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<p>Health IT & Health Information Services Semi-Annual Market Review January 2018 www.hgp.com Copyright 2018 Healthcare Growth Partners Health IT & Health Information Services: Market Review January 2018 Table of Contents Health IT Executive Summary 3 Health IT Market Trends 6 HGP 2017 Corporate M&A Survey 9 HIT M&A (Including Buyout) 16 Health IT Capital Raises (Non-Buyout) 21 Healthcare Capital Markets 22 Macroeconomics 26 Health IT Headlines 28 About Healthcare Growth Partners 35 HGP Transaction Experience 36 Appendix 39 1 2 3 4 5 6 7 8 9 10 11 Health IT Executive Summary Market Disorientation 2017 was a blockbuster year for Health IT. Despite uncertainty surrounding a failed effort to repeal the ACA and the resignation of HHS Secretary Tom Price, the HGP Health IT index gained 25%, Health IT Investment activity shattered prior records, and Health IT M&A activity and valuations hover at all-time highs. Global and U.S. Health IT investment are up 849% and 583% since 2011, respectively. The S&P 500 gained nearly 20%, marking the 9th year of a bull market. The U.S. unemployment rate is at a 17 year low at 4.1%, and interest rates, while trending up, remain near all- time lows, providing easy access to capital. All of this occurred even before lower corporate and individual tax rates kicked in on January 1. The Health IT stats are staggeringly good. But are they scary good? In this HGP HIT Market Review, we uncover the findings from our bi-annual Health IT M&A Survey. Our 13 question survey covers a range of topics, including whether the Health IT market is in a bubble, to which survey respondents reported the following in comparison to the same question in 2015: There is certainly an abundance of growth capital flooding into the Health IT Market we've seen nearly $34 billion globally and $26.2 billion in the U.S. since 2013. Compared to the prior 5-years, this represents a 608% and 387% increase in capital. With such a swing, one can speculate that the market is either correcting for historical underfunding or significantly overfunded. To determine which, we took a look at the numbers. Copyright 2018 Healthcare Growth Partners 3 1 Valuation Annual Revenue ($ mm) U.S. Health IT Investment Pre- Money Post- Money Exit (2x return) Starting Exit Net New 2013 2,849 4,274 6,268 12,536 1,068 3,134 2,066 2014 4,554 6,832 10,020 20,041 1,708 5,010 3,302 2015 6,173 9,260 13,582 27,163 2,315 6,791 4,476 2016 5,564 8,347 12,243 24,485 2,087 6,121 4,034 2017 7,102 10,653 15,625 31,250 2,663 7,812 5,149 5 Year Average 5,249 7,873 11,548 23,095 1,968 5,774 3,805 Post-money value is calculated by assuming investors are acquiring 40% ownership on average and that approximately 70% of all invested capital is primary capital, while 30% is used to cash out existing shareholders (secondary capital). We assume investors are targeting a 2.0x return on their investments, valuing the enterprise using a 4.0x Enterprise Value / Revenue multiple Based on our assumptions, revenue must grow 2.9x for investors to realize a target 2.0x return. Is Health IT in a bubble? Survey Year Yes No Maybe 2017 36% 18% 46% 2015 29% 31% 40% U.S. Health IT investment amounts are drawn from private equity growth investment transactions seen by HGP. These numbers do not include buyout transactions or public offerings which both typically operate under different returns models. Nor does this analysis attempt to solve for any missing data from unreported investments. The analysis is dependent on certain assumptions for which there is no available data. Health IT Executive Summary Market Disorientation, cont'd On average, $5.2 billion was invested in the U.S. Health IT market in each of the last 5 years. We assume that those investors are targeting a 2x return, which is consistent with median private equity returns of about 14% over a typical hold period of 5.5 years. The target 2x return means they need to create about $11.5 billion in incremental value over and above the new capital invested. Assuming a relatively conservative 4x revenue multiple, this amount of investment implies that approximately $3.8 billion of new revenue needs to be generated annually to support the target value creation. That new revenue needs to come from one of two places, either from shifting cost that is captured elsewhere in the system, or directly through additional expense for the end- consumer (i.e., the American population). We optimistically assume this revenue is the result of efficiencies created from new technology investment that will ultimately benefit the healthcare system on the whole. Translated to healthcare costs, the $3.8 billion in new annual revenue represents an increased cost of $11.68 per person every year ($0.97 pmpm) across the U.S. population. The companies that received this investment need to save customers at least this much in order to justify their contribution to the healthcare economy. Over the last decade, electronic medical record (EMR) adoption and its byproducts have significantly expanded the addressable market for Health IT. We estimate the U.S. Health IT market is about a $115 billion annual revenue market. Based on our returns assumptions involving investment over the past 5 years, the market would need to achieve an annual growth of 3.3% to support the 5-year rate of investment and an annual growth rate of 4.5% to support 2017 investment. However, these growth rates do not also account for companies who are financing growth from their balance sheets, public companies, or buyout transactions. Taken together, we estimate that the companies that receive institutional funding in our database represent between 25-50% of the overall Health IT market. This would imply that the overall market needs to grow 2 4x the rate of growth implied by our database analysis. Our analysis concludes that the overall Health IT market would need to grow at an annual rate of 6.6% to 13.2% based on the 5-year average or 9.0% to 18.0% based on 2017 to support the current rate of investment, as outlined in the following table. While the growth rate suggested by the level of investment in 2017 is high, our supply-side analysis is not inconsistent with market studies using a bottoms-up demand analysis. We believe that the Health IT market can ultimately sustain this level of investment as market participants begin to capitalize on the critical mass of EMR adoption that we have finally reached, as well as a number of other favorable market forces, including value-based care, precision medicine, and telehealth. Copyright 2018 Healthcare Growth Partners 4 1 0% 20% 40% 60% 80% 100% 2008 2009 2010 2011 2012 2013 2014 2015 EHR Adoption Physicians (Any EHR) Hospitals (Basic EHR) Implied Expected Growth Rates Investment Period U.S. Investment ($mm) Implied Revenue Growth to Support 2x Return Implied Revenue Growth as % of Health IT Market Investment Share of total Health IT Market Implied Health IT Market Growth to Support Investment 5-yr Average $5,249 $3,805 3.3% 25-50% 6.6% - 13.2% 2017 $7,102 $5,149 4.5% 25-50% 9.0% - 18.0% Health IT Executive Summary Market Disorientation, cont'd While the numbers say one thing, the words tell another story. The Health IT industry is ripe with buzzwords, both from a technology and market perspective. Like it or not, buzzwords are as much reality as perception among the investment community, yet buzzwords have a rapidly depleting value - today's buzzword becomes tomorrow's standard and is no longer a differentiator, and the cycle repeats itself. However, intrinsic and economic value is created by turning that buzzword into a marketable product that generates revenue by delivering a strong customer value proposition. The selling point is not the technology itself, but the value that it delivers to customers. The overuse of buzzwords on its own is not necessarily an indicator of bubble activity, however the buzzwords of the day are indicative of changing attitudes in the market. The market gets disoriented and bubbles form when companies focus too much on messaging to investors to the neglect of customers. There is no better example of this than the dot com era, when companies got carried away by investors' appetite for buzzwords at the expense of creating true value. Examples of recent buzzwords in the Health IT segment, according to an annual vote managed by HIStalk, include Cloud, mHealth, Meaningful Use, Big Data, and Population Health. Over the past year, however, companies have quickly pivoted to two new buzzwords - Blockchain and Artificial Intelligence (AI). One risk of the significant increase in Health IT investment is that it may reorient the market away from customers and toward investors, and history shows that this is indicative of bubble behavior. There is no doubt that blockchain and AI are transformational innovations that will likely be standards of the future, but healthcare is an industry that is less enamored by technology than the value that technology can deliver. Customers don't buy blockchain or AI, they buy products that utilize blockchain or AI, and the use of these technologies only matters to the customer if the product has a better value proposition (increases revenue or reduces cost) than alternatives. We believe long-term value creation is a byproduct of serving customers, while investor-centric buzzwords push companies to operate at the leading edge of innovation. So long as market participants keep this balance in mind, the market should be able to sustain the level of growth implied by recent investment activity. Copyright 2018 Healthcare Growth Partners 5 1 Most Overused Buzzword 2013 2014 2015 2016 2017 Customer- Centric vs. Investor- Centric ACO Pop. Health Management Patient Engagement Pop. Health Value-based Care Interoperability Meaningful Use Patient- Centered Patient Engagement Pop. Health Meaningful Use Big Data Analytics/ Big Data Interoperability Interoperability Big Data Cloud Optimization Big Data Patient Engagement Cloud Cloud Big Data Health IT Market Trends HGP Analysis of HIT Sector Valuations HGP keeps close tabs on M&A valuations to see how the market evolves over time. While we can only draw data from deals we observe with disclosed multiples, 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. While telemedicine sees the highest median revenue multiples, it also sees a large amount of variability and positive skew. While 25% of the observed telemedicine oriented companies received 9.3x revenue or more in sale transactions, another 25% received less than 2.8x 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 from buyers. The box-and-whisker plot on page 7 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 (blue columns) is the 75th Percentile minus the 25th Percentile and serves to describe the variation in the range of outcomes. 