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Semi-Annual Market Review HEALTH IT & HEALTH INFORMATION SERVICES JANUARY 2021 www.hgp.com Copyright© 2021 Healthcare Growth Partners 2 TABLE OF CONTENTS Health IT Executive Summary 3 Health IT Market Trends 7 Health IT M&A (Including Buyout) 10 Health IT Capital Raises (Non-Buyout) 15 Healthcare Capital Markets 16 Macroeconomics 21 Health IT Headlines 23 About Healthcare Growth Partners 29 HGP Transaction Experience 30 Appendix A – M&A Highlights 33 Appendix B – Buyout Highlights 38 Appendix C – Investment Highlights 43 1 11 10 9 8 7 6 5 4 3 2 12 Copyright© 2021 Healthcare Growth Partners 3 HEALTH IT EXECUTIVE SUMMARY 1 The paradox of a raging bull market amidst a raging pandemic is a reality nearly impossible to reconcile. While Health IT fundamentals are as strong as ever, it feels cavalier to begin our market discussion without recognizing the toll of this pandemic. After all, we at HGP and readers of our research choose to be in healthcare because we collectively believe in the industry’s responsibility to serve the greater good. We know our industry is fraught with moral hazard, and while a few seek to exploit, most aim to solve. Fueled by low interest rates and stimulus, the pandemic has bolstered the investment thesis in health informatics, yet we know the gains will never atone for the losses. - 2mm 4mm 6mm 8mm 10mm 12mm 14mm 16mm 18mm 20mm 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 31-Dec-19 31-Mar-20 30-Jun-20 30-Sep-20 31-Dec-20 US InfectionsNASDAQ IndexCumulative COVID-19 US Infections NASDAQ Price Index NASDAQ PERFORMANCE IN THE CONTEXT OF US CV-19 INFECTIONS Never has it been more apparent that the market is a forward-looking entity. Not more than a month into the pandemic, the market signaled that vaccines and stimulus would bring brighter days. While the rate of Health IT investment held steady through 2020, Health IT M&A spiked to record levels in Q3 and Q4. All things equal, valuations are higher post-pandemic, and despite surging COVID cases, Health IT sees more tailwinds than headwinds. In 2020, global Health IT Investment (excluding buyouts) increased 24.8% to $22.6B meanwhile the number of transactions declined a minimal 2.7% to 814, reflecting larger investment rounds. Global Health IT M&A increased 13.3% to 460 transactions with the total amount of transactions spiking 35.7% to $60.5B. We hesitate to prognosticate 2021 because even the best were proven wrong in 2020. Based on what we know at this time, vaccine deployment is underway, valuations are at record highs, M&A is occurring at record levels, the market is awash in liquidity with more stimulus measures to come, the pandemic underscores the need for digital health, and the incoming political administration is healthcare friendly. Barring another unforeseen crisis, market signals are positive going into 2021. A “Healthcare” Crisis Paradox EXECUTIVE SUMMARY Copyright© 2021 Healthcare Growth Partners 4 1 MACRO CATALYST SUMMARY FISCAL STIMULUS The total amount of stimulus, between the $1.8T CARES Act and December’s $900mm COVID relief bill, is more than 3x the 2009 stimulus package during the financial crisis. Stimulus will follow in 2021, flooding the market with liquidity. MONETARY POLICY Interest rates are at record lows and the Fed upped its 2021 real GDP forecast to 4.2% and projects the unemployment rate to fall to 5.0% by the end of 2021. The Fed balance sheet is at an all-time high. RISK ON (BUYERS) & RISK OFF (SELLERS) Risk On: Low interest rates and excess market liquidity are pushing valuations to top decile levels. Health IT M&A is at an all-time high. Risk Off: Sellers see tax increases on the horizon and are rattled by volatility, motivating sale transactions and managing valuation expectations. Net Impact: A narrowing of the spread between the bid and the ask, resulting in more transactions. MACRO RISKS Inflation: Despite instinct that the flood of liquidity will drive inflation, economists believe slack in the economy will absorb inflation pressure in the foreseeable future. Other: US-China relations, punitive tax policies, cyberattacks, and recession are all risks, but no higher than recent norms. HEALTHCARE CATALYST SUMMARY “HEALTHCARE” CRISIS The pandemic highlighted the shortcomings of our healthcare system, underscoring the need to invest in virtual care, resource optimization, patient access, drug discovery and clinical trial optimization, cybersecurity, supply chain, behavioral health, and patient safety, among many others. POST-PANDEMIC VIRTUALIZATION The world will never return to 2019 behavioral patterns since the pandemic accelerated the inflection and validated the efficacy of virtual models, especially in the workforce. POLITICS With Democratic control, expect a more aggressive healthcare agenda in Washington, focusing on retrenching the ACA and targeting drug pricing plus additional healthcare stimulus funding and a likely focus on value-based care models. HEALTHCARE RISKS Pandemic: A resurgence of COVID-19 poses the greatest risk to global growth and financial markets. However, scientists remain confident that vaccines will provide protection for near-and medium-term variants. 149 139 154 165 144 196 1H 2H 1H 2H 1H 2H 2018 2019 2020 HEALTH IT US M&A ACTIVITY Macro and Healthcare Forces Converging to Support Health IT Thesis 150 - semi- annual average EXECUTIVE SUMMARY Copyright© 2021 Healthcare Growth Partners 5 1 Expanding on the “healthcare” crisis and the post-pandemic world, COVID-19 is certainly a catalyst for change, accelerating disruption across all facets of the healthcare system. CV-19 THEME SYNOPSIS QUOTABLE EXPANDING HEALTH INSURANCE The spike in unemployment highlights the dependency on employer-sponsored insurance, the need to improve ACA insurance marketplaces, a potential to expand Medicaid, and the sensitivity to coverage of preexisting conditions. Expect all to be addressed by the incoming Biden administration with a focus on value-based care models. “Over the last three quarters of 2020, an estimated 3.5 million people will become uninsured (and not gain coverage through other sources) due to COVID-19-related job losses, a situation that could be worse in states that did not expand Medicaid.” Source: Health Affairs SUPPORTING FINANCIALLY VULNERABLE PROVIDERS Already financially vulnerable, physician offices underwent a 60% reduction in patient volumes at the peak of the pandemic and hospitals project a $323 billion loss, putting further strain on the healthcare system, according to NEJM. “Visits to ambulatory providers fell nearly 60 percent by early April. Since then visits have rebounded, returning in [September] to prepandemic levels. While visits overall have returned to levels prior to the pandemic, they vary by several factors….visits involving children, certain specialties, and behavioral health remain substantially below their baseline.” Source: The Commonwealth Fund MITIGATING RACIAL DISPARITIES OF CARE COVID-19 disproportionately impacted racial and ethnic minorities, underscoring shortcomings in the healthcare system to insure, manage chronic conditions, and provide access to a historically underserved population. “Black and Hispanic/Latino populations comprise 3.7x and 4.1x COVID-19 hospitalizations, respectively, and 2.8x COVID-19 deaths compared to white populations.” Source: CDC IMPROVING PATIENT SAFETY Whether providing care in non-acute settings or managing hospital-acquired infections, COVID-19 reinforced the need for healthcare providers to focus on all elements of patient safety. Patient safety protocols were stressed during COVID-19. Coordinated risk identification, analysis and management encompassing all elements of the clinical journey are required to mitigate such future risks. Even prior to COVID-19, “4 out of 10 patients are harmed in primary and ambulatory care”. Source: WHO NORMALIZING TELEHEALTH & VIRTUAL CARE MODELS COVID-19 massively accelerated telehealth adoption by healthcare providers, patients, and payers, including loosening regulations and expanding reimbursement. Behavioral Health has seen the largest increase in Telehealth utilization. Telehealth visits increased from 0.1% to 14.0% then regressed to near 6.0% of total visits. “The percentage of all visits via telemedicine visits is slowly declining from its April peak. But it continues to be well above the pre-pandemic baseline.” Source: The Commonwealth Fund EXECUTIVE SUMMARY Copyright© 2021 Healthcare Growth Partners 6 1 CV-19 THEME SYNOPSIS QUOTABLE DECENTRALIZING THE CARE SETTING Expanding on the telehealth thesis, expanding access to care at the home and alternative sites, such as pharmacies and ambulatory surgery centers, can provide a safer, cost-effective, and high-quality alternative to traditional care models. “Nationwide, deaths in long-term care facilities account for 40% of all COVID-19 deaths.“ Source: Kaiser Family Foundation (KFF) DIVERSIFYING THE SUPPLY CHAIN From ventilators, to PPE, to vaccines, to protocols set by regulators, such as the CDC, the healthcare supply was upended during COVID-19. “There's been a flood of new entrants making supplies. We probably vetted 500 to 600 new entrants to market and I'd say less than 5 percent were actually viable, highlighting the fact that there's really a limited amount of actual sources out there that are legitimate.” Source: Cardinal Health FLEXING CLINICAL RESOURCES The conundrum of the pandemic is that the healthcare system incurred huge losses and layoffs at the same time it experienced demand far exceeding capacity. “Health care employment decreased 9.5% from February through April 2020”, meanwhile “65% of physicians indicated that the COVID-19 pandemic has increased their feelings of burnout.” Source: KFF & Medical Economics ADDRESSING MENTAL AND BEHAVIORAL HEALTH Stress, isolation, fear, and job loss all contributed to a worsening state of affairs for mental health. The long-term impact of stay-at-home orders and school closures is yet to be fully understood, however data suggests that the majority of the population experienced some degree of mental illness or substance abuse disorders. Behavioral health has seen the most significant increase in telehealth utilization. “53% of adults in the United States reported that their mental health has been negatively impacted due to worry and stress over the coronavirus.” Source: KFF ADAPTING TO THE POST- PANDEMIC WORKFORCE It goes unsaid that the adoption of digitization, on-demand, and virtual models accelerated during COVID-19, including many employer-sponsored healthcare benefits. The question is how much will stick. “More than 60 percent of workers in the US economy cannot work remotely”, however “at least 16 percent of American workers will switch from office-based settings to working at home at least two days per week after COVID-19 subsides.” Source: McKinsey & HBS research 7 HEALTH IT MARKET TRENDS 2 HGP keeps close tabs on M&A valuations to see how the market evolves over time. While we can only draw data from deals with disclosed multiples and therefore must be careful to consider bias in any conclusions we draw from this data, we can still get a good sense for how the market values companies within the different subsectors of Health IT. The following table and accompanying box- and-whisker plot show the distributions of revenue multiples in 13 subsectors of Health IT. The sectors were sorted according to median revenue multiple from largest to smallest. We believe it’s important to keep dispersion in mind when assessing valuation data, which is why we include the 25th percentile, 75th percentile, and standard deviation in our summary statistics. While measures of central tendency like the median and mean are certainly indicative of how buyers are valuing assets, the dispersion shows that with higher multiples, we also see higher risk. This becomes especially apparent when we chart the data using a box-and-whisker plot. Generally speaking, the sectors with highest median revenue multiple also experience large standard deviations and positive skew. For instance, while 25% of the observed telemedicine companies received 10.0x revenue or more in sale transactions during the period, another 25% received less than 4.1x revenue at exit. Companies in these hot spaces cannot forget that they still need to show strong operating metrics in order to recognize premium valuation multiples. It is worth noting that the multiples reported here cover the time period from 2015 through 2020. COVID-19 has very quickly changed the global economy, which means that these multiples may not be representative of valuations across Health IT sectors in