inc. DVA $75.81 84.5% $7,395 $11,354 $6,776 $2,169 $1,326 32.0% 19.6% 1.7x 8.6x Laboratory Corp. of America Holdings LH $85.97 85.2% $8,861 $10,759 $5,472 $2,255 $1,254 41.2% 22.9% 2.0x 8.6x MEDNAX, Inc. MD $72.01 95.4% $3,493 $3,501 $1,552 $560 $374 36.1% 24.1% 2.3x 9.4x MedQuist Holdings, Inc. MEDH $9.62 67.7% $436 $695 $438 $180 $109 41.2% 24.8% 1.6x 6.4x Alliance Healthcare Services, Inc. AIQ $1.26 26.6% $67 $674 $491 $212 $139 43.2% 28.3% 1.4x 4.9x RadNet, Inc. RDNT $2.13 41.0% $82 $613 $598 $188 $102 31.4% 17.1% 1.0x 6.0x Bio-Reference Laboratories, Inc. BRLI $16.27 62.6% $456 $483 $559 $271 $75 48.5% 13.3% 0.9x 6.5x Average 69.7% $3,784 $5,207 $2,918 $1,115 $617 39.4% 21.4% 1.6x 7.4x Median 76.1% $1,975 $2,098 $1,075 $416 $256 41.2% 21.9% 1.6x 7.5x Stock Price Performance (LTM) Select M&A Transactions – Services (Q4 2011) ($ in millions) Closed Enterprise EV / EV / 130% Date Target Buyer Value Revenue EBITDA Nov-11 Caris Life Sciences, Inc., Anatomic Pathology Business MIRACA Holdings, Inc $725.0 3.5x NA 120% Pending American Dental Partners, Inc. JLL Partners $390.0 1.3x 8.0x Oct-11 Continucare Corp. Metropolitan Health Networks, Inc. $368.5 1.1x 8.6x 110% 3.5% Pending HealthTran, LLC SXC Health Solutions, Inc. $250.0 0.9x 12.5x Nov-11 TheraCom, LLC Lash Group Healthcare Consultants $250.0 0.4x NA 100% 0% Oct-11 Allied Healthcare International, Inc. Saga Group, Ltd. $140.4 0.5x 7.7x Oct-11 CellTex Therapeutics Corp. RNL Bio Co., Ltd. $100.9 NA NA 90% Dec-11 American Medical Alert Corp. Tunstall Group, Ltd. $80.8 1.9x 12.6x 80% Oct-11 Impulse Monitoring, Inc. NuVasive, Inc. $80.0 NA NA Nov-11 Platinum Medical Imaging, LLC Oxford Instruments plc $55.0 3.9x NA 70% Nov-11 American Radiology Services, Inc. and The Imaging Institute Radnet Management, Inc. $45.7 NA NA Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Nov-11 College of Veterinary Medicine, Research Animal Diagnostic IDEXX Laboratories, Inc. $43.0 NA NA Laboratory S&P 500 Healthcare Services Index Nov-11 The Corkery Group, Inc. Cooney/Waters Group, Inc. $27.0 2.7x NA Source: Capital IQ *Highlighted indicates announced transactions during the quarter that have not been completed. HYDE PARK CAPITAL 8 Investment Banking | Mergers & Acquisitions | Capital Raising
Industry Sector Overview – Managed Healthcare Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA Unitedhealth Group, Inc. UNH $50.68 94.7% $55,495 $51,037 $99,976 $27,007 $9,169 27.0% 9.2% 0.5x 5.6x Aetna, Inc. AET $42.19 91.7% $16,434 $16,861 $33,747 $10,008 $3,656 29.7% 10.8% 0.5x 4.6x WellPoint, Inc. WLP $66.25 80.9% $24,908 $15,509 $60,118 $13,552 $5,278 22.5% 8.8% 0.3x 2.9x Cigna Corp. CI $42.00 79.3% $11,459 $12,443 $21,946 $9,447 $2,506 43.0% 11.4% 0.6x 5.0x Humana, Inc. HUM $87.61 96.3% $14,784 $4,871 $36,323 $7,802 $2,496 21.5% 6.9% 0.1x* 2.0x* Coventry Health Care, Inc. CVH $30.37 80.2% $4,499 $4,109 $12,101 $2,961 $928 24.5% 7.7% 0.3x 4.4x HealthSpring, Inc. HS $54.54 99.3% $3,457 $2,737 $4,996 $1,000 $507 20.0% 10.1% 0.5x 5.4x AMERIGROUP Corp. AGP $59.08 78.0% $3,032 $2,470 $6,174 $1,088 $417 17.6% 6.7% 0.4x 5.9x Centene Corp. CNC $39.59 97.0% $2,060 $1,843 $5,027 $1,084 $247 21.6% 4.9% 0.4x 7.5x Average 88.6% $15,125 $12,431 $31,157 $8,217 $2,800 25.3% 8.5% 0.4x 5.2x *Excluded from average and median calculation. Median 91.7% $11,459 $4,871 $21,946 $7,802 $2,496 22.5% 8.8% 0.4x 5.2x Stock Price Performance (LTM) Select M&A Transactions – Managed Healthcare (Q4 2011) ($ in millions) Closed Enterprise EV / EV / 160% Date Target Buyer Value Revenue EBITDA 150% Pending HealthSpring, Inc. CIGNA Corp. $3,140.4 0.6x 6.2x 140% The AmeriHealth Mercy Family of 32.6% Dec-11 Companies Blue Cross Blue Shield of Michigan, Inc. $340.0 NA NA 130% Pending XLHealth Corp. United HealthCare Services, Inc. NA NA NA 120% 110% Dec-11 Burlington Anesthesia Associates PA MEDNAX, Inc. NA NA NA 100% 0% Dec-11 PCA Hospitalists, Inc. IPC The Hospitalist Company, Inc. NA NA NA 90% Nov-11 Senior Whole Health, LLC TA Associates NA NA NA 80% 70% Oct-11 Community Care Health Network, Inc. Welsh, Carson, Anderson & Stowe NA NA NA 60% Oct-11 Outcome Based Delivery Systems, LLC JSA Healthcare Corp. NA NA NA Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Oct-11 MEA Management, LLC Team Health Holdings, Inc. NA NA NA S&P 500 Managed Care Index *Highlighted indicates announced transactions during the quarter that have not been completed. Source: Capital IQ HYDE PARK CAPITAL 9 Investment Banking | Mergers & Acquisitions | Capital Raising
