HCIT Market Research Oct 2011

The Healthcare IT (HCIT) M&A market is witnessing significant activity, a sign the sector’s predicted expansionand transformation is taking shape. While most deals in2011 can be categorized as smaller tuck-ins, two marqueetransactions were announced this summer: ExpressScripts’$29 billion acquisition of Medco, a pharmacy benefits management provider, and Blackstone’s $3 billion acquisitionof Emdeon, a revenue cycle management and medical dataservices provider. As consolidation and HCIT spendingcontinue to accelerate, we believe the healthcare market ispoised for increased M&A activity and growth.

Government financial incentives and regulations requiringautomation in healthcare practices will continue to be the main drivers in the sector for the next several years. The HCIT market in the U.S. is expected reach $40 billionby the end of 2011 and grow at an impressive 24% compound annual growth rate (CAGR) from 2012-2014.1

Spending on healthcare software is expected to rise 20.5%,from $6.8 billion in 2010 to $8.2 billion in 2011.2 A large portion of the growth will come from spending on electronic health record (EHR) systems and mobile applications.

Signal Hill Chase SandersDirector

[email protected]

Sector M&A Update: Healthcare IT 2011

Sector M&A Update: Healthcare IT 2011 www.signalhill.com

Q/Q Rev

Growth

Key Factors Driving Continued HCIT

Investment and M&A

Some of the key factors that we see driving investment andconsolidation in the HCIT sector are as follows:

Increased government initiatives and healthcare•

reform: Spurred by attractive government incentivesthat began in 2011 and greater clarity surroundingmeaningful use rules, hospitals will invest billions ofdollars into certified EHR systems. Although many hospital systems were already planning to invest inEHRs, the government’s new regulations considerablycondensed their timelines. The criteria for meaningfuluse will be staged in three steps over the next severalyears, with Medicare penalties beginning in 2015. Stage 1,currently in process through 2012, sets the baseline forelectronic data capture and information sharing.

Skyrocketing cost of healthcare delivery to •

patients, physicians and providers: The largest contributorof increasing medical costs comes from care providers, which account for up to 81% of the

medical benefit.3 Growth in medical costs for 2011 hasbeen primarily driven by provider cost-shifting fromMedicare to commercial payers due to rate cuts,increased bargaining power from continued provider consolidation (physicians and hospitals) and large capital investments by hospitals for IT systems and professionals.

Desire to improve patient safety and health outcomes:•

An estimated 80% of serious medical errors involvemiscommunication between caregivers when a patientis transferred or handed off.4 Improvements in the completeness, accuracy and accessibility of patientinformation can reduce defective hand-offs by an average of 52%.5

Innovative technology from niche players: Niche •

players continue to develop new technologies to capture and use data and drive change in the HCITspace. These niche markets are large enough to providesignificant venture capital returns, with readily foreseeableexit opportunities as large strategics consolidate andbecome “one-stop-shops.”

IN THIS ISSUE: M&A Update - Healthcare IT 2011

2 HCIT M&A By The Numbers

2 Public HCIT Company Multiples

3 Noteworthy Recent Transactions

4 Largest HCIT Transactions

5 Venture Investments in HCIT

6 Public HCIT Equity Performance

7 HCIT Public Company Data

8 Precedent HCIT Transactions

10 References

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HCIT M&A By The Numbers

HCIT M&A activity has grown steadily since 2008. The total number of announced deals grew substantially in 2010 andthe expected deal count for 2011 is on pace to exceed it. Median deal size for 2011 grew slightly over 2010, continuing a positive trend since a low in 2009. The median revenue multiple for 2011 also grew slightly compared to 2010 to 2.5x. The continued expansion of these metrics signals increased market confidence and the growing value of HCIT to strategic and financial investors.

Figure 1: HCIT M&A Deal Metrics, 2008-2011

Figure 2: Signal Hill HCIT Composite Enterprise Value / LTM Revenue Public Company Trading Multiples

Note: Signal Hill HCIT Composite: ABCO, ACCL, AH, ATHN, CERN, CGM-FR, COP-DE, CPSI, EM, EPOC, ERT, HMSY, HSTM, ICAD, MCK, MDAS, MDRX, MDSO, MEDW, MRGE, OMCL, OSIS, QSII, SECT.B-SE, SXCI, WBMD and ZIXI.

