MERGER & ACQUISITION ACTIVITY

The Healthcare Services industry reported strong M&A activity in 2015 across four major

sectors: Ambulatory Facilities, Assisted Living & Elderly Care, Home Health & Hospice Care

and Physician Practices. After 2014, which had multiple blockbuster deals including

Brookdale’s $5.4 billion acquisition of Emeritus and Kindred’s $1.8 billion acquisition of

Gentiva, focus has shifted back to the middle market. There has been increased

j

Q2 2016HEALTHCARE SERVICES

CONTACTS

John Ferrara

Founder & President

(617) 619-3325

jferrara@capstonellc.com

Len Batsevitsky

Director

(617) 619-3365

lbatsevitsky@capstonellc.com

Sophea Chau

Director

(617) 619-3307

schau@capstonellc.com

Healthcare Services: M&A Transaction Volume by Type

Sources: Capstone Partners LLC research, Capital IQ

BOSTON

CHICAGO

LONDON

LOS ANGELES

NEW YORK

ORANGE COUNTY

PHILADELPHIA

SAN DIEGO

SILICON VALLEY

TAMPA

18852

47Private

Strategic

Public

Strategic

Financial

consolidation amongst strategic players, as

companies look to expand both their

geographical reach and service offering.

Overall, strategic acquisitions dominated

M&A in 2015, accounting for 84% of deal

activity vs. 76% in 2014. Supporting this

trend are record high debt multiples that

reached 4.0x in 2015, reflecting an

abundance of available and affordable

financing to buyers. Financial acquirers are

attracted to the Healthcare Services industry

because of the opportunity surrounding an

aging population and rising healthcare

expenditures.INDUSTRY OUTLOOK

Demand for healthcare services will remain strong in 2016, driven by the availability of

affordable healthcare, an aging population and a declining unemployment rate. The

outlook for Healthcare Services remains largely positive, reflecting similar prospects within

the broader $2.9 trillion US Healthcare market. Technology will continue to drive

efficiency and new opportunities for all sectors, expanding the possibilities of

personalized and preventative care.

41 32 29 39

85 9572

89

39 3252 50

64 70 70109

229 229 223

287

0

50

100

150

200

250

300

350

2012 2013 2014 2015

Ambulatory Assisted Living Home Care Physician Practices Total

2015 Transactions by Buyer Type

Healthcare Services

Q2 2016

Capstone Partners LLC 2

INDUSTRY DRIVERS AND TRENDS

Technological innovation, population demographics and healthcare reform will

drive growth in the Healthcare Services industry in 2016, as detailed below.

An aging population creates demand for services – According to the US

census bureau, the percentage of people over the age of 65 grew from 13.0%

to 14.5% in 2014. In fact, over the past 50 years, the share of the population

that is over 65 has increased each census, with the average median age rising

from 29.5 in 1960 to 37.2 in 2010. This trend has driven higher levels of

demand, as this demographic is more likely to utilize healthcare services. As

baby boomers age and near retirement, the number of people over the age of

65 is projected to account for approximately 20% of the population by 2030,

driving demand to unprecedented levels.

Growth in private health insurance – Over the past few years, healthcare

reform has increased the number of people with private insurance, thus

driving growth within the industry. According to Gallup-Healthways’ Well

Being Index, the percentage of privately insured individuals rose from 61.8% at

the end of 2013 to 64.4% in 2015. Under the Affordable Care Act, the number

of individuals with healthcare coverage is forecasted to increase by 2.8 million

in 2016 and 1.9 million in 2017. Ultimately, 32.0 million previously uninsured

individuals are forecasted to gain coverage by 2019.

Advances in telemedicine and other technology will increase availability

and drive cost savings – Telehealth has been growing at an astronomical

34.1% annual growth rate since 2010 due to convenience, cost benefits and a

shortage of doctors. Recently, adoption of telehealth services has been

propelled by improvements in wearable medical technology and

communication equipment. Looking forward, Capstone expects telehealth to

drive growth within the Healthcare Services industry.

Rising disposable income makes healthcare more affordable – As

disposable income rises, the number of people who can afford private health

insurance and out-of-pocket expenses has also risen. This, in turn, has

generated demand for healthcare services. In Q1, GDP per capita is expected

to be $46,480 and will reach an estimated $50,024 by 2020. The rise in per

capita income is especially important to the Healthcare Services industry as

out-of-pocket expenses account for a significant amount of industry revenue

including 14.5% for specialty doctors, 9.5% for primary care, 10.0% for home

care and the majority of assisted living costs.

