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MOSS ADAMS CAPITAL LLC

Healthcare Providers & Facilities

Market Monitor

Fall 2015

2 MOSS ADAMS CAPITAL LLC Healthcare Providers & Facilities

Selected Healthcare Transactions


Contents

Section

Industry Update

Public Company Stock Performance & Valuations

Recent M&A Activity & Valuations

Mid-Market M&A Overview

Moss Adams Overview

Contact Information

Page

4

6

11

14

17

22


Obama Signs Budget Deal that Cuts Hospital Payments

On November 2nd, President Obama signed into law a two-year budget deal that will curb payments to new hospital-owned physician practices and extend other reimbursement cuts. Under the deal, commencing in 2017 Medicare will no longer pay certain hospital-owned physician practices higher rates than independently owned practices. The reimbursement changes will apply to hospital-owned physician practices that were acquired or opened since 11/2/15, and that are more than 250 yards from a hospital's main campus.

The American Hospital Association (“AHA”) and the Federation of American Hospitals have both spoken out against severely limiting hospitals’ ability to receive HOPD reimbursement for services furnished at off-campus facilities. (The Advisory Board - 11/3/15).

Consolidation Among Health-Insurers Increases, Following Similar HC Provider Consolidation

Sparked largely by the Affordable Care Act, the HC provider niche has seen a surge of consolidation in recent years – now health insurers are following suit. And the pace of consolidation is accelerating. Recently, large insurers announced acquisitions that plan to consolidate the five largest healthcare insurers into three, with Aetna Inc. announcing plans to acquire Humana Inc., and Anthem Inc. planning to acquire Cigna Corp.

“As providers have … consolidated, payers have been finding they’re getting pushed by providers” who are telling the payers ”Take my rates or you’ll have no network … these [insurer consolidation deals] aim to help balance the power.” These planned mergers/acquisitions, in turn, have resulted in concern from healthcare providers and regulators, drawing increased scrutiny from Government officials. (Anna Wilde Mathews, The Wall Street Journal - 9/21/15).

NFP Hospital Financial Metrics Improve, according to Moody’s and S&P During the week of September 7th, two major credit ratings agencies (Moody’s & S&P) released reports showing that operating margins improved for NFP hospitals and health systems. These improved performance metrics have led both ratings agencies to upgrade the outlook for the NFP healthcare sector, to stable from negative.

“Median trends overall were favorable in 2014 and they really provided us with evidence of stability in the sector”…. “Overall, we expect the [improving] trends for 2014 to continue through 2015” (Jennifer Soule, S&P). The ratings agencies also noted that the current environment continues to favor larger providers and hospital systems vs. standalone hospitals, as well as a reemergence of a “credit gap” between larger and smaller provider systems. (Beth Kutscher, Modern Healthcare - 9/11/2015).

(Continued)

Industry Update


Skepticism Grows Around the Medicare Readmissions Program

Medicare is four years into its drive to reduce the number of patients who are readmitted to hospitals within a few weeks of being discharged. Significantly, according to a review of data provided by the Government, 2,665 hospitals will have their federal reimbursements reduced by Medicare in fiscal year 2016 (Modern Healthcare). This is an increase as compared to the same data provided for the 2015 fiscal year. Further, according to the report, only 799 hospitals will not be penalized, while 514 hospitals will face a penalty of 1% or more, and 38 hospitals will face the maximum 3% penalty.

As a reminder, the payment reductions are part of the third phase of the Hospital Readmissions Reductions Program (“HRRP”), which was launched in October 2012 with the goal of reducing healthcare costs, by curbing hospital readmission rates. (Sabriya Rice, Modern Healthcare - 8/8/2015)

CMS Announces 0.9% Hospital Payment Increase for 2016

The Centers for Medicare & Medicaid Services (“CMS”) lowered its final increase for hospital rates in 2016 to just 0.9%, down from the 1.1% increase proposed in April. “The move will heighten pressure on the nation’s 3,400 acute case hospitals to rein in costs and reduce unnecessary spending.” CMS posted a final rule on July 31st, 2015, that said long-term care hospitals can expect to see a decrease in payments by $250 million next year.

CMS’ 2,100+ page ruling/announcement also outlines new quality reporting requirements for acute care hospitals and long-term care facilities, as well as for cancer hospitals that are exempt from the prospective payment system. (Sabriya Rice, Modern Healthcare - 7/31/15).

Industry Update (cont.)


The overall outlook for the HC Providers industry group remains positive, with the rate of revenue growth (note graph on right, below) for all HC niches expected to outpace the general S&P 500 index over the next 12 months.

EV/EBITDA multiples have generally increased, in line with the S&P 500 index. Valuations vary by industry niche, with Senior/Assisted Living at the high end, at 13.1x, and Acute Care Hospitals lagging, at 7.8x.

