Sectorwatch: Healthcare IT Q4 2018
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Healthcare IT Q4 2018
Sector Dashboard [4]
Public Basket Performance [5]
Operational Metrics [7]
Valuation Comparison [10]
Recent Deals [12]
7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to be delivered only in conjunction with a verbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice & Disclaimer at the end of the document. All data cited in this document was believed to be accurate at the time of authorship and came from publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations as to the accuracy or completeness of third-party data contained herein. This document should be treated as confidential and for the use of the intended recipient only. Please notify 7 Mile Advisors if it was distributed in error.
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Overview
7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A and private capital transactions, and provide market assessments and benchmarking. As a close knit team with a long history together and a laser focus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets. We publish our sectorwatch, a review of M&A and operational trends in the industries we focus.
Dashboard • Summary metrics on the sector • Commentary on market momentum by
comparing the most recent 12-month performance against the last 3-year averages.
Public Basket Performance
• Summary valuation and operating metrics for a basket of comparable public companies
Valuation Comparison • Graphical, detailed comparison of valuation
multiples for the public basket Recent Deals
• The most recently announced deals in the sector
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Dashboard
Operating Metrics
Valuation
14.6%
15.8%
56.0%
0% 20% 40% 60%
Median LTM EBITDA Margin %
Median LTM Revenue Growth %
Median LTM Gross Profit Margin %
4.5x
23.1x
30.7x
63.1x
0x 20x 40x 60x 80x
Median TEV / LTM Revenue
Median TEV / LTM EBIT
Median TEV / LTM EBITDA
Median Price / LTM Earnings
Revenue Growth Momentum
-2.5% One year revenue growth percentage compared
to revenue growth average percentage for last
3 years.
Pricing / Gross Margin Momentum
0.4% One year gross profit percentage compared to
gross profit percentage average for last 3
years.
Profitability Momentum
1.6% One year EBITDA percentage compared to
EBITDA percentage average for last 3 years.
Current revenue growth rate is less than the average of the last 3
years, indicating that the market may be flattening, but the average
growth rate is still 22%.
Current gross profit margin slightly exceeds the average of the last 3
years gross profit margin by this amount so companies are
maintaining margins.
Current EBITDA margin exceeds the average of the last 3 years
EBITDA margin by this amount.
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Public Basket Company TEV $m
LTM Rev $m
Rev Growth
YoY GP % EBITDA
% TEV / Rev X
TEV / EBITDA
X # FTEs Rev /
FTE $k
Cerner Corporation 20,450 5,149 4% 84% 25% 4.0 15.8 26,000 198
M3, Inc. 12,355 898 21% 57% 29% 14.0 48.8 5,165 174
Veeva Systems Inc. 11,881 763 23% 70% 24% 15.6 64.2 2,171 352
HealthEquity, Inc. 5,042 258 28% 61% 32% 19.5 61.6 1,027 251
athenahealth, Inc. 4,967 1,287 12% 54% 19% 3.9 20.5 5,156 250
Teladoc Health, Inc. 4,942 330 110% 72% -11% 15.0 0.0 1,231 268
Allscripts Healthcare Solutions, Inc. 4,311 2,006 21% 49% 5% 2.1 40.6 8,900 225
Medidata Solutions, Inc. 4,103 611 16% 76% 15% 6.7 45.8 1,680 364
Winning Health Technology Group Co., Ltd. 3,174 201 32% 51% 21% 16.6 77.9 3,613 56
CompuGroup Medical Societas Europaea 2,993 791 16% 39% 21% 3.9 18.5 4,572 173
HMS Holdings Corp. 2,743 562 13% 37% 21% 4.9 23.7 2,500 225