Source: Signal Hill

As of Q3

2008 2009 2010 2011(E)* 2010 2011*

Number of Deals 48 77 106 118 71 88

% change from prior year - 60.4% 37.7% 11.3% - 23.9%

Total Enterprise Value ($M) $3,607.0 $10,610.1 $8,106.2 $7,848.0 $7,177.0 $5,869.8

% change from prior year - 194.2% -23.6% -3.2% - -18.2%

Median Announced Deal Size ($M) $51.6 $10.5 $59.0 $60.0 $61.3 $60.0

% change from prior year - -79.7% 461.9% 1.7% - -2.1%

Median EV/TTM Revenue Multiple 2.2x 1.1x 2.4x 2.5x 2.7x 2.5x

% change from prior year - -50.0% 118.2% 4.2% - -7.4%

*2011 data excludes the EV $34 billion ExpressScripts/Medco transaction.

Public HCIT Company Multiples

Public HCIT company revenue trading multiples are a key indicator of the health of the market and began expanding at a healthy clip in 2011, peaking at 3.2x. However, macroeconomic head winds from a slowing U.S. economy and concernsof a spreading debt crisis in Europe have since depressed HCIT revenue trading multiples to around 2.4x over the last few months.

Sep-09 Feb-10 July-10 Dec-10 May-11 Sep-11Source: Signal Hill

3.4x

3.2x

3.0x

2.8x

2.6x

2.4x

2.2x

2.0x

1.8x

3.4x

3.2x

3.0x

2.8x

2.6x

2.4x

2.2x

2.0x

1.8x

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Note: Payor IT: HMSY and SXCI; Pharma IT: ACCL, CGM-FR, EPOC, ERT, MDSO and WBMD; Physician IT: AH, ATHN, COP-DE, MDRX, QSII and ZIXI; Hospital IT:

CERN, CPSI, MCK, MDAS, MEDW and OMCL; Imaging IT: ICAD, MRGE, OSIS and SECT.B-SE; and Services IT: ABCO, EM and HSTM.

Noteworthy Recent HCIT M&A Transactions

Emdeon / Blackstone (Enterprise Value: $3,061 million; 2.8x revenue): Private equity firm Blackstone agreed to acquire•a controlling interest in Emdeon, a provider of revenue and payment cycle management solutions, connecting payers,providers and patients in the U.S. healthcare system. Under the terms of the merger agreement, holders of Emdeoncommon stock will receive $19.00 per share in cash, representing a 39% premium to its average 30-day trading price.This transaction marks a complete exit from Emdeon by General Atlantic, the private equity firm that bought a 52% stake in the company in 2006 from HLTH for $1.25 billion. The remaining private equity shareholder, Hellman &Friedman will retain a minority equity interest in Emdeon.

Vangent / General Dynamics (EV: $960 million; 1.3x revenue): General Dynamics, a provider of information technology,•systems engineering, professional services and simulation and training support to government customers, agreed toacquire Vangent, a provider of health informatics and information exchange, electronic health records, data analyticsand business-process outsourcing solutions, also to government customers. The acquisition will add depth and breadthto GD’s IT operations, which provides HCIT systems and solutions to federal, commercial and military customers. It isthe second time in four years Vangent ownership has changed; Veritas acquired the company from Pearson for $600 million in 2007.

Sage Software Healthcare / Vista Equity Partners (EV: $320 million; 2.8x revenue): Vista Equity Partners, a private•equity firm focused on enterprise software and technology businesses, agreed to acquire Sage Software Healthcare, aprovider of practice management and EHR offerings. The transaction will allow Sage to focus on other U.S opportunitieswithin its core customer base. Sage will make a loss of up to 70 million pounds ($108.4 million) through the sale and redistribute cash proceeds of $320 million to shareholders by buying back shares.

Figure 3: Current Signal Hill HCIT Subsector Composites Median Enterprise Value / Revenue Trading Multiples

The table below provides a snapshot of public company trading multiples broken down by key subsectors of HCIT.

4.5x

4.0x

3.5x

3.0x

2.5x

2.0x

1.5x

1.0x

0.5x

0.0xHospital IT Imaging IT Payor IT  Pharma IT Physician IT  Service IT

2.2x

1.9x

2.3x

1.2x 1.2x 1.2x

3.4x

3.0x

2.5x

1.4x 1.4x1.2x

4.0x

3.3x

2.9x

3.5x

3.1x

2.6x

LTM  2011E 2012PSource: Signal Hill

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Gateway EDI / TriZetto (EV: $230 million; revenue multiple unavailable): TriZetto, a healthcare payment software and•services provider, agreed to acquire Gateway EDI, a St. Louis-based provider of healthcare revenue cycle managementsolutions. The acquisition will enable TriZetto to offer an integrated end-to-end payment information product.Gateway EDI’s leadership will remain in place and will operate the company as an independent subsidiary.

