IntegraMed America acquired by Sagard Capital Partners: fairness opinion by Jefferies
Deal terms
Implied value per share by method vs. $14.05 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Jefferies to the target board
Discounted cash flow assumptions
Free cash flows calculated as adjusted EBITDA (stock-based comp treated as non-cash) less D&A, less taxes at an assumed 40.5% rate, plus D&A, less capex, less increases/plus decreases in working capital. Terminal value derived by applying perpetuity growth rates to CY2016 unlevered free cash flows adjusted to normalized levels.
Selected public companies (10)
Almost Family, Inc. · Amedisys, Inc. · AmSurg Corp. · Chemed Corporation · Gentiva Health Services Inc. · Hanger Orthopedic Group, Inc. · LHC Group, Inc. · Lincare Holdings Inc. · RadNet, Inc. · US Physical Therapy Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| TEV / CY2012E Adjusted EBITDA | 4.5x | 5.5x | 7.7x | 4.0x–6.0x | $10.85–$14.26 |
| TEV / CY2013E Adjusted EBITDA | 4.3x | 5.3x | 7.2x | 3.5x–5.5x | $11.55–$15.85 |
Selected precedent transactions (14)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2011-11-04 | American Dental Partners, Inc. | JLL Partners, Inc. | — |
| 2011-07-29 | Allied Healthcare International Inc. | Saga Group Ltd. | — |
| 2011-04-07 | National Surgical Care, Inc. | AmSurg Corp. | — |
| 2011-03-03 | America Service Group Inc. | Valitas Health Services, Inc. | — |
| 2011-01-21 | NovaMed, Inc. | Surgery Center Holdings, Inc. | — |
| 2010-09-27 | NightHawk Radiology Holdings, Inc. | Virtual Radiologic Corporation | — |
| 2010-08-16 | Prospect Medical Holdings, Inc. | Leonard Green & Partners, L.P. | — |
| 2010-08-14 | Res-Care, Inc. | Onex Corporation | — |
| 2010-05-24 | Odyssey Healthcare, Inc. | Gentiva Health Services Inc. | — |
| 2010-04-05 | National Dentex Corporation | GDC Holdings, Inc. | — |
| 2010-01-24 | Critical Homecare Solutions Holdings, Inc. | Bioscrip, Inc. | — |
| 2008-06-19 | Apria Healthcare Group Inc. | The Blackstone Group L.P. | — |
| 2008-02-19 | TLC Health Care Services, Inc. | Amedisys, Inc. | — |
| 2007-04-24 | Symbion, Inc. | Crestview Partners, L.P. | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Adjusted EBITDA | 5.2x | 7.6x | 9.3x | 5.5x–7.5x | $12.52–$15.61 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Premiums Paid Analysis (informational only) | Premiums paid in selected North American healthcare service company transactions announced January 1, 2008 to June 8, 2012 with transaction values of $50 million to $1.0 billion; selected premium range of 24% to 56% applied to closing price of common shares on March 12, 2012 (last trading day before news reports the Company was exploring a sale). | $13.84–$17.51 |
Aggregate fee of $2.0 million for financial advisory services, of which a portion was payable upon delivery of Jefferies' opinion and $1.0 million is payable contingent upon completion of the merger; plus expense reimbursement and indemnification.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | CAGR |
|---|---|---|---|---|---|
| Revenue | $338M | $380M | $427M | $480M | 12.4% |
| Revenue growth | 11.6% | 12.4% | 12.5% | 12.3% | |
| EBITDA | $26.3M | $33.1M | $41.6M | $51.0M | 24.7% |
| EBITDA growth | 25.6% | 25.9% | 25.7% | 22.6% | |
| EBITDA margin | 8% | 9% | 10% | 11% | |
| Implied EV / EBITDA | 6.8x | 5.4x | 4.3x | 3.5x |
Year-1 growth is against LTM at announcement ($303M revenue, $20.9M EBITDA); later years are year over year.
Management prepared financial forecasts for 2011E-2016E showing revenues growing from $270.3 million (2011E) to $479.7 million (2016E) and adjusted EBITDA from $17.5 million to $51.0 million. These were updated in May 2012 for actual 2011 and Q1 2012 results, producing a 2012E-2016E case with revenues of $302.8 million (2012E) to $479.7 million (2016E), adjusted EBITDA of $20.8 million to $50.9 million, and free cash flow of $1.9 million to $22.8 million; the updated forecasts were used by Jefferies. A terminal year free cash flow of $24.6 million was also calculated reflecting steady-state operations excluding certain one-time 2016 capital expenditures.
Process notes
Other Professional Services fairness opinions
- American Dental Partners / JLL Partners 2011 · 8.1x EV/EBITDA
- Pet DRx / VCA 2010 · 9.8x EV/EBITDA
- Birner Dental Management Services / Mid-Atlantic Dental Partners 2018 · 21.9x EV/EBITDA