Industry Sector Overview – Healthcare Technology Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA Cerner Corp. CERN $61.25 82.3% $10,547 $9,979 $2,088 $1,683 $556 80.6% 26.6% 4.8x 18.0x Allscripts Healthcare Solutions, Inc. MDRX $18.94 81.9% $3,746 $4,042 $1,366 $630 $246 46.1% 18.0% 3.0x 16.4x WebMD Health Corp. WBMD $37.55 64.1% $2,371 $2,067 $577 $376 $149 65.2% 25.8% 3.6x 13.9x Quality Systems, Inc. QSII $36.99 73.0% $2,168 $2,042 $397 $261 $123 65.6% 31.0% 5.1x 16.6x athenahealth, Inc. ATHN $49.12 67.6% $1,756 $1,637 $301 $189 $52 62.6% 17.1% 5.4x 31.8x* MedAssets, Inc. MDAS $9.25 43.1% $530 $1,407 $528 $404 $141 76.5% 26.7% 2.7x 10.0x Merge Healthcare, Inc. MRGE $4.85 67.1% $412 $617 $215 $138 $49 64.3% 22.8% 2.9x 12.6x Computer Programs & Systems, Inc. CPSI $51.11 64.6% $563 $535 $174 $80 $43 46.1% 24.7% 3.1x 12.4x Medidata Solutions, Inc. MDSO $21.75 79.4% $539 $436 $185 $131 $40 71.0% 21.7% 2.4x 10.9x Healthstream, Inc. HSTM $18.45 95.5% $428 $397 $78 $49 $15 62.5% 19.2% 5.1x 26.6x* Average 71.9% $2,306 $2,316 $591 $394 $141 64.1% 23.4% 3.8x 13.8x *Excluded from average and median calculation. Median 70.3% $1,159 $1,522 $349 $225 $87 64.7% 23.7% 3.3x 13.3x Stock Price Performance (LTM) Select M&A Transactions – Technology (Q4 2011) ($ in millions) 140% Closed Date Target Buyer Enterprise Value EV / Revenue EV / EBITDA Nov-11 Emdeon, Inc. Hellman & Friedman $3,306.3 3.1x 13.1x 130% Dec-11 HealthDataInsights, Inc. HMS Holdings Corp. $400.0 NA NA 120% Nov-11 Sage Software Healthcare, Inc. Vista Equity Partners $314.7 1.3x NA 7.5% 110% Dec-11 HealthMEDX, Inc. Spectrum Equity Investors NA NA NA Dec-11 Anvita, Inc. Humana, Inc. NA NA NA 100% 0% Nov-11 The Breakaway Group, Inc. Affiliated Computer Services, Inc. NA NA NA 90% Nov-11 Poiesis Informatics, Inc. MedQuist Holdings, Inc. NA NA NA Nov-11 MobileMD, Inc. Siemens Healthcare NA NA NA 80% Oct-11 SDI Health, LLC IMS Health, Inc. NA NA NA 70% Oct-11 Financial Healthcare Systems, LLC TransUnion Healthcare, LLC NA NA NA Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Oct-11 Clairvia, Inc. Cerner Corp. NA NA NA S&P 500 Healthcare Technology Index Source: Capital IQ HYDE PARK CAPITAL 10 Investment Banking | Mergers & Acquisitions | Capital Raising
Industry Sector Overview – Healthcare Equipment & Supplies Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA Covidien plc COV $45.01 78.1% $22,370 $25,075 $11,574 $6,619 $3,172 57.2% 27.4% 2.2x 7.9x Stryker Corp. SYK $49.71 76.2% $19,598 $18,165 $8,087 $5,519 $2,417 68.2% 29.9% 2.2x 7.5x Zimmer Holdings, Inc. ZMH $53.42 76.4% $10,322 $10,899 $4,419 $3,336 $1,578 75.5% 35.7% 2.5x 6.9x CR Bard, Inc. BCR $85.50 75.1% $7,588 $7,730 $2,862 $1,783 $921 62.3% 32.2% 2.7x 8.4x Varian Medical Systems, Inc. VAR $67.13 93.0% $7,971 $7,585 $2,597 $1,136 $641 43.7% 24.7% 2.9x 11.8x DENTSPLY International, Inc. XRAY $34.99 86.7% $5,027 $7,019 $2,368 $1,216 $470 51.4% 19.8% 3.0x 14.9x Alere, Inc. ALR $23.09 56.1% $1,954 $4,751 $2,314 $1,210 $471 52.3% 20.3% 2.1x 10.1x The Cooper Companies, Inc. COO $70.52 83.8% $3,392 $3,834 $1,331 $807 $328 60.6% 24.6% 2.9x 11.7x Lincare Holdings, Inc. LNCR $25.71 80.9% $2,420 $2,986 $1,777 $891 $450 50.1% 25.3% 1.7x 6.6x Sirona Dental Systems, Inc. SIRO $44.04 76.1% $2,523 $2,546 $914 $484 $233 52.9% 25.5% 2.8x 10.9x Steris Corp. STE $29.82 78.5% $1,799 $1,875 $1,367 $559 $247 40.9% 18.1% 1.4x 7.6x Average 78.2% $7,724 $8,406 $3,601 $2,142 $994 55.9% 25.8% 2.4x 9.5x Median 78.1% $5,027 $7,019 $2,368 $1,210 $471 52.9% 25.3% 2.5x 8.4x Stock Price Performance (LTM) Select M&A Transactions – Equipment & Supplies (Q4 2011) ($ in millions) Closed Enterprise EV / EV / 130% Date Target Buyer Value Revenue EBITDA Nov-11 Kinetic Concepts, Inc. Apax Partners Worldwide $5,793.2 2.8x 9.1x Pending SonoSite, Inc. FUJIFILM Holdings Corp. $855.9 2.8x 23.0x 120% Nov-11 Atrium Medical Corp. MAQUET Cardiovascular, LLC $680.0 NA NA Pending Medtronic Emergency Response Systems, Inc. Bain Capital $487.0 NA NA 110% Nov-11 Baxa Corp. Baxter International, Inc. $380.0 2.5x NA Jan-12 BÂRRX Medical, Inc. Covidien plc $325.0 NA NA 0% 100% Dec-11 Lutonix, Inc. CR Bard, Inc. $325.0 NA NA Pending Synovis Life Technologies, Inc. Baxter International, Inc. $253.5 3.1x 17.8x 4.0% Nov-11 Medivance, Inc. Bard