TECHNOLOGY SERVICES MONTHLY ELECTRONIC HEALTH RECORDS

Transcription

1 TECHNOLOGY SERVICES MONTHLY ELECTRONIC HEALTH RECORDS June Arch Street, 39th Floor Philadelphia, PA

2 TECHNOLOGY SERVICES MONTHLY Welcome to the MHH Technology Newsletter! Welcome to the June edition of the Mufson Howe Hunter Technology Monthly. This month, we highlight key themes and growth drivers in the electronic health records space. Each month, our team aims to provide you with a newsletter that contains thought-provoking content and analysis, as well as updates on macroeconomic themes, equity capital market performance, private capital market trends and noteworthy M&A activity all of which is relevant to our core industry sectors: Cloud Healthcare IT Infrastructure Specialty Consulting Digital Agencies Information IT Outsourcing We hope you find this information valuable, and we welcome any comments or suggestions. Sincerely, Tech-Enabled Solutions Outsourcing Enterprise Software Internet Mobile Tech-Enabled Business Process Outsourcing Select 2018 Franchise Themes Digital Transformation & Advisory: Business processes will continue to migrate from legacy systems to modern technology (cloud, edge computing, analytics, IoT, blockchain, AI, etc.). We expect to see continued growth in the digital transformation consulting (DTC) channel. Trusted advisors with the ability to sell across senior business stakeholders within an organization (CMO, CRO, CCO, COO, CIO) and who provide thought leadership, commercial insights, targeted research and proprietary IP will be leaders in the category. For additional insight see our November 2017 TSM. Regulation Technology: The rapid proliferation of new and increasingly complex regulations will continue to drive demand for RegTech solutions that provide operational efficiencies and cost benefits when applied to compliance and risk management practices. Increased regulation isn t just a temporary challenge for global financial institutions it s the new reality. Financial services firms average costs to meet their obligations are $60 million; some are spending up to $500 million on compliance with KYC and Customer Due Diligence (Thomson Reuters). For additional insight see our August 2017 TSM. Healthcare IT: The sweeping paradigm shift toward population health management and value-based reimbursement models will continue to drive robust demand for healthcare IT products and services. Consulting, Data Analytics and Patient Engagement Technology will comprise a growing portion of the overall HCIT market, reaching an estimated $74 billion in annual spending by 2021 (Markets and Markets and MHH calculations). Service providers and solutions that improve interoperability among myriad disparate systems will be in high demand for many years to come. For additional insight see our May 2017 and September 2017 TSM. Brandon K. Eck Managing Director, Head of Technology What we are reading Next-gen EHRs: Epic, Allscripts and others reveal future of electronic health records Halifax Health integrates EHR, cloud decision support to combat sepsis A New Model of Interaction for Regulatory Technologies What is the IoT? Everything you need to know about the Internet of Things right now IoT-Optimized Infrastructure : Connected things will streamline vendor operational models while reducing customer costs. IoT will introduce tons of useful data to the cloud that needs to be captured and effectively managed. IaaS and PaaS companies will be a direct beneficiary of this trend. Cisco expects database, analytics and IoT workloads to account for 22% of total workloads by 2020 (Cisco, 2016). For additional insight, see our June 2017 TSM. Blockchain in Financial & Beyond: Although most widely associated with cryptocurrencies, some of the largest financial services firms are exploring using blockchain technology to improve high-risk and/or time-consuming operations, including cross-border payments, AML & KYC compliance, IAM security protocols and smart contracts. We also expect to see further adoption across a variety of other industries, including healthcare, automotive, manufacturing and retail, among others. For additional insight see our December 2017 TSM. MHH Technology Group 2