HC Providers & Facilities – Valuations Vary Across Industry Niche

Note: As of 10/26/2015. Note: The Healthcare Providers & Facilities indices are composed of the public companies included on pages 12-14. Estimated growth is based on the median estimates of Wall Street analysts. Source: S&P Capital IQ, WSJ.

The Senior/Assisted Living HC niche, as tracked by MAC, had a significant, temporary, increase in valuation, due to a decline in Brookdale Senior Living’s EBITDA, as a result of merger-related expenses.

Revenue growth in the Post-acute Care/Rehab niche is now expected to outpace the Senior/Assisted Living HC niche, with 21.9% revenue growth expected over the next 12 months.

Healthcare Providers & Facilities vs. S&P Next 12 Months: Estimated Sales Growth

Senior / Assisted Living

13.3x

Healthcare Distributors

12.0x

Home Care / Home

Health / Hospice

12.0x

Healthcare Services

11.2x

S&P 500

10.6x

Post-Acute Care / Rehab

9.8x

Acute Care Hospitals

7.8x 5.0x

7.0x

9.0x

11.0x

13.0x

15.0x

17.0x

19.0x

21.0x

23.0x

25.0x

Mar

ket

Per

form

ance


HC Providers & Facilities – Recent Stock Performance As noted in the table below, over the past three years, shares of publicly traded companies in three of the six HC industry niches,

tracked by MAC, have significantly outperformed the overall S&P 500 index. At the same time, publicly traded shares in three of the HC niches have underperformed the overall S&P 500 index,

The three HC industry segments that have outperformed the S&P 500 index’s performance (of +46.7%) are Home Care/Hospice (+125.8%), Acute Care Hospitals (+119.6%), and Healthcare Distributors (+100.4%).

Note: The Healthcare Providers & Facilities indices are composed of the public companies included on pages 12-14. Source: Moss Adams Capital, S&P Capital IQ.

3-Year Indexed Stock Price Performance

Percent (%) Change:

Oct ’12 - Present

Home / Hospice Care - 125.8%

Acute Care Hospitals - 119.6%

Healthcare Distributors - 100.4%

S&P 500 Index - 46.7%

Post-Acute Care / Rehab - 40.9%

Healthcare Services - 35.4%

Senior / Assisted Living - (6.7% )

-50%

0%

50%

100%

150%

200%

250%

Mar

ket

Per

form

ance


Valuation Metrics: Acute & Post-Acute Care

Note: Not meaningful (NM) if EV/Revenue is greater than 5x, or EV/EBITDA is greater than 20x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. . NTM figures are based on the median estimate of Wall St. analysts. Sources: S&P, Capital IQ, Wall Street Journal.

($US in millions, except per share amounts)

11/5/15 TTM Data EV Multiple

Company Name

Share

Price

52 Week

High - Low

Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

Acute Care Hospitals

HCA Holdings, Inc. $68.59 $95.49 - $43.91 $27,962 $58,743 $39,065 $7,691 19.7% 5.0% 4.1% 1.5x 7.6x 1.4x 7.3x

Universal Health Services Inc. 122.91 148.57 - 95.63 12,171 15,747 8,765 1,654 18.9% 16.3% 6.3% 1.8x 9.5x 1.5x 9.0x

Community Health Systems, Inc. 30.05 65.00 - 25.36 3,551 20,843 19,557 2,806 14.3% 2.7% 7.0% 1.1x 7.4x 1.0x 6.9x

Tenet Healthcare Corp. 33.62 60.93 - 26.62 3,351 19,611 18,085 2,270 12.6% 13.5% 7.8% 1.1x 8.6x 1.0x 8.0x

Acadia Healthcare Company, Inc. 72.64 85.62 - 54.41 5,204 7,043 1,594 342 21.4% 29.1% 38.4% 4.4x 20.6x 3.4x 14.9x

LifePoint Health, Inc. 70.75 88.18 - 58.61 3,079 5,129 5,107 650 12.7% 12.4% 15.8% 1.0x 7.9x 0.9x 6.8x

Median $17,679 $13,425 $1,962 16.6% 13.0% 7.4% 1.3x 8.3x 1.2x 7.7x

Average $21,186 $15,362 $2,569 16.6% 13.2% 13.2% 1.8x 10.3x 1.5x 8.8x

Post-acute Care/Rehab

HEALTHSOUTH Corp. $35.18 $48.37 - $33.00 $3,217 $5,567 $2,857 $653 22.8% 22.9% 18.3% 1.9x 8.5x 1.6x 7.2x

Select Medical Holdings Corporation 12.16 17.20 - 10.07 1,595 4,253 3,420 363 10.6% 21.9% 32.5% 1.2x 11.7x 1.0x 8.8x

