The document presents an analysis of the continuing evolution and consolidation within the healthcare continuing medical education (CME) sector, highlighting trends such as the anticipated growth of the eLearning market and the integration of various systems into talent management frameworks. It emphasizes the opportunities for acquirers in purchasing ACCME accredited companies as they transition into larger healthcare ecosystems, despite challenges like weak funding in the CME sector since 2008. The report concludes that well-positioned CME providers are likely to attract interest from a variety of buyers, suggesting a favorable outlook for market transactions.

1. Pegasus Intellectual Capital Solutions
Highly Confidential | February 29, 2016
Preliminary Findings and Recommendations
CME Outlook: The Coming Integration into Talent Management Ecosystems

2. 2
Our Methodology
In conducting our analysis of the CME market, we:
reviewed the M&A activity in both the public and private markets for CME
companies
identified and studied factors which effect the value of CME companies
industry drivers and dynamics
competitive landscape
roll-up strategies of the largest players
outlined additional influencing factors that bolster CME company
enterprise value
determined the range of enterprise values driven by these factors

3. 3
Our Understanding of the Current Situation - the Positive
1eLearning Industry Trends Market Forecast
2U.S. Department of State, February 2012
3PWC 2011 Millennials at work
4Statista
 Global eLearning market expected to
reach $51 billion in 2016, or an
annual growth rate of 8%
 Shift in eLearning influenced by
younger demographics, increasing
mobile devices and access to SaaS
platforms
 Over half of the world’s population is
under the age of 302
 By 2020 Millennials will form 50%
of the global workforce3
 The global mobile education market
is expected to reach $21 billion by
2018
Global eLearning Growth Continues
Annual Growth Rate1
2013 2016
$24bn
$27bn
+4%
2013 2016
$7bn
$12bn
+17%
2013 2016
$8bn
$9bn
+7%
2013 2016
$1bn $2bn
+16%
2013 2016
$1bn $1bn
+11%

4. Our Understanding of the Current Situation – the Negative
ACCME funding has been weak since 2008. It was up for the first time in
2014, but only 2.2%. This paints a lackluster outlook for growth opportunities
for a non-strategic acquiror.
4

5. Our Understanding of the Current Situation – the Dynamics
The corporate learning market is undergoing a dramatic consolidation and
integration of disparate systems under the moniker of Talent Management:
Talent Acquisition/Onboarding
Workforce Planning
Learning Management/Competency Management
Performance Appraisal/Goal Management
Career/Succession Planning
Compensation Management
Greater integration of these systems will occur and be combined with
sensors/wearables, Big Data, and ultimately AI to produce far greater
efficiency and productivity in all corporations including healthcare.
5

6. Our Understanding of the Current Situation – the Dynamics
The convergence of evidence-based education with analytics in EHR has
the potential to play a critical role in practice by allowing clinicians to
leverage the vast amount of data at their fingertips.
Integration of CME with other healthcare provider systems will permit the
use of Big Data, improved efficacy, and far greater efficiency.
These industry dynamics make the case for integration of CME companies
into one of the new, growing healthcare information ecosystems.
6

7. Our Understanding of the Current Situation - Ecosystems
The consolidation of systems in healthcare to create knowledge ecosystems is
already evident:
WebMD/Medscape
CME
Patient engagement – employee access to their health, plan and claim data
Patient simulation/Gamification (TheraSim)
Diversified Business Communications/PriMed/pmiCME
EHR/EMR
CME
Medical conferences
Print Magazines
Digital Publications
7

8. Our Understanding of the Current Situation - Ecosystems
8
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
2013 2015 2018
Learning Management System MarketBillion

9. Our Understanding of the Current Situation - Ecosystems
eClinicalWorks
EHR/EMR
RCM
Patient engagement
Integration of wearables data directly into EMR
Televisits
Online appointment booking
Population health data
Care Planning
Electronic referral network
Health Information Aggregator
Predictive and discriminant analytics
9

