him industry trends driving m&a 2012

Healthcare Information & Media

(“HIM”)

Industry Overview & Trends Driving HIM M&A

August 2012

“[Patients] seek health information from media companies more than from government,

healthcare companies, and consumer companies combined.” - PwC, 2012

Healthcare Information & Media (“HIM”) Universe Defined

Content

Professional

Consumer

Distribution

DTC Advertising Healthcare

Spectr

um

Information & Media Spectrum

HC Social Networks

Waiting Room Media

Directories

Patient Education

Diagnostic Games/Awards

Digital Disease

Management

Doctor Reviews

Personal Health Magazines

Data Analytics

Practice Management

Tele-health/V-consults

Smart Monitors

Electronic Health Records

Appointment Scheduling

Digital Health Management

Electronic Medical Records

DTP Advertising Old CME

Prescribing Data

Research Data

Management

Clinical Collaboration

Provider Collaboration

Professional Journals

Physician Reference

HCIT Consulting Services

UGC Publishing

Lead-generation

Remote Monitoring

2

New CME

$0

$1

$2

$3

$4

$5

2006 2008 2010 2012 2014 2016 2018 2020

US National Healthcare Expenditures (In Trillions)

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 Research

Healthcare Spending Will Continue to Accelerate

Source: U.S. Department of Health & Human Services

Growth in healthcare spending is primarily being driven in the hospital care, physician & clinician

services and the prescription drugs segments

3

Key Trends Driving M&A

in the HIM Economy

1. Clinical Intelligence Is Driving Information Materiality

2. Marketers Roles Are Being Redefined By Outcomes Focus

3. Accountable Care Legislation Stimulating Pay-For-Performance

4. Legislation Driving EMR Adoption And Workflow Integration

5. Capital Overhang Fostering Healthcare Business Model Evolution

4

Clinical Intelligence is Driving Information Materiality

Drivers

Data driven customization is dividing

customers into revealing micro-segments

Data liquidity arises from the emergence of

intelligence across a continuum of care

Liquidity & customization has lead to

predictive intelligence

• data + analytics = information

GOAL: Audience Ownership

5

Selected Clinical Intelligence Deals

Buyer Target Target Description Price Year

OptumHealth Connextions CRM and analytics driven

consumer insight company $325 2011

PerkinElmer ArtusLabs Cloud computing infrastructure $15 2011

PerkinElmer Cambridge

Soft

Knowledge management in a lab

setting (SaaS) $205 2011

Oracle ClearTrial Clinical trial software (planning to

payment, SaaS) 2012

PerkinElmer Labtronics Electronic lab notebook (SaaS) 2011

Aetna Medicity Health information exchange $500 2011

Aetna Payflex Consumer focused digital HC

expense management $202 2011

Predictive intelligence has created a new level of data

materiality as Healthcare companies compete for the

opportunity to message and affect behavior

Marketers Roles are being Redefined by Outcomes Focus

Drivers

Changing Pharma landscape is forcing a

reassessment of multi-channel marketing mix

• 17 Brands ($34B in retail sales) will lose patents

over the next 2 years

Predictive Intelligence has created opportunity

to message and affect behavior

• Patient education

• Adherence

• Lead Generation

Fogg Behavior Model

Selected HC Information Deals

6


Dowden

Health Media

Priority

Integrated

Marketing

Multichannel marketing targeting

Payers and Providers 2011

Menlo

Ventures Lumos Labs

Subscription based neuroscience

games/exercises for consumers $33 2011

Remedy

Health Media

Intelecare

Compliance

Mobile medical adherence,

prescription compliance 2011

Medivo WellApps

Mobile & online symptom tracking

applications for patients with

chronic illnesses

2012

Vista Equity

Partners

Essential

Learning

Interactive e-learning solutions

for behavioral health issues 2012

InVentiv

Health

SDI Health's

Promo &

Audit

Business

Analytical physicians surveys

for Pharma 2012

Sharecare Real Age Online health measurement tool 2012

Source: www.behaviormodel.org.