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 Population Health or Benefits Management. Copyright 2018 Healthcare Growth Partners 6 2 Reported 2010 2017 Deals with Disclosed Revenue Multiples Deals with Disclosed EBITDA Multiples Revenue Multiple EBITDA Multiple 25th %-tile Median 75th %-tile Mean Std. Deviation Median Telemed 8 4 2.8x 4.8x 9.3x 6.0x 4.0x 12.0x Benefits Mgmt 15 4 2.3x 4.0x 6.8x 5.9x 5.9x 15.0x Analytics 22 10 2.6x 3.9x 4.4x 4.3x 3.4x 13.9x Population Health 39 12 3.0x 3.9x 6.9x 6.3x 6.2x 11.5x Content 26 9 2.0x 3.8x 6.0x 4.4x 2.9x 12.2x RCM Tech 35 24 2.2x 3.0x 4.1x 3.6x 2.2x 15.5x Infrastructure Tech 46 27 1.7x 2.7x 3.6x 2.8x 1.6x 10.0x PM/EMR 68 42 1.4x 2.3x 4.1x 2.8x 2.0x 13.0x Utilization Mgmt 9 5 0.8x 1.9x 2.9x 2.4x 2.4x 10.0x Clinical Trial Mgmt 9 5 1.5x 1.9x 2.6x 1.9x 0.7x 10.0x RCM Services 18 13 1.0x 1.7x 2.7x 1.9x 1.1x 10.0x Consulting 18 12 1.2x 1.6x 2.0x 1.8x 1.0x 10.4x Outsourced Services 23 15 1.2x 1.4x 2.2x 1.9x 1.6x 9.0x Health IT Market Trends HGP Analysis of HIT Sector Valuations 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 is also much 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. The table on page 8 provides additional context on the valuation trends within each sector as well as a sample of recent transactions within each. While the metrics presented here may be used as a guidepost for expected outcomes, the end result 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 2018 Healthcare Growth Partners 7 2 Health IT Market Trends HGP Analysis of HIT Sector Valuations Copyright 2018 Healthcare Growth Partners 8 2 Sector Description Representative Deals Telemed (8 deals) Median: 4.8X Std. Dev.: 4.0X Contains a mix of pure telemedicine services and connected device transactions. Best Doctors (Teladoc), Healthiest You (Teladoc), Cardiocom (Medtronic) Benefits Management (15 deals) Median: 4.0X Std. Dev.: 5.9X Includes benefits management and admin software companies serving payers and employers. HealthX (JMI), Benaissance (WEX), bswift (Aetna), Health Advocate (West), Extend (Towers Watson) Analytics (22 deals) Median: 3.9X Std. Dev.: 3.4X Primarily represents a mix of life sciences and provider analytics, and to a lesser extent, payer analytics. IMS (Quintiles), Truven (IBM), MedeAnalytics (Thoma Bravo), DRG (Piramal), Humedica (Optum) Population Health (39 deals) Median: 3.9X Std. Dev.: 6.2X Comprised of patient engagement, provider connectivity, and care management technologies. Emmi (Wolters Kluwer), Press Ganey (EQT), Wellcentive (Philips), MedHOK (Hearst), Phytel (IBM) Content (26 deals) Median: 3.8X Std. Dev.: 2.9X Transactions are a mix of online consumer content and provider- oriented clinical content. Everyday Health (j2 Global), Milliman (Hearst), Health Language (Wolters Kluwer), Healthgrades (Vestar) RCM Tech (35 deals) Median: 3.0X Std. Dev.: 2.2X Includes tech-oriented RCM vendors serving hospitals and physicians, and to a lesser extent, payers. Zirmed (Navicure), Brightree (ResMed), Passport (Experian), MedAssets (Pamplona), TriZetto (Cognizant) Infrastructure Tech (46 deals) Median: 2.7X Std. Dev.: 1.6X Compliance and resource management software generally serving provider organizations. Morrisey (HealthStream), CenTrak (Halma), VendorMate (GHX), Concerro (API), Lawson (Infor) PM/EMR (68 deals) Median: 2.3X Std. Dev.: 2.0X Includes ambulatory, acute, post- acute, alternate site, and departmental EMR/PM systems. Mediware (TPG), Netsmart (Allscripts/GI), Healthland (CPSI), HealthFusion (QSI), Merge (IBM) Utilization Mgmt (9 deals) Median: 1.9X Std. Dev.: 2.4X Payer-oriented software and services vendors focused on traditional utilization management. HealthHelp (WNS), Alere (Abbott), HSM & CDMI (Magellan) Clinical Trial Mgmt (9 deals) Median: 1.9X Std. Dev.: 0.7X Includes traditional CTMS vendors as well as other vendors that deliver value in the clinical trial process. NOTOCORD (Instem), Phlexglobal (Bridgepoint), BioClinica (JLL), eResearch (Genstar) RCM Services (18 deals) Median: 1.7X Std. Dev.: 1.1X Outsourced revenue cycle management services generally serving hospitals and physicians. Anthelio (Atos), Cardon (MedData), Equian (New Mountain), MedSynergies (Unitedhealth) Consulting (15 deals) Median: 1.6X Std. Dev.: 1.0X Project-based IT consulting and staff augmentation companies generally serving provider organizations. HCI Group (Tech Mahindra), CynergisTek (Auxilio), Encore (Quintiles), Vonlay (Huron) Outsourced Services (23 deals) Median: 1.4X Std. Dev.: 1.6X Includes non-RCM outsourced services primarily serving payers as well as providers. Connextions (TeleTech), Edco (ExamWorks), Patriot National (Ebix), HealthPlan Holdings (Wipro) Copyright 2018 Healthcare Growth Partners 9 HGP 2017 Corporate Survey Results and Commentary Q1: What is your job title? To assess the general sentiment on the status and future of Health IT, we surveyed C-level and business development professionals at 500 companies across the Health IT sector and broke down the findings in this edition of our report. Out of the 500 companies surveyed, we gathered responses from 85 distinct companies across the Health IT landscape. HGP surveyed a mix of C-level executives, M&A professionals, and private equity professionals. It is important to note that our survey most likely has selection bias, which we cannot fully assess given the confidential nature of the survey response data. Anyone likely to respond to a survey about M&A in Health IT is likely to have an interest or pursuit in M&A. Furthermore, we are more likely to generate responses from individuals who are familiar with HGP, and HGP generally interacts with companies interested in Health IT transactions. It is safe to conclude that our survey findings have a bias toward respondents who are more interested in Health IT investments and acquisition than not. However, we believe that the data set is broad enough to be meaningful and deliver insights, particularly in mapping out the priorities and criteria of active buyers. Q2: How large is the company you represent? Respondents represent a mix of large and small companies. The largest share involves companies with over $100mm in revenue, representing 40% of responses. When selecting smaller companies to include in the survey, which includes the 49% of companies surveyed with under $50mm revenue, HGP aimed to include companies with the capital wherewithal to execute M&A transactions, such as private-equity backed platforms. 3 Corp Dev/M&A Professional 40% CFO 9% CEO 26% Private Equity Professional 26% 23% 26% 11% 40% <$20mm revenue $20-50mm revenue $50-100mm revenue $100mm+ revenue Copyright 2018 Healthcare Growth Partners 10 HGP 2017 Corporate Survey Results and Commentary Q3: Would you define your company's primary business (>50% revenue) as Health IT? For purposes of the survey, we broadly define Health IT as any health software, data, information, consulting, or technology-enabled outsourcing company that may serve providers, payers, pharma, employers, or consumers. The 29% of non-Health IT respondents were given the option to write-in the nature of their company, and responses included Enterprise Software, Employee Benefits Brokerage, Healthcare Services, Health Insurance, and IT Consulting. In addition to these categories, HGP also surveyed medical device, biopharma, media, pharmacy benefit managers, distributors and group purchasing organizations, and telecom organizations, and these responses are likely included among the 29% non-Health IT. Q4: Since 2015, has your company made any Health IT acquisitions? Noting that our survey likely has selection bias, we expected respondents to this question to have a history of Health IT transactions, but were surprised to see that the largest share and over 1/3 of respondents had not consummated a Health IT transaction in the prior three years. The rest of the respondents, give or take 20% each, have completed one, two, and three plus acquisitions in the prior three years. 3 29% 71% No, Health IT is one of many business lines Yes 36% 24% 18% 22% No acquisitions 1 acquisition 2 acquisitions 3+ acquisitions 13% 15% 18% 21% 29% 29% 37% 39% 53% 58% Life Sciences Technology Benefits Tech Direct-to-Consumer Tech or Services Employee & Member Wellness/Care EMR/Clinical Documentation Virtual Care, Remote Care, or Telemedicine Infrastructure Tech Payer Services RCM Tech or Services Population Health/Data/Analytics/CDS Copyright 2018 Healthcare Growth Partners 11 HGP 2017 Corporate Survey Results and Commentary Q5: In which sectors are you seeking acquisitions (check all that apply)? The initial four questions aimed to gather information about the type of organizations that were responding to the survey. The next series of questions gathers information about their perspective on the market, acquisition criteria, and strategic priorities. HGP has performed the Health IT Corporate M&A Survey since 2014, and in each of those surveys, Population Health Management (58% in 2017 vs 77% in 2015) and Revenue Cycle Management (53% in 2017 vs 41% in 2015) ranked as the top two sectors. Payer Services (39%) and Infrastructure Technology (e.g., resource management, supply chain, compliance) received 39% and 37% of responses, respectively. EMR received 29% responses, which is consistent with the 30% and 26% in the 2015 and 2014 surveys. Write-in responses included Quality, Release of Information, Media, Contract Management, Compliance, Communications, and Device Connectivity. The survey audience generally reflects the market share across customer segments (provider, payer, employer, biopharma), and as such, a potential flaw in the survey is that this mix potentially understates the potential interest in segments with a lower overall market share, such as life sciences IT, especially when compared to provider technology (hospital, physician, post-acute, alternative site, etc.). Write-In Responses Quality Release of Information Media Contract Management Compliance Communications Device Connectivity 3 HGP 2017 Corporate Survey Results and Commentary Q6: In which customer segments are you seeking Health IT acquisitions (check all that apply)? Given the range of potential customer end-markets in the provider segment, we broke the provider segment into three categories: Hospital/Health System (including ACO), Physician, and Other Clinical Settings (e.g., urgent care, post-acute). Write-in responses would be included in the Other Clinical Settings category and include pharmacy IT, behavioral health IT, and physical therapy IT. We consolidated the Payer/TPA/Employer segments since these end-markets share similar characteristics. The largest share of respondents expressed interest in the Hospital/Health System (including ACO) (77%) followed by the Payer/TPA/Employer segment (51%). The preference for customer end-markets is consistent with the sector interest themes in the prior question. Q7: Do you seek a certain financial threshold for your acquisition target(s)? Based on the response data, it would appear that size, in terms of revenue and EBITDA, is not a key criteria for transactions. Our experience says otherwise. Approximately 35% of respondents stated that they do not have a target revenue threshold and 59% do not have a target EBITDA threshold. We would agree that EBITDA is often not mission-critical to drive a successful transaction. However, companies generally need to generate enough revenue to prove their value proposition, commercial viability, and scale in order to position for a transaction. Based on our experience, $5mm is a reasonable revenue threshold, and the data supports this with 30% of respondents selecting this threshold. However, it is clear that there is not hard and fast policy great businesses can transact at any size. Strategic buyers have less sensitivity toward EBITDA thresholds due to the fact that they often focus on growth first, profitability second, and profitability can be realized through integration synergy and does not necessarily need to be generated by the stand-alone entity that is selling. It is worth noting that private equity buyout funds will take a different stance and have a much stronger preference for material profitability. 