the future. Reported 2015 – 2020 Deals with Disclosed Revenue Multiples Deals with Disclosed EBITDA Multiples Revenue Multiple EBITDA Multiple 25th %-tile Median 75th %-tile Mean Std. Deviation Median Life Sciences IT 6 5 2.2x 6.6x 7.6x 5.5x 3.0x 15.2x Telemed 12 5 4.1x 6.3x 10.0x 7.1x 3.9x 14.0x Analytics 48 13 2.7x 4.6x 6.9x 6.0x 5.0x 14.7x Population Health 23 9 3.2x 4.4x 5.9x 4.9x 2.3x 18.0x Benefits Mgmt 24 19 3.0x 4.1x 6.3x 4.5x 2.1x 16.2x Infrastructure Tech 16 3 2.1x 3.9x 4.4x 3.7x 2.0x 15.0x PM/EMR 31 16 2.4x 3.6x 4.7x 3.8x 2.0x 9.5x Content 14 4 2.4x 3.6x 4.3x 4.2x 2.8x 11.3x RCM Tech 42 25 2.1x 3.4x 5.0x 3.7x 2.0x 15.0x Consulting 18 7 1.6x 2.0x 2.7x 2.4x 1.4x 12.0x RCM Services 15 11 1.4x 1.9x 2.4x 1.9x 0.9x 9.0x Utilization Mgmt 6 3 0.7x 1.8x 2.7x 1.8x 1.1x 10.9x Outsourced Services 18 11 1.2x 1.8x 2.7x 2.1x 1.2x 10.0x Copyright© 2021 Healthcare Growth Partners HEALTH IT MARKET TRENDS 8 2 The box-and-whisker plot graphically displays the Median, 25th Percentile, 75th Percentile, Minimum, and Maximum; where points beyond 1.75 times the Inter-Quartile Range are shown as outliers. The inter-quartile range is represented by the “box” and shows the range between the 75th Percentile and the 25th Percentile. Visually, the inter-quartile range serves to describe the variability of the data. Note that point estimates such as the mean or median can often be misleading on their own, as they do not convey the level of variability which can be very high such as in the Telemedicine, Population Health, or Benefits Management sectors. The sectors were sorted according to decreasing median revenue multiple and show a trend of decreasing IQR as median revenue multiple decreases. Thus, while companies that fall within sectors further to the right on the graph can expect a lower revenue multiple in a transaction, the transaction outcome is also more predictable. A company that falls within a sector on the left, however, cannot have as strong a confidence in their expected outcome. These observations follow a common theme in investment theory: that with greater potential upside, there is also greater risk and volatility. While the metrics presented here may be used as a guidepost for expected outcomes, the end result of any transaction often depends on buyer circumstances as much as on seller or market fundamentals, and buyer circumstances tend to be extremely unpredictable. It is not uncommon for the clearing price of a transaction to be significantly higher than the cover bids. This usually occurs when a buyer has unique circumstances that justify a higher price than the rest of the buyer universe. Identifying those buyers and appropriately positioning in relation to them is part of the art of running a successful transaction process. Copyright© 2021 Healthcare Growth Partners HEALTH IT MARKET TRENDS 9 2 Sector Description Representative Deals Life Sciences IT (6 deals) Median: 6.6x Std. Dev.: 3.0x Includes traditional CTMS vendors as well as other vendors that deliver value in the drug/device process. Medidata (Dassault Systemes), Bracket Global (Genstar Capital), Phlexglobal (Vitruvian Partners) Telemed (12 deals) Median: 6.3x Std. Dev.: 3.9x Contains a mix of pure telehealth tech, telehealth services, and virtual care models. AbleTo (United Health), Stratus Video (AMN Healthcare), PillPack (Amazon), Best Doctors (Teladoc) Population Health (48 deals) Median: 4.6x Std. Dev.: 5.0x Comprised of patient engagement, provider connectivity, and care management technologies. BioTelemetry (Philips), Propeller Health (ResMed), Emmi (Wolters Kluwer), Press Ganey (EQT), Wellcentive (Philips) Analytics (23 deals) Median: 4.4x Std. Dev.: 2.3x Primarily represents a mix of life sciences and provider analytics, and to a lesser extent, payer analytics. EPSi (Roper), Central Logic (Rubicon Venture Partners), Truven (IBM), IMS (Quintiles) RCM Tech (24 deals) Median: 4.1x Std. Dev.: 2.1x Includes tech-oriented RCM vendors serving hospitals and physicians, and to a lesser extent, payers. HMS Holdings (Gainwell), eRx Network (Change Healthcare), InstaMed (JPMorgan), ABILITY (Inovalon) Benefits Management (16 deals) Median: 3.9x Std. Dev.: 2.0x Includes benefits management and admin software companies serving payers and employers. OneDigital (Onex Partners), Connecture (Francisco Partners), HealthX (JMI), Benaissance (WEX), bswift (Aetna) Infrastructure Tech (31 deals) Median: 3.6x Std. Dev.: 2.0x Compliance and resource management software generally serving provider organizations. Symplr (Clearlake), Datix (Rothschild), Morrisey (HealthStream), CenTrak (Halma), VendorMate (GHX) Content (14 deals) Median: 3.6x Std. Dev.: 2.8x Transactions are a mix of online consumer content and provider- oriented clinical content. WebMD (Internet Brands), Quantum Health (Great Hill Partners), Everyday Health (j2 Global) PM/EMR (42 deals) Median: 3.6x Std. Dev.: 2.0x Includes ambulatory, acute, post- acute, alternate site, and departmental EMR/PM systems. HST Pathways (Bain Capital), Intelerad (HGCapital), athenahealth (Veritas), Kinnser (Mediware) Consulting (18 deals) Median: 2.0x Std. Dev.: 1.4x Project-based IT consulting and staff augmentation companies generally serving provider organizations. Kinapse (Syneos), Advisory Board (UnitedHealth), HCI Group (Tech Mahindra), CynergisTek (Auxilio) RCM Services (15 deals) Median: 1.9x Std. Dev.: 0.9x Outsourced revenue cycle management services generally serving hospitals and physicians. MedPartners (AMN), Intermedix (R1), Anthelio (Atos), Cardon (MedData), Equian (New Mountain) Utilization Mgmt (6 deals) Median: 1.8x Std. Dev.: 1.1x Payer-oriented software and services vendors focused on traditional utilization management. New Century (Evolent), HealthHelp (WNS), Alere (Abbott), HSM & CDMI (Magellan) Outsourced Services (18 deals) Median: 1.8x Std. Dev.: 1.2x Includes non-RCM outsourced services primarily serving payers as well as providers. Sedgwick & MedRisk (Carlyle Group), InVentiv (INC Research) Patriot National (Ebix), HealthPlan Holdings (Wipro) The following table provides additional context on the valuation trends within each sector as well as a sample of recent transactions within each. Copyright© 2021 Healthcare Growth Partners 10 HEALTH IT M&A (INCLUDING BUYOUT) 3 HGP has observed a number of tangible and intangible company and transaction characteristics that typically define where a deal falls on the valuation distribution. Growth, profitability, and recurring revenue are the most commonly identified factors used to justify valuation multiples. Not all health IT companies capture premium valuations just because they operate in health IT. However, those companies that offer a combination of growth, address an unmet need, and fit into the vision of healthcare reform are seeing valuations significantly higher than historical patterns of activity. Premium value is also created when a seller fulfills the specific needs of a buyer at a specific point in time. Timing and serendipity are external factors that play a large and sometimes unpredictable role in the creation of value. HEALTH IT REVENUE MULTIPLES DISTRIBUTION 2015-2020 Copyright© 2021 Healthcare Growth Partners 0% 10% 20% 30% 40% 50% 0-1X 1-2X 2-3X 3-5X 5-7X 7-10X >10X Software Services BEST GOOD PASSABLE AVOID Recurring Revenue Monthly Subscription or Monthly Transaction Annual Subscription or Prepaid Transactional 1-Year+ Prepaid Subscription Perpetual License + Maintenance Revenue Metric Contracted Annual Recurring Revenue Annual Recurring Revenue Trailing Twelve Month Sum of Parts Revenue Multiples Revenue Growth 35%+ 20-35% 10-20% <10% Gross Margin 80%+ 70-80% 60-70% GM <70% for SaaS Lower for Services Revenue Retention 95%+ 90-95% Depends on Customer Type <90% Customer Concentration <10% 10-20% 20-30% 1 customer > 30% or a handful of >50% Profitability 20%+ 0-20% Small Losses Large Losses HGP’S TARGET METRICS FOR EMERGING GROWTH HIT SOFTWARE COMPANIES HEALTH IT M&A (INCLUDING BUYOUT) 11 3 The M&A activity in 2020 is striking in the context of the COVID-19 driven economic recession in 2020. As of HGP’s July 2020 Market Review, we were expecting to end the year with at least 8% fewer deals compared to 2019. Instead, we saw an acceleration of M&A in the 2H to yield the most active year for HIT M&A in over a decade. Compared to 405 transactions in 2019, 2020 saw 460 total transactions. In terms of aggregate deal dollar value, HGP observed $60.5 billion of total transaction value so far in 2020, a significant increase compared to the already healthy $44.6 billion of transaction value observed in 2019. The Health IT M&A market has clearly thrived this year despite the disruptive impact of COVID-19. Copyright© 2021 Healthcare Growth Partners $14,074 $53,864 $28,931 $37,226 $42,437 $58,600 $1,084 $905 $771 $1,090 $2,177 $1,925 285 294 300 288 319 340 51 77 70 76 87 120 0 50 100 150 200 250 300 350 400 2015 2016 2017 2018 2019 2020 $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000 Deal VolumeDeal Value ($mm)Deal Value - US Deal Value - Non-US Deal Volume - US Deal Volume - Non-US HIT M&A DEALS BY QUARTER 90 68 93 85 100 86 102 83 96 89 91 94 82 105 97 80 102 90 97 117 110 86 130 134 0 20 40 60 80 100 120 140 160 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2015 2016 2017 2018 2019 2020 HIT M&A ACTIVITY FROM 2015 THROUGH 2020 HEALTH IT M&A (INCLUDING BUYOUT) 12 3 HIT Software Companies HIT Services Companies Revenue Multiple EBITDA Multiple Transaction Value Revenue Multiple EBITDA Multiple Transaction Value All Transactions # of Transactions 184 79 189 54 31 56 Median 4.0x 14.5x $ 140.00 2.0x 9.6x $ 167.36 Mean 4.7x 15.3x $ 500.02 2.1x 10.9x $ 711.62 <$30mm Transactions # of Transactions 47 10 44 11 7 11 Median 3.1x 9.8x $ 10.21 1.6x 9.0x $ 15.90 Mean 4.1x 10.9x $ 12.36 1.6x 8.9x $ 14.78 $30-100mm Transactions # of Transactions 34 16 34 15 8 15 Median 3.2x 11.6x $ 50.15 1.5x 8.5x $ 45.00 Mean 4.4x 12.4x $ 54.82 1.7x 8.1x $ 49.01 $100-500mm Transactions # of Transactions 66 26 69 18 10 18 Median 4.3x 14.5x $ 195.00 2.0x 11.0x $ 287.50 Mean 4.9x 16.9x $ 229.27 2.4x 11.4x $ 306.10 $500mm-$1B Transactions # of Transactions 18 11 21 3 0 3 Median 5.5x 16.2x $ 700.00 2.7x NA $ 690.00 Mean 5.6x 17.5x $ 690.03 3.2x NA $ 680.00 >$1B Transactions # of Transactions 19 16 21 7 6 9 Median 5.0x 16.6x $ 2,010.00 2.4x 14.9x $ 3,200.00 Mean 5.4x 17.0x $ 2,942.17 2.6x 16.0x $ 3,489.21 Copyright© 2021 Healthcare Growth Partners Getting more granular into valuation multiples, it is useful to note that multiples are often somewhat correlated to a target’s enterprise value. For instance, HIT Software valuations experience an inflection above $30mm in value, which steadily climbs until approximately the $1B valuation mark. HIT Services multiples experience a similar inflection at $100mm, especially in higher decile transactions. The inflection points are in part due to a private equity universe that has expanded leverage capacity for larger transactions, which in turn drives up valuation multiples as the enterprise value increases. HEALTH IT M&A (INCLUDING BUYOUT) 13 3 The above tables clearly demonstrate the valuation inflection points of increasing scale. The growth scalability inflection for Software businesses at enterprise values of around $30mm results in median revenue multiples increasing from 2.9x to 3.7x in the 2015-2020 data. As those similar software businesses increase to over $500mm and reach mature scalability, revenue multiples further increase to a median of nearly 5.0x. The Services business data also exhibits a valuation inflection with size; however, the growth scalability inflection point occurs at a larger value closer to $100mm, and mature scalability occurs nearer to $1bn. The result is Services business revenue multiples increasing from a median of 1.5x for growth-stage businesses to greater than 2.5x for mature businesses. 2015-2020 HIT Software Revenue Multiple Distribution by Target Enterprise Value Percentile <$30mm $30-100mm $100-500mm $500mm-$1B >$1B 90th Percentile 6.6x 9.2x 8.6x 8.2x 9.3x 75th Percentile 4.5x 5.4x 6.3x 7.1x 7.4x 50th Percentile 2.9x 3.7x 4.3x 4.9x 5.0x 25th Percentile 2.0x 2.7x 2.9x 3.8x 4.2x 2015-2020 HIT Services Revenue Multiple Distribution by Target Enterprise Value Percentile <$30mm $30-100mm $100-500mm $500mm-$1B >$1B 90th Percentile 2.7x 2.8x 5.4x nm nm 75th Percentile 2.1x 2.3x 2.9x nm 3.2x 50th Percentile 1.7x 1.5x 2.1x 2.7x 2.4x 25th Percentile 1.2x 0.9x 1.6x nm 2.2x Copyright© 2021 Healthcare Growth Partners Generally, companies have three valuation inflection points: proof-of-concept, growth scalability, and mature scalability. 