AdvantEdge Healthcare Solutions October 2010

Overview

 AHS provides Billing and Practice Management services and

solutions to large Physician Groups, Ambulatory Surgery Centers, and Hospitals

 Value proposition centers around proprietary software, workflow

management and Client First™ _{service delivery}

 Clients and prospects have high propensity to outsource due to

practice characteristics

 National footprint / Local presence

Business Characteristics

 Highly predictable recurring revenues and strong cash flow

 Client retention exceeds 97%

 Significant operating leverage: Scalable platform built on

proprietary technology

 Effective buy-and-build strategy

 Targeted sales & marketing approach

 Management team has extensive industry, acquisition, and

Key Events

(2007)

Exit run-rate revenue: $7.5M Burn rate $250+_/month

Multiple processing systems Billing services only

(2010)

$32.5M projected exit run-rate revenue Positive EBITDA

Single processing platform

Services include practice management, consulting, & new compliance product

Timeline

 3/2006 – Platform purchased by Founders Equity  11/2006 – Safeguard Scientifics co-investment

 3/2007 – First acquisition: Anesthesiology billing company ($3.5M)  8/2007 – Redesigned system to handle multiple specialties

 9/2007 – Completed integration of 1st acquisition  6/2009 – Completed 2nd acquisition: Lombard, IL  12/2009 – Completed 3rd acquisition: Dayton, OH  3/2010 – Completed 4th acquisition: Portland, ME

Timeline

 3/2006 – Platform purchased by Founders Equity

 11/2006 – Safeguard Scientifics co-investment

 3/2007 – First acquisition: Anesthesiology billing company ($3.5M)

 8/2007 – Redesigned system to handle multiple specialties

 9/2007 – Completed integration of 1st acquisition

 6/2009 – Completed 2nd acquisition: Lombard, IL

 12/2009 – Completed 3rd acquisition: Dayton, OH

Value Proposition

high-quality staff

The AHS Solution

 More Money, Faster

 AHS staff are experts in billing and reimbursement management

 Compliance, Built-in

 AHS responsible for all billing and related compliance

 Business Intelligence and Reporting – Anytime/Anywhere

 AHS responsible for technology development and implementation – Reduced capital investments

 Client First™ Service

AHS Office

AHS Remote Client

AHS Client Concentration

Geographic Footprint

Diverse Client Base

IL NY OH PA NJ Other Clients by State Clients by Specialty Multi-Specialty _Radiology Pathology Other Anesthesia

High Low High Ad ministrative Costs Practice Revenue

Specialty Focus & Market DNA

Radiology (no OSIC)

Surgical Group Anesthesiology Cardiology OB/GYN Emergency MD Pathology Internal Medicine High Low High Patient Inter act ion

Need for non-Physician Clinical Employees Emergency MD Radiology Pathology Anesthesiology Internal Medicine Cardiology

Surgical Group OB/GYN

Radiology (w/ OSIC)

Outsource (RCM) Rich Environment In-source (ASP) Rich Environment

Complex and sophisticated practices are most likely to outsource administrative functions of the business.

$4.00 $4.00

$3.30

$0.70

The market for the company’s services is estimated at $4B - $8B

Billing and Practice Management Service Market (Falcon Capital): $8.0B

Total RCM Market (Wallingford Capital/HBMA, 2007): $4.75 B; top 10 billing cos.: $1.0B

In-House:

Practice Management _{Hospital Based MD}

RCM Office-based RCM AHS Target Market Target markets

Large and growing market:

 Physician expenditures

increasing by more than 8% per year

 Increasing shift to

outsourcing (RCM); currently less than 20% of total

 Largest competitor has

under 5% of total market

Large and growing market:

 Physician expenditures

increasing by more than 8% per year

 Increasing shift to

outsourcing (RCM); currently less than 20% of total

 Largest competitor has

under 5% of total market

Market Potential

Buy-and-Build Strategy

 Extremely disciplined in target screening and identifying synergies

 Acquire established, profitable billing companies with favorable

geographic and specialty market penetration

 Rapidly migrate acquisitions onto Virtual Manager platform

Financial Performance & Trends

EB IT D A Quarterly EBITDA: Actual $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 2006 2007 2008 Q1 Q2 Q3 Q4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Average/Quarter 2009 Actuals 2010 Actuals 2010 Projected

R

e

ve

nue

Quarterly Revenue: Actual

 2009 Revenue and EBITDA growth of 225% and 174% respectively

 2010 Revenue and EBITDA growth of 28% and 51% respectively

Strategic Pathway

Strategic Pathway

Creating Value for Clients, Employees, and Stakeholders through:

Creating Value for Clients, Employees, and Stakeholders through:

GROWTH EFFICIENCY ZERO CLIENT _ATTRITION TECHNOLOGY

O rga nic _& A cqu is itio_n M arg in & P rof it E xp an sio_n M ea sur ed a s R ev enu e p er _FT E & P ro ce ss_ing C os t p er _P ro ce dur e C lie nt ₁ st P hil_os op hy P er_fo rm an ce E nh an ce_m en_t M ar ke t D iffe re nti ati_on INTEGRATION O ne _C om pa ny O ne _B ra nd O ne _V is io_n