Kindred Healthcare Inc. 11.82 24.66 - 12.18 991 4,350 6,539 411 6.3% 15.2% 68.0% 0.7x 10.6x 0.6x 6.3x

The Ensign Group, Inc. 48.08 54.08 - 37.91 1,241 1,279 1,246 105 8.4% 22.3% 50.7% 1.0x 12.2x 0.8x 8.1x

AAC Holdings, Inc. 24.25 46.60 - 15.09 543 646 175 33 18.6% 41.5% 43.7% 3.7x 19.9x 2.6x 13.8x

Civitas Solutions, Inc. 26.56 27.85 - 14.08 985 1,609 1,343 143 10.6% 4.3% 10.1% 1.2x 11.3x 1.1x 10.2x

US Physical Therapy Inc. 52.43 56.37 - 37.44 651 701 320 53 16.7% 9.9% (2.1%) 2.2x 13.1x 2.0x 13.4x

Median $1,609 $1,343 $143 10.6% 21.9% 32.5% 1.2x 11.7x 1.1x 8.8x

Average $2,629 $2,271 $251 13.4% 19.7% 31.6% 1.7x 12.5x 1.4x 9.7x

NTM Est. Growth


Valuation Metrics: Senior / Assisted Living & Homecare / Hospice

Note: Not meaningful (NM) if EV/Revenue is greater than 5x, or EV/EBITDA is greater than 20x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts. Sources: S&P, Capital IQ. Wall street Journal.



Company Name

Share

Price

52 Week

High - Low

Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

Senior/Assisted Living

Brookdale Senior Living Inc. $22.98 $39.89 - $20.27 $4,240 $10,336 $4,240 $766 18.1% 22.1% 18.7% 2.4x 13.5x 2.0x 11.4x

Genesis Healthcare, Inc. 5.27 9.32 - 4.85 809 5,666 5,056 438 8.7% 15.1% (34.7%) 1.1x 12.9x 1.0x 19.8x

Capital Senior Living Corp. 23.68 27.75 - 19.20 699 1,420 404 72 17.7% 8.0% 27.4% 3.5x 19.8x 3.3x 15.5x

Five Star Quality Care Inc. 3.08 5.07 - 2.74 151 199 1,115 17 1.5% 26.1% 126.8% 0.2x 11.6x 0.1x 5.1x

Median $3,543 $2,678 $255 13.2% 18.6% 23.0% 1.8x 13.2x 1.5x 13.5x

Average $4,405 $2,704 $323 11.5% 17.8% 34.5% 1.8x 14.5x 1.6x 13.0x

Homecare/Home Health/Hospice

Chemed Corp. $158.50 $158.72 - $100.49 $2,675 $2,773 $1,524 $218 14.3% 4.4% 9.6% 1.8x 12.7x 1.7x 11.6x

Amedisys Inc. 43.87 48.34 - 24.62 1,477 1,407 1,226 100 8.1% 3.7% 15.8% 1.1x 14.1x 1.1x 12.2x

The Ensign Group, Inc. 48.08 54.08 - 37.91 1,241 1,279 1,246 105 8.4% 22.3% 50.7% 1.0x 12.2x 0.8x 8.1x

LHC Group, Inc. 47.59 51.83 - 22.37 855 876 775 78 10.0% 6.7% 3.1% 1.1x 11.3x 1.1x 11.0x

Almost Family Inc. 43.45 50.48 - 26.25 427 504 512 37 7.3% 18.2% 26.7% 1.0x 13.5x 0.8x 10.6x

Addus HomeCare Corporation 22.08 38.08 - 19.65 244 232 335 24 7.2% 10.4% 18.4% 0.7x 9.7x 0.6x 8.2x

Median $1,077 $1,001 $89 8.3% 8.6% 17.1% 1.1x 12.5x 0.9x 10.8x

Average $1,178 $936 $94 9.2% 11.0% 20.7% 1.1x 12.2x 1.0x 10.3x

NTM Est. Growth


Valuation Metrics: Healthcare Services & Distributors

Note: Not meaningful (NM) if EV/Revenue is greater than 5x, or EV/EBITDA is greater than 20x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts. Sources: S&P, Capital IQ, Wall Street Journal.