Omnicell, Inc. 2,647 758 12% 47% 9% 3.5 36.9 2,350 322
Inovalon Holdings, Inc. 2,412 476 13% 69% 16% 5.1 30.7 1,758 271
Evolent Health, Inc. 1,790 506 40% 40% -3% 3.5 0.0 2,600 194
Tabula Rasa HealthCare, Inc. 1,646 170 56% 31% 9% 9.7 112.5 536 317
Benefitfocus, Inc. 1,108 267 14% 53% 0% 4.2 0.0 1,450 184
Vocera Communications, Inc. 866 169 16% 61% -1% 5.1 0.0 590 287
Pharmagest Interactive SA 855 182 22% 28% 24% 4.8 20.6 907 200
Agfa-Gevaert NV 833 2,731 -6% 33% 6% 0.3 4.9 9,840 278
NNIT A/S 780 459 3% 18% 14% 1.7 12.0 3,031 152
HealthStream, Inc. 743 260 14% 57% 12% 2.9 24.0 955 272
Pro Medicus Limited 702 27 14% 99% 47% 27.6 58.4 - NA
Computer Programs and Systems, Inc. 495 284 9% 55% 12% 1.7 14.2 2,000 142
Simulations Plus, Inc. 348 29 34% 73% 41% 11.9 29.4 83 352
NantHealth, Inc. 334 88 9% 58% -58% 3.8 0.0 494 179
Castlight Health, Inc. 266 145 26% 60% -36% 1.8 0.0 527 276
Average 3,569 746 22% 55% 11% 7.5 38.1 3,565 238
Median 2,101 395 16% 56% 15% 4.5 30.0 2,000 250
share price as of 24Oct18
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Public Basket Valuation Trends
Public EBITDA Multiples over Time
Public Revenue Multiples over Time
0x
2x
4x
6x
8x
TEV/Revenue - Median TEV/Revenue - Average
0x5x
10x15x20x25x30x35x
TEV/EBITDA - Median TEV/EBITDA - Average
25.7x
5.1x
0x
5x
10x
15x
20x
25x
30x
35x
TEV/EBITDA - Median TEV/Revenue - Median
TEV/EBITDA - Average TEV/Revenue - Average
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Operational Metrics
LTM Revenue Growth % LTM Revenue per
Full Time Employee x 000’s
$- $100 $200 $300 $400
Median
Winning Health Technology…
Computer Programs and…
NNIT A/S
CompuGroup Medical…
M3, Inc.
NantHealth, Inc.
Benefitfocus, Inc.
Evolent Health, Inc.
Cerner Corporation
Pharmagest Interactive SA
HMS Holdings Corp.
Allscripts Healthcare…
athenahealth, Inc.
HealthEquity, Inc.
Teladoc Health, Inc.
Inovalon Holdings, Inc.
HealthStream, Inc.
Castlight Health, Inc.
Agfa-Gevaert NV
Vocera Communications, Inc.
Tabula Rasa HealthCare, Inc.
Omnicell, Inc.
Veeva Systems Inc.
Simulations Plus, Inc.
Medidata Solutions, Inc.
-20% 0% 20% 40% 60% 80% 100%120%
Median
Agfa-Gevaert NV
NNIT A/S
Cerner Corporation
Computer Programs and Systems,…
NantHealth, Inc.
Omnicell, Inc.
athenahealth, Inc.
Inovalon Holdings, Inc.
HMS Holdings Corp.
Pro Medicus Limited
HealthStream, Inc.
Benefitfocus, Inc.
Medidata Solutions, Inc.
Vocera Communications, Inc.
CompuGroup Medical Societas…
Allscripts Healthcare Solutions, Inc.
M3, Inc.
Pharmagest Interactive SA
Veeva Systems Inc.
Castlight Health, Inc.
HealthEquity, Inc.
Winning Health Technology Group…
Simulations Plus, Inc.
Evolent Health, Inc.
Tabula Rasa HealthCare, Inc.
Teladoc Health, Inc.
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Operational Metrics
LTM Gross Profit Margin % LTM EBITDA %
-60% -40% -20% 0% 20% 40% 60%
Median
NantHealth, Inc.
Castlight Health, Inc.
Teladoc Health, Inc.
Evolent Health, Inc.
Vocera Communications, Inc.
Allscripts Healthcare Solutions,…
Agfa-Gevaert NV
Tabula Rasa HealthCare, Inc.
Omnicell, Inc.
HealthStream, Inc.
Computer Programs and…
NNIT A/S
Medidata Solutions, Inc.
Inovalon Holdings, Inc.
athenahealth, Inc.
HMS Holdings Corp.
CompuGroup Medical Societas…
Winning Health Technology…
Pharmagest Interactive SA
Veeva Systems Inc.
Cerner Corporation
M3, Inc.
HealthEquity, Inc.
Simulations Plus, Inc.
Pro Medicus Limited
0% 20% 40% 60% 80% 100%
Median
NNIT A/S
Pharmagest Interactive SA
Tabula Rasa HealthCare, Inc.
Agfa-Gevaert NV
HMS Holdings Corp.
CompuGroup Medical…
Evolent Health, Inc.
Omnicell, Inc.
Allscripts Healthcare…
Winning Health Technology…
Benefitfocus, Inc.
athenahealth, Inc.
Computer Programs and…
M3, Inc.
HealthStream, Inc.
NantHealth, Inc.
Castlight Health, Inc.