1. Proof-of-concept is value created when a company shows that its product can be successfully sold and deployed in a commercial setting. 2. Growth scalability occurs when an earlier stage company begins to show profitability or at least scale at high levels of growth, although the organization is still small and lean. 3. Mature scalability takes place after a company has matured to a level where it takes on real corporate and organizational infrastructure and the company begins to show strong profitability. HEALTH IT M&A (INCLUDING BUYOUT) 14 3 Please note that transaction multiples are based on trailing twelve-month financial information, assume the achievement of all contingent consideration, such as earnouts, and most EBITDA multiples do not include any adjustments for unusual items. It is also important to note that less than one-third of transactions contain a disclosed multiple, therefore the multiple data presented represents only a portion of the overall transaction activity and may include sampling bias. The median revenue multiple seen in 2020 was 4.5x for HIT Software, between the 4.2x observed in 2019 and the 5.0x high water mark observed in 2018. Overall, interest in Health IT Software was strong in 2020 as COVID-19 drove accelerated digitization. Conversely, Health IT Services businesses saw a slight depression in valuations. MEDIAN M&A MULTIPLES 2015 THROUGH 2020 Copyright© 2021 Healthcare Growth Partners Detailed multiples trends can be found in the following bar charts. It should be noted that valuation multiple trends can be very volatile given the limited availability of data. Refer to Appendices A and B for a list of notable M&A and Buyout transactions in 2020. 3.8X 3.9X 3.4X 5.0X 4.2X 4.5X 14.0X 14.0X 14.0X 15.6X 14.8X 17.3X 0.0X 5.0X 10.0X 15.0X 20.0X 2015 2016 2017 2018 2019 2020 Health IT SoftwareRevenue EBITDA 2.0X 1.8X 1.9X 2.4X 2.0X 1.4X 9.0X 10.0X 9.6X 10.2X 10.8X 9.3X 0.0X 5.0X 10.0X 15.0X 2015 2016 2017 2018 2019 2020 Health IT ServicesRevenue EBITDA 15 HEALTH IT CAPITAL RAISES (NON-BUYOUT) 4 The chart below summarizes quarterly private-equity and venture capital activity in Health IT and related services since 2015 according to the Healthcare Growth Partners database. The data below and in this section do not include buyout private equity activity. In 2020, Healthcare Growth Partners monitored 814 capital raise transactions amounting to $22.6 billion in value, a 25% increase in total invested capital compared to 2019. HIT INVESTMENT ACTIVITY FROM 2015 THROUGH 2020 HIT INVESTMENT DEALS BY QUARTER Refer to Appendix C for a list of notable non-buyout capital raises in 2020. Copyright© 2021 Healthcare Growth Partners 88 122 101 115 106 97 135 155 128 190 189 154 204 237 199 156 181 240 211 203 196 195 218 204 0 50 100 150 200 250 300 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 2015 2016 2017 2018 2019 2020 $6,173 $5,724 $7,584 $10,800 $11,363 $15,983 $996 $2,370 $3,171 $5,755 $6,723 $6,582 362 361 414 547 573 513 66 133 252 254 264 301 0 100 200 300 400 500 600 700 2015 2016 2017 2018 2019 2020 $- $5,000 $10,000 $15,000 $20,000 $25,000 Deal VolumeDeal Value ($mm)Deal Value - US Deal Value - Non-US Deal Volume - US Deal Volume - Non-US 16 HEALTHCARE CAPITAL MARKETS 5 HGP tracks a basket of stock indices within health IT and closely related sectors. It is important to consider sectors outside of pure “HIT” because the universe of health IT and related services encompasses many companies that share similar characteristics to other healthcare sectors. What classifies a company in the universe of health IT and related services, and ideally creates a valuation premium, is a strong information technology and data component that creates scalability and competitive strength. This is particularly relevant to services organizations that use technology and data analytics to streamline their operations. With this in mind, HGP considered six sectors when evaluating the performance of publicly traded companies – details of the components of these sectors can be found on page 20. All 6 indices felt the effects of COVID-19 and plunged alongside the S&P 500 in the first quarter of 2020. However, the remarkable recovery seen in Q2 continued through the second half of 2020 as markets continued to rally despite a struggling economy. As the year progressed, the unsettling contrast between the prospering markets and the hardships faced across America became even more striking as deaths continued to tick upwards while the market continued its stunning upward trajectory. Notably, the Health IT Index had a phenomenal year, up 62.4%, while HIT & Payer Services and PBM continued to underperform as compared to the S&P 500. The chart and the table on the following page summarize the performance of the HGP Indices in 2020. HIT & RELATED INDEX PERFORMANCE 2020 Jan 21 – First case of coronavirus in the U.S reported March 27 – CARES Act was signed into law in response to CV-19 Nov. 7 – Biden defeats Trump in Presidential Election Dec. 11 – FDA issues emergency use authorization for 1st COVID vaccine 2020 Index Performance S&P 500 15.5% HIT 62.4% Healthcare Services 23.9% NASDAQ 43.4% Payers 14.0% HIT & Payer Services -1.6% CRO 24.5% PBM -12.7% April 19 – CMS recommends opening HC systems with low CV-19 incidence May 4 – Trump pushes to reopen as virus toll begins to double Copyright© 2021 Healthcare Growth Partners -60% -40% -20% 0% 20% 40% 60% 80% 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 CRO Health IT Payers PBM Healthcare Services HIT & Payer Services S&P 500 HEALTHCARE CAPITAL MARKETS 17 5 Company Share Price % Change EV/ Rev EV/ EBITDA Company Share Price % Change EV/ Rev EV/ EBITDA Allscripts 47.1% 2.1X 13.1X Livongo 457.7% NA NA Accolade 13.0% 13.6X NMF Model N 1.7% 6.8X NMF Amwell 40.7% 18.5X NMF MultiPlan -18.6% 5.3X 6.7X Benefitfocus -34.0% 2.2X 14.6X NantHealth 213.6% 7.0X NA Care.com -0.2% NA NA NextGen Healthcare 13.5% 2.2X 11.8X Castlight Health -2.3% 1.3X NMF NRC Health -35.2% NA NA Cerner 6.9% 4.3X 13.3X Oak Street Health 191.2% 11.3X NMF Certara 46.6% 20.4X NMF Omnicell 46.9% 4.8X 23.9X Change Healthcare 13.8% 3.4X 11.7X One Medical 211.8% 11.6X NMF CPSI 1.7% 1.7X 9.1X Peloton 434.2% 11.0X NMF ehealth -26.5% 2.0X 8.2X Phreesia 103.7% 14.8X NMF Evolent Health 77.1% 1.5X NMF Premier -7.3% 3.4X 10.7X Fitbit 3.5% 1.1X NMF Progyny 54.4% 6.6X NMF GoHealth -35.0% 4.6X 13.7X Roper Technologies 21.7% 8.7X 23.9X GoodRx 22.2% 21.0X NMF Simulations Plus 147.4% 26.1X NMF Health Catalyst 25.4% 7.8X NMF SmileDirectClub 36.6% 5.4X NMF HealthEquity -5.9% 8.4X 26.0X Specialists On Call -16.4% 8.1X NMF HealthStream -19.7% 2.5X 14.7X Streamline Health 12.2% 4.4X NMF HMS Holdings 24.2% 4.4X NA Tabula Rasa -12.0% 3.6X NMF Inovalon Holdings -3.5% 4.9X 13.7X Teladoc Health 138.8% 14.7X NMF Invitae 159.2% 14.3X NMF Veeva Systems 93.6% 27.4X NMF IQVIA 16.0% 3.7X 16.7X Vocera 100.0% 5.8X NMF iRhythm Technologies 248.4% 19.0X NMF Multiples based off 2021E Revenue and EBITDA HIT INDEX PERFORMANCE DETAIL – AS OF DECEMBER 31, 2020 Copyright© 2021 Healthcare Growth Partners Revenue Multiples EBITDA Multiples Sector 2020E 2021E 2020E 2021E Health IT 6.4x 5.6x 12.8x 13.5x CRO 3.6x 3.2x 19.2x 16.4x Payers 0.7x 0.7x 10.8x 10.6x PBM 0.5x 0.5x 11.2x 11.0x Healthcare Services 1.7x 1.8x 8.4x 8.5x HIT & Payer Services 1.4x 1.3x 10.3x 12.3x INDEX VALUATION MULTIPLES Despite a tumultuous 2020, valuation multiples have increased across all sectors as compared to 1H 2020. Notably, HIT continues to receive the most significant valuation premiums. HEALTHCARE CAPITAL MARKETS 18 5 2020 saw an astonishing boom in special purpose acquisition company (SPAC) transactions, with a record-breaking 248 companies opting for this non-traditional route to hit the public markets, more than 4 times 2019’s total. An increase in market volatility and uncertainty fueled by the unprecedented COVID-19 pandemic created a market ripe for SPACs. The enticing promise of greater market certainty and speed in hitting the markets has driven a SPAC craze as more and more companies sidestep the traditional IPO route. Health IT felt this momentum as well, with 7 out of 11 Health IT go-public transactions in 2H 2020 choosing this newly reemerged option (MultiPlan, SOC Telemed, Accountable Healthcare America, Clover Health, Augmedix, and Cloudbreak Health/ UpHealth). For HIT companies hoping to capitalize on favorable market dynamic, such as the rise in virtual care, the SPAC route has been highly attractive as it offers a streamlined and efficient approach to hitting the market. HEALTH IT IPOS AND SPACS Copyright© 2021 Healthcare Growth Partners 2H 2020 IPOs and SPACs Include: • Primary care startup, Oak Street Health, raised $328 million in its IPO on August 6, selling 15.6 million shares at $21/ share. Oak Street’s model includes striking value-based care agreements to care for Medicare patients and has proved successful in a time when many clinics are struggling with the drop in in-person visits. The Company ended the year 191% up from its IPO date. • MultiPlan, provider of data analytics cost management solutions for payers, became the first HIT company in 2020 to announce its plans to go public via a reverse merger with SPAC Churchill Capital on July 10. The business combination, valued at $11 billion, closed on October 8 and is the largest US SPAC deal. However, the company had a tumultuous debut, ending the year down 19%. • Joining MultiPlan in the SPAC trend, SOC Telemed announced plans to go public via a reverse merger with Healthcare Merger Corp. on July 29. The merger closed on October 30th and valued the Company at an estimated $720mm. Despite the surge in telemedicine due to CV-19, shares for SOC Telemed ended the year down 16%. $3.5mm $10.0mm $10.8mm $13.6mm $83.0mm 13 34 46 59 248 0 50 100 150 200 250 300 $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 2016 2017 2018 2019 2020 Gross Proceeds SPAC IPO Count SPAC PROCEEDS AND IPO COUNT HEALTHCARE CAPITAL MARKETS 19 5 • Prescription drug online marketplace, GoodRx, raised $1.1 billion in its September 23 IPO, pricing the deal well above the expected range. Fueled by the increasing trend in virtual consultations and online purchases, GoodRx shares jumped 40% on their first day and ended the year up 22%. • Hims, telemedicine and digital pharmacy platform, filed to go public via a reverse merger with Oaktree Acquisition on July 29 valuing the company at approximately $1.6 billion. Hims continues to experience rapid success amidst the lockdown and quarantine measures and reported 91% year-over-year growth for Q3 2020. • Accountable Healthcare America announced it entered into a definitive agreement to combine with SPAC GreenVision Acquisition Corp on August 27 in a deal valuing the company at $150 million, 6.6X AHA’s projected 2021 EBITDA. AHA is technology-enabled population health company that owns and manages Medicare-focused, risk-bearing provider networks. • Clover Health, an insurtech company for Medicare Advantage plans, announced plans to go public through a reverse merger with SPAC Social Capital on October 6, valuing Clover at $3.7 billion. The deal, led by former Facebook executive Chamath Palihapitiya is Social Capital’s 4th SPAC. • Google Glass-powered medical scribe service, Augmedix, went public via a reverse merger with Malo Holdings and began trading on OTCQB on October 5. • Drug development services firm, Certara, sold 29.1 million shares at $23/ share on December 11, raising approximately $670 million in its IPO. The IPO valued the company at $3.5 billion, which reported revenue of $178.9 million for the nine months ended September 2020 and profit of $5.1 million. Shares soared 72% on day 1 of trading and ended the year 47% up from their debut. • Hoping to capitalize on the telemedicine surge, UpHealth and Cloudbreak announced plans to merge with SPAC Gig2Capital on November 23 in a business combination valued at $1.35 billion. The deal combines UpHealth’s integrated care management and digital pharmacy expertise with Cloudbreak’s telemedicine and video medical interpretation solutions to create a global digital healthcare company serving an entire spectrum of needs. • Following a $140 million funding round, health insurance startup Oscar, filed for an IPO on December 21. Oscar has not yet announced details for its IPO, but investors are eyeing insurtech peer Lemonade as an indication of Oscar’s potential as the company promises to make health insurance more digital and accessible. HEALTH IT IPOS AND SPACS Copyright© 2021 Healthcare Growth Partners HEALTHCARE CAPITAL MARKETS 20 5 As discussed previously, HGP tracks six indices across the health IT and services sectors. The components of each index are listed below. Each index is based on an equal-weighted