healthtech heartbeat - q2 2015 market review

Deep domain expertise in three inter-related sectors… … and broad industry networks

A market-leading corporate finance advisory firm…

• Founded in 1991

• Entrepreneurial and owner-managed

• 40 person team; 250+ completed transactions

• Broad global network

• Creative solutions

• Senior level focus on every transaction

…with global reach

1

About Results International

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60

70

80

90

100

110

120

130

Jun 14 Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15 Mar 15 Apr 15 May 15 Jun 15

Healthcare IT - Europe Healthcare IT - US Biopharma IT Generalists NASDAQ Composite Index FTSE 100

Q2 2015 Performance

Healthcare IT – Europe 19.3%

Healthcare IT - US (0.3)%

Biopharma IT 10.2%

Generalists (3.9)%

HealthTech(1)

0.8%

Results International Global HealthTech Indices

Note: Based on share prices as at 30 June 2015 Note: Indices weighted by market capitalisation Note:

(1) Excludes Generalists

Sources: Capital IQ and Results analysis 2

18.8% 17.3%

13.1%

(0.9)%

17.0%

(3.3)%

49.3%

26.0%

47.4%

15.1% 17.9% 21.2% 20.7%

33.9%

(8.4)%

3.3%

(14.8)%

(3.4)%

2.3% 3.2%

(46.4)%

25.2%

(16.0)%

111.5%

10.1%

26.9%

13.3%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

Last

12 M

on

ths

14.6%

5.7%

20.6%

6.6%

11.5%

22.3%

(1.9)%

(6.8)%

14.2%

(4.2)%

(6.0)%

15.2%

17.0%

2.3% 3.6% 4.2%

20.6%

(1.7)%

5.7%

10.2% 9.5%

7.1%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Q1-2

015

HealthTech: Share Price Performance

Note: Share price performance as at 30 June 2015 Note: *‘Last 3 Months’ & ‘Last 12 Months’ reference dates adjusted to first trading day post IPO for Evolent Health (4-Jun-15); and ‘Last 12 Months’ for Inovalon Holdings (11-Feb-15) Sources: Capital IQ and Results analysis 3

Healthcare IT – Europe Healthcare IT – US Biopharma IT

* *

HealthTech: Recent IPO Performances

4

Note: Calendarised to December year end; $ millions, except share price data Note:

(1) Current increase from IPO price; Market data as of 30 June 2015

Note: (2)

Evolent Health projecting negative EBITDA for CY2015; current EV adjusted to reflect additional cash from IPO not accounted for in most recent Balance Sheet Note:

(3) Castlight projecting negative EBITDA for CY2015

Source: Capital IQ

Company IPO Date Description Raised Indicative Price

Range ($)

IPO Price

($)

Increase vs.

range

Day 1

Increase

Current

Increase(1)

Current

EV

EV / Revenue

2015E

EV / EBITDA

2015E

Jun-15 Healthcare delivery and payments software

195.5 14.00-16.00 17.00 13.3% 10.9% 14.7% 947 6.0x n.m. (2)

Feb-15 Cloud-based healthcare data analytics software

600.0 24.00-26.00 27.00 8.0% 0.0% 3.3% 3,622 8.3x 22.4x

Apr-14 Healthcare information technology and services

1,300.0 18.00-21.00 20.00 2.5% 15.0% 53.3% 13,602 4.7x 14.9x

Mar-14 Healthcare enterprise management software

177.6 13.00-15.00 16.00 14.3% 148.8% (49.1)% 578 7.6x n.m. (3)

Dec-13

Software, hardware and services for the healthcare and energy sectors

199.7 n.a. 2.93 n.a. 20.1% 63.1% 335 3.2x 13.1x

Oct-13

Cloud-based CRM software for the biopharma industry

260.9 16.00-18.00 20.00 17.6% 85.8% 40.2% 3,264 8.4x 28.7x

NYSE

NYSE

LSE

NYSE

NasdaqGS

NYSE

HealthTech: Valuation Benchmarks

5

EBITDA Margin 2015E EV / EBITDA 2015E

Revenue Growth (2015-16E) EV / Revenue 2015E

Note: EV = Enterprise Value; Financials calendarised to December year end Note: Median values reported; excludes negative multiples Note: See Selected Publicly Traded Companies (Slide 9) for details of companies included in each category Note: McKesson excluded from above analysis because majority of revenue is generated from pharmaceutical distribution Source: Capital IQ