Medical, Inc. $250.0 NA NA 90% Nov-11 Medicis Technologies Corp. Solta Medical, Inc. $184.6 NM NA Dec-11 Codman & Shurtleff, Inc., Surgical Instruments Business Specialty Surgical Instrumentation, Inc. $165.0 NA NA 80% Oct-11 Reichert, Inc. Ametek, Inc. $150.0 2.7x NA Oct-11 Concentric Medical, Inc. Stryker Corp. $135.0 NA NA 70% Nov-11 IZI Medical Products, Inc. Landauer, Inc. $93.0 5.0x NA Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Oct-11 Claros Diagnostics, Inc. Opko Health, Inc. $55.3 NA NA Dec-11 Webtec Converting, LLC Scapa Group plc $45.0 1.7x NA S&P 500 Healthcare Equipment & Supplies Index Oct-11 Calypso Medical Technologies, Inc. Varian Medical Systems, Inc. $10.0 0.7x NA Source: Capital IQ *Highlighted indicates announced transactions during the quarter that have not been completed. HYDE PARK CAPITAL 11 Investment Banking | Mergers & Acquisitions | Capital Raising
Industry Sector Overview – Healthcare Distribution Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA McKesson Corp MCK $77.91 89.2% $19,906 $19,955 ###### $6,368 $2,659 5.4% 2.3% 0.2x 7.5x Cardinal Health, Inc. CAH $40.61 86.3% $14,290 $14,701 ###### $4,284 $1,951 4.1% 1.9% 0.1x 7.5x AmerisourceBergen Corp. ABC $37.19 85.6% $10,328 $9,867 $80,218 $2,537 $1,352 3.2% 1.7% 0.1x 7.3x Henry Schein, Inc. HSIC $64.43 85.9% $6,014 $6,339 $8,214 $2,340 $673 28.5% 8.2% 0.8x 9.4x Omnicare, Inc. OCR $34.45 97.7% $3,919 $5,382 $6,272 $1,388 $612 22.1% 9.8% 0.9x 8.8x Patterson Companies, Inc. PDCO $29.52 79.9% $3,489 $3,643 $3,413 $1,144 $402 33.5% 11.8% 1.1x 9.1x Owens & Minor, Inc. OMI $27.79 77.8% $1,748 $1,764 $8,502 $851 $235 10.0% 2.8% 0.2x 7.5x PSS World Medical, Inc. PSSI $24.19 82.1% $1,353 $1,569 $2,095 $659 $169 31.4% 8.1% 0.7x 9.3x PharMerica Corp. PMC $15.18 92.3% $446 $697 $2,077 $277 $89 13.3% 4.3% 0.3x 7.9x Average 86.3% $6,832 $7,102 $37,009 $2,205 $905 16.8% 5.6% 0.5x 8.2x Median 85.9% $3,919 $5,382 $8,214 $1,388 $612 13.3% 4.3% 0.3x 7.9x Stock Price Performance (LTM) Select M&A Transactions – Distribution (Q4 2011) ($ in millions) Closed Enterprise EV / EV / 140% Date Target Buyer Value Revenue EBITDA Nov-11 Arriva Medical, LLC Alere, Inc. $83.6 NA NA 130% Pending Esperanza Dental Supply Co. Benco Dental Co. NA NA NA 120% Pending Integrated Healthcare Services, Inc. MSC Group, Inc. NA NA NA 110% 8.6% *Highlighted indicates announced transactions during the quarter that have not been completed. 100% 0% 90% 80% 70% Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 S&P 500 Healthcare Distribution Index Source: Capital IQ HYDE PARK CAPITAL 12 Investment Banking | Mergers & Acquisitions | Capital Raising
HYDE PARK CAPITAL Investment Banking | Mergers & Acquisitions | Capital Raising Recent Transactions John Hill Senior Managing Director hill@hydeparkcapital.com (813) 383-0205 has been acquired by has been recapitalized by has been acquired by has been acquired by has acquired John McDonald Senior Managing Director mcdonald@hydeparkcapital.com ADG Acquisition (813) 383-0206 Harbert Mezzanine Partners Holdings, LLC Keith Hodgdon Senior Vice President hodgdon@hydeparkcapital.com (813) 383-0208 Jeffrey Bridge has been acquired by has been acquired by has been acquired by has been recapitalized by has merged with Vice President bridge@hydeparkcapital.com (813) 383-0204 Michael Mariani Associate mariani@hydeparkcapital.com (813) 597-2649 has been recapitalized by has acquired has been recapitalized by has been acquired by has been acquired by Hyde Park Capital Advisors, LLC Sage Compliance 701 N. Franklin Street Services, Inc. Tampa, FL 33602 Tel: 813-383-0202 www.hydeparkcapital.com HYDE PARK CAPITAL Member FINRA/SIPC Investment Banking | Mergers & Acquisitions | Capital Raising

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Q11 Healthcare Report

  • 1.
    HYDE PARK CAPITAL Investment Banking | Mergers & Acquisitions | Capital Raising John Hill Senior Managing Director [email protected] Healthcare (813) 383-0205 John McDonald M&A Report Senior Managing Director [email protected] Q4 2011 (813) 383-0206 Keith Hodgdon Senior Vice President [email protected] (813) 383-0208 Jeffrey Bridge Vice President [email protected] (813) 383-0204 Michael Mariani Associate [email protected] (813) 597-2649 Hyde Park Capital Advisors, LLC 701 N. Franklin Street Tampa, FL 33602 Tel: 813-383-0202 www.hydeparkcapital.com Member FINRA/SIPC
  • 2.