10. Ecosystems of the Future
Ecosystems of the future will create integrated behemoths that EHR/EMR
RCM
CME (Learning Management/Competency Management) and Gamification
Talent Acquisition, Onboarding, Workforce Planning
Performance Appraisal, Compensation Management, Succession Planning
Patient engagement, wearables, sensors and nanorobots
Remote healthcare, portable diagnostics/tricorders
Population health data, Genomics, Geographic/GIS data
Predictive and discriminant analytics
AI/Machine learning
10

11. Threats and Opportunities
Large players will create integrated ecosystems that will force all but the
most creative and agile players to the margins
There is currently an opportunity to sell well-positioned ACCME
accredited companies to both for-profit competitors that want to gain
market share prior to selling to a strategic acquiror, or directly to a strategic
acquiror during this roll-up phase
11

12. 12
Firm Value Composition
Enterprise Value of a Firm
Tangible Capital
Financial
Assets
Net debt &
other working
capital items
Tangible
Assets
Inventory,
property, plant
& equipment
Intellectual Capital
Human
Capital
Relational
Capital
Structural
Capital
Customers,
partners &
vendors
Trade secrets,
processes &
IP portfolio
Leadership,
culture & talent
management

13. 13
Intellectual Capital
80% of value from the value of the S&P 500 is attributable to intellectual
capital
Intellectual property comprises only a part of intellectual capital
All intellectual capital is ultimately derived from human capital
Source: Ocean Tomo
17%
32%
68%
80% 80%
1975 1985 1995 2005 2010
Components of the S&P 500 Market Value
Intangible Assets Tangible Assets

14. 14
Key Drivers of IC Value
Its all about the people and talent management

15. 15
Business Valuation Methodologies
Analysis Description Comments
 Projects the future, unlevered free cash flows
 Calculates the present value of the cash flows and the
terminal value using an appropriate cost of capital
 Target capital structure reflected in valuation analysis
through discount rate
Discounted Cash Flow
(DCF)
Intrinsic Value
 Heavily dependent on cash flow,
growth assumptions, cost of capital,
and terminal value calculation
 Less sensitive to market volatility
and excludes a control premium
Comparable Companies
(Trading Comps)
Market Value
 Applies multiples derived from similar, publicly traded
companies to a company's operating metrics
(recognizing that no two companies are exactly alike).
 Implied values based on multiples of comparable
companies that are publicly traded
 Reliability depends on level of
comparability to public companies
 More likely to reflect Market’s
growth & risk expectations and
excludes a control premium
Precedent Transactions
(Deal Comps)
Market Value
 Apply actual acquisition multiples derived from similar
or comparable precedent M&A transactions to a
company's operating metrics
 Specific buyer synergies, transaction structure, and
general macroeconomic conditions affect multiples
 Reliability depends on the number
of precedent transactions, levels of
comparability, and market cycles
among several other factors
 Includes a control premium

16. 16
Valuation Drivers
Its all about cash, whether now or in the future, which is driven by:
growth opportunities
scalability
depth on the bench
ability to live without the owner
diversification of the client base
lack of concentration of customers

17. Comps
17
There are no directly comparable trading comps. All traded healthcare services
companies are either much larger or showing operating losses.
Transaction comps are for much larger companies, none of which are directly
comparable.
Our review of transaction comps for SIC 8099 (Health and Allied Services, not
elsewhere classified) and NAICS 621999 (All Other Miscellaneous Ambulatory
Health Care Services) did not reveal any recent direct comparables

18. Trading Comps: No Clear Indicators
18
Company Ticker EV/
EBITDA
EV/
Revenue
P/E EV ($M) Revenue
($M)
Cerner Corporation CERN 17.9 4.9 39.6 20,300.00 4,100.00
Medidata Solutions, Inc. MDSO 60.2 6.3 207.3 2,420.00 3,829.00
Medassets, Inc. MDAS 12.1 3.3 N/A 2,630.00 764.20
Webmd Health Corp. WBMD 15.7 3.3 41.7 2,000.00 607.00
Quality Systems, Inc. QSII 16.1 1.8 32.0 918.40 499.40
Merge Healthcare Incorporated MRGE 24.3 4.3 45.4 920.03 212.30
Computer Programs and Systems, Inc. CPSI 14.4 2.8 25.7 509.20 184.20
Averages 23.0 3.8
Average w/o Medidata 16.7 3.4
Streamline Health Solutions, Inc. STRM -5.4 1.0 N/A 27.70 28.50
Aspyra, Inc. APYI -1.1 0.5 N/A 4.06 7.80
Authentidate Holding Corp. ADAT -3.9 9.3 N/A 28.10 3.00
Surequest Systems Incorporated SUQU -16.8 1.3 N/A 1.70 1.30
Image Technology Laboratories, Inc. IMTL 21.4 0.7 N/A 0.55 0.74
Speedus Corp. SPDE -0.3 2.9 N/A 1.60 0.60
Primecare Systems, Inc. PCYS -0.6 8.5 N/A 0.21 0.02
Averages -1.0 3.5
Averages, all datapoints 11.0 3.6
Source: Capital IQ
*Acquired byIBM August 2015. IBM intends to use Merge to cross reference medical images with lab results, genetic testing, etc.

