Q3: % from Q3: % from Q3:13

(1)

Q3:14 was a very active quarter for Healthcare M&A with

322 deals announced representing $60.8 billion of deal

value.

Healthcare services contributed 53% of the deal volume, but only 20% of the combined

deal value. The Pharmaceutical sector contributed 21% of deal volume, but with a few

mega-mergers in the sector, pharmaceuticals represented 57% of the quarter’s overall

spending with total deal value of $34.7 billion. Biotech, eHealth, and Medical Devices

accounted for the remaining 26% of the deal volume and 23% of the overall spending.

HEALTHCARE

M&A

QUARTERLY

Healthcare M&A Quarterly

KPMG Corporate Finance LLC

Source: Irving Levin Associates, Inc.

Deal Value

$60.8 billion

in Q3:14.

Up

17.1 %

from Q3:13

Up

21.0 %

from Q3:13

Deal Volume

322 transactions

in Q3:14.

Long-Term Care

Chapter 11 Filings remain high in

Health Care Services:

On a trailing four-quarter average,

the percentage of healthcare services Chapter

11 filings has risen from 1.1% to 2.7%

between 2010 and 2014, resulting in market

consolidation due to distressed investing.

Mega Deal:

$17.0 Billion

acquisition of Sigma-Aldrich

Corporation (NasdaqGS:SIAL) by

Germany’s Merck KGaA (DB:MRK)

announced in September 2014.

The mega deal demonstrated the continued consolidation of laboratory

testing materials manufacturers – a reaction to pharmaceutical

companies cutting costs by limiting the number of suppliers they use.

Hospital sector

Number of reported

transactions

remained low, with

only

9 deals

each

announced in the

second and third

quarter of this year.

The Long-Term Care sector, which is set to have

its biggest year ever in M&A, contributed

46%

(77 deals) to the healthcare services deal

volume in the quarter. The sector has seen

heavy M&A activity since Q4:13.

Q3:14

(2)

0

10

20

30

40

50 Pharma-ceuticals

E-Health

Biotech-nology

Medical

Devices

D

eal

V

ol

um

e

0

10

20

30

40

50

60

70 Long-term

care

Physician

Groups

Home Health

Hospitals

Lab. MRI &

Dialysis

Managed

Care

Rehabilitation Behavioral

Health

Other

services

D

eal

V

ol

um

e

Healthcare Services

Healthcare Medtech, Pharma and Life Sciences

Other Healthcare M&A Volume

Subsector Activity Comparison

Long-Term Care

Other Services

Home Health

Physician Groups

Hospitals

Lab, MRI & Dialysis

Managed Care

Rehabilitation

Behavioral Health Care

46%

21%

8 %

5%

5 %

3%

1 %

Healthcare Services M&A Volume

16%

18 %

21%

45 %

Biotechnology

E-Health

Pharmaceuticals

Medical Devices

Q3 14

Q2 14

Note: All Q3:14 deal volume and deal value figures exclude the failed acquisition of Shire (NASDAQ:SHPG by AbbVie (NYSE:ABBV).

(3)

Insert Company

CIQ Com pany Nam e

Market Cap Enterprise Value (1) Share Price(2) % of 52-Wk High Revenue 1yr Rev. Grow th EBITDA(3) EBITDA Margin LTM Revenue LTM EBITDA Am bulatory Surgery

AMSG AmSurg Corp. 2,412 4,633 50.11 92.0% 1,342 31.5% 234 17.5% 3.5x 19.8x Am bulatory Surgery Mean 2,412 4,633 92.0% 1,342 31.5% 234 17.5% 3.5x 19.8x

Am bulatory Surgery Median 2,412 4,633 92.0% 1,342 31.5% 234 17.5% 3.5x 19.8x

Assisted / Senior Living

BKD Brookdale Senior Living Inc. 6,203 12,380 33.82 93.5% 2,931 16.5% 522 17.8% 4.2x 23.7x CSU Capital Senior Living Corp. 685 1,324 23.55 87.6% 367 8.7% 57 15.5% 3.6x 23.3x FVE Five Star Quality Care Inc. 198 233 4.08 67.0% 1,086 0.6% 39 3.5% 0.2x 6.0x Assisted / Senior Living Mean 2,362 4,645 82.7% 1,462 8.6% 206 12.3% 2.7x 17.7x Assisted / Senior Living Median 685 1,324 87.6% 1,086 8.7% 57 15.5% 3.6x 23.3x

