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HCIT Market Research Oct 2011

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  • 1. Chase Sanders Signal Hill Director csanders@signalhill.com Sector M&A Update: Healthcare IT 2011The Healthcare IT (HCIT) M&A market is witnessing Government financial incentives and regulations requiringsignificant activity, a sign the sector’s predicted expansion automation in healthcare practices will continue to beand transformation is taking shape. While most deals in the main drivers in the sector for the next several years.2011 can be categorized as smaller tuck-ins, two marquee The HCIT market in the U.S. is expected reach $40 billiontransactions were announced this summer: ExpressScripts’ by the end of 2011 and grow at an impressive 24%$29 billion acquisition of Medco, a pharmacy benefits compound annual growth rate (CAGR) from 2012-2014.1management provider, and Blackstone’s $3 billion acquisition Spending on healthcare software is expected to rise 20.5%,of Emdeon, a revenue cycle management and medical data from $6.8 billion in 2010 to $8.2 billion in 2011.2 A largeservices provider. As consolidation and HCIT spending portion of the growth will come from spending oncontinue to accelerate, we believe the healthcare market is electronic health record (EHR) systems and mobilepoised for increased M&A activity and growth. applications.Key Factors Driving Continued HCIT medical benefit.3 Growth in medical costs for 2011 hasInvestment and M&A been primarily driven by provider cost-shifting from Medicare to commercial payers due to rate cuts, increased bargaining power from continued providerSome of the key factors that we see driving investment and consolidation (physicians and hospitals) and largeconsolidation in the HCIT sector are as follows: capital investments by hospitals for IT systems and • Increased government initiatives and healthcare professionals. reform: Spurred by attractive government incentives Q/Q Rev • Desire to improve patient safety and health outcomes: that began in 2011 and greater clarity surrounding Growth An estimated 80% of serious medical errors involve meaningful use rules, hospitals will invest billions of miscommunication between caregivers when a patient dollars into certified EHR systems. Although many is transferred or handed off.4 Improvements in the hospital systems were already planning to invest in completeness, accuracy and accessibility of patient EHRs, the government’s new regulations considerably information can reduce defective hand-offs by an condensed their timelines. The criteria for meaningful average of 52%.5 use will be staged in three steps over the next several years, with Medicare penalties beginning in 2015. Stage 1, • Innovative technology from niche players: Niche currently in process through 2012, sets the baseline for players continue to develop new technologies to electronic data capture and information sharing. capture and use data and drive change in the HCIT • Skyrocketing cost of healthcare delivery to space. These niche markets are large enough to provide patients, physicians and providers: The largest contributor significant venture capital returns, with readily foreseeable of increasing medical costs comes from care exit opportunities as large strategics consolidate and providers, which account for up to 81% of the become “one-stop-shops.” IN THIS ISSUE: M&A Update - Healthcare IT 2011 2 HCIT M&A By The Numbers 4 Largest HCIT Transactions 7 HCIT Public Company Data 2 Public HCIT Company Multiples 5 Venture Investments in HCIT 8 Precedent HCIT Transactions 3 Noteworthy Recent Transactions 6 Public HCIT Equity Performance 10 ReferencesSector M&A Update: Healthcare IT 2011 www.signalhill.com
