Healthcare IT Acquisition Proposal

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HEALTHCARE IT COMPANY-ACQUISITION AND GROWTH STRATEGY
1. Healthcare IT Industry
a. EPIC based IT Services-why EPIC?
2. Our Strategy
a. Build a Healthcare IT Firm
b. Product, Project and Services
c. Acquire IT/healthcare IT Firms and build
d. Growth plans after acquisition
3. Target Acquisition Company
a. $10M company, $1.4m EBITDA, Valuation: $2.55m
b. Financing Needs
i. $1m to help acquisition
ii. Remaining manage by self-funding and earn out
proposals.
c. Value Proposition
d. Topline growth and Outsourcing Opportunities
4. Projection
a. $48m Sales, $7.6m EBITDA and valuation of $21m in 3
years
b. Today’s $1m investment yields $8m in 3 years.
5. Recent example of a Healthcare IT Company Valuation
6. Key People Involved
7. Healthcare IT Trends and Investment-Facts and Figures
Success occurs when opportunity meets preparation.

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1. Healthcare IT Industry
Healthcare Industry in USA - 1 Trillion USD
Healthcare Information Technology market (HCIT) - $53.8 Billion
HCIT CAGR (Compound Annual Growth Rate) - 16.1%
Accenture Market Research shows Global Market for Electronic
Health Records (EHR) Expected to Reach $22.3 Billion by the end
of 2015.
a. Why acquire EPIC based company?
About 40% of the U.S. population–127 million patients–will have their
medical information stored in an EPIC digital record. EPIC Systems is a
Wisconsin based privately held healthcare software company with 1.7B
USD revenue.

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Around $35 billion in federal subsidies paid to hospitals and doctors to
purchase EHR systems.
EPIC’s current market
EPIC has 297 customers and 70 percent of HIMSS Analytics Stage 7
hospitals use EPIC.
Some of the nation's largest hospitals and health systems using EPIC's
EHR system -
Kaiser Permanente (4B USD)
Cleveland Clinic
Johns Hopkins Medicine in Baltimore
UCLA Health in Los Angeles
Arlington-based Texas Health Resources
Massachusetts General Hospital in Boston (400MUSD)
University of California, San Francisco (150M USD)
Dartmouth-Hitchcock Medical Center in New Hampshire (80M
USD)
Mount Sinai Health System in New York City
Duke University Health System in Raleigh, N.C (700M USD)
Cambridge Health Alliance
Atrius
New EPIC Customers
Partners healthcare is replacing Eclipsys with $700m EPIC
implementation.
Lahey Clinic is replacing Meditech/Allscripts with EPIC
Lee Memorial Health System.
CVS Caremark's retail clinic chain, Minute Clinic, will switch from
its proprietary EHR system to EPIC. When the transition is
complete, about 51 percent of Americans will have an EPIC
record.

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Source: Definitive Healthcare
2. Our Strategy
a. The plan is to build a $50m IT firm over a period of 3 yrs. We do
this through the acquisition of an IT consulting firm or healthcare IT
firm in U.S. Healthcare IT is the fastest growing, high margin segment
in IT sector due to adoption of HIS systems like EPIC, Cerner, etc., in
hospitals here and slowly moving to around the world.
b. Future Business Segments
c. IT Consulting requirements for Healthcare IT Services and
Solutions
ARRA / HITECH / Meaningful Use
Project Managers, Project Leads, Project Coordinators,
Informatics/Clinicians
Clinical Workflow & Re-design Specialist
Analysts: Clinical, Business, Ambulatory, Decision Support,
Application, Order Set, Patient Monitoring, Gap, Etc.
Developers: EMR, EHR, PHR, Application Program Interface
Clinical Informatics Professionals
IT Security Specialists
Architects
Infrastructure Professionals
Future Growth Areas
High Valuation & Client
Entry(Predictive Analysis
Tools-BI, Patient Health Portal)
- 20%
Value Added Growth(EHR
implementation-EPIC,
CERNER,ALLSCRIPTS,
Healthcare IT) - 30%
Cash Generation(IT Services-
Application Programmers,
DBAs, Cloud, DW etc) - 50%

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HIPAA and Compliance Professionals
ICD-9 to ICD-10
d. Growth Plans after acquisition.
MARKETS PRACTICE AREAS OFFERINGS
Hospitals and Medical
Group.
Medical Device cos.
Health Information
Exchange.
Pharmaceutical and Life
Sciences.
Meaningful use Stage 2
compliance.
Healthcare Interoperability.
Healthcare BI.
Consumer Health.
Population Health Management
Health Cloud.
Mobile Health.
Healthcare –
-Software Eng.
-Professional Services.
-QA/Test Auto.
-Tech consulting.
-BI/Analytics and
dashboards.
-Remote patient
help/monitoring
3. Target Acquisition Company
a. $10M company, $1.4m EBITDA, Valuation: $2.55m
b. Financing Needs
$1m to help acquisition
Remaining manage by self-funding and earn out proposals.
c. Value Proposition
Relationships with internal teams and knowledge of particular
implementation decisions within the EMR software create high
switching costs for clients
EPIC is considered one of the top tier players in the hospital EMR space
and there is a general industry shortage of qualified consultants.
d. Top Line Growth & Outsourcing Opportunities
New, international implementations are just beginning and will increase
the demand for qualified consulting resources.
Existing clients provide an opportunity for a potential buyer with
overseas presence to explore outsourcing opportunities. Target
Company’s relationship status with these clients can also be used to
explore additional consulting services such as:
Systems Integration support
Data center relocation and upgrades