Accountable Care Legislation Stimulating Pay-for-Performance

Drivers Selected ACA Driven Deals

Pay for Performance

Implications:

Soaring demand for and valuations of:

• comparative data companies

• digital practice management companies

• integrity service companies

Focus on Patient outcomes is driving Payer

and Provider information needs to converge

7


Harris

Corporation

Carefx

Corporation

Provides focused, data

aggregator that partners with

existing EMR

$155 2011

HMS Holdings Health Data

Sights

Payment integrity

services to Payers $400 2011

Verisk

Analytics

Bloodhound

Technologies

Payer-focused hosted claims

editing and analytics $82 2011

Verisk

Analytics

MediConnect

Global

Provides proprietary systems

and services that facilitate the

aggregation and analysis of

medical records

$349 2012

Experian Medical

Present Value

Eligibility verification,

credit scoring services,

and claims software

$185 2011

McKesson Portico

Enables Payers to design,

build, service and deliver

value-based reimbursement

to Providers

$90 2011

SAI Global Compliance

360

Payer/Provider cloud-based

regulatory compliance and risk

management SaaS

2012

General

Dynamics Vangent

HIE, EMR, data analytics,

business-process

outsourcing

$960 2011

Legislation Driving EMR Adoption & Workflow Integration

Drivers

Meaningful Use legislation has driven

growth the EMR industry

The tipping point of the materiality of

information has been reached

• Driving consolidation in EMR and across the entire continuum of care

Selected Practice Management Deals

8


Cerner Resource

Systems

Electronic, point-of-care

documentation services for LTCs 2011

Quadramed

NCR

Healthcare

Solutions

Distributor of kiosks &

tablets for registration 2012

Automatic

Data

Processing

ADP

AdvancedMD

EHR and practice

management SaaS $205 2011

Nuance Transcend Transcription & clinical

documentation services $321 2012

McKesson peerVue Workflow and communications

solutions 2012

CSC iSOFT International EMR & revenue

cycle management $188 2011

Lumeris NaviNet Real-time healthcare

communications network 2012

Passport

Health

STAT

Tech’s Enterprise scheduling 2012

$1,919.0

Und* Und* Und*

$3,970.0

$213.0

61

1 5

2

19

16

0

10

20

30

40

50

60

$0.0

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0

$4,000.0

HealthInformation

Management

PersonalHealthRecord

Mobile Health Telemedicine RevenueCycle

Management

ServiceProviders

HIM M&A 2011

US$ in Million 2011 Total No. of Deals

Capital Overhang Fostering Healthcare Business Model Evolution

Drivers

Competition is heating up: private equity

players, flush with cash, are chasing

digital/SaaS • Typically favor platform/bolt-on strategies with

operating leverage

• $100 billion of which is nearing the end of its

investment horizon

• Low % of digital revenue can make a 2-3x

multiple impact on price

Selected Private Equity Deals

Capital Overhang of US PE Investors by Vintage Year

9

Buyer Target Description Price Year

InVentiv

(TH Lee)

Ingenix, i3

CRO Clinical development business $400 2011

InVentiv

(TH Lee)

Kforce

Clinical

Research

Outsourcing solutions to

pharmaceutical, biotech and

medical device companies

$50 2012

The

Riverside

Company

Avatar

Internat’l

Patient satisfaction and

Physician engagement surveys 2011

Avatar

(Riverside)

HR Solutions

Internat’l

Management consulting firm

specializing in employee and

physician engagement

2011

T-System

(Francisco

Partners)

Practice

Management

Associates

Medical billing 2012

T-System

(Francisco

Partners)

Clinical

Coding

Solutions

Medical charge management and

auditing services 2012

API

Healthcare

(Francisco

Partners)

Concerro Cloud-based SaaS for HC staffing

& scheduling systems 2012

Gateway EDI

(Apax) NHXS

SaaS that helps medical practices

manage physician reimbursement 2012

Digital Health Ecosystems ARMS RACE

Employers

Commercial

Medicaid

Med

Devices

Biotech

CROS AROs

ACOs

Hospitals

Medical

Professionals Associations

Politicians

Policy

Regulators

PBMs

Pharmacies

Organized

Groups

Providers

Payers

Medicare

Pharma

Generics

Large

Pharma

Politics

Patients

$$$

Consulting Business

Comprehensive Pharma

management consultancy

Pharma Ecosystem Case Study

THLee’s Strategic Vision. Create an organization that relieves the pain points of Pharma.