portfolio. Sector Components Health IT (HIT) – Constituents Allscripts – NAS:MDRX Accolade – NAS:ACCD Amwell – NYS:AMWL Benefitfocus – NAS:BNFT Care.com – NYS:CRCM [Acquired 2/11/2020] Castlight Health – NYS:CSLT Cerner – NAS:CERN Certara – NAS:CERT Change Healthcare – NAS:CHNG Computer Programs & Systems – NAS:CPSI ehealth – NAS:EHTH Evolent Health – NYS:EVH Fitbit – NYS:FIT GoHealth – NAS:HCAT GoodRx – NAS:GDRX Health Catalyst – NAS:HCAT HealthEquity – NAS:HQY HealthStream – NAS:HSTM Hms Holdings – NAS:HMSY Inovalon Holdings – NAS:INOV Invitae – NYS:NVTA IQVIA – NYS:IQV iRhythm Technologies – NAS:IRTC Livongo – NAS:LVGO [Acquired 11/4/2020] Model N – NYS:MODN MultiPlan – NYS:MPLN NantHealth – NAS:NH NextGen – NAS:NXGN NRC Health – NAS:NRC Oak Street Health – NYS:OSH Omnicell – NAS:OMCL One Medical – NAS:ONEM Peloton – NAS:PTON Phreesia – NYS:PHR Premier – NAS:PINC Progyny – NAS:PGNY Roper Technologies – NYS:ROP Simulations Plus – NAS:SLP SmileDirectClub – NAS:SDC Specialists on Call – NAS:TLMD Streamline Health Solutions – NAS:STRM Tabula Rasa Healthcare – NAS:TRHC Teladoc – NYS:TDOC Veeva Systems – NYS:VEEV Vocera Communications – NYS:VCRA PBMs – Constituents CVS Health – NYS:CVS Rite Aid – NYS:RAD Walgreens Boots Alliance – NAS:WBA HIT & Payer Services – Constituents Accenture – NYS:ACN CACI International – NYS:CACI CBIZ – NYS:CBZ Conduent – NYS:CNDT Corvel – NAS:CRVL DXC Technology – NYS:DXC Huron Consulting Group – NAS:HURN Kforce – NAS:KFRC Magellan Health – NAS:MGLN Tivity Health – NAS:TVTY Healthcare Services – Constituents Amedisys – NAS:AMED Brookdale Senior Living – NYS:BKD Community Health Systems – NYS:CYH Encompass Health Corp – NYS:EHC HCA Management Services – NYS:HCA Laboratory Corporation of America Holdings – NYS:LH Mednax – NYS:MD Quest Diagnostics – NYS:DGX Select Medical Holdings – NYS:SEM Tenet Healthcare – NYS:THC Universal Health Services – NYS:UHS CROs – Constituents Charles River Laboratories International – NYS:CRL Icon – NAS:ICLR IQVIA – NYS:IQV Pharmaceutical Product Development – NAS:PPD PRA Health Sciences – NAS:PRAH Schrodinger – NAS:SDGR Syneos Health – NAS:SYNH Payers – Constituents Anthem – NYS:ANTM Centene – NYS:CNC Cigna – NYS:CI Humana – NYS:HUM Molina Healthcare – NYS:MOH UnitedHealth Group – NYS:UNH WellCare – NYS:WCG [Acquired 1/23/2020] Copyright© 2021 Healthcare Growth Partners 21 MACROECONOMICS 6 2020 was a rollercoaster year few will forget. During the second half of the year, while COVID-19 continued to wreak havoc around the world, the United States conducted one of the most tense elections for U.S. President in history. In addition to COVID-19, debated topics during the election cycle included the confirmation of Amy Coney Barrett to fill Ruth Bader Ginsburg’s seat in the U.S. Supreme Court as well as the Black Lives Matter movement. Ultimately, former Vice President Joe Biden and incumbent U.S. Senator Kamala Harris won the election with more than 81 million votes, the most votes ever cast for a U.S. Presidential ticket. While the election took over news networks and international attention, the stock market regained momentum and ended the year in another bull market, again reaching all-time highs. The S&P 500 ended the year up over 15%, and the NASDAQ up an impressive 43.2%, bolstered by technology stocks benefiting from the new work-from-home world and interest rates at their lowest level in decades. Similar to the uplift experienced in both the stock market and in the M&A market, IPO activity surged in the second half of the year as low interest rates, federal stimulus, and high valuations combined to create a favorable environment for raising equity. In 2020, there were 494 IPOs raising an aggregate $174 billion – more than double that of 2019. Special Purpose Acquisition Companies (SPACs) were a favorite this year, providing a faster and less volatile means for an operating company to become publicly listed. On the other hand, only two companies opted to eschew the traditional IPO process and go public via a direct listing this year, likely a result of risk-aversion to direct listing in 2020’s volatile market. Copyright© 2021 Healthcare Growth Partners 2020 US STOCK MARKET PERFORMANCE -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020 DJIA S&P 500 Nasdaq MACROECONOMICS 22 6 Copyright© 2021 Healthcare Growth Partners We should celebrate the resilience of the market; however, this success needs to be tempered by the realization that the overall economy has not fared quite as well. Unemployment skyrocketed in April to nearly 14.7% (or nearly 23% if we include underemployed and discouraged workers). By the end of the year, unemployment has improved somewhat but is still at a high 6.7%. Underemployment is a major issue as we enter 2021, both from an economic perspective in a consumer-driven economy and from a humanitarian perspective in making sure that everyone has sufficient access to healthcare and necessities. Private equity and venture capital velocity slowed in Q2 but saw renewed momentum in the second half of the year. According to CB Insights, venture capital-backed companies raised nearly $130 billion (14% more compared to 2019) across over 6,000 investments. While investment activity overall continued to thrive despite COVID-19, investors strongly favored larger, established companies, with seed-stage deals declining significantly in the year. Private equity firms also saw a resurgence of activity in the second half, completing over 2,700 transactions worth over $200 billion in the United States alone. M&A followed-suit, with $545 billion in aggregate U.S. transaction value in Q4 alone, compared to just $77.3 billion in Q2. The second-half set numerous records, both in terms of volume and value of transaction activity, yielding a strong overall year despite the complete halt on almost all activity in Q2 during the onset of the COVID-19 pandemic. Moving into 2021, the markets have settled into a strong bull-market mentality, fueled by multiple newly approved vaccines for COVID-19 and confidence in continued government stimulus programs. As we enter 2021, we have many reasons to be hopeful for the future. COVID-19 will continue to be a significant drag on the economy in the short-term as it continues to infect and kill thousands every day; however, there is a light at the end of the tunnel, and we expect to see some favorable effects from the vaccines in the coming months. UNEMPLOYMENT RATE 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 U-3 (official) U-6 (including underemployed and discouraged workers) 23 HEALTH IT HEADLINES 7 Notable headlines from 2020 are outlined in the following pages on a quarterly basis. The headlines in 2020 illustrate the significant influence that policy and regulatory intervention has on the incentives that dictate health IT investment and innovation trends, the increasing vertical integration across healthcare, and the expanding presence of non-traditional companies in the health IT market. Q1 HEADLINES Snohomish County man is first U.S. case of new coronavirus January 21: The first case of Wuhan Coronavirus reported in the United States is a Snohomish County man in his 30s who traveled to China., federal and local officials announced January 21st. At the time, there were 440 cases reported worldwide Tuesday, and the U.S. joined a growing list of places outside mainland China reporting cases, following Thailand, Japan, South Korea and Taiwan. Epic ramps up campaign against HHS interop rules January 24: Epic CEO Judy Faulkner escalated her campaign against HHS' data sharing rules, triggering backlash from patients and advocates who say she's trying to protect the Wisconsin company's business interests at patients' expense. She argued that the rules don't provide privacy protections for patients, and that once patients send the data into unregulated apps that might sell or exploit it, it's impossible to get it back. Practice Fusion to pay $145 million to resolve criminal and civil investigations January 27: As part of the criminal resolution, Practice Fusion admits that it solicited and received kickbacks from a major opioid company in exchange for utilizing its EHR software to influence physician prescribing of opioid pain medications. Google-Backed One Medical surges 58% in trading debut February 1: 1Life Healthcare Inc., a provider of tech-driven primary care clinics under the One Medical brand, closed its first day of trading up 58% after raising $245 million in an initial public offering. The shares closed Friday at $22.07, giving the company a value of $2.7 billion. The company priced them Thursday at the bottom of the $14 to $16 target range. UnitedHealth stock suffers worst day in nearly 9 years as Sanders’ Nevada win stokes investor fear February 25: Shares of UnitedHealth plunged toward their worst day in nearly 9 years, declining 7.8%, as the narrative around a potential Bernie Sanders nomination may have swung to negative from positive following the senator’s surprisingly big win in Nevada. Shares of Centene Corp,which provides programs and services to government-sponsored health-care programs, plunged 9.4%. U.S. stocks tumble 11% in worst week since 2008 crisis February 28: The spread of the coronavirus rattled global financial markets, sending U.S. stocks to their worst week since the financial crisis more than a decade ago. The S&P 500 plunged 11% in the five days. Treasuries surged, pushing yields on the 10- and 30-year notes to record lows during the period. Oil plunged toward $45 a barrel in its biggest weekly rout since 2008. Copyright© 2021 Healthcare Growth Partners HEALTH IT HEADLINES 24 7 HIMSS cancels conference due to coronavirus March 5: HIMSS has canceled its annual health information and technology conference in the wake of the COVID-19 outbreak. It marks the first time in 58 years that the event has been canceled. President Donald Trump had been scheduled to speak on March 9, marking the first time a sitting president would have given remarks at the event and leading some to predict HHS planned to release final versions of long-awaited information-blocking and interoperability rules at HIMSS20. HHS releases final interoperability, data blocking regulations March 9: The Trump administration released widely anticipated rules that change how providers, insurers and patients exchange health data. The regulations will allow patients to access and download their health records with third-party apps. Putting patients in charge of their health records is a key piece of giving patients more control in healthcare, and patient control is at the center of the Trump administration’s work toward a value-based healthcare system, Trump officials said. CMS lays out regulatory relief for value-based care programs amid COVID-19 pandemic March 22: The Trump administration has extended the deadlines for quality reporting and applications for providers in value-based care programs. CMS released relief for regulatory requirements as providers face the growing tide of COVID-19 patients. CMS also announced it will not use any quality data on services from Jan. 1 through June 30 in the agency’s calculations for quality reporting and value-based purchasing programs. OCR will ease restrictions on telehealth tech during COVID-19 March 17: The Office for Civil Rights (OCR) announced, effective immediately, that it will exercise its enforcement discretion and will waive potential penalties for HIPAA violations against health care providers that serve patients through everyday communications technologies during the COVID-19 nationwide public health emergency. This exercise of discretion applies to widely available communications apps, such as FaceTime or Skype, when used in good faith for any telehealth treatment or diagnostic purpose, regardless of whether the telehealth service is directly related to COVID-19. Apple and Google partner on COVID-19 contact tracing technology April 10: Across the world, governments and health authorities are working together to find solutions to the COVID-19 pandemic, to protect people and get society back up and running. Software developers are contributing by crafting technical tools to help combat the virus and save lives. In this spirit of collaboration, Google and Apple are announcing a joint effort to enable the use of Bluetooth technology to help governments and health agencies reduce the spread of the virus, with user privacy and security central to the design. CMS issues recommendations to re-open health care systems in areas with low incidence of CV-19 April 19: As the US continues to face the unprecedented public health emergency from the COVID-19 pandemic, the tide is