3 MHH Technology Group 3 TECHNOLOGY SERVICES PRACTICE OVERVIEW The Mufson Howe Hunter Technology Group serves growth-oriented, rapidly scalable businesses that leverage proprietary and enabling technologies to address the evolving needs of modern enterprise customers. We apply deep industry expertise and broad transaction experience to provide thoughtful, tailored advice and solutions for our clients. Our clients turn to us for outstanding M&A advisory and capital-raising execution. Senior Banking Team Sector Coverage Business Model Coverage Brandon Eck Managing Director, Head of Technology beck@mhhco.com Sell-side Advisory Buy-side Assignments Private Placements Recapitalizations Financial Advisory Fairness Opinions Tech-Enabled Solutions Prior Experience: Managing Director, Head of Technology &, Janney Montgomery Scott Principal, Katalyst Securities Principal, RCW Mirus Education: Gettysburg College (BA) Cloud IT Outsourcing Healthcare IT Outsourcing 18+ Years of Experience 60+ Transactions Completed Andrew Wilson Vice President, Technology Tech-Enabled BPO Digital Agencies Enterprise Software awilson@mhhco.com Prior Experience: Senior Associate, Technology &, Janney Montgomery Scott Associate, TMT, J.P. Morgan Attorney, M&A, Wilson Sonsini Goodrich & Rosati Education: Duke University (JD, MBA) U. North Carolina, Chapel Hill (BA) Infrastructure Information Specialty Consulting Internet 8+ Years of Experience 20+ Transactions Completed Mobile

4 EHR: A PHYSICIAN S POINT OF VIEW What is EHR? Electronic health record (EHR) systems are a central element of a sweeping effort to digitize the collection and sharing of medical records and treatment history replacing archaic, paper-based charts with electronic records that can be updated in real time and travel with the patient. The industry-wide push to establish a standards-based, population health management paradigm of care delivery demands that patient information be easily collected, aggregated, analyzed and shared across myriad providers and systems. In 2009, The American Recovery and Reinvestment Act mandated that all healthcare providers adopt and demonstrate meaningful use of EHR systems, as defined by a sequential series of escalating milestones. The industry as a whole has also come to recognize that encouraging patients to take greater ownership in managing their own health is a powerful lever in improving long-term health outcomes and reducing expenditures on high-cost emergency care. Accordingly, most major EHR vendors also offer various elements of patient engagement technology (PET) to complement their core EHR offerings. As emphasis continues to move beyond the four walls of the hospital setting toward a more holistic, clinically-integrated network model of care delivery, EHR vendors are increasingly expected to offer cloud-based, mobile-enabled platforms. How Physicians Feel about Their EHR Top Rated EHR for Satisfaction Where do EHR Vendors Need to Improve? 1 EHR vendors do not allow physicians to customize products to their specific needs 4 Improve Patient Billing 1 77% 2 Physicians report low levels of technical support from vendors 4 Eases communications with Payers 1 Detracts from Patient Care 2 37% 72% 3 EHR systems do not consistently support clinicians in providing real care or substantially change the ways doctors think and access information, dividing tasks in ways not consistent with how physicians work 5 Satisfaction with EHR vendor 2 34% 4 EHR vendors do not allow physicians to customize products to their specific needs 4 1 Healthcare Informatica, CIO Agenda: Healthcare Provider Industry Insights, Medscape EHR Report 2016: Physicians Rate Top EHRs 4 Rand, Factors Affecting Physician Professional Satisfaction and Their Implications for Patient Care, Health Systems, and Health Policy, The Institute, Focusing on Ways to Improve Electronic Health Records, 2016 MHH Technology Group 4

5 Target Buyers Market Dynamics MARKETPLACE DYNAMICS & MARKET SHARE Market Share 1 Fragmented Market Hospital Owned vs. Independent Practices According to Office of the National Coordinator s dashboard, there are 632 EHR vendors providing certified EHR technology to physicians attesting for meaningful use. The Top 10 vendors account for 65% of the physician practice EHR market, leaving 35% of the market with 622 vendors. These vendors dominate the smaller physician practice market 10 physicians (small) to 50+ (large). Hospital-Owned Practices: Population Health-driven trend lean toward selecting vendors with integrated healthcare information systems (HIS). Independent Practices: Owned by physicians and more likely to select vendors without an HIS. 35% 2% 2% Physician Practice Market Share 3% 4% 4% 5% 5% 23% 7% 9% Other Consolidation Vendor Consolidation: Large vendors and private equity players have been acquiring small to mid-size vendors. Practice Consolidation: Small and solo medical practices are being acquired by hospitals and larger physician groups who mandate use of their EHR technology. Jan-2018 Sep-2017 Jun-2017 May-2016 Cross Over Vendors 1 MD Practices 15K 7K 83K 33K 17K 14K 3K 19K 25K 1K 12K 8K 3K Hospitals MD Vendor Overview, HIS Professionals, LLC, 2017 MHH Technology Group 5