Behavioral Health

ACHC Acadia Healthcare Company, Inc. 3,730 4,717 62.25 93.1% 900 41.1% 180 20.0% 5.2x 26.2x PRSC Providence Service Corp. 543 598 34.24 69.3% 1,304 15.2% 62 4.8% 0.5x 9.6x Behavioral Health Mean 2,136 2,657 81.2% 1,102 28.1% 121 12.4% 2.9x 17.9x Behavioral Health Median 2,136 2,657 81.2% 1,102 28.1% 121 12.4% 2.9x 17.9x

Dental Practice Managem ent

BDMS Birner Dental Management Services Inc. 28 38 15.65 69.9% 65 1.6% 4 5.6% 0.6x 10.6x Dental Practice Managem ent Mean 28 38 69.9% 65 1.6% 4 5.6% 0.6x 10.6x

Dental Practice Managem ent Median 28 38 69.9% 65 1.6% 4 5.6% 0.6x 10.6x

Diagnostic Im aging

AIQ Alliance Healthcare Services, Inc. 235 701 22.21 62.7% 437 -3.4% 113 25.8% 1.6x 6.2x RDNT RadNet, Inc. 358 972 8.38 81.0% 710 3.9% 116 16.3% 1.4x 8.4x Diagnostic Im aging Mean 296 836 71.9% 574 0.2% 114 21.1% 1.5x 7.3x

Diagnostic Im aging Median 296 836 71.9% 574 0.2% 114 21.1% 1.5x 7.3x (US$ in millions, except per share amounts)

Selected Public Healthcare Companies

Latest Tw elve Months (LTM) Enterprise Value

Date

Announced

Target

Target Country/Region Buyer

Subsector

Implied

Enterprise

Value (TEV)

TEV /

Revenue

TEV /

EBITDA

9/23/2014

Springfield Service

Corporation

United States

Conifer Health Solutions, LLC.

Healthcare

Services

235.0 -

-9/17/2014

Community Care Health

Network, Inc.

United States

Providence Service Corp.

Healthcare

Services

400.0 2.1x

9.2x

9/15/2014

Alere Inc.

United States

Company Insiders

Healthcare

Supplies

7,841.4

2.6x

13.8x

9/14/2014

TriZetto Corporation

United States

Cognizant Technology Solutions

Corporation

Health Care

Technology

2,700.0

-

-8/25/2014

Allegro Portfolio

United States

American Realty Capital Healthcare

Trust II Operating Partnership, LP

Healthcare

Facilities

172.5 -

-8/4/2014

Symmetry Medical, Inc.

United States

Tecomet, Inc.

Healthcare

Equipment

439.4 1.1x

8.7x

8/1/2014

Avalon Laboratories, LLC

United States

Nordson Medical Corporation

Healthcare

Supplies

180.0 -

-7/18/2014

Fourteen Skilled Nursing

Facilities in the Mid-Atlantic

Region

United States

Formation Capital, L.L.C.; SAFANAD

Limited

Healthcare

Facilities

150.0 -

-7/17/2014

Gentiva Health Services Inc.

United States

Kindred Healthcare (NYSE: KND)

Healthcare

Services

1,791.7

0.9x

11.6x

7/14/2014

NeuroTherm, Inc.

United States

St. Jude Medical Inc.

Healthcare

Equipment

200.0 -

-Selected US Healthcare M&A Transactions - Q3:14

(US$ in millions)

(4)

Insert Company

Market Cap Enterprise Value (1) Share Price(2) % of 52-Wk High Revenue 1yr Rev. Grow th EBITDA(3) EBITDA Margin LTM Revenue LTM EBITDA Dialysis

DVA DaVita HealthCare Partners Inc. 16,227 23,062 75.51 96.2% 12,519 12.0% 2,283 18.2% 1.8x 10.1x DB:FME Fresenius Medical Care AG & Co. KGAA 22,262 30,682 68.81 92.9% 15,666 6.4% 2,712 17.3% 2.0x 11.3x Dialysis Mean 19,244 26,872 94.5% 14,093 9.2% 2,498 17.8% 1.9x 10.7x