Company Name

Share

Price

52 Week

High - Low

Market

Cap

Enterprise

Value Sales EBITDA

EBITDA

Margin Sales EBITDA

TTM

Sales

TTM

EBITDA

NTM

Sales

NTM

EBITDA

Healthcare Services

Laboratory Corp. of America Holdings 121.93 $131.19 - $98.54 12,339 18,440 7,774 1,567 20.2% 16.9% 21.3% 2.4x 11.8x 2.0x 9.7x

Quest Diagnostics Inc. $68.65 89.00 - 60.07 $9,841 $13,617 $7,527 $1,489 19.8% 0.1% 4.2% 1.8x 9.1x 1.8x 8.8x

Team Health Holdings, Inc. 58.75 70.21 - 45.45 4,264 4,893 3,408 338 9.9% 12.2% 24.2% 1.4x 14.5x 1.3x 11.7x

IPC Healthcare, Inc. 79.75 80.23 - 37.68 1,392 1,517 729 67 9.1% 9.4% 9.1% 2.1x 22.8x 1.9x 20.9x

Healthways Inc. 12.23 23.30 - 9.93 441 677 783 52 6.6% (0.2%) 21.5% 0.9x 13.1x 0.9x 10.8x

Median $4,893 $3,408 $338 9.9% 9.4% 21.3% 1.8x 13.1x 1.8x 10.8x

Average $7,829 $4,044 $702 13.1% 7.7% 16.1% 1.7x 14.2x 1.6x 12.4x

Healthcare Distributors

McKesson Corporation $185.94 $243.61 - $160.10 $42,786 $47,381 $187,716 $4,213 2.2% 4.3% 28.5% 0.3x 11.2x 0.2x 8.7x

Cardinal Health, Inc. 88.20 91.91 - 74.76 29,016 31,201 106,516 2,842 2.7% 12.5% 16.0% 0.3x 11.0x 0.3x 9.5x

AmerisourceBergen Corporation 97.89 120.68 - 86.49 21,164 22,399 135,962 1,611 1.2% 9.1% 50.8% 0.2x 13.9x 0.2x 9.2x

Henry Schein, Inc. 154.21 156.01 - 122.23 12,788 14,172 10,481 917 8.8% 6.4% 8.1% 1.4x 15.5x 1.3x 14.3x

Patterson Companies, Inc. 48.12 53.07 - 42.62 4,849 6,336 4,579 440 9.6% 22.9% 8.3% 1.4x 14.4x 1.1x 13.3x

Owens & Minor Inc. 36.44 36.44 - 31.89 2,292 2,729 9,777 270 2.8% 1.4% 8.2% 0.3x 10.1x 0.3x 9.4x

PharMerica Corporation 30.55 36.96 - 19.42 930 1,265 2,003 134 6.7% (0.1%) 3.7% 0.6x 9.5x 0.6x 9.1x

Median $14,172 $10,481 $917 2.8% 6.4% 8.3% 0.3x 11.2x 0.3x 9.4x

Average $17,926 $65,290 $1,490 4.8% 8.1% 17.6% 0.6x 12.2x 0.6x 10.5x

NTM Est. Growth


Selected Recent M&A Transactions - 9/15- Present (a)

Sources: S&P, Capital IQ. (a) Public Companies in bold.

$ in millions

Transaction

Announced Acquirer/Investor Target Target Description Value

10/22/15 Berkshire Partners LLC Affordable Care, Inc. Provides denture and dental care services in the United States. -

10/20/15 Prime Healthcare Services, Inc. River Valley Health Partners Provider of healthcare services. -

10/16/15 BayCare Health System, Inc. Bartow HMA, LLC Operates an acute care medical facility that serves patients in South Lakeland, Bartow, Ft. -

10/16/15 CPF Senior Living Acquisitions LLC Dirigo Pines Retirement Community, LLC Operates retirement communities. -

10/15/15 Addiction Research and Treatment, Inc. MedMark Services, Inc. Provides addiction treatment and primary healthcare services in the United States. -

10/13/15 Vision Group Holdings, LLC Global Laser Vision San Diego Lasik Center Operates a laser eye surgery facility in California. -

10/12/15 Prospect Medical Holdings, Inc. Crozer-Keystone Health System Inc. Operates a chain of hospitals. -

10/08/15 MyLife Recovery Centers, Inc. Start Fresh Private Management, Inc. Provides drug and alcohol addiction treatment services for patients. -

10/07/15 Hospice Compassus, Inc. Hospice Advantage, Inc. Provides end-of-life care services in the Midwest and South United States. -

10/09/15 Global Medical REIT, Inc. Lancaster Regional Hospital, L.P. Owns and operates an acute care general hospital in Lancaster, Texas. $20.5

10/07/15 Physiotherapy Corporation The Hammonds Centre, LLC Provides physical therapy services to patients. -

10/06/15 Jefferson Health System, Inc. Aria Health System Operates acute care hospitals, and a network of outpatient centers. -

09/30/15 Epic Health Services, Inc. HomeFirst Healthcare Services, LLC Provides homecare, personal care, private duty nursing, and pediatric care services. -

09/30/15 Meadville Medical Center Titusville Area Hospital Owns and operates an acute care hospital. -

