M&A Update | Healthcare

Q1-2018

HEALTHCARE

M&A UPDATE

PUBLICATION CONTENT PROVIDED BY BAKER TILLY CAPITAL

Sector spotlight: Radiology The $18.0+ billion radiology/diagnostic imaging market is forecast to grow at an annualized rate of 1.8 percent over the next five years, driven by favorable demographics (aging population), increased private health insurance coverage and the renewed recognition of imaging as a cost-effective and noninvasive diagnostic alternative to investigative surgery or curative care. The high level of market fragmentation and the presence of many radiology groups that can act as platform investments to scale to regional or national providers has garnered significant attention from both private equity and strategic acquirers who recognize the tremendous opportunity that exists to scale the business model. Drivers for radiology practice consolidation include: • Highly fragmented market: The Radiology Business 2017 rankings showed that the top 50 groups had a combined 3,837 radiologist full-time employees, representing just 12 percent of the more than 30,000 radiologists estimated nationally. • Central role in population health management: Imaging is increasingly becoming more critical to improving the overall quality of care, including for care coordination, utilization management, big data and improved quality and outcomes. • Evolving healthcare landscape: Due to the shifting reimbursement model from volume to value-based care, continuing hospital consolidation and rising technology and infrastructure costs, independent radiology groups increasingly determine that they need a partner to remain competitive. • Importance of scale for success: Larger group practices will be at an advantage over smaller groups and provide for increased leverage with payers and downstream customers, such as physicians and hospitals who have grown larger through increased M&A activity and begun to bring radiology services in-house. • Personal liquidity: Significant interest from private equity investors has led to attractive valuation multiples for radiology practices, providing an exit strategy for retiring radiologists who are often being replaced by younger radiologists who are less interested in running the business side of the practice.

Table 1: Recent radiology practice transactions

Closed Date

Acquirer (Financial Backer)

Target

Target Business Description

4/5/2018

Five Imaging Centers In Fresno, California Radiology Associates of Florida, P.A.

Comprises imaging centers.

RadNet, Inc. (NasdaqGM:RDNT)

4/3/2018

Offers radiology services. The company was founded in 1970 and is headquartered in Tampa, Florida.

Radiology Partners, Inc. (New Enterprise Associates)

3/27/2018

Cool Springs Interventional, PLLC Provides outpatient diagnostic and therapeutic radiological services. The company was founded in 2008 and is based in Franklin, Tennessee. Outpatient Imaging Affiliates, LLC Owns and operates outpatient imaging centers in Alabama, Colorado, Illinois, Kentucky, Maryland, Nebraska, New Jersey, North Carolina, Pennsylvania, Tennessee and Virginia. Chandler Radiology Associates LLP Provides radiology services. The company is based in Chandler, Arizona.

MEDNAX, Inc. (NYSE:MD)

3/13/2018

ICV Partners, LLC

2/28/2018

Envision Healthcare Corporation (Maverick Capital, Ltd.) West County Radiology Group, Inc.

2/8/2018

South County Radiologists, Inc.

Offers radiology services. The company was founded in 1978 and is based in Saint Louis, Missouri.

1/24/2018

Atlantic Imaging Group

Offers diagnostic imaging services.

Concordia Care, Inc.

1/4/2018

Renaissance Imaging Medical Associates, Inc.

Provides diagnostic imaging and radiology services. The company was incorporated in 1999 and is based in Northridge, California.

Radiology Partners, Inc. (New Enterprise Associates) Radiology Partners, Inc. (New Enterprise Associates)

12/12/2017

Southwest Diagnostic Imaging, Ltd. Provides radiology and imaging services. The company was founded in 2004 and is based in Phoenix, Arizona. Synergy Radiology Associates, P.A. Provides medical imaging services. The company was founded in 2011 and is based in Houston, Texas.

10/18/2017

MEDNAX, Inc. (NYSE:MD) MEDNAX, Inc. (NYSE:MD) MEDNAX, Inc. (NYSE:MD)

9/28/2017

Jefferson Radiology, P.C.

Private practice radiology group, provides diagnostic and therapeutic radiology services at various hospitals in Connecticut. Provides radiological services to patients in hospitals and outpatient centers in Miami and South Florida. The company was founded in 1960.

8/23/2017

Radiology Associates of South Florida, PA

8/8/2017

Diagnostic Imaging Associates, P.A. Owns and operates imaging centers in Northern Delaware. The company was founded in 1984 and is based in Wilmington, Delaware.