Dialysis Median 19,244 26,872 94.5% 14,093 9.2% 2,498 17.8% 1.9x 10.7x

Distribution

ABC AmerisourceBergen Corporation 19,972 20,159 89.01 99.2% 119,569 35.9% 1,371 1.1% nm 14.7x CAH Cardinal Health, Inc. 26,596 28,134 80.36 99.2% 90,631 -9.1% 2,390 2.6% 0.3x 11.8x HSIC Henry Schein, Inc. 11,027 11,776 130.94 98.3% 10,196 8.0% 805 7.9% 1.2x 14.6x MCK McKesson Corporation 47,392 54,160 204.38 98.8% 161,201 27.1% 3,546 2.2% 0.3x 15.3x MWIV MWI Veterinary Supply, Inc. 2,026 2,101 157.57 83.6% 2,981 27.0% 133 4.5% 0.7x 15.8x OCR Omnicare Inc. 6,907 8,836 70.56 98.7% 6,326 10.5% 730 11.5% 1.4x 12.1x OMI Owens & Minor Inc. 2,105 2,261 33.37 86.6% 9,267 2.5% 237 2.6% 0.2x 9.5x PDCO Patterson Companies, Inc. 4,696 5,120 46.26 100.7% 4,243 17.0% 400 9.4% 1.2x 12.8x PMC PharMerica Corporation 766 1,120 23.40 76.8% 1,822 4.6% 115 6.3% 0.6x 9.7x Distribution Mean 13,499 14,852 93.5% 45,137 13.7% 1,081 5.4% 0.7x 12.9x

Distribution Median 6,907 8,836 98.7% 9,267 10.5% 730 4.5% 0.7x 12.8x

Healthcare IT

MDRX Allscripts Healthcare Solutions, Inc. 2,217 2,767 12.30 62.5% 1,388 1.1% 46 3.3% 2.0x nm ATHN athenahealth, Inc. 4,708 4,816 123.59 59.8% 711 31.7% 59 8.3% nm nm CERN Cerner Corporation 21,900 20,715 64.14 99.1% 3,181 15.2% 841 26.5% nm 24.6x CPSI Computer Programs & Systems Inc. 685 657 61.14 85.1% 210 6.2% 60 28.5% 3.1x 11.0x HMSY HMS Holdings Corp. 1,834 1,911 20.89 78.5% 453 -10.1% 104 22.9% 4.2x 18.4x MDAS MedAssets, Inc. 1,181 2,075 19.61 73.9% 692 2.8% 207 29.9% 3.0x 10.0x QSII Quality Systems Inc. 892 768 14.80 63.1% 462 3.6% 41 9.0% 1.7x 18.5x Healthcare IT Mean 4,774 4,816 74.6% 1,014 7.2% 194 18.3% 2.8x 16.5x

Healthcare IT Median 1,834 2,075 73.9% 692 3.6% 60 22.9% 3.0x 18.4x

Hom e Health

ADUS Addus HomeCare Corporation 233 223 21.45 72.0% 300 15.5% 20 6.7% 0.7x 11.1x AFAM Almost Family Inc. 250 297 26.35 77.6% 466 34.8% 22 4.7% 0.6x 13.7x AMED Amedisys Inc. 828 937 24.81 92.8% 1,191 -6.9% 52 4.4% 0.8x 18.1x GTIV Gentiva Health Services Inc. 709 1,751 19.17 96.3% 1,970 18.3% 154 7.8% 0.9x 11.4x LHCG LHC Group, Inc. 418 478 23.49 90.3% 690 7.5% 49 7.2% 0.7x 9.7x Hom e Health Mean 488 737 85.8% 923 13.9% 59 6.1% 0.7x 12.8x

Hom e Health Median 418 478 90.3% 690 15.5% 49 6.7% 0.7x 11.4x

Hospice

CHE Chemed Corp. 1,830 1,985 107.59 96.7% 1,425 -0.5% 184 12.9% 1.4x 10.8x Hospice Mean 1,830 1,985 96.7% 1,425 -0.5% 184 12.9% 1.4x 10.8x