    Capital Markets Overview Commentary Select Public Offerings – Healthcare (Q4 2011) ($ in millions)  As of December 31, 2011, major market indices including the S&P Offer Date Issuer Industry Sector IPO / Secondary Offering Size 500, Nasdaq and S&P Global Healthcare indices shown below, 11/16/11 Cigna Corp. Managed Healthcare Secondary $650 rallied during the recently completed 4th quarter. However, when 11/15/11 Clovis Oncology, Inc. Biotechnology IPO $130 compared to prior year levels the S&P 500 and Nasdaq remained relatively flat, while the S&P Global Healthcare index increased 8%. 10/18/11 ZELTIQ Aesthetics, Inc. Healthcare Equipment & Supplies IPO $91 11/14/11 Cadence Pharmaceuticals, Inc. Pharmaceuticals IPO $71  As detailed in the table on the right, the equity markets displayed overall strength and investor demand across the Healthcare 12/15/11 Acadia Healthcare Company, Inc. Healthcare Facilities Secondary $63 industry as several initial public offerings were announced and 11/16/11 Idenix Pharmaceuticals, Inc. Biotechnology Secondary $61 successfully completed during the 4th quarter. 11/17/11 Healthstream, Inc. Healthcare Technology Secondary $53  In Q4 2011, the Healthcare industry’s strongest performing sector Pending Cancer Genetics, Inc. Healthcare Equipment & Supplies IPO $50 was Managed Healthcare, which climbed 19% during the quarter 11/10/11 NewLink Genetics Corp. Biotechnology IPO $43 and gained 33% for the full year 2011. 12/15/11 MELA Sciences, Inc. Healthcare Equipment & Supplies Secondary $16 Public Market Performance (LTM) Public Company Market Performance by Sector 120% Median Change in Stock Price Enterprise Value / LTM 8.3% Industry Sector 3 Months 12 months Revenue EBITDA 110% Healthcare Facilities 9.5% (19.5%) 1.0x 6.5x 0% Healthcare Services 20.1% 3.5% 1.6x 7.5x 100% Managed Healthcare 18.5% 32.6% 0.4x 5.2x 1.8% Healthcare Technology (2.0%) 7.5% 3.3x 13.3x 90% Healthcare Equipment and Supplies 9.5% (4.0%) 2.5x 8.4x Healthcare Distribution 8.5% 8.6% 0.3x 7.9x 80% Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 S&P 500 Nasdaq S&P Global Healthcare Index Source: Capital IQ HYDE PARK CAPITAL 2 Investment Banking | Mergers & Acquisitions | Capital Raising
  • 3.
    Annual Middle MarketM&A Activity – Healthcare Commentary Middle Market Purchase Multiples – Enterprise Value / EBITDA  As detailed in the annual charts below, overall U.S. middle market M&A activity, or deal volume, in the Healthcare industry was at a three-year high in 2011 with 317 closed transactions, up nearly 5% from 2010 and on par with 2007 activity.  In addition to increased deal activity, the total value of completed M&A transactions for 2011 climbed approximately 5% to $46 billion, up from $44 billion in the prior year period. In terms of total transaction value, 2011 equaled 2007 levels and ranks as the top performing year over the past decade.  In 2011, middle market transaction pricing, defined as Enterprise Value over EBITDA, declined slightly from a historical perspective to an average of 11.5x for completed middle market transactions across the entire Healthcare industry. U.S. Middle Market M&A Activity – Annual Trends: VOLUME U.S. Middle Market M&A Activity – Annual Trends: VALUE Total Transaction Value ($ in billions) Total Transaction Volume Less than $100M $100 - $499M $500 - $1,000M Less than $100M $100 - $499M $500 - $1,000M Source: Capital IQ (middle market includes all closed deals with disclosed deal value between $10 million and $1 billion) HYDE PARK CAPITAL 3 Investment Banking | Mergers & Acquisitions | Capital Raising
  • 4.
    Quarterly Middle MarketM&A Activity – Healthcare Commentary Middle Market M&A Transactions by Deal Size – Healthcare  Overall, during the 4th quarter Healthcare M&A transaction volume ($ in billions) and value declined year-over-year across most segments of the middle market (deals valued at less than $1 billion). Q4 2010 Q4 2011 % Change Deal Size Volume Value Volume Value Volume Value Less than $100M 74 $2.6 36 $1.6 (51.4%) (39.1%)  The number of completed Healthcare deals valued at less than $500 $100 - $499M 35 $7.0 28 $7.4 (20.0%) 5.9% million declined 41% in Q4 2011 to 64, down from 109 in Q4 2010, $500 - $999M 14 $9.6 3 $2.0 (78.6%) (78.7%) while total deal value for the segment decreased approximately 6% Total Middle Market 123 $19.3 67 $11.1 (45.5%) (42.5%) over the same period to $9 billion. % of Middle Market  Transactions valued at less than $500 million represented slightly Less than $100M 60% 14% 54% 14% more than 95% of the total deal volume in Q4 2011, an increase $100 - $499M 28% 37% 42% 67% $500 - $999M 11% 11% 4% 18% from the prior year, and accounted for approximately 80% of the Total Middle Market 100% 100% 100% 100% total deal value during the quarter. U.S. Middle Market M&A Activity – Quarterly Trends: VOLUME U.S. Middle Market M&A Activity – Quarterly Trends: VALUE Total Transaction Value ($ in billions) Total Transaction Volume Less than $100M $100 - $499M $500 - $1,000M Less than $100M $100 - $499M $500 - $1,000M Source: Capital IQ (middle market includes all closed deals with disclosed deal value between $10 million and $1 billion) HYDE PARK CAPITAL 4 Investment Banking | Mergers & Acquisitions | Capital Raising
  • 5.
    M&A Activity byHealthcare Sector U.S. Middle Market M&A Activity by Healthcare Sector: VOLUME % Change 24% 34% 61% 16% 40% 8% 2010 2011 U.S. Middle Market M&A Activity by Healthcare Sector: VALUE % Change ($ in billions) 30% 36% 70% 6% 400% 11% 2010 2011 Source: Capital IQ (includes all closed deals with disclosed deal value between $10 million and $1 billion) HYDE PARK CAPITAL 5 Investment Banking | Mergers & Acquisitions | Capital Raising
  • 6.