Vitalize Consulting / SAIC (EV: $190 million; 2.5x revenue): SAIC, a scientific, engineering, and technology •applications company, agreed to acquire Vitalize Consulting, a provider of clinical, business and IT services for healthcareenterprises. The acquisition enables SAIC to expand in the commercial health provider market and leverage its information integration and data analytics expertise with Vitalize Consulting’s HCIT and clinical workflow optimizationcapabilities to further grow as commercial and Federal health markets converge.

Medical Present Value / Experian (EV: $185 million; 4.1x revenue): Experian, a global information services company,•agreed to acquire Medical Present Value, a provider of data, analytics and software in the RCM market. MedicalPresent Value’s revenue CAGR over the past three years has exceeded 30%, driven primarily by new business wins.The acquisition will provide Experian a more comprehensive set of products and services across the healthcare payments life cycle and help clients manage multiple vendors through a single point of contact.

M*Modal / MedQuist (EV: $130 million; 5.4x revenue): MedQuist, a provider of integrated clinical documentation •solutions for healthcare, agreed to acquire M*Modal, a provider of speech recognition and natural language processingsoftware enabling structured data to be pulled from dictation and placed in an EHR. The deal will allow MedQuist toprovide advanced speech understanding technologies and services that seamlessly capture the physician narrative.MedQuist intends to enhance further the integration of M*Modal’s front-end speech recognition technology withMedQuist’s clinical documentation platform.

Figure 4: Largest HCIT Transactions by Enterprise Value, 2010-2011

Source: Signal Hill

DateAnnounced Seller Buyer

EnterpriseValue ($M)

EV/ TTMRevenueMultiple Target Description

21-Jul-11 Express Scripts,Inc.

Medco HealthSolutions

$34,000.0 0.5x Pharmacy benefit management provider.

09-Jul-10 MultiPlan, Inc. BC Partners &Silver LakePartners

$3,100.0 NA Provider of healthcare cost management solutions that deliver transactionbased services to insurers, health plan administrators, and other payersof healthcare services.

04-Aug-11 Emdeon, Inc. The BlackstoneGroup

$3,061.0 2.8x Provider of revenue and payment cycle management and clinical information exchange solutions.

09-Jun-10 Eclipsys Allscripts $1,205.0 2.3x Provider of advanced integrated clinical, revenue cycle and performancemanagement software, clinical content and professional services.

16-Aug-11 Vangent, Inc. GeneralDynamics

$960.0 1.3x Provider of health informatics and information exchange, electronichealth records and data analytics, as well as state-of-the-art businessprocess outsourcing solutions to federal clients.

14-Sep-10 The BroadlaneGroup

MedAssets, Inc. $850.0 5.1x Provider of supply chain management, strategic sourcing of suppliesand services, capital equipment lifecycle management, medical deviceor PPI cost management, centralized procurement, clinical and leanprocess consulting, and clinical workforce optimization.

16-Apr-10 Phase Forward Oracle Corp. $575.9 2.7x Provider of integrated data management solutions for clinical trials anddrug safety.

07-Dec-10 Medicity Inc. Aetna Inc. $500.0 NA Offers a broad range of products and services that enable health systems,hospitals, physician practices and health information exchanges tosecurely access and exchange health care information.

22-Sep-11 Sage Group /Sage SoftwareHealthcare LLC

Vista EquityPartners

$320.0 2.8x Provides electronic healthcare records (EHR) and medical practicemanagement software for the medical sector with features for businessintelligence analytics, patient online self-service, reporting andtransaction processing.

14-Sep-10 ChamberlinEdmonds &Associates, Inc.

Emdeon, Inc. $260.0 NA Provides comprehensive eligibility services through technology-enabledpatient access solutions nationwide for hospitals, government agenciesand managed care organizations.

05-Mar-10 AMICAS, Inc. MergeHealthcareIncorporated

$240.1 3.3x Offers a suite of image and information management solutions including radiology PACS, cardiology PACS, radiology information systems, cardiovascular information systems, revenue cycle managementsolutions and enterprise content management tools designed to powerthe imaging component of the electronic medical record (EMR).