09/23/15 Nobilis Health Corp. Freedom Pain Hospital Operates a hospital that offers treatment for chronic pain. $2.4

09/22/15 Lutheran Homes of Michigan, Inc.Livonia Woods Nursing and Rehabilitation

CenterOwns and operates a care center to provide short term rehabilitation and long term care. -

09/21/15 DaVita HealthCare Partners, Inc. (NYSE:DVA) The Everett ClinicA multi-specialty physician group that provides healthcare to patients in Snohomish County,

WA.-

09/21/15 Prime Healthcare Services, Inc. Lehigh HMA, LLC Operates a hospital in Lehigh Acres. -

09/21/15 ER Holdings ER Centers of America, Inc. Provides medical care for emergency and urgent medical conditions in Texas. -

09/18/15 Universal Health Services Inc. Foundations Recovery Network, LLC Provides an integrated treatment for co-occurring mental health and substance use disorders. $350.0

09/15/15 U.S. Healthworks, Inc. PRO MED Medical Care Centers Provides urgent care services to patients in Austin. -

09/15/15 NorthStar Healthcare Income, Inc.; Griffin-American Healthcare REIT III, Inc.; Northstar Asset Management Group Inc.Trilogy Investors LLC Owns and operates purpose-built integrated senior healthcare campuses. $1,125.0

09/10/15 Orthology, Inc. NYSportsMed Operates a sports medicine, physical therapy, and athlete performance improvement clinic. -

09/10/15 Riceland HealthCare, L.P. Physician's Link Home Care, PLLC Offers specialty care services for health and wellness at home. -

09/04/15 Vision Group Holdings, LLC Advanced Laser Center of Oklahoma, LLC Operates eye care centers in Oklahoma. -

09/03/15 LHC Group, Inc. Halcyon Home Health, LLC Provides hospice and home health services. $58.5


Recent Notable and Disclosed M&A Transactions (a)

M&A Transactions in the table above include those with EV above $5 million and with reported deal metrics. Sources: S&P, Capital IQ. (a) Public companies in bold.

Deal Revenue EBITDA

Size Multiple Multiple

Transactions Represented 17 14 9

High $1,600.0 7.7x 27.5x

Median $415.0 1.6x 10.3x

Low $29.0 0.6x 4.9x

Mean $543.2 2.1x 11.0x

$ in millions

Transaction

Announced Acquirer/Investor Target Target Description Value Metric

10/16/15 RadNet (Nasdaq:RDNT) Diagnostic Imaging Group Owns and operates 17 imaging centers. $65.4 0.9x Rev

09/18/15Universal Health Services

(NYSE:UHS)Foundations Recovery Network

Provides treatment for persons with a dual diagnosis of substance addiction

and mental health disorders.$350.0

09/16/15 Fujian Thai Hot InvestmentAlliance HealthCare Services

(Nasdaq:AIQ)Provides outpatient diagnostic and radiation therapy services in the U.S. $699.0 1.6x Rev; 5.8x EBITDA

09/15/15 Griffin-American Healthcare REIT Trilogy InvestorsOwner-operator of integrated senior healthcare campuses throughout the

Midwest.$1,125.0

09/03/15 LHC Group (Nasdaq:LHCG) Halcyon HospiceIndependent providers of hospice services with 16 locations across three

states.$58.5 1.4x Rev

09/03/15 Molina Healthcare (NYSE:MOH) Providence Human Services National provider of behavioral and mental health services. $200.0 0.6x Rev

09/02/15 BayBridge Seniors Housing Amica Mature Lifestyles (TSX:ACC) Luxury seniors residences, with 26 properties throughout Canada. $835.0 7.7x Rev; 27.5 EBITDA

08/31/15 Encompass Home Health CareSouth Health System Portfolio of 45 home health locations. $170.0 1.6x Rev

08/24/15DaVita HealthCare Partners

(NYSE:DVA)Renal Ventures Management Operates 36 dialysis clinics in 6 states. $415.0

08/04/15 Team Health (NYSE:TMH) IPC Healthcare (Nasdaq:IPCM) Acute hospitalist and post-acute provider organization. $1,600.0 2.2x Rev; 10.7x EBITDA

07/30/15 Envision Healthcare (Nasdaq:EVHC) Rural/Metro Provider of emergency and non-emergency ambulance transportation. $620.0 1.0x Rev; 10.3x EBITDA

07/27/15Medical Properties Trust

(NYSE:MPW)Capella Healthcare Owns and operates acute care and specialty hospital facilities in six states. $1,500.0 1.9x Rev; 14.3x EBITDA

07/01/15 Madison Dearborn Partners Pattersori Companies' Medical Business Provides rehabilitation, assistive, and splitting products. $715.0 1.5x Rev; 10.6x EBITDA

06/12/15Quantum International Income Corp.