6 U.S. ECONOMIC INDICATORS MHH Technology Group % 40.0% 30.0% 20.0% 10.0% U.S. Market Indices 10-Year Treasury Rate SP500 NSDQ DJIA May 2.2% 5.3% 1.0% 12.2% 20.1% 16.6% 3-Year 28.4% 46.8% 35.6% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 0.0% -10.0% -20.0% May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 S&P 500 NASDAQ Dow Jones Industrial Average 1.0% 0.5% 0.0% May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May Year Teasury Rate Unemployment Rate 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% U.S. Unemployment & Labor Labor Participation Rate 63.2% 63.0% 62.8% 62.6% 62.4% 62.2% 62.0% 0.0% 61.8% May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Unemployment Rate Labor Participation Rate U.S. PPI, CPI and PCE 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Consumer Price Index Producer Price Index Personal Consumption Expenditures Sources: CapitalIQ, Federal Reserve Bank of St. Louis

7 U.S. TECH SERVICES MIDDLE-MARKET PRIVATE EQUITY: BUY-OUT ACTIVITY Select May 2018 Buy-Outs** PE Buy-Outs, Trailing 8 Quarters, as of May 31 Company Investor Date Sector May 29 Infrastructure Number of Deals Total Capital $1.2B $1.0B May 29 May 17 May 16 Infrastructure Information Healthcare IT $0.8B $0.6B $0.4B $0.2B May 14 May 3 Healthcare IT Healthcare IT - 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Add-Ons Platform Total Capital Invested* $0.0B PE Buy-Outs, by Deal Size PE Buy-Outs, Historical Annual, as of May 31 Number of Deals 600 Total Capital $4.5B 30% 500 $4.0B $3.5B 43% $0-25mm $25-50mm $50-100mm $3.0B $2.5B $2.0B $ mm 200 $1.5B 17% 100 $1.0B $0.5B 11% $0.0B Deal Count Total Capital Invested* Source: Pitchbook *For deals with announced transaction value **Please contact the MHH Technology Group directly for any information regarding valuation and deal size MHH Technology Group 7

8 U.S. TECH SERVICES MIDDLE-MARKET PRIVATE EQUITY: MINORITY ACTIVITY Select May 2018 Minority Deals** Number of Deals PE Minority, Trailing 8 Quarters, as of May 31 Total Capital Company Stage Date Sector 300 $2.5B Early Stage VC May 29 Infrastructure 250 $2.0B Early Stage VC May 22 Information 200 $1.5B 150 Late Stage VC May 9 Healthcare IT 100 $1.0B Late Stage VC May 7 Healthcare IT 50 $0.5B Late Stage VC May 3 Healthcare IT - 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 $0.0B Late Stage VC May 1 Healthcare IT Deal Count Total Capital Invested* 19% PE Minority, by Stage PE Minority, Historical Annual, as of May 31 Number of Deals 1,200 6% 1, Angel / Seed Early Stage VC % Later Stage VC 400 Total Capital $9.0B $8.0B $7.0B $6.0B $5.0B $4.0B $3.0B 26% PE Growth/Expansion $2.0B $1.0B $0.0B Deal Count Total Capital Invested* Source: Pitchbook *For deals with announced transaction value **Please contact the MHH Technology Group directly for any information regarding valuation, deal size, and investors MHH Technology Group 8