  • 2. Healthcare IT 2011HCIT M&A By The NumbersHCIT M&A activity has grown steadily since 2008. The total number of announced deals grew substantially in 2010 andthe expected deal count for 2011 is on pace to exceed it. Median deal size for 2011 grew slightly over 2010, continuing apositive trend since a low in 2009. The median revenue multiple for 2011 also grew slightly compared to 2010 to 2.5x. Thecontinued expansion of these metrics signals increased market confidence and the growing value of HCIT tostrategic and financial investors.Figure 1: HCIT M&A Deal Metrics, 2008-2011 Source: Signal Hill As of Q3 2008 2009 2010 2011(E)* 2010 2011* Number of Deals 48 77 106 118 71 88 % change from prior year - 60.4% 37.7% 11.3% - 23.9% Total Enterprise Value ($M) $3,607.0 $10,610.1 $8,106.2 $7,848.0 $7,177.0 $5,869.8 % change from prior year - 194.2% -23.6% -3.2% - -18.2% Median Announced Deal Size ($M) $51.6 $10.5 $59.0 $60.0 $61.3 $60.0 % change from prior year - -79.7% 461.9% 1.7% - -2.1% Median EV/TTM Revenue Multiple 2.2x 1.1x 2.4x 2.5x 2.7x 2.5x % change from prior year - -50.0% 118.2% 4.2% - -7.4% *2011 data excludes the EV $34 billion ExpressScripts/Medco transaction.Public HCIT Company MultiplesPublic HCIT company revenue trading multiples are a key indicator of the health of the market and began expanding ata healthy clip in 2011, peaking at 3.2x. However, macroeconomic head winds from a slowing U.S. economy and concernsof a spreading debt crisis in Europe have since depressed HCIT revenue trading multiples to around 2.4x over the last fewmonths.Figure 2: Signal Hill HCIT Composite Enterprise Value / LTM Revenue Public Company Trading Multiples 3.4x 3.4x 3.2x 3.2x 3.0x 3.0x 2.8x 2.8x 2.6x 2.6x 2.4x 2.4x 2.2x 2.2x 2.0x 2.0x 1.8x 1.8x Sep-09 Feb-10 July-10 Dec-10 May-11 Sep-11 Source: Signal Hill Note: Signal Hill HCIT Composite: ABCO, ACCL, AH, ATHN, CERN, CGM-FR, COP-DE, CPSI, EM, EPOC, ERT, HMSY, HSTM, ICAD, MCK, MDAS, MDRX, MDSO, MEDW, MRGE, OMCL, OSIS, QSII, SECT.B-SE, SXCI, WBMD and ZIXI.2
  • 3. Signal HillThe table below provides a snapshot of public company trading multiples broken down by key subsectors of HCIT.Figure 3: Current Signal Hill HCIT Subsector Composites Median Enterprise Value / Revenue Trading Multiples 4.5x 4.0x 4.0x 3.5x 3.4x 3.5x 3.3x 3.0x 3.1x 3.0x 2.9x 2.6x 2.5x 2.5x 2.3x 2.2x 2.0x 1.9x 1.5x 1.4x 1.4x 1.2x 1.2x 1.2x 1.2x 1.0x 0.5x 0.0x Hospital IT Imaging IT Payor IT  Pharma IT Physician IT  Service IT LTM  2011E 2012P Source: Signal Hill Note: Payor IT: HMSY and SXCI; Pharma IT: ACCL, CGM-FR, EPOC, ERT, MDSO and WBMD; Physician IT: AH, ATHN, COP-DE, MDRX, QSII and ZIXI; Hospital IT: CERN, CPSI, MCK, MDAS, MEDW and OMCL; Imaging IT: ICAD, MRGE, OSIS and SECT.B-SE; and Services IT: ABCO, EM and HSTM.Noteworthy Recent HCIT M&A Transactions • Emdeon / Blackstone (Enterprise Value: $3,061 million; 2.8x revenue): Private equity firm Blackstone agreed to acquire a controlling interest in Emdeon, a provider of revenue and payment cycle management solutions, connecting payers, providers and patients in the U.S. healthcare system. Under the terms of the merger agreement, holders of Emdeon common stock will receive $19.00 per share in cash, representing a 39% premium to its average 30-day trading price. This transaction marks a complete exit from Emdeon by General Atlantic, the private equity firm that bought a 52% stake in the company in 2006 from HLTH for $1.25 billion. The remaining private equity shareholder, Hellman & Friedman will retain a minority equity interest in Emdeon. • Vangent / General Dynamics (EV: $960 million; 1.3x revenue): General Dynamics, a provider of information technology, systems engineering, professional services and simulation and training support to government customers, agreed to acquire Vangent, a provider of health informatics and information exchange, electronic health records, data analytics and business-process outsourcing solutions, also to government customers. The acquisition will add depth and breadth to GD’s IT operations, which provides HCIT systems and solutions to federal, commercial and military customers. It is the second time in four years Vangent ownership has changed; Veritas acquired the company from Pearson for $600 million in 2007. • Sage Software Healthcare / Vista Equity Partners (EV: $320 million; 2.8x revenue): Vista Equity Partners, a private equity firm focused on enterprise software and technology businesses, agreed to acquire Sage Software Healthcare, a provider of practice management and EHR offerings. The transaction will allow Sage to focus on other U.S opportunities within its core customer base. Sage will make a loss of up to 70 million pounds ($108.4 million) through the sale and redistribute cash proceeds of $320 million to shareholders by buying back shares. 3