RadNet, Inc. (NasdaqGM:RDNT)

Source: S&P Capital IQ; IBISWorld; AMB; Baker Tilly Capital insights (April 2018)

1

Major U.S. indexes The first quarter of 2018 (Q1-2018) showed mixed performance for the broader U.S. equity market, as the S&P and DJIA closed down 1.2 percent and 2.5 percent, respectively, and the NASDAQ closed up 2.3 percent for the quarter. For the 12 months ending March 31, 2018, the S&P, DJIA and NASDAQ closed up 11.8 percent, 16.3 percent and 19.4 percent, respectively. Healthcare relative performance As of March 31, 2018, two of the five healthcare sectors shown below exhibited declines on a trailing 12-month basis. Of the five healthcare sectors shown, the home health and hospice sector achieved the best performance. This sector exhibited stock gains of 35.6 percent, while the S&P 500 index realized an 11.8 percent return for the observed period.

Table 2: Healthcare relative market performance

-30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

34.7% 35.6%

11.8% 11.7% -8.8% -2.1%

S&P 500 Index (^SPX)

Managed Healthcare Long-Term Care

Home Health and Hospice

Non-Acute Care

Acute Care

Table 3: Indexed market performance by sector

% Change

Median EV/ LTM

Industry Sector

3 Months 12 Months Revenue EBITDA

Home Health and Hospice 21.6%

35.6% 34.7% 11.7% (2.1%) (8.8%)

1.4x 0.6x 1.9x 1.0x 1.2x

18.7x 10.6x 11.7x

Managed Healthcare

36.6%

Non-Acute Care

1.4%

Acute Care

(9.1%) (6.7%)

9.2x

Long-Term Care

10.3x

Source: S&P Capital IQ and Baker Tilly Capital research (April 2018) LTM as of March 31, 2018 EV = Enterprise value

2

Table 4: Healthcare guideline companies

LTM

LTM Margins

EV/ LTM

Closing Price % of 52 Enterprise 3/31/2018 Week High Value

Company Name (Ticker)

Revenue Gross Profit EBITDA Gross Profit

EBITDA Revenue EBITDA

Managed Healthcare

UnitedHealth Group Incorporated (NYSE:UNH)

$214.0 $219.7 $169.0 $167.7 $268.8 $106.9 $193.6

85.3% $231,037 82.0% $72,959 86.9% $60,593 73.9% $43,317 91.6% $38,141 95.1% $19,428

$201,159 $90,049 $60,535 $41,616 $53,767 $45,807 $17,007 $19,445

$47,011 $16,904 $17,812 $5,450 $15,907 $5,685 $13,754 $4,675 $10,271 $3,672 $7,956 $1,830 $2,262 $637 $2,372 $222

23.4% 8.4% 1.1x 19.8% 6.1% 0.8x 26.3% 9.4% 1.0x 33.0% 11.2% 1.0x 19.1% 6.8% 0.7x 17.4% 4.0% 0.4x 13.3% 3.7% 0.3x 12.2% 1.1% 0.2x 19.3% 3.4% 0.2x 18.9% 5.8% 0.6x 19.2% 5.1% 0.6x 5.0% 4.2% 0.5x 31.0% 14.4% 2.7x 40.3% 8.5% 1.4x 36.4% 8.4% 2.0x 32.9% 5.2% 1.0x 25.7% 7.9% 1.3x 33.3% 8.9% 1.7x 32.9% 8.4% 1.4x 29.8% 22.1% 2.0x 25.2% 13.4% 1.5x 30.1% 16.9% 2.0x 41.8% 20.5% 2.3x 22.8% 17.5% 3.2x 21.0% 9.9% 0.9x 21.5% 12.9% 1.4x 22.2% 15.8% 2.9x 32.7% 17.2% 1.5x 40.5% 18.1% 2.8x 11.9% 7.5% 0.9x 51.5% 0.8% 0.0x 34.2% 10.9% 1.3x 36.6% 12.3% 1.2x 37.2% 18.8% 1.6x 35.6% 11.8% 1.0x 34.6% 5.9% 0.9x 19.7% 11.9% 1.3x 31.6% 10.6% 0.8x 40.0% 7.0% 0.7x 33.1% 11.0% 1.0x 35.1% 11.2% 1.0x 8.5% 4.0% 0.5x 38.2% 13.7% 1.7x 26.1% 14.7% 1.8x 24.0% 14.8% 1.9x

13.7x 13.4x 10.7x

Anthem, Inc. (NYSE:ANTM) Aetna Inc. (NYSE:AET) Cigna Corporation (NYSE:CI) Humana Inc. (NYSE:HUM) Centene Corporation (NYSE:CNC)

