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REHABILITATION THERAPY SERVICES AND PROVIDERS: Valuation, Acquisitions and Investments Analysis Executive Summary 2 Mergers and Acquisitions Analysis 3 Institutional Investments 11 C O N T E N T S T E N T C O N Publicly-Traded Companies 14 SCOTT-MACON Healthcare Investment Banking 2 REHABILITATION THERAPY SERVICES AND PROVIDERS: Valuation, Acquisitions and Investments Analysis Dear Clients and Friends, Scott-Macon is pleased to present you with our analysis of the Rehabilitation Therapy Market. This article reviews Rehabilita- tion Therapy Services and Provider Companies from three perspectives: Mergers and Acquisitions — The table starting on page 3 includes selected merger and acquisition transactions that have taken place from 2009 through the first quarter of 2014. Following this analysis on page 10, we present valuation metrics for these deals having publicly-disclosed information. Institutional Investments — The table on page 11 lists selected Rehabilitation Therapy Services and Provider Companies having institutional investors, and following that table on page 12 we show the list of institutional investors, along with their corresponding rehab investments. Publicly-Traded Companies — The table on page 14 presents rehab and comparable publicly-traded companies. Following are the summary valuation statistics: Revenue EBITDA Mergers & Acquisitions Multiple Multiple Mean 2.0x 9.6x Median 1.2x 8.6x Publicly-Traded Companies Mean 1.2x 10.1x Median 0.8x 10.0x I would welcome your call or email to discuss your corporate development plans or answer any questions you may have about this article or Scott-Macon’s merger and acquisition advisory and capital raising capabilities. Sincerely Yours, Nathan D. Cortright Managing Director Group Head – Healthcare Investment Banking [email protected] Telephone: 212-755-8200 SCOTT-MACON HEALTHCARE INVESTMENT BANKING 3 ANALYSIS OF SELECTED REHABILITATION THERAPY SERVICES AND PROVIDERS MERGER AND ACQUISITION TRANSACTIONS 1 2009—2014 ($ millions) Acquirer/ Price/ Price/ Date Target Price Revenue EBITDA2 Target Description 1/15/2013 Accelerated Rehabilitation Centers/ NA NA NA Operates rehabilitation facilities. Momentum Physical Therapy 1/23/2009 Accelerated Rehabilitation Centers/ NA NA NA Clinics offering rehabilitative services and provides reha- PRORehab P.C.; Therapy Services of Iowa bilitation services. 7/8/2013 Accountable Healthcare Holdings/ NA NA NA Provides rehabilitation therapy and nurse staffing in HGI Healthcare clinical settings, such as hospitals and healthcare insti- tutions. 10/15/2012 Accountable Healthcare Holdings/ NA NA NA Operates as a therapy staffing and recruitment firm that Medrec recruits and employs physical, occupational, and speech therapists for healthcare facilities. 5/11/2011 Advance Rehabilitation/ NA NA NA Outpatient physical therapy clinic. Georgia Pro Motion Physical Therapy 5/31/2010 Aegis Investment Management/ $2.4 NA NA Healthcare and fitness center. iQuest 10/25/2013 Agility Health Holdings, Inc./ $7.3 1.6x NA Delivers cost-containment solutions to leading employ- Work-Fit®, Inc. ers through an array of worksite-based injury prevention and management programs. 11/11/2013 Agility Health/ $3.1 0.5x NA Provides physical therapy and athletic enhancement Babar Enterprises services. 7/19/2011 AIM Health Group/ $3.1 NA NA Occupational health and disability management ser- ATF Canada; Oncidium Health Group vices. 1/20/2009 AIM Health Group/ NA NA NA Provides healthcare solutions and services including Med-Emerg International Staffing Solutions, Pain Management Services, and Infusion Services. 6/18/2009 Alegro Health/ $16.3 NA NA Physiotherapy clinics. Active Health Management, Inc.; Brenda Rusnak Clinics Announced Align Networks/ NA NA NA Provides physical therapy and functional capacity Providian Companies evaluation services. 7/1/2009 Allegany HealthCare Group/ $8.0 NA NA Rehabilitation facility with 153 beds. Allegany County Nursing Home and Rehabilitation Center 11/22/2011 American Realty Capital Healthcare Trust, Inc./ $33.8 NA NA Operates a rehabilitation hospital which offers inpatient Reliant Rehabilitation Hospital North Texas, LP services. 7/1/2011 ATI Holdings/ NA NA NA Physical and occupational therapy services in outpatient Advanced Physical Therapy PC settings. 12/9/2013 ATI Holdings/ NA NA NA Provides physical therapy services. Bedford Physical Therapy 12/6/2013 ATI Holdings/ NA NA NA Physical and occupational therapy services in outpatient Dwight Orthopedica Rehabilitation Company settings. 7/2/2013 Avera Queen Of Peace Hospital/ NA NA NA Provides rehabilitation services, aqua therapies and University Physical Therapy ergonomic services. 