9 ITO BPO IFS IS HIT VALUATION & PERFORMANCE METRICS IT Outsourcing: technology services and consulting solutions, including engineering, application development, knowledge management and business process management Business Process Outsourcing: services for administering and managing select technology-enabled business processes, including outsourced product development, finance and accounting, human resources, research and analytics, and other industry-specific processes Infrastructure : providers of managed, hosting and consulting services around planning, designing, implementing and managing mission-critical IT infrastructure Information : providers of independent rating, benchmarking, research and data analytic services Healthcare IT: software and technology-related services focused on the design, development, creation, use and maintenance of information systems for the healthcare industry Sector Indices Performance, as of May 31, 2018 Median Valuation Metrics 80.0% SP500 NSDQ ITO BPO IFS IS HIT May 2.2% 5.3% (2.4%) 7.7% 0.4% 4.3% 8.0% EV/2018E REVENUE 7.0x 60.0% 40.0% 12.2% 20.1% 16.0% 24.8% 10.5% 29.5% 2.8% 3-Year 28.4% 46.8% 27.0% 50.8% 55.3% 69.0% 7.8% 2.1x 3.1x 5.0x 2.7x 20.0% ITO BPO IFS IS HIT 0.0% -20.0% 11.6x EV/2018E EBITDA 17.0x 14.4x 10.8x 12.7x -40.0% May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Median Operational KPIs ITO BPO IFS IS HIT 2018E REVENUE GROWTH GROSS MARGIN EBITDA MARGIN FWD PRICE/EARNINGS 27.5x 27.6x ITO 6.1% ITO 31.5% ITO 19.9% 24.1x 23.1x BPO 11.6% BPO 36.5% BPO 14.5% 16.8x IFS 15.2% IFS 63.8% IFS 27.2% IS 9.9% IS 62.9% IS 39.2% HIT 10.9% HIT 57.7% HIT 13.0% ITO BPO IFS IS HIT Source: CapitalIQ MHH Technology Group 9

10 IT OUTSOURCING MHH Technology Group 10 Valuation Metrics Relative Valuation ($ in millions) Operating Metrics Valuation Multiples Market Revenue Gross EBITDA (2) EBITDA EV / Revenue EV / EBITDA Company Cap (1) 2018E 2019E Margin 2018E 2019E Margin 2018E 2019E 2018E 2019E Accenture plc (ACN) $100,154 $39,836 $42, % $6,796 $7, % 2.6x 2.4x 2.3x 14.0 x 14.3 x 13.3 x Cognizant Technology Solutions Corporation (CTSH) $44,147 $16,237 $17, % $3,420 $3, % 2.6x 2.5x 2.3x 11.8 x 11.7 x 10.3 x Infosys Limited (INFY) $39,205 $11,130 $12, % $2,923 $3, % 3.2x 3.2x 2.9x 11.9 x 12.1 x 11.3 x DXC Technology Company (DXC) $26,232 $22,484 $21, % $4,862 $4, % 1.3x 1.4x 1.5x 6.3 x 6.6 x 6.5 x FALSE $16,987 $8,833 $9, % $1,612 $1, % 2.1x 2.1x 2.0x 12.0 x 11.3 x 10.8 x HCL Technologies Limited (NSEI:HCLTECH) $18,563 $8,141 $8, % $1,910 $2, % 2.2x 2.1x 1.9x 9.7 x 9.0 x 8.4 x Wipro Limited (BSE:507685) $17,263 $8,211 $8, % $1,583 $1, % 1.9x 1.8x 1.7x 9.3 x 9.5 x 8.9 x Atos SE (ATO) $14,196 $14,308 $14, % $2,057 $2, % 1.0x 1.0x 1.0x 7.4 x 7.0 x 6.6 x Syntel, Inc. (SYNT) $2,613 $953 $ % $243 $ % 3.0x 3.0x 2.9x 10.5 x 11.6 x 11.2 x Virtusa Corporation (VRTU) $1,441 $1,205 $1, % $103 $ % 1.6x 1.3x 1.2x 16.0 x 15.7 x 12.2 x Perficient, Inc. (PRFT) $915 $500 $ % $69 $ % 2.0x 1.9x 1.8x 13.6 x 14.0 x 12.5 x Mean $25,611 $11,985 $12, % $2,325 $2, % 2.1x 2.1x 2.0x 11.2x 11.2x 10.2x Median $17,263 $8,833 $9, % $1,910 $2, % 2.1x 2.1x 1.9x 11.8x 11.6x 10.8x NA = Not Available; NM = Not Meaningful; = Latest Twelve Months (1) As of close May 31, = excluded from Mean and Median calculations (2) Excludes non-recurring, discontinued operations and stock-based compensation Source: Public Filings, Press Releases and Published Research Reports EV/EBITDA 16.0 x VRTU 14.0 x GIB.A ACN 12.0 x SYNT INFY 1 HCLTECH 8.0 x PRFT 6.0 x BSE: DXC 4.0 x ENXTPA:ATO 2.0 x 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Revenue Growth Select May 2018 Precedent Transactions* Announced Acquirer Target Description May 23 Provides digital marketing and IT services EV/Revenue 3.5 x 3.0 x 2.5 x ACN BSE: SYNT INFY CTSH May 16 Provides IT consulting services May 15 Provides IT consulting services 2.0 x 1.5 x 1.0 x GIB.A PRFT HCLTECH DXC VRTU May 2 Provides consulting and analytics services May 1 Source: CapitalIQ *Please contact the MHH Technology Group directly for any information regarding valuation and deal size Information security consulting and advisory services 0.5 x ENXTPA:ATO 0.0% 10.0% 20.0% 30.0% 40.0% Revenue Growth + EBITDA Margin ()