9.3x

10.4x 10.6x

WellCare Health Plans, Inc. (NYSE:WCG) Molina Healthcare, Inc. (NYSE:MOH) Magellan Health, Inc. (NasdaqGS:MGLN) Triple-S Management Corporation (NYSE:GTS)

87.3% 86.4% 97.3% 88.8%

$5,606 $3,850 $3,198

8.8x

$81.2

17.3x 13.2x

$107.1

$5,839 $2,916

$292 $242

$26.1

$445

$563

$99

4.5x

Average Median

$155.4 $168.4

87.5% $47,857 $53,814 87.1% $28,785 $43,712

$11,820 $3,942 $9,114 $2,751

11.2x 10.6x

Home Health and Hospice

Chemed Corporation (NYSE:CHE) Amedisys, Inc. (NasdaqGS:AMED) LHC Group, Inc. (NasdaqGS:LHCG) BioScrip, Inc. (NasdaqGS:BIOS)

$272.9

95.5% 91.5% 80.9% 72.6% 91.2% 86.3% 91.2%

$4,500 $2,054 $2,126

$1,667 $1,509 $1,063

$516 $240 $608 $128

18.7x 16.0x 23.7x 19.6x 16.7x 18.9x 18.7x 10.9x 12.0x 11.5x 18.1x 10.6x 18.0x 13.4x 12.4x 12.5x 11.7x 8.6x 9.1x

$60.3 $61.6

$387 $269 $107

$90 $43 $33

$2.5

$837 $548

$817 $417

Addus HomeCare Corporation (NasdaqGS:ADUS)

$48.7

Average Median

$89.2 $60.3

$2,013 $2,054

$1,095 $1,063

$377 $107

$387

$90

Non-Acute Care

DaVita Inc. (NYSE:DVA)

$65.9 $38.4 $55.6 $39.2 $17.2 $15.4 $14.4 $81.3 $69.1 $11.5 $40.8 $38.8

81.7% $21,942 60.0% $11,429

$10,884 $7,819 $3,458 $2,836 $1,312 $1,511

$3,244 $2,409 $1,969 $1,047 $1,043 $583 $1,186 $581 $299 $230 $318 $149 $198 $119

Envision Healthcare Corporation (NYSE:EVHC)

MEDNAX, Inc. (NYSE:MD)

81.2% 72.1% 71.3% 77.2% 99.0% 92.9% 92.8% 87.9% 81.6% 81.4% 42.8% 64.3% 89.9% 61.9% 64.7% 63.1%

$6,975 $6,654 $4,160 $1,285 $1,261 $1,173

Acadia Healthcare Company, Inc. (NasdaqGS:ACHC)

Surgery Partners, Inc. (NasdaqGS:SGRY)

Civitas Solutions, Inc. (NYSE:CIVI) RadNet, Inc. (NasdaqGM:RDNT)

$922 $410

U.S. Physical Therapy, Inc. (NYSE:USPH)

$91

$65 $65 $39

The Providence Service Corporation (NasdaqGS:PRSC)

$873 $478

$1,624

$137 $107

AAC Holdings, Inc. (NYSE:AAC)

$281

Average Median

$5,623 $2,723

$3,106 $1,567

$859 $529 $308 $189

Long-Term Care

Brookdale Senior Living Inc. (NYSE:BKD) Capital Senior Living Corporation (NYSE:CSU) The Ensign Group, Inc. (NasdaqGS:ENSG) Five Star Senior Living Inc. (NasdaqCM:FVE)

$6.7

$5,879 $1,320 $1,619

$3,856

$1,261 $662

8.9x

$10.8 $26.3

$465

$189

$84

15.7x 11.6x

$1,849 $1,136 $1,827 $1,493

$220 $139

$1.3

$32

$585

$9

3.5x

Average Median

$11.3

$2,213 $1,470

$564 $224 $402 $112

9.9x

$8.7

10.3x

Acute Care

HCA Healthcare, Inc. (NYSE:HCA)

$97.0 $24.3

90.8% $68,248 96.1% $19,330 37.7% $14,413

$43,614 $19,179 $15,353 $4,364 $6,291 $6,034

$16,239 $8,186 $6,820 $2,259 $5,305 $901 $860 $519 $1,991 $670 $2,411 $421 $5,604 $2,159 $3,858 $785

8.3x 8.6x

Tenet Healthcare Corporation (NYSE:THC) Community Health Systems, Inc. (NYSE:CYH) Select Medical Holdings Corporation (NYSE:SEM)

