Inovalon Holdings acquired by Nordic Capital / Insight Partners: fairness opinion by Evercore and J.P. Morgan
Deal terms
Implied value per share by method vs. $41.00 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Evercore to the special committee
Discounted cash flow assumptions
Unlevered free cash flows discounted to present value as of August 3, 2021; net debt as of August 3, 2021 subtracted.
Selected public companies (18)
HealthEquity, Inc. · SignifyHealth, Inc. · Multiplan Corporation · Omnicell, Inc. · R1 RCM Inc. · Vocera Communications, Inc. · Tabula Rasa Healthcare, Inc. · Healthstream, Inc. · NICE Ltd. · PTC Inc. · Dropbox, Inc. · Cerence Inc. · Datto Holding Corp. · Qualys, Inc. · SPS Commerce, Inc. · Mimecast Limited · Cornerstone OnDemand, Inc. · Mitek Systems, Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / 2021E Adjusted EBITDA - Healthcare Payor Technology | 11.3x | 25.2x | 37.3x | — | — |
| EV / 2021E Adjusted EBITDA - Healthcare Provider Technology | 18.8x | 31.1x | 51.0x | — | — |
| EV / 2021E Adjusted EBITDA - Technology/Software | 14.8x | 27.5x | 39.0x | — | — |
| EV / 2021E Adjusted EBITDA (applied) | — | — | — | 22.0x–28.0x | $32.76–$43.16 |
| EV / 2022E Adjusted EBITDA - Healthcare Payor Technology | 10.9x | 22.3x | 28.9x | — | — |
| EV / 2022E Adjusted EBITDA - Healthcare Provider Technology | 16.1x | 25.6x | 38.7x | — | — |
| EV / 2022E Adjusted EBITDA - Technology/Software | 12.6x | 23.7x | 32.5x | — | — |
| EV / 2022E Adjusted EBITDA (applied) | — | — | — | 19.0x–25.0x | $34.71–$47.36 |
| EV / 2021E Revenue - Healthcare Payor Technology | 7.9x | 8.1x | 8.3x | — | — |
| EV / 2021E Revenue - Healthcare Provider Technology | 3.5x | 4.4x | 7.2x | — | — |
| EV / 2021E Revenue - Technology/Software | 5.4x | 8.8x | 12.8x | — | — |
| EV / 2021E Revenue (applied) | — | — | — | 7.0x–10.0x | $29.32–$44.19 |
| EV / 2022E Revenue - Healthcare Payor Technology | 6.6x | 7.5x | 7.9x | — | — |
| EV / 2022E Revenue - Healthcare Provider Technology | 3.0x | 3.8x | 6.3x | — | — |
| EV / 2022E Revenue - Technology/Software | 5.0x | 7.8x | 10.9x | — | — |
| EV / 2022E Revenue (applied) | — | — | — | 6.0x–9.0x | $29.24–$46.54 |
Selected precedent transactions (17)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2021-01 | Change Healthcare Inc. | UnitedHealth Group Incorporated | — |
| 2020-12 | HMS Holdings Corp. | Gainwell Technologies | — |
| 2019-06 | Medidata Solutions, Inc. | Dassault Systemes SE | — |
| 2018-11 | athenahealth, Inc. | Veritas Capital | — |
| 2018-06 | Cotiviti Holdings, Inc. | Verscend Technologies, Inc. | — |
| 2021-04 | Proofpoint, Inc. | Thoma Bravo, L.P. | — |
| 2021-04 | Nuance Communications, Inc. | Microsoft Corporation | — |
| 2021-04 | Blue Yonder, Inc. | Panasonic Corporation | — |
| 2020-12 | RealPage, Inc. | Thoma Bravo, L.P. | — |
| 2020-02 | Forescout Technologies, Inc. | Advent International Corporation | — |
| 2019-10 | Sophos Group plc | Thoma Bravo, LLC | — |
| 2019-08 | Carbon Black, Inc. | VMware, Inc. | — |
| 2019-06 | Tableau Software, Inc. | salesforce.com, inc. | — |
| 2019-02 | The Ultimate Software Group, Inc. | Hellman & Friedman LLC | — |
| 2018-11 | Apptio, Inc. | Vista Equity Partners | — |
| 2018-10 | Red Hat, Inc. | International Business Machines Corporation | — |
| 2018-01 | Callidus Software Inc. | SAP SE | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Revenue - Healthcare Platform Technology | 4.3x | 5.1x | 8.8x | — | — |
| EV / LTM Revenue - Technology | 4.6x | 9.0x | 13.2x | — | — |
| EV / LTM Revenue (applied) | — | — | — | 7.0x–11.0x | $26.81–$45.20 |
| EV / NTM Revenue - Healthcare Platform Technology | 4.1x | 4.4x | 7.6x | — | — |
| EV / NTM Revenue - Technology | 3.9x | 7.6x | 13.4x | — | — |
| EV / NTM Revenue (applied) | — | — | — | 6.0x–10.0x | $26.80–$48.25 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Last 52-Week Trading Range | Low and high closing prices during the twelve months ended July 26, 2021 (last trading day prior to public report of rumored sale). | $17.56–$34.47 |
| Equity Research Analyst Price Targets | Range of selected analyst price targets as of August 13, 2021. | $23.00–$45.00 |
| Premiums Paid Analysis | 21 selected transactions/announced bids for control of US public targets with transaction value between $1bn and $15bn in healthcare and technology since January 1, 2019; applied a 20%-35% premium range (25th-75th percentile) to the $32.71 unaffected closing price as of July 26, 2021. | $39.25–$44.16 |
$3 million retainer fee payable on execution of engagement letter; $1 million opinion fee upon delivery of opinion, fully creditable against the $3 million retainer; plus an additional discretionary fee of up to $7 million at the Special Committee's sole discretion at conclusion of the assignment. Evercore received ~$9 million of fees from Nordic Capital X, ~$46 million from GIC and ~$57 million from Insight affiliates from Jan 1, 2019 to Aug 18, 2021.