    Private Equity Activity– Healthcare Commentary Select Private Equity Transactions – Healthcare (Q4 2011) ($ in millions) T  With financing markets cooperating, financial sponsors remained Announced Date Target a Buyer Industry Transaction Value C active across all sectors of the Healthcare industry in the 4th quarter 10/03/11 Pharmaceutical Product e Hellman & Friedman Life Sciences $3,875 Development, Inc. of 2011, as shown in the table on the right. Medtronic Emergency Response p V 11/17/11 a Bain Capital, LLC Healthcare Equipment $487 Systems, Inc. r D  Several notable transactions were announced during the 4th 11/07/11 American Dental Partners, Inc. P JLL Partners Healthcare Services $396 L quarter, including Bain Capital’s buyout of Medtronic Emergency 10/31/11 Legend Healthcare, LLC, Four G r National Health Investors, Inc. Healthcare Facilities $55 Response Systems, Inc., a subsidiary of Medtronic, Inc. (NYSE:MDT) Nursing Facilities a D for nearly $500 million; and JLL Partners proposed acquisition of 10/14/11 Bethesda Health City, Inc. P L Investcorp International, Inc. Healthcare Facilities $37 C American Dental Partners, Inc. (NasdaqGS:ADPI), a provider of 12/14/11 HealthMEDX, Inc. o Spectrum Equity Investors Health Care Technology NA dental practice management services, for approximately $400 n D 12/07/11 Blue Belt Technologies, Inc. P HealthpointCapital Healthcare Equipment NA million (as detailed on this page). L S 12/02/11 SouthernCare, Inc. o Kohlberg & Co. Healthcare Services NA u  During the 4th quarter, financial sponsors represented the buyer in 11/15/11 Den-Mat Holdings, LLC S y Centre Partners Management Healthcare Equipment NA approximately 1 of 7 completed deals. n N 10/21/11 Great Expressions Dental Centers a OMERS Private Equity Healthcare Services NA t Financial Sponsors vs. Strategic Buyers Profiled Healthcare Private Equity Transaction American Dental Partners, Inc. (NasdaqGS:ADPI) to be acquired by JLL Partners Announced Nov. 7, 2011 Total Transaction Value ($ in billions) Financial Profile Transaction Analysis ($ in millions) Total Transaction Volume LTM Income Statement 9/30/11 Purchase Price (Equity) $295.0 Revenue $289.3 Net Assumed Liabilities $76.2 EBITDA $48.9 Total Rights/Warrants/Options $18.8 Net Income $11.3 Implied Enterprise Value $390.0 As of Balance Sheet 9/30/11 Implied Purchase Multiples Cash $5.7 Revenue 1.3x Financial Sponsor Strategic Buyer Financial Sponsor Strategic Buyer Debt $81.4 EBITDA 8.0x Net Debt $75.7 Net Income NM Source: Capital IQ (includes all closed deals with disclosed deal value between $10 million and $1 billion) HYDE PARK CAPITAL 6 Investment Banking | Mergers & Acquisitions | Capital Raising
  • 7.
    Industry Sector Overview– Healthcare Facilities Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA HCA Holdings, Inc. HCA $22.03 62.3% $10,830 $37,416 $31,904 $13,645 $5,620 42.8% 17.6% 1.2x 6.7x Community Health Systems, Inc. CYH $17.45 41.1% $1,596 $10,453 $13,901 $6,402 $1,720 46.1% 12.4% 0.8x 6.1x Universal Health Services, Inc. UHS $38.86 68.8% $3,839 $7,537 $7,221 $3,164 $1,153 43.8% 16.0% 1.0x 6.5x Tenet Healthcare Corp. THC $5.13 66.6% $2,636 $6,546 $9,523 $3,918 $1,124 41.1% 11.8% 0.7x 5.8x Health Management Associates, Inc. HMA $7.37 62.8% $1,873 $5,344 $5,592 $2,637 $802 47.2% 14.3% 1.0x 6.7x Lifepoint Hospitals, Inc. LPNT $37.15 85.5% $1,915 $3,306 $3,497 $1,685 $550 48.2% 15.7% 0.9x 6.0x HEALTHSOUTH Corp. HLS $17.67 62.0% $1,924 $3,185 $2,121 $974 $464 45.9% 21.9% 1.5x 6.9x Vanguard Health Systems, Inc. VHS $10.22 55.0% $540 $2,732 $5,552 $1,421 $449 25.6% 8.1% 0.5x 6.1x Select Medical Holdings Corp. SEM $8.48 87.8% $1,305 $2,717 $2,723 $593 $370 21.8% 13.6% 1.0x 7.3x AmSurg Corp. AMSG $26.04 93.0% $809 $1,200 $754 $424 $266 56.2% 35.2% 1.6x 4.5x Hanger Orthopedic Group, Inc. HGR $18.69 65.6% $635 $1,111 $897 $316 $145 35.3% 16.2% 1.2x 7.7x Average 68.2% $2,537 $7,413 $7,608 $3,198 $1,151 41.3% 16.6% 1.0x 6.4x Median 65.6% $1,873 $3,306 $5,552 $1,685 $550 43.8% 15.7% 1.0x 6.5x Stock Price Performance (LTM) Select M&A Transactions – Facilities (Q4 2011) ($ in millions) Closed Enterprise EV / EV / 130% Date Target Buyer / Investor Value Revenue EBITDA Nov-11 American Access Care, LLC Fresenius Medical Care AG & Co. $385 NA NA 120% Oct-11 Saint Vincent Catholic Medical Centers North Shore – Long Island Jewish Health System, Inc. $260 NA NA 110% Dec-11 Palmyra Park Hospital, Inc. Phoebe Putney Memorial Hospital, Inc. $198 NA NA Oct-11 Tomball Regional Medical Center Community Health Systems, Inc. $192 NA NA 100% 0% Pending Health Central, Inc. Orlando Health, Inc. $177 NA NA 90% Pending Southeastern Skilled Nursing Facility Portfolio Grubb & Ellis Healthcare REIT II, Inc. $167 NA NA Nov-11 15 Properties in US Chartwell Seniors Housing REIT $142 NA NA 80% 19.5% Pending Eight Property Seniors-Housing Portfolio Harrison Street Real Estate Capital $125 NA NA Oct-11 Kisco Senior Living, 3 Assisted Living Facilities Clarion Partners Americas, LLC $100 NA NA 70% Nov-11 Hoboken University Medical Center HUMC Holdco, LLC $92 NA NA 60% Nov-11 Edgehill Continuing Care Retirement Benchmark Senior Living, LLC $72 NA NA Community, Inc. Nov-11 Belmont Village Senior Living Facility Health Care REIT, Inc. $69 NA NA 50% Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Oct-11 Seven Senior Living Facilities Sunrise Senior Living Investments, Inc. $65 NA NA Legend Healthcare, LLC, Four Skilled Nursing Oct-11 National Health Investors, Inc. $55 NA NA S&P 500 Healthcare Facilities Index Facilities Oct-11 Woodland Terrace Senior Living Complex Prudential Real Estate Investors $53 NA NA Source: Capital IQ *Highlighted indicates announced transactions during the quarter that have not been completed. HYDE PARK CAPITAL 7 Investment Banking | Mergers & Acquisitions | Capital Raising
  • 8.