19. Trading Comps
19
-30
-20
-10
0
10
20
30
40
50
60
70
-2,000.00
-1,000.00
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
Revenue ($M) EV/EBITDA
Linear (Revenue ($M)) Linear (EV/EBITDA)
Correlation of Revenue Level and EBITDA Multiples

20. Transactions in eLearning
20
Year Acquiror Target Market
2011 SmithBucklin The France Foundation ACCME accredited CME specializing in Pharmacist
2008 Indegene MedCases LLC ACCME accredited CME
2008 HMP Comm., Sig Growth Fund, Alta Comm. Princeton Media Associates ACPE accredited CME specializing in Pharmacist training
2015 Bertelsmann 1 Relias Learning Healthcare - compliance and performance
2012 Vista Equity Partners Essential Learning and Silverchair Learning Systems Health and Human Services
2014 Charterhouse Capital Partners Skillsoft 2
Global enterprises, government, and corporations
2012 Skillsoft Mindleaders LMS/Talent Management
2006 Skillsoft NETg LMS
2011 Skillsoft ElementK LMS: e-learning content, virtual labs, ILT print materials
2011 Skillsoft 50 Lessons Corporate learning - 1,000 video business
2014 WebMD TheraSim Healthcare
2013 WebMD Avado Healthcare
2001 WebMD Medscape Healthcare
2011 Diversified Communications 3
Pri-Med (pmiCME) Healthcare
2013 NetDimensions eHealthcareIT Healthcare - compliance
2014 Renovus Capital EMS Corporate Learning
2013 Xerox LearnSomething, Inc Food and Drug Retailers
2012 SAP Datango Enterprise software training
2012 Peoplefluent Strategia LMS
2015 Vector Capital Saba Learning Management (LMS)
1) Bertelsmann is focusing on three segments in the education sector: e-learning, medical education and services for universities.
2) Sold by Berkshire Partners, Bain Capital and Advent International
3) Revenues estimated between $50-$100,000,000
LMS: learning management systems are software applications for the administration, documentation, tracking, reporting and delivery of electronic educational technology (also called e-learning)
courses or training programs: Payroll, tax filing, benefits, human resources, compliance, workforce management, recruiting software, evaluation, and learning systems for sales, sustems, product
knowledge, customer service and health and safety.

21. Transaction Comps – Private Companies
21
No
SIC
Code
NAICS
Code
Business Description Net Sales Sale Date
1 8071 621512 Unborn Imaging Business $85,169 3/5/2014
2 8082 621610 Provider of In-Home Health Assessment and Care Management Services $165,037,000 10/23/2014
3 8099 621910 Remote Medical Services - Oilfield Emergency $6,313,000 2/28/2014
4 8099 621999 Provides Health Information Management Solutions $7,100,804 8/30/2012
5 8099 621999 Home Medical Monitoring Service $31,545 11/8/2011
6 8099 621999 Provides Independent Medical Reports, X-Ray Exams, Lab Work, Peer Reviews, Billing, and Consulting $129,617,283 2/28/2011
7 8099 621999 Medical Licensing Business $662,431 12/23/2009
8 8099 621999 Healthcare Professional Certification and Continuing Education $4,398,487 6/3/2009
9 8099 621999 Processes Electrocardiograms (ECG’s) as Part of Clinical Trials of Pharmaceutical Candidates $30,875,000 11/28/2007
10 8099 621999 Preventive Health Care Programs $119,946,000 12/1/2006
11 8099 621999 Drug Testing and Background Checks $106,887 4/28/2006
12 8099 621999 Provides Disease and Patient Management Information Services $124,272,000 1/19/2006
13 8099 621999
Provides Applicant Interviews for Life Insurance Companies by Sending Nurse Aides to Homes and
Businesses to Measure Statistics and Answer Health Questions
$91,153 11/22/2005