Impact of the Affordable Care Act (ACA) – As a result of the ACA, more

individuals will have healthcare insurance and access to a larger variety of

medical procedures. While patient numbers rise, Medicaid reimbursement

rates decreased in 2015 and are under continued pressure in 2016. The full

impact of ACA is still yet to be determined, but early indications are that it has

forced industry consolidation. Through consolidation, operators can better

meet the challenges of increasing patient volume, falling reimbursements,

expanding regulations and updating existing technology.

Healthcare Services

Q2 2016

Capstone Partners LLC 3

INDUSTRY DRIVERS AND TRENDS (CONTINUED)

Accountable Healthcare provides future M&A opportunities – Accountable

Care Organizations (ACOs) are groups of doctors, hospitals and other health

care providers, who voluntarily come together to give coordinated high quality

care to patients. ACOs place a degree of financial responsibility on providers

in hopes of improving care management and limiting unnecessary

expenditures. By increasing care coordination, ACOs can help reduce

unnecessary medical care costs and improve health outcomes. Should

accountable care expand throughout the broader healthcare market, a large

amount of consolidation would be the most likely impact. Successful ACOs

need to effectively and efficiently share patient data (via EHR), administrative

resources and quality metrics. This would best be accomplished in a model

where the providers of care has common ownership, and as such would create

significant M&A demand.

VALUATION DRIVERS

Based on recent discussions with buyers and investors, these market

participants are generally favoring (or ascribing premium valuation to)

businesses with the following characteristics:

Lower reimbursement risk providers – Buyers are generally seeking

business models with lower reimbursement risk. To the extent services

are provided on an out-of-network basis, those businesses with smaller

premiums over in-network contract rates are generally preferred.

Favorable patient demographics and commercial insurance payer

mix – Businesses located in markets with good patient demographics

for the types of services provided coupled with a favorable mix of

commercial insurance payers (where reimbursements can be

maximized) are preferred.

Medical service providers with facilities control – Medical groups

and doctor practices that control the facilities where they provide

services are favored.

Strong back office support – Organizations with strong back office

capabilities including talented personnel in billing & coding, patient

coordination & scheduling and accounting together with a state-of-

the-art EMR system that can be leveraged are favored.

Vibrant marketing infrastructure – Robust marketing capabilities are

in favor with buyers as these organizations typically have much lower

reliance on referring doctors for patient leads. Businesses that

generate their own patient leads receive premium values.

Low/flexible capital expenditure requirements – Buyers are

generally seeking businesses with low capital expenditure

requirements, thereby allowing most of the cash flow generated to the

business to be available for strategic growth initiatives or distribution

to owners. Capital expenditure requirements should be flexible with

the ability to decrease capex spending if procedure volume declines.

AMBULATORY FACILITIES: SEGMENT HIGHLIGHT

The Ambulatory Facilities segment has experienced a steady 4.0% increase in revenue throughout 2015 and is

expected to reach $99.4 billion for the year. Factors that influence the overall Healthcare Services industry,

such as an aging population, increased healthcare coverage and rising disposable income, are the driving

forces for industry growth. Changing patient preferences for minimally invasive surgeries with cost savings of

30%-60% compared to inpatient centers and technological advancements will further propel growth within

this segment. Ambulatory surgery centers (ASCs) make up the largest vertical within the Ambulatory Facilities

segment, accounting for 27.9% of the industry. Originally branching off of emergency care centers, ASCs have

expanded to provide a broader range of care.

Consolidation within this segment has remained strong in 2015. Ambulatory care centers are seeking

acquisitions in order to institute operational changes that cut costs, improve patient outcomes and streamline

payment processing. Some acquirers have experienced regulatory complications when expanding

geographically because of varying state regulations. Hospitals continue to acquire independent outpatient

centers because of the cost efficiencies they offer. For some centers, operating costs have risen faster than

revenue, thus driving a need to consolidate in order to eliminate excess capacity and to negotiate lower costs

with suppliers due to scale. Demand for ambulatory care services will add new entrants to the sector and is

projected to outpace consolidation. This segment is expected to see a 4.4% annual increase in operators

through 2020.

Public company multiples for this segment range from about 1.5x to 3.0x for revenue and 8.0x to 10.0x for

LTM EBITDA.