26% 26% 31% 49% 51% 77% Pharma/Device Patient/Patient Family Other Clinical Settings (urgent care, post-acute) Physicians Payer/TPA/Employer Hospital/Health System (including ACO) Copyright 2018 Healthcare Growth Partners 12 18% 30% 8% 8% 35% 33% 8% 0% 0% 59% At least $1mm At least $5mm At least $10mm At least $20mm No Threshold Revenue EBITDA Pharmacy IT Behavioral Health IT Physical Therapy IT 3 HGP 2017 Corporate Survey Results and Commentary Q8: How important are the following criteria when evaluating an acquisition target? The most important criterium for a seller is growth and recurring revenue, representing a 'must- have' response from 75% and 67% of respondents. The days of one-time revenue are gone, and all companies should orient their pricing model toward recurring revenue. This is especially difficult for early stage companies that use revenue as a form of non-dilutive financing. A growing category of lower dilution financing sources are now available for early stage recurring revenue companies, such as SaaS-based lending models. The third most important criterium is addressable market size. In health IT, true addressable markets of over $1 billion tend to be fewer. A solid and true addressable market in the $100-200 million range may more than satisfy a buyer. Our view is that quality trumps quantity when it comes to addressable markets. Respondents were relatively split on profitability, with 44% stating 'must-have' and 56% 'nice to have'. While profitability is not a key metric in our survey findings, we believe that significant losses can have a significant drag on valuation, even in high growth situations. Thus, companies may be comfortable operating around breakeven but should cautiously and thoughtfully approach strategies that drive substantial losses. Q9: Does your company consider or seek investments (not just acquisitions) in Health IT? Strategic investing is increasingly common across all markets, but it is especially prevalent in healthcare. Examples of strategic investors include health plans, biopharma and med device, health systems, healthcare services companies, benefits brokers, and enterprise software companies. At HGP, we have experienced strategic investment firsthand through transactions involving Anthem, Optum, UPMC, LabCorp, and Hearst, to name a few. Many of these entities have gone so far as to set up corporate venture capital funds, while many leverage their innovation or corporate development teams to make investments. Over half (54%) of respondents would consider direct investments (versus acquisitions). The response rate is especially high considering that a number of our respondents are private equity backed platform companies that would seem less likely to make strategic investments due to the constraints on the time horizon of the private equity investment. Copyright 2018 Healthcare Growth Partners 13 28% 35% 44% 53% 67% 75% 0% 20% 40% 60% 80% Strong Management SaaS Technology Profitability Large Market Size Recurring Revenue Growth Trajectory Yes 55% No 45% Nice to Have Must Have 3 HGP 2017 Corporate Survey Results and Commentary Q10: What is the regulatory impact of the Trump Administration on your company? When we woke up the morning after the November presidential election, we felt certain that the Affordable Care Act as we know it would be dramatically altered or repealed. We were concerned that this uncertain regulatory path under the new administration would result in a bit of a headwind for the Health IT industry because industry stakeholders may not have the conviction to invest in technologies due to unclear regulatory incentives and requirements for many of these programs. The Trump administration immediately and aggressively pursued repeal, as part of the overall preference for deregulation, price transparency, and patient responsibility. As the year passed and bills did not gather the required support of Republicans, the GOP moved on from healthcare reform to tax reform, thus leaving much of the ACA construct in- place. However, even tax reform addresses core pillars of the ACA, such as the elimination of the individual mandate. In the face of all of this, it is surprising to see nearly 80% of respondents state that the Trump administration has a neutral or positive impact on their performance. Only 1 out of every 5 respondents have experienced a negative impact. We suspect that the positive results indicate a combination of generally strong purchasing trends for Health IT, as well as a capital budgeting cycle for FY 2017 that was put into place prior to the November election. No doubt health systems are betting on a future of tougher operating conditions, given the recent mega-mergers between Ascension and Providence St. Joseph Health, Catholic Health Initiatives and Dignity Health, and Advocate Health Care and Aurora Health Care, as well as pay-vider deals such as CVS Health buying Aetna and Unitedhealth buying Davita's Medical Group. As we roll into the FY 2018 budget cycle, we will continue to closely monitor the link between purchasing cycles, regulation and policy. Q11: What is the regulatory impact of the Trump Administration on your acquisition strategy? Respondents overwhelmingly agree that the Trump Administration has no material impact on their M&A strategy. In a way, the biggest development in healthcare regulatory reform last year was that there was not any major development! Copyright 2018 Healthcare Growth Partners 14 Positive 7% Negative 21% No impact 72% We intend to make more acquisitions 8% We intend to make fewer or no acquisitions 8% No impact 84% 3 HGP 2017 Corporate Survey Results and Commentary Q12: Health IT has attracted significant investment recently and seen an accelerating number of acquisitions; do you think Health IT is in a "bubble"? An interesting observation to this question is the trendline from our 2015 survey: Respondents tilted more in favor of bubble than in prior surveys. Perhaps the over 20% rise in the stock market in 2017 influences this sentiment. Most likely, it reflects the 46% annual growth in global Health IT investment since 2011, according to HGP's data. At HGP, we think the Health IT market offers unbelievably strong fundamentals as well as a superior investment thesis. That said, there is certainly bubble behavior among pockets of investors and acquirors and no shortage of distressed assets in the market. Write-in responses were as follows: Copyright 2018 Healthcare Growth Partners 15 Bulls Bears Expect that mega mergers (e.g., CVS/Aetna) will continue as scale and leverage is required to herd care to appropriate settings and to reduce costs; expect many assets to get picked up along the way and others to become obsolete; all eyes appear to be on Amazon (again). Industry consolidation will continue for years to come in revenue cycle. The growth trajectory is positive. Trump Administration changes may perhaps lead to fewer lives insured, however, the market is too big for any negative impact. We are very bullish in this space and hope to have more acquisitions soon. View it from the health plan as a user of IT vendors and there is a lot of changing needs for the plans and how they serve the consumer/member. The healthcare industry continues to operate in a massive transformation that will require technology to enable and support. Demand for services will increase, health system complexity will increase, patients are more demanding than ever before...all factors that bode well for growth and opportunity. Steady growth wins the race in Healthcare IT; Inflow of capital doesn't change the fact that payers and providers are historically not early adopters for cutting edge technology. Evolution not revolution especially for AI and machine learning. Scarcity of high quality, profitable, mid-market targets We need certainty on what will happen to Healthcare. Trump's and Republicans attempts to destabilize and inability to pass a deal therefore creating uncertainty will not help. A bi-partisan effort to correct the faults of Obamacare is the only way. Limiting access to care for poor people will further cause the divide to increase but may be that is what the current administration seeks. The lack of exit activity is a bit concerning. The Trump Administration's inability to confirm clarity on healthcare reform causes indecision on hospital purchasing decisions as they take a cautious "wait and see" position M&A landscape is still strong, but there seems to be some separation between value for strong companies and ones that may be borderline. Previously, even somewhat weaker companies could command a premium if (for example) a strategic buyer was seeking rapid provider growth via consolidation, or a financial sponsor was seeking a HIT platform. At this point, strong companies are getting a lot of attention and can command a premium value, while deals are not getting done for marginal businesses. Lots of targets short on current performance and long on future hopes - hoping to price on the latter (!) Survey Year Yes No Maybe 2017 36% 18% 46% 2015 29% 31% 40% 3 Health IT M&A (Including Buyout) Overview 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 Among the many business and market characteristics that drive superior valuations, the following are core components to healthcare IT businesses that have established themselves as outliers: SaaS Architecture and Delivery Single database enabling robust analytics Delivery model that creates scale on the cost side, and recurring revenue on the top line Reform-Centric Value Proposition Addresses healthcare structural flaws rather than take advantage of them in an effort to deliver sustainable change in a policy-based environment Pricing Alignment with ROI Pricing methodology that aligns with customer ROI the vendor wins when the customer wins General Considerations Market leadership (or opportunity to lead) = favorable supply/demand characteristics at exit Large and growing market opportunity with strong financial characteristics = recurring revenue and growth, inherent scalability if not profitability, strong management, and size Scalable Distribution Model Efficient distribution model (eg, customer acquisition cost < customer value) Data Rights Contract structures that contain explicit rights to data 16 4 1 2 3 5 6 4 Copyright 2018 Healthcare Growth Partners 0% 10% 20% 30% 40% 50% 0-1X 1-2X 2-3X 3-5X 5-7X 7-10X >10X Software Services Health IT M&A (Including Buyout) Health IT M&A Activity The following chart summarizes annual M&A activity since 2008, according to the Healthcare Growth Partners database. After a record 373 transactions in 2016, health IT M&A activity continued at a healthy pace of 366 transactions in 2017. Total transaction value tends to be much more volatile than deal volume since it only takes one or two very large deals to skew the data and the majority of transactions do not disclose value, thus HGP looks toward transaction volume as a better indicator of deal activity. Generally, sub $100 million companies have three valuation inflection points: proof-of-concept, growth scalability, and mature scalability. 17 4 Copyright 2018 Healthcare Growth Partners 0 5 10 15 20 25 30 0 2 4 6 8 10 12 14 16 Stage of Growth Valuation Proof of Concept Growth Scalability Mature Scalability Revenue <$1mm Revenue $5-10mm Revenue >$20mm Stage of Growth Chart (for Companies <$100mm in Revenue) $7,020 $20,698 $17,967 $13,336 $16,356 $5,093 $35,736 $14,014 $53,892 $22,290 $1,752 $249 $599 $1,069 $593 $359 $2,520 $1,084 $747 $721 167 141 221 234 264 192 274 285 296 298 50 42 38 50 43 40 47 51 77 68 0 50 100 150 200 250 300 350 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 Deal VolumeDeal Value ($mm)Deal Value - US Deal Value - Non-US Deal Volume - US Deal Volume - Non-US Health IT M&A (Including Buyout) Health IT M&A Valuation Proof-of-concept is value created when a company shows that its product can be successfully sold and deployed in a commercial setting. The proof-of-concept inflection point is generally of more importance to venture investors than it is to acquirers, as companies at this stage tend to be too immature to realize significant value through a sale. 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. Mature scalability takes place after a company has matured to a level where it takes on real infrastructure, and the company begins to show strong profitability after building out a mature corporate organization. Although the size of a company at each inflection point can vary significantly based on a company's product or services and sector, the general rule of thumb in health IT is that proof of concept occurs at revenue of less than $1 million, growth scalability occurs in the $5 to $10 million revenue range, and mature scalability occurs starting in the $20 million revenue range. 