  • 4. Healthcare IT 2011 • Gateway EDI / TriZetto (EV: $230 million; revenue multiple unavailable): TriZetto, a healthcare payment software and services provider, agreed to acquire Gateway EDI, a St. Louis-based provider of healthcare revenue cycle management solutions. The acquisition will enable TriZetto to offer an integrated end-to-end payment information product. Gateway EDI’s leadership will remain in place and will operate the company as an independent subsidiary. • Vitalize Consulting / SAIC (EV: $190 million; 2.5x revenue): SAIC, a scientific, engineering, and technology applications company, agreed to acquire Vitalize Consulting, a provider of clinical, business and IT services for healthcare enterprises. The acquisition enables SAIC to expand in the commercial health provider market and leverage its information integration and data analytics expertise with Vitalize Consulting’s HCIT and clinical workflow optimization capabilities to further grow as commercial and Federal health markets converge. • Medical Present Value / Experian (EV: $185 million; 4.1x revenue): Experian, a global information services company, agreed to acquire Medical Present Value, a provider of data, analytics and software in the RCM market. Medical Present Value’s revenue CAGR over the past three years has exceeded 30%, driven primarily by new business wins. The acquisition will provide Experian a more comprehensive set of products and services across the healthcare payments life cycle and help clients manage multiple vendors through a single point of contact. • M*Modal / MedQuist (EV: $130 million; 5.4x revenue): MedQuist, a provider of integrated clinical documentation solutions for healthcare, agreed to acquire M*Modal, a provider of speech recognition and natural language processing software enabling structured data to be pulled from dictation and placed in an EHR. The deal will allow MedQuist to provide advanced speech understanding technologies and services that seamlessly capture the physician narrative. MedQuist intends to enhance further the integration of M*Modal’s front-end speech recognition technology with MedQuist’s clinical documentation platform.Figure 4: Largest HCIT Transactions by Enterprise Value, 2010-2011Source: Signal Hill EV/ TTMDate Enterprise RevenueAnnounced Seller Buyer Value ($M) Multiple Target Description21-Jul-11 Express Scripts, Medco Health $34,000.0 0.5x Pharmacy benefit management provider. Inc. Solutions09-Jul-10 MultiPlan, Inc. BC Partners & $3,100.0 NA Provider of healthcare cost management solutions that deliver transaction Silver Lake based services to insurers, health plan administrators, and other payers Partners of healthcare services.04-Aug-11 Emdeon, Inc. The Blackstone $3,061.0 2.8x Provider of revenue and payment cycle management and clinical Group information exchange solutions.09-Jun-10 Eclipsys Allscripts $1,205.0 2.3x Provider of advanced integrated clinical, revenue cycle and performance management software, clinical content and professional services.16-Aug-11 Vangent, Inc. General $960.0 1.3x Provider of health informatics and information exchange, electronic Dynamics health records and data analytics, as well as state-of-the-art business process outsourcing solutions to federal clients.14-Sep-10 The Broadlane MedAssets, Inc. $850.0 5.1x Provider of supply chain management, strategic sourcing of supplies Group and services, capital equipment lifecycle management, medical device or PPI cost management, centralized procurement, clinical and lean process consulting, and clinical