    Industry Sector Overview– Healthcare Services Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA Quest Diagnostics, Inc. DGX $58.06 94.9% $9,484 $13,577 $7,455 $3,084 $1,558 41.4% 20.9% 1.8x 8.7x DaVita, Inc. DVA $75.81 84.5% $7,395 $11,354 $6,776 $2,169 $1,326 32.0% 19.6% 1.7x 8.6x Laboratory Corp. of America Holdings LH $85.97 85.2% $8,861 $10,759 $5,472 $2,255 $1,254 41.2% 22.9% 2.0x 8.6x MEDNAX, Inc. MD $72.01 95.4% $3,493 $3,501 $1,552 $560 $374 36.1% 24.1% 2.3x 9.4x MedQuist Holdings, Inc. MEDH $9.62 67.7% $436 $695 $438 $180 $109 41.2% 24.8% 1.6x 6.4x Alliance Healthcare Services, Inc. AIQ $1.26 26.6% $67 $674 $491 $212 $139 43.2% 28.3% 1.4x 4.9x RadNet, Inc. RDNT $2.13 41.0% $82 $613 $598 $188 $102 31.4% 17.1% 1.0x 6.0x Bio-Reference Laboratories, Inc. BRLI $16.27 62.6% $456 $483 $559 $271 $75 48.5% 13.3% 0.9x 6.5x Average 69.7% $3,784 $5,207 $2,918 $1,115 $617 39.4% 21.4% 1.6x 7.4x Median 76.1% $1,975 $2,098 $1,075 $416 $256 41.2% 21.9% 1.6x 7.5x Stock Price Performance (LTM) Select M&A Transactions – Services (Q4 2011) ($ in millions) Closed Enterprise EV / EV / 130% Date Target Buyer Value Revenue EBITDA Nov-11 Caris Life Sciences, Inc., Anatomic Pathology Business MIRACA Holdings, Inc $725.0 3.5x NA 120% Pending American Dental Partners, Inc. JLL Partners $390.0 1.3x 8.0x Oct-11 Continucare Corp. Metropolitan Health Networks, Inc. $368.5 1.1x 8.6x 110% 3.5% Pending HealthTran, LLC SXC Health Solutions, Inc. $250.0 0.9x 12.5x Nov-11 TheraCom, LLC Lash Group Healthcare Consultants $250.0 0.4x NA 100% 0% Oct-11 Allied Healthcare International, Inc. Saga Group, Ltd. $140.4 0.5x 7.7x Oct-11 CellTex Therapeutics Corp. RNL Bio Co., Ltd. $100.9 NA NA 90% Dec-11 American Medical Alert Corp. Tunstall Group, Ltd. $80.8 1.9x 12.6x 80% Oct-11 Impulse Monitoring, Inc. NuVasive, Inc. $80.0 NA NA Nov-11 Platinum Medical Imaging, LLC Oxford Instruments plc $55.0 3.9x NA 70% Nov-11 American Radiology Services, Inc. and The Imaging Institute Radnet Management, Inc. $45.7 NA NA Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Nov-11 College of Veterinary Medicine, Research Animal Diagnostic IDEXX Laboratories, Inc. $43.0 NA NA Laboratory S&P 500 Healthcare Services Index Nov-11 The Corkery Group, Inc. Cooney/Waters Group, Inc. $27.0 2.7x NA Source: Capital IQ *Highlighted indicates announced transactions during the quarter that have not been completed. HYDE PARK CAPITAL 8 Investment Banking | Mergers & Acquisitions | Capital Raising
  • 9.
    Industry Sector Overview– Managed Healthcare Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA Unitedhealth Group, Inc. UNH $50.68 94.7% $55,495 $51,037 $99,976 $27,007 $9,169 27.0% 9.2% 0.5x 5.6x Aetna, Inc. AET $42.19 91.7% $16,434 $16,861 $33,747 $10,008 $3,656 29.7% 10.8% 0.5x 4.6x WellPoint, Inc. WLP $66.25 80.9% $24,908 $15,509 $60,118 $13,552 $5,278 22.5% 8.8% 0.3x 2.9x Cigna Corp. CI $42.00 79.3% $11,459 $12,443 $21,946 $9,447 $2,506 43.0% 11.4% 0.6x 5.0x Humana, Inc. HUM $87.61 96.3% $14,784 $4,871 $36,323 $7,802 $2,496 21.5% 6.9% 0.1x* 2.0x* Coventry Health Care, Inc. CVH $30.37 80.2% $4,499 $4,109 $12,101 $2,961 $928 24.5% 7.7% 0.3x 4.4x HealthSpring, Inc. HS $54.54 99.3% $3,457 $2,737 $4,996 $1,000 $507 20.0% 10.1% 0.5x 5.4x AMERIGROUP Corp. AGP $59.08 78.0% $3,032 $2,470 $6,174 $1,088 $417 17.6% 6.7% 0.4x 5.9x Centene Corp. CNC $39.59 97.0% $2,060 $1,843 $5,027 $1,084 $247 21.6% 4.9% 0.4x 7.5x Average 88.6% $15,125 $12,431 $31,157 $8,217 $2,800 25.3% 8.5% 0.4x 5.2x *Excluded from average and median calculation. Median 91.7% $11,459 $4,871 $21,946 $7,802 $2,496 22.5% 8.8% 0.4x 5.2x Stock Price Performance (LTM) Select M&A Transactions – Managed Healthcare (Q4 2011) ($ in millions) Closed Enterprise EV / EV / 160% Date Target Buyer Value Revenue EBITDA 150% Pending HealthSpring, Inc. CIGNA Corp. $3,140.4 0.6x 6.2x 140% The AmeriHealth Mercy Family of 32.6% Dec-11 Companies Blue Cross Blue Shield of Michigan, Inc. $340.0 NA NA 130% Pending XLHealth Corp. United HealthCare Services, Inc. NA NA NA 120% 110% Dec-11 Burlington Anesthesia Associates PA MEDNAX, Inc. NA NA NA 100% 0% Dec-11 PCA Hospitalists, Inc. IPC The Hospitalist Company, Inc. NA NA NA 90% Nov-11 Senior Whole Health, LLC TA Associates NA NA NA 80% 70% Oct-11 Community Care Health Network, Inc. Welsh, Carson, Anderson & Stowe NA NA NA 60% Oct-11 Outcome Based Delivery Systems, LLC JSA Healthcare Corp. NA NA NA Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Oct-11 MEA Management, LLC Team Health Holdings, Inc. NA NA NA S&P 500 Managed Care Index *Highlighted indicates announced transactions during the quarter that have not been completed. Source: Capital IQ HYDE PARK CAPITAL 9 Investment Banking | Mergers & Acquisitions | Capital Raising
  • 10.