Capstone Partners LLC 4

Healthcare Services

Q2 2016

AMBULATORY FACILITIES: PUBLIC COMPANY TRADING & OPERATING DATA

Price % 52 Wk Market Enterprise LTM EV / LTM

Company 04/11/16 High Cap Value Revenue EBITDA Margin Revenue EBITDA

Alliance Healthcare Services, Inc. $7.00 28.6% $73.8 $708.5 $473.1 $116.8 24.7% 1.5x 6.1x

DaVita HealthCare Partners Inc. $74.10 87.0% $15,542.8 $23,843.4 $13,772.6 $2,494.0 18.1% 1.7x 9.6x

Fresenius Medical Care $89.74 94.4% $27,488.7 $37,420.6 $17,147.2 $3,012.6 17.6% 2.2x 12.4x

HCA Holdings, Inc. $79.14 82.9% $31,321.1 $62,681.1 $39,678.0 $7,869.0 19.8% 1.6x 8.0x

Medical Facilities Corp. $12.54 91.1% $389.4 $436.4 $308.8 $99.2 32.1% 1.4x 4.4x

Nobilis Health Corp. $3.42 40.3% $258.9 $310.9 $225.7 $38.3 17.0% 1.4x 8.1x

RadNet, Inc. $4.92 52.9% $232.2 $876.4 $809.6 $101.3 12.5% 1.1x 8.6x

Surgical Care Affiliates, Inc. $47.15 98.2% $1,874.4 $3,120.2 $1,034.3 $263.5 25.5% 3.0x 11.8x

Surgery Partners, Inc. $12.52 56.1% $602.9 $2,288.0 $936.3 $212.9 22.7% 2.4x 10.7x

Mean 21.1% 1.8x 8.9x

Median 19.8% 1.6x 8.6x

Harmonic Mean 19.7% 1.7x 7.8x

EV = enterprise value; LTM = last twelve months

$ in millions, except per share data

NM = Not Meaningful; NA = Not Available

AMBULATORY FACILITIES: SELECT M&A TRANSACTIONS

Enterprise EV / LTM

Ann. Date Target Acquirer Target Business DescriptionValue

(mm)Revenue EBITDA

03/29/16ATI Physical

TherepyAdvent Provides outpatient rehabilitation services. - - -

02/22/16Nobilis

Health

Healthcare

Ventures

Manages ambulatory surgical centers and healthcare

facilities in the US.- - -

02/17/16Naperville

Surgical Centre

SCA and Midwest

Physician Operates an outpatient surgery center in Illinois. - - -

01/04/16CareSpot

Express

United Surgical

Partners

Provides walk-in healthcare and scheduled medical

services.- - -

12/29/15Baylor Surgery

at Fort Worth

Carter Validus

Mission Comprises an ambulatory surgery center. $14.4 - -

12/18/15Immediate

Medical CareUS Healthworks

Operates a clinic and urgent care facility that provides

medical treatment for work related injuries and illnesses. - - -

12/18/15Texan

Urgent Care

FastMed

Urgent CareOperates urgent care centers. - - -

11/19/15 MEP Health US Acute Care Provides emergency and outpatient care services to

patients in the Mid-Atlantic and New England regions. $120.0 - -

11/05/15Integrated

Oncology

SJ Medical

Center Comprises an outpatient department of the hospital. - - -

11/02/15Urgent Care's

Nevada CentersHCA Comprises urgent care healthcare facilities in Nevada. - - -

10/29/15Equity Stake in

3 Care CentersSCA

Provides ambulatory surgery centers and operates

healthcare facilities.$13.8 - -

10/16/15Diagnostic

Imaging

Mid Rockland

Imaging

Operates outpatient radiological imaging centers in New

York and New Jersey. $65.4 - -

09/16/15First Med

Urgent

Sovereign

OperationsOperates walk-in urgent care medical clinics in Oklahoma. - - -

09/16/15Alliance

Healthcare

Fujian

Thaihot

Provides outpatient diagnostic and radiation therapy

services in the US.$774.3 1.7x 6.5x

09/15/15PRO MED

Medical US Healthworks Provides urgent care services to patients in Austin. - - -

08/07/15Barnabas'

Imaging Center

New Jersey

Imaging Comprises an outpatient diagnostic imaging center. - - -

08/05/15 Medac Health American

Caresource Operates an urgent care center in North Carolina. $5.6 - -

07/28/15Four Urgent

Care Centers

CHRISTUS

Santa Rosa Comprises urgent care facilities in Texas. - - -

07/01/15Four Therapy

Practices

US Physical

Therapy Offers outpatient physical therapy clinics. $6.1 1.1x -

06/29/15AFC’s Florida

Franchise

American

Family Care Operates an urgent care and walk-in clinic in Florida. - - -

06/25/15Star Physical

Therapy MOTION PT

Operates a network of outpatient physical therapy clinics

in Kentucky and Indiana. - - -

06/10/15Garden State

Endoscopy

Physicians

Endoscopy Provides ambulatory surgical care services. - - -

06/04/15Endoscopy of

Santa Monica

Cedars-Sinai

Medical Comprises an ambulatory surgery center. - - -

04/08/15MedExpress

Urgent CareOptum Operates urgent care facilities throughout the US. $1,500.0 - -

03/27/15Marysville

Ohio Surgical

Memorial

Health Operates a multi-specialty ambulatory surgical center. - - -

02/03/15Delaware

Outpatient

Surgery

Partners Operates an outpatient surgical facility. - - -

01/09/15Advanced

Surgery Center

Centers for

Special Surgery

Comprises a single operating room ambulatory surgery

center. - - -

Capstone Partners LLC 5

Healthcare Services

Q2 2016

Capstone Partners LLC 6

Healthcare Services

Q2 2016

ASSISTED LIVING & ELDERLY CARE: SEGMENT HIGHLIGHT

Of the four segments within the Healthcare Services industry, Assisted Living & Elderly Care most directly