(TSXV:QIC)Columbus Hospital LTACH LLC Operates an acute care specialty hospital for higher acute patients. $29.0 1.1x Rev

06/11/15 HEALTHSOUTH Corp. (NYSE:HLS) Reliant Hospital Partners, LLC Owns and operates rehabilitation hospitals in the United States. $730.0 2.9x Rev; 8.9x EBITDA

06/09/15 Patient Home Monitoring Sleep ManagementProvides home based medical services focused on patients with chronic

sleep conditions,$88.1 2.1x Rev; 4.9x EBITDA

05/13/15 American Addiction Centers, Inc. The Oxford Centre, Inc. Operates a drug and alcohol addiction treatment center. $35.0 2.9x Rev; 6.3x EBITDA


Overview of Selected M&A Transactions TeamHealth Holdings (NYSE:TMH) acquires IPC Healthcare (Nasdaq:IPCM) August 4, 2015

On August 4, 2015, TeamHealth, a healthcare staffing and administrative firm based out of Knoxville, TN, agreed to buy IPC Healthcare, a hospitalist services provider based out of North Hollywood, CA, for a reported $1.6 billion.

The deal increased the number of TeamHealth HC professionals to 15,000, and expands post-acute care offerings to as many as 2,000 facilities across 28 states.

According to TeamHealth SVP Patricia Ball, “the more diverse network of services will put the company in a better position to work under a value-based payment model….this acquisition creates a wonderfully physician-focused organization.”

Note: At the time of announcement, analysts speculated that a significant driver of the acquisition was to make TeamHealth more marketable in a sale event: On October 20, 2015, TeamHealth announced it was being acquired by AmSurge Corp.

Medical Properties Trust (NYSE:MPW) acquires Capella Healthcare July 27, 2015

On July 27, 2015, Medical Properties Trust, Inc. (“MPT”), a real estate investment trust (REIT) focused on developing and acquiring healthcare facilities, agreed to buy Capella Healthcare (“Capella”), a privately owned provider of healthcare services based in Franklin, TN, for $1.5 billion. Capella is one of the ten largest for-profit hospital companies in the United States.

With the acquisition, MPT added seven acute care hospitals across five states to its portfolio, representing more than two million sq. f.t of space, and 1,169 beds. The acquisition was the largest in MPT’s history.

“The acquisition of Capella, which in a single stroke accretively increases our portfolio of high quality hospital real estate by almost 20 percent, is simply the next step along our track record of creating strong double digit growth,” said Edward K. Aldag, Jr., Chairman, President and CEO of MPT.

Sources: Company press releases, S&P Capital IQ, Modern Healthcare.

Providers & Facilities Mid-Market M&A*

* YTD figures represent total year-to-date M&A as of

October 27, 2014 & 2015. Middle market M&A includes

transactions with EV < $500mm, and transactions with

undisclosed EV.

147 150

255

287 285

252

288

233

221

0

50

100

150

200

250

300

350

2008 2009 2010 2011 2012 2013 2014 2014YTD*

2015YTD*

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Public Company Equity Offerings

U.S. Public equity offerings of at least $5 million the last three years. Sources: S&P Capital IQ and PitchBook Data Inc.

$ in millions

Transaction

Date Company Funding Type Target Description Value

10/01/15 Surgery Partners (SGRY) IPO Portfolio of 99 surgical facilities across 28 states. $271.4

08/31/15 PharMEDium Healthcare IPO National provider of compounded sterile preparations to acute care hospitals. $100.0

08/31/15 American Renal Associates Holdings, Inc. IPO Operates 181 dialysis clinic locations in 23 states. NA

07/31/15 Adeptus Health (ADPT) Follow-On Equity Offering Owns and operates a network of independent freestanding emergency rooms. $200.2

07/01/15 Teladoc (TDOC) Follow-on Equity Offering Provider of 24/7 tele-health consultations. $135.0

06/25/15 BioCorRx Inc. (OTCPK:BICX) PIPE Operates alcoholism rehabilitation and treatment centers in California. $10.0

06/05/15 Evolent Health (EVH) IPO Provider of population health managed services solutions. $891.0

05/21/15 Community Healthcare Trust (CHCT) IPO REIT focused on acquiring non-urban healthcare properties. $119.7

05/04/15 Acadia Healthcare Company, Inc. (NasdaqGS:ACHC) Follow-on Equity Offering Provider of inpatient behavioral health care services. $299.3

03/31/15 Convalo Health International Corp. (TSXV:CXV) PIPE Operates as an intensive outpatient treatment services company. $14.1

