HealthTronics acquired by Endo Health Solutions: fairness opinion by Lazard Middle Market
Deal terms
Implied value per share by method vs. $4.85 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Lazard Middle Market to the target board
Discounted cash flow assumptions
Present value as of June 30, 2010 of standalone unlevered after-tax free cash flows; perpetuity growth rates applied to FY2013 projected unlevered free cash flows; present values took into account estimated net operating loss carryforwards.
Selected public companies (6)
Alliance Healthcare Services, Inc. · American Dental Partners, Inc. · NightHawk Radiology Holdings, Inc. · NovaMed, Inc. · RadNet, Inc. · Virtual Radiologic Corporation
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / CY2010E Adjusted EBITDA | — | — | — | — | $3.13–$4.30 |
Selected precedent transactions (6)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| — | Allion Healthcare, Inc. | H.I.G. Capital, L.L.C. | — |
| — | Critical Homecare Solutions Holdings, Inc. | BioScrip, Inc. | — |
| — | Symbion, Inc. | Crestview Partners, L.P. | — |
| — | Surgical Care Affiliates Inc. | TPG Partners V, L.P. | — |
| — | Alliance Imaging, Inc. | Oaktree Capital Management, L.P. / MTS Health Investors, LLC | — |
| — | Outpatient Rehabilitation Division of HealthSouth Corporation | Select Medical Corporation | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Adjusted EBITDA (as of March 31, 2010) | — | — | — | — | $2.41–$6.57 |
| EV / CY2010E Adjusted EBITDA (forward fiscal year) | — | — | — | — | $3.52–$7.04 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Historical stock price and trading volume review | LMM reviewed historical stock prices and trading volumes of Company common stock. | — |
Filing refers to Item 5 for engagement terms; fee amounts not stated in the sliced sections. LMM and affiliates have provided investment banking services to Parent; Lazard Capital Markets LLC acted as co-manager for Parent's $379.5 million convertible notes offering in 2008.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | CAGR |
|---|---|---|---|---|
| Revenue | $247M | $284M | $319M | 13.8% |
| Revenue growth | 15.9% | 15.0% | 12.6% | |
| EBITDA | $45.5M | $54.3M | $61.4M | 16.2% |
| EBITDA growth | 25.7% | 19.3% | 13.1% | |
| EBITDA margin | 18% | 19% | 19% | |
| Implied EV / EBITDA | 6.9x | 5.8x | 5.1x |
Year-1 growth is against LTM at announcement ($213M revenue, $36.2M EBITDA); later years are year over year.
Company management prepared forecasts for 2010-2013 that were reviewed by the Board, provided to LMM and to Parent and other bidders. Revenues grow from $213.0 million in 2010 to $319.4 million in 2013; adjusted EBITDA from $36.2 million to $61.4 million; EBIT from $71.1 million to $110.9 million; and net income from $15.6 million to $33.3 million. Adjusted EBITDA excludes equity-based compensation and is adjusted for net income attributable to noncontrolling interests.
Process notes
Other Specialty Outpatient Facilities fairness opinions
- Dialysis Corporation of America / U.S. Renal Care 2010 · 14.1x EV/EBITDA
- NovaMed / Surgery Partners 2011 · 7.8x EV/EBITDA
- AmSurg / Envision Healthcare Holdings 2016 · 12.0x EV/EBITDA
- Alliance Healthcare Services / Tahoe Investment Group Co. 2017 · 5.7x EV/EBITDA
- Surgical Care Affiliates / Optum 2017 · 16.4x EV/EBITDA
- FONAR / Damadian family Acquisition Group 2025 · 4.3x EV/EBITDA
All Specialty Outpatient Facilities opinions → · Lazard Middle Market opinions