workforce optimization.16-Apr-10 Phase Forward Oracle Corp. $575.9 2.7x Provider of integrated data management solutions for clinical trials and drug safety.07-Dec-10 Medicity Inc. Aetna Inc. $500.0 NA Offers a broad range of products and services that enable health systems, hospitals, physician practices and health information exchanges to securely access and exchange health care information.22-Sep-11 Sage Group / Vista Equity $320.0 2.8x Provides electronic healthcare records (EHR) and medical practice Sage Software Partners management software for the medical sector with features for business Healthcare LLC intelligence analytics, patient online self-service, reporting and transaction processing.14-Sep-10 Chamberlin Emdeon, Inc. $260.0 NA Provides comprehensive eligibility services through technology-enabled Edmonds & patient access solutions nationwide for hospitals, government agencies Associates, Inc. and managed care organizations.05-Mar-10 AMICAS, Inc. Merge $240.1 3.3x Offers a suite of image and information management solutions Healthcare including radiology PACS, cardiology PACS, radiology information Incorporated systems, cardiovascular information systems, revenue cycle management solutions and enterprise content management tools designed to power the imaging component of the electronic medical record (EMR).4
  • 5. Signal HillHCIT Venture Capital InvestmentsVenture Capital investments in the HCIT sector witnessed significant growth during 2010 and 2011. As of September 30,the number of investments was up more than 10% compared to 2010, while total dollars invested already exceeds thetotal amount for all of 2009.Figure 5: HCIT Venture Capital Investments, 2005-2011*Source: VentureXpert/ThomsonOne As of 9/30 TOTAL as of 2005 2006 2007 2008 2009 2010 2011(E) 2011* Q3 2011Total Number of Investments 42 54 53 55 45 69 67 49 367Percent change over previous period - 28.6% -1.9% 3.8% -18.2% 53.3% -2.9% 11.4% -Total Dollars Invested ($M) $195.7 $257.7 $257.4 $349.1 $184.6 $282.7 $259.2 $194.0 $1,721.2Percent change over previous period - 31.6% -0.1% 35.6% -47.1% 53.2% -8.3% -10.2% -*2011 as of 9/30/10. Percentage change compared to same period in 2010.Business process management technology for healthcare continued to bring in the majority of venture capital investmentsduring the first three quarters of 2011. Revenue cycle management witnessed a large increase in investments, while theother subsectors witnessed declines, mostly due to general market weaknesses.Figure 6: HCIT Venture Capital Investments by Subsector, 2005-2011*Source: VentureXpert/ThomsonOne As of 9/30Sub-sector 2005 2006 2007 2008 2009 2010 2011(E) 2011 TOTALElectronic Medical Records(EMR) $27.4 $30.3 $11.5 $29.1 $9.5 $16.4 $12.8 $9.6 $133.8Health Information Exchange(HIE) $13.2 $25.0 $4.0 $0.4 $0.5 $41.1 $20.1 $15.0 $99.2Revenue Cycle Management $44.5 $79.6 $91.9 $121.8 $52.9 $18.8 $49.3 $36.9 $446.4Healthcare Business ProcessManagement $96.0 $91.2 $98.6 $101.0 $101.2 $92.2 $127.4 $95.3 $675.6Storage of Medical Information NA $9.1 $14.8 $9.1 $4.0 $53.1 $19.3 $14.4 $104.5Mobile / Internet Technology $14.6 $22.6 $36.5 $87.7 $16.6 $16.6 $3.3 $2.5 $197.0for Healthcare*2011 data as of 9/30/10. 5
  • 6. Healthcare IT 2011Public HCIT Equity PerformanceThe Signal Hill HCIT Composite performed in line with the NASDAQ Composite over the last quarter of 2010 andoutperformed the NASDAQ through Q3 2011, up 22.7% over the last year.Figure 7: One Year Signal Hill HCIT Composite vs NASDAQ Composite 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% -10% -10% Sep-10 Dec-10 Feb-11 May-11 Jul-11 Sep-11 Signal Hill HCIT Composite NASDAQ Composite Source: Signal Hill Note: Signal Hill HCIT Composite: ABCO, ACCL, AH, ATHN, CERN, CGM-FR, COP-DE, CPSI, EM, EPOC, ERT, HMSY, HSTM, ICAD, MCK, MDAS, MDRX, MDSO, MEDW, MRGE, OMCL, OSIS, QSII, SECT.B-SE, SXCI, WBMD and ZIXI.The HCIT equity subsectors for Services, Payor, Physician, Hospital and Imaging outperformed the NASDAQ Compositeover the last year, up 56.6%, 40.6%, 31.9%, 28.1% and 