$4.0

16.0x 10.9x

$17.3 $47.0

87.2% 69.2% 76.9%

$5,670 $4,788 $4,180

LifePoint Health, Inc. (NasdaqGS:LPNT) Kindred Healthcare, Inc. (NYSE:KND)

7.2x 9.9x

$9.2

Average Median

$33.1 $20.8

76.3% $19,438 $15,806 82.1% $10,042 $10,822

10.2x

9.2x

Source: S&P Capital IQ and Baker Tilly Capital research (April 2018)

3

Table 5: Historical median trading multiples

Managed Healthcare

Average 11.0x

Average 9.5x

Average 0.5x

EV/EBIT

EV/Revenue

EV/EBITDA

10.0x 12.0x 14.0x 16.0x 18.0x

3.0x

10.0x 12.0x 14.0x 16.0x 18.0x 20.0x

2.5x

2.0x

1.5x

0.0x 2.0x 4.0x 6.0x 8.0x

0.0x 2.0x 4.0x 6.0x 8.0x

1.0x

0.5x

0.0x

2014

2015

2016

2017

LTM

2014

2015

2016

2017

LTM

2014

2015

2016

2017

LTM

Home Health and Hospice

Average 16.3x

Average 13.7x

Average 1.1x

EV/EBIT

EV/Revenue

EV/EBITDA

25.0x

3.0x

10.0x 12.0x 14.0x 16.0x 18.0x 20.0x

2.5x

20.0x

2.0x

15.0x

1.5x

0.0x 2.0x 4.0x 6.0x 8.0x

10.0x

1.0x

5.0x

0.5x

0.0x

0.0x

2014

2015

2016

2017

LTM

2014

2015

2016

2017

LTM

2014

2015

2016

2017

LTM

Non-Acute Care

Average 2.0x

Average 11.6x

Average 17.7x

EV/Revenue

EV/EBITDA

EV/EBIT

3.0x

10.0x 12.0x 14.0x 16.0x 18.0x 20.0x

25.0x

2.5x

20.0x

2.0x

15.0x

1.5x

0.0x 2.0x 4.0x 6.0x 8.0x

10.0x

1.0x

5.0x

0.5x

0.0x

0.0x

2014

2015

2016

2017

LTM

2014

2015

2016

2017

LTM

2014

2015

2016

2017

LTM

Long-Term Care

Average 1.5x

Average 12.4x

Average 33.8x

EV/Revenue

EV/EBITDA

EV/EBIT

3.0x

10.0x 12.0x 14.0x 16.0x 18.0x 20.0x

60.0x

2.5x

50.0x

2.0x

40.0x

1.5x

30.0x

0.0x 2.0x 4.0x 6.0x 8.0x

1.0x

20.0x

0.5x

10.0x

0.0x

0.0x

2014

2015

2016

2017

LTM

2014

2015

2016

2017

LTM

2014

2015

2016

2017

LTM

Acute Care

Average 14.1x

Average 8.3x

Average 1.0x

EV/EBIT

EV/Revenue

EV/EBITDA

10.0x 12.0x 14.0x 16.0x 18.0x

3.0x

10.0x 12.0x 14.0x 16.0x 18.0x

2.5x

2.0x

1.5x

0.0x 2.0x 4.0x 6.0x 8.0x

0.0x 2.0x 4.0x 6.0x 8.0x

1.0x

0.5x

0.0x

2014

2015

2016

2017

LTM

2014

2015

2016

2017

LTM

2014

2015

2016

2017

LTM

Source: S&P Capital IQ and Baker Tilly Capital research (April 2018)

4

M&A activity There were 247 reported M&A transactions that closed during Q1-2018, down from 264 transactions during the fourth quarter of 2017 (Q4-2017). Reported closed transactions in Q1-2018 decreased 20.3 percent compared to 310 closed deals for the same period in 2017. The aggregate deal value of the closed M&A transactions with reported values was $35.9 billion during Q1-2018. This is a decrease from the total reported deal value of $68.8 billion in Q4-2017. We note that quarters with peak values were driven by large individual transactions that closed during each respective period, such as the first quarter of 2015. Additionally, the first quarter of 2017 included the $30.0 billion acquisition of St. Jude Medical by Abbott Laboratories, while the second quarter of 2017 did not have any closed transactions with reported values above $2.5 billion. The third quarter of 2017 included six closed transactions with reported values above $2.0 billion, which includes the $9.1 billion acquisition of VCA Inc. by Mars, Incorporated. Q4-2017 included five closed transactions with reported values above $2.0 billion, which includes the $25.8 billion acquisition of C.R. Bard, Inc. by Becton, Dickinson and Company. Q1-2018 included the $9.3 billion acquisition of Juno Therapeutics, Inc. by Celgene Corporation and the $11.5 billion acquisition of Bioverativ Inc. by Sanofi.