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HCIT Venture Capital Investments

Venture Capital investments in the HCIT sector witnessed significant growth during 2010 and 2011. As of September 30,the number of investments was up more than 10% compared to 2010, while total dollars invested already exceeds thetotal amount for all of 2009.

*2011 as of 9/30/10. Percentage change compared to same period in 2010.

Figure 5: HCIT Venture Capital Investments, 2005-2011*

Business process management technology for healthcare continued to bring in the majority of venture capital investmentsduring the first three quarters of 2011. Revenue cycle management witnessed a large increase in investments, while theother subsectors witnessed declines, mostly due to general market weaknesses.

Figure 6: HCIT Venture Capital Investments by Subsector, 2005-2011*

*2011 data as of 9/30/10.

Source: VentureXpert/ThomsonOne

2005 2006 2007 2008 2009 2010 2011(E)As of 9/30

2011*TOTAL as of

Q3 2011

Total Number of Investments 42 54 53 55 45 69 67 49 367

Percent change over previous period - 28.6% -1.9% 3.8% -18.2% 53.3% -2.9% 11.4% -

Total Dollars Invested ($M) $195.7 $257.7 $257.4 $349.1 $184.6 $282.7 $259.2 $194.0 $1,721.2

Percent change over previous period - 31.6% -0.1% 35.6% -47.1% 53.2% -8.3% -10.2% -

Source: VentureXpert/ThomsonOne

Sub-sector 2005 2006 2007 2008 2009 2010 2011(E)As of 9/30

2011 TOTAL

Electronic Medical Records

(EMR) $27.4 $30.3 $11.5 $29.1 $9.5 $16.4 $12.8 $9.6 $133.8

Health Information Exchange

(HIE) $13.2 $25.0 $4.0 $0.4 $0.5 $41.1 $20.1 $15.0 $99.2

Revenue Cycle Management $44.5 $79.6 $91.9 $121.8 $52.9 $18.8 $49.3 $36.9 $446.4

Healthcare Business Process

Management$96.0 $91.2 $98.6 $101.0 $101.2 $92.2 $127.4 $95.3 $675.6

Storage of Medical Information NA $9.1 $14.8 $9.1 $4.0 $53.1 $19.3 $14.4 $104.5

Mobile / Internet Technology

for Healthcare$14.6 $22.6 $36.5 $87.7 $16.6 $16.6 $3.3 $2.5 $197.0

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H e a l t h c a r e I T 2 0 1 1

Note: Signal Hill HCIT Composite: ABCO, ACCL, AH, ATHN, CERN, CGM-FR, COP-DE, CPSI, EM, EPOC, ERT, HMSY,

HSTM, ICAD, MCK, MDAS, MDRX, MDSO, MEDW, MRGE, OMCL, OSIS, QSII, SECT.B-SE, SXCI, WBMD and ZIXI.

The HCIT equity subsectors for Services, Payor, Physician, Hospital and Imaging outperformed the NASDAQ Compositeover the last year, up 56.6%, 40.6%, 31.9%, 28.1% and 20.0% respectively. Only the Pharma HCIT equity subsector under-

performed the NASDAQ Composite over last year, down 38.7%.

Figure 7: One Year Signal Hill HCIT Composite vs NASDAQ Composite

Figure 8: One Year Signal Hill HCIT Sub-sector Composites vs NASDAQ Composite

Note: Payor IT: HMSY and SXCI; Pharma IT: ACCL, CGM-FR, EPOC, ERT, MDSO and WBMD; Physician IT: AH, ATHN, COP-DE, MDRX, QSII and ZIXI; Hospital IT: CERN, CPSI, MCK, MDAS, MEDW and OMCL; Imaging IT: ICAD, MRGE, OSIS and SECT.B-SE; and Services IT: ABCO, EM and HSTM.

Public HCIT Equity Performance

The Signal Hill HCIT Composite performed in line with the NASDAQ Composite over the last quarter of 2010 and outperformed the NASDAQ through Q3 2011, up 22.7% over the last year.

