Healthcare Information & Media                (“HIM”)Industry Overview & Trends Driving HIM M&AAugust 2012“[Patients] seek...
Healthcare Information & Media (“HIM”) Universe Defined                                         Professional              ...
Healthcare Spending Will Continue to Accelerate        Growth in healthcare spending is primarily being driven in the hos...
Key Trends Driving M&A     in the HIM Economy1.    Clinical Intelligence Is Driving Information Materiality2.    Marketers...
Clinical Intelligence is Driving Information Materiality                     Drivers                         Selected Clin...
Marketers Roles are being Redefined by Outcomes Focus                                 Drivers                             ...
Accountable Care Legislation Stimulating Pay-for-Performance                  Drivers                                   Se...
Legislation Driving EMR Adoption & Workflow Integration                                          Drivers                  ...
Capital Overhang Fostering Healthcare Business Model Evolution                       Drivers                              ...
Digital Health Ecosystems ARMS RACE    Medicare                Commercial                  Generics                     Me...
Pharma Ecosystem Case Study  THLee’s Strategic Vision. Create an organization that relieves the pain points of Pharma.  Co...
Pharma Ecosystem Case StudyCommercial Business holdings detail:            Full-service brand identity consultancy        ...
Provider Ecosystem Case Studyathenahealth’s Strategic Vision: Driving value to doctors through the last mile.  By combini...
Provider Ecosystem Case Study: athenaNet – “The Hedgehog”                                                                 ...
Payer Ecosystem Case StudyUnitedHealthcare’s Strategic Vision. Create a Patient & Primary Care Provider-centric experience...
Payer Ecosystem Case StudyOptumHealth              OptumInsight                                                           ...
Payer Ecosystem Case Study: Health Cloud                                              Dashboards & Hosting                ...
Payer/ACO Ecosystem Case Study       Aetna’s Strategic Vision: Create a Health 2.0 Accountable Care Organization using da...
Payer/ACO Ecosystem Case Study: Convergence   Industry observers are seeing a path to convergence of Payers and Providers...
For More InformationLora Lindsey                                                Over the course of her career, Lora has be...
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HIM Industry Trends Driving M&A 2012

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5 Key Trends Driving M&A in the Digital Health Space and Selected Acquisition Case Studies of Interesting Buyers

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HIM Industry Trends Driving M&A 2012

  1. 1. Healthcare Information & Media (“HIM”)Industry Overview & Trends Driving HIM M&AAugust 2012“[Patients] seek health information from media companies more than from government,healthcare companies, and consumer companies combined.” - PwC, 2012
  2. 2. Healthcare Information & Media (“HIM”) Universe Defined Professional HCIT Consulting Services DTP Advertising Old CME New CME Clinical Collaboration Prescribing Data Data AnalyticsPhysician Reference Directories Research Data Practice Management Management Spectrum Professional Journals Smart Monitors Digital Disease Lead-generation Electronic Medical Records Management Remote MonitoringContent Information & Media Spectrum Distribution Healthcare Doctor Reviews Personal Health Magazines Tele-health/V-consults Appointment Scheduling Patient Education Electronic Health Records Waiting Room Media DTC Advertising Digital Health Management HC Social Networks Provider Collaboration Diagnostic Games/Awards UGC Publishing Consumer 2
  3. 3. Healthcare Spending Will Continue to Accelerate Growth in healthcare spending is primarily being driven in the hospital care, physician & clinician services and the prescription drugs segments US National Healthcare Expenditures (In Trillions) $5 $4 $3 $2 $1 $0 2006 2008 2010 2012 2014 2016 2018 2020 Hospital Care Physician and Clinical Services Prescription Drugs Other Health Services Retirement/Nursing/Home HC Net Cost of Private Health Ins Gov Health Activities and Admin Structures & Equipment Dental Services Durable/Non-Dur Med Equip ResearchSource: U.S. Department of Health & Human Services 3
  4. 4. Key Trends Driving M&A in the HIM Economy1. Clinical Intelligence Is Driving Information Materiality2. Marketers Roles Are Being Redefined By Outcomes Focus3. Accountable Care Legislation Stimulating Pay-For-Performance4. Legislation Driving EMR Adoption And Workflow Integration5. Capital Overhang Fostering Healthcare Business Model Evolution 4