20.0% respectively. Only the Pharma HCIT equity subsector under-performed the NASDAQ Composite over last year, down 38.7%.Figure 8: One Year Signal Hill HCIT Sub-sector Composites vs NASDAQ Composite 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% -10% -10% -20% -20% -30% -30% -40% -40% -50% -50% Sep-10 Dec-10 Feb-11 May-11 Jul-11 Sep-11 Payor IT NASDAQ Composite Pharma IT Physician IT  Hospital IT  Imaging IT Services IT Source: Signal Hill Note: Payor IT: HMSY and SXCI; Pharma IT: ACCL, CGM-FR, EPOC, ERT, MDSO and WBMD; Physician IT: AH, ATHN, COP-DE, MDRX, QSII and ZIXI; Hospital IT: CERN, CPSI, MCK, MDAS, MEDW and OMCL; Imaging IT: ICAD, MRGE, OSIS and SECT.B-SE; and Services IT: ABCO, EM and HSTM.6
  • 7. Signal HillFigure 8: HCIT Public Company Data($ in Millions, except per share data)Source: Signal Hill Market Data Financial Data Valuation Data StockPricing Date 09/30/11 Price Q/Q Rev LTM Margins EV/Revenues EV/EBITDA1 Price % of 52 Market Enterprise LTM Growth CY CY CY CYMedian Metrics 9/30/11 Week High Cap Value Revenue YoY Seq. Gross EBITDA LTM 2011(E) 2012(P) LTM 2011(E) 2012(P) Hospital IT McKesson Corp $72.70 83.3% $18,466 $19,339 $114,614 9.2% 3.9% 5.3% 2.2% 0.2x 0.2x 0.2x 7.6x 6.6x 6.1x Cerner Corp. 68.52 92.1% 11,894 11,327 1,979 15.0% 6.6% 77.8% 30.5% 5.7x 5.3x 4.7x 18.8x 16.9x 14.3x MedAssets Inc. 9.61 42.7% 566 1,465 481 54.9% 12.9% 58.7% 28.4% 3.0x 2.5x 2.3x 10.7x 8.0x 7.2x Computer Programs & Systems Inc 66.15 83.7% 732 707 173 29.5% 20.9% 46.3% 23.7% 4.1x 3.9x 3.5x 17.2x 15.5x 13.5x Omnicell Inc. 13.78 75.9% 468 287 232 11.5% 6.7% 54.8% 8.7% 1.2x 1.2x 1.0x 14.3x 8.4x 6.7x Mediware Information 11.90 86.8% 100 70 56 20.6% 16.0% 58.5% 27.8% 1.3x 1.2x NA 4.5x NA NA Systems Inc. Median 83.5% 17.8% 9.8% 56.7% 25.8% 2.2x 1.9x 2.3x 12.5x 8.4x 7.2x Imaging IT OSI Systems Inc. $33.52 74.0% $662 $609 $656 10.9% 4.9% 36.5% 10.6% 0.9x 0.9x 0.8x 8.7x 7.8x 6.5x Merge Healthcare Inc. 5.75 93.2% 515 719 200 91.7% 5.5% 55.1% 22.5% 3.6x 3.1x 2.7x 16.0x 11.5x 10.0x Sectra AB 6.12 87.7% 230 202 131 -0.8% -25.8% 2.1% 8.5% 1.5x 1.6x 1.6x 18.3x 14.5x 9.7x icad Inc. 0.47 26.6% 26 18 26 9.0% -9.5% 71.0% -43.0% 0.7x 0.6x 0.4x NM NA NA Median 80.9% 10.0% -2.3% 45.8% 9.5% 1.2x 1.2x 1.2x 16.0x 11.5x 9.7x Payor IT SXC Health Solutions $55.70 83.9% $3,552 $3,217 $3,326 152.8% 10.4% 7.0% 3.9% 1.0x 0.7x 0.5x 24.8x 19.2x 14.2x HMS Holdings Corp. 24.39 86.3% 2,115 1,997 339 26.3% 8.4% 34.3% 27.7% 5.9x 5.4x 4.4x 21.3x 17.9x 14.6x Median 85.1% 89.6% 9.4% 20.7% 15.8% 3.4x 3.0x 2.5x 23.1x 18.6x 14.4x Pharma IT WebMD Health Corp. $30.15 51.5% $1,769 $1,424 $577 15.2% 7.4% 60.7% 27.6% 2.5x 2.4x 2.2x 8.9x 7.2x 6.3x Cegedim S.A. 30.72 43.0% 430 1,133 1,316 15.2% 22.8% 12.5% 5.9% 0.9x 0.9x 0.9x 14.5x 5.0x 4.6x Medidata Solutions Inc. 16.44 60.0% 408 314 179 24.5% 23.2% 68.7% 21.8% 1.7x 1.7x 1.5x 8.0x 7.2x 5.9x Epocrates Inc. 9.01 29.8% 233 152 111 10.2% -4.5% 67.8% 6.7% 1.4x 1.3x 1.1x 20.4x 10.4x 5.8x Accelrys Inc. 6.06 67.7% 336 220 NA NA NA NM NM NA 1.5x 1.4x NA 7.3x 6.1x eResearch Technology 4.46 51.9% 220 208 175 47.3% 2.8% 42.5% 26.1% 1.2x 1.2x 1.1x 4.6x 4.3x 3.3x Median 51.7% 15.2% 7.4% 60.7% 21.8% 1.4x 1.4x 1.2x 8.9x 7.2x 5.9x Physician IT Allscripts Healthcare $18.02 77.9% $3,470 $3,470 $1,085 81.8% 6.1% 35.1% 11.6% 3.2x 2.4x 2.2x 27.7x 9.6x 8.2x Solutions Inc. Accretive Health Inc. 21.23 64.7% 2,146 1,995 676 20.9% 12.1% 22.5% 5.5% 3.0x 2.4x 1.8x 53.3x 25.2x 15.5x Quality Systems Inc. 97.00 95.7% 2,852 2,722 371 21.1% 3.4% 64.3% 33.1% 7.3x 6.6x 5.6x 22.2x 20.5x 16.3x athenahealth Inc. 59.55 81.9% 2,130 2,026 280 33.0% 11.4% 57.8% 17.8% 7.2x 6.3x 4.9x 40.5x 31.9x 23.4x CompuGROUP 11.94 69.0% 635 986 484 29.8% 2.3% 25.2% 18.2% 2.0x 1.8x 1.6x 11.2x 9.3x 7.2x Medical AG Zix Corp. 2.67 54.7% 180 163 34 5.8% 1.7% 82.0% 26.7% 4.7x 4.2x 3.6x 17.7x 13.2x 10.1x Median 73.5% 25.4% 4.7% 46.4% 18.0% 4.0x 3.3x 2.9x 24.9x 16.9x 12.8x Services IT Emdeon Inc. CI A $18.79 99.4% $1,716 $2,815 $1,075 16.0% 3.9% 21.5% 23.4% 2.6x 2.5x 2.3x 11.2x 9.3x 8.5x Advisory Board Co. 64.53 94.6% 1,090 1,055 305 22.4% 5.7% 43.8% 11.8% 3.5x 3.1x 2.6x 29.4x 17.0x 13.4x HealthStream Inc. 12.83 86.4% 300 273 74 26.4% 13.8% 56.4% 18.4% 3.7x 3.4x 2.9x 20.1x 16.8x 14.3x Median 94.6% 22.4% 5.7% 43.8% 18.4% 3.5x 3.1x 2.6x 20.1x 16.8x 13.4x ALL HCIT Companies 77.9% 21.0% 6.3% 50.5% 18.3% 2.5x 2.4x 2.0x 17.2x 10.4x 8.5x 7