18 4 Copyright 2018 Healthcare Growth Partners HIT Software Companies HIT Services Companies Transaction Value Revenue Multiple EBITDA Multiple Transaction Value Revenue Multiple EBITDA Multiple All Transactions # of Transactions 267 265 136 71 71 46 Median $ 82.30 3.00X 13.00X $ 144.00 1.55X 9.90X Mean $ 399.07 3.96X 14.42X $ 626.67 1.99X 11.15X <$30mm Transactions # of Transactions 87 94 34 17 17 9 Median $ 9.50 2.17X 8.30X $ 11.50 1.21X 9.00X Mean $ 11.07 3.36X 9.87X $ 11.59 1.25X 8.85X $30-100mm Transactions # of Transactions 50 50 20 15 15 9 Median $ 48.05 3.00X 10.00X $ 44.00 1.44X 8.00X Mean $ 52.04 4.43X 11.97X $ 56.07 1.70X 8.40X $100-500mm Transactions # of Transactions 91 84 53 26 26 17 Median $ 220.00 3.57X 14.00X $ 248.65 1.71X 11.00X Mean $ 236.55 4.23X 17.12X $ 263.64 2.55X 11.67X $500mm-$1B Transactions # of Transactions 17 15 11 6 6 4 Median $ 720.85 4.32X 18.00X $ 727.50 2.25X 16.00X Mean $ 698.17 4.89X 16.65X $ 714.70 2.43X 13.75X >$1B Transactions # of Transactions 22 22 18 7 7 7 Median $ 1790.77 3.13X 14.15X $ 4291.71 2.20X 15.50X Mean $ 3163.33 3.82X 16.42X $ 4616.11 1.94X 14.91X Health IT M&A (Including Buyout) Health IT M&A Valuation, continued Continuing the analysis on the prior page, HGP evaluated the distribution of transaction size by target enterprise value. HIT Software valuations experience a nice inflection above $30mm in value, which steadily climbs until approximately the $1B valuation mark. HIT Services multiples experience a similar inflection at $30mm, and a second inflection at $100mm especially with higher percentile transactions. The second inflection is in part due to a private equity universe that has expanded leverage capacity for larger transactions, which in turn drives up valuation multiples. In 2017, Healthcare Growth Partners monitored 366 health IT and related services M&A transactions, compared to 373 transactions in 2016. In terms of aggregate deal size, only $23 billion in transactions was announced in 2017, well short of the excessive $54.6 billion in all of 2016 and more in line with the $15.1 billion announced in 2015. The $54.6 billion number in 2016 was skewed by several large transactions, including the $9 billion sale ($4.9 billion equity) of Alere to Abbot Labs, the $2.6 billion sale of Truven to IBM, and the $13.5 billion ($8.8 billion equity) acquisition of IMS by Quintiles. The median revenue multiple in 2017 was 3.7x for HIT Software, a slight decrease from 3.8x in 2016, and 2.0x for Health IT Services, an increase over the 1.8x reported in 2016. Detailed annual trends can be found in the following bar chart. It should be noted that 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 2017. 19 4 HIT Software Revenue Multiple Distribution by Target Enterprise Value Percentile <$30mm $30-100mm $100-500mm $500mm-$1B >$1B 90th Percentile 6.31X 8.35X 7.94X 7.88X 7.07X 75th Percentile 3.52X 4.41X 5.50X 7.02X 4.78X 50th Percentile 2.17X 3.00X 3.57X 4.32X 3.13X 25th Percentile 1.38X 2.28X 2.17X 3.80X 2.30X HIT Services Revenue Multiple Distribution by Target Enterprise Value Percentile <$30mm $30-100mm $100-500mm $500mm-$1B >$1B 90th Percentile 2.31X 2.58X 6.21X nm nm 75th Percentile 1.66X 2.43X 3.08X 3.85X 2.70X 50th Percentile 1.21X 1.44X 1.71X 2.25X 2.20X 25th Percentile 0.77X 1.20X 1.22X 0.84X 1.10X Copyright 2018 Healthcare Growth Partners Health IT M&A (Including Buyout) Median M&A Multiples 2010 2017 It is important to 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 represents only a portion of the overall transaction activity. HIT M&A Deals by Quarter 20 4 Copyright 2018 Healthcare Growth Partners 1.2X 1.2X 1.2X 1.4X 1.2X 2.1X 1.8X 2.0X 9.0X 14.0X 16.0X 9.0X 10.0X 9.0X 10.0X 9.6X 0.0X 5.0X 10.0X 15.0X 20.0X 2010 2011 2012 2013 2014 2015 2016 2017 Health IT ServicesRevenue EBITDA 84 64 81 55 90 70 75 72 63 56 55 58 71 97 76 77 91 68 92 85 99 86 104 84 96 88 91 91 0 20 40 60 80 100 120 Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr42011 2012 2013 2014 2015 2016 2017 2.1X 2.1X 2.3X 4.7X 3.8X 3.8X 3.8X 3.7X 11.0X 12.0X 10.6X 14.0X 14.0X 14.0X 13.0X 14.3X 0.0X 5.0X 10.0X 15.0X 20.0X Health IT Software Health IT Capital Raises (Non-Buyout) The chart below summarizes quarterly private-equity and venture capital activity in Health IT and related services since 2008, according to the Healthcare Growth Partners database. The data below and in this section do not include buyout private equity activity. In 2017, Healthcare Growth Partners monitored 654 capital raise transactions, a massive increase over the 494 transactions monitored in 2016. HIT Investment Activity HIT Investment Deals by Quarter Refer to Appendix C for a list of notable non-buyout capital raises in 2017. 21 5 Copyright 2018 Healthcare Growth Partners 37 43 48 49 46 49 49 52 68 68 70 78 75 100 116 92 87 122 102 115 107 97 135 154 128 188 186 147 0 40 80 120 160 200 Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr42011 2012 2013 2014 2015 2016 2017 $958 $484 $884 $1,040 $1,426 $2,849 $4,555 $6,173 $5,565 $7,102 $145 $172 $63 $43 $171 $254 $870 $1,012 $2,374 $3,179 89 92 120 162 173 245 311 360 361 401 23 26 15 25 33 42 73 68 133 253 0 50 100 150 200 250 300 350 400 450 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Deal VolumeDeal Value ($mm)Deal Value - US Deal Value - Non-US Deal Volume - US Deal Volume - Non-US Healthcare Capital Markets 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 seven sectors when evaluating the performance of publicly traded companies details of the components of these sectors can be found on page 25. U.S. stock markets ended 2016 with an election-rally uptick which continued forcefully into 2017. Strikingly, the HGP HIT Index, which performed the worst in 2016 with a decline of 16.6%, gained 25.7% in 2017, topped by the Payer Services Index with gains of 29.7%, the CRO Index with gains of 35.3%, and the Payers Index with gains of 47.6%. The 25%+ gains for these sectors are significant for a 12-month period. The chart and the table on the following page summarize the performance of the HGP health IT and services indices in 2017. HIT & Related Index Performance 2017 22 6 Copyright 2018 Healthcare Growth Partners -20% -10% 0% 10% 20% 30% 40% 50% 60% 12/30/2016 2/28/2017 4/30/2017 6/30/2017 8/31/2017 10/31/2017 HIT HIT Services PBM Healthcare Services Payers CRO Payer Services S&P 500 12/31/2017 Jan. 20 President Trump enters office May 4 House passes ACA repeal bill the "American Health Care Act" July 18 The "Better Care and Reconciliation Act" to repeal the ACA dies July 28 Senate vote on 'skinny repeal' bill fails Aug. 14 The CMS proposes cancelling, rolling back bundled payment programs Sept. 26 ACA repeal bill "Graham-Cassidy" is shelved Sept. 29 HHS Secretary Tom Price resigns Oct. 12 Trump executive order ends cost-sharing reduction payments to insurers HIT Index Performance Detail 2017 Company Share Price % Change EV/ Rev EV/ EBITDA Company Share Price % Change EV/ Rev EV/ EBITDA Allscripts (MDRX) 42.5% 2.6x 26.2x McKesson Corporation (MCK) 11.0% 0.2x 10.5x athenahealth (ATHN) 26.5% 4.7x nmf Medidata Solutions (MDSO) 27.6% 6.9x nmf Benefitfocus (BNFT) -9.1% 3.5x nmf MINDBODY (MB) 43.0% 7.9x nmf Care.com (CRCM) 110.5% 3.1x nmf Model N (MODN) 78.0% 3.5x nmf Castlight Health (CSLT) -24.2% 3.5x nmf NantHealth (NH) -69.3% 5.0x nmf Cerner (CERN) 42.3% 4.6x 16.7x National Research Corp. (NRCI.B) 34.5% 8.0x 24.0x Computer Programs & Systems (CPSI) 27.3% 2.1x 19.9x Omnicell (OMCL) 43.1% 3.0x nmf Connecture (CNXR) -90.5% 1.3x nmf OneView Group (ONEV) -68.4% 2.5x nmf Cotiviti Holdings (COTV) -6.4% 5.6x 15.7x Orion Health Group (OHE) -54.5% 0.9x nmf eHealth (EHTH) 63.1% 1.5x nmf Premier (PINC) -3.9% 3.1x 8.8x Evolent Health (EVH) -16.9% 2.0x nmf Quality Systems (QSII) 3.3% 1.7x 15.2x Fitbit (FIT) -22.0% 0.4x nmf Roper (ROP) 41.5% 7.3x 21.7x Health Insurance Innovations (HIIQ) 39.8% 1.3x 8.3x Simulations Plus (SLP) 66.8% 10.8x 25.9x HealthEquity (HQY) 15.2% 12.8x nmf Streamline Health Solutions (STRM) 35.2% 1.8x nmf HealthStream (HSTM) -7.5% 2.6x 23.7x Tabula Rasa Healthcare (TRHC) 87.2% 5.7x nmf HMS (HMSY) -6.7% 3.3x 17.3 Teladoc (TDOC) 111.2% 12.4x nmf Inovalon (INOV) 45.6% 4.1x 24.1x The Advisory Board Company (ABCO) 61.9% 3.3x 21.9x Invitae (NVTA) 14.4% 8.1x nmf Veeva Systems (VEEV) 35.8% 11.4x nmf IQVIA (IQV) 28.7% 3.7x 16.9x Vocera (VCRA) 63.4% 5.4x nmf iRhythm Technologies (IRTC) 86.6% 14.7x nmf WebMD Health Corp. (WBMD) 34.1% 2.3x 11.2x Healthcare Capital Markets 23 6 Copyright 2018 Healthcare Growth Partners 2017 Index Performance S&P 500 19.4% Payers 47.6% NASDAQ 28.2% PBM 18.4% CRO 35.3% Healthcare Services -3.8% HIT 25.7% HIT Services -8.4% Payer Services 29.7% 24 Revenue Multiples EBITDA Multiples Sector 2016 2017 2018P 2016 2017 2018P Health IT 3.3x 3.9x 3.3x 14.8x 17.4x 15.1x HIT Services 1.3x 1.2x 1.2x 10.7x 9.8x 10.0x CRO 2.6x 3.5x 3.0x 11.9x 17.3x 13.2x Healthcare Services 1.3x 1.4x 1.2x 9.5x 9.2x 9.0x Payer Services 1.8x 2.9x 2.6x 10.2x 12.4x 10.6x Payers 0.6x 0.7x 0.7x 8.2x 10.3x 9.3x PBM 0.6x 0.5x 0.6x 10.6x 9.2x 9.0x Healthcare Capital Markets The Health IT IPO market has all but dried up in the last year. Following nine IPOs in 2014 (Care.com, IMS, Castlight, Everyday Health, Medical Transcription Billing, Imprivata, HealthEquity, Connecture, Orion), eight IPOs in 2015 (Inovalon, Press Ganey, Teladoc, Evolent, Invitae, Fitbit, Mindbody, Adherium) and five IPOs in 2016 (Tabula Rosa, Oneview, Cotiviti, NantHealth, iRhythm), not a single health IT IPO issued in 2017, however, word on the street is that Change Healthcare may file for an IPO in 2018. Valuation multiples across the healthcare sector remain strong. The HIT and CRO sectors receive the most significant valuation premiums over the rest of the market. 6 Copyright 2018 Healthcare Growth Partners 0 2 4 6 8 10 2013 2014 2015 2016 2017 IPOs Healthcare Capital Markets As discussed previously, HGP tracks seven 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. 25 6 Copyright 2018 Healthcare Growth Partners Sector Components Healthcare IT (HIT) Allscripts Healthcare Solutions, Inc. (NasdaqGS:MDRX) athenahealth, Inc. (NasdaqGS:ATHN) Benefitfocus, Inc. (NasdaqGM:BNFT) Care.com, Inc. (NYSE:CRCM) Castlight Health, Inc. (NYSE:CSLT) Cerner Corporation (NasdaqGS:CERN) Computer Programs and Systems, Inc. (NasdaqGS:CPSI) Connecture, Inc. (NasdaqGM:CNXR) Cotiviti Holdings, Inc. (NYSE:COTV) eHealth, Inc. (NasdaqGS:EHTH) Evolent Health, Inc. (NYSE:EVH) Fitbit, Inc. (NYSE:FIT) Health Insurance Innovations, Inc. (NasdaqGM:HIIQ) HealthEquity, Inc. (NasdaqGS:HQY) HealthStream, Inc. (NasdaqGS:HSTM) HMS Holdings Corp. (NasdaqGS:HMSY) Inovalon Holdings, Inc. (NasdaqGS:INOV) Invitae Corporation (NYSE:NVTA) IQVIA Holdings, Inc. (NYSE:IQV) iRhythm Technologies, Inc. (NasdaqGM:IRTC) McKesson Corporation (NYSE:MCK) Medidata Solutions, Inc. (NasdaqGS:MDSO) MINDBODY, Inc. (NasdaqGM:MB) Model N, Inc. (NYSE:MODN) NantHealth, Inc. (NasdaqGS:NH) National Research Corporation (NasdaqGS:NRCI.B) Omnicell, Inc. (NasdaqGS:OMCL) OneView Group plc (AIM:ONEV) Orion Health Group Limited (NZSE:OHE) Premier, Inc. (NasdaqGS:PINC) Quality Systems, Inc. (NasdaqGS:QSII) Roper Technologies, Inc. (NYSE:ROP) Simulations Plus, Inc. (NasdaqCM:SLP) Streamline Health Solutions, Inc. (NasdaqCM:STRM) Tabula Rasa Healthcare, Inc. (NasdaqGM:TRHC) Teladoc, Inc. (NYSE:TDOC) The Advisory Board Company (NasdaqGS:ABCO) [de-listed November 17, 2017] Veeva Systems Inc. (NYSE:VEEV) Vocera Communications, Inc. (NYSE:VCRA) WebMD Health Corp. (NasdaqGS:WBMD) [de-listed September 14, 2017] Payers - Constituents Aetna Inc. (NYSE:AET) Anthem, Inc. (NYSE:ANTM) Centene Corporation (NYSE:CNC) Cigna Corporation (NYSE:CI) Humana Inc. (NYSE:HUM) Molina Healthcare, Inc. (NYSE:MOH) UnitedHealth Group Incorporated (NYSE:UNH) WellCare Health Plans, Inc. (NYSE:WCG) HIT Services DXC Technology Company (NYSE:DXC) Conduent Incorporated (NYSE:CNDT) Huron Consulting Group Inc. (NasdaqGS:HURN) CBIZ, Inc. (NYSE:CBZ) DST Systems, Inc. (NYSE:DST) Kforce Inc. (NasdaqGS:KFRC) Navigant Consulting, Inc. (NYSE:NCI) Accenture plc (NYSE:ACN) CACI International Inc (NYSE:CACI) PBMs - Constituents BioScrip, Inc. (NasdaqGS:BIOS) CVS Health Corporation (NYSE:CVS) Express Scripts Holding Company (NasdaqGS:ESRX) Rite Aid Corporation (NYSE:RAD) Walgreens Boots Alliance, Inc. (NasdaqGS:WBA) Healthcare Services - Constituents Amedisys, Inc. (NasdaqGS:AMED) Brookdale Senior Living Inc. (NYSE:BKD) Civitas Solutions, Inc. (NYSE:CIVI) Community Health Systems, Inc. (NYSE:CYH) Encompass Health Corporation (NYSE:EHC) Envision Healthcare Holdings, Inc. (NYSE:EVHC) Genesis Healthcare, Inc. (NYSE:GEN) HCA Holdings, Inc. (NYSE:HCA) Kindred Healthcare, Inc. (NYSE:KND) Laboratory Corporation of America Holdings (NYSE:LH) LifePoint Health, Inc. (NasdaqGS:LPNT) MEDNAX, Inc. (NYSE:MD) Quest Diagnostics Incorporated (NYSE:DGX) Select Medical Holdings Corporation (NYSE:SEM) Tenet Healthcare Corp. (NYSE:THC) Universal Health Services, Inc. (NYSE:UHS) Payer Services - Constituents CorVel Corporation (NasdaqGS:CRVL) Tivity Health, Inc. (NasdaqGS:TVTY) Magellan Health, Inc. (NasdaqGS:MGLN) WageWorks, Inc. (NYSE:WAGE) CROs - Constituents Charles River Laboratories International, Inc. (NYSE:CRL) ICON Public Limited Company (NasdaqGS:ICLR) INC Research Holdings, Inc. (NasdaqGS:INCR) PAREXEL International Corporation (NasdaqGS:PRXL) [de- listed September 29, 2017] PRA Health Sciences, Inc. (NasdaqGS:PRAH) 26 Macroeconomics 2017 Macroeconomic and Market Summary As the new year begins, President Donald Trump's election continues to prompt bullish growth of the U.S. stock market. The Dow Jones Industrial Average rose by almost 25% in 2017, one of the strongest growth rates in the last decade. The S&P 500 climbed an additional 19%, which marks further gains over the 9% growth in 2016 to deliver triple the returns expected by some Wall Street experts. Additionally, the NASDAQ Composite increased by 28% last year, quadrupling 2016's performance. All three indexes eclipsed previous all-time highs in recent weeks, while the dollar reached its highest value in 15 years in the Fed's Trade-Weighted U.S. Dollar Index. After the oil market's massive plunge in 2016, which lowered the barrel price from $100 to $30, it reached a stabilized recovery mode in 2017. Taking advantage of the anticipated bullish trend in 2018, analysts are expecting further upturn in the oil market mostly due to higher demand for crude because of synchronized global economic growth. Healthcare also experienced a boost of more than 20% in 2017, along with 33% growth in the technology sector, the most significant gain among S&P 500 sectors. The U.S. economy overall continued to see a consistent upturn in the last year. Gross domestic product rose to an annualized rate of 3.3% in the third quarter, the highest since the third quarter of 2014. The unemployment rate fell to 4.1% in December 2017, a record 17-year low. Over the year, the unemployment rate decreased by 0.6% and job growth totaled 2.1 million, compared to 2.2 million additions in 2016. Nonfarm payroll employment rose by 148,000 in December, and health care, construction, and manufacturing all added jobs. The healthcare sector contributed 300,000 jobs in 2017 but was slower than the 379,000 jobs gained in 2016. Significantly, the Federal Reserve raised the target range of the federal fund by a quarter point to 1.5% in December, in line with market expectations. The Federal Reserve has also signaled it will further raise the range of the federal fund to 2% in 2018, 2.5% in 2019, and 3% in 2020, which could be critical for the U.S. economic outlook. After a severe downturn in the previous year, the U.S. IPO market rebounded strongly in 2017 with 189 IPOs raising $49.33B, an increase of 55% in capital and 52% in the number of IPOs from 2016. Although the 2017 data shows a lot of promise compared to 2016, which was the worst year in terms of IPO volume since 2003, many bankers and investors are yet to be convinced due to the lack of high value, marquee companies emerging on the IPO market. Further discouragement stemmed from Snap Inc., one high profile deal of 2017, which ended up trading below its IPO price for most of the year. 2018 could host some of the notable names' market debut, such as music-streaming company Spotify, but other big-name companies including Uber, Airbnb, and Lyft will hold off for at least another year before going public. Global M&A volume reached $3 trillion for the fourth consecutive year, with total deal volume reaching $3.5 trillion in 2017, a 1% drop from 2016. Although the U.S. market remained the most active, making 12,400 deals worth $1.4T, the value of M&A deals in the U.S. dropped by 16% in contrast with those of 2016. However, European deals rose by 16% from last year to close at $856.3B. Deals in the Asia-Pacific region also climbed by 11% to reach $911.6B. 2017 witnessed a few blockbuster transactions sparked by the threat of Amazon, Facebook, and Netflix using their size and scale to push into new horizons. Amazon's acquisition of grocery chain Whole Foods for $13.7B disrupted an entire industry. The mere rumor of Amazon's desire to enter the pharmacy business triggered the U.S.'s largest drugstore chain, CVS Health, to acquire healthcare insurer Aetna for $69B. 7 Copyright 2018 Healthcare Growth Partners 27 Macroeconomics 2017 Macroeconomic and Market Summary, continued In the same vein, media mogul Rupert Murdoch sold 21st Century Fox to Disney for $66B, as Facebook and Netflix try to muscle into the sports, media, and film production industries. The momentum of M&A deals is expected to continue in 2018, as every industry is being disrupted by innovative technologies, and companies will be buying strategic assets to better position themselves to remain relevant and survive against global competition. Globally, investors deployed $213.6B to 15,700 venture-capital deals materializing in 2017. In contrast to Q3 of 2017, Q4 experienced a downturn of 15.8% for angel and seed-stage deal volume globally, however, dollar volume in the deals increased by 11.3%. Compared to Q4 2016, early-stage deal and dollar volume increased by 8.1% and 43.7%, respectively, in Q4 of 2017. Similarly, late- stage deal and dollar volume increased by 7.9% and 61.6%, respectively, in Q4 of 2017 compared to Q4 2016. 1,577 late-stage deals occurred in 2017 globally, 11.2% higher than the 1,418 deals of 2016. Although there is an upturn in the annual deal and dollar volume, Q4 2017 experienced a cool-off period in comparison to Q3 of 2017. 2017 also experienced a craze around digital assets or cryptocurrencies, leading to soaring cryptocurrency prices and several initial coin offerings. The applications of a digital, borderless currency appealed to a wide range of investors to convert fiat into cryptocurrency. The value of bitcoin, the symbolic elephant in the decentralized crypto world, rose from a mere $970 at the start of the year to nearly $20,000 by December, a gain of 2000%. Other major blockchain players, including ethereum and litecoin, skyrocketed in value by more than 12000% and 5500% in the last 12 months. While the beginning of 2018 has seen a significant correction in the value of cryptocurrencies with the value of bitcoin dropping below 50% of its 2017 peak, we believe 2018 will see continued interest in this hot segment of the market. 2017 U.S. Major Indices 7 Copyright 2018 Healthcare Growth Partners -5% 0% 5% 10% 15% 20% 25% 30% 35% 12/30/2016 2/28/2017 4/30/2017 6/30/2017 8/31/2017 10/31/2017 S&P 500 NASDAQ DOW JONES 12/31/2017 Health IT Headlines Overview Notable headlines from 2017 are outlined in the following pages on a quarterly basis. The headlines in 2017 illustrate the significant influence that policy and regulatory intervention has on the incentives that dictate health IT investment trends and innovation. Q1 Headlines Battle lines drawn as GOP maps first steps to repeal ACA With congressional Republicans poised to take their first step in a bid to dismantle the Affordable Care Act, leaders both for and against the healthcare reform law are gearing up for a high-stakes battle. Republicans are expected to use the budget reconciliation processas they did in a measure Obama vetoed in 2015to defund key parts of the law. That would include the penalty for remaining uninsured and subsidies that help make insurance premiums affordable, NPR noted. The House plans to vote on a budget blueprint during the week of Jan. 9 and act on legislation to carry it out the week of Jan. 30, The New York Times reported. The rules of the budget reconciliation process would exempt any bill that replaces or reforms the ACA from being challenged on the House floor, a measure that would normally affect a bill if it introduces new spending. Republican lawmakers float ACA replacement bill Hours after the GOP engaged Democrats in a war of words over the Affordable Care Act, the Republican Study Committee offered up a bill it hopes will serve as a framework for a health law replacement. The bill in question the American Health Care Reform Actwas first introduced in 2013 by GOP Rep. Phil Roe, M.D., of Tennessee. At a news conference on Jan. 4, Roe touted his plan as a way to put patients and doctors back in charge of healthcare decisions, instead of bureaucrats and health insurance companies. While his bill has not been endorsed by Republican leadership, according to CNN, it is the first concrete ACA replacement suggestion to emerge since the 115th Congress convened on Jan. 3. Patients don't trust health IT More than 50% of consumers are skeptical about the benefits of healthcare information technologies, including patient portals, mobile apps, and electronic health records, according to a Black Book research survey of more than 12,000 adults. Moreover, the survey revealed that 70% of Americans distrust health technology, up sharply from just 10% in 2014. High-profile cybersecurity incidents were part of the reason patient respondents don't think providers are keeping their information private and secure, the survey found. Respondents fear that their pharmacy prescriptions (90%), mental-health notes (99%) and chronic-condition data (81%) are shared beyond their chosen provider and payer to retailers, employers, or the government without their consent. Trump's regulatory freeze delays HHS rules An announcement from the White House freezing all new and pending federal regulations has forced the Department of Health and Human Services to withdraw a dozen rules, including one in which the freeze could delay eligibility for those with exchange plans, Medicare Part D, or Medicaid. Senate confirms Price as HHS secretary The Senate voted 52-47 on Feb. 10 to confirm Rep. Tom Price, R-Ga., as HHS secretary. Price, an orthopedic surgeon who has held a House seat since 2005, has backed repeal of the Affordable Care Act and conversion of Medicaid to a block grant program. 28 8 Copyright 2018 Healthcare Growth Partners Health IT Headlines Q1 Headlines, cont'd Republicans outline ACA replacement Republicans met Feb. 16 to discuss plans for repealing and replacing the Affordable Care Act, and House Speaker Paul Ryan, R-Wis., said legislation would be introduced after the House returns from a 10-day recess on Feb. 27. Lawmakers received a 19-page "policy brief" with details on an ACA replacement plan, including restructuring Medicaid, eliminating penalties for the uninsured and employers that do not offer coverage, offering incentives for health savings accounts, and introducing an age-based monthly tax credit that does not vary with income for those who purchase coverage. Rx drugs dominate healthcare spending, AHIP analysis shows An infographic and analysis from political advocacy association AHIP break down where consumers' premium dollars go, and prescription drugs account for the largest share at 22.1%. Physician and outpatient services account for 22% and 19.8%, respectively, and inpatient care accounts for 15.8%. GOP releases ACA replacement plan House Republicans' proposal to replace the Affordable Care Act would end funding for Medicaid expansion by January 2020 while capping federal spending on the program, eliminate the mandate to buy health insurance, and replace income-based subsidies with age-based tax credits. The plan would require insurers to cover those with preexisting conditions without charging more as long as coverage is continuous, give states a $100 billion budget for programs such as high-risk pools, and retain but delay the Cadillac tax until 2025. CBO: Republican healthcare bill would cover millions fewer than ACA but reduce federal deficit The Congressional Budget Office released its highly anticipated score of House Republicans' healthcare bill today, finding that it would increase the number of uninsured individuals by millions, but also lower individual market premiums in the long run and decrease the federal deficit. In 2018, 14 million more people would be uninsured under the GOP bill than under the Affordable Care Act mostly due to the repeal of individual mandate penalties. By 2026, that number would swell to 24 million because of changes to subsidies in the individual market and in the Medicaid program. Relative to projections for the ACA, the Republicans' bill would lead to higher average premiums in the individual market before 202015% in 2018 and 20% in 2019and lower average premiums after that. The CBO notes, though, that premium changes under the new proposal would differ "significantly" for people of different ages, given the bill's provision that allows insurers to charge older customers up to five times more for coverage. AHCA failure is not the end of healthcare policy debate When GOP leaders pulled the proposed American Health Care Act from the House floor March 24 after falling short on votes, Speaker Paul Ryan, R-Wis., called the Affordable Care Act "the law of the land," and it appeared the administration would move on to other priorities. But Republicans speaking over the weekend said their efforts to reshape health care are not finished, and some advocated for a bipartisan approach. Q2 Headlines CMS proposes new hospital payment rates, CQM requirements The Centers for Medicare and Medicaid Services (CMS) released proposed payment policies for fiscal year 2018 that aim to "reduce burdens for hospitals so they can focus on providing high quality care for patients," CMS Administrator Seema Verma said. The proposed rule would result in 2.9% higher inpatient operating prospective payments, reduce payments to long-term hospitals by nearly 3.75%, and relax clinical quality measure reporting standards for hospitals with an electronic health record system. 