SCOTT-MACON HEALTHCARE REVIEW: OCTOBER 2017 October 2017 Healthcare Review 2 Healthcare Overview, Mean Revenue Multiples 4 Healthcare Overview, Mean EBITDA Multiples 5 Analysis of Selected Healthcare, Medical and 6 Pharmaceutical Merger and Acquisition Transactions October 1—October 31, 2017 Analysis of Selected 12 Publicly-Traded Healthcare, Medical and Pharmaceutical Companies Scott-Macon Professionals’ 23 Representative Closed Transactions Scott-Macon Contact Information 24 CONTENTS 2 OCTOBER 2017 HEALTHCARE REVIEW Dear Clients and Friends, Scott-Macon is pleased to present our PBM giant Express Scripts announced its Healthcare Review covering October 2017. $3.6 billion deal for specialty care provider If you haven’t done so already, please eviCore, formerly known as CareCore. In email me at [email protected] addition, Allscripts closed on HIT company to automatically continue receiving our PF2 for $185 million; and Murata of Japan publications in the future as we are transi- closed on Vios Medical in the wireless tioning to digital publishing with email dis- monitoring space for $101 million. In Out- tribution. sourcing Services, publicly-traded Fortive closed on Landauer for $740 million, or Pages four and five represent a visual 17x EBITDA; and Fidelity National Finan- snapshot of the average multiples for all of cial Ventures closed on T-System for $200 the healthcare, medical and pharmaceutical million. transactions that either closed or were an- nounced during October, along with the av- In the Provider arena, Ambry Genet- erage multiples for the major publicly- ics in the lab sector was acquired by Inno- traded healthcare, medical and pharmaceu- vation and Konica of Japan for $1 billion. tical companies. In the Non-Acute space, Concentra in the workers’ comp sector announced its take- In the Insurance Services space, be- over of U.S. Healthworks for $753 million, havioral-focused Magellan Healthcare and Canadian player New Vision closed on closed on its acquisition of Medicare/ IRIS in the eye care business for $93 mil- Medicaid plan provider Senior Whole lion. In Long-Term Care, BlueMountain Health for $400 million in a major diversi- closed on a cluster of facilities from Kin- fication move. In Technology Services, 3 dred for $700 million; and Sienna Senior ended October at 16.0X (up from 15.1X in Living closed on Storey Oaks of Tulsa for September 2017); Providers at 12.2X $130 million. (down from 12.6X in September 2017); and Products at 15.6X (unchangd from Turning next to Products, in Clinical 15.6X in September 2017). Technology Devices Teleflex picked up Neo Tract in services companies ended October at the urology arena for $1.1 billion; publicly- 23.7X, while Outsourcing services compa- traded Integra LifeSciences closed on nies were 16.8X. The Insurance segment DePuy Synthes’s Codman business for $1 EBITDA multiple came in at 12.4X (down billion; and Exactech went private for $625 from 12.9X in September 2017). million, or 14.6X EBITDA. In Commercial Products, Alere got sold to Abbott for $7.6 Finally, contact information for the billion, or 20.7X EBITDA; Catalent picked Scott-Macon Healthcare Investment Bank- up Cook Pharmica for $950 million; and ing Group Professionals appears on the Quidel acquired divisions of Alere for $680 back cover. We welcome your call or email million. In the Pharmaceuticals sector, to discuss your thoughts on this article. Nanjing Xinjlekou of Japan announced its deal for Dendreon Pharmaceuticals for Sincerely yours, $905 million, and publicly-traded Emer- gent BioSolutions closed on ACAM2000 for $125 million. Nathan D. Cortright Managing Director Following the mergers and acquisi- Group Head – Healthcare Investment Banking tions analysis, we present an analysis of publicly-traded Services, Providers, and Products companies by sector. Mean EBITDA multiples for Services companies 4 HEALTHCARE OVERVIEW MEAN REVENUE MULTIPLES OVERALL: Revenue Multiple 3.4x 2.9x 2.1x 1.6x 2.2x NA Services Providers Products SERVICES: Revenue Multiple 4.8x 3.2x 2.2x 1.4x 2.1x 1.9x 1.9x NA NA NA Insurance Technology Outsourcing India-Based Outsourcing Information PROVIDERS: Revenue Multiple 2.8x 1.4x 1.6x 1.3x 1.0x NA NA NA NA NA Labs Home Health & Hospice Non-Acute Long-Term Care Acute PRODUCTS: Revenue Multiple 3.2x 3.1x 2.7x 2.9x 3.4x 1.7x NA NA Clinical Devices Non-Clinical Devices Disposables Commercial 3.2x 2.3x 0.9x NA NA NA Consumer Pharmaceuticals Distribution Public Companies M&A Transactions 5 HEALTHCARE OVERVIEW MEAN EBITDA MULTIPLES OVERALL: EBITDA Multiple 17.0x 16.0x 15.6x 14.8x 12.2x NA Services Providers Products SERVICES: EBITDA Multiple 23.7x 24.2x 16.8x 17.0x 12.4x 10.3x NA NA NA NA Insurance Technology Outsourcing India-Based Outsourcing Information PROVIDERS: EBITDA Multiple 14.1x 15.1x 14.3x 11.0x 8.2x NA NA NA NA NA Labs Home Health & Hospice Non-Acute Long-Term Care Acute PRODUCTS: EBITDA Multiple 20.4x 20.7x 17.6x 17.5x 17.3x 11.9x NA NA Clinical Non-Clinical Disposables Commercial 15.0x 13.6x 10.2x