Opinion of J.P. Morgan to the target board
Discounted cash flow assumptions
Discounted to present value as of August 3, 2021; adjusted by subtracting net debt and other adjustments as of August 3, 2021.
Selected public companies (10)
NICE LTD. · PTC Inc. · Black Knight, Inc. · GoDaddy Inc. · Datto Holding Corp. · Qualys, Inc. · Mimecast Limited · Omnicell, Inc. · R1 RCM Inc. · Health Equity, Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| FV / 2022E Adjusted EBITDA | — | — | — | 18.5x–24.0x | $34.00–$45.75 |
Selected precedent transactions (16)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2021-04-23 | Blue Yonder Group, Inc. | Panasonic Corporation | — |
| 2021-04-12 | Nuance Communications, Inc. | Microsoft Corporation | — |
| 2019-08-22 | Carbon Black, Inc. | VmWare, Inc. | — |
| 2019-06-12 | Medidata Solutions, Inc. | Dassault Systèmes | — |
| 2019-06-10 | Tableau Software, Inc. | Salesforce.com, Inc. | — |
| 2018-10-28 | Red Hat, Inc. | International business Machines Corporation | — |
| 2018-06-19 | Cotiviti Holdings, Inc. | Verscend Technologies, Inc. | — |
| 2018-01-30 | Callidus Software Inc. | SAP SE | — |
| 2021-04-26 | Proofpoint, Inc. | Thoma Bravo, L.P. | — |
| 2020-12-21 | RealPage, Inc. | Thoma Bravo, L.P. | — |
| 2020-11-10 | Planview Inc. | TA Associates | — |
| 2020-02-06 | Forescout Technologies, Inc. | Advent International | — |
| 2019-10-14 | Sophos Group plc | Thoma Bravo, L.P. | — |
| 2019-02-04 | Ultimate Software Group Inc. | Hellman & Friedman LLC | — |
| 2019-02-12 | Ellie Mae, Inc. | Thoma Bravo, LLC | — |
| 2018-11-11 | Apptio, Inc. | Vista Equity Partners | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| FV / NTM Revenue | — | — | — | 7.0x–11.0x | $32.75–$54.50 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Reference prices | Analyses compared to the unaffected closing price of $32.71 as of July 26, 2021, the closing price of $37.22 as of August 18, 2021, and the implied per share consideration of $41.00. | — |
Estimated fee of $42 million, $3.0 million payable upon delivery of the opinion and the remainder contingent upon consummation of the Merger. J.P. Morgan recognized ~$15.2 million of aggregate fees from Nordic Capital X during the two years preceding the opinion; no fees from the Company or Parent.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
|---|---|---|---|---|---|---|
| Revenue | $902M | $1.0B | $1.2B | $1.4B | $1.6B | 14.9% |
| Revenue growth | 16.4% | 15.3% | 15.4% | 15.4% | 13.6% | |
| EBITDA | $330M | $404M | $492M | $594M | $675M | 19.6% |
| EBITDA growth | 21.8% | 22.4% | 21.8% | 20.7% | 13.6% | |
| EBITDA margin | 37% | 39% | 41% | 43% | 43% | |
| Implied EV / EBITDA | 22.1x | 18.1x | 14.8x | 12.3x | 10.8x |
Year-1 growth is against LTM at announcement ($775M revenue, $271M EBITDA); later years are year over year.
Company management prepared the "Projections and Extrapolations" covering fiscal 2021E-2025E (management forecast) and 2026E-2030E (management extrapolation), which the Special Committee directed Evercore and the Board directed J.P. Morgan to use. Revenue grows from $775 million in 2021E to $1,385 million in 2025E and $2,137 million in 2030E; Adjusted EBITDA grows from $271 million in 2021E to $594 million in 2025E and $917 million in 2030E. Unlevered free cash flow rises from $124 million in 2021E to $514 million in 2030E; EBIT from $153 million to $786 million.
Process notes
Other Digital / HealthTech fairness opinions
- Cerner / Oracle 2021 · 15.2x EV/EBITDA
- Nuance Communications / Microsoft 2021 · 45.9x EV/EBITDA
- Change Healthcare / Optum 2021 · 13.8x EV/EBITDA
- Benefitfocus / Voya Financial 2022 · 11.6x EV/EBITDA
- SOC Telemed / Patient Square Capital 2022
- Castlight Health / Vera Whole Health 2022 · 30.4x EV/EBITDA
All Digital / HealthTech opinions → · Evercore opinions · J.P. Morgan opinions