benefits from an aging population, along with Home Health & Hospice Care. Despite pressures from

increased compliance costs and reimbursement cuts, the industry has experienced significant growth.

Through 2020, this segment is projected to grow at an annual rate of 6.1% to reach $83.1 billion, up from an

average growth rate of 3.7% from 2010 to 2015. Growth drivers include an improving macro-economic

climate, healthcare reform, new services and an aging population.

As baby boomers age, they become more susceptible to chronic illnesses and potential injury, motivating

families to turn to assisted living facilities. The decision to enter an assisted living community is ultimately

needs based. That said, the decision is also influenced by other factors such as alternative options, housing

prices and disposable income. Future growth in the industry will come from new technology and services that

make living in an assisted living facility more desirable. Facilities are starting to offer additional services such

as access to nutritionists and physicians, as well as providing technology that connects consumers with family

and friends.

According to the American Seniors Housing Association, the industry is highly fragmented with the six largest

companies accounting for 17.7% of the total market share, with Brookdale Senior Living accounting for 10.1%

of the market. In order to drive growth, companies seek acquisitions to create economies of scale as well as

benefit from centralized operations. Investors, such as real estate investment trusts (REITs), view assisted

living facilities as a necessary asset to diversify their portfolio, which also includes medical offices, skilled-

nursing facilities and hospitals. Companies who have superior financial management, provide a broad

spectrum of care and have a solid reputation will be attractive M&A targets.

ASSISTED LIVING & ELDERLY CARE: PUBLIC COMPANY TRADING & OPERATING DATA

Price % 52 Wk Market Enterprise LTM EV / LTM

Company 04/11/16 High Cap Value Revenue EBITDA Margin Revenue EBITDA

Brookdale Senior Living Inc. $17.02 43.7% $3,146.8 $9,491.1 $4,237.3 $811.7 19.2% 2.2x 11.7x

Capital Senior Living Corp. $18.14 65.4% $535.8 $1,288.4 $411.0 $73.2 17.8% 3.1x 5.0x

The Ensign Group, Inc. $22.92 84.8% $1,162.5 $1,218.3 $1,341.8 $121.2 9.0% 0.9x 10.1x

Five Star Quality Care Inc. $2.04 40.2% $100.9 $183.5 $1,124.7 $27.0 2.4% 0.2x 6.8x

Genesis Healthcare, Inc. $2.22 27.5% $340.9 $5,447.1 $5,518.7 $543.9 9.9% 1.0x 10.0x

Kindred Healthcare Inc. $12.59 51.1% $1,072.3 $4,234.8 $7,054.9 $562.5 8.0% 0.6x 7.5x

National HealthCare Corporation $62.65 90.3% $939.8 $938.9 $906.6 $106.8 11.8% 1.0x 8.8x

Sienna Senior Living Inc. $12.82 91.7% $468.2 $943.2 $362.6 $52.2 14.4% 2.6x 18.1x

Mean 11.5% 1.5x 9.7x

Median 10.8% 1.0x 9.4x

Harmonic Mean 7.9% 0.7x 8.6x

EV = enterprise value; LTM = last twelve months

$ in millions, except per share data

NM = Not Meaningful; NA = Not Available

ASSISTED LIVING & ELDERLY CARE: SELECT M&A TRANSACTIONS

Enterprise EV / LTM

Ann. Date Target Acquirer Target Business DescriptionValue

(mm)Revenue EBITDA

03/24/16Winthrop

Senior LivingEnlivant Comprises two senior housing communities in Georgia. - - -

02/25/16Senior Living

Communities

Capital Senior

Living

Comprises five senior living communities based in

Wisconsin and Florida. $64.8 - -

02/18/16 Aston Care Welltower Operates senior living communities in Florida. $569.0 - -