turning and some areas throughout the country are seeing a decline in cases. As states and localities begin to stabilize, the Centers for Medicare & Medicaid Services (CMS) is issuing guidance on providing essential non-COVID-19 care to patients without symptoms of COVID-19 in regions with low and stable incidence of COVID-19. This is part of Phase 1 in the Trump Administration’s Guidelines for Opening Up America Again. Copyright© 2021 Healthcare Growth Partners Q2 HEADLINES HEALTH IT HEADLINES 25 7 Hospitals ask Congress for another $100 billion COVID-19 May 1: In an odd twist to the pandemic, hospitals are actually struggling financially as beds that would have been taken by non-COVID patients sit empty. Health care workers are bearing the brunt of the distress, having their hours and pay cut. As Trump pushes to reopen, government sees virus toll nearly doubling May 4: The projections, based on data collected by various agencies, including the Centers for Disease Control and Prevention, and laid out in an internal document obtained Monday by The New York Times, forecast about 200,000 new cases each day by the end of May, up from about 30,000 cases now. There are currently about 1,750 deaths per day, the data shows. The U.S. death toll has reached 100,000 May 27: One hundred thousand Americans dead in less than four months. The death toll from the coronavirus passed that hard-to-fathom marker on May 27, which slipped by like so many other days in this dark spring, one more spin of the Earth, one more headline in a numbing cascade of grim news. U.S. health agency reverses Obamacare transgender protections June 12: The U.S. Department of Health and Human Services issued a rule that would lift anti- discrimination protections under Obamacare for transgender people and women seeking abortions, drawing condemnation from Democratic lawmakers. The rule reverses some provisions of the Affordable Care Act passed during President Barack Obama’s administration, also known as Obamacare, that extended civil rights protections in healthcare to cover areas including gender identity and the termination of a pregnancy. Hospitals lose lawsuit against HHS over price disclosure rule June 23: Industry groups representing hospitals and health systems across the nation sued HHS last year, challenging a rule that requires hospitals to disclose the rates they negotiate with insurers beginning in 2021. On June 23, a federal judge granted HHS' motion for summary judgement. Under a final rule issued in November, hospitals are required to disclose the standard charges, including payer-specific negotiated rates, for all services beginning next year. CMS creates new Office of Burden Reduction and Health Informatics June 24: The CMS has formed the new Office of Burden Reduction and Health Informatics – an outgrowth of its Patients over Paperwork Initiative, whose mission is eliminating red tape in healthcare documentation and, officials say, "permanently embeds a culture of burden reduction across all platforms of CMS agency operations.“ The new office is meant to bolster CMS's efforts to decrease the hours and costs clinicians and providers incur for CMS-mandated compliance. Copyright© 2021 Healthcare Growth Partners University of California Health creates centralized data set to accelerate COVID-19 research July 15: Drawing on electronic health records from across its academic health system, University of California Health has developed a unified, secure data set for use in COVID-19 research. The HIPAA Limited Data Set consisting of clinical information with more than 460 million data points is accessible to researchers across the entire UC system, enabling them to rapidly compare treatment options from previous patients to help future patients. Q3 HEADLINES HEALTH IT HEADLINES 26 7 Virginia first state to fully deploy COVID-19 exposure notification app based on Apple-Google tech August 6: The Virginia Department of Health says the app, called COVIDWISE, is fully opt-in for residents, includes stringent privacy protections (including not collecting location data or personal information) and will not be used for the state's contact tracing efforts. Instead, app users can notify others and get exposure notifications following positive COVID-19 test results. If they choose to report their result, Virginia residents positive are provided a personal identification number they enter into COVIDWISE to verify their identity and make sure exposure notifications are legitimate. Other app users will then get a notification if their phones were within six feet of the infected individual within the past two weeks, based on the strength and duration of the Bluetooth signal. HHS chief information officer abruptly resigns August 14: Arrieta told senior leaders that he would stay on for up to a month to help with the transition, said two individuals with knowledge of his plans. He departs just four months after the department stood up the public data sharing hub HHS Protect, and a little over a year since he took over as chief information officer. Firm Collecting Virus Data, TeleTracking, Refuses to Answer Senators’ Questions August 14: In a letter dated Aug. 3, a lawyer for TeleTracking Technologies cited the nondisclosure agreement in declining to say how it collects and shares data. The lawyer refused to share the company’s proposal to the government, its communications with administration officials and other information related to the awarding of the contract. That contract has come under scrutiny in the wake of an abrupt decision last month by Alex M. Azar II, who ordered hospitals to stop reporting coronavirus patient data to the Centers for Disease Control and Prevention and instead send the information to TeleTracking for inclusion in a new centralized coronavirus database. The order raised alarms about data transparency and the sidelining of C.D.C. experts. AMA releases 2021 CPT code set September 1: The first major overhaul in more than 25 years to the codes and guidelines for office and other outpatient evaluation and management (E/M) services was included in September’s release of the 2021 Current Procedural Terminology (CPT®) code set published by the AMA. These foundational modifications were designed to make E/M office visit coding and documentation simpler and more flexible, freeing physicians and care teams from clinically irrelevant administrative burdens that led to time-wasting note bloat and box checking. Judge dismisses data privacy suit against University of Chicago and Google September 9: Back in 2019, Healthcare IT News reported on a unique privacy case involving Google and the University of Chicago Medical Center – which had been named as defendants in a class action suit alleging that they'd failed to properly de-identify data used for machine learning research and predictive analytics projects. On September 4, Judge Rebecca R. Pallmeyer granted the University of Chicago and Google's motions to dismiss the suit. As insurers move this week to stop waiving telehealth copays, patients may have to pay more for virtual care September 29: Starting Oct. 1, several private health insurers will no longer fully pay for virtual visits under certain circumstances — effectively reinstituting costs for patients reliant on the virtual care that has been heralded as a lifeline at a time when Covid-19 is still killing more than 700 Americans each day. Copyright© 2021 Healthcare Growth Partners HEALTH IT HEADLINES 27 7 Copyright© 2021 Healthcare Growth Partners Q4 HEADLINES House Lawmakers Condemn Big Tech’s ‘Monopoly Power’ and Urge Their Breakups October 6: House lawmakers who spent the last 16 months investigating the practices of the world’s largest technology companies said that Amazon, Apple, Facebook and Google had exercised and abused their monopoly power and called for the most sweeping changes to antitrust laws in half a century. To amend the inequities, the lawmakers recommended restoring competition by effectively breaking up the companies, emboldening the agencies that police market concentration and throwing up hurdles for the companies to acquire start-ups. They also proposed reforming antitrust laws, in the biggest potential shift since the Hart-Scott-Rodino Act of 1976 created stronger reviews of big mergers. Trump Administration Finalizes Rule Requiring Health Insurers to Disclose Price and Cost-Sharing Information October 29: The rule requires that almost all health insurance companies and self-insured plans disclose pricing and cost-sharing information. Under this final rule, more than 200 million Americans with private-sector insurance (both individual-market and employer-based) will have access to a list of real-time price information, including cost-sharing, enabling them to know how much care will cost them before going in for treatment. Teladoc finalizes blockbuster deal with Livongo in less than 3 months October 30: Teladoc announced Aug. 5 it planned to pay $18.5 billion in cash and stock for Livongo, which provides diabetes monitoring and remote monitoring. The combination of two of the largest publicly-traded virtual care companies will create a health technology giant just as the demand for virtual care soars. The deal was wrapped up quickly, in under three months, as the companies likely look to leverage the current financial tailwinds of the telehealth boom and investor interest in digital health spurred by the COVID-19 pandemic. Biden defeats Trump for White House, says ‘time to heal’ November 7: Democrat Joe Biden defeated President Donald Trump to become the 46th president of the United States on Saturday and offered himself to the nation as a leader who “seeks not to divide, but to unify” a country gripped by a historic pandemic and a confluence of economic and social turmoil. Trump refused to concede, threatening further legal action on ballot counting. But Biden used his acceptance speech as an olive branch to those who did not vote for him, telling Trump voters that he understood their disappointment but adding, “Let’s give each other a chance.” HHS finalizes rules to nix Part D rebate safe harbor, tie Part B prices to foreign countries November 20: The Trump administration finalized a rule that gets rid of the safe harbor shielding Medicare Part D rebates from the anti-kickback statute and a rule that will tie certain Medicare Part B drug prices to those paid by countries overseas. Trump called for both rules to be published during a flurry of executive orders back in September. The rebate rule is expected to generate significant pushback from providers, payers and pharmacy benefit managers (PBM) that say it will harmfully impact seniors' access to cheaper drugs. The so-called most-favored-nation rule will also change how providers get paid for administering and storing Part B drugs. The rebate rule will replace the safe harbor for Part D rebates, meaning they could be targeted under the federal anti-kickback law, with a new safe harbor that applies only to discounts offered at the point of sale. HEALTH IT HEADLINES 28 7 FDA Takes Key Action in Fight Against COVID-19 By Issuing Emergency Use Authorization for First COVID-19 Vaccine December 11: The emergency use authorization allows the Pfizer-BioNTech COVID-19 Vaccine to be distributed in the U.S. “The FDA’s authorization for emergency use of the first COVID-19 vaccine is a significant milestone in battling this devastating pandemic that has affected so many families in the United States and around the world,” said FDA Commissioner Stephen M. Hahn, M.D. Trump signs stimulus and government spending bill into law, averting shutdown December 27: President Trump unexpectedly capitulated Sunday night and signed the stimulus bill into law, releasing $900 billion in emergency relief funds into the economy and averting a Tuesday government shutdown. He had demanded changes to the stimulus and spending package for a week, suggesting he would refuse to sign it until these demands were met. This continued defiance caused lawmakers from both parties to panic, worried about the implications of a government shutdown during a pandemic. It was unclear what prompted him to change his mind late Sunday, but he was under tremendous pressure from Republicans to acquiesce. Drugmakers to hike prices for 2021 as pandemic, political pressure put revenues at risk December 31: Drugmakers including Pfizer Inc, Sanofi SA, and GlaxoSmithKline Plc plan to raise U.S. prices on more than 300 drugs in the United States on Jan. 1, according to drugmakers and data analyzed by healthcare research firm 3 Axis Advisors. The hikes come as drugmakers are reeling from effects of the COVID-19 pandemic, which has