Corporate Timeline:

May 2010

Joe Massaro appointed CFO, previously

worked as MD at Liberty Lane Partners,

former SVP of Global Business Services

at Fisher Scientific International

inVentiv Health taken

private after acquisition by

Thomas H. Lee Partners

Sept 2010

Acquires Kforce

Clinical Research

for $50M

Jan 2011

Paul Meister appointed CEO,

founder/CEO of Liberty Lane

Partners, former Chairman of

Fisher Scientific International

Jan 2011

inVentiv acquires the Campbell

Alliance Group, a healthcare related

management consulting firm, for

$400M

Jan 2011

inVentiv acquires i3 clinical

development businesses of

Ingenix from OptumInsight for

$140M

May 2011

inVentiv acquires

PharmaNet Development

Group, a clinical

development services

company, for $600M

Mar 2012

Clinical Business (50% of rev)

Clinical trial staffing

Drug development service

provider

Pharmaceutical, life science

and device staffing

Kforce Clinical Research

Commercial Business

Providing people, tools, and

technology to support the

successful commercialization of

pharmaceuticals, biologics, and

medical device or diagnostic

products

11 Source: inVentiv Health Strategy Team

Today

Value

estimated

at ~$2B

Full-service brand identity consultancy

Education and communications for advocacy

Clinical trial staffing solution

Global PR and marketing

Full service healthcare ad agency

Digital healthcare ad agency

Multifaceted creative services company

Brand perception company

Canadian full service healthcare ad agency

Provider of live/on-demand event services

Ad agency known for creating experiences

Patient relationship marketing programs

Commercial Business holdings detail:

Ad agency focused in oncology/immunology

Full-service communications/events

Patient educational information

Analyzes claims data to reduce costs

Patient medication use and risk management

Patient access and reimbursement services

Customized sales solutions

Sales team recruitment

Specialized medical education

Digital ad agency selling accelerator

Non-personal healthcare marketing

Pharmaceutical service and support

12

Pharma Ecosystem Case Study

Provider Ecosystem Case Study

athenahealth’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:

1997

Co-founders

Todd Park and

Jonathan Bush

purchased a

small practice

and incorporated

as athenahealth

Developed

athenaCollector:

a billing and

practice mgmt

tool

2000

Expanded the

technology with

athenaClinicals

2006

Company

valued at $76M

Aug 2007

Sept 2007

IPO’d on

NASDAQ

Aug 2008

Acquired Crest Line

Technologies for $7.7M,

later re-branded as

athenaCommunicator in

2010

Acquired Anodyne

Health Partners for $30M

from VC’s, later used to

build out analytics

business

Acquired Proxsys for

$36M, later re-brands as

athenaCoordinator

Oct 2009

Jul 2011

Acquired MDX

Medical/Vitals

for $3M

Sept 2011

Today

Company

has ~$2.8B

market cap

Source: athenahealth Strategy Team

13

Provider Ecosystem Case Study: athenaNet – “The Hedgehog”

athenaCollector

• Physician billing and

practice management

athenaRules

• Patented billing Rules Engine

enables client performance

benchmarked across athenaNet

athenaCoordinator

• Order transmission and

patient registration

Anodyne Analytics

• Data visualization tools and

insight into client’s practice

performance

athenaClinicals

• Electronic medical records

integrating Provider and Payer

intelligence

athenaService

• Over 1,000 people who

interact with clients at all

of the key steps in the

revenue cycle

athenaCommunicator

• Order Transmission

insurance pre-certification

and patient registration

“Driving Value

to Doctors

through the

last 10 feet”