Hospice Median 1,830 1,985 96.7% 1,425 -0.5% 184 12.9% 1.4x 10.8x

General Acute Care

CYH Community Health Systems, Inc. 5,407 22,255 46.50 80.6% 17,129 32.7% 2,142 12.5% 1.3x 10.4x HCA HCA Holdings, Inc. 28,498 56,604 65.73 88.9% 36,118 6.9% 6,662 18.4% 1.6x 8.5x LPNT Lifepoint Hospitals Inc. 3,006 4,965 66.39 86.8% 4,173 15.3% 541 13.0% 1.2x 9.2x THC Tenet Healthcare Corp. 4,664 16,017 47.46 74.6% 16,032 67.9% 1,696 10.6% 1.0x 9.4x UHS Universal Health Services Inc. 9,989 13,415 100.93 87.3% 7,759 7.0% 1,335 17.2% 1.7x 10.0x General Acute Care Mean 10,313 22,651 83.6% 16,242 26.0% 2,475 14.3% 1.4x 9.5x

General Acute Care Median 5,407 16,017 86.8% 16,032 15.3% 1,696 13.0% 1.3x 9.4x (US$ in millions, except per share amounts)

(5)

Insert Company

Market Cap Enterprise Value (1) Share Price(2) % of 52-Wk High Revenue 1yr Rev. Grow th EBITDA(3) EBITDA Margin LTM Revenue LTM EBITDA Laboratory

BRLI Bio-Reference Laboratories Inc. 782 823 28.21 74.3% 797 16.1% 97 12.2% 1.0x 8.5x LH Laboratory Corp. of America Holdings 8,457 10,896 100.08 91.4% 5,936 2.8% 1,137 19.2% 1.8x 9.6x DGX Quest Diagnostics Inc. 9,111 12,834 63.04 97.5% 7,308 2.0% 1,363 18.7% 1.8x 9.4x Laboratory Mean 6,117 8,184 87.7% 4,680 6.9% 866 16.7% 1.5x 9.2x

Laboratory Median 8,457 10,896 91.4% 5,936 2.8% 1,137 18.7% 1.8x 9.4x

LTC/SNF

DVCR Diversicare Healthcare Services Inc. 66 113 10.75 80.7% 348 40.2% 16 4.6% 0.3x 7.1x ENSG The Ensign Group, Inc. 878 837 39.07 81.8% 988 12.5% 111 11.3% 0.8x 7.5x KND Kindred Healthcare Inc. 1,254 2,573 19.40 72.4% 5,081 5.2% 275 5.4% 0.5x 9.4x NHC National Healthcare Corp. 854 887 60.62 96.4% 855 10.5% 105 12.3% 1.0x 8.5x SKH Skilled Healthcare Group, Inc. 285 682 7.09 89.7% 831 -0.9% 67 8.0% 0.8x 10.2x LTC/SNF Mean 667 1,018 84.2% 1,620 13.5% 115 8.3% 0.7x 8.5x

LTC/SNF Median 854 837 81.8% 855 10.5% 105 8.0% 0.8x 8.5x

Managed Care

AET Aetna Inc. 30,324 37,400 86.22 99.9% 56,415 28.1% 4,851 8.6% 0.7x 7.7x CI Cigna Corp. 26,927 30,453 102.94 99.5% 34,098 6.9% 3,057 9.0% 0.9x 10.0x HNT Health Net, Inc. 3,981 3,366 51.09 99.5% 12,993 16.6% 368 2.8% 0.3x 9.2x HUM Humana Inc. 21,079 22,979 137.47 97.7% 46,359 14.0% 2,244 4.8% 0.5x 10.2x MGLN Magellan Health, Inc. 1,674 1,557 61.34 96.1% 3,786 12.4% 199 5.3% 0.4x 7.8x UNH UnitedHealth Group Incorporated 92,591 102,937 96.47 99.7% 128,158 6.7% 10,997 8.6% 0.8x 9.4x WCG WellCare Health Plans, Inc. 3,075 2,424 70.03 89.4% 11,984 32.0% 270 2.3% 0.2x 9.0x WLP WellPoint Inc. 34,355 49,599 127.27 99.3% 72,792 6.4% 5,162 7.1% 0.7x 9.6x Managed Care Mean 26,751 31,339 97.6% 45,823 15.4% 3,394 6.1% 0.6x 9.1x

Managed Care Median 24,003 26,716 99.4% 40,229 13.2% 2,651 6.2% 0.6x 9.3x

PBM / Specialty Pharm acy

BIOS BioScrip Inc. 397 820 5.78 63.9% 1,029 41.9% -3 -0.3% 0.8x nm ESRX Express Scripts Holding Company 58,023 71,876 79.06 99.6% 100,356 -5.0% 6,472 6.4% 0.7x 11.1x PBM / Specialty Pharm acy Mean 29,210 36,348 81.7% 50,692 18.4% 3,234 3.1% 0.8x 11.1x