  • 8. Healthcare IT 2011Figure 9: Precedent HCIT M&A TransactionsSource: Signal HillDate EnterpriseAnnounced Seller Buyer Value ($M) Revenue EBIT EBITDA Target Description16-Aug-11 Vangent, Inc. General $960.0 1.3x 21.9x 11.7x Provider of health informatics and information Dynamics exchange, electronic health records and data analytics, as well as state-of-the-art business-process outsourcing solutions to federal clients.12-Aug-11 Zircadian Allocate Software $9.8 2.4x NA 30.4x SaaS provider of software used to plan the rotas of Holdings Limited junior doctors and consultants in the NHS.04-Aug-11 Emdeon, Inc. The Blackstone $3,061.0 2.8x 28.6x 12.2x Provider of revenue and payment cycle management Group and clinical information exchange solutions connecting payers, providers and patients in the United States healthcare system.01-Aug-11 Salar Inc. Transcend $11.0 2.8x 9.2x NA Developer of electronic clinical documentation and Services, Inc. billing workflow software for the healthcare market.11-Jul-11 M*Modal MedQuist Inc. $130.0 5.4x NA NA Provides speech recognition software and software as a service (SaaS) for the purposes of clinical documentation and transcription for the medical sector.28-Jun-11 Medical Present Experian Group $185.0 4.1x NA NA Provides Web-based medical patient and insurance Value, Inc. Ltd. provider payment, as well as revenue cycle management software for the medical sector.22-Jun-11 Portico Systems McKesson $90.0 4.6x NA NA Provides healthcare benefits provider network Corporation management, administration and collaboration software for health insurance providers.06-Jun-11 Ophthalmic Merge Healthcare $32.3 1.8x NM NM Provides digital eye scanning systems and related Imaging Systems image capture and management software for the ophthalmology sector. Also provides related electronic healthcare records (EHR) management software.28-Apr-11 Vital Images, Inc. Toshiba Medical $152.1 2.5x 66.2x 27.0x Provider of advanced visualization and analysis Systems software for physicians and healthcare specialists. Corporation27-Apr-11 Bloodhound Verisk Analytics, $82.0 8.2x NA NA Provider of real-time pre-adjudication claims editing Technologies Inc. web-based software for healthcare payers.11-Apr-11 Tribal Group plc / Capita plc $25.9 0.2x NA NA The Government and Health Businesses offers strategic Government and and operational advisory and consultancy services to Health Business government clients and the healthcare industry in developing countries on behalf of government funded donor organizations.07-Mar-11 BioWisdom, Ltd Instem Life $2.4 1.0x NA NA Provides software to accelerate access to scientific Science Systems information for better decision support during product plc discovery, development and commercialization.22-Feb-11 Gateway EDI The TriZetto $230.0 NA NA 20.2x Offers electronic claims processing and revenue cycle Group management services to more than 70,000 physicians.16-Dec-10 InfoLogix, Inc. Stanley Black & $61.2 0.7x NA NA Provider of enterprise mobility and advanced Decker wireless asset tracking solutions for the healthcare and commercial industries.14-Dec-10 iSOFT Business The Capita Group $36.5 1.4x 7.6x 4.2x iSOFT Business Solutions offers financial management, Solutions Plc purchasing and e-business solutions to customers across both public and private sectors primarily in the UK and Ireland.04-Nov-10 Group DCA PDI, Inc. $55.0 2.9x NA 5.5x Interactive digital communications agency serving biopharmaceutical companies that leverages the strengths of the Internet, multimedia, tablet PCs, dimensional direct mail, and its proprietary software called DIAGRAM™.22-Oct-10 Spryance, Inc. Transcend $8.5 0.5x NA NA Specializes in high-quality, full-service medical (dba Heartland) Services, Inc. transcription services. The company interfaces with various health information systems and software.8