- Jonathan

Bush

14

Payer Ecosystem Case Study

UnitedHealthcare’s Strategic Vision. Create a Patient & Primary Care Provider-centric experience

that 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 structures

Corporate timeline:

Q1 2011

OptumHealth acquires

care mgmt company,

INSPIRIS, from a

consortium of VC’s at

an undisclosed amount

United rebrands itself

to match its market

facing businesses,

thereby creating the

Optum segments

Mar 2011

Optum introduces the

Health Cloud Platform

May 2011


state and federal care

service, Logistics

Health Inc from

Gundersen Lutheran

Aug 2011

OptumInsight sells it’s

i3 clinical development

business to inVentiv

Health for $140M

Jun 2011


business process and

technology outsourcing

company, Connextions,

from New Mountain for

$325M

Sept 2011

OptumInsight acquires toxicology

and clinical research consultancy,

GlobalTox, from MTE Consultants

for an undisclosed amount

Today

15 Source: UnitedHealthcare Strategy Team

OptumHealth

• Care Solutions

• Behavior Solutions

• Financial Services

• Collaborative Care

• Logistics Health

OptumRx

• PBM services

• Mail order and specialty

fulfillment

• Claims processing and

retail network/rebate

contracting

Payer Ecosystem Case Study

OptumInsight

• Provider solutions including financial performance improvement,

compliance, clinical workflow and accountable care solutions

• Payer solutions including network performance, clinical quality,

operational efficiency/payment integrity and risk optimization

• Government solutions including program integrity, 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

Payer Ecosystem Case Study: Health Cloud

HIPAA compliant tools:

Optum Care Suite

Healthcare Scheduling Exchange

Dashboards & Hosting

Optum Care Population: Condition specific

Patient registry analyzed for health intelligence

Foundation for an Accountable Care Organization Patient Centric, Outcome Focused

Healthcare Scheduling Exchange (HSE):

Provider referral & secure Patient messages

Optum Care Pathways: Establish care plan

across Provider continuum; access to EMRs

Optum Care Coordination: Track &

document care w/ multiple Providers

Optum Care Quality: Aggregate & analyze outcomes from

Payer claims, Provider records, and Patient reports

17

Payer/ACO Ecosystem Case Study

18

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:

Nov. 2010

Joeseph Zubretsky and Meg

McCarthy are appointed

Executive VP’s; Mark

Bertolina becomes CEO.

Acquires health care

analytics company

ActiveHealth

Management for

$400 million.

May 2005 Jan. 2011

Enters into a strategic

partnership with leading

pharmacy CVS Caremark.

Acquires Health

Information Exchange

company Medicity for

approximately $490

million.

Jan. 2011

Jun. 2011

Acquires 3rd party

administrator Prodigy

Health for approximately

$600 million.

Acquires health plan

administrator Payflex

for approximately

$202 million.

Jul. 2011

Acquires Healthagen,

developer of iTriage,

top rated mobile

health app.

Dec. 2011

Today

Aetna’s market

cap is ~$14.2B

Source: Aetna Strategy Team, SEC filings

Payer/ACO Ecosystem Case Study: Convergence

19

Industry observers are seeing a path to convergence of Payers and Providers

Lora Lindsey

Healthcare Information & Media

Passionate about connecting People and Ideas

in Health Information & Media (HIM)™

Email [email protected]

Mobile 646.734.8375

Skype Lora.Lindsey1

Twitter @HIMBanker

LinkedIn www.linkedin.com/pub/lora-lindsey/0/185/225

Pinterest www.pinterest.com/HIMBanker

Crunchbase www.crunchbase.com/

For More Information

Over the course of her career, Lora has been

involved in the execution of over 44 deals

including: 12 M&A transactions, 16 equity

financings, 10 debt financings and 6 other advisory

assignments:

• Vice President, Media IB, Bear Stearns

• 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,

distressed workouts (chapters 11 & 7), converts

• Equity: public equity (large, small, and nano

cap), PIPES, private placements, alternative

investments (venture and private equity)

Securities Industry Registration: Series 79

BBA, University of Washington

MBA, Columbia Business School

him industry trends driving m&a 2012

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