4/12/2013 BA Healthcare Holdings, LLC; Vibra Healthcare/ NA NA NA Healthcare facility that provides rehabilitation services. Twin Creeks Hospital 1/29/2010 Baton Rouge Rehabilitation Hospital/ NA NA NA 80-bed rehabilitation center. Baton Rouge Rehab SCOTT-MACON HEALTHCARE INVESTMENT BANKING 4 Acquirer/ Price/ Price/ Date Target Price Revenue EBITDA2 Target Description 12/31/2011 Bow River Capital Partners; Private Equity Capital NA NA NA Provides home nursing services to ill children. Corp./ Professional Pediatric Home Care, Inc. 3/11/2013 Bphealth Clinics/ NA NA NA Occupational therapy assessment and treatment ser- Lesya Kyk, O.T. Services vices. 2/7/2012 Cardon Healthcare Network./ NA NA NA Offers care management services to hospitals and Outreach Services healthcare systems. 6/1/2011 CarePartners/ NA NA NA Occupational therapy, physiotherapy, and speech- Dynamic Therapy Solutions language therapy. 11/12/2013 Carter Validus Mission Critical REIT, Inc./ $25.8 NA NA Owns and operates licensed 65 bed specialty hospital Post Acute Medical at San Antonio, LLC with inpatient and outpatient programs for adults and children. 9/8/2011 Catholic Health Initiatives/ NA NA NA Rehabilitation therapy services and drug and alcohol Elekta AB, Assets of all AccuBoost Installations in programs. US 8/31/2011 Centre De Readaptation Gabrielle Major/ NA NA NA Rehabilitation centers and intellectual disabilities and Foundation Des Services De Réadaptation pervasive developmental disorders treatment. L'Intégrale 12/22/2010 Chicago Growth Partners; Fifth Street Capital LLC; NA NA NA Provides minimally invasive, diagnostic, and therapeutic Golub Capital; services to enable patients to restore function and re- Oakwood Medical Investors/ lieve pain. Advanced Pain Management, S.C. 8/6/2010 China Printing & Packaging/ NA NA NA A developmental stage company, focuses on providing USA Therapy short and long term, and temporary to permanent place- ments of qualified and licensed therapists. 10/1/2010 Christ Hospital Corporation/ NA NA NA An orthopedic clinic. Christ Hospital Orthopaedic Associates 11/1/2010 Christ Hospital Orthopaedic Associates/ NA NA NA Orthopedic and sports medicine services. Freiberg Orthopaedics & Sports Medicine 9/2/2011 Clearview Capital, LLC/ NA NA NA Provides pediatric health care services for medically Child Health Holdings, Inc. complex, technology-dependent, and behaviorally chal- lenged children. 2/8/2012 Closing The Gap Healthcare Group/ NA NA NA Rehabilitation services and insurance services. Therapacc 3/17/2011 Concentra/ NA NA NA Occupational medicine services Cascade Occupational Medicine Physicians 9/19/2011 Concentra/ NA NA NA Offers occupational and urgent care services. NextCare, Four Urgent Care Medical Centers 10/5/2010 Concentra/ NA NA NA A clinic offering occupational health services. Olathe Medical Services, Olathe Occupational Medicine Clinic 12/2/2010 Concentra/ NA NA NA Urgent care. Urgent Medical Care And StatCare 8/19/2010 Cornerstone Healthcare Plus REIT/ $14.8 8.7x NA Inpatient rehabilitation facility that includes 42 beds. Global Rehab Inpatient Rehab Facility 4/30/2012 Court Square Capital Partners/ $510.0 1.4x NA Hand, speech, and wound care rehabilitation therapy Physiotherapy Associates services. 1/3/2014 Crozer-Keystone Health System/ NA NA NA Services for the urgent care of dislocation injuries, ortho- Pioneer Urgent Care pedic care and other injuries. 1/2/2014 Crystal Ridge Colorado/ $12.9 NA NA 15-acre property which provides rehabilitation services. Community Hospital Association, Mapleton Center 1/1/2013 Dignity Health/ NA NA NA Owns and operates healthcare centers. Advanced Occupational Medicine Specialists SCOTT-MACON HEALTHCARE INVESTMENT BANKING 5 Acquirer/ Price/ Price/ Date Target Price Revenue EBITDA2 Target Description 6/18/2013 Dignity Health/ NA NA NA Comprises seven clinics and two worksites. OHS-Compare, Seven Clinics and Two Worksites in Kansas City 11/1/2013 Dignity Health/ NA NA NA An occupational healthcare and urgent care center. Urgent Medical Care 8/3/2011 E & A Physical Therapy/ NA NA NA Full-service physical therapy services. Apex Physical Therapy 6/24/2013 E & A Physical Therapy/ NA NA NA Rehabilitation services. Main Line Hand Center 11/15/2011 Ensign Group/ NA NA NA Rehabilitation center offering hospitality, family-tailored Pocatello Care and Rehabilitation Center care, and rehabilitation services. 12/5/2011 Ensign Group/ NA NA NA A rehabilitation and nursing center offering physical, Rosewood Rehabilitation Center speech, and occupational therapies. 9/13/2013 Evangelical Community Hospital/ NA NA NA Engages in the diagnosis and treatment of bone and SUN Orthopaedic Group joint disorders. 1/1/2012 Excelsior Orthopaedics/ NA NA NA Diagnosis, treatment, and rehabilitation services for Hand and Shoulder Center of Western New York hand injuries,