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Application management and support
ERP projects
Management consulting
4. Projection
Profit and Loss Projection (3 Years)
Organic Growth Model with 50% annual Growth and 6M Acquisition in 2016
2014 % 2015 % 2016 % 2017 %
Sales $11,750,000 100.00% $17,625,000 100.00% $32,437,500 100.00% $48,656,250 100.00%
Cost/ Goods Sold (COGS) 4,640,000 39.49% 6,960,000 39.49% 14,596,875 45.00% 21,408,750 44.00%
Gross Profit $7,110,000 60.51% $10,665,000 60.51% $17,840,625 55.00% $27,247,500 56.00%
Operating Expenses
Salary (Office & Overhead) $3,995,000 34.00% $5,992,500 34.00% $9,731,250 36.81% $14,596,875 30.00%
Payroll (taxes etc.) 355,000 3.02% $532,500 3.02% $1,167,750 4.42% $1,751,625 3.60%
Outside Services 445,000 3.79% $534,000 3.03% $973,125 3.68% $1,946,250 4.00%
Supplies (off and operation) 2,500 0.02% $2,875 0.02% $4,298 0.02% $4,943 0.01%
Repairs/ Maintenance 5,000 0.04% $5,750 0.03% $7,935 0.03% $9,125 0.02%
Advertising 1,500 0.01% $1,725 0.01% $2,381 0.01% $2,738 0.01%

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Major Clients
0
5
10
15
20
25
30
35
40
45
50
2013 2014 2015 2016 2017
MillionsofDollars
Revenue Vs Profit Projections
Revenue
Profit
Car, Delivery and Travel 3,500 0.03% $4,025 0.02% $5,555 0.02% $6,388 0.01%
Accounting and Legal 5,000 0.04% $5,750 0.03% $7,935 0.03% $9,125 0.02%
Rent 6,000 0.05% $6,900 0.04% $9,522 0.04% $10,950 0.02%
Telephone 1,200 0.01% $1,380 0.01% $1,825 0.01% $2,099 0.00%
Utilities 1,000 0.01% $1,150 0.01% $1,521 0.01% $1,749 0.00%
Insurance 145,000 1.23% $166,750 0.95% $220,527 0.83% $253,606 0.52%
Taxes (real estate etc.) - 0.00% $- 0.00% $- 0.00% $- 0.00%
Interest 80,000 0.68% $240,000 1.36% $376,000 1.42% $432,400 0.89%
Depreciation 9,000 0.08% $10,350 0.06% $13,688 0.05% $15,741 0.03%
Other expense (EarnOut) 200,000 1.70% $600,000 3.40% $600,000 2.27% $600,000 1.23%
Other expense (specify) - 0.00% $- 0.00% $- 0.00% $- 0.00%
Total Expenses $5,254,700 44.72% $8,105,655 45.99% $13,123,311 40.46% $19,643,614 40.37%
Net Profit 1,855,300 15.79% 2,559,345 14.52% 4,717,314 14.54% 7,603,886 15.63%
Projection for 3 years (in $ Millions)
Potential Customers Sales
Growth
2014 2015 2016 2017
after
acquisition
Management Consulting 40% 1 1.4 2 2.4
Health IT Services 50% 8.75 12.9 19.7 37
Pharmaceutical and Life
Sciences-IT Services
30% 1 1.3 1.7 2.2
Partnership Program and
Implementation
100% 1 2 3 7
Total Revenue 11.75 17.6 26.4 48.6

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5. Recent example of Healthcare IT Company valuation
Citiustech Inc
$75m revenue at 50% growth for last 6 years
Valuation: $360m (4.8 times revenue)
General Atlantic invested $112m.
6. Key Personnel
Shibu Kizhakevilayil, B.Tech, MBA,
President
Strong expertise in the Health care domain, technology and
management.
Identify and acquire new businesses.
Eze Systems Inc , sold to SWII , a pink sheet company in 2005.
Acquisition was funded by Baron Partners.
Ecm Tek Inc, sold to MGL, public limited company in India and
operations in U.S and Europe in 2008.
Econtent Managers Inc, sold to ultimate Partners, a private
equity group in 2011.
Doney Joseph, B.Tech, MFA

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Director
Extensive experience in private equity and consulting business in
India and USA.
Helping entrepreneurs raise capital and with growth plans.
Manoj Sreenilayam, B.Tech, MBA
Advisor
Has over 15 years of experience in product development,
implementation of large software systems across various
vertical industries, supervising delivery of custom solutions,
and managing technical operations.
Currently serving as Vice President, Operations at Get Real
Health
Instrumental in growing industry leading Healthcare product,
InstantPHR (www.instantphr.com).
7. Healthcare IT Trends and Investment-Facts and Figures

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PROVIDERS

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Of 650 hospital IT and physician leaders who responded to the
survey, 19 percent said they currently are outsourcing their
coding work. 47 percent of respondents, however, indicated that
they'll turn to outsourcing by Oct. 1, 2015, the anticipated new
deadline for switching from ICD-9 to ICD-10.
The U.S. and Canada lead in the global healthcare IT outsourcing
market, with North America accounting for the largest share at 72
percent, according to a new report from RnRMarketResearch.com
The global market is expected to reach $50.4 billion by 2018 from
$35 billion in 2013, with health insurance, healthcare systems
and the pharmaceutical industry driving growth.
Increasing health IT adoption, global care mandates and venture
capital investments will help to push the health analytics
market to 25 percent annual growth over next five years,
according to a new report from IQ4I Research & Consultancy.

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We met for a
reason, either
you're a
blessing or a
lesson.
-Thank you.