Healthcare Valuations in an Era of Reform and Uncertainty
Personal care physicians series b preferred investment presentation
1. It’s not for everyone.
It’s healthcare for you.
An estimated $5 billion dollar industry and growing at a 34% CAGR, concierge medicine in the U.S. is highly fragmented and growing quickly.
*The Concierge Medicine Research Collective
2. Legal Disclaimer
This presentation uses forward-looking statements and assumptions that involve risks and uncertainties, including, but not exclusively,
the risks associated with the effect of changing economic conditions, changes in the markets, variations in the company’s business plan,
market acceptance risk, technical development risks, and other business risk factors. In light of these and other risks, and uncertainties,
there can be no assurance that the events predicted will in fact transpire. All care and diligence has been used to ensure fair
and accurate projections, based upon current methodology, current market conditions, research and analytic data.
AN ALTERNATIVE INVESTMENT INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE UNDERTAKEN ONLY BY PERSONS
WHOSE FINANCIAL RESOURCES ARE SUFFICIENT TO ENABLE THEM TO ASSUME SUCH RISK AND TO BEAR THE TOTAL
LOSS OF THEIR INVESTMENT.
THIS PRESENTATION IS ONLY FOR ACCREDITED INVESTORS, INSTITUTIONAL LENDERS AND QUALIFIED PURCHASERS.
4. Momentum
Largest provider of concierge healthcare services in Orange County, CA
3 locations, 1,800 paying members
300 personal training members
20 enterprise accounts
$3M+ recurring management fee revenue
$5M+ in recurring practice access fee revenue
Health system brand license
Secured $4.5M in equity
Sourced immediate expansion opportunities in adjacent geographies
Trending EBITDA positive Q4 2015
5. Industry Growth
Healthcare inflation & decreasing service quality has led to dissatisfaction with traditional primary care and has led to rapid
growth in concierge medicine.
Concierge physicians grown at 34% CAGR over the past 3 years
Market is estimated to be $5BB*
Highly fragmented market; 60% of concierge physicians practice alone*
A national category killer does not exist
Sophisticated competition does not exist in Southern California market
o Significant investment capital is being deployed in the space in an effort to meet growing
demand.
o One Medical, a low-price competitor has raised $140 million
o MDVIP sold for ~$300 million in April 2014; estimated to be 19 x trailing EBITDA
o Qliance has raised $27 million in investment capital
o iorahealth has raised $70 million in Series A, B, and C investment capital
*The Concierge Medical Research Collective
7. Geographic Scope
The prototypical PersonalCare member is an
executive with annual household income of
$250,000 or greater.
Southern California has 280,000 households with
income of $250,000+ representing 900,000
prospects.
PersonalCare’s goal is to acquire 3% of Southern
California residents earning $250k, which will
generate 21,000 members for PCP’s managed
practices.
8. • 24/7 access by phone,
text, & email.
• Patient Time Priority
• Same day
appointments
• Critical health issue
response
• Access to best
specialists and medical
centers
• Personalized,
comprehensive health
& wellness plan
• One-on-one
consultations
• Proactive,
personalized health
updates
• Continuous
monitoring and
assessing
• Board certified
• Highly respected
in medical
communities
• Medical partners
steeped in
patients’ health
histories
• A team of highly
trained clinicians
• State-of-the-art
diagnostics
• Establish key
preventive markers
• Assessment
integrates nutrition,
mobility, flexibility,
and fitness
• Fitness & nutrition
support with
medical supervision
9. Business Model
PCP generates revenue by managing concierge medical practices for a fee
Fees are either formulated as a percent of revenue or a mark-up on cost
Fees in existing practices average 55% of practice revenue
Physicians generate approximately $625k in management fee revenue once membership panel hits 380
Practice margins at capacity are approximately 40%
o Fees of practices in development in Los Angeles and San Diego will be cost + mark up (approximately 20%)
oCost + management agreements have lower margins than percent of revenue management agreements but these
locations are immediately profitable and therefore enhance PCP’s ability to scale into new markets at minimal risks
10. Strategic Growth Plan
Secure large membership base by dominating the B2B market for executive health and concierge services; augment enterprise
growth by “rolling up” existing concierge medical groups.