HealthEquity, Inc.
Vocera Communications, Inc.
Inovalon Holdings, Inc.
Veeva Systems Inc.
Teladoc Health, Inc.
Simulations Plus, Inc.
Medidata Solutions, Inc.
Cerner Corporation
Pro Medicus Limited
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Valuation
TEV / LTM Revenue TEV / LTM EBITDA
0x 10x 20x 30x
Median
Agfa-Gevaert NV
NNIT A/S
Computer Programs…
Castlight Health, Inc.
Allscripts Healthcare…
HealthStream, Inc.
Omnicell, Inc.
Evolent Health, Inc.
NantHealth, Inc.
athenahealth, Inc.
CompuGroup…
Cerner Corporation
Benefitfocus, Inc.
Pharmagest…
HMS Holdings Corp.
Inovalon Holdings,…
Vocera…
Medidata Solutions,…
Tabula Rasa…
Simulations Plus, Inc.
M3, Inc.
Teladoc Health, Inc.
Veeva Systems Inc.
Winning Health…
HealthEquity, Inc.
Pro Medicus Limited
0x 20x 40x 60x 80x 100x 120x
Median
NNIT A/S
Computer Programs…
Cerner Corporation
CompuGroup Medical…
athenahealth, Inc.
Pharmagest…
HMS Holdings Corp.
HealthStream, Inc.
Simulations Plus, Inc.
Inovalon Holdings,…
Omnicell, Inc.
Allscripts Healthcare…
Medidata Solutions,…
M3, Inc.
Pro Medicus Limited
HealthEquity, Inc.
Veeva Systems Inc.
Winning Health…
Tabula Rasa…
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Valuation
Price / LTM Earnings Historical Valuation Multiples versus Revenue Growth Rate
0x 20x 40x 60x 80x 100x
Median
NNIT A/S
Cerner Corporation
Pharmagest…
Simulations Plus, Inc.
Agfa-Gevaert NV
athenahealth, Inc.
CompuGroup Medical…
HealthStream, Inc.
Omnicell, Inc.
M3, Inc.
HMS Holdings Corp.
Pro Medicus Limited
Medidata Solutions,…
Winning Health…
Veeva Systems Inc.
HealthEquity, Inc.
-10%
0%
10%
20%
30%
40%
50%
60%
0x
20x
40x
60x
80x
100x
120x
LTM
RG
R%
EBIT
DA(x
)
EBITDA(x) LTM RGR%
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RECENT TRANSACTIONS SUMMARY
In the last twelve months there were transactions totaling $23.8b transactions in the healthcare IT sector. 7 Mile Advisors tracked 1,215 transactions in the sector, including 295 M&A transactions.
All Transactions by Region All Transactions by Type M&A Transaction Ranges by Value
Merger & Acquisition Statistics
Valuation Summary
Total Deal Value($mm): $23,825.68
Average Deal Value: $297.82
Average TEV/Revenue: 6.86x
Average TEV/EBITDA: 31.16x
Average Day Prior Premium(%): 284.56%
Average Week Prior Premium(%): 281.18%
Average Month Prior Premium(%): 306.58%
Private Placement,
920
Merger/Acquisition
, 295
Africa /
Middle East,
21
Europe, 218
United
States and
Canada, 785
Asia / Pacific,
185
Latin
America and
Caribbean, 6
Greater than
$1 billion, 6
$500 -
$999.9mm, 1
$100 -
$499.9mm, 13
Less than
$100mm, 60
Undisclosed,
213
Most Active Buyers/Investors by Number of Transactions
Company NameNumber Of
Transactions
Ben Franklin Technology Partners of Southeastern Pennsylvania, Investment Arm 13
Y Combinator M anagement LLC 8
F-Prime Capital Partners 6
M orningside Venture Capital 6
New Enterprise Associates 6
Albion Capital Group LLP 5
Bessemer Venture Partners 5
Bpifrance Investissement 5
GE Ventures 5
GV 5
Most Active Buyers/Investors by Total Transaction Size
Company NameTransaction
Size ($mm)
Ellio tt M anagement Corporation 6,879.97
Verscend Technologies, Inc. 5,118.56
Roche Holding AG (SWX:ROG) 1,900.0
SoftBank Investment Advisers 1,550.0
Inovalon Holdings, Inc. (NasdaqGS:INOV) 1,200.0
SBI Holdings, Inc. (TSE:8473) 1,150.0
SBI Investment Co., Ltd. 1,150.0
Veritas Capital Fund M anagement, LLC 1,050.0
Global Payments Inc. (NYSE:GPN) 700.0
China Investment Corporation 650.8
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Recent Transactions Date Target Buyer / Investor