4.2%

8.0%

12.7%

19.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Generalists Healthcare IT -

Europe

Healthcare IT - US Biopharma IT

28.0%

23.3%

19.5%

23.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%


Europe


4.0 x

3.3 x

4.6 x

7.5 x

0.0 x

1.0 x

2.0 x

3.0 x

4.0 x

5.0 x

6.0 x

7.0 x

8.0 x


Europe


11.0 x 12.7 x

14.4 x

28.7 x

0.0 x

5.0 x

10.0 x

15.0 x

20.0 x

25.0 x

30.0 x

35.0 x


Europe


21

17

20

32

29

18

28 27

28

32

44

61

54

49

4

3

5

1

1

7

2

7 5

6

2

8

12

5

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

0

10

20

30

40

50

60

70

80

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015

Healthcare IT Biopharma IT Healthcare IT Total Disclosed Deal Value Biopharma IT Total Disclosed Deal Value

HealthTech: Global M&A Activity

6 Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis

Nu

mb

er

of D

ea

ls

Tota

l D

isc

lose

d D

ea

l V

alu

e (

$m

)

HealthTech: Selected Deals in Q2 2015

Date Buyer Target EV ($m) EV /

Revenue EV /

EBITDA Company description

Target Location

Jun-15 - - - Nurse and doctor scheduling automation software

Jun-15 6.4 - - Healthcare information systems software for sexual health and substance misuse

May-15 - - - Population health information platform for socioeconomic and community health data

May-15 - - - Healthcare informatics and image archiving software

May-15 140.0 - - Customer-driven healthcare and reimbursement accounts software and services

May-15 1.9 - - Patient flow and bed management software

May-15 - - - Big data analysis software for healthcare

May-15 - - - Medical informatics software for diagnostic image management

May-15 105.0 - - Big data machine learning software for the life sciences, healthcare, manufacturing, retail and financial services sectors

May-15 - - - Compliance and performance improvement software for care enhancement

May-15 - - - Occupational medicine and preventative health software

May-15 46.9 - - Diagnostic laboratory and clinical applications support software and managed services

Apr-15 24.1 - - Venous biometric patient identification systems

Apr-15 175.4 - - Healthcare information management systems software

Apr-15 - - - Cloud-based healthcare intelligence software

Apr-15 - - - Cloud-based population health data management software

Apr-15 - - - Healthcare data analytics software

7

Note: Financials relate to the companies’ full fiscal year before the transaction took place Note: Enterprise Value (EV) = transaction value scaled to 100% shareholding plus net debt (includes minority interest) Sources: Press releases, Capital IQ, Mergermarket, 451 Research and Results analysis

Date Company Type of round Funds

raised ($m) Investor participation Description

Company headquarters

Jun-15 Series B 9.2 Amadeus Capital Partners; Gilde Healthcare Partners; Archimedia Primary care practice and case management software

Jun-15 - 0.5 Investessor, Investment Arm Mobile application for Electronic Health Record management

Jun-15 - 1.2 Castle Connolly Medical; Inveready Asset Management Consumer online physician selection and healthcare information platform

Jun-15 - - WuXi PharmaTech (NYSE:WX) Data management and analysis software for the life sciences industry

May-15 - 0.5 Individual investor Online marketplace and consultation platform for telemedicine services

May-15 Seed 1.1 Rothenberg Ventures Clinical treatment applications for psychology

May-15 Series A 5.0 Industrifonden; Briban Invest Mobile patient recruitment and trial management software and services

May-15 Seed 1.9 Delft University of Technology, Endowment Arm; Buysse & Partners Invest