NA NA NA Consumer Pharmaceuticals Distribution Public Companies M&A Transactions 6 ANALYSIS OF SELECTED HEALTHCARE, MEDICAL AND PHARMACEUTICAL SERVICES AND PRODUCTS MERGER & ACQUISITION TRANSACTIONS1 (CLOSED OR ANNOUNCED BETWEEN OCTOBER 1—OCTOBER 31, 2017) ($ Millions Except Per Share Data) Target Target Price/ Price/ Date Acquirer / Target Price Revenue EBITDA2 Revenue EBITDA2 Target Description SERVICES - INSURANCE 10/31/2017 Magellan Healthcare, Inc. / $400.0 NA NA NA NA Operates as a health maintenance organization. Senior Whole Health, LLC 10/9/2017 Paramount Care, Inc. / NA NA NA NA NA Comprises workers' health insurance plans. Health Plan of The Upper Ohio Valley Inc., Workers' Compensation Divisions MEAN (INSURANCE) NA NA MEDIAN (INSURANCE) NA NA SERVICES - TECHNOLOGY 10/2/2017 Allscripts Healthcare, LLC / $185.0 NA NA NA NA Comprises healthcare information technology PF2 EIS LLC and PF2 Enterprise Information Solutions Canada solutions. Announced ANGLEULC Biosciences Inc.; ANGLE Europe Limited / $4.9 NA NA NA NA Develops and delivers a portfolio of tools that Axela Inc. provide enhanced analysis of proteins, DNA, and RNA. 10/11/2017 Azalea Health Innovations, Inc. / NA NA NA NA NA Provides clinical enterprise software for rural and Prognosis Innovation Healthcare community hospitals and health systems. 10/24/2017 Bracket Global LLC / NA NA NA NA NA Provides mobile technologies for life science and Montentia, LLC pharmaceutical companies. 10/16/2017 Convey Health Solutions, Inc. / NA NA NA NA NA Provides health care professional and software Gorman Health Group, LLC services. 10/16/2017 Eye Care Leaders, LLC / NA NA NA NA NA Develops electronic medical record, enterprise iMedicWare Inc. practice management, and ambulatory surgery centers software for ophthalmologists. 10/24/2017 Imprivata, Inc. / NA NA NA NA NA Comprises identity and access management Caradigm USA LLC, Identity And Access Management Business solutions, including governance, risk management and compliance, and clinical and IT efficiency solutions, such as single sign-on and multi-factor authentication, to healthcare organizations. 10/3/2017 Medecision, Inc. / NA NA NA NA NA Comprises population health management AxisPoint Health, Platform Business software platform and related clientele. 10/30/2017 Medicine-On-Time / NA NA NA NA NA Provides medication management, care Clinical Support Services, Inc. management, and care coordination software and services to Medicare, Medicaid, ACO, self-insured employer, and pharmacy organizations. Announced Medsphere Systems Corporation / NA NA NA NA NA Provides software solutions and services to Stockell Healthcare Systems, Inc. manage revenue cycles for hospitals, behavioral healthcare providers, and integrated health networks. 10/13/2017 Murata Electronics North America, Inc. / $101.7 NA NA NA NA Develops wireless monitoring platform for Vios Medical, Inc. intensive healthcare applications. Announced Oz Parent, Inc. / $3,600.0 NA NA NA NA Develops and operates evidence-based cloud eviCore healthcare, LLC centric healthcare solutions for managed care organizations, self-insured entities, and risk- bearing provider organizations. 10/12/2017 Paradigm Management Services, LLC / NA NA NA NA NA Designs and develops cost containment software ForeSight Medical, LLC that provides suite of surgical management solutions in the workers' compensation marketplace. 10/3/2017 Trilliant Health, Inc. / NA NA NA NA NA Operates a big data platform that provides Expression Health Analytics LLC insights needed to make strategic decisions for healthcare organizations and providers. 10/11/2017 Unknown Buyer / NA NA NA NA NA Provides electronic data interchange solutions to Practice Insight, LLC the healthcare industry. 10/12/2017 UPMC Work Partners / NA NA NA NA NA Provides cloud based health information service. HCMS Group LLC 10/5/2017 VitalHub Corp. (TSXV:VHI) / $2.8 $1.4 NA 2.1x NA Designs and develops specialty documentation B Sharp Technologies Inc. and case management software. 10/3/2017 WebPT, Inc. / NA NA NA NA NA Develops and offers patient relationship Strive Labs, Inc. management platform for rehab therapy providers. 10/5/2017 Welltok, Inc. / $90.0 NA NA NA NA Provides SaaS-based communication solutions for Tea Leaves Health, LLC the healthcare industry. MEAN (TECHNOLOGY) 2.1x NA MEDIAN (TECHNOLOGY) 2.1x NA SERVICES - OUTSOURCING 10/20/2017 AHS Staffing, LLC / NA NA NA NA NA Offers healthcare staffing services. Advance Med, LLC 10/10/2017 Avizia, Inc. / NA NA NA NA NA Provides medical care via phone, Webcam, or Carena, Inc. house call to diagnose and treat patients’ injuries or illness. 10/24/2017 Century Ambulance Service, Inc. / NA NA NA NA NA Provides dedicated transport services to St. St. Vincent Ambulance Services Vincent HealthCare facilities. 7 Target Target Price/ Price/ Date Acquirer / Target Price Revenue EBITDA2 Revenue EBITDA2 Target Description Announced Community Care Health Network, Inc. / NA NA NA NA NA Provides case management services.