  • 9. Signal HillSource: Signal HillDate EnterpriseAnnounced Seller Buyer Value ($M) Revenue EBIT EBITDA Target Description14-Sep-10 The Broadlane MedAssets, Inc. $850.0 5.1x NA 17.0x Provider of supply chain management, strategic sourcing Group of supplies and services, capital equipment lifecycle management, medical device or PPI cost management, centralized procurement, clinical and lean process consulting, and clinical workforce optimization.30-Aug-10 A.D.A.M., Inc. Ebix, Inc. $67.0 2.4x 16.8x 10.1x Provider of consumer health information and benefits technology solutions to healthcare organizations, benefits brokers, employers, consumers, and educational institutions.26-Aug-10 Tela Sourcing, The TriZetto - NA NA NA Tela offers a wide range of solutions for BPO and Inc Group, Inc. software application development with knowledge of the healthcare, managed care, insurance markets and operations management.19-Aug-10 Akimeka LLC VSE $44.0 1.2x 6.8x NA Develops advanced IT solutions for government Corporation customers. By blending top technical talent, specialized domain knowledge, and customer service, Akimeka delivers high-impact solutions for high-priority challenges.28-Jul-10 Pulse Systems, Cegedim SA $58.0 3.6x NA NA US healthcare software provider. Pulse offers EHR, Inc. Practice Management, ePrescribing, and Revenue Cycle Management (Billing and Collection Services) used nationwide in 35 medical specialties and subspecialties.09-Jun-10 Eclipsys Allscripts $1,205.0 2.3x 59.6x 17.3x Provider of advanced integrated clinical, revenue cycle and performance management software, clinical content and professional services.16-Apr-10 Phase Forward Oracle Corp. $575.9 2.7x 42.7x 18.4x Provider of integrated data management solutions for clinical trials and drug safety. Specifically, its SaaS- based Integrated Clinical Research Suite manages clinical development and safety processes from Phase 1 clinical trials through regulatory submission and post- approval monitoring.05-Mar-10 AMICAS, Inc. Merge $240.1 3.3x NM 114.7x Offers a suite of image and information management Healthcare solutions – from radiology PACS to cardiology PACS, Incorporated from radiology information systems to cardiovascular information systems, from revenue cycle management solutions to enterprise content management tools designed to power the imaging component of the electronic medical record (EMR).02-Mar-10 Cerrus Ltd Advanced $0.6 0.6x NA NA Cerrus principal product is Saturn, a community Computer care and support management solution, which Software Plc manages the delivery of care, resource management and organizational financial requirements for over 60 community health & social care providers.02-Mar-10 Concuity The Advisory $34.5 6.9x NA NA Provider of revenue cycle management software and Board Company services specializing in contract profitability, contract compliance, denial management, and revenue process and lifecycle improvement.22-Feb-10 UltraGenda BV iSOFT Group $14.4 3.0x NA NA Provides an Enterprise-Wide Multi-Resource Limited Scheduling software solution that enables healthcare organizations to schedule and manage appointments and resources to improve efficiencies within multiple operational provider facilities01-Feb-10 Global Med Haemonetics $62.6 2.0x 36.8x 20.2x Healthcare information technology company which Technologies, Corporation markets a breadth of software solutions and services Inc. that span the blood supply continuum, from blood collection to the hospital transfusion center to the patient care environment. 9