  5. 5. Clinical Intelligence is Driving Information Materiality Drivers Selected Clinical Intelligence Deals Data driven customization is dividing customers into revealing micro-segments Buyer Target Target Description Price Year Data liquidity arises from the emergence of OptumHealth Connextions CRM and analytics driven $325 2011 consumer insight company intelligence across a continuum of care Liquidity & customization has lead to PerkinElmer ArtusLabs Cloud computing infrastructure $15 2011 predictive intelligence • data + analytics = information Cambridge Knowledge management in a lab PerkinElmer $205 2011 Soft setting (SaaS) GOAL: Audience Ownership Clinical trial software (planning to Oracle ClearTrial 2012 payment, SaaS) PerkinElmer Labtronics Electronic lab notebook (SaaS) 2011 Aetna Medicity Health information exchange $500 2011 Consumer focused digital HC Aetna Payflex $202 2011 expense management Predictive intelligence has created a new level of data materiality as Healthcare companies compete for the opportunity to message and affect behavior 5
  6. 6. Marketers Roles are being Redefined by Outcomes Focus Drivers Selected HC Information Deals Changing Pharma landscape is forcing a Buyer Target Target Description Price Year reassessment of multi-channel marketing mix • 17 Brands ($34B in retail sales) will lose patents Priority Dowden Multichannel marketing targeting over the next 2 years Health Media Integrated Payers and Providers 2011 Marketing Predictive Intelligence has created opportunity to message and affect behavior Menlo Lumos Labs Subscription based neuroscience $33 2011 Ventures games/exercises for consumers • Patient education • Adherence Remedy Intelecare Mobile medical adherence, • Lead Generation Health Media Compliance prescription compliance 2011Fogg Behavior Model Mobile & online symptom tracking Medivo WellApps applications for patients with 2012 chronic illnesses Vista Equity Essential Interactive e-learning solutions 2012 Partners Learning for behavioral health issues SDI Healths InVentiv Promo & Analytical physicians surveys 2012 Health Audit for Pharma Business Sharecare Real Age Online health measurement tool 2012Source: www.behaviormodel.org. 6
  7. 7. Accountable Care Legislation Stimulating Pay-for-Performance Drivers Selected ACA Driven Deals Buyer Target Target Description Price Year Provides focused, data Harris Carefx aggregator that partners with $155 2011 Corporation Corporation existing EMR Health Data Payment integrity HMS Holdings $400 2011 Sights services to Payers Verisk Bloodhound Payer-focused hosted claims $82 2011 Analytics Technologies editing and analytics Provides proprietary systems Verisk MediConnect and services that facilitate the $349 2012 Analytics Global aggregation and analysis of Pay for Performance medical records Eligibility verification, Medical Experian credit scoring services, $185 2011 Present Value and claims software Enables Payers to design,Implications: McKesson Portico build, service and deliver $90 2011 value-based reimbursement Soaring demand for and valuations of: to Providers • comparative data companies Compliance Payer/Provider cloud-based SAI Global regulatory compliance and risk 2012 • digital practice management companies 360 management SaaS • integrity service companies General HIE, EMR, data analytics, Vangent business-process $960 2011 Focus on Patient outcomes is driving Payer Dynamics outsourcing and Provider information needs to converge 7
  8. 8. Legislation Driving EMR Adoption & Workflow Integration Drivers Selected Practice Management Deals  Meaningful Use legislation has driven Buyer Target Target Description Price Year growth the EMR industry  The tipping point of the materiality of Cerner Resource Systems Electronic, point-of-care documentation services for LTCs 2011 information has been reached NCR Distributor of kiosks & Quadramed Healthcare 2012 • Driving consolidation in EMR and across Solutions tablets for registration the entire continuum of care Automatic ADP EHR and practice Data $205 2011 AdvancedMD management SaaS Processing HIM M&A 2011$4,000.0 $3,970.0 Transcription & clinical 61 Nuance Transcend $321 2012 60 documentation services$3,500.0$3,000.0 50 Workflow and communications McKesson peerVue 2012 solutions$2,500.0 40$2,000.0 $1,919.0 International EMR & revenue 30 CSC iSOFT $188 2011 cycle management$1,500.0 19 20$1,000.0 16 Real-time healthcare Lumeris NaviNet 2012 10 communications network $500.0 5 1 2 $213.0 $0.0 Und* Und* Und* 0 Passport STAT Health Personal Mobile Health Telemedicine Revenue Service Enterprise scheduling 2012 Information Health Cycle Providers Health Tech’s Management Record Management US$ in Million 2011 Total No. of Deals 8