Table 6: Quarterly U.S. healthcare M&A activity for transactions closed Aggregate transaction value and number of deals

Number of Deals

$160

100 150 200 250 300 350 400 450 500

$137.6

$140

$120

$100

$90.8

$79.9 $76.7

$79.2

$80

$71.7

$68.8

$67.2

$54.2

$60

$49.6

$38.0 $42.7

$35.9

$40

$28.8

Number of Deals

$18.8

$15.0

$20

0 50

$0 Aggregate Transaction Value ($BB)

Q2-2014

Q3-2014

Q4-2014

Q1-2015

Q2-2015

Q3-2015

Q4-2015

Q1-2016

Q2-2016

Q3-2016

Q4-2016

Q1-2017

Q2-2017

Q3-2017

Q4-2017

Q1-2018

As detailed in Table 7 and Table 8, the closed Q1-2018 transactions with reported deal multiples 1 had higher median revenue and higher median EBITDA multiples than the historic median multiples.

Table 7: Quarterly M&A TEV / revenue multiples

Table 8: Quarterly M&A TEV / EBITDA multiples

Median 12.0x

Median 2.5x

3.2

3.0 2.9

3.0 3.3

16.8

16.4

2.9

2.7

15.2

14.3

2.5

2.5 2.4 2.3

2.4

13.5

2.2

12.5 12.3

12.4

11.8

11.2

10.1

10.1 10.3

9.8

1.6 1.6 1.4

6.5

6.0

Q2-2014

Q3-2014

Q4-2014

Q1-2015

Q2-2015

Q3-2015

Q4-2015

Q1-2016

Q2-2016

Q3-2016

Q4-2016

Q1-2017

Q2-2017

Q3-2017

Q4-2017

Q1-2018

Q2-2014

Q3-2014

Q4-2014

Q1-2015

Q2-2015

Q3-2015

Q4-2015

Q1-2016

Q2-2016

Q3-2016

Q4-2016

Q1-2017

Q2-2017

Q3-2017

Q4-2017

Q1-2018

Source: S&P Capital IQ and Baker Tilly Capital research (April 2018) 1 14 revenue multiples and nine EBITDA multiples reported

5

U.S. middle-market healthcare M&A activity There were 41 reported middle-market 2 transactions that closed during Q1-2018, down from 46 transactions during Q4-2017. Reported closed transactions in Q1-2018 decreased 18.0 percent compared to 50 deals for the same period in 2017. The aggregate deal value of the closed middle-market M&A transactions with reported values was $8.5 billion during Q1- 2018. This is a decrease from the middle-market deal value of $8.7 billion in Q4-2017.

Table 9: Middle-market healthcare M&A activity for transactions closed Aggregate transaction value and number of deals

Number of Deals

$10 $12 $14 $16 $18 $20

120

100

80

60

$18.5

$17.1

$0 $2 $4 $6 $8

$15.3

40

$12.9

$12.6 $11.6 $11.2

$11.8

$11.3

$10.5

$8.9

$8.3

$7.9 $9.1 $8.7 $8.5

Number of Deals

20

Aggregate Transaction Value ($BB)

0

Q2-2014

Q3-2014

Q4-2014

Q1-2015

Q2-2015

Q3-2015

Q4-2015

Q1-2016

Q2-2016

Q3-2016

Q4-2016

Q1-2017

Q2-2017

Q3-2017

Q4-2017

Q1-2018

As detailed in Table 10 and Table 11, the closed Q1-2018 middle-market transactions with reported deal multiples 3 had higher median revenue and higher median EBITDA multiples than the historic median multiples.

Table 10: Middle-market quarterly M&A TEV / revenue multiples

Table 11: Middle-market quarterly M&A TEV / EBITDA multiples

Median 2.6x

Median 10.4x

4.6

16.8

16.8

14.5

3.3

12.6

12.5

12.2

11.9

2.8 2.8

2.8 2.7 2.7

10.7 9.9

10.2

10.1

2.5

10.1

9.1

2.2 2.3 2.4 2.7

8.5

2.1 2.3

2.0

6.1

1.5

5.0

Q2-2014

Q3-2014

Q4-2014

Q1-2015

Q2-2015

Q3-2015

Q4-2015

Q1-2016

Q2-2016

Q3-2016

Q4-2016

Q1-2017

Q2-2017

Q3-2017

Q4-2017

Q1-2018

Q2-2014

Q3-2014

Q4-2014

Q1-2015

Q2-2015

Q3-2015

Q4-2015

Q1-2016

Q2-2016

Q3-2016

Q4-2016

Q1-2017

Q2-2017

Q3-2017

Q4-2017

Q1-2018

Source: S&P Capital IQ and Baker Tilly Capital research (April 2018) 2 Middle-market is defined as transaction values between $10 million and $1 billion 3 Nine revenue multiples and four EBITDA multiples reported