01/28/16Queen

Anne Manor

Capital Senior

LivingOperates a retirement community. $36.3 - -

01/20/16Courtyard

Fountains

Healthcare Trust

and American Realty

Comprises a 252-unit independent and assisted living

community. $55.5 - -

01/18/16US Senior

Living

MorningStar

Senior and AIM Comprises senior living communities. $85.0 - -

01/07/16Inspired

Living

Validus

Senior Living Comprises an assisted living facility in Tampa. - - -

12/14/15Newcastle

Place

Life Care and

ROC Seniors

Operates as a not-for-profit continuing care retirement

community. - - -

12/09/15Assisted &

Alzheimer's Care Greystone Comprises an assisted living care facility. $27.5 - -

12/09/15Durham

Retirement

Sienna

Senior Living Operates a retirement community. $27.3 - -

12/01/15Cambridge

Place at Opelika

Oxton

Senior Living Comprises a senior living community. - - -

11/19/15Senior Living in

Montgomery

Oxton

Senior Living Comprises a retirement community. - - -

11/18/15Assisted

Living Facility

Summit

Healthcare

Comprises a 50-unit assisted living facility in New

Hampshire. $13.2 - -

11/11/15Brightwater

Senior Living Extendicare Comprises two retirement communities. $37.9 - -

11/11/15Harvest

Retirement Extendicare

Operates a retirement community that provides senior

living facilities. $21.4 - -

11/04/15Aston Gardens

FacilityWelltower

Comprises a 325-unit senior center which offers assisted

living services and memory care. $78.6 - -

11/03/15Senior Living

Communities

Capital

Senior Living

Comprises three senior living communities in Ohio, Illinois

and Indiana. $49.8 - -

10/30/15Senior Living

Community

Capital

Senior Living Comprises a senior living community in Virginia. $38.0 - -

10/16/15Savannah

Senior Gold Mining Operates a senior living facility. $11.5 - -

10/01/15Empire

Crossing Humana

Comprises a 64 suite independent and assisted living

community center in Canada.$15.3 - -

09/08/15Courtyard

Towers Sierra Capital

Comprises a 175-unit independent living, assisted living

and memory care community in Arizona. $20.9 - -

09/02/15Amica Mature

Lifestyles

BayBridge

Seniors

Develops and manages luxury seniors’ residences in

Canada. $837.4 7.6x 26.7x

09/01/15Nine Property

PortfolioCare Capital Comprises nursing and assisted living facilities. $190.0 - -

08/31/15Arcadian

Cove

American

Realty Capital Comprises a seniors housing community. - - -

08/31/15Golden Age

and The Brook

National Health

Investors

Comprises two senior living communities in Oregon and

Michigan.$12.7 - -

08/27/15 Cedarhurst American

Realty Capital Operates assisted-living apartments for senior living. $11.6 - -

08/11/15Topanga Park

Assisted Living

DiNapoli

Capital Comprises a senior living facility. $23.4 5.2x -

Capstone Partners LLC 7

Healthcare Services

Q2 2016

Capstone Partners LLC 8

Healthcare Services

Q2 2016

HOME HEALTH & HOSPICE CARE: SEGMENT HIGHLIGHT

Home Health & Hospice Care is one of the fastest growing segments within the Healthcare Services industry

and is projected to expand at an annual rate of 6.5% through 2020. Major factors contributing to this growth

include a rise in the number of people over the age of 65, increasing disposable income and low barriers to

entry. The high demand and low capital requirements necessary to provide home healthcare has led to

numerous operators entering the market. From 2010 to 2015, the number of operators increased annually by

5.2% to 386,384, more than any other segment.

For some patients, especially those with chronic diseases, home care is preferable to inpatient care. Home

healthcare alleviates an already burdened healthcare system, as chronically ill patients account for 76% of all

hospitalizations according to Partnership for Solutions (a joint project between Johns Hopkins University and

the Robert Wood Johnson Foundation). Payers prefer home care because it is more affordable than inpatient

care. With patients, providers and payers all benefitting from home healthcare, this segment will see

consolidation by strategic and financial buyers for the foreseeable future.

One detractor from industry growth continues to be decreasing levels of federal funding as the largest payers

for home healthcare are government programs: Medicare and Medicaid. While this has impeded industry

growth to a certain extent, pressure on profit margins due to lower reimbursements has also driven merger

and acquisition activity within the industry. This trend is expected to continue throughout the short-term,

coupled with a shortage in skilled personnel.

This has experienced significant consolidation in recent years with Kindred Healthcare acquiring Gentiva

Services in 2014 to become the largest home healthcare provider in the US. HealthSouth also entered the

home health & hospice care market via its acquisition of the fifth largest provider of home health services,

Encompass Home Health and Hospice, in 2014.