Integrated genomics analytics platform

May-15 - - Individual investor Patient-oriented engagement solution for diabetes management

May-15 - 10.0 - Online platform for medical and dental appointment scheduling

May-15 Series A 7.2 QUALCOMM Ventures; Mangrove Capital Partners; Innovation Capital; ABRT Venture Fund; TA Ventures; Maya Capital LLP

Online platform for private and public healthcare appointment booking

May-15 - - NorthCap Partners Image analysis and stereology software for the biopharma industry

May-15 Venture 3.9 XLHealth Mobile telemedicine application for video healthcare consultations

May-15 - - Parkwalk Advisors Late phase clinical trial design, data capture and management software

Apr-15 Venture 5.2 Den Danske Forskningsfond; RusBio Ventures Tech-enabled MRI utilisation services for clinical trials

Apr-15 Venture 1.1 Individual investors DNA analysis software for laboratories and biopharma

Apr-15 Venture 5.3 Prime Ventures Healthcare information exchange software for clinical information sharing

HealthTech: Selected European Fundraisings in Q2 2015

8 Sources: Capital IQ and Results analysis

Operating Metrics Valuation Metrics

Price % of 52 Market Total Net Enterprise Revenue Rev. Growth Gross Margin Revenue EBITDA

Company (30-Jun-15) Week High Cap Cash Debt Value CY2015 CY15-16 Historical CY2015 CY2016 CY2015 CY2016 CY2015 CY2016

Generalists with significant HealthTech exposure

Oracle 40.30 86% 179,559 54,368 (11,975) 167,584 38,517 2.6% 60.7% 44.7% 46.6% 4.4 x 4.2 x 9.7 x 9.1 x

EMC 26.39 85% 51,799 6,450 600 52,399 25,617 5.9% 62.4% 26.4% 27.1% 2.0 x 1.9 x 7.7 x 7.1 x

SAP 70.00 89% 85,510 4,959 6,324 91,833 22,631 5.3% 72.2% 34.0% 34.3% 4.1 x 3.9 x 12.0 x 11.3 x

Thermo Fisher Scientific 129.76 93% 52,265 873 13,997 66,262 16,765 4.2% 46.2% 25.4% 26.4% 4.0 x 3.8 x 15.6 x 14.4 x

Computer Sciences Corporation 65.64 90% 9,157 2,098 599 9,756 11,864 (0.5%) 24.1% 14.9% 18.1% 0.8 x 0.8 x 5.5 x 4.6 x

Thomson Reuters 38.12 90% 29,951 1,032 8,170 38,121 9,918 3.0% 28.0% 28.0% 29.2% 3.1 x 3.0 x 11.0 x 10.2 x

Aspen Technology 45.55 96% 3,921 216 (216) 3,705 458 9.1% 81.6% 45.4% 45.3% 8.1 x 7.4 x 17.9 x 16.4 x

25th percentile 2.8% 37.1% 25.9% 26.7% 2.6 x 2.5 x 8.7 x 8.1 x

Median 4.2% 60.7% 28.0% 29.2% 4.0 x 3.8 x 11.0 x 10.2 x


Healthcare IT - Europe

CompuGroup Medical 34.89 96% 1,735 28 361 2,096 613 9.2% 33.9% 22.0% 23.6% 3.4 x 3.1 x 15.5 x 13.3 x

Cegedim 42.17 97% 589 19 587 1,176 574 2.2% 46.2% 18.9% 19.8% 2.0 x 2.0 x 10.8 x 10.1 x

EMIS Group 14.50 92% 915 7 26 941 250 6.5% 48.2% 30.5% 30.8% 3.8 x 3.5 x 12.3 x 11.5 x

NoemaLife 6.46 91% 49 6 38 87 119 12.8% 22.4% 19.2% 19.6% 1.0 x 0.9 x 5.4 x 4.7 x

Servelec Group 4.78 93% 335 6 0 335 104 7.9% 45.3% 24.6% 25.3% 3.2 x 3.0 x 13.1 x 11.8 x

Craneware 10.34 95% 280 36 (36) 244 50 8.2% 90.5% 30.4% 30.7% 4.9 x 4.5 x 16.1 x 14.8 x


Median 8.0% 45.7% 23.3% 24.4% 3.3 x 3.1 x 12.7 x 11.6 x


Healthcare IT - US

McKesson 224.81 92% 52,878 5,341 5,973 58,851 186,896 5.6% 6.3% 2.6% 2.8% 0.3 x 0.3 x 12.2 x 10.6 x

Cerner 69.06 91% 24,798 684 (58) 24,740 4,950 20.7% 84.5% 32.7% 34.2% 5.0 x 4.1 x 15.3 x 12.1 x

IMS Health 30.65 95% 10,279 639 3,323 13,602 2,913 9.7% 53.4% 31.3% 31.9% 4.7 x 4.3 x 14.9 x 13.4 x

Allscripts Healthcare Solutions 13.68 80% 2,576 88 484 3,060 1,399 5.4% 45.5% 16.8% 18.7% 2.2 x 2.1 x 13.0 x 11.1 x

athenahealth 114.58 75% 4,509 61 205 4,714 918 21.2% 59.8% 18.1% 17.8% 5.1 x 4.2 x 28.4 x 23.8 x

MedAssets 22.06 86% 1,343 19 857 2,200 760 4.8% 76.1% 30.5% 30.7% 2.9 x 2.8 x 9.5 x 9.0 x

Quality Systems 16.57 88% 999 131 (131) 869 517 6.7% 54.6% 14.1% 15.8% 1.7 x 1.6 x 11.9 x 9.9 x

Inovalon Holdings 27.90 83% 4,120 793 (498) 3,622 438 21.2% 68.8% 37.0% 38.0% 8.3 x 6.8 x 22.4 x 18.0 x

Merge Healthcare 4.80 77% 470 25 255 725 249 9.1% 60.8% 20.9% 22.7% 2.9 x 2.7 x 14.0 x 11.8 x

Healthstream 30.42 94% 962 64 (36) 926 204 15.7% 56.6% 14.2% 16.5% 4.5 x 3.9 x 32.0 x 23.7 x

Computer Programs & Systems 53.42 80% 605 41 (41) 564 197 6.8% 45.9% 24.5% 26.3% 2.9 x 2.7 x 11.7 x 10.2 x

Evolent Health 19.50 98% 1,150 220 (203) 947 157 34.8% 27.5% (26.3%) (14.5%) 6.0 x 4.5 x n.m. n.m.

Castlight Health 8.14 49% 763 186 (186) 578 76 56.1% 39.1% (90.8%) (44.0%) 7.6 x 4.9 x n.m. n.m.


Median 12.7% 55.6% 19.5% 20.7% 4.6 x 4.0 x 14.4 x 11.9 x


Biopharma IT

Medidata Solutions 54.32 92% 3,085 298 (54) 3,031 403 19.2% 74.7% 23.3% 24.8% 7.5 x 6.3 x 32.3 x 25.5 x

Veeva Systems 28.03 83% 3,693 429 (429) 3,264 390 23.6% 62.9% 29.2% 29.9% 8.4 x 6.8 x 28.7 x 22.7 x

Instem 3.21 94% 40 2 - 28 22 8.7% 14.8% 16.6% 18.3% 1.7 x 1.5 x 10.1 x 8.4 x


Median 19.2% 62.9% 23.3% 24.8% 7.5 x 6.3 x 28.7 x 22.7 x


EBITDA Margin

HealthTech: Selected Publicly Traded Companies

9

Note: Calendarised to December year end; $ millions, except share price data; Multiples capped at 20x EV / Revenue and 50x EV / EBITDA; Net debt includes minority interest Note:

(1)McKesson excluded from ‘Healthcare IT – US’ summary analysis above because majority of revenue is generated from pharmaceutical distribution

Note: (2)

Evolent Health current EV adjusted to reflect additional cash from IPO not accounted for in most recent Balance Sheet Source: Capital IQ

(1)

(2)

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