reduced doctor visits and demand for some drugs. They are also fighting new drug price cutting rules from the Trump administration, which would reduce the industry’s profitability. Copyright© 2021 Healthcare Growth Partners Copyright© 2021 Healthcare Growth Partners 29 ABOUT HEALTHCARE GROWTH PARTNERS 8 Healthcare Growth Partners (HGP) is an exceptionally experienced Investment Banking & Strategic Advisory firm exclusively focused on the transformational Health IT market. We unlock value for our clients through our Sell-Side Advisory, Buy-Side Advisory, Capital Advisory, and Pre-Transaction Growth Strategy services, functioning as the exclusive investment banking advisor to over 120 health IT transactions representing over $2 billion in value since 2007. Our passion for healthcare inspires us to not only create value for our clients, but to also generate broad, overarching improvements to the functionality and sustainability of health. With our focus, we deliver knowledgeable, honest and customized guidance to select clients looking to execute high value health IT, health information services, and digital health transactions. CONTACT INFORMATION Christopher McCord Managing Director chris@hgp.com 2001 Kirby Drive, Suite 814 Houston, TX 77019 (713) 955-7935 www.hgp.com Securities offered through HGP Securities, LLC, member FINRA & SIPC, broker-dealer affiliate of Healthcare Growth Partners, LLC. Sources of Information: CMS, CBS, CNBC, CNN, company press releases, company SEC filings, Dealogic, EY Global, FactSet, FierceHealthcare, Forbes, FRED, Health Data Management, Healthcare Growth Partners database, HealthLeaders Media, HIStalk, Mercom Capital Group, Mergermarket, Modern Healthcare, NVCA, Pitchbook, PwC, Reuters, Rock Health, SIFMA, StartUp Health, The New York Times, and The Wall Street Journal. These statistics are presented for informational purposes only. While the information presented has been obtained from sources deemed to be reliable, no representation or warranty, express or implied, is made as to the accuracy or completeness of such information. Copyright© 2021 Healthcare Growth Partners 30 HGP TRANSACTION EXPERIENCE 9 RCM Vendor HGP TRANSACTION EXPERIENCE 31 9 Copyright© 2021 Healthcare Growth Partners HGP TRANSACTION EXPERIENCE 32 9 Copyright© 2021 Healthcare Growth Partners 33 APPENDIX A Strategic M&A Highlights 10 Quarter Acquiror Seller Seller Description Deal Size ($mm) Q1 CompuGroup Medical H&S Qualita Provides solutions including patient management, disease and dosage management, blood pressure level, spirometry and pulse oximetry which is linked and can be viewed on a tablet, a laptop or a mobile. na Q1 ResMed Snapworx Software built on artificial intelligence that automates the outdated, manual processing that slows down patient management. na Q1 Nestle Health Sciences LivingMatrix Developer of a cloud-based application for Functional Medicine Practitioners that streamlines and automates the paper intake process, maps patient information into the Functional Medicine Timeline and Matrix and makes tracking patients’ progress easy. na Q1 Healthgrades eVariant Provider of SaaS-based enterprise platform designed to modernize physician alignment strategies with data analysis. $150 Q1 HCA Healthcare Valify Develops a Web-based solution that allows healthcare organizations to identify, benchmark, and track savings in purchased services. na Q1 SCI Solutions Tonic Solutions Provider of a patient data collection and payments platform designed to collect any information from any patient on any device. na Q1 Teladoc InTouch Health Provides comprehensive telemedicine solutions and expertise that enable physicians to perform real-time consults with patients. $600 Q1 R1 SCI Solutions The company offers PATIENT REFERRALS, a solution to connect and expand reach to referring providers, capture and grow outpatient volumes, streamline operations, and increase revenues; and PATIENT SCHEDULING, an access management healthcare scheduling solution. $190 Q1 Global Healthcare Exchange Lumere Provider of data-driven technology platform intended to improve patient care. The company's platform provides both physicians and hospital leaders with evidence-based data, information, and analytics. $135 Q1 Infor Global Solutions Intelligent Insites Provides healthcare organizations with a single system capable of locating patients, staff, equipment, and inventory via information derived through various wireless locating technologies. na Q1 Evive WiserTogether Treatment-guidance tool that helps people find the right treatment. na Q1 Clarivate Analytics Decision Resources Group Provides analytics and consulting services to help vendors identify, assess and forecast medical-device and drug utilization trends and market opportunities. $950 Q1 Hill-Rom Excel Medical The company aggregates data from physiological monitors, medical devices and its surveillance tools enable caregivers to evaluate data from multiple sources and track trends that might point to patient deterioration. $19.2 Q1 Imprivata GroundControl Provider of automation software for managing mobile devices in modern enterprises. na Q1 AMN Healthcare Services Stratus Video Provider of interpreting, video and telecommunication services designed to change the way limited English proficiency patients communicate with their healthcare providers. $475 Q1 HealthMark Otech Provider of patient intake management software and systems. na Q1 CompuGroup Medical Cerner - Germany & Spain Assets The products include medico and Soarian Integrated Care, which are health information systems in Germany; Selene, a leading health information system for public hospitals in Spain; and Soarian Health Archive, a system for digitizing and storing health information. $248 Copyright© 2021 Healthcare Growth Partners APPENDIX A – M&A HIGHLIGHTS 34 10 Quarter Acquiror Seller Seller Description Deal Size ($mm) Q1 OnShift Avesta Systems The company's CandidateCare and AssociateCare applications streamline the process of attracting, identifying and building a skilled workforce and provide services such as background checks and drug screening, employee engagement surveys as well as HR support and consulting. na Q1 Medtronic Digital Surgery A pioneer in surgical artificial intelligence (AI), data and analytics, and digital education and training. na Q1 symplr The Patient Safety Company Offers cloud-based solutions that provide healthcare event reporting, incident management, audit process control, management of clinical governance, performance management, and quality improvement na Q1 Health Catalyst Able Health Developer of a software platform for physician organizations designed to manage value-based programs. $27 Q1 ShareCare Visualize Health Developer of a population health and quality measure attainment platform for medical providers to close gaps in patient care and maximize value- based reimbursements. na Q1 Smith & Nephew MiJourney Developer of a patient management software that enables coordination across the entire episode of care by administrators, physicians, and patients. na Q1 CentralReach Thread Learning Provider of an educational platform intended to facilitate learning management of autism students. na Q1 Navihealth Innovative Healthcare Delivery Specializes in identifying and addressing social determinants of health in order to improve quality of life and clinical outcomes for patients. na Q1 Roche Diagnostics OBI Medical Developer of a software intended to accurately measure gas values in the bloodstream. na Q1 RevSpring Loyale Healthcare Provides solutions to develop financial relationships between providers and their patients through financing options, balance notification, online payment options, and secure digital communications.. na Q1 Ginger LiveBetter App for better mental health and well-being. na Q1 HealthStream NurseGrid Developer of staffing, communication and schedule management tools designed to modernize staffing processes for nurses. $21.4 Q1 WebMD Health Corp. StayWell Company Provider of patient education and population health management services. The company focuses on health engagement though health information and education programs. na Q1 Press Ganey Associates NarrativeDx The company's platform uses natural language processing and machine learning to collect, analyze and visualize unstructured patient feedback from internal and external sources and automatically highlight key areas for improvement and provide specific recommendations. na Q1 Fresenius Medical Care North America DGG Developer of digital and scalable disease management programs for patients with chronic diseases. The company is engaged in developing disease management software for health insurance providers and global pharmaceutical companies. na Q1 Thomson Reuters Corporation Pondera Solutions Provider of fraud detection as a service intended to combat fraud, waste and abuse in large government programs and health systems. na Q1 Valsoft MacPractice Developer of a practice management and clinical software built for doctors who use macs. na Q2 Integrichain Incorporated Cumberland Life Sciences Life Sciences Division specializes in advisory services, business process outsourcing, analytics solutions and systems implementation around contracts, pricing and compliance for pharma manufacturers of all sizes.. na Copyright© 2021 Healthcare Growth Partners APPENDIX A – M&A HIGHLIGHTS 35 10 Quarter Acquiror Seller Seller Description Deal Size ($mm) Q2 UnitedHealth Group AbleTo Provider of technology-enabled behavioral health care platform designed to integrate behavioral and medical health care. $470 Q2 Change Healthcare eRx Network Provider of comprehensive, innovative, and secure data-driven claims processing solutions for pharmacies. $212.9 Q2 Kaufman Hall Change Healthcare - Connected Analytics Business Provider of enterprise performance management (EPM) software, data, and management consulting services. $55 Q2 Optum NaviHealth Provides post-acute care support solutions, including Advantage Navigator, which helps Medicare Advantage plans to manage their post-acute care spending, Post-Acute Compass, which helps hospitals for developing and managing a network of providers to better assess and manage patients following hospital discharge, and SeniorMetrix that provides a suite of functional assessment and clinical decision-support technology $2,950 Q2 Omada Physera The company's health tracking mobile application provides guided exercises, track progress and connect with a therapist, enabling users to seamlessly recover from injuries and get fit again. $30 Q2 Ontario Systems SwervePay Provides cloud-based payment and customer service solutions to pay medical bills via text. na Q2 Change Healthcare PDX Provider of pharmacy management software and services intended to offer innovative and patient care, medical accounting services and reporting tools for operational management. $208 Q2 R1 Cerner RevWorks Cerner RevWorks consists of an array of revenue cycle management (RCM) services ranging from discrete services related to claims processing and denial management for both physician practices and health systems to larger outsourcing agreements. $30 Q2 Walmart CareZone Prescription Management Tech CareZone’s prescription management technology and related patents. na Q2 Cedar Gate Technologies Citra Health Solutions The company engages in delivering comprehensive, technology-powered, people-driven applications which aggregates clinical, financial, and patient data from multiple sources to create a holistic perspective of a provider's panel and individual patient touch points within the healthcare system. na Q2 Syntellis Kaufman Hall & Associates – Software Diivision Provides financial and capital advisory services to the healthcare sector. na Q2 Lululemon Mirror Developer of a connected fitness platform designed to bring the essential components of a great studio workout in-home. $500 Q3 Dedalus DXC Healthcare Developer of healthcare software based in Tysons, Virginia. The open digital health platform helps to improve care outcomes by delivering contextual and actionable insights across the healthcare ecosystem. $525 Q3 HealthEdge Software The Burgess Group Developer of a claims reimbursement management software designed to streamline medical claims reimbursement. The company's SaaS-based claims reimbursement management software offers network contract modeling, historical claims payment analytics, CMS rate research and forecasting as well as claims pricing and editing. na Copyright© 2021 Healthcare Growth Partners APPENDIX A – M&A HIGHLIGHTS 36 10 Quarter Acquiror Seller Seller Description Deal Size ($mm) Q3 Roper