11 BUSINESS PROCESS OUTSOURCING MHH Technology Group 11 Valuation Metrics Relative Valuation ($ in millions) Operating Metrics Valuation Multiples Market Revenue Gross EBITDA (2) EBITDA EV / Revenue EV / EBITDA Company Cap (1) 2018E 2019E Margin 2018E 2019E Margin 2018E 2019E 2018E 2019E Automatic Data Processing, Inc. (ADP) $57,277 $13,767 $14, % $3,047 $3, % 4.4x 4.1x 3.9x 19.4 x 18.7 x 16.6 x Genpact Limited (G) $5,717 $2,975 $3, % $494 $ % 2.4x 2.2x 2.1x 14.5 x 13.4 x 12.2 x EPAM Systems, Inc. (EPAM) $6,578 $1,847 $2, % $328 $ % 3.9x 3.3x 2.7x 21.9 x 18.5 x 14.9 x WNS (Holdings) Limited (WNS) $2,579 $801 $ % $170 $ % 3.2x 3.1x 2.8x 17.4 x 14.4 x 12.0 x Globant S.A. (GLOB) $1,840 $508 $ % $88 $ % 4.1x 3.5x 3.0x 23.4 x 20.4 x 17.0 x 3. ExlService Holdings, Inc. (EXLS) $1,950 $851 $ % $150 $ % 2.3x 2.1x 1.9x 13.2 x 11.8 x 10.7 x Luxoft Holding, Inc. (LXFT) $1,224 $930 $1, % $118 $ % 1.2x 1.2x 1.1x 8.9 x 9.5 x 7.5 x Mean $11,024 $3,097 $3, % $628 $ % 3.1x 2.8x 2.5x 16.9x 15.3x 13.0x Median $2,579 $930 $1, % $170 $ % 3.2x 3.1x 2.7x 17.4x 14.4x 12.2x NA = Not Available; NM = Not Meaningful; = Latest Twelve Months (1) As of close May 31, = excluded from Mean and Median calculations (2) Excludes non-recurring, discontinued operations and stock-based compensation Source: Public Filings, Press Releases and Published Research Reports EV/EBITDA 25.0 x 2 GLOB ADP 15.0 x G WNS EPAM EXLS 1 LXFT 5.0 x 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Revenue Growth Select May 2018 Precedent Transactions* Announced Acquirer Target Description May 31 May 29 Offers outsourced document management services Offers outsourced subscription-based analytics services May 24 Engages in B2B e-procurement business May 14 Provides procurement consulting services May 9 Provides outsourced telecommunications and strategy services EV/Revenue 4.5 x 4.0 x ADP 3.5 x WNS GLOB 3.0 x 2.5 x EPAM 2.0 x EXLS 1.5 x G 1.0 x LXFT 0.5 x 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Revenue Growth + EBITDA Margin () Source: CapitalIQ *Please contact the MHH Technology Group directly for any information regarding valuation and deal size