29 8 Copyright 2018 Healthcare Growth Partners Health IT Headlines Q2 Headlines, cont'd Amendment might bring AHCA back to House floor for vote An amendment to the American Health Care Act proposed by Rep. Tom MacArthur, R-N.J., would retain the Affordable Care Act's essential health benefits (EHBs) at the federal level but allow states to request approval to replace the EHBs with their own list. States could also let insurers charge higher premiums to people with preexisting conditions if they create high-risk pools for those patients, according to the amendment, which has been billed as a tool for resurrecting the legislation for a vote the White House would like to see happen next week. AHCA clears House, but Senate is likely to draft its own bill After narrowly clearing the House, the American Health Care Act heads to the Senate, but Republican leaders there said they are likely to draft their own legislation. Among senators' concerns about the AHCA are cuts to Medicaid and the number of people who would be covered. Senate confirms Gottlieb as FDA commissioner; health IT organizations rejoice The U.S. Senate voted 57-42 to confirm Scott Gottlieb as President Donald Trump's nomination to lead the Food and Drug Administration, ushering in a new era of drug and device regulation. Gottlieb's confirmation was widely expected, although he faced criticism from Democratic senators over his close ties to the pharmaceutical and digital health industry. But health IT organizations were generally pleased with Gottlieb's confirmation. Digital health CEOs and investors said that they saw Gottlieb's experience as both a regulator and an investor as a benefit for the industry. Huge cyberattack hits nearly 100 countries with 'Wanna Decryptor' malware Hospitals, schools, companies, and governments around the world were assessing the damage after a massive cyberattack hit almost 100 countries on May 12, infecting computers with malware that demanded ransom payments. Antivirus provider Avast reported that the crippling malware had infected some 100,000 computers and that the "WanaCrypt0r 2.0" ransomware, as it is called, had been detected in 99 countries, with Russia, Ukraine, and Taiwan the top targets. FDA to create centralized digital health unit The Food and Drug Administration is creating a digital health unit within its Center for Devices and Radiological Health in an effort to develop internal technical expertise and streamline the agency's software review process and regulation of medical devices. Among its responsibilities, the digital health unit will work on: Developing software and digital health technical expertise to provide assistance for premarket submissions that include Software as a Medical Device (SaMD), software inside of medical devices (SiMD), interoperable devices, or other novel digital health technologies. Utilizing technical experts as appropriate or when requested by the manufacturer for submissions that include SaMD, SiMD, interoperable devices or other novel digital health technologies. Incorporating appropriate metrics for digital health improvements to monitor, track, analyze, and report the results of digital health premarket review timelines. Feds fine eClinicalWorks $155M for EHR performance issues A major vendor of electronic health record systems for physicians, eClinicalWorks, will pay the federal government $155 million to settle a False Claims Act lawsuit contending that its products are faulty. The settlement is the first of its kind for a healthcare information technology company facing formal charges that its systems did not help providers achieve objectives of the Meaningful Use Program for EHRs and that usability shortcomings put patient lives at risk. In addition, the settlement contends that eClinicalWorks paid kickbacks in exchange for promoting its product, which had flaws that could expose patients to potential safety issues. 30 8 Copyright 2018 Healthcare Growth Partners Health IT Headlines Q2 Headlines, cont'd FDA chief makes plans to tackle high drug costs FDA Commissioner Scott Gottlieb said he intends to use the agency's powers to lower drug prices by promoting competition between generic and brand-name drug manufacturers, including prioritization of generic-drug applications for brand-name drugs that have fewer than three generic competitors. Other ideas include expediting approval of generics that copy complex therapies, such as Mylan's EpiPen epinephrine auto-injector or GlaxoSmithKline's Advair asthma inhaler, and releasing a list of 180 branded drugs that no longer have patent protection yet lack generic competition. GOP aims to release revised bill on June 30 Moderate and conservative GOP senators have conflicting ideas about how the Better Care Reconciliation Act should be modified, and it's not clear both sides can be satisfied, but Republicans are aiming to finalize changes to the legislation by June 30 and vote after the coming recess. Senate conservatives say the bill doesn't do enough to reduce premiums, government spending, and regulation, while moderates want the bill to allocate more funding for Medicaid and fighting the opioid epidemic. Q3 Headlines McConnell pivots to full ACA repeal plan after losing support for BCRA Senate Majority Leader Mitch McConnell, R-Ky., said the effort to repeal and immediately replace portions of the Affordable Care Act will fail after two more colleagues -- Sens. Jerry Moran, R- Kan., and Mike Lee, R- Utah -- announced that they would oppose a measure to advance the Better Care Reconciliation Act. The announcement left McConnell short of the required votes to advance the legislation, so he said the Senate will instead vote on a full ACA repeal with a two-year delay. Report analyzes data breach incidents for first half of 2017 An Identity Theft Resource Center report found that a record 791 data breaches in the U.S. in the first half of this year have exposed the information of 12.4 million people, with the health care sector accounting for 179 incidents, or 22.6% of the total. 63.0% of data breaches across all industries were caused by hacking. Of the reported hacking attacks, 47.7% involved phishing, while 18.8% of the hacking data breaches were from ransomware or malware incidents. FDA unveils precertification pilot program for digital health technology, maps out upcoming guidance The FDA's Software Pre-Cert Pilot Program, part of a broader Digital Health Innovation Action Plan released by the agency on July 27, would soften the regulatory requirements for digital health companies with a track record of developing and testing quality products. Broadly, the agency's plan sketches out a rough timeline for the FDA to provide additional guidance on various types of medical software detailed in the 21st Century Cures Act, including clinical decision support software, mobile medical applications, data systems, medical image storage devices and low-risk wellness products, along with additional clarifications regarding when software modification requires a new 510(k) clearance. Early filings show impact of ACA uncertainty Health plans have until August 16 to finalize premiums for coverage offered through HealthCare.gov, but a Kaiser Family Foundation analysis suggests the health insurance tax, questions about whether the individual mandate will be enforced and especially uncertainty about whether cost-sharing reduction payments will continue is driving premium increases. In many areas, increases are modest, foundation Associate Director Cynthia Cox says, but Senior Vice President Larry Levitt says most markets would already have stabilized if not for the continued uncertainty. 31 8 Copyright 2018 Healthcare Growth Partners Health IT Headlines Q3 Headlines, cont'd CDC finds record overdose mortality in U.S. U.S. drug overdose death rates increased to 18.5 cases per 100,000 people for the 12-month period ending September 2016 from 16.1 per 100,000 for the 12 months prior, according to a quarterly report from the CDC's National Center for Health Statistics. Deaths from drug overdoses continued to climb from 2015, when a record 52,404 people died, and 33,091 of those overdoses were attributed to opioids. CMS proposes to cancel, pare back bundled payment models The CMS on August 15 published a proposed rule to cancel the cardiac bundled payment program and the episode payment models program, which were set to begin in January. The agency also proposed reducing the mandatory geographic areas for the joint bundled program from 67 to 34. Providers in the areas no longer required to participate would be able to do so voluntarily. The CMS predicts between 450 and 470 hospitals would participate in the joint bundled program, including 60 to 80 on a voluntary basis. Trump quietly signs FDA reauthorization bill, officially funding a new digital health unit For the health IT sector, the FDARA officially authorized the Medical Device User Fee Agreement (MDFUA), codifying several new approaches to digital health. Perhaps most notably, the MDFUA establishes a central digital health unit within the Center for Devices and Radiological Health (CDRH). Efforts to overhaul the agency's approach to digital health are already well underway with a new software precertification program announced last month, part of a broader Digital Health Innovation Plan that aims to provide clearer regulatory guidance to the industry. The Equifax Breach Exposes America's Identity Crisis Equifax's revelation that 143 million Americans may have had their SSNs stolen (along with other sensitive personal information) has security experts pressing for a fundamental reassessment in how, and why, we identify ourselves. Some regulatory initiatives have had success curtailing SSN distribution, like the Center for Medicare Services recent announcement that SSNs will be removed from Medicare benefits cards. U.S. uninsured rate fell to record low in 2016 A Census Bureau report found that the percentage of Americans who were uninsured fell to a record low of 8.8% in 2016 from 9.1% in 2015. Last year was the third consecutive year the uninsured rate declined, a trend that started in 2014 when the majority of the Affordable Care Act's coverage provisions were implemented. FDA selects participants for new digital health software precertification pilot program After culling through the applications of over 100 interested companies, the FDA selects Apple, Fitbit, Johnson & Johnson, Pear Therapeutics, Phosphorus, Roche, Samsung, Tidepool, and Verily to participate in its Pre-Cert pilot program. Announced in late July, the pilot will help the FDA better understand how the fast-tracking of pre- certified companies could impact the market. The nine companies have agreed to give the FDA access to measures related to their software development, testing, and maintenance; and to participate in FDA site visits. Tom Price resigns as HHS secretary; President Trump taps Don J. Wright as acting replacement HHS Secretary Tom Price has resigned following days of controversy related to his use of private planes for travel. President Trump will name Don J. Wright, the acting assistant secretary for health, to serve as acting secretary. 