Technologies EPSi Financial decision support tool. $365 Q3 GENEX Services Coventry Workers Comp Services Provider of compensation cost and care management services intended to enhance network development, clinical integration and operational efficiencies at the client desktop. $850 Q3 Teladoc Health Livongo Health Develops and operates a consumer digital health platform for people with diabetes. $18,500 Q3 Providence Services Group Navin, Haffty & Associates Offers a full range of consulting services that are strategically aligned with MEDITECH’s solutions and future direction. na Q3 Health Catalyst VitalWare Developer of a cloud-based SaaS platform designed to easily document, code, and audit healthcare records. $120 Q3 Waystar eSolutions Offers revenue cycle solutions - products assist healthcare providers in automating and enhancing workflow with regard to claims review, editing, and denials/appeals management, as well as eligibility verification and payor connectivity. $1,350 Q3 Omnicell Pharmaceutical Strategies Group 340B Link combines industry-leading software, deep knowledge of the 340B program, and software-enabled services. $225 Q3 Qualifacts Systems Credible Behavioral Health Developer of electronic health record and practice management software for behavioral health clinics. na Q3 Bayer AG Care/of Provider of an online healthcare platform designed to recommend personalized vitamins and supplements. $157.5 Q3 GoodRx Scriptcycle The company partners with regional retail pharmacy chains to provide discount offerings, control costs and comprehensively manage their prescription business. $60.1 Q3 Verisk Analytics Franco Signor The company offers comprehensive Medicare secondary payer (MSP) compliance solutions to the largest employers, insurers, and third-party administrators enabling them to mitigate exposures for primary plans and offers services like insurer reporting, conditional payment resolution, Medicare set-aside allocations, and post-settlement administration. $160 Q3 Provation ePreop The company offers patient engagement and surgical case management software that enables document management, quality outcome reporting, coordinate perioperative care, billing support, readmission prevention and other functions. na Q3 CorroHealth TrustHCS Provider of outsourced coding and health information management consulting services to the medical sector. na Q3 CorroHealth Visionary RCM Based in India, provides revenue cycle management solutions. na Q3 CorroHealth T-System Provider of clinical documentation and coding services. The company's emergency department information system services include physician and nurse paper documentation systems and document management. na Q4 WellSky CarePort Health Provider of software to facilitate post-acute hospital care. The company offers a web-based platform enabling hospitals, patients and post-hospital care providers to coordinate and manage care across the post-acute care continuum. $1,350 Q4 Netsmart Technologies Tellus Developer of an electronic visit verification and care management platform intended to improve patient outcomes and management. na Q4 symplr TractManager The company's software suite offers business intelligence, compliance and contract management tools to healthcare professionals and hospitals, enabling them to create, oversee and effectively manage their contractual agreements in compliance with regulations. na Copyright© 2021 Healthcare Growth Partners APPENDIX A – M&A HIGHLIGHTS 37 10 Quarter Acquiror Seller Seller Description Deal Size ($mm) Q4 RLDatix Verge Health Provider of risk management platform designed to leverage technology to create meaningful improvements in regard to protecting patients and protecting margins. na Q4 Teleperformance USA Intrado Health Advocate Business Provider of health advocacy, navigation, and well-being and integrated benefits programs. $690 Q4 ExamWorks Sedgwick (Peer Review and IME) The group health peer review and independent medical examination assets of Sedgwick. na Q4 Centene Corp. Apixio Offers CKX Platform, a cloud-based clinical knowledge exchange platform that imports and reconciles patient data, and Patient Analyzer, which provides a view of an integrated patient record comprised of coded data, narrative text, and scanned documents na Q4 MultiPlan HSTechnology Solutions Developer of an innovative healthcare technology platform intended to reduce healthcare costs. The platform uses sophisticated data analytics and tools to engage members and providers on both the front and back end of healthcare. $140 Q4 CompuGroup Medical eMDs Provider of electronic health record and practice management software and services to ambulatory care organizations. $240 Q4 Cloudbreak Health UpHealth The company's platform improves patient access to timely and personalized digital care by delivering care management tools, remote monitoring applications, ePharmacy delivery, behavioral health solutions and tech- enabled primary care. na Q4 HealthStream ANSOS Staff Scheduling Enterprise productivity management solution for healthcare providers that want to anticipate workload requirements, meet staffing variations in real time, and balance clinical needs with staff’s professional goals. $67.5 Q4 DuvaSawko Abeo Management The company's software specializes in revenue cycle management, practice management, med suite billing and offers medical transcription services to private practices, hospitals and surgery centers. na Q4 Imprivata FairWarning Provider of software to protect the health, wealth, and personal information for healthcare, financial services, and other businesses. na Q4 Intelerad Medical Systems Digisonics Provider of cardiovascular and obstetrics/gynecology information and structured reporting systems. The company's platform consolidates multiple systems to optimize the physician workflow, enabling cardiologists, obstetricians and gynecologists to improve patient care. na Q4 Cedar Gate Technologies Deerwalk The company's healthcare analytics platform offers actionable insights, intelligent reporting and administrative solutions serving the needs of payers, providers, employers and ASOs, including health plans, TPAs, brokers and consultants. na Q4 Kyruus Healthsparq Offers a platform that provides members with cost and quality information about doctors, hospitals and medical services, based on their individual benefits. na Q4 Philips BioTelemetry Provides monitoring services and digital population health management for healthcare providers, medical device manufacturing, and centralized core laboratory services for clinical research. $2,800 Q4 Gainwell Technologies HMS Holdings Provider of health care revenue enhancement, accounts receivable management and third-party electronic claims services. $3,400 Q4 Zipari HealthX SaaS technology platform that delivers online healthcare portals to 12.8 million health plan members and 425,000 physicians, providing them with a central data repository for key, real-time information. na Q4 Firstsource Solutions PatientMatters Developer of patient registration and medical billing software intended to reduce the stress of care, drive brand loyalty and improve and accelerate cash collections. $13 Copyright© 2021 Healthcare Growth Partners 38 APPENDIX B Financial Sponsor Buyout Highlights 11 Quarter Acquiror Seller Seller Description Deal Size ($mm) Q1 ABRY Partners Centauri Health Solutions Developer of cloud-based data management software solution designed to create custom solutions for health plans and hospitals, optimizing government-sponsored healthcare reimbursement for the care and coverage provided to health plan members and hospital patients. na Q1 HGCapital Intelerad Medical Systems Provider of medical images, workflow and data management software. The company's software specializes in medical imaging, distributed radiology services, distributed architecture and workflow orchestration, radiology and workflow modules. $849.5 Q1 Ridgemont Equity Partners Healthmark Provider of health information management services for medical clinics and hospitals. The company's services involve the release of information process creating a patient-centric experience with advanced management and technology services. na Q1 Astorg eResearch Technology Provider of health outcomes research services to biopharma sponsors and contract research organizations. na Q1 Windjammer Capital Compex Legal Services Provider of litigation support services to the legal and insurance communities designed to help clients to meet their minority purchasing goals. na Q1 Arsenal Capital Partners BresMed Health Solutions Provider of health economics and outcomes research consultancy service based in Sheffield, England. na Q1 SymphonyAI Group TeraRecon Developer of 3D medical image processing systems intended to provide solutions that impact clinical care across health systems. na Q1 Francisco Partners Smith Technologies Provider of software suite for community and long-term care (LTC) pharmacies, local government agencies, and utility districts. na Q1 Record Reproduction Services, Graue Mill, TPE Boulder, Iron Creek, Milk Street, Search Fund Partners Quest HIMS Provider of medical record retrieval and medical record disclosure management services for hospitals and medical groups based in Illinois, United States. The company specializes in quality review, delivery method verification, invoicing, delivery, and collection services for healthcare organizations. na Q1 SunMed Advisors Connextyx Technologies The company provides unique products for the healthcare market including MedFlash, the electronic Personal Health Manager (ePHM), Medical Alert US, a Personal Emergency Response Services (PERS) product and Medical Transcription, Disease Management, Revenue Cycle Management and Medical Consulting - Billing. na Q1 Genstar Capital ConnectiveRx Provider of patient prescription medication assistance and payment reimbursement services. na Q1 The Blackstone Group HealthEdge Software Provider of next-generation claims and benefit administration, business intelligence and portal software products for healthcare payors. $730 Q1 Parthenon Capital Partners RxSense Provider of pharmacy benefit management services, health savings programs, and pharmacy technology services throughout the United States. na Q1 Marlin Equity Partners SmartLinx Solutions Developer of end-to-end workforce management and human capital management software. na Q1 Main Capital Partners Alfa Kommun & Landsting The company's broad offering includes both complete information systems and niche products, such as solutions for journaling, electronic prescription, medication management and care planning. na Copyright© 2021 Healthcare Growth Partners APPENDIX B – BUYOUT HIGHLIGHTS 39 11 Quarter Acquiror Seller Seller Description Deal Size ($mm) Q2 Verdane Capital Conscriptor Developer of medical journal documentation services and dictation software based in Henan, Sweden. The company offers journal writing, Medspeech hybrid dictation and dictation analysis to hospitals, clinics and public primary care facilities. na Q2 Glide Buy Out Partners Corilus Offers practice management systems, communication tools, electronic patient records, data exchange and billing systems. na Q2 Summit Partners, TPG Capital, Silversmith Capital Partners Lifestance Provider of behavioral healthcare and evidence-based treatment services. The company offers psychiatry and medication management, psychological testing and evaluation, Intensive Outpatient Programs (IOPs) as well as child and adolescent services to patients suffering from addiction, substance abuse and eating disorders. $1,200 Q2 Nautic Partners ProHealth Medical ProHealth Medical, Inc. enables health systems to service its home infusion patients rather than sending them to outside providers. The service generates a new revenue source from existing patients and resources in the rapidly-growing area of infusion services. na Q2 Nautic Partners Bioplus The company's service specialize at providing comprehensive benefit investigations, financial and co-pay assistance, drug list review, outcome reports for REMs and LDD reporting, timely patient status update, financial savings and therapeutic outcomes and patient status reports, enabling patients to enjoy 24/7 access to pharmacists. na Q2 Rubicon Venture Partners Central Logic Leading provider of transfer center and on-call scheduling technology solutions for healthcare systems. $100 Q2 Sunstone Partners Med Tech Solutions The company offers all-encompassing healthcare IT installation, deployment and maintenance from in-office devices to cloud-based applications, assess, implement and maintain compliant