Vocera Communications acquired by StrykerCorp.: fairness opinion by Evercore
Deal terms
Implied value per share by method vs. $79.25 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Evercore to the target board
Discounted cash flow assumptions
Perpetuity growth methodology: Base Case $24.79-$47.68; Upside Case $46.99-$88.47; Downside Case $12.56-$23.64. Terminal multiple methodology: Base Case $38.25-$51.77; Upside Case $71.11-$89.66; Downside Case $17.66-$26.53. Net cash of $45 million as of December 31, 2021 added to enterprise values.
Selected public companies (44)
Allscripts · Cerner (Unaffected) · Health Catalyst · Model N · Omnicell · Phreesia · Premier · R1 RCM · Teladoc Health · Veeva Systems · Baxter · Becton, Dickinson and Company · Getinge · Masimo · Philips · Siemens Healthineers · Stryker Corporation · Arista Networks · Cisco Systems · Citrix Systems · F5 Networks · Motorola Solutions · Ubiquiti · Everbridge · Five9 · LivePerson · NICE · PagerDuty · RingCentral · Twilio · Verint Systems · Zebra Technologies · Zoom · AppFolio · Avalara · Bentley Systems · Cerence · Descartes Systems · ironSource · Olo · Paycor HCM · PowerSchool · PTC · Tyler Technologies
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| TEV / CY2021E Revenue | 1.8x | — | 22.5x | 8.0x–11.0x | $50.46–$67.80 |
| TEV / CY2022E Revenue (Base Case) | 1.8x | — | 18.4x | 7.0x–9.0x | $51.79–$65.43 |
| TEV / CY2022E Revenue (Upside Case) | — | — | — | 7.0x–9.0x | $53.29–$67.20 |
| TEV / CY2022E Revenue (Downside Case) | — | — | — | 7.0x–9.0x | $50.34–$63.74 |
| TEV / CY2021E Revenue - Healthcare Technology median | — | 7.2x | — | — | — |
| TEV / CY2022E Revenue - Healthcare Technology median | — | 5.9x | — | — | — |
| TEV / CY2021E Revenue - Medical Technology median | — | 4.5x | — | — | — |
| TEV / CY2022E Revenue - Medical Technology median | — | 3.7x | — | — | — |
| TEV / CY2021E Revenue - Enterprise Networking median | — | 5.8x | — | — | — |
| TEV / CY2022E Revenue - Enterprise Networking median | — | 5.4x | — | — | — |
| TEV / CY2021E Revenue - Enterprise / Cloud Communications Software median | — | 10.5x | — | — | — |
| TEV / CY2022E Revenue - Enterprise / Cloud Communications Software median | — | 9.0x | — | — | — |
| TEV / CY2021E Revenue - Vertical Software median | — | 13.8x | — | — | — |
| TEV / CY2022E Revenue - Vertical Software median | — | 11.1x | — | — | — |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Last 52-Week Trading Range | Historical trading prices of Shares during the 12-month period ended January 5, 2022; low and high closing prices ranged from $32.70 to $67.03 per Share. Referenced for informational purposes only. | $32.70–$67.03 |
| Equity Research Analyst Price Targets | Publicly available analyst price targets as of January 5, 2022 ranged from $36.00 to $71.00 per Share. Referenced for informational purposes only. | $36.00–$71.00 |
| Premiums Paid Analysis | U.S. public target control transactions with aggregate transaction value between $1.0 billion and $5.0 billion announced December 1, 2016 through December 3, 2021. Median premiums: 21.3% (1-day), 32.8% (4-weeks), 1.4% (52-week high); mean premiums: 36.1%, 48.7%, 4.1%. Evercore applied 20.0%-40.0% to the January 5, 2022 closing price, implying $75.02-$87.53, and 0.0%-10.0% to the 52-week high closing price as of January 4, 2022, implying $67.03-$73.73. Referenced for informational purposes only. | $67.03–$87.53 |
Fee of approximately $45 million, of which $4.0 million was paid upon delivery of the opinion and the balance is contingent on consummation of the Transactions; plus expense reimbursement and indemnity.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | CAGR |
|---|---|---|---|---|---|
| Revenue | $320M | $376M | $442M | $518M | 17.4% |
| Revenue growth | 16.8% | 17.5% | 17.6% | 17.2% | |
| EBITDA | $62.0M | $82.0M | $107M | $135M | 29.6% |
| EBITDA growth | 26.5% | 32.3% | 30.5% | 26.2% | |
| EBITDA margin | 19% | 22% | 24% | 26% | |
| Implied EV / EBITDA | 41.3x | 31.3x | 24.0x | 19.0x |
Year-1 growth is against LTM at announcement ($274M revenue, $49.0M EBITDA); later years are year over year.
Vocera management prepared three standalone cases (Base, Upside, Downside, the "December 19 Forecasts") covering fiscal years 2021E-2026E, provided to the Board and Evercore. Base Case revenue grows from $233 million in 2021E to $518 million in 2026E with Adjusted EBITDA of $41 million rising to $135 million; Upside Case reaches $605 million revenue and $195 million Adjusted EBITDA in 2026E; Downside Case reaches $389 million revenue and $89 million Adjusted EBITDA in 2026E. Unlevered after-tax free cash flow in the Base Case goes from $(3) million in 2022E to $53 million in 2026E. Only the Base Case and Upside Case were shared with Stryker in diligence.
Process notes
Other Digital / HealthTech fairness opinions
- Benefitfocus / Voya Financial 2022 · 11.6x EV/EBITDA
- SOC Telemed / Patient Square Capital 2022
- Castlight Health / Vera Whole Health 2022 · 30.4x EV/EBITDA
- NextGen Healthcare / Thoma Bravo 2023 · 16.1x EV/EBITDA
- Tabula Rasa HealthCare / Nautic Partners / ExactCare Pharmacy 2023 · 27.1x EV/EBITDA
- Cerner / Oracle 2021 · 15.2x EV/EBITDA