MONTHLY HEALTHCARE M&A UPDATE SECTOR SPOTLIGHT: DENTAL SERVICES AUGUST 2015 COKER CAPITAL ADVISORS AUGUST 2015

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1 MONTHLY HEALTHCARE M&A UPDATE SECTOR SPOTLIGHT: DENTAL SERVICES AUGUST 2015

2 Dental Services Overview and Update Dental services (including dental practice management) is a $123 billion industry with expected growth of 6.0% annually from 2015 to There are more than 183,000 dental offices in the United States, and the four largest participants account for only 4.0% of industry revenue. The sector is expected to benefit from several significant, enduring trends that will drive investment and contribute to a long-term positive outlook, including the following: - Greater Numbers of People with Private Health Insurance: The number of Americans with private dental insurance is expected to increase. The Affordable Care Act includes several specific provisions that will likely lead to increased numbers of patients receiving treatment, such as mandating that pediatric dental care be included in minimal essential coverage for health plans participating in state-run insurance exchanges. Additionally, employerprovided dental plans are exempt from the tax on premium health plans ( Cadillac plans ). - Increased Patient Disposable Income in Improving Economy: Approximately 25% of dