sectorwatch: healthcare it€¦ · 7ma provides investment banking & advisory services to the...

Sectorwatch:Healthcare ITQ2 2018

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Healthcare ITQ2 2018

Sector Dashboard [4]

Public Basket Performance [5]

Operational Metrics [7]

Valuation Comparison [10]

Recent Deals [13]

Appendix [14]

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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

4.2x

24.6x

25.1x

56.1x

0x 15x 30x 45x 60x

Median TEV / LTM Revenue

Median TEV / LTM EBITDA

Median TEV / LTM EBIT

Median Price / LTM Earnings

13.1%

14.4%

57.3%

0% 10% 20% 30% 40% 50% 60%

Median LTM EBITDA Margin %

Median LTM Revenue Growth %

Median LTM Gross Profit Margin %

Revenue Growth Momentum

-3.1% One year revenue growth percentage compared to

revenue growth average percentage for last 3 years.

Pricing / Gross Margin Momentum

0.03% One year gross profit percentage compared to gross

profit percentage average for last 3 years.

Profitability Momentum

-0.7% 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

19%.

Current gross profit margin slightly exceeds the average of the last 3 years

gross profit margin by this amount so companies are maintining margins.

Current EBITDA margin is a bit less than the average of the last 3 years EBITDA

margins, which may signal pricing pressure and further consolidation.

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Public BasketCompany TEV $m

LTM Rev

$m

Rev

Growth

YoY GP %

EBITDA

%

TEV /

Rev X

TEV /

EBITDA

X # FTEs

Rev /

FTE $k

Cerner Corporation 19,340 5,073 5% 85% 26% 3.8 14.6 26,000 195

M3, Inc. 13,290 890 21% 57% 33% 15.5 47.4 - NA

Veeva Systems Inc. 10,034 686 26% 69% 24% 14.6 60.8 2,171 316

athenahealth, Inc. 6,335 1,264 14% 54% 17% 5.0 29.9 5,156 245

HealthEquity, Inc. 4,385 230 29% 59% 31% 19.1 62.3 1,027 223

Medidata Solutions, Inc. 4,328 567 16% 77% 15% 7.6 49.4 1,680 338

Allscripts Healthcare Solutions, Inc. 4,306 1,907 18% 50% 8% 2.3 29.6 8,900 214

Cotiviti Holdings, Inc. 3,683 738 15% 66% 39% 5.0 12.8 3,300 224

Winning Health Technology Group Co., Ltd. 3,412 199 26% 99% 0% 17.5 0.0 - NA

Teladoc, Inc. 3,182 280 101% 73% -13% 11.4 0.0 1,231 227

CompuGroup Medical Societas Europaea 2,800 769 8% 38% 19% 3.8 19.9 4,572 168

Omnicell, Inc. 1,947 750 12% 46% 9% 2.6 30.5 2,350 319

HMS Holdings Corp. 1,914 549 13% 37% 20% 3.5 17.7 2,500 220

Evolent Health, Inc. 1,459 468 51% 39% -5% 3.1 0.0 2,600 180

Web.com Group, Inc. 1,440 751 0% 68% 20% 1.9 9.8 3,600 209

Inovalon Holdings, Inc. 1,330 434 0% 66% 13% 3.1 23.9 1,758 247

Benefitfocus, Inc. 1,116 261 11% 53% 0% 4.3 0.0 1,450 180

Pharmagest Interactive SA 1,009 176 14% 28% 25% 5.9 23.7 907 194

Tabula Rasa HealthCare, Inc. 985 151 48% 30% 7% 6.5 95.5 536 281

Quality Systems, Inc. 938 528 4% 55% 10% 1.8 18.4 2,771 190

NNIT A/S 707 475 2% 18% 14% 1.6 10.9 3,031 157

HealthStream, Inc. 694 251 12% 57% 11% 2.8 25.2 955 262

Vocera Communications, Inc. 692 166 21% 60% -3% 4.2 0.0 590 282

Agfa-Gevaert NV 663 2,962 -5% 33% 7% 0.2 3.4 9,840 301

Computer Programs and Systems, Inc. 566 284 8% 56% 13% 2.0 15.2 2,000 142

Pro Medicus Limited 561 26 16% 99% 47% 22.6 48.1 - NA

NantHealth, Inc. 523 90 12% 59% -59% 5.8 0.0 494 182

Castlight Health, Inc. 414 140 31% 61% -38% 3.0 0.0 527 266

Simulations Plus, Inc. 321 27 30% 74% 42% 11.7 28.0 83 331

Average 3,185 727 19% 57% 12% 6.6 30.8 3,463 234

Median 1,440 468 14% 57% 14% 4.2 24.6 2,086 223

share price as of 23May18

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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

10x15x20x25x30x

TEV/EBITDA - Median TEV/EBITDA - Average

22.3x

4.4x

0x

5x

10x

15x

20x

25x

30x

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

$- $70 $140 $210 $280 $350

Median

Computer Programs and…

NNIT A/S

CompuGroup Medical Societas…

Evolent Health, Inc.

Benefitfocus, Inc.

NantHealth, Inc.

Quality Systems, Inc.

Pharmagest Interactive SA

Cerner Corporation

Web.com Group, Inc.

Allscripts Healthcare Solutions,…

HMS Holdings Corp.

HealthEquity, Inc.

Cotiviti Holdings, Inc.

Teladoc, Inc.

athenahealth, Inc.

Inovalon Holdings, Inc.

HealthStream, Inc.

Castlight Health, Inc.

Tabula Rasa HealthCare, Inc.

Vocera Communications, Inc.

Agfa-Gevaert NV

Veeva Systems Inc.

Omnicell, Inc.

Simulations Plus, Inc.

-20% 10% 40% 70% 100% 130%

MedianAgfa-Gevaert NV

Web.com Group, Inc.Inovalon Holdings, Inc.

NNIT A/SQuality Systems, Inc.

Cerner CorporationCompuGroup Medical Societas…

Computer Programs and…Benefitfocus, Inc.

HealthStream, Inc.Omnicell, Inc.

NantHealth, Inc.HMS Holdings Corp.

athenahealth, Inc.Pharmagest Interactive SA

Cotiviti Holdings, Inc.Pro Medicus Limited

Medidata Solutions, Inc.Allscripts Healthcare Solutions,…

Vocera Communications, Inc.M3, Inc.

Veeva Systems Inc.Winning Health Technology…

HealthEquity, Inc.Simulations Plus, Inc.Castlight Health, Inc.

Tabula Rasa HealthCare, Inc.Evolent Health, Inc.

Teladoc, Inc.

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Operational Metrics

LTM Gross Profit Margin % LTM EBITDA %

-80% -50% -20% 10% 40% 70%

Median

NantHealth, Inc.Castlight Health, Inc.

Teladoc, Inc.Evolent Health, Inc.

Vocera Communications, Inc.

Benefitfocus, Inc.Tabula Rasa HealthCare, Inc.

Agfa-Gevaert NV

Allscripts Healthcare Solutions,…

Omnicell, Inc.

Quality Systems, Inc.HealthStream, Inc.


Computer Programs and…

NNIT A/S

Medidata Solutions, Inc.athenahealth, Inc.

CompuGroup Medical Societas…

Web.com Group, Inc.

HMS Holdings Corp.

Veeva Systems Inc.

Pharmagest Interactive SA

Cerner Corporation

HealthEquity, Inc.

M3, Inc.



Pro Medicus Limited

0% 30% 60% 90% 120%

MedianNNIT A/S

Pharmagest Interactive SATabula Rasa HealthCare, Inc.

Agfa-Gevaert NVHMS Holdings Corp.

CompuGroup Medical Societas…Evolent Health, Inc.

Omnicell, Inc.Allscripts Healthcare Solutions,…

Benefitfocus, Inc.athenahealth, Inc.

Quality Systems, Inc.Computer Programs and…

M3, Inc.HealthStream, Inc.HealthEquity, Inc.

NantHealth, Inc.Vocera Communications, Inc.

Castlight Health, Inc.Cotiviti Holdings, Inc.

Inovalon Holdings, Inc.Web.com Group, Inc.

Veeva Systems Inc.Teladoc, Inc.

Simulations Plus, Inc.Medidata Solutions, Inc.

Cerner CorporationWinning Health Technology…

Pro Medicus Limited

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Valuation

TEV / LTM Revenue TEV / LTM EBITDA

0x 5x 10x 15x 20x 25x

Median

NNIT A/S

Web.com Group, Inc.