Grow B2B
Partner with health networks to allow PCP services to be provided in the system’s closed-end insurance network
Partner with enterprise accounts that want to provide best-in-class healthcare to executives
Grow B2C
Increase prospect generation by investing in targeted marketing campaigns – historically all leads come from WOM and
referrals
Add “Cost +” and Specialists to scale
Partner with existing concierge providers in Orange County, Los Angeles and San Diego to maximize speed-to-market
12. Board of Directors
Troy Medley
•Chairman & CEO
•Pepperdine MBA
Will Kessinger
•Founder (VFormation)
•Managing Partner Parthenon Capital Partners
•Harvard MBA
Jordy Spiegel
•Spiegel & Partners
•Harvard MBA
Cynthia Perezzo
•Hoag Board Designee
•Senior Vice-President, Strategy and Business
Development
•Harvard MBA
Dr. Jeffrey Barke, M.D.
•Founder
Dr. Kenneth Cheng, D.O.
•Founder
14. 2015 2016 2017 2018
Practices 5 8 9 10
Physicians 14 20 25 30
Members 2,800 5,500 8,000 9,000
Revenue $4.1M $9.2M $12.8M $14.7M
Expenses $4.7M $7.3M $8.3M $8.4M
EBITDA $(684)K $1.9M $4.4M $6.3M
*PCP intends to build additional practices in Orange County and expand throughout Southern California.
Practices are currently being developed for Newport Beach, La Jolla, Beverly Hills and Century City.
*Forecasted performance of current practice footprint AND practices in development
Forecast - Growth
15. 2015 2016 2017 2018
Practices 3 3 3 3
Physicians 10 12 14 14
Members
2,360 3,700 4,400 4,550
Revenue $3.6M $5.4M $7.3M $8.0M
Expenses $4.2M $4.3M $4.4M $4.5M
EBITDA $(660)K $1.1M $2.9M $3.5M
*Forecasted performance of current practice footprint at current growth trend
Forecast – Steady State
16. Forecast – Steady State vs. Growth
($2)
$0
$2
$4
$6
$8
$10
$12
$14
$16
2015 2016 2017 2018
Growth Forecast
Revenue Expense EBITDA
Million
($2)
$0
$2
$4
$6
$8
$10
$12
$14
$16
2015 2016 2017 2018
Steady State Forecast
Revenue Expense EBITDA
Million
18. Exit Strategy
Expected Price Premium at Exit
HealthSystems
• Allows health
system access to
the premium
consumer of
healthcare
services which
enhances the
value of its closed
insurance network
• Health systems
need premium
payers to subsidize
mass market
StrategicBuyer
• Allows provider of
revenue
enhancement
solutions to health
systems to partner
with health systems
to rapidly create a
concierge network
• Revenue
enhancement
consultants need a
“new” service that can
provide immediate
value, as cost
containment
strategies have
reached diminishing
returns
Competitor
• Allows competitor
that invested in
scale without a
differentiated
solution to plug a
better service into
its network
• Undifferentiated
competitors need
to purchase
capabilities to
compete as
industry matures
GrowthEquity
• Allows a financial
buyer looking to
create critical mass
entry into the
lucrative Southern
California market
• Financial buyers
need scale to
reach IPO
19. Investment
$1M of an authorized $2M in Series B Preferred growth equity = 4% of the company.
Current investors: Management, Silicon Valley venture capital firm, and Hoag Hospital
LLC liquidation preference enhances tax shield and IRR
8% accruing preferred distribution
Closing before April 15th, 2014
Use of Capital
Add Business Development personnel
Underwrite legal costs associated with developing cost+ management agreements
Fund working capital
General corporate needs