PBM / Specialty Pharm acy Median 29,210 36,348 81.7% 50,692 18.4% 3,234 3.1% 0.8x 11.1x

Physical Rehab

HLS HEALTHSOUTH Corp. 3,373 4,844 38.44 90.6% 2,336 5.0% 525 22.5% 2.1x 9.2x SEM Select Medical Holdings Corporation 1,782 3,329 13.61 84.2% 2,997 2.1% 354 11.8% 1.1x 9.4x USPH US Physical Therapy Inc. 465 497 37.93 86.2% 290 14.6% 41 14.3% 1.7x 12.0x Physical Rehab Mean 1,873 2,890 87.0% 1,874 7.2% 307 16.2% 1.6x 10.2x

Physical Rehab Median 1,782 3,329 86.2% 2,336 5.0% 354 14.3% 1.7x 9.4x

Physician Practice Managem ent

MD MEDNAX, Inc. 6,465 6,674 64.38 99.8% 2,356 14.5% 538 22.9% 2.8x 12.4x Phys. Practice Managem ent Mean 6,465 6,674 99.8% 2,356 14.5% 538 22.9% 2.8x 12.4x

Phys. Practice Managem ent Median 6,465 6,674 99.8% 2,356 14.5% 538 22.9% 2.8x 12.4x

Staffing

AHS AMN Healthcare Services Inc. 736 873 15.79 87.8% 1,005 -0.6% 84 8.4% 0.9x 10.4x CCRN Cross Country Healthcare, Inc. 297 354 9.49 82.2% 539 22.2% 11 2.1% 0.7x nm ASGN On Assignment Inc. 1,599 1,972 30.54 76.6% 1,809 16.8% 179 9.9% 1.1x 11.0x TMH Team Health Holdings, Inc. 3,899 4,602 54.83 86.9% 2,651 14.9% 282 10.6% 1.7x 16.3x Staffing Mean 1,633 1,950 83.4% 1,501 13.3% 139 7.7% 1.1x 12.6x

Staffing Median 1,167 1,423 84.5% 1,407 15.9% 131 9.1% 1.0x 11.0x

Source: Company filings.

All figures in US$; where applicable, converted at rates as of November 18, 2014.

(1) As shown, Enterprise Value defined as Market Capitalization plus Preferred Stock and Net Debt. (2) Closing share prices as of November 18, 2014.

(3) EBITDA reduced to account for minority interest expense.

(US$ in millions, except per share amounts)

(6)

Selected recent transactions

Global Coverage. Industry Knowledge.

Middle-Market Focus.

The Corporate Finance practices of KPMG

International’s network of independent member

firms (KPMG) have been ranked collectively as a

leading global mid-market advisor based on total

deal volume announced in 2013, according to

Thomson Reuters SDC. KPMG firms operate in 156

countries with over 2,600 professionals who are

able to meet the needs of clients across the globe.

KPMG Corporate Finance LLC

KPMG Corporate Finance LLC (KPMG CF) provides

a broad range of investment banking and advisory

services to its domestic and international clients.

Our professionals have the experience and depth

of knowledge in global M&A and project finance to

advise clients on mergers and acquisitions, sales

and divestitures, buyouts, financings, debt

restructurings, equity recapitalizations,

infrastructure project finance, capital advisory, real

estate, portfolio solutions, and other advisory

initiatives. For more information on KPMG CF,

please visit

www.kpmgcorporatefinance.com

.

Healthcare Investment Banking Contacts

Christopher Mercier

Managing Director

Chicago

T:

+1-312-665-8091

E:

[email protected]

kpmgcorporatefinance.com

Adam Heller

Vice President

Chicago

T:

+1 312 665 1353

E:

[email protected]

Maureen Spivack

Managing Director

NewYork

T:

+1-212-954-4248

E:

[email protected]

has been recapitalized by

September 2014

has been acquired by

November 2014

has been acquired by

May 2014

has been acquired by

July 2014

A portfolio company of Jemison Investment Co., Inc. and Stonehenge Growth Capital

December 2013

has been acquired by

March 2014

A portfolio company of