12 INFRASTRUCTURE SERVICES MHH Technology Group 12 Valuation Metrics Relative Valuation ($ in millions) Operating Metrics Valuation Multiples Market Revenue Gross EBITDA (2) EBITDA EV / Revenue EV / EBITDA Company Cap (1) 2018E 2019E Margin 2018E 2019E Margin 2018E 2019E 2018E 2019E Equinix, Inc. (REIT) (EQIX) $31,533 $5,106 $5, % $2,418 $2, % 8.8x 8.0x 7.1x 18.2 x 16.8 x 14.8 x VeriSign, Inc. (VRSN) $16,055 $1,213 $1, % $866 $ % 13.7x 13.3x 12.8x 19.6 x 18.6 x 18.0 x United Internet AG (UTDI) $12,779 $5,970 $6, % $1,404 $1, % 2.9x 2.5x 2.4x 12.7 x 10.7 x 9.8 x Zayo Group Holdings, Inc. (ZAYO) $8,650 $2,636 $2, % $1,315 $1, % 5.5x 5.4x 5.1x 11.1 x 10.8 x 1 GoDaddy Inc. (GDDY) $11,227 $2,634 $2, % $748 $ % 5.6x 5.0x 4.5x 30.7 x 17.7 x 16.4 x Wix.com Ltd. (WIX) $4,077 $597 $ % $108 $ % 8.1x 6.4x 5.1x NM 35.2 x 22.2 x Endurance International Group Holdings, Inc. (EIGI) $1,277 $1,154 $1, % $315 $ % 2.6x 2.7x 2.6x 8.8 x 9.8 x 9.6 x Web.com Group, Inc. (WEB) $851 $749 $ % $186 $ % 2.0x 2.0x 1.9x 8.8 x 8.0 x 7.6 x Internap Corporation (INAP) $214 $323 $ % $111 $ % 3.1x 2.7x 2.6x 10.1 x 7.8 x 7.3 x Mean $9,629 $2,265 $2, % $830 $ % 5.8x 5.3x 4.9x 15.0x 15.0x 12.9x Median $8,650 $1,213 $1, % $748 $ % 5.5x 5.0x 4.5x 11.9x 10.8x 10.0x NA = Not Available; NM = Not Meaningful; = Latest Twelve Months (1) As of close May 31, = excluded from Mean and Median calculations (2) Excludes non-recurring, discontinued operations and stock-based compensation Source: Public Filings, Press Releases and Published Research Reports EV/EBITDA x WIX x VRSN GDDY 2 EQIX 15.0 x EIGI ZAYO UTDI 1 INAP 5.0 x WEB -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Revenue Growth Select May 2018 Precedent Transactions* Announced Acquirer Target Description May 30 Provides end-to-end automation services EV/Revenue 14.0 x 12.0 x 1 VRSN May 29 Provides cloud computing and infrastructure solutions May 8 Provides data hosting and IaaS services May 7 Provides data center services May 3 Provides cloud-based business and storage solutions 8.0 x 6.0 x 4.0 x GDDY EIGI WIX ZAYO EQIX 2.0 x UTDI WEB INAP 0.0% 20.0% 40.0% 60.0% 80.0% Revenue Growth + EBITDA Margin () Source: CapitalIQ *Please contact the MHH Technology Group directly for any information regarding valuation and deal size