03/31/15 AdCare Health Systems, Inc. (AMEX:ADK) PIPE Owns and manages skilled nursing facilities and assisted living facilities. $8.5

03/13/15 Surgical Care Affiliates, Inc. (NasdaqGS:SCAI) Follow-on Equity Offering Owns and operates a network of multi-specialty ambulatory centers and surgical hospitals. $232.8

03/09/15 BioScrip, Inc. (NasdaqGS:BIOS) PIPE Provides home infusion and other home care services. $83.9

02/09/15 The Ensign Group, Inc. (NasdaqGS:ENSG) Follow-on Equity Offering Provides skilled nursing and rehabilitative care services. $102.5

01/06/15 Providence Service Corp. (NasdaqGS:PRSC) Follow-on Equity Offering Provides and manages government sponsored non-emergency transportation services. $65.5

11/17/14 Kindred Healthcare Inc. (NYSE:KND) Follow-on Equity Offering Provides healthcare services in the U.S. $98.8

11/10/14 AmSurg Corp. (NasdaqGS:AMSG) Follow-on Equity Offering Provides ambulatory and physician services. $228.2

09/19/14 The Joint Corp. (NasdaqCM:JYNT) IPO Operates as a franchisor of chiropractic clinics. $19.5

09/08/14 Brookdale Senior Living Inc. (NYSE:BKD) Follow-on Equity Offering Owns and operates senior living communities in the U.S. $300.0

07/11/14 AAC Holdings, Inc. (NYSE:AAC) IPO Provides inpatient substance abuse treatment services. $75.0


Private Company Capital Raises

Equity capital raises of $5 million for U.S. private companies in the last six months. Sources: S&P Capital IQ and PitchBook Data Inc.

$ in millions

Transaction

Date Company Funding Type Target Description Value

10/16/15 Healthcare Integrity LLC Venture Capital Manages a general acute care hospital. $5.0

10/08/15 PM Pediatrics Management Group Growth Capital / Private Equity Provides pediatric urgent care in New York and New Jersey. $8.4

10/07/15 Merrill Gardens, LLC Growth Capital / Private Equity Owns and operates senior living communities across 6 states. $100.0

09/30/15 Access Integrated Healthcare Venture Capital Healthcare services organization serving the workers' compensation industry. $50.0

09/22/15 Access Clinical Partners Venture Capital Owns and operates urgent care centers. $25.4

09/17/15 VillageMD Venture Capital Management services company that partners with leading healthcare providers. $36.0

09/16/15 DJ HealthUnion Systems Undisclosed Provider of digital hospital solutions. $12.5

09/08/15 Aegis Senior Communities LLC Growth Capital / Private Equity Owns and operates senior living communities in WA and CA. $12.5

09/03/15 Community Intervention Services Growth Capital / Private Equity Provider of behavioral health services that cares for more than 50,000 patients annually. $55.0

08/20/15 ZocDoc Venture Capital Online doctor appointment service. $130.0

08/20/15 Grand Rounds Venture Capital Online platform that connects patients with medical specialists. $55.0

08/20/15 Maryland Proton Treatment Center, LLC Growth Capital / Private Equity Development stage company intending to operate a cancer treatment facility. $20.0

07/31/15 Community Medical Group Growth Capital / Private Equity Operates medical centers providing Medicaid and Medicare services in Florida. $15.3

07/28/15 South Bay Mental Health Center, Inc. Growth Capital / Private Equity Provides community-based services to patients in MA. $11.2

07/22/15 Gynesonics Growth Capital / Private Equity Women's healthcare company. $43.0

07/22/15 Qliance Medical Management, Inc. Growth Capital / Private Equity Operates insurance-free direct primary care clinics. $6.0

07/21/15 ContinuumRx, Inc. Growth Capital / Private Equity Provides specialty home infusion therapies and services. $13.5

07/17/15 Daughters of Charity Health System Growth Capital / Private Equity Regional California based NFP health system. $250.0

06/29/15 Activate Healthcare Growth Capital/Private Equity Provider of workplace health clinics. NA

06/08/15 National Surgical Healthcare Growth Capital/Private Equity Owns and operates surgical hospitals and ambulatory surgery centers. $52.5


Overview of Selected Capital Raises

Sources: Company press releases, S&P Capital IQ, SeekingAlpha.

Surgery Partners Inc. (Nasdaq:SGRY) (Nashville, TN) October 1, 2015

Founded in 2004, Surgery Partners, Inc. is one of the largest and fastest-growing surgical services businesses in the U.S. The company has an outpatient delivery model focused on providing high-quality, cost-effective solutions for surgical and related ancillary care. Surgery Partners offers its services through 94 ambulatory surgery centers and five surgical hospitals, located across the U.S.