  9. 9. Capital Overhang Fostering Healthcare Business Model Evolution Drivers Selected Private Equity Deals Competition is heating up: private equity players, flush with cash, are chasing Buyer Target Description Price Year digital/SaaS InVentiv Ingenix, i3 • Typically favor platform/bolt-on strategies with (TH Lee) CRO Clinical development business $400 2011 operating leverage Kforce Outsourcing solutions to • $100 billion of which is nearing the end of its InVentiv Clinical pharmaceutical, biotech and $50 2012 (TH Lee) investment horizon Research medical device companies • Low % of digital revenue can make a 2-3x The Avatar Patient satisfaction and Riverside 2011 multiple impact on price Internat’l Physician engagement surveys Company Capital Overhang of US PE Investors by Vintage Year Management consulting firm Avatar HR Solutions specializing in employee and 2011 (Riverside) Internat’l physician engagement T-System Practice (Francisco Management Medical billing 2012 Partners) Associates T-System Clinical Medical charge management and (Francisco Coding 2012 auditing services Partners) Solutions API Healthcare Cloud-based SaaS for HC staffing Concerro 2012 (Francisco & scheduling systems Partners) Gateway EDI SaaS that helps medical practices NHXS 2012 (Apax) manage physician reimbursement 9
  10. 10. Digital Health Ecosystems ARMS RACE Medicare Commercial Generics Med Devices Employers Large Medicaid Biotech Pharma PBMs Payers AROs Pharma CROS Patients PolicyPharmacies ACOs $$$ Regulators Hospitals Providers Politics Organized Politicians Groups Medical Associations Professionals
  11. 11. Pharma Ecosystem Case Study THLee’s Strategic Vision. Create an organization that relieves the pain points of Pharma. Corporate Timeline: Paul Meister appointed CEO, inVentiv acquires i3 clinical inVentiv Health taken Acquires Kforce founder/CEO of Liberty Lane development businesses of private after acquisition by Clinical Research Partners, former Chairman of Ingenix from OptumInsight for Thomas H. Lee Partners for $50M Fisher Scientific International $140M Sept 2010 Jan 2011 May 2011 TodayMay 2010 Jan 2011 Jan 2011 Mar 2012 Joe Massaro appointed CFO, previously inVentiv acquires the Campbell inVentiv acquires Value worked as MD at Liberty Lane Partners, Alliance Group, a healthcare related PharmaNet Development estimated former SVP of Global Business Services management consulting firm, for Group, a clinical at ~$2B at Fisher Scientific International $400M development services company, for $600M Clinical Business (50% of rev) Consulting Business Commercial Business Providing people, tools, and Clinical trial staffing technology to support the Comprehensive Pharma Drug development service successful commercialization of management consultancy provider pharmaceuticals, biologics, and medical device or diagnostic Pharmaceutical, life science products and device staffing Kforce Clinical Research Source: inVentiv Health Strategy Team 11
  12. 12. Pharma Ecosystem Case StudyCommercial Business holdings detail: Full-service brand identity consultancy Ad agency focused in oncology/immunology Education and communications for advocacy Full-service communications/events Clinical trial staffing solution Patient educational information Global PR and marketing Analyzes claims data to reduce costs Full service healthcare ad agency Patient medication use and risk management Digital healthcare ad agency Patient access and reimbursement services Multifaceted creative services company Customized sales solutions Brand perception company Sales team recruitment Canadian full service healthcare ad agency Specialized medical education Provider of live/on-demand event services Digital ad agency selling accelerator Ad agency known for creating experiences Non-personal healthcare marketing Patient relationship marketing programs Pharmaceutical service and support 12
  13. 13. Provider Ecosystem Case Studyathenahealth’s Strategic Vision: Driving value to doctors through the last mile.  By combining the information collected across a multitude of providers with athenaRules and then leveraging the analytics provided by Anodyne, athenahealth has created a platform for comparing payer performance and utilizing predictive analytics  Corporate timeline: Co-founders Todd Park and Jonathan Bush Acquired Anodyne purchased a Health Partners for $30M small practice Expanded the from VC’s, later used to Acquired MDX and incorporated IPO’d on build out analytics Medical/Vitals technology with as athenahealth NASDAQ business for $3M athenaClinicals 2000 Aug 2007 Aug 2008 Jul 2011 Today 1997 2006 Sept 2007 Oct 2009 Sept 2011 Developed Company Acquired Crest Line Acquired Proxsys for Company athenaCollector: valued at $76M Technologies for $7.7M, $36M, later re-brands as has ~$2.8B a billing and later re-branded as athenaCoordinator market cap practice mgmt athenaCommunicator in tool 2010 Source: athenahealth Strategy Team 13
  14. 14. Provider Ecosystem Case Study: athenaNet – “The Hedgehog” athenaClinicals athenaCollector • Electronic medical records • Physician billing and integrating Provider and Payer practice management intelligence athenaService athenaRules • Over 1,000 people who • Patented billing Rules Engine “Driving Value interact with clients at all enables client performance of the key steps in the benchmarked across athenaNet to Doctors revenue cycle through the last 10 feet” - Jonathan Bush athenaCoordinator athenaCommunicator • Order transmission and • Order Transmission patient registration insurance pre-certification and patient registration Anodyne Analytics • Data visualization tools and insight into client’s practice performance 14