Allscripts Healthcare…

HealthStream, Inc.


HMS Holdings Corp.

Cerner Corporation

Benefitfocus, Inc.

athenahealth, Inc.

Pharmagest…

Medidata Solutions, Inc.


M3, Inc.

HealthEquity, Inc.

0x 20x 40x 60x 80x 100x

Median

Agfa-Gevaert NV

Web.com Group, Inc.

NNIT A/S


Cerner Corporation

Computer Programs…

HMS Holdings Corp.


CompuGroup Medical…

Pharmagest Interactive…


HealthStream, Inc.


Allscripts Healthcare…

athenahealth, Inc.

Omnicell, Inc.

M3, Inc.

Pro Medicus Limited


Veeva Systems Inc.

HealthEquity, Inc.

Tabula Rasa…

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Valuation

Price / LTM Earnings

0x 30x 60x 90x 120x

Median

Agfa-Gevaert NV

Web.com Group, Inc.


NNIT A/S

Cerner Corporation

Pharmagest Interactive…


HMS Holdings Corp.


Omnicell, Inc.

CompuGroup Medical…

athenahealth, Inc.

HealthStream, Inc.

M3, Inc.

Pro Medicus Limited

Veeva Systems Inc.

Winning Health…

HealthEquity, Inc.



Historical Valuation Multiples versus Revenue Growth Rate

-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%

RECENT TRANSACTIONS SUMMARY

In the last twelve months there were transactions totaling $8.6b transactions in the healthcare IT sector. 7 Mile Advisors tracked 1,071 transactions in the sector, including 273 M&A transactions.

All Transactions by RegionAll Transactions by Type M&A Transaction Ranges by Value

Private Placement,

801

Merger/Acquisition, …Europe, 190

Asia / Pacific, 129

Africa / Middle East,

25

United States and

Canada, 730

Latin America and Caribbean, 6

Greater than $1 billion, 4

$500 -$999.9mm, 0

$100 -$499.9mm,

11

Less than $100mm, 59

Undisclosed, 205

Most Active Buyers/Investors by Number of Transactions

Company NameNumber Of

Transactions

Ben Frankl in Technology Partners of Southeastern Pennsylvania, Investment Arm 8

GE Ventures 6

GPI SpA (BIT:GPI) 6

New Enterprise Associates 6

Y Combinator Management LLC 6

Draper Fisher Jurvetson 5

Flare Capita l Management Company, LLC 5

Khos la Ventures 5

Merck Global Health Innovation Fund, LLC 5

Sabby Management, LLC 5

Most Active Buyers/Investors by Total Transaction Size

Company NameTransaction

Size ($mm)

Oz Parent, Inc. 3,600

Roche Holding AG (SWX:ROG) 1,900

SoftBank Investment Advisers 1,550

Inovalon Holdings , Inc. (NasdaqGS:INOV) 1,200

SBI Holdings , Inc. (TSE:8473) 1,150

SBI Investment Co., Ltd. 1,150

Veritas Capita l Fund Management, LLC 1,050

Goldman Sachs Asset Management, L.P. 574

Leerink Transformation Partners LLC 524

Pri tzker Group Venture Capita l 511

Merger & Acquisition Statistics

Valuation Summary

Total Deal Value($mm): $10,999

Average Deal Value: $149

Average TEV/Revenue: 6.39

Average TEV/EBITDA: 25.64

Average Day Prior Premium(%): 205.3%

Average Week Prior Premium(%): 710.2%

Average Month Prior Premium(%): 557.5%

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Recent TransactionsDate Target Buyer Total Transaction Value Target Revenue TEV / Revenue TEV / EBITDA

7May18 athenahealth, Inc. Elliott Management Corporation 6,879.97 1,264.30 5.4x 32.2x

27Apr18 HealthGrid Allscripts Healthcare, LLC 110.00 - - -

6Apr18 MedFORCE Technologies, Inc. Ideagen plc 9.00 4.70 1.9x -

2Apr18 Value-Based Care Division of GE Healthcare LLC Veritas Capital Fund Management, LLC 1,050.00 - - -

12Mar18 Bolder Healthcare Solutions LLC Cognizant Technology Solutions Corporation - - - -