32 8 Copyright 2018 Healthcare Growth Partners Health IT Headlines Q4 Headlines Calif. drug-price transparency bill signed into law A bill requiring drugmakers to inform health insurers and government health plans at least 60 days before raising a drug's price by more than 16% over a two-year period has been signed into law by California Gov. Jerry Brown. The law, which will also require pharmaceutical firms to justify the price hike, will take effect on Jan. 1. Trump signs executive order that starts effort to unwind ACA President Donald Trump signed an executive order that aims to succeed where Congress has failed in a bid to reshape the country's health insurance markets. The executive order does not in itself implement any policies, but rather directs federal agencies to draft regulations. The order seeks to do that by issuing three primary directives to federal agencies: Consider ways to expand access to association health plans, potentially allowing employers to purchase insurance across state lines. Consider expanding coverage through short-term health insurance plans, which are not subject to the Affordable Care Act's regulations such as minimum coverage requirements. Consider changes to health reimbursement arrangements (HRAs)employer-funded accounts that reimburse workers for healthcare expensesto allow employers to make better use of them. Senators reach bipartisan agreement to stabilize ACA markets Senate health committee Chairman Lamar Alexander, R-Tenn., and ranking member Sen. Patty Murray, D-Wash., announced a deal to stabilize the individual insurance market by funding cost-sharing reduction payments through 2019, giving states more flexibility to skirt certain Affordable Care Act requirements, allowing consumers over age 30 to purchase copper plans, and providing $106 million to support ACA enrollment. However, the proposal garnered mixed messages from President Donald Trump, while Senate Majority Leader Mitch McConnell, R-Ky., has not said whether he will allow a vote, and some Republicans said they oppose it. Trump nominates Alex Azar as new HHS Secretary Taking advantage of Twitter's new 280 character limit, President Trump announces that he will nominate Alex Azar for HHS Secretary, quickly followed by a tweet calling for an end to Obamacare's "unfair & highly unpopular" individual mandate. Azar served as HHS general counsel from 2001 to 2005, and then as deputy secretary until 2007, when he joined pharmaceutical giant Eli Lilly. He resigned as president of Eli Lilly affiliate Lilly USA in January. AHIP and other health care organizations praised the nomination. CVS Health to acquire health insurer Aetna for $69B Drugstore chain CVS Health has agreed to take over Aetna, one of the biggest health insurers in the U.S., for $69 billion. The two companies said they can cut costs for patients by turning CVS' 10,000 pharmacies and clinics into community health care facilities. UnitedHealth to buy DaVita primary care unit for $4.9 billion The largest U.S. health insurer UnitedHealth Group Inc will buy DaVita Inc's primary and urgent care services for $4.9 billion in its second acquisition this year to expand its fast-growing medical group. Denver-based DaVita operates medical groups in six states that serve 1.7 million patients through about 300 clinics, adding to UnitedHealth's 250 MedExpress urgent care centers and its 200 surgical centers that are part of recently acquired Surgical Care Affiliates. U.S. health care spending grew at slower rate last year, CMS finds An analysis from the CMS Office of the Actuary showed growth in U.S. health care spending slowed last year, increasing by 4.3% to $3.3 trillion, compared with 5.1% growth in 2014 and 5.8% in 2015. The decline was driven by slower enrollment growth in government and private health insurance programs, which resulted in decelerated use of medical services, according to the report. 33 8 Copyright 2018 Healthcare Growth Partners Health IT Headlines Q4 Headlines, continued Statement from FDA Commissioner Scott Gottlieb, M.D., on advancing new digital health policies to encourage innovation, bring efficiency and modernization to regulation FDA releases three sets of digital health guidance: clinical decision support (draft), reassertion that lifestyle apps will not be treated as medical devices (draft), and how software will be assessed as a medical device (final). FDA will focus its attention and medical device status on software that analyzes medical images, physiological monitoring data, sound waves, sleep apnea monitor data, spectroscopy data, and slide pathology, as well as software that uses undisclosed algorithms. Humana, private-equity firms buy Kindred Healthcare for $4 billion U.S. health insurer Humana and two private-equity firms agreed to buy home health-care and long-term care operator Kindred Healthcare for about $4 billion, the latest expansion by a U.S. health insurer into patient care. Humana, TPG Capital, and Welsh, Carson, Anderson & Stowe will pay $9 per share in cash for the home health- care provider and hospice operator, a 4.7 percent premium over the stock's Friday close, and split the company into two parts. Senate passes tax package eliminating ACA individual mandate penalty The Senate approved a $1.5 trillion tax package that would cut the corporate tax rate from 35% to 21% and the top individual rate from 39.6% to 37%, while eliminating the Affordable Care Act tax penalty for Americans who do not buy health insurance. The bill passed the House on Tuesday but will be sent back to the lower chamber for a re-vote after changes to three minor provisions were made in the Senate. 34 8 Copyright 2018 Healthcare Growth Partners About Healthcare Growth Partners 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 100 health IT transactions representing over $2 billion in value since 2007. Our passion for healthcare inspires us to not only create value for our clients, but to also generate broad, overarching improvements to the functionality and sustainability of health. With our focus, we deliver knowledgeable, honest and customized guidance to select clients looking to execute high value health IT, health information services, and digital health transactions. Contact Information Christopher McCord Managing Director chris@hgp.com 2001 Kirby Drive, Suite 814 Houston, TX 77019 (713) 955-7935 www.hgp.com Securities offered through HGP Securities, LLC, member FINRA & SIPC, broker-dealer affiliate of Healthcare Growth Partners, LLC. Sources of Information: Bureau of Economic Analysis, Bureau of Labor Statistics, S&P Capital IQ, CMS, Company press releases, Company SEC filings, Health Data Management, Healthcare Growth Partners database, HealthLeaders Media, HIStalk, Mercom Capital Group, Modern Healthcare, The New York Times, Mergermarket, MarketsandMarkets Research, Allied Market Research, FierceHealthcare, StartUp Health, Rock Health, Pitchbook, Thomson-Reuters, Renaissance Capital IPO Intelligence, Dealogic, and The Wall Street Journal. These statistics are presented for informational purposes only. While the information presented has been obtained from sources deemed to be reliable, no representation or warranty, express or implied, is made as to the accuracy or completeness of such information. 35 9 Copyright 2018 Healthcare Growth Partners 36 HGP Transaction Experience 10 Copyright 2018 Healthcare Growth Partners Copyright 2018 Healthcare Growth Partners 37 HGP Transaction Experience 10 38 HGP Transaction Experience 10 Copyright 2018 Healthcare Growth Partners Appendix A Strategic M&A Highlights 39 Quarter Acquiror Seller Deal Size ($mm) Q1 Hearst Corporation Polyglot Systems na Q1 WNS Holdings HealthHelp 95 Q1 HMS Holdings Corp. Eliza Corporation 170 Q1 nThrive e4e na Q1 Tech Mahindra The HCI Group 220 Q1 One Call Care Management High Line Health na Q1 Centauri Health Solutions Human Arc na Q1 McKesson CoverMyMeds 1400 Q1 Formativ Health Etransmedia Technology na Q1 Castlight Health Jiff 155 Q2 Roche Holding AG mySugr na Q2 MatrixCare (MDI Achieve) eHealth Solutions na Q2 Teladoc Best Doctors 440 Q2 athenahealth Praxify Technologies 63 Q2 Accenture LabAnswer na Q2 Mediware Information Systems Kinnser Software na Q2 symplr Vistar Technologies Corp na Q2 Cochlear Limited Sycle 78 Q2 INC Research Holdings InVentiv Health na Q2 Apple Beddit.com na Q2 DocuTAP ClockwiseMD (Lightshed Healthcare Technologies) na Q2 Surgical Information Systems Source Medical na Q2 CIOX Health ArroHealth 127 Q2 Quality Systems Entrada 34 Q2 Keais Records Service National Legal Services na Q2 TeleTech Holdings Connextions 80 Q2 ABILITY Network ShiftHound na 11 Copyright 2018 Healthcare Growth Partners Appendix A Strategic M&A Highlights, continued 40 Quarter Acquiror Seller Deal Size ($mm) Q3 Konica Minolta Ambry Genetics Corp 1000 Q3 Press Ganey Holdings Soyring Consulting Group na Q3 Cotiviti Holdings Rowdmap 70 Q3 UDG Healthcare plc Vynamic 32 Q3 Internet Brands DentalPlans.com na Q3 Magellan Healthcare Senior Whole Health 400 Q3 eMids Technologies Encore Health Resources na Q3 UDG Healthcare plc Cambridge BioMarketing Group 35 Q3 Netsmart Technologies DeVero na Q3 Internet Brands WebMD 3751 Q3 Medasys SA Netika 9.8 Q3 Quality Systems EagleDream Health 23 Q3 Allscripts Healthcare Solutions Enterprise Information Solutions business from McKesson 185 Q3 PRA Health Sciences Symphony Health Solutions 530 Q3 PRA Health Sciences Parallel 6 49.7 Q3 TELUS Corporation Kroll Computer System 250 Q3 Decision Resources Context Matters na Q3 eSolutions RemitDATA na Q3 AIM Specialty Health Applied Pathways na Q3 UnitedHealth Group The Advisory Board Company 1300 Q3 Tabula Rasa Healthcare SinfoniaRx 132 Q3 Navicure ZirMed 750 Q3 Livongo Health Diabeto na Q3 UDG Healthcare plc MicroMass Communications 76 Q3 Konica Minolta InviCRO 285 Q4 MEDecision AxisPoint Health na Q4 WellTok Tea Leaves Health 90 Q4 Express Scripts EviCore Healthcare 3600 11 Copyright 2018 Healthcare Growth Partners Appendix A Strategic M&A Highlights, continued 41 Quarter Acquiror Seller Deal Size ($mm) Q4 Azalea Health Innovations Prognosis Innovation Healthcare na Q4 Medsphere Systems Corporation Stockell Healthcare Systems na Q4 Navigant Consulting Quorum Consulting 70 Q4 Diplomat Pharmacy Pharmaceutical Technologies, Inc. 47 Q4 Roche Holding AG Viewics na Q4 Koninklijke Philips Electronics NV Analtytical Informatics 400 Q4 Jensen Hughes Russell Phillips and Associates na Q4 Koninklijke Philips NV Forecare 35 Q4 Koninklijke Philips NV VitalHealth na Q4 Cigna Corp. Brighter na 11 Copyright 2018 Healthcare Growth Partners Appendix B Financial Sponsor Buyout Highlights 42 Quarter Acquiror Seller Deal Size ($mm) Q1 GPB Capital Holdings Healthcare Software assets of NTT Data (nka Cantata Health) na Q1 Spectrum Equity; Cressey & Company Verisys Corporation na Q1 Cedar Springs Capital; Crestline Investors CarePayment Technologies na Q1 HGM; HOV Services Limited; Quinpario Acquisition Corp; Saratoga Investment Corp SourceHOV na Q1 Vesey Street Capital Partners HealthChannels na Q1 Thompson Street Capital Partners Revenue Management Solutions na Q1 JMI Equity HealthX na Q1 Frontier Capital AccessOne MedCard na Q1 Genstar Capital Bracket Global LLC na Q1 Riverside Partners Medical Reimbursements of America na Q1 ABRY Partners Integrity Tracking, dba MobileHelp 130 Q1 Veritas Capital Harris Corporation, Government IT Services Business 690 Q2 LLR Partners Kemberton Healthcare na Q2 Cimarron Healthcare Capital; Leavitt Equity Partners; RAF Industries Advanced Medical Pricing Solutions na Q2 GTCR GreatCall na Q2 Summa Equity Ivbar Institute na Q2 New Mountain Capital OneDigital health and Benefits 560 Q2 IFM Investors Pty Ltd Genie Solutions na Q2 Platform Partners; Galtney Partners Beneplace na Q2 CareCapital Advisors; Clayton, Dublier & Rice Carestream Dental na Q2 Main Capital Partners Verklizan na Q2 Great Hill Partners Quantum Health na Q2 Nexus AG CHILI GmbH na Q2 Great Hill Partners PartsSource