40%

30%

20%

10%

0%

-10%

40%

30%

20%

10%

0%

-10%

Source: Signal Hill

Sep-10 Dec-10 Feb-11 May-11 Jul-11 Sep-11

70%

60%

50%

40%

30%

20%

10%

0%

-10%

-20%

-30%

-40%

-50%

70%

60%

50%

40%

30%

20%

10%

0%

-10%

-20%

-30%

-40%

-50%Sep-10 Dec-10 Feb-11 May-11 Jul-11 Sep-11

Payor IT NASDAQ Composite Pharma IT Physician IT  Hospital IT  Imaging IT Services IT Source: Signal Hill

Signal Hill HCIT Composite NASDAQ Composite

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Figure 8: HCIT Public Company Data

Source: Signal Hill Market Data Financial Data Valuation Data

Pricing Date 09/30/11

Stock

Price LTM Margins EV/Revenues EV/EBITDA1

Median Metrics

Price

9/30/11

% of 52

Week High

Market

Cap

Enterprise

Value

LTM

Revenue YoY Seq. Gross EBITDA LTM

CY

2011(E)

CY

2012(P) LTM

CY

2011(E)

CY

2012(P)

Hospital IT

McKesson Corp $72.70 83.3% $18,466 $19,339 $114,614 9.2% 3.9% 5.3% 2.2% 0.2x 0.2x 0.2x 7.6x 6.6x 6.1x

Cerner Corp. 68.52 92.1% 11,894 11,327 1,979 15.0% 6.6% 77.8% 30.5% 5.7x 5.3x 4.7x 18.8x 16.9x 14.3x

MedAssets Inc. 9.61 42.7% 566 1,465 481 54.9% 12.9% 58.7% 28.4% 3.0x 2.5x 2.3x 10.7x 8.0x 7.2x

Computer Programs

& Systems Inc 66.15 83.7% 732 707 173 29.5% 20.9% 46.3% 23.7% 4.1x 3.9x 3.5x 17.2x 15.5x 13.5x

Omnicell Inc. 13.78 75.9% 468 287 232 11.5% 6.7% 54.8% 8.7% 1.2x 1.2x 1.0x 14.3x 8.4x 6.7x

Mediware Information

Systems Inc.11.90 86.8% 100 70 56 20.6% 16.0% 58.5% 27.8% 1.3x 1.2x NA 4.5x NA NA

Median 83.5% 17.8% 9.8% 56.7% 25.8% 2.2x 1.9x 2.3x 12.5x 8.4x 7.2x

Imaging IT

OSI Systems Inc. $33.52 74.0% $662 $609 $656 10.9% 4.9% 36.5% 10.6% 0.9x 0.9x 0.8x 8.7x 7.8x 6.5x

Merge Healthcare Inc. 5.75 93.2% 515 719 200 91.7% 5.5% 55.1% 22.5% 3.6x 3.1x 2.7x 16.0x 11.5x 10.0x

Sectra AB 6.12 87.7% 230 202 131 -0.8% -25.8% 2.1% 8.5% 1.5x 1.6x 1.6x 18.3x 14.5x 9.7x

icad Inc. 0.47 26.6% 26 18 26 9.0% -9.5% 71.0% -43.0% 0.7x 0.6x 0.4x NM NA NA

Median 80.9% 10.0% -2.3% 45.8% 9.5% 1.2x 1.2x 1.2x 16.0x 11.5x 9.7x

Payor IT

SXC Health Solutions $55.70 83.9% $3,552 $3,217 $3,326 152.8% 10.4% 7.0% 3.9% 1.0x 0.7x 0.5x 24.8x 19.2x 14.2x

HMS Holdings Corp. 24.39 86.3% 2,115 1,997 339 26.3% 8.4% 34.3% 27.7% 5.9x 5.4x 4.4x 21.3x 17.9x 14.6x

Median 85.1% 89.6% 9.4% 20.7% 15.8% 3.4x 3.0x 2.5x 23.1x 18.6x 14.4x

Pharma IT

WebMD Health Corp. $30.15 51.5% $1,769 $1,424 $577 15.2% 7.4% 60.7% 27.6% 2.5x 2.4x 2.2x 8.9x 7.2x 6.3x

Cegedim S.A. 30.72 43.0% 430 1,133 1,316 15.2% 22.8% 12.5% 5.9% 0.9x 0.9x 0.9x 14.5x 5.0x 4.6x

Medidata Solutions Inc. 16.44 60.0% 408 314 179 24.5% 23.2% 68.7% 21.8% 1.7x 1.7x 1.5x 8.0x 7.2x 5.9x