    Industry Sector Overview– Healthcare Technology Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA Cerner Corp. CERN $61.25 82.3% $10,547 $9,979 $2,088 $1,683 $556 80.6% 26.6% 4.8x 18.0x Allscripts Healthcare Solutions, Inc. MDRX $18.94 81.9% $3,746 $4,042 $1,366 $630 $246 46.1% 18.0% 3.0x 16.4x WebMD Health Corp. WBMD $37.55 64.1% $2,371 $2,067 $577 $376 $149 65.2% 25.8% 3.6x 13.9x Quality Systems, Inc. QSII $36.99 73.0% $2,168 $2,042 $397 $261 $123 65.6% 31.0% 5.1x 16.6x athenahealth, Inc. ATHN $49.12 67.6% $1,756 $1,637 $301 $189 $52 62.6% 17.1% 5.4x 31.8x* MedAssets, Inc. MDAS $9.25 43.1% $530 $1,407 $528 $404 $141 76.5% 26.7% 2.7x 10.0x Merge Healthcare, Inc. MRGE $4.85 67.1% $412 $617 $215 $138 $49 64.3% 22.8% 2.9x 12.6x Computer Programs & Systems, Inc. CPSI $51.11 64.6% $563 $535 $174 $80 $43 46.1% 24.7% 3.1x 12.4x Medidata Solutions, Inc. MDSO $21.75 79.4% $539 $436 $185 $131 $40 71.0% 21.7% 2.4x 10.9x Healthstream, Inc. HSTM $18.45 95.5% $428 $397 $78 $49 $15 62.5% 19.2% 5.1x 26.6x* Average 71.9% $2,306 $2,316 $591 $394 $141 64.1% 23.4% 3.8x 13.8x *Excluded from average and median calculation. Median 70.3% $1,159 $1,522 $349 $225 $87 64.7% 23.7% 3.3x 13.3x Stock Price Performance (LTM) Select M&A Transactions – Technology (Q4 2011) ($ in millions) 140% Closed Date Target Buyer Enterprise Value EV / Revenue EV / EBITDA Nov-11 Emdeon, Inc. Hellman & Friedman $3,306.3 3.1x 13.1x 130% Dec-11 HealthDataInsights, Inc. HMS Holdings Corp. $400.0 NA NA 120% Nov-11 Sage Software Healthcare, Inc. Vista Equity Partners $314.7 1.3x NA 7.5% 110% Dec-11 HealthMEDX, Inc. Spectrum Equity Investors NA NA NA Dec-11 Anvita, Inc. Humana, Inc. NA NA NA 100% 0% Nov-11 The Breakaway Group, Inc. Affiliated Computer Services, Inc. NA NA NA 90% Nov-11 Poiesis Informatics, Inc. MedQuist Holdings, Inc. NA NA NA Nov-11 MobileMD, Inc. Siemens Healthcare NA NA NA 80% Oct-11 SDI Health, LLC IMS Health, Inc. NA NA NA 70% Oct-11 Financial Healthcare Systems, LLC TransUnion Healthcare, LLC NA NA NA Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Oct-11 Clairvia, Inc. Cerner Corp. NA NA NA S&P 500 Healthcare Technology Index Source: Capital IQ HYDE PARK CAPITAL 10 Investment Banking | Mergers & Acquisitions | Capital Raising
  • 11.
    Industry Sector Overview– Healthcare Equipment & Supplies Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA Covidien plc COV $45.01 78.1% $22,370 $25,075 $11,574 $6,619 $3,172 57.2% 27.4% 2.2x 7.9x Stryker Corp. SYK $49.71 76.2% $19,598 $18,165 $8,087 $5,519 $2,417 68.2% 29.9% 2.2x 7.5x Zimmer Holdings, Inc. ZMH $53.42 76.4% $10,322 $10,899 $4,419 $3,336 $1,578 75.5% 35.7% 2.5x 6.9x CR Bard, Inc. BCR $85.50 75.1% $7,588 $7,730 $2,862 $1,783 $921 62.3% 32.2% 2.7x 8.4x Varian Medical Systems, Inc. VAR $67.13 93.0% $7,971 $7,585 $2,597 $1,136 $641 43.7% 24.7% 2.9x 11.8x DENTSPLY International, Inc. XRAY $34.99 86.7% $5,027 $7,019 $2,368 $1,216 $470 51.4% 19.8% 3.0x 14.9x Alere, Inc. ALR $23.09 56.1% $1,954 $4,751 $2,314 $1,210 $471 52.3% 20.3% 2.1x 10.1x The Cooper Companies, Inc. COO $70.52 83.8% $3,392 $3,834 $1,331 $807 $328 60.6% 24.6% 2.9x 11.7x Lincare Holdings, Inc. LNCR $25.71 80.9% $2,420 $2,986 $1,777 $891 $450 50.1% 25.3% 1.7x 6.6x Sirona Dental Systems, Inc. SIRO $44.04 76.1% $2,523 $2,546 $914 $484 $233 52.9% 25.5% 2.8x 10.9x Steris Corp. STE $29.82 78.5% $1,799 $1,875 $1,367 $559 $247 40.9% 18.1% 1.4x 7.6x Average 78.2% $7,724 $8,406 $3,601 $2,142 $994 55.9% 25.8% 2.4x 9.5x Median 78.1% $5,027 $7,019 $2,368 $1,210 $471 52.9% 25.3% 2.5x 8.4x Stock Price Performance (LTM) Select M&A Transactions – Equipment & Supplies (Q4 2011) ($ in millions) Closed Enterprise EV / EV / 130% Date Target Buyer Value Revenue EBITDA Nov-11 Kinetic Concepts, Inc. Apax Partners Worldwide $5,793.2 2.8x 9.1x Pending SonoSite, Inc. FUJIFILM Holdings Corp. $855.9 2.8x 23.0x 120% Nov-11 Atrium Medical Corp. MAQUET Cardiovascular, LLC $680.0 NA NA Pending Medtronic Emergency Response Systems, Inc. Bain Capital $487.0 NA NA 110% Nov-11 Baxa Corp. Baxter International, Inc. $380.0 2.5x NA Jan-12 BÂRRX Medical, Inc. Covidien