Total Transaction
Value Target
Revenue TEV /
Revenue TEV /
EBITDA
23Oct18 Vendor Credentialing Service LLC Clearlake Capital Group, L.P. - - - -
17Sep18 Healthcare Technologies Business of Aramark TriMedx, LLC 300.00 - - -
17Sep18 Connance, Inc. Waystar, Inc - - - -
16Sep18 Lucro Solutions, Inc. Valify LLC - - - -
14Sep18 DIMEC Limited Co-op Ventures - - - -
13Sep18 Nemaris, Inc. Globus Medical, Inc. - - - -
12Sep18 Wellpass Welltok, Inc. - - - -
11Sep18 Apex Revenue Technologies, LLC RevSpring, Inc. 200.00 - - -
6Sep18 VirMedica, Inc. CareMetx, LLC - - - -
31Aug18 MVI Health Inc. Penumbra, Inc. 20.00 - - -
24Aug18 Herald Technologies Inc. Persistent Systems, Inc. 5.20 - - -
28Aug18 Iatric Systems, Inc. Harris Healthcare Group - - - -
28Aug18 Intellitec Softway Medical SAS - - - -
27Aug18 ClariCare Inc. True Nature Holding, Inc. - - - -
23Aug18 Medical Reservations Technology Co., Ltd. (nka:GMO Medical Reservations Technology Co., Ltd.)
GMO Epsilon, Inc. - - - -
12Aug18 CareX Blockchain Platform Inc. Paragon Blockchain Inc. 0.30 - - -
14Aug18 Mevoked, Inc. WellBrain Inc. - - - -
13Aug18 factis GmbH CompuGroup Medical Societas Europaea - - - -
2Aug18 AdvancedMD, Inc. Global Payments Inc. 700.00 - - -
1Aug18 BlueStrata EHR Mediware Information Systems, Inc. - - - -
30Jul18 Swisstec Health Analytics Ltd Genetic Technologies Limited - - - -
30Jul18 Avalon Health Services, LLC Hcsc Ventures Inc - - - -
27Jul18 Acumyn Inc. Elekta AB (publ) - - - -
24Jul18 Alert Services Corporation HealthLink Dimensions LLC - - - -
17Jul18 Allocate Software Limited HgCapital LLP - - - -
16Jul18 viaDirect Solutions PlayMaker, Inc. (nka:PlayMaker Health) - - - -
11Jul18 RadicaLogic Technologies, Inc. Datix Limited - - - -
10Jul18 Certain assets of Medical Columbus AG GHX Europe GmbH 21.93 - - -
9Jul18 Nuesoft Technologies, Inc. AdvancedMD, Inc. - - - -
2Jul18 ADS Data Systems, Inc. Consolo Services Group, LLC - - - -
22Jun18 AcuStream, Inc./CloudMed Solutions Revint Solutions - - - -
19Jun18 Cotiviti Holdings, Inc. Verscend Technologies, Inc. 5,118.56 737.56 6.7x 16.9x
13Jun18 Caradigm USA LLC Inspirata, Inc. - - - -
13Jun18 Life Account, LLC Alight Solutions LLC - - - -
11Jun18 SHYFT Analytics, Inc. Medidata Solutions, Inc. - - - -
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Contact Information 7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A and private capital transactions, and provide market assessments and benchmarking. As a close-knit team with a long history together and a laser focus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets. Securities offered through 7M Securities LLC.
Leroy Davis, Partner 704.899.5962 [email protected]
Tripp Davis, Partner 704.899.5762 [email protected]
Andy Johnston, Partner 704.899.5961 [email protected]
Ben Lunka, Managing Director 704.496.2995 [email protected]
Jeff Stoecklein, Managing Director 312.796.9330 [email protected]
Kristina Sergueeva, Director 704.899.5149 [email protected]
Neil Churman, Director 281.742.9340 [email protected]
John Cooper, Director 704.973.3996 [email protected]
Tim Frye, Director 704.973.3994 [email protected]
Nicholas Prendergast, Financial Analyst 704.973.3995 [email protected]
Ariail Siggins, Marketing Director 704.981.2908 [email protected]
Sydney Larese, Associate 704.973.3998 [email protected]
Marty Johnson, Associate 704.973.3999 [email protected]
Rory Julyan, Associate 704.981.2520 [email protected]
Garth Martin, Associate 704.973.3997 [email protected]
Chevonese Dacres, Analyst 704.981.2342 [email protected]