Epocrates Inc. 9.01 29.8% 233 152 111 10.2% -4.5% 67.8% 6.7% 1.4x 1.3x 1.1x 20.4x 10.4x 5.8x

Accelrys Inc. 6.06 67.7% 336 220 NA NA NA NM NM NA 1.5x 1.4x NA 7.3x 6.1x

eResearch Technology 4.46 51.9% 220 208 175 47.3% 2.8% 42.5% 26.1% 1.2x 1.2x 1.1x 4.6x 4.3x 3.3x

Median 51.7% 15.2% 7.4% 60.7% 21.8% 1.4x 1.4x 1.2x 8.9x 7.2x 5.9x

Physician IT

Allscripts Healthcare

Solutions Inc.$18.02 77.9% $3,470 $3,470 $1,085 81.8% 6.1% 35.1% 11.6% 3.2x 2.4x 2.2x 27.7x 9.6x 8.2x

Accretive Health Inc. 21.23 64.7% 2,146 1,995 676 20.9% 12.1% 22.5% 5.5% 3.0x 2.4x 1.8x 53.3x 25.2x 15.5x

Quality Systems Inc. 97.00 95.7% 2,852 2,722 371 21.1% 3.4% 64.3% 33.1% 7.3x 6.6x 5.6x 22.2x 20.5x 16.3x

athenahealth Inc. 59.55 81.9% 2,130 2,026 280 33.0% 11.4% 57.8% 17.8% 7.2x 6.3x 4.9x 40.5x 31.9x 23.4x

CompuGROUP

Medical AG11.94 69.0% 635 986 484 29.8% 2.3% 25.2% 18.2% 2.0x 1.8x 1.6x 11.2x 9.3x 7.2x

Zix Corp. 2.67 54.7% 180 163 34 5.8% 1.7% 82.0% 26.7% 4.7x 4.2x 3.6x 17.7x 13.2x 10.1x

Median 73.5% 25.4% 4.7% 46.4% 18.0% 4.0x 3.3x 2.9x 24.9x 16.9x 12.8x

Services IT

Emdeon Inc. CI A $18.79 99.4% $1,716 $2,815 $1,075 16.0% 3.9% 21.5% 23.4% 2.6x 2.5x 2.3x 11.2x 9.3x 8.5x

Advisory Board Co. 64.53 94.6% 1,090 1,055 305 22.4% 5.7% 43.8% 11.8% 3.5x 3.1x 2.6x 29.4x 17.0x 13.4x

HealthStream Inc. 12.83 86.4% 300 273 74 26.4% 13.8% 56.4% 18.4% 3.7x 3.4x 2.9x 20.1x 16.8x 14.3x

Median 94.6% 22.4% 5.7% 43.8% 18.4% 3.5x 3.1x 2.6x 20.1x 16.8x 13.4x

ALL HCIT Companies 77.9% 21.0% 6.3% 50.5% 18.3% 2.5x 2.4x 2.0x 17.2x 10.4x 8.5x

($ in Millions, except per share data)

Q/Q Rev

Growth

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H e a l t h c a r e I T 2 0 1 1

Figure 9: Precedent HCIT M&A Transactions

Source: Signal Hill

DateAnnounced Seller Buyer

EnterpriseValue ($M) Revenue EBIT EBITDA Target Description

16-Aug-11 Vangent, Inc. General

Dynamics

$960.0 1.3x 21.9x 11.7x Provider of health informatics and information

exchange, electronic health records and data analytics,

as well as state-of-the-art business-process outsourcing

solutions to federal clients.

12-Aug-11 Zircadian

Holdings Limited

Allocate Software $9.8 2.4x NA 30.4x SaaS provider of software used to plan the rotas of

junior doctors and consultants in the NHS.

04-Aug-11 Emdeon, Inc. The Blackstone

Group

$3,061.0 2.8x 28.6x 12.2x Provider of revenue and payment cycle management

and clinical information exchange solutions connecting

payers, providers and patients in the United States

healthcare system.

01-Aug-11 Salar Inc. Transcend

Services, Inc.

$11.0 2.8x 9.2x NA Developer of electronic clinical documentation and

billing workflow software for the healthcare market.

11-Jul-11 M*Modal MedQuist Inc. $130.0 5.4x NA NA Provides speech recognition software and software

as a service (SaaS) for the purposes of clinical

documentation and transcription for the medical sector.