6

EV ($MM) Revenue EBITDA EV

Closed Date

Target

Target Business Description

Buyers/Investors

Non-Acute Healthcare Provider

3/28/2018 Southern Tier Pediatrics, P.C.

Provides pediatric care services, including adolescent issues, screening and treatment for anxiety, depression and attention-deficit/hyperactivity disorder (ADHD), child abuse evaluation, and pediatric diabetes/endocrine disorders.

Guthrie Clinic Ltd.

- - -

3/27/2018 Cool Springs Interventional, PLLC Provides outpatient diagnostic and therapeutic radiological services.

MEDNAX, Inc. ncgCARE Inc. MEDNAX, Inc.

- - - - - - - - - - - -

3/26/2018 Grace Harbour, Inc. 3/21/2018 Childrens Eye Care, PLLC

Operates as an outpatient mental health practice.

Offers medical and surgical eye care services for children and adults. Provide advanced eye care and ambulatory surgery services.

3/21/2018 The Eye Associates Of Manatee LLP and Piedmont Surgery Center and Clemson Eye

Eye Health America

3/21/2018 Alpha Ortho-Care, Inc.

Offers primary care and specialty services to seniors and families with a focus on preventive care. The company is headquartered in Hialeah, Florida.

Strategic Health Services, LLC

- - -

3/19/2018 Shreveport Sedation Associates

Provides anesthesia services to an ambulatory surgical center.

CRH Medical Corporation Pharos Capital Group, LLC

- - - - - - - - -

3/19/2018 Horizon Oncology Research, LLC Provides oncology and hematology services to cancer patients.

3/16/2018 Two Leading Obstetric and Gynecological Practices 3/15/2018 Van Dam Dermatology and Laser Center 3/14/2018 One Hour Optical and 20/20 Image Eye Centers 3/14/2018 Maryland Vision Institute, LLC

Provide obstetric and gynecological care services in Virginia.

Advantia Health LLC

Provides face and body treatments for pigment, redness, rejuvenation, skin lifting, skin tightening, and body contouring. One Hour Optical and 20/20 Image Eye Centers provide eye care services.

Pinnacle Dermatology, LLC

- - -

Acuity Eyecare Holdings, LLC

- - -

Offers ophthalmology services in Western Maryland and West Virginia.

Mid-Atlantic Ophthalmology Group

- - - - - -

3/13/2018 Outpatient Imaging Affiliates, LLC The company specializes in operating outpatient imaging centers with healthcare providers, such as health systems, academic medical centers, and radiology groups.

ICV Partners, LLC

3/13/2018 Orlando Rangel, M.D., P.A. 3/13/2018 Decillion Healthcare LLC

Provides family medicine, internal medicine, and geriatric care.

Cano Health, LLC

- - - - - -

Provides individualized pharmacy and clinical support services for patients with chronic, difficult to treat conditions in neurology, oncology, gastroenterology, immunology, and rheumatology.

BioMatrix, LLC

3/9/2018

Stewart Animal Clinic P.C.

Stewart Animal Clinic P.C. provides veterinary services.

Southern Veterinary Partners, LLC - - -

3/9/2018 3/7/2018

Newbury Park Dental Studio Champion Physical Therapy and Professional Therapies, Inc. Nine New Jersey Locations of DermOne Inc.

Newbury Park Dental Studio offers dental care services to patients.

Johnson Family Dental

- - - - - -

Champion physical therapy, LLC and Professional Therapies, Inc. offer physical therapy services.

CORA Health Services, Inc.

3/6/2018

Provides dermatological healthcare services.

Schweiger Dermatology Group, PLLC - - -

3/2/2018 3/2/2018 3/1/2018

Presence Health Network

Operates as a Catholic health system in Illinois.

AMITA Health Genoptix, Inc.

- - -

CynoGen, Inc.

Provides lab services and solutions for diagnosis of cancer. Operates as an animal hospital in Owego, New York.

1.0

- -

Owego Veterinary Hospital

Endless Mountains Veterinary Center, PC

- - -

3/1/2018

Columbus Regional Healthcare System East Texas Medical Center Regional Healthcare System

Provides healthcare and wellness programs in North and South Carolina.