  • 10. Healthcare IT 2011References:  1. RNCOS 2. Ibid 3. PricewaterhouseCoopers’ Health Research Institute 4. American College of Surgeons 5. IbidAbout Signal HillSignal Hill is a privately-held investment banking partnership with a sole focus on growth companies. Our professionalshave deep expertise in Information Technology, Media & Internet, Telecom Services & Internet Infrastructure,Communications, Education & Business Services, and Healthcare Services. Signal Hill has more than 60 professionalsacross five offices in Baltimore, Nashville, New York, Reston and San Francisco.Scott Wieler Howard Loewenberg Ira Cohen Greg AgerChairman Head of Investment Banking Managing Director Managing Directorswieler@signalhill.com hloewenberg@signalhill.com icohen@signalhill.com gager@signalhill.comJustin Balciunas Mathew Dahl David Dunn J. Adam HittManaging Director Managing Director Managing Director Managing Directorjbalciunas@signalhill.com mdahl@signalhill.com ddunn@signalhill.com ahitt@signalhill.comJohn MacDonald Don More Jeff Nahley Michael ParentManaging Director Managing Director Managing Director Managing Directorjmacdonald@signalhill.com dmore@signalhill.com jnahley@signalhill.com mparent@signalhill.comMatthew Shilling Joel Strauch Douglas Webster Henry SageManaging Director Managing Director Managing Director Directormshilling@signalhill.com jstrauch@signalhill.com dwebster@signalhill.com hsage@signalhill.comChase Sanders Bart Shaeffer David Dolan Matt FioreDirector Director Vice President Vice Presidentcsanders@signalhill.com bshaeffer@signalhill.com ddolan@signalhill.com mfiore@signalhill.comRob Lung Justin Puccio Franklin E.W. StaleyVice President Vice President Vice Presidentrlung@signalhill.com jpuccio@signalhill.com fstaley@signalhill.com Baltimore • Nashville • N e w Yo r k • Reston • San FranciscoSignal Hill DisclaimerThe information and opinions in this report were prepared by Signal Hill. The information herein is believed by Signal Hill to be reliable and has been obtained from andbased upon public sources believed to be reliable, but Signal Hill makes no representation as to the accuracy or completeness of such information. Signal Hill may provide,may have provided or may seek to provide M&A advisory services to one or more companies mentioned herein. In addition, employees of Signal Hill may have purchasedor may purchase securities in one or more companies mentioned in this report. Opinions, estimates and analyses in this report constitute the current judgment of the authoras of the date of this report. They do not necessarily reflect the opinions of Signal Hill and are subject to change without notice. Signal Hill has no obligation to update,modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, estimate, forecast or analysis set forth here-in, changes or subsequently becomes inaccurate. This report is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitationof an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction.Data cited herein is sourced from Signal Hill’s database and derived from publicly available sources – additional information is available on request.©2011 Signal Hill. All rights reserved.10
  • 11. September 2011 September 2011 September 2011 August 2011 $97.5 Million August 2010 Mid-Atlantic Skilled Nursing Group (“Sellers”) a company has been acquired by has been acquired by has been acquired by has been acquired in a sale- leaseback transaction by has been acquired by July 2011 July 2011 June 2011 May 2011 May 2011Series B Private Placement has been acquired by has been acquired by $15,120,000 has been acquired by Follow-On Offering March 2011 February 2011 January 2011 October 2010 October 2010has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by a subdivision ofGreater Outcomes®Signal Hill strategic M&A advisory services achieve greater outcomes for our clients. Our team of experiencedbankers and former technology company executives has created billions of dollars in aggregate transaction value forthe information technology industry. Let us help you maximize your companys value through guiding and timingan acquisition growth path or liquidity event. Signal Hill©2011 Signal Hill. All rights reserved. All trademarks are property of their owners. www.signalhill.com
  • 12. Signal Hill w w w . s i g n a l h i l l . c o mBaltimore • Nashville • N e w Yo r k • Re s t o n • S a n Fr a n c i s c o