28-Jun-11 Medical Present

Value, Inc.

Experian Group

Ltd.

$185.0 4.1x NA NA Provides Web-based medical patient and insurance

provider payment, as well as revenue cycle management

software for the medical sector.

22-Jun-11 Portico Systems McKesson

Corporation

$90.0 4.6x NA NA Provides healthcare benefits provider network

management, administration and collaboration

software for health insurance providers.

06-Jun-11 Ophthalmic

Imaging Systems

Merge Healthcare $32.3 1.8x NM NM Provides digital eye scanning systems and related

image capture and management software for the

ophthalmology sector. Also provides related electronic

healthcare records (EHR) management software.

28-Apr-11 Vital Images, Inc. Toshiba Medical

Systems

Corporation

$152.1 2.5x 66.2x 27.0x Provider of advanced visualization and analysis

software for physicians and healthcare specialists.

27-Apr-11 Bloodhound

Technologies

Verisk Analytics,

Inc.

$82.0 8.2x NA NA Provider of real-time pre-adjudication claims editing

web-based software for healthcare payers.

11-Apr-11 Tribal Group plc /

Government and

Health Business

Capita plc $25.9 0.2x NA NA The Government and Health Businesses offers strategic

and operational advisory and consultancy services to

government clients and the healthcare industry in

developing countries on behalf of government funded

donor organizations.

07-Mar-11 BioWisdom, Ltd Instem Life

Science Systems

plc

$2.4 1.0x NA NA Provides software to accelerate access to scientific

information for better decision support during product

discovery, development and commercialization.

22-Feb-11 Gateway EDI The TriZetto

Group

$230.0 NA NA 20.2x Offers electronic claims processing and revenue cycle

management services to more than 70,000 physicians.

16-Dec-10 InfoLogix, Inc. Stanley Black &

Decker

$61.2 0.7x NA NA Provider of enterprise mobility and advanced

wireless asset tracking solutions for the healthcare

and commercial industries.

14-Dec-10 iSOFT Business

Solutions

The Capita Group

Plc

$36.5 1.4x 7.6x 4.2x iSOFT Business Solutions offers financial management,

purchasing and e-business solutions to customers

across both public and private sectors primarily in the

UK and Ireland.

04-Nov-10 Group DCA PDI, Inc. $55.0 2.9x NA 5.5x Interactive digital communications agency serving

biopharmaceutical companies that leverages the

strengths of the Internet, multimedia, tablet PCs,

dimensional direct mail, and its proprietary software

called DIAGRAM™.

22-Oct-10 Spryance, Inc.

(dba Heartland)

Transcend

Services, Inc.

$8.5 0.5x NA NA Specializes in high-quality, full-service medical

transcription services. The company interfaces with

various health information systems and software.

9

S i g n a l H i l l

Source: Signal Hill

DateAnnounced Seller Buyer

EnterpriseValue ($M) Revenue EBIT EBITDA Target Description

14-Sep-10 The Broadlane

Group

MedAssets, Inc. $850.0 5.1x NA 17.0x Provider of supply chain management, strategic sourcing

of supplies and services, capital equipment lifecycle

management, medical device or PPI cost management,

centralized procurement, clinical and lean process

consulting, and clinical workforce optimization.

30-Aug-10 A.D.A.M., Inc. Ebix, Inc. $67.0 2.4x 16.8x 10.1x Provider of consumer health information and benefits

technology solutions to healthcare organizations,

benefits brokers, employers, consumers, and

educational institutions.

26-Aug-10 Tela Sourcing,

Inc

The TriZetto

Group, Inc.

- NA NA NA Tela offers a wide range of solutions for BPO and

software application development with knowledge of

the healthcare, managed care, insurance markets and

operations management.

19-Aug-10 Akimeka LLC VSE

Corporation

$44.0 1.2x 6.8x NA Develops advanced IT solutions for government

customers. By blending top technical talent,

specialized domain knowledge, and customer

service, Akimeka delivers high-impact solutions for

high-priority challenges.

28-Jul-10 Pulse Systems,

Inc.

Cegedim SA $58.0 3.6x NA NA US healthcare software provider. Pulse offers EHR,

Practice Management, ePrescribing, and Revenue

Cycle Management (Billing and Collection Services)

used nationwide in 35 medical specialties and

subspecialties.