HOME HEALTH & HOSPICE CARE: PUBLIC COMPANY TRADING & OPERATING DATA

Price % 52 Wk Market Enterprise LTM EV / LTM

Company 04/11/16 High Cap Value Revenue EBITDA Margin Revenue EBITDA

Addus HomeCare Corporation $17.49 45.9% $192.8 $191.6 $336.8 $22.2 6.6% 0.6x 8.6x

Almost Family Inc. $37.38 74.0% $384.6 $500.3 $532.2 $40.5 7.6% 0.9x 5.0x

Amedisys Inc. $47.87 97.1% $1,595.5 $1,668.8 $1,266.5 $88.1 7.0% 1.3x 18.9x

Brookdale Senior Living Inc. $17.02 43.7% $3,146.8 $9,491.1 $4,237.3 $811.7 19.2% 2.2x 11.7x

Chemed Corp. $135.77 84.8% $2,258.2 $2,334.7 $1,543.4 $219.0 14.2% 1.5x 10.7x

The Ensign Group, Inc. $22.92 84.8% $1,162.5 $1,218.3 $1,341.8 $121.2 9.0% 0.9x 10.1x

Extendicare Inc. $7.14 93.0% $628.6 $898.9 $755.7 $65.6 8.7% 1.2x 13.7x

HEALTHSOUTH Corp. $35.57 73.5% $3,193.4 $6,592.3 $3,115.7 $706.2 22.7% 2.1x 9.3x

Kindred Healthcare Inc. $12.59 51.1% $1,072.3 $4,234.8 $7,054.9 $562.5 8.0% 0.6x 7.5x

LHC Group, Inc. $35.99 69.4% $646.8 $755.1 $797.1 $80.0 10.0% 0.9x 9.4x

Mean 11.3% 1.2x 10.5x

Median 8.9% 1.1x 9.7x

Harmonic Mean 9.6% 1.0x 9.7x

EV = enterprise value; LTM = last twelve months

$ in millions, except per share data

NM = Not Meaningful; NA = Not Available

HOME HEALTH & HOSPICE CARE: SELECT M&A TRANSACTIONS

Enterprise EV / LTM

Ann. Date Target Acquirer Target Business DescriptionValue

(mm)Revenue EBITDA

03/24/16Preferred Health

Home Care

Spectrum

HealthProvides home care services in Canada. $12.4 - -

03/09/16Genesis’s Home

Health Bus.

Hospice

CompassusOffers home healthcare and hospice care. $84.0 1.2x 9.3x

02/11/16Associated

Home Care Amedisys Provides in-home senior care services in Massachusetts. $38.1 1.0x -

02/10/16All Metro

Aids One Equity

Provides home health care services to patients in New

York, New Jersey and Florida. - - -

02/04/16 H.H. Systems Linsalata

Capital

Provides in-home care and home healthcare services for

seniors.- - -

12/09/15Alliance

Home Health Sutter Care Offers home health care services in California. - - -

12/03/15Four Oaks

Hospice

Missouri Delta

Medical

Provides symptom management, pain control and support

for hospice patients and their families.- - -

12/03/15Visiting

Nurse LHC Group

Provides home healthcare and personal services in Ohio

and Kentucky. - - -

11/17/15InnovAge

Home Care

Welsh, Carson,

Anderson & Stowe

Provides in-home senior care services in Colorado and

New Mexico. $186.0 - -

11/12/15BestCare

Home Care

Addus

HomeCare

Provides home healthcare services for seniors/elderly and

rehabilitation patients in the US.- - -

11/04/15Black Stone

Of Cincinnati

National

Health

Provides in-home care for elderly and disabled persons in

Ohio. $41.0 0.9x -

11/03/15Infinity

HomeCare Amedisys

Offers personalized home patient care for disease

management, post operation and wound care.$63.0 1.3x 9.8x

11/02/15AutumnBridge

Hospice

New Century

Hospice

Provides hospice services to help terminally ill patients and

their families in Oklahoma. - - -

11/02/15Heritage

Home

Good Samaritan

Society

Provides home health care services to patients and their

families. - - -

10/26/15 Narus Health Apple Tree Provides palliative care services to patients facing a life-

limiting illness. - - -

10/07/15Hospice

Advantage

Hospice

Compassus Provides end-of-life care services to patients and families. - - -

09/10/15Physician's Link

Home Care

Riceland

HealthCare

Offers specialty care services for health and wellness at

home. - - -

09/03/15Halcyon

Healthcare LHC Group

Provides hospice and home health services in the

southeast US.$458.5 1.4x -

08/31/15CareSouth

Health HealthSouth

Provides home health and other non-acute health services

in the US.$170.0 1.6x -

08/24/15Apismellis

Homecare

Cornerstone

Healthcare

Provides homecare services to homebound seniors and

adults. - - -

07/22/15Advocate

Home Health

American

In-Home Care Offers medical home care services. - - -

07/06/15Buena Vista

Hospice

Cornerstone

HealthcareOffers hospice care services in California. - - -

06/03/15Managed Care

At Home

Cornerstone

HealthcareOffers home-based medical care services in San Francisco. - - -

05/14/15 Advanced Care LivHOMEProvides home health care services for elders and disabled