plc $325.0 NA NA 0% 100% Dec-11 Lutonix, Inc. CR Bard, Inc. $325.0 NA NA Pending Synovis Life Technologies, Inc. Baxter International, Inc. $253.5 3.1x 17.8x 4.0% Nov-11 Medivance, Inc. Bard Medical, Inc. $250.0 NA NA 90% Nov-11 Medicis Technologies Corp. Solta Medical, Inc. $184.6 NM NA Dec-11 Codman & Shurtleff, Inc., Surgical Instruments Business Specialty Surgical Instrumentation, Inc. $165.0 NA NA 80% Oct-11 Reichert, Inc. Ametek, Inc. $150.0 2.7x NA Oct-11 Concentric Medical, Inc. Stryker Corp. $135.0 NA NA 70% Nov-11 IZI Medical Products, Inc. Landauer, Inc. $93.0 5.0x NA Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Oct-11 Claros Diagnostics, Inc. Opko Health, Inc. $55.3 NA NA Dec-11 Webtec Converting, LLC Scapa Group plc $45.0 1.7x NA S&P 500 Healthcare Equipment & Supplies Index Oct-11 Calypso Medical Technologies, Inc. Varian Medical Systems, Inc. $10.0 0.7x NA Source: Capital IQ *Highlighted indicates announced transactions during the quarter that have not been completed. HYDE PARK CAPITAL 11 Investment Banking | Mergers & Acquisitions | Capital Raising
  • 12.
    Industry Sector Overview– Healthcare Distribution Public Company Analysis ($ in millions, except per share) Enterprise Value / Closing Price % of 52 Equity Enterprise LTM LTM Margins LTM Company Ticker 12/31/11 Week High Value Value Revenue Gross Profit EBITDA Gross Profit EBITDA Revenue EBITDA McKesson Corp MCK $77.91 89.2% $19,906 $19,955 ###### $6,368 $2,659 5.4% 2.3% 0.2x 7.5x Cardinal Health, Inc. CAH $40.61 86.3% $14,290 $14,701 ###### $4,284 $1,951 4.1% 1.9% 0.1x 7.5x AmerisourceBergen Corp. ABC $37.19 85.6% $10,328 $9,867 $80,218 $2,537 $1,352 3.2% 1.7% 0.1x 7.3x Henry Schein, Inc. HSIC $64.43 85.9% $6,014 $6,339 $8,214 $2,340 $673 28.5% 8.2% 0.8x 9.4x Omnicare, Inc. OCR $34.45 97.7% $3,919 $5,382 $6,272 $1,388 $612 22.1% 9.8% 0.9x 8.8x Patterson Companies, Inc. PDCO $29.52 79.9% $3,489 $3,643 $3,413 $1,144 $402 33.5% 11.8% 1.1x 9.1x Owens & Minor, Inc. OMI $27.79 77.8% $1,748 $1,764 $8,502 $851 $235 10.0% 2.8% 0.2x 7.5x PSS World Medical, Inc. PSSI $24.19 82.1% $1,353 $1,569 $2,095 $659 $169 31.4% 8.1% 0.7x 9.3x PharMerica Corp. PMC $15.18 92.3% $446 $697 $2,077 $277 $89 13.3% 4.3% 0.3x 7.9x Average 86.3% $6,832 $7,102 $37,009 $2,205 $905 16.8% 5.6% 0.5x 8.2x Median 85.9% $3,919 $5,382 $8,214 $1,388 $612 13.3% 4.3% 0.3x 7.9x Stock Price Performance (LTM) Select M&A Transactions – Distribution (Q4 2011) ($ in millions) Closed Enterprise EV / EV / 140% Date Target Buyer Value Revenue EBITDA Nov-11 Arriva Medical, LLC Alere, Inc. $83.6 NA NA 130% Pending Esperanza Dental Supply Co. Benco Dental Co. NA NA NA 120% Pending Integrated Healthcare Services, Inc. MSC Group, Inc. NA NA NA 110% 8.6% *Highlighted indicates announced transactions during the quarter that have not been completed. 100% 0% 90% 80% 70% Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 S&P 500 Healthcare Distribution Index Source: Capital IQ HYDE PARK CAPITAL 12 Investment Banking | Mergers & Acquisitions | Capital Raising
  • 13.
    HYDE PARK CAPITAL Investment Banking | Mergers & Acquisitions | Capital Raising Recent Transactions John Hill Senior Managing Director [email protected] (813) 383-0205 has been acquired by has been recapitalized by has been acquired by has been acquired by has acquired John McDonald Senior Managing Director [email protected] ADG Acquisition (813) 383-0206 Harbert Mezzanine Partners Holdings, LLC Keith Hodgdon Senior Vice President [email protected] (813) 383-0208 Jeffrey Bridge has been acquired by has been acquired by has been acquired by has been recapitalized by has merged with Vice President [email protected] (813) 383-0204 Michael Mariani Associate [email protected] (813) 597-2649 has been recapitalized by has acquired has been recapitalized by has been acquired by has been acquired by Hyde Park Capital Advisors, LLC Sage Compliance 701 N. Franklin Street Services, Inc. Tampa, FL 33602 Tel: 813-383-0202 www.hydeparkcapital.com HYDE PARK CAPITAL Member FINRA/SIPC Investment Banking | Mergers & Acquisitions | Capital Raising