Piedmont Healthcare, Inc.

280.0

- -

3/1/2018

A not-for-profit organization, operating primary, secondary, and tertiary healthcare facilities in East Texas.

The University of Texas System; AHS Medical Holdings LLC

- - -

3/1/2018

MacNeal Health Network, Inc.

Operates healthcare facilities in the United States.

Loyola University Health System 270.0

- -

2/28/2018 Southwest Ohio Gastroenterology Southwest Ohio Gastroenterology Inc. provides healthcare services.

Clinton Memorial Hospital LLC Alliance Physical Therapy Management, LLC Envision Healthcare Corporation

- - -

2/28/2018 Agility Health, LLC

Provides rehabilitation services to patients, healthcare providers, and employers in the United States.

45.0

- -

2/28/2018 Chandler Radiology Associates 2/26/2018 Gulf Coast Pain Institute

Provides provides radiology services.

- - - - - -

Provides interventional and non-interventional pain management treatments, physical therapy, chiropractic services, laboratory testing, and medication management services.

NexPhase Capital

2/20/2018 Two Pain Management Practices In Jacksonville 2/20/2018 Women's Health Specialists of Montgomery County, P.A. 2/16/2018 HealthFair USA, Inc. 2/13/2018 Southwest Dermatology PC 2/10/2018 Solis Medical Laboratories (SML), Inc.

Comprises two pain management practices.

Physician Partners of America, LLC - - -

Provides treatment of gynecologic and gynecologic oncology conditions to women and girls of all ages.

Advantia Health LLC

- - -

Operates as a mobile health screening company.

Community Care Health Network

160.0 3.6x - - - - - - - - - - - - - - - -

Southwest Dermatology PC offers dermatology services in Orland Park, Illinois. Operates as a medical laboratory which offers clinical laboratory testing, phlebotomy, and courier services.

Pinnacle Dermatology, LLC De Novo Diagnostics, LLC

2/8/2018 2/7/2018 2/5/2018

South County Radiologists, Inc.

Offers radiology services in Saint Louis, Missouri. Provides dental services in the United States.

West County Radiology Group, Inc.

The Smile Center, P.A.

Jefferson Dental Clinics P.C. North Clark Medical Group

Physicians Primary Care PLLC Offers primary care for all ages, counseling services, advanced imaging, physical medicine, diagnostic testing, and home care services.

2/5/2018

Tifton Ophthalmology

Offers medical and surgical eye and vision care.

Tift Regional Medical Center, Inc.

- - -

7

EV ($MM) Revenue EBITDA EV

Closed Date

Target

Target Business Description

Buyers/Investors

Non-Acute Healthcare Provider (continued)

2/1/2018 2/1/2018 2/1/2018

Seven Ambulatory Surgical Centers Seven ambulatory surgical centers sold by Meridian Surgical Partners, LLC.

MFC Nueterra Holding Company

46.5

- -

OU Medical Center U.S. Healthworks, Inc.

Operates as a medical center in Oklahoma City, Oklahoma.

OU Medicine Inc. Concentra, Inc.

- - -

Owns and operates occupational healthcare and urgent care centers in twenty states throughout the United States. Provides health screening services to health companies and medical groups.

753.0

- 11.3x

2/1/2018

Mobile Medical Examination Services, Inc

Quest Diagnostics Incorporated

- - -

2/1/2018 2/1/2018

Grace Holdings LLP

Operates a multi-specialty clinic in Texas. Provides eye care services and products.

Covenant Health System EyeZone Nevada Concordia Care, Inc.

- - - - - - - - -

Central Nevada Vision Inc

1/24/2018 Atlantic Imaging Group and iHCFA iHCFA, a clearinghouse, specializes in the electronic processing of workers compensation and automobile bills. Atlantic Imaging Group offers diagnostic imaging services.

1/24/2018 Behavior Care Specialists, Inc. 1/24/2018 Primary Care Specialists, Inc. 1/24/2018 Cyberknife Cancer Institute of Chicago, LLC 1/22/2018 Vaaca of Kentucky PSC 1/19/2018 Arlington Eye Center, Inc.

Offers behavioral treatment utilizing the principles of Applied Behavior Analysis.

The Family Treatment Network Inc UT Regional One Physicians Cancer Treatment Centers of America, Inc. Advanced ENT & Allergy, PLLC

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Provides primary care healthcare services.

Offers personalized cancer care and state-of-the-art technologies, such as the CyberKnife® radiosurgery system. Operates healthcare centers that provide treatment for allergic disorders.