individuals. - - -

02/25/15 BracorNational

Health Provides home nursing, rehabilitation and personal care. $50.5 0.7x -

01/15/15Revera Home

HealthExtedicare Offers home health care services for seniors. $69.7 - -

01/01/15Caring

Partners

United Methodist

Retirement

Provides home health and personal care services to

individuals.- - -

Capstone Partners LLC 9

Healthcare Services

Q2 2016

Capstone Partners LLC 10

Enterprise EV / LTM

Ann. Date Target Acquirer Target Business DescriptionValue

(mm)Revenue EBITDA

03/29/16Mid-Missouri

NeonatologyMEDNAX

Provides baby delivery, neonatal, newborn and pediatric

services.- - -

03/15/16German

Orthodontics

Spring & Sprout

DentalProvides orthodontics services in Ohio. - - -

02/26/16Anesthesia

Care Group

North American

AnesthesiaProvides anesthesia services. - - -

02/17/16Central

Cardiology

Hardin

MemorialOffers cardiology services. - - -

02/16/16DeKalb

Gastro.

Physicians

Endoscopy

Offers treatment for reflux, ulcer disease, irritable bowel

syndrome and Crohn’s disease.- - -

02/10/16Central Ohio

Neurological

Mount Carmel

Health Provides neurosurgical services. - - -

02/08/16University

Physicians

Northwell

Health

Operates a multi-specialty medical group of healthcare

professionals in New York.- - -

01/25/16W. Wyoming

Dermatology

Advanced

Dermatology

Provides dermatologic care services for adult and pediatric

patients in Wyoming. - - -

01/25/16Physiotherapy

Associates

Select

Medical

Offers general orthopedics, spinal care and neurological

rehabilitation.$400.0 - -

01/11/16Dermatology

GroupRiverside Provides medical and surgical dermatologic care. - - -

01/05/16Capital

Dermatology

Advanced

Dermatology Offers dermatologic services in Maryland. - - -

01/05/16Rehabilitation

of Charleston

ATI Physical

Therapy Provides orthopedic and sports physical therapy services. - - -

01/04/16Professional

Anesthesia MEDNAX Provides anesthesia services in general hospitals. - - -

PHYSICIAN PRACTICES: SELECT M&A TRANSACTIONS

Healthcare Services

Q2 2016

PHYSICIAN PRACTICES: SEGMENT HIGHLIGHT

The Physician Practice segment can be broken down into two main verticals: Primary Care and Specialist

Physicians. While each offers a unique set of services, they maintain similar structures and are influenced by

similar drivers. Combined, the segment generates approximately $490 billion in revenue with each vertical

contributing roughly half. Over the next five years, this segment is expected to grow at around 4% annually,

primarily due to expanding insurance coverage under the ACA and increased coverage of adults aged 65 and

older.

As the Physician Practices segment continues to grow, it will face economic and regulatory obstacles which

will lead to greater consolidation. While regulatory changes have increased the scope of coverage, it has also

forced the segment to be more efficient and address rising healthcare costs related to patient care. Instead of

opening independent practices, doctors are joining group practices and hospitals in order to reduce

operational, regulatory and compliance burdens while maximizing administrative and billing infrastructure,

and expanding negotiation power with insurance payers and vendors. Other factors that impact this segment

include the rise in malpractice premiums, costs of new technology and the delay in reimbursement from

payers.

In 2015, physician groups were seeking acquisitions in order to add complementary services as well as expand

their geographic presence. MEDNAX’s acquisition of Lakeshore Anesthesia in July 2015 highlighted these

trends, as MEDNAX added 41 full-time anesthesiologists and anesthetists around Michigan. Paul Chovaz,

M.D., will serve as Medical Director for the practice and said, “The combination of having access to anesthesia

best practices as well as the support of MEDNAX’s back-office infrastructure and access to its research,

education and quality initiatives will ultimately allow us to continue to provide the best patient care possible.”

Capstone Partners LLC 11

CAPSTONE PARTNERS: HEALTHCARE SERVICES TRANSACTIONS

Healthcare Services

Q2 2016

has been acquired by has been acquired by has been acquired by has been acquired by

has been acquired by

a portfolio company of

has been acquired byhas been acquired by has been acquired by

CERTIFIED IT &

ITRICITY FREEDOM DATA

has acquired

CERTIFIED I.T.