na Q2 Temasek Holdings Global Healthcare Exchange na Q2 Warburg Pincus Modernizing Medicine 231 11 Copyright 2018 Healthcare Growth Partners Appendix B Financial Sponsor Buyout Highlights, continued 43 Quarter Acquiror Seller Deal Size ($mm) Q3 Silver Lake, General Atlantic A Place For Mom na Q3 EQT Equity Certara na Q3 Graphite Capital Random42 na Q3 MTS Health Investors Accuity Delivery Systems 25.5 Q3 Primus Capital EnableComp 65 Q3 Sverica Capital Management Womens Health USA na Q3 FNFV Group T-System 200 Q3 Yukon Partners Practice Insight na Q3 Clanwilliam Group Healthlink Ltd na Q3 Anthem, Blue Cross and Blue Shield Association, Francisco Partners, Health Care Services Corp., Humana Availity na Q4 Water Street Healthcare Partners Employee Benefit Management Services na Q4 Primus Capital Care Operative (aka Healthcare Bluebook) na Q4 777 Partners ML Healthcare Services LLC na Q4 New Mountain Capital Cytel na Q4 Accel-KKR InfoMC na Q4 Odyssey Investment Partners TrialCard na Q4 Leonard Green Partners MDVIP 560 Q4 The Carlyle Group Centerstone Insurance and Financial Services (dba BenefitMall) na Q4 Praesidian Capital, Topspin Partners Remedy Health Media na Q4 New Mountain Capital CenseoHealth na Q4 New Mountain Capital Advance Health na Q4 Beecken Petty O'Keefe & Company Zenith American Solutions na Q4 Level Equity Management, The Carlyle Group Net Health Systems na Q4 The Carlyle Group MedRisk na Q4 Symphony Corporation Influence Health Empower Patient Portal na Q4 The Carlyle Group Visionary RCM Infotech India na 11 Copyright 2018 Healthcare Growth Partners Appendix C Private Equity Highlights (non-buyout) 44 Quarter Investor Target Raise ($mm) Q1 Edgewood Partners Insurance Center; Two Sigma Ventures Decisely Insurance Services 60 Q1 Blue Cross and Blue Shield Association; Sandbox Industries Higi na Q1 Hakim Unique Internet California Healthcom Group (Haoeyou) 40 Q1 Updata Partners Jellyvision Lab 20 Q1 American Investment Holdings; EDB Investments; General Catalyst Partners; Investment AB Kinnevik; Microsoft Livongo Health 52.5 Q1 Omron Healthcare; Mayo Clinic AliveUSA (dba AliveCor) 30 Q1 Express Scripts Mango Health na Q1 Venrock; Allen & Company; Ev Williams Obvious Ventures; Redmile Group; Scifi VC Virta Health 37 Q1 Warburg Pincus Alignment Healthcare 115 Q1 F-Prime Capital Partners; WuXi Healthcare Ventures Fluidnet Corporation (aka Ivenix) 50 Q1 BOE Technology Cnoga Medical 50 Q1 Allen & Company; AME Cloud Ventures; Andreessen Horowitz; Asset Management Ventures; CRV; Data Collective; GV; Innvoation Endeavors; Polaris Partners; Spectrum 28 Capital; The Founders Fund Freenome 65 Q1 Edgewood Partners Insurance Center; Two Sigma Ventures Decisely Insurance Services 60 Q1 Blue Cross and Blue Shield Association; Sandbox Industries Higi na Q1 Hakim Unique Internet California Healthcom Group (Haoeyou) 40 Q1 American Investment Holdings; EDB Investments; General Catalyst Partners; Investment AB Kinnevik; Microsoft Livongo Health 52.5 Q1 Omron Healthcare; Mayo Clinic AliveUSA (dba AliveCor) 30 Q1 Express Scripts Mango Health na Q1 Venrock; Allen & Company; Ev Williams Obvious Ventures; Redmile Group; Scifi VC Virta Health 37 Q1 Warburg Pincus Alignment Healthcare 115 Q1 F-Prime Capital Partners; WuXi Healthcare Ventures Fluidnet Corporation (aka Ivenix) 50 11 Copyright 2018 Healthcare Growth Partners Appendix C Private Equity Highlights (non-buyout), continued 45 Quarter Investor Target Raise ($mm) Q1 BOE Technology Cnoga Medical 50 Q1 Allen & Company; AME Cloud Ventures; Andreessen Horowitz; Asset Management Ventures; CRV; Data Collective; GV; Innvoation Endeavors; Polaris Partners; Spectrum 28 Capital; The Founders Fund Freenome 65 Q1 Wellcome Trust; Goldman Sachs; Four Rivers Group; Benchmark Capital; The Founders Fund ResearchGate 52.6 Q1 Tencent Holdings Beijing Interactive Peak (Good Doctor Online) 200 Q1 Koninklijke Philips NV OneLife Health na Q1 IDG Capital Partners; Matrix Partners; Qiming Weichuang Venture Capital Beijing Hilficom Information Consulting (dba Anxin Doctor) 29 Q1 Ascension Ventures Intelligent Medical Objects na Q1 Foresite Capital Management; NanoDimension Management Limited; Paladin Capital Group; Spruce Capital Partners; Venrock Muse Biotechnology 23 Q1 TA Associates Management Retriever Medical/Dental Payments na Q1 Dragoneer Investment Group; JMI Equity PointClickCare 85 Q1 Goldman Sachs M3 457 Q1 Temasek Holdings Verily Life Sciences 800 Q1 Accel Partners; Bpifrance Doctolib 28 Q1 Kleiner Perkins Caufield & Byers Nuna 90 Q1 Altimeter Capital Management; CapitalG; Matrix Partners; Recruit Holdings; RSI I Fund; ruNet Holdings; Sequoia Capital; Sofina Societe Anonyme; Tencent Holdings; Thrive Capital Practo Technologies 55 Q1 Biomatics Capital; GV; Maryland Venture Fund; Venrock; Arch Venture Partners Aledade 20 Q1 Merck; GE Ventures; Peloton Equity; Zaffre Investments; Morgan Stanley Arcadia Healthcare Solutions 30 Q1 iCarbonx; The Invus Group PatientsLikeMe 100 Q1 Primus Capital Payspan na Q2 Spectrum Equity Headspace 36.7 11 Copyright 2018 Healthcare Growth Partners Appendix C Private Equity Highlights (non-buyout), continued 46 Quarter Investor Target Raise ($mm) Q2 Collaborative Fund; Maverick Capital; Norwest Venture Partners; Union Square Ventures Science Exchange 28 Q2 Accel Partners; Index Ventures; Creandum; Project A Ventures Webbhalsa AB (dba KRY) 22.7 Q2 Georgian Partners; Insulet Corporation; Mayo Clinic; Canaan Partners; Social Capital; Medtronic; Samsung NEXT Glooko 35 Q2 Searchlight Capital Partners; Silver Point Capital PatientPoint 140 Q2 Health Catalyst Capital Management; Vision+; TEXO Ventures; SoftTech VC; Lifeline Ventures; B-Fore Capital BetterDoctor 11 Q2 Acequia Capital; CRV; General Catalyst Partners; GV; M13 Inc.; Temasek Holdings; Thrive Capital ClassPass 70 Q2 ABS Capital; BroadOak Capital Partners; Pablo Capital LabConnect 24.5 Q2 S. C. Johnson & Son Clean Hands Safe Hands na Q2 Greenoaks Capital Partners; Jackson Square Ventures ScriptDash (dba Alto) 23 Q2 Johnson & Johnson Innovation; Seventure Partners; Mayo Clinic DayTwo 13.5 Q2 Bessemer Venture Partners; Cross Creek Advisors; Flare Capital Partners; Greenspring Associates; Greycroft Partners; New Enterprise Associates; Redpoint Ventures Bright Health 160 Q2 Balyasny Asset Management; CapitalG; Goldman Sachs; Leerink Transformation Partners; Pritzker Group Venture Capital Contextmedia Health (Outcome Health) 500 Q2 Balyasny Asset Management; Fidelity Investments; GGV Capital; Kleiner Perkins Caufiled & Byers; NBCUniversal Media; QuestMark Partners; True Ventures; Wellington Management Group Peloton Interactive 325 Q2 Questa Capital Management Medrio 30 Q2 Baxter Ventures; MVM Life Science Partners Vital Connect 33 Q2 Thrive Capital; Sound Ventures; Virgin Group Capsule Corporation 20 Q2 5AM Venture Management; Bootstrap Incubation; Heritage Provider Network; Leerink Transformation Partners Assay Depot (Scientist.com) 24 Q2 Asia-Pac eCommerce; Penta Global Advisors Fund Guangdong Jianke Pharmaceutical 50 11 Copyright 2018 Healthcare Growth Partners Appendix C Private Equity Highlights (non-buyout), continued 47 Quarter Investor Target Raise ($mm) Q2 Hillhouse Capital Management; Banyan Capital; Sequoia Capital; Yunfeng Capital; ZhenFund Shanghai Yitu Network Technology 55.2 Q2 GV Clover Health 130 Q2 Dell Technologies Capital; Moore Venture Partners; Qualcomm Ventures Edico Genome 22 Q2 Yunfeng Capital; Temasek Holdings; Amgen Ventures; 3W Partners WuXi NextCODE Genomics 75 Q2 Nokia Growth Partners; Xiaomi Ventures Yuedongquan 14.5 Q2 Glynn Capital Management; GV; Amgen Ventures; Redmile Group; dRx Capital; Sanofi Genzyme BioVentures; Lux Capital Management Science 37 29 Q2 Undisclosed Babylon Healthcare Services 60 Q2 GV; Qiming Weichuang Venture Capital; SR One ZappRx 25 Q2 .406 Ventures; CrossLink Capital; New Enterprise Associates; Sapphire Ventures Reltio 40 Q2 CITIC Capital Asset Management MORE Health 36.3 Q2 Eight Partners Blink Health 90 Q2 Sanofi Genzyme BioVentures; GE Ventures; B Capital Group Evidation Health 10 Q2 Tech Mahindra; Eight Roads Ventures; F- Prime Capital Partners MedWell Ventures 21 Q2 Singapore Technologies Telemedia Armor Defense 89 Q2 Accel Partners; Aspect Ventures; CRV; Highland Capital Partners; Pilot Wall Group; The Northwestern Mutual Life Insurance Company Amino 25 Q2 Sequoia Capital HealthEngine 26.7 Q3 Pamlico Capital Beckers Healthcare na Q3 Aberdare Ventures Gravie 14.1 Q3 F-Prime Capital Partners Wellframe 15 Q3 Medica HealthEdge Software 34 Q3 Cohen Private Ventures DocAsap na Q3 General Catalyst Partners Color Genomics 80 11 Copyright 2018 Healthcare Growth Partners Appendix C Private Equity Highlights (non-buyout), continued 48 Quarter Investor Target Raise ($mm) Q3 Canaan Partners, New Leaf Venutre Partners, Tribeca Venture Partners, McKesson, New Atlantic Ventures Truveris 24.7 Q3 F-Prime Capital Partners, Venrock, New Enterprise Associates, Portag3 Ventures Stride Health 23.5 Q3 Draper Fisher Jurvetson, Social Capital, True Ventures Lumity 19 Q3 .406 Ventures, Aetna, Bain Capital, HLM Venture Partners, Horizon Healthcare Services, Sandbox Industries AbleTo 36.6 Q3 Accel Partners, IDG Ventures, Kalaari Capital, Rnt Associates Cure Fit Healthcare 25 Q3 Sequoia Capital, Sofina Societe Anonyme, Zodius Advisors India MedGenome Labs 30 Q3 Sequoia Capital, Fidelity Investments, Altimeter Capital Management, Casdin Capital, Euclidean Capital, The Knut and Alice Wallenberg Foundation 23andMe 250 Q3 Compound, Firstime, Norwest Venture Partners, Qumra Capital, SoftBank Capital, Spark Capital Partners Groop Internet Platform (dba Talkspace) 31 Q3 Camden Partners Holdings, HighBar Partners, Merck & Co., Psilos Group, TPG Growth PatientSafe Solutions 25 Q3 360 Capital, Alychlo NV, Balderton Capital, Invoke Capital Sophia Genetics 30 Q3 Index Ventures, Redmile Group, Refactor Capital, Western Technology Investment, Y Combinator Call9 24 Q3 Undisclosed 98point6 19.5 Q3 Hearst Health Ventures Moffitt Genetics (dba M2Gen) 75 Q3 Elsewhere Partners Relatient na Q3 Alta Partners, Questa Capital Management, US Acute Care Solutions DispatchHealth 30.8 Q3 Khosla Ventures, True Ventures, Angel Investor Deep Genomics 13 Q4 Canaan Partners, New Enterprise Associates, Bessemer Venture Partners WellTok 25.5 Q4 Beyond Ventures, eGarden Ventures, G10 Anson Roadobi Partners, Hong Kong Entrepreneurs Fund, Mfund, Yuantai Investment Partners Prenetics 40 11 Copyright 2018 Healthcare Growth Partners Appendix C Private Equity Highlights (non-buyout), continued 49 Quarter Investor Target Raise ($mm) Q4 Eight Roads Ventures Doctorlink 26.3 Q4 General Catalyst Partners, Pillar Companies, Refactor Capital, 8VC, Danhua Capital, kdT Ventures PathAI 14.9 Q4 LabCorp MC10 na Q4 Cigna Corp., GIS Strategic Ventures, Hermed Alpha Industrials Co., Hikma Ventures, MAYWIC Select Investments, Merck & Co., Safeguard Scientifics Medivo (dba Prognos.ai) 20.5 Q4 Perceptive Advisors Counsyl 80 Q4 Ascension Ventures, GE Ventures, Intermountain Healthcare, Safeguard Scientifics, Social Capital, Amgen Ventures, Medidata Solutions, Merck & Co., Roche Venture Fund Syapse 30 Q4 Kleiner Perkins Caufield & Byers, Kaiser Permanente Ventures, Providence Ventures, Peterson Ventures, Maverick Ventures, EPIC Ventures, Bessemer Venture Partners Collective Medical Technologies 47.5 Q4 Andreessen Horowitz, CRV, First Round Capital Health IQ 34.6 Q4 Insight Venture Partners LeanTaas 26 Q4 GE Ventures, Northwell Ventures, Varian Medical Systems, DNA Capital, Emergent Medical Partners, Temasek Holdings, New York Presbyterian Fund, ORI Capital Arterys 30 Q4 Bpifrance, Eurazeo Doctolib 41.6 Q4 TT Capital Partners Revel LLC 17 Q4 Avista Capital Holdings United BioSource Corporation na Q4 Lerer Hippeau Ventures, Greycroft Partners, Blue Pool Capital, Advancit Capital, Canvas Venture Fund, Female Founders Fund, Angel Investors Thrive Global 30 Q4 Insight Venture Partners, Arena Ventures, Pear Ventures, Switch VC Aaptiv 38 Q4 China Electronics Corp., China Renaissance Partners, Sequoia Capital, Tencent Holdings Medlinker 60.5 Q4 The Founder Fund, Thrive Capital, Martin Ventures, SV Angel Cedar, Inc. 13 Q4 Venrock, Biomatics Capital Aledade 23 11 Copyright 2018 Healthcare Growth Partners </p>