Surgery Partners’ controlling private equity owner, H.I.G. Capital, took the company public on October 1, 2015, on the NASDAQ,

Originally expected to trade within an initial price range of $22-$26/sh., the company’s shares were subsequently offered at $19/sh., or slightly more than 20% below the IPO’s expected midpoint.

On 11/6/15 (the date of this report) SGRY’s shares closed at a price of $18.81/sh.

Merrill Gardens, LLC (Private Company) (Seattle, WA) October 7, 2015

On October 7, 2015, Merrill Gardens, LLC (“Merrill”), announced that it would raise $100 million in a new round of financing. The company announced it would issue membership units as part of the transaction.

Merrill owns and operates senior living communities in Alabama, Arizona, Washington, California, Georgia, and Nevada. It offers independent living, assisted living, Alzheimer’s and dementia care, continuing care, memory care, as well as other services directed at the senior living segment. It also offer various management services. Merrill was founded in 1993.

As of October, 22, 2015, the company had received $52.4 million from 66 investors in the first tranch close.

Providers & Facilities Mid-Market Cap Raises*

* YTD figures represent total year-to-date capital raises as of

October 27, 2014 & 2015. Middle market Public Offerings &

Capital Raises includes transactions with < $500mm, and

transactions with undisclosed values.

34

46

77

97

102

107

94

75

99

0

20

40

60

80

100

120

2008 2009 2010 2011 2012 2013 2014 2014YTD*

2015YTD*

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Moss Adams Capital LLC • Boutique investment bank

and strategic advisor • Dedicated industry

specialists • Advisory and execution • Private equity • Debt • Mergers and acquisitions • Restructuring Long-Term Industry Relationships • All product types • Major markets and metro

areas • Public and private entities

Moss Adams LLP • Fully integrated accounting,

tax, and business advisory firm

• 100+ years old • Dominant in western US • Middle-market specialists • Accounting, tax, and

transaction Experience • Real estate accounting best

practices • Senior, experienced tax

specialists • Leverageable transaction

resources International Presence • Dominance in Western US • 2,200 employees in 27 offices • Presence on national/global

basis • Praxity affiliates across US and

more than 100 countries around globe

Leadership through Experience and Results

Moss Adams at a Glance


I N D U S T R Y K N O W L E D G E M A T C H E D W I T H A N E X P E R I E N C E D T E A M

• Senior Level Attention

• Commitment to our Clients

• Professional Excellence

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• Creating Value for Owners

• Global Presence & Capabilities

Expert Teams

Premier accounting and financial services advice for middle market healthcare providers and facilities companies.


Capital Placement – Equity and Debt

Merger and acquisition advisory

Strategic alternatives assessment

Exclusive sales and divestitures

Strategic planning

Management buy-outs

Recapitalizations

Fairness opinions

Restructuring and special situations advisory

Corporate Finance Comprehensive Industry Coverage

Automotive & Dealer Services

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Healthcare Services & Products

Industrials / Niche Manufacturing

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Aerospace, Defense &

Government Services

Real Estate, Lodging & Leisure

Technology, Communications,

& Media

Transportation & Logistics

Completed more than 250 transactions

Access to key decision-makers among institutional investor universe

Coverage of relevant strategic partners

Average of 20 years of investment banking experience among senior leaders

Highlights and Accomplishments

Full Service Mid Market Investment Bank

Moss Adams Capital Overview


Moss Adams is a founding member of Praxity, AISBL, a global alliance of independent accounting firms. In addition to its deep, direct international relationships, Praxity provides access and trusted advisory expertise worldwide.

Global Reach

Middle East and Indian Subcontinent Bahrain, India, Israel, Jordan, Kuwait, Lebanon, Oman, Pakistan, Palestinian territories, Qatar, Saudi Arabia, Sri Lanka, Tajikistan, United Arab Emirates

North America Canada, United States

Europe Austria, Azerbaijan, Belgium, Bosnia-Herzgovina, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Jersey, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, Ukraine

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Australasia Australia, New Caledonia, New Zealand

Latin America and Caribbean Argentina, Bermuda, Brazil, Cayman Islands, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Panama, Peru, Puerto Rico, Uruguay, Venezuela


Local, National and Global Reach

Our affiliation with CFxB consists of 150+ Corporate Finance Professionals across the U.S. and in over 25 countries.

more than 25 countries

Global M&A Reach Through Local Relationships

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Harman Wales Managing Director (206) 302-6770 [email protected] Richard Anderson Managing Director (949) 221-4006 [email protected] Tyler Dale Vice President (949) 221-4030 [email protected]

Contributing Authors: Wiley Kitchell Managing Director (206) 302-6780 [email protected]

Robert Miranda Vice President (949) 221-4021 [email protected] Andrew Suen Vice President (949) 517-9428 [email protected]

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