Operates as an eye care center.

One Vision Eye Partners Advantia Health LLC

1/19/2018 Comprehensive Women's Health Offers women's internal medicine services in Maryland.

1/18/2018 Preventure, Inc. 1/16/2018 Phillips Eye Center

Provides custom health and wellness solutions for corporate businesses.

Virgin Pulse, Inc.

Operates an ophthalmic care and surgery facility.

Omni Eye Services, Inc.

1/15/2018 ProEx Physical Therapy's Norwell 1/15/2018 Dermatology & Advanced Skin Care, Inc. 1/15/2018 Spring Creek Dental Care, PC 1/11/2018 Laser Business Unit of Precision Eye Services, Inc.

Owns and operates clinics that provides physical therapy services.

Proex Physical Therapy, LLC Integrated Dermatology LLC

Provides dermatology services in the United State.

Doing business as Chattanooga Dental Care, provides dental care services.

CORDENTAL Group

- - - - - -

Business operation that offers mobile laser cataract service.

LENSAR, Inc.

1/10/2018 Tri-Valley Neonatal Medical Group Provides neonatology and newborn nursery services.

MEDNAX, Inc. AR-MED, LLC

- - - - - -

1/10/2018 Bruce K. Burton, M.D., P.A.

Provides cardiac care including early heart screenings, heart disease testing, and vein and vascular care in Malvern, Arkansas.

1/9/2018

Shoreline Vision

Provides eye care services to patients in the West Michigan Lakeshore community. Great Lakes Management Services Organization

- - -

1/9/2018 1/4/2018

New Orleans Urgent Care, L.L.C. The Monroe Clinic, Inc. And Agnesian Healthcare, Inc.

New Orleans Urgent Care, L.L.C. offers urgent care services.

Ochsner Health System

- - - - - -

The Monroe Clinic provides healthcare services and Agnesian Healthcare operates not-for-profit integrated healthcare facilities.

SSM Health

1/4/2018 1/4/2018

Drayer Physical Therapy Institute Owns and operates outpatient physical therapy clinics .

Upstream Rehabilitation Inc. Radiology Partners, Inc.

- - - - - -

Renaissance Imaging Medical Associates, Inc.

Provides diagnostic imaging and radiology services.

1/3/2018 1/3/2018 1/1/2018

JFK Health System, Inc.

Provides health care services to residents in the Central New Jersey region. Provides dermatology services to the greater Dallas-Fort Worth market.

Hackensack Meridian Health, Inc. Epiphany Dermatology PA Washington Gastroenterology

- - - - - - - - -

Lucy Li, MD, PA

Digestive Health Specialists & Gastroenterology Associates & Northwest Gastroenterology Associates

Provides gastroenterology healthcare services.

Managed Healthcare

3/29/2018 Orion Medical Management, Inc. 3/28/2018 Healthcare Specialty Business of Kelly Services, Inc.

Operates an online marketplace for dental savings plans.

Radiology Partners, Inc.

- - - - - -

Comprises a healthcare staffing business.

InGenesis, Inc.

3/9/2018

Northeast Tennessee Emergency Physicians, PC Consulting Division of PBC Advisors, LLC

Offers emergency department management services to seven Ballad Health hospitals. Comprises a division which provides consulting and advisory services to the healthcare industry including managed care and value-based care strategies, medical group formation, and sponsored health plan development services.

American Physician Partners, LLC - - -

2/5/2018

BDO USA, LLP

- - -

1/29/2018 Fifth Avenue Healthcare Services Engages in gathering data, verification, and tracking of healthcare provider credentials for the purpose of liability and risk management.

Seeman Holtz Property and Casualty, Inc. Foster & Foster Consulting Actuaries, Inc.

- - -

1/22/2018 Marsh Consulting Group

Engages in the management and consultancy of health and welfare benefits.

- - -

1/3/2018

RXC Acquisition Company

Provides healthcare outsourcing services to pharmaceutical, biotechnology and medical device manufacturers.

McKesson Specialty Health

735.0

- -

Source: S&P Capital IQ and Baker Tilly Capital research (April 2018)

8

All information and analysis in this report is provided by Baker Tilly Capital, LLC, which provides investment banking services before, during, and after a sell-side or buy-side transaction. Baker Tilly Capital, member FINRA and SIPC, is a wholly- owned subsidiary of Baker Tilly Virchow Krause, LLP. RubinBrown and Baker Tilly Virchow Krause are independent members of Baker Tilly International, the world’s ninth largest network of accountancy and business advisory firms.

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