1Mar18 Evolent Health, Inc. - 41.65 434.95 2.2x NM

5Jan18 Practice Fusion, Inc. Allscripts Healthcare, LLC 100.00 - - -

14Dec17 Brighter, Inc. Cigna Corporation - - - -

13Dec17 Connect Healthcare Health Platforms, Inc. - - - -

8Dec17 VitalHealth Software B.V. Koninklijke Philips N.V. - - - -

24Oct17 Montentia, LLC Bracket Global LLC - - - -

11Oct17 Prognosis Innovation Healthcare Azalea Health Innovations, Inc. - - - -

10Oct17 MedHelp International, Inc. The Staywell Company, LLC - - - -

10Oct17 Carena, Inc. Avizia, Inc. - - - -

3Oct17 Tea Leaves Health, LLC Welltok, Inc. 90.00 - - -

25Sep17 CareLinx Incorporated Generali Global Assistance - - - -

13Sep17 Diabeto, Inc. Livongo Health, Inc. - - - -

6Sep17 SinfoníaRx, Inc. Tabula Rasa HealthCare, Inc. 131.54 27.10 4.9x -

31Aug17 ACAExpress.com, Inc. and Benefit Geek Vimo, Inc. - - - -

14Aug17 Senosis Health Inc. Alphabet Inc. - - - -

3Aug17 Curoverse, Inc. Veritas Genetics International Ltd. - - - -

31Jul17 EagleDream Health, Inc. NextGen Healthcare Information Systems,

LLC

26.00 - - -

24Jul17 WebMD Health Corp. MH SUB I, LLC 3,751.26 708.99 3.7x 14.3x

17Jul17 Encore Health Resources, LLC eMids Technologies Inc. - - - -

11Jul17 MedApproved, LLC TractManager, Inc. - - - -

4Jul17 Health and Parenting Limited Koninklijke Philips N.V. - - - -

29Jun17 mySugr GmbH Roche Holding AG 73.02 - - -

19Jun17 Best Doctors, Inc. Teladoc, Inc. 440.00 98.24 4.5x 44.8x

16Jun17 Verklizan B.V. Main Capital Partners B.V. - - - -

13Jun17 TMG Health, Inc. Cognizant Technology Solutions Corporation - - - -

8Jun17 Praxify Technologies, Inc. athenahealth, Inc. 63.00 - - -

7Jun17 GreatCall, Inc. GTCR, LLC - 250.00 - -

30May17 Expert-24 Limited Medvivo Group Ltd - - - -

8May17 Beddit.com Oy Apple Inc. - - - -

2May17 Milner-Fenwick, Inc. Interactivation Health Networks LLC - - - -

27Apr17 Lightshed Healthcare Technologies LLC DocuTAP, Inc. - - - -

19Apr17 Health 2.0 LLC Healthcare Information and Management

Systems Society, Endowment Arm

- - - -

7May18 athenahealth, Inc. Elliott Management Corporation 6,879.97 1,264.30 5.4x 32.2x

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Contact Information7MA provides Investment Banking & Advisory Services to the Business Services and TechnologyIndustries globally. We advise on M&A and private capital transactions, and provide marketassessments and benchmarking. As a close-knit team with a long history together and a laser focuson our target markets, we help our clients sell their companies, raise capital, grow throughacquisitions, 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]

Tom Dinnegan, Managing Director 310. 426.2410 [email protected]

Ben Lunka, Managing Director 704.496.2995 [email protected]

Jeff Stoecklein, Managing Director 312.373.3737 [email protected]

Kristina Sergueeva, Director 704.899.5149 [email protected]

Neil Churman, Director 704.899.5960 x 121 [email protected]

John Cooper, Director 704.973.3996 [email protected]

Tim Frye, Director 704.973.3994 [email protected]

Casey Augustine, Business Development - Manager 704.973.3999 [email protected]

Nicholas Prendergast, Financial Analyst 704.899.5960 [email protected]

Ariail Siggins, Marketing Director 704.899.5960 x 123 [email protected]

Sydney Larese, Associate 704.899.5960 [email protected]

Marty Johnson, Associate 704.899.5960 [email protected]

Rory Julyan, Associate 704.899.5960 [email protected]

Chevonese Dacres, Analyst 360.499.1502 [email protected]

sectorwatch: healthcare it€¦ · 7ma provides investment banking & advisory services to the...

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