09-Jun-10 Eclipsys Allscripts $1,205.0 2.3x 59.6x 17.3x Provider of advanced integrated clinical, revenue

cycle and performance management software, clinical

content and professional services.

16-Apr-10 Phase Forward Oracle Corp. $575.9 2.7x 42.7x 18.4x Provider of integrated data management solutions for

clinical trials and drug safety. Specifically, its SaaS-

based Integrated Clinical Research Suite manages

clinical development and safety processes from Phase

1 clinical trials through regulatory submission and post-

approval monitoring.

05-Mar-10 AMICAS, Inc. Merge

Healthcare

Incorporated

$240.1 3.3x NM 114.7x Offers a suite of image and information management

solutions – from radiology PACS to cardiology PACS,

from radiology information systems to cardiovascular

information systems, from revenue cycle management

solutions to enterprise content management tools

designed to power the imaging component of the

electronic medical record (EMR).

02-Mar-10 Cerrus Ltd Advanced

Computer

Software Plc

$0.6 0.6x NA NA Cerrus' principal product is Saturn, a community

care and support management solution, which

manages the delivery of care, resource management

and organizational financial requirements for over 60

community health & social care providers.

02-Mar-10 Concuity The Advisory

Board Company

$34.5 6.9x NA NA Provider of revenue cycle management software and

services specializing in contract profitability, contract

compliance, denial management, and revenue process

and lifecycle improvement.

22-Feb-10 UltraGenda BV iSOFT Group

Limited

$14.4 3.0x NA NA Provides an Enterprise-Wide Multi-Resource

Scheduling software solution that enables healthcare

organizations to schedule and manage appointments

and resources to improve efficiencies within multiple

operational provider facilities

01-Feb-10 Global Med

Technologies,

Inc.

Haemonetics

Corporation

$62.6 2.0x 36.8x 20.2x Healthcare information technology company which

markets a breadth of software solutions and services

that span the blood supply continuum, from blood

collection to the hospital transfusion center to the

patient care environment.

Signal Hill Disclaimer

The information and opinions in this report were prepared by Signal Hill. The information herein is believed by Signal Hill to be reliable and has been obtained from andbased upon public sources believed to be reliable, but Signal Hill makes no representation as to the accuracy or completeness of such information. Signal Hill may provide,may have provided or may seek to provide M&A advisory services to one or more companies mentioned herein. In addition, employees of Signal Hill may have purchasedor may purchase securities in one or more companies mentioned in this report. Opinions, estimates and analyses in this report constitute the current judgment of the authoras of the date of this report. They do not necessarily reflect the opinions of Signal Hill and are subject to change without notice. Signal Hill has no obligation to update,modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, estimate, forecast or analysis set forth here-in, changes or subsequently becomes inaccurate. This report is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitationof an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction.

Data cited herein is sourced from Signal Hill’s database and derived from publicly available sources – additional information is available on request.

©2011 Signal Hill. All rights reserved.

B a l t i m o r e • N a s h v i l l e • N e w Y o r k • R e s t o n • S a n F r a n c i s c o

About Signal HillSignal Hill is a privately-held investment banking partnership with a sole focus on growth companies. Our professionalshave deep expertise in Information Technology, Media & Internet, Telecom Services & Internet Infrastructure,Communications, Education & Business Services, and Healthcare Services. Signal Hill has more than 60 professionalsacross five offices in Baltimore, Nashville, New York, Reston and San Francisco.

Justin BalciunasManaging [email protected]

Mathew DahlManaging [email protected]

David DunnManaging [email protected]

J. Adam HittManaging [email protected]

John MacDonaldManaging [email protected]

Don MoreManaging [email protected]

Jeff NahleyManaging [email protected]

Michael ParentManaging [email protected]

Matthew ShillingManaging [email protected]

Joel StrauchManaging [email protected]

Douglas WebsterManaging [email protected]

Henry [email protected]

Chase [email protected]

Bart [email protected]

David DolanVice [email protected]

Matt FioreVice [email protected]

H e a l t h c a r e I T 2 0 1 1

Scott [email protected]

Howard LoewenbergHead of Investment [email protected]

Ira CohenManaging [email protected]

Greg AgerManaging [email protected]

Rob LungVice [email protected]

Justin PuccioVice [email protected]

Franklin E.W. StaleyVice [email protected]

References: 

1. RNCOS2. Ibid3. PricewaterhouseCoopers’ Health Research Institute4. American College of Surgeons5. Ibid

10

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