22. The Problem with Trading Comps and Transaction Comps
22
Trading comps and transaction comps work well when they are in a mature
industry, in the same business, at the same growth rate and have the same
business models
The reality is that no two companies are alike, and no two mergers are alike
Trading comps and transaction comps work poorly when n is small, as in
new industries and product/markets
Trading comps and transaction comps cannot be adjusted to account for
differences in EBITDA margin, working capital efficiency, capital
expenditures, or business models
DCF gives the best prediction of value for young, fast growing companies
with unique characteristics, if used wisely

23. DCF Sensitivities
23
The DCF is sensitive to:
growth rate
gross margin and EBITDA margin
company size
DCF valuations are all about cash flow, and that is about far more than
sales and EBITDA
Changes in collection terms and payment terms affect valuations
Stage of growth determines cost of equity and debt

24. Modeling
24
Needs to be done by senior staff, not junior
Is only meaningful if conducted by a securities analyst, and takes into account:
valid historical analysis integrated with probabilities of different scenarios
industry dynamics, market size, and growth outlook
competitive set including benchmarking against competitors
forecasts of the subject company including fully integrated income
statements, cash flow statements and balance sheets
correct cost of equity, cost of debt, and market tolerance to leverage
all of which tie to the DCF analysis

25. Cost of Equity, Cost of Debt and Leverage
25

26. 26
Valuation Summary
Discounted
Cash Flow
Analysis
Market
Comparables
Analysis
Precedent
Transactions
Analysis
Summary Valuation Range
Note: Valuation Summary based on preliminary information and management projections
Based on assumed $2mm 2014 Adjusted EBITDA
Implied 2015
EV/EBITDA
5.0x-12x
Implied 2015
EV/EBITDA
10.2x-11.0x

27. Opinion of Value
27
Based upon our review of the company’s materials, we would place a value
on the company adjusted EBITDA multiple of 5.0x-12.0x
The valuation is highly dependent on individual company facts
Conditions to our opinion are numerous but include:
historical growth rate
EBITDA margins
tracking of monthly operating performance to achieve 2016 forecasts
independence and validity of the company’s analysis of its industry,
competition, competitor offerings, and assumptions underlying the company’s
forecasts
accuracy of the company’s financial statements

28. Preliminary Buyers Commentary
High quality offerings will attract more bidders at the high end of our range
Strategic acquirors will value the company with an eye to realizing
synergies through:
economies of scale
improvement in their brand image
integration with one of the healthcare ecosystems
CME companies will generate strong interest with financial buyers but their
valuations will be in the range of 4-7x EBITDA.
28

29. Strategic Buyer Overview
29
Buyer Characteristic Key Acquisition Rationale Selected Examples
Investors in privately held
near-competitors
Understanding of industry and
opportunity

30. Strategic Buyer Overview
30
Buyer Characteristic Key Acquisition Rationale Selected Examples
Investors in publically
traded near-competitors
Understanding of industry and
opportunity

31. Strategic Buyer Overview
31
Buyer Characteristic Key Acquisition Rationale Selected Examples
Focus on overlapping client
base
Use Target's reputation to expand
the acquiror's business

32. Financial Buyer Overview
32
Renovus Capital Partners is a private equity fund focused on providing
capital and strategic assistance to small and mid-sized education
companies. Its team helped more than 20 education companies grow and
succeed. The team's investing expertise covers all segments of the
education industry including for-profit colleges and schools, training
companies, content providers, and technology and services businesses.
Charterhouse is one of the longest established private equity firms operating
in Europe, and has invested in buyouts since the early days of the market in
the 1980s. They are owned by their team and focus solely on private equity
investing with 140 completed transactions worth an aggregate in excess of
€50 billion in value
Illustrative Buyer Investment Rationale
Vector has been investing for over 20 years and was one of the first private
equity firms to focus exclusively on technology, and have invested $1.6
billion in more than 40 technology companies. They partner with
management teams and align incentives to transform businesses and create
value.