ITRICITY FREEDOM DATA

has acquired

has divested assets to

acquisition advisoryhas been acquired by has divested assets to

has recapitalized with

A PRIVATE

INVESTMENT GROUP a portfolio company of

AUDAX GROUP, INC.

has been acquired byhas been acquired by

has recapitalized with has been acquired by has been acquired by

has been acquired by

John Ferrara, Founder & President

jferrara@capstonellc.com • (617) 619-3325

John Ferrara, the founder and principal shareholder of Capstone, serves as the

firm's President and Managing Partner. Over his extensive career in investment

banking, venture capital and management consulting, John has executed over

100 related engagements representing in excess of $6 billion in value. John was

formerly a Regional Managing Partner with Andersen Corporate Finance, where

he founded the Boston office and held various national and global leadership

positions. He started his career in Lehman's Brothers' M&A group in New York,

London and Riyadh, later becoming a founding member of Rodman & Renshaw's

M&A practice in New York. He earned an MBA in Entrepreneurial Studies from

The Anderson School at UCLA and the London School of Economics, during

which time he founded and operated a corporate finance advisory boutique, JG

Atlas Advisors, and its related investment arm, Atlantis Capital Partners. He holds

dual BA degrees from Wesleyan University and is qualified as a General Securities

Principal.

Len Batsevitsky, Director

lbatsevitsky@capstonellc.com • (617) 619-3365

With over 17 years of investment banking and financial advisory experience, Len

has developed extensive M&A transaction expertise serving as an adviser to

middle market companies on the buy-side and sell-side as well as advising on

capital raising transactions. In the past several years, he has been successful in

executing M&A or capital raising transactions with an aggregate value of nearly

half a billion dollars. Len also has extensive financing knowledge having spent six

years working in commercial lending/underwriting for Santander Bank. Prior to

investment banking and commercial lending, Len began he career at

PricewaterhouseCoopers LLP. Len is a graduate of the University of Buffalo with

a BS in Finance and Accounting. Len is a Certified Public Accountant, CFA

Charterholder and Registered Securities Representative having passed the FINRA

Series 79 and 63 examinations.

Sophea Chau, Director

schau@capstonellc.com • (617) 619-3307

Sophea specializes in mergers & acquisitions, private placements and financial

advisory services. Her responsibilities include providing financial and valuation

analysis, performing due diligence, asset positioning and strategy articulation.

Prior to joining Capstone, Sophea was an analyst at FTN Midwest Securities, a

full-service investment banking firm based in Cleveland. While working in their

New York office, she focused on M&A advisory for middle-market companies in

a variety of industries, including healthcare, pharmaceutical services and

marketing & advertising. Sophea is Vice President of the Columbia Alumni

Association of Boston and holds a Bachelor of Arts in Economics from Columbia

University.

Capstone Partners LLC 12

THE HEALTHCARE SERVICES TEAM

Healthcare Services

Q2 2016

© 2016 Capstone Partners LLC. All rights reserved.

World Class Wall Street Expertise. Built for the Middle Market.

CAPSTONE’S OFFICE LOCATIONS

ABOUT CAPSTONE PARTNERS

Capstone Partners LLC is a premier investment banking firm dedicated to

serving the corporate finance needs of middle market business owners,

investors and creditors. The firm provides M&A, corporate restructuring,

private placement and financial advisory services. Headquartered in Boston,

Capstone has offices in Chicago, London, Los Angeles, New York, Orange

County, Philadelphia, San Diego, Silicon Valley and Tampa with an

international presence that spans 450+ professionals in 70 offices across 31

countries.

BOSTON

176 Federal Street

3rd Floor

Boston, MA 02110

(617) 619-3300

CHICAGO

200 South Wacker Drive

Suite 3100

Chicago, IL 60606

(312) 674-4531

LONDON

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London W1K 5DB

United Kingdom

+44 (0) 203 427 5068

LOS ANGELES

401 Wilshire

Suite 1200

Santa Monica, CA 90401

(858) 926-5950

NEW YORK

41 Madison Avenue

31st Floor

New York, NY 10010

(212) 634-0855

ORANGE COUNTY

23046 Avenida de la Carlota

Suite 600

Laguna Hills, CA 92653

(949) 460-6431

PHILADELPHIA

1515 Market Street

12th Floor

Philadelphia, PA 19102

(215) 854-4063

SAN DIEGO

12707 High Bluff Drive

Suite 200

San Diego, CA 92130

(858) 926-5950

SILICON VALLEY

228 Hamilton Avenue

3rd Floor

Palo Alto, CA 94301

(650) 319-7370

TAMPA

1550 W Cleveland Street

Suite 10

Tampa, FL 33679

(813) 251-7285

For more information

about our expertise,

please visit

www.capstonellc.com