13 TECHNOLOGY INFORMATION SERVICES: INFORMATION SERVICES SERVICES MHH Technology Group 13 Valuation Metrics Relative Valuation ($ in millions) Operating Metrics Valuation Multiples Market Revenue Gross EBITDA (2) EBITDA EV / Revenue EV / EBITDA Company Cap (1) 2018E 2019E Margin 2018E 2019E Margin 2018E 2019E 2018E 2019E S&P Global Inc. (SPGI) $49,632 $6,459 $6, % $3,185 $3, % 8.6x 8.2x 7.7x 17.2 x 16.6 x 15.5 x Moody's Corporation (MCO) $32,732 $4,692 $5, % $2,271 $2, % 8.5x 7.9x 7.4x 17.0 x 16.3 x 15.1 x IQVIA Holdings Inc. (Q) $20,245 $10,246 $10, % $2,185 $2, % 3.6x 2.9x 2.8x 16.3 x 13.7 x 12.7 x IHS Markit Ltd. (INFO) $19,284 $3,872 $4, % $1,522 $1, % 6.4x 6.0x 5.7x 16.6 x 15.4 x 14.2 x Verisk Analytics, Inc. (VRSK) $17,557 $2,384 $2, % $1,130 $1, % 9.1x 8.5x 7.9x 19.9 x 17.9 x 16.5 x MSCI Inc. (MSCI) $14,473 $1,440 $1, % $788 $ % 11.9x 10.9x 10.0x 21.5 x 19.9 x 17.8 x Gartner, Inc. (IT) $12,111 $3,989 $4, % $741 $ % 4.1x 3.7x 3.4x 29.5 x 20.1 x 17.7 x FactSet Research Systems Inc. (FDS) $7,814 $1,373 $1, % $469 $ % 6.2x 5.9x 5.5x 17.5 x 17.3 x 15.9 x Mean $21,731 $4,307 $4, % $1,536 $1, % 7.3x 6.8x 6.3x 19.4x 17.2x 15.7x Median $18,421 $3,930 $4, % $1,326 $1, % 7.4x 7.0x 6.6x 17.3x 17.0x 15.7x EV/EBITDA 24.0 x x 12.0 x 8.0 x 4.0 x MSCI SPGI FDS INFO VRSK MCO Q IT NA = Not Available; NM = Not Meaningful; = Latest Twelve Months (1) As of close May 31, = excluded from Mean and Median calculations (2) Excludes non-recurring, discontinued operations and stock-based compensation Source: Public Filings, Press Releases and Published Research Reports -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% Revenue Growth Select May 2018 Precedent Transactions* Announced Acquirer Target Description May 31 Source: CapitalIQ *Please contact the MHH Technology Group directly for any information regarding valuation and deal size Provides analytics and news for credit market professionals May 17. Provides ratings and research services May 11 Provides credit reporting services May 3 May 1 Provides shareholder engagement consulting services Provides patent risk management and discovery services EV/Revenue x VRSK 8.0 x SPGI MCO 7.0 x 6.0 x INFO 5.0 x FDS 4.0 x IT 3.0 x Q 2.0 x 1.0 x 0.0% 20.0% 40.0% 60.0% 80.0% Revenue Growth + EBITDA Margin ()