33. 33
Conclusions and Recommendations
Healthcare eLearning is a hot area within a hot industry.
We strongly believe ACCME accredited CME providers will be well
received in the markets by a wide range of buyers.
PegasusICS is well positioned to conduct a successful sale process and
maximize shareholder value for ACCME CME providers.

34. 34
Go to Market Process
Pegasus Due Diligence
Investor Pre-Screening
Investor Due Diligence
Final Negotiations
Closing
Conduct due diligence as an
investor would and create
investment deliverables
Identify and pre-screen
investors with “Teaser” on a
no-names basis
Confidential Marketing
Distribute Confidential
Information Memorandum
“CIM” and Term Sheet
Complete investor diligence
and purchase agreement
markups/ revisions
Drive process to a timely
closing
Prepare for management
presentations and letters of
intent
 Construct investor list for approval
 Prepare virtual data room
 Begin pre-screening buyers
 Distribute CIM post Non-Disclosure Agreement
 Field initial inquiries
 Receive preliminary Indications of Interest (IOI)
 Investors introduced to management
 Buyer due diligence
 Receive final letters of intent (LOI)
 Select buyer
 Confirmatory diligence and negotiations
 Drafting of Definitive Sale Agreement (DSA)
 Review and analyze financial information
 Formulate projections, re-cast financials
 Submit deliverables for approval
 Sign final agreements after legal review
 Wire transfer
Description Key Elements

35. 35
Go to Market Process: Timing
Pegasus Due Diligence
Investor Pre-Screening
Investor Due Diligence
Final Negotiations
Closing
Conduct due diligence as an
investor would and create
investment deliverables
Identify and pre-screen
investors with “Teaser” on a
no-names basis
Confidential Marketing
Distribute Confidential
Information Memorandum
“CIM” and Term Sheet
Complete investor diligence
and purchase agreement
markups/ revisions
Drive process to a timely
closing
Prepare for management
presentations and letters of
intent
Description Key Elements
1- 2 months
1 month
2-3 months
6-9 months
1 month
1 - 2 months

36. Why Pegasus is the Best Partner
Senior team member dedicated to your transaction
Over 37 years of experience and $5 billion in successful transactions
Senior point of contact and dedicated team throughout the entire process
Numerous awards for innovative work
Intellectual Capital practitioners and creators of the Intellectual Capital Audit™
Strong relationships with relevant investor bases
Long established relationships in the business services sector
Robust network of strategic and financial investors focused on intellectual
capital rich companies
Well-known former clients in relevant, strategic sectors including international
relationships

37. An Award Winning Boutique Investment Bank
Award Winning Recognition in Middle MarketAdvisory
– “Investment Banking Boutique of the Year – North America – 2015”
- M&A Today
– “Investment Bank of the Year – 2015” - Finalist
- The M&A Advisor
– “Investment Banking Boutique of the Year – 2014/15”
- Acquisition International Magazine
– “Investment Banking Boutique of the Year – 2014/15”
- Wealth & Finance Magazine
– “Investment Banking Boutique of the Year – 2013”
- Acquisition Finance Magazine
Middle Market Accolades Team Member Publications
Key Statistics
$5.3 billion
Total transactional value
$20 - $200 million
Typical transaction size
126
Transactions since 1990
100%
Advisory revenue
Services Mix
45%
40%
10%
5% M&A
Advisory
Financing
IP Monetization
Restructuring
Advisory
Note: Key Statistics contains deals advised by Pegasus ICS professionals prior to Pegasus

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39. 39
Historical Transactions

40. 40
Historical Transactions

41. Pegasus Intellectual Capital Solutions
70 West Madison Street
Suite 1400
Chicago, IL 60602-4270
Preliminary Findings and Recommendations
CME Outlook: The Coming Integration into Talent Management Ecosystems