  15. 15. Payer Ecosystem Case StudyUnitedHealthcare’s Strategic Vision. Create a Patient & Primary Care Provider-centric experiencethat utilizes information to transition from a fee for service to pay-for-performance environment by:  Optimizing care quality • focus on the holistic health of the consumer: prevention, wellness and disease management  Reducing costs • integrate information systems across care providers and pay-for-performance payment structuresCorporate timeline: United rebrands itself OptumHealth acquires OptumHealth acquires to match its market state and federal care business process and facing businesses, service, Logistics technology outsourcing thereby creating the Health Inc from company, Connextions, Optum introduces the Optum segments Gundersen Lutheran from New Mountain for Health Cloud Platform $325M Mar 2011 Jun 2011 Sept 2011 May 2011 Aug 2011 Today Q1 2011 OptumHealth acquires OptumInsight sells it’s OptumInsight acquires toxicology care mgmt company, i3 clinical development and clinical research consultancy, INSPIRIS, from a business to inVentiv GlobalTox, from MTE Consultants consortium of VC’s at Health for $140M for an undisclosed amount an undisclosed amount Source: UnitedHealthcare Strategy Team 15
  16. 16. Payer Ecosystem Case StudyOptumHealth OptumInsight OptumRx• Care Solutions • Provider solutions including financial performance improvement, • PBM services compliance, clinical workflow and accountable care solutions • Mail order and specialty• Behavior Solutions fulfillment • Payer solutions including network performance, clinical quality,• Financial Services • Claims processing and operational efficiency/payment integrity and risk optimization• Collaborative Care retail network/rebate • Government solutions including program integrity, health contracting• Logistics Health management/population analytics and data warehousing/ business intelligence • Life Science solutions including market access/optimization, strategic regulatory services, risk management and patient insights 16
  17. 17. Payer Ecosystem Case Study: Health Cloud Dashboards & Hosting HIPAA compliant tools: Optum Care Suite Healthcare Scheduling Exchange Optum Care Pathways: Establish care plan across Provider continuum; access to EMRs Healthcare Scheduling Exchange (HSE): Optum Care Coordination: Track & Provider referral & secure Patient messages document care w/ multiple Providers Optum Care Population: Condition specific Optum Care Quality: Aggregate & analyze outcomes from Patient registry analyzed for health intelligence Payer claims, Provider records, and Patient reports Foundation for an Accountable Care Organization Patient Centric, Outcome Focused 17
  18. 18. Payer/ACO Ecosystem Case Study  Aetna’s Strategic Vision: Create a Health 2.0 Accountable Care Organization using data and mobility solutions. • Stay Current: adapt healthcare management options to the changing habits of society. • Remain Flexible: Maintain a wide array of options for all sorts of clients.  Corporate Timeline:Acquires health careanalytics company Acquires 3rd party Acquires Healthagen,ActiveHealth Enters into a strategic administrator Prodigy developer of iTriage,Management for partnership with leading Health for approximately top rated mobile$400 million. pharmacy CVS Caremark. $600 million. health app. Nov. 2010 Jan. 2011 Jul. 2011 Today May 2005 Jan. 2011 Jun. 2011 Dec. 2011 Acquires Health Acquires health plan Aetna’s market Joeseph Zubretsky and Meg Information Exchange administrator Payflex cap is ~$14.2B McCarthy are appointed company Medicity for for approximately Executive VP’s; Mark approximately $490 $202 million. Bertolina becomes CEO. million. Source: Aetna Strategy Team, SEC filings 18
  19. 19. Payer/ACO Ecosystem Case Study: Convergence Industry observers are seeing a path to convergence of Payers and Providers 19
  20. 20. For More InformationLora Lindsey Over the course of her career, Lora has been involved in the execution of over 44 dealsHealthcare Information & Media including: 12 M&A transactions, 16 equity financings, 10 debt financings and 6 other advisory assignments:Passionate about connecting People and Ideas • Vice President, Media IB, Bear Stearnsin Health Information & Media (HIM)™ • Associate, Healthcare IB, Goldman Sachs • Analyst, Lev. Finance & Media Lending, BofA • Volunteer, US Peace Corps Asset classes underwritten include: • Debt: leveraged loans (middle market), syndicated loans, sub-investment grade bonds,Email nyclindsey@gmail.com distressed workouts (chapters 11 & 7), convertsMobile 646.734.8375 • Equity: public equity (large, small, and nanoSkype Lora.Lindsey1 cap), PIPES, private placements, alternativeTwitter @HIMBanker investments (venture and private equity)LinkedIn www.linkedin.com/pub/lora-lindsey/0/185/225Pinterest www.pinterest.com/HIMBanker Securities Industry Registration: Series 79Crunchbase www.crunchbase.com/ BBA, University of Washington MBA, Columbia Business School

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