14 TECHNOLOGY SERVICES: HEALTHCARE INFORMATION IT SERVICES MHH Technology Group 14 Valuation Metrics ($ in millions) Operating Metrics Valuation Multiples Market Revenue Gross EBITDA (2) EBITDA EV / Revenue EV / EBITDA Company Cap (1) 2018E 2019E Margin 2018E 2019E Margin 2018E 2019E 2018E 2019E Cerner Corporation (CERN) $19,803 $5,371 $5, % $1,626 $1, % 3.8x 3.6x 3.3x 13.6 x 11.9 x 10.8 x Veeva Systems Inc. (VEEV) $11,075 $829 $ % $277 $ % 14.1x 12.2x 10.4x 44.2 x 36.7 x 31.1 x athenahealth, Inc. (ATHN) $6,080 $1,354 $1, % $376 $ % 4.9x 4.6x 4.2x 23.1 x 16.5 x 14.8 x Allscripts Healthcare Solutions, Inc. (MDRX) $2,251 $2,178 $2, % $432 $ % 2.3x 2.0x 1.9x 22.8 x x Inovalon Holdings, Inc. (INOV) $1,584 $564 $ % $161 $ % 3.2x 2.4x 2.1x 18.8 x 8.6 x 7.1 x Quality Systems, Inc. (QSII) $1,124 $537 $ % $84 $89 8.4% 2.1x 2.1x 2.0x 19.9 x 13.4 x 12.7 x National Research Corporation (NRC) $848 NA NA 58.2% NA NA 32.1% 6.9x NM NM 20.4 x NM NM HealthStream, Inc. (HSTM) $900 $229 $ % $39 $ % 2.8x 3.1x 3.0x 24.0 x 17.9 x 16.4 x Computer Programs and Systems, Inc. (CPSI) $440 $291 $ % $52 $ % 2.0x 2.0x 1.9x 12.9 x 11.1 x 11.3 x Castlight Health, Inc. (CSLT) $490 $154 $ % ($14) $7-38.1% 3.0x 2.7x 2.3x NM NM NM Mean $4,459 $1,279 $1, % $337 $ % 4.5x 3.9x 3.5x 22.2x 15.8x 14.2x Median $1,354 $564 $ % $161 $ % 3.1x 2.7x 2.3x 20.4x 12.7x 12.0x NA = Not Available; NM = Not Meaningful; = Latest Twelve Months (1) As of close May 31, = excluded from Mean and Median calculations (2) Excludes non-recurring, discontinued operations and stock-based compensation Source: Public Filings, Press Releases and Published Research Reports EV/EBITDA x x x x QSII NRC Relative Valuation** CERN ATHN MDRX VEEV INOV 0.0% 10.0% 20.0% 30.0% Revenue Growth Announced Acquirer Target Description May 31 Select May 2018 Precedent Transactions* Provides performance management software solutions for healthcare practices EV/Revenue (2017E) 14.0 x 12.0 x 1 VEEV May 29 May 9 May 4 May 2 (aka Zone3W Inc.) Develops web and mobile medical billing solutions Designs and develops user experience solutions for monitoring patient compliance Develops software solutions for health information exchanges and patient engagement Developer of a cloud-based solution for laboratory management 8.0 x 6.0 x ATHN 4.0 x QSII CERN NRC 2.0 x INOV MDRX 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Revenue Growth (2017E) + EBITDA Margin () Source: CapitalIQ *Please contact the MHH Technology Group directly for any information regarding valuation and deal size **Excluded: CSLT

15 TECHNOLOGY SERVICES MONTHLY For more information, please contact: Brandon Eck Managing Director, Head of Technology Andrew Wilson Vice President, Technology The Mufson Howe Hunter Technology Indices IT Outsourcing is currently comprised of: ACN, CTSH, INFY, NESI:HCLTECH, GIB.A, WIT, ENXTPA:ATO, SYNT, VRTU, PRFT; Business Process Outsourcing Index is currently comprised of: ADP, G, EPAM, LXFT, EXLS, WNS, GLOB; Infrastructure Index is currently comprised of: EQIX, ZAYO, UTDI, VRSN, DFT, GDDY, EIGI, WIX, WEB, INAP; Information Index is currently comprised of: SPGI, Q, MCO, INFO, VRSK, IT, MSCI, FDS; and, Healthcare IT is currently comprised of: CERN, VEEV, ATHN, MDRX, WBMD, INOV, QSII, HSTM, NRCI.B, CPSI, CSLT. The companies that comprise each Index periodically change as a result of mergers, acquisitions, initial public offerings and other transactions; therefore, comparisons to historical time periods and historical performance for each Index may not entirely correspond and correlate to the Index s current performance. Historical performance is not a guarantee or prediction of future results. The information and statistical data contained herein have been obtained from sources that Mufson Howe Hunter believes are reliable, but Mufson Howe Hunter makes no representation or warranty as to the accuracy or completeness of any such information and data and expressly disclaims any and all liability relating to or resulting from your use of these materials. The information and data contained herein are current only as of the date(s) indicated and Mufson Howe Hunter has no intention, obligation or duty to update these materials after such date(s). These materials do not constitute an offer to sell or the solicitation of an offer to buy any securities. Copyright January 2018 Mufson Howe Hunter & Company LLC. All rights reserved. Technology Monthly is produced monthly by Mufson Howe Hunter. Mufson Howe Hunter provides a full range of investment banking services to Technology companies. For more information, visit Icons by Flaticon Arch Street, 39th Floor Philadelphia, PA