environments to meet healthcare regulations. na Q2 Fusion Capital Kalos The company provides pharmacy software programs and hardware systems that are used in a variety of settings such as retail pharmacies, universities, and correctional facilities, and also engages in custom designing and printing of promotional products and corporate apparel. na Q2 LLR Partners TrueLearn Provider of test preparation software for medical examinations. The company's platform enables medicine students in preparing with SaaS- based outcome-driven exam preparation techniques while making the learning process fun, impactful and permanent. na Q2 Trinity Hunt Partners Juris Medicus Provider of medical expert sourcing and case management services. The company offers a team of professionals with extensive experience as paralegals, legal assistants, litigation clerks, nurses, and medical records specialists to make the medical expert process as efficient and effective as possible for all involved. na Q2 Lightyear Capital HealthPlanOne Provider of an online marketplace for health insurance. The company engages in offering health insurance sales and distribution through its digital marketing, proprietary technology and call center operations, enabling health insurance carrier and broker customers to research and select health insurance plans in an efficient and compliant manner. na Q2 Nordic Healthcare Group Health Innovation Institute Provider of health and social services and analytics intended to build a better social and healthcare system. The company specializes in health innovation, health IT, and medical equipment and governance in healthcare, delivering clients with a high-quality product or service in an efficient manner. na Q2 Hublo MedGo SAS An online platform for health care facilities to manage and solicit its network of replacements, including over-time and on-call replacements. na Q2 ArchiMed Actigraph Developer of physical activity and sleep or wake monitoring device designed to facilitate users to configure and initiate data collection. na Copyright© 2021 Healthcare Growth Partners APPENDIX B – BUYOUT HIGHLIGHTS 40 11 Quarter Acquiror Seller Seller Description Deal Size ($mm) Q2 Thomas H. Lee Partners Seniorlink Provider of in-home elder-care advice and care management services. The company offers professional advice, education, in-home geriatric care assessments and ongoing care management for elders and individuals with disabilities while also offering a platform to connect caregivers with the users. $400 Q2 EXA Capital eBenefits Network Developer of HR tool intended for employee benefits management. The company's tool provides premium and deduction management, billing and reconciliations, claims integration, insurance enrollment, payroll contributions and COBRA processing. na Q3 ABRY Partners HealthEZ Independent third-party administrator helping businesses of all sizes design plans that work for them. na Q3 Francisco Partners Management MyFitnessPal Operates an online nutrition and calorie counter database that allows users to record their food intake, and track calorie counting and food plans $345 Q3 Madison Dearborn Partners Benefytt Technologies Health insurance technology company engaged in the development and operation of private e-commerce health insurance marketplaces, consumer engagement platforms, agency technology systems, and insurance policy administration platforms. $410 Q3 Renovus Capital Partners Futura Mobility The company's services include advisory services, clinical mobility, strategic planning and telemedicine, helping businesses to focus on their core operations. $13.5 Q3 TPG Capital, Leonard Green & Partners WellSky The company is a supplier of performance management and information software systems for acute, non-acute, community-based care, healthcare providers, accountable care organizations and governments across the globe thus helping them to improve cost controls, productivity, quality and meet the challenges of their rapidly changing industries. $3,000 Q3 Parthenon Capital Partners Nuvem Health Provider of pharmacy claims administration. na Q3 Parthenon Capital Partners 340Basics Developer of cloud-based pharmacy claims administration system. na Q3 TA Associates Francisco Partners Edifecs Serves as a data exchange, data sharing, and data infrastructure platform between health insurance companies and outside parties including physicians, clearinghouses, and other insurers. $1,420 Q3 Vesey Street Capital Partners QualityMetric Developer of patient-reported outcomes and clinical outcomes assessment products and provider of scientific consulting and translation services for the healthcare and life sciences companies. na Q3 GI Partners Clinical Ink Offers SureSource, a clinical trials solution that allows users to record comments, explanations, and validated source data. na Q3 The Blackstone Group Ancestry Provider of online genealogical services intended to discover the family history of individuals. $4,700 Q3 K1 Capital Rethink First Developer of a web-based autism treatment platform designed to place evidence-based treatment services in the hands of every educator, clinician or parent working with a child with special needs. na Q3 Reliance Industries Netmeds.com Operates an online pharmacy chain and sells prescription and over-the- counter (OTC) drugs. $83 Q3 BID Equity CareCenter Software Developer of healthcare facility management software offering complete software solution for inpatient, disability, rehabilitation and spa facilities and outpatient services. The company's software specializes in management of administration, billing, therapy, medicine and nursing documentation. na Q3 Sunstone Partners Rsource Healthcare Provider of revenue cycle management services to hospitals and health systems. na Copyright© 2021 Healthcare Growth Partners APPENDIX B – BUYOUT HIGHLIGHTS 41 11 Quarter Acquiror Seller Seller Description Deal Size ($mm) Q3 FTV Capital 6 Degrees Developer of healthcare reimbursement technology designed to enhance health care cost containment solutions. na Q3 The Carlyle Group TriNetx Operator of a global health research network intended to optimize clinical trial design and recruitment processes. na Q3 Kohlberg Kravis Roberts & Co. 1-800 Contacts Offers contacts and supplies though phone, Internet, mail, or fax orders, as well as customer service agents. $3,100 Q3 The Chernin Group SketchyMedical Online education company that teaches concepts through visual memory techniques. $30 Q3 JLL Partners MedeAnalytics Provide cloud-based analytics to hospitals to determine how clinical performance impacts financial performance. $225 Q4 Odyssey Investment Partners ProPharma Group Provider of outsourced medical information, pharmacovigilance and compliance consulting services to the life sciences industry. na Q4 Veritas Capital DXC Social Health Division The company offers technology-enabled, mission-critical solutions that are fundamental to the administration and operations of health programs which leads to reliable delivery of highly complex systems for public sector clients. $5,000 Q4 Gridiron Capital Cubii Maker of a stationary exercise peddler. $85 Q4 Onex Partners OneDigital Health and Benefits Employee benefits agency, provides employee benefits insurance products and services to small and mid-sized businesses, and individuals. $2,650 Q4 Accel-KKR Surgical Information Systems Provides perioperative software to ASCs and hospitals. na Q4 Providence Equity Partners PatientNow The company's management tool offers appointment scheduling, before- and-after photos, a point of sale (POS), inventory management and reputation management, along with providing an online patient portal. na Q4 Kainos Capital Nutrisystem Provider of weight-management products and services. The company offers weight-management programs through pre-packaged food deliveries and online or telephone diet counseling. $575 Q4 ABRY Partners Benefit Recovery Group Provider of healthcare subrogation services serving health plan administrators and employers. The company offers subrogation and compensation recovery services thereby saving costs for its clients by recovering dollars. $40 Q4 Frazier, 22C Capital, WindRose Health, Adams Street Partners Accuity Delivery Systems Provides clinical documentation, coding, and client education services for the healthcare sector. na Q4 Morgan Stanley US HealthConnect Operator of a holding company providing education through a digital platform for healthcare providers. The company focuses on diversified areas such as oncology, cardiology and women's health using its unique, data-driven strategic and consultative approach to help pharmaceutical clients meet the information needs of healthcare providers. na Q4 Bindley Capital Partners DentalWorks USA Operator of dental claim management and consulting agency. The company focuses exclusively on managing workers' compensation dental claims and serves self-insured employers, third-party administrators and insurance carriers active in the workers' compensation industry. na Q4 OpenGate Capital Aurotech Provider of digital and business services for the US federal healthcare and adjacent civilian agencies. The company offers creative and actionable business solutions in the areas of work management, program & portfolio management, litigation & eDiscovery, business transformations, drug lifecycle tracking and healthcare data archiving services. na Copyright© 2021 Healthcare Growth Partners APPENDIX B – BUYOUT HIGHLIGHTS 42 11 Quarter Acquiror Seller Seller Description Deal Size ($mm) Q4 Great Hill Partners, Advent International RxBenefits Provider of pharmacy benefit procurement and administration services intended for employee benefits consultants and self-insured employers. na Q4 Northwestern Mutual, HarbourVest Partners, Mubadala Investment, GHO Capital Envision Pharma Group Provider of technology and scientific communication that serves pharmaceutical, biotechnology and medical device companies. na Q4 New Mountain Capital HealthComp A full-service TPA providing medical, dental, vision, COBRA, and HIPAA services. The company also provides flexible benefit plans, utilization review, wellness, case management and other medical management services. na Q4 Bain Capital HST Pathways Developer of cloud-based ambulatory surgery center (ASC) software for single and multi-specialty ASCs, corporate management companies, hospital outpatient and same-day surgical facilities. $215 Q4 DW Healthcare Partners CareXM Provider of virtual care and patient engagement solutions for post-acute and non-acute healthcare providers. na Q4 Stone Point Capital Allied Benefit System The company designs creative self-insurance services for organizations that choose to take control of their healthcare in collaboration with clients and benefits consultants, enabling them to institute the right plan to support the best options for employees and their families. $475 Q4 Clearlake Capital Group nThrive Technology Division The business unit's end-to-end software-as-a-service (SaaS) platform offers patient access, charge integrity, claims management, contract management, machine learning and robotic process automation, data and analytics and education software solutions to hospitals and health systems. $1,000 Q4 Novacap, Investissement Quebec Logibec The company develops administrative and clinical software tools as well as health care information management software that integrates medical and clinical content with administrative management functions na Q4 Serent Capital Procurement Partners The company's platform provides an automated end-to-end purchasing solution, encompassing the full purchasing cycle from product selection to vendor payment also offering a compliance audit feature that helps to reduce bottom-line vendor spend for its customers. na Q4 Linden Capital Partners Specialty Networks Consulting The company offers technical advisory services, taking into consideration various changes in outcomes related to the effectiveness, delivery and costs, enabling clients in the healthcare industry to strategize the vast amount of information data analytics that can create actionable steps with a proven outcome. na Q4 Thoma Bravo Zipari Designs and develops technology solutions for the health insurance industry, including a CRM solution and a consumer experience platform. $500 Q4 Nordic Capital Cytel Provider of analytical software and services for the life sciences sector. $1,000 Q4 Hughes & Company, STG Azara Healthcare Developer and provider of data-driven reporting and analytics software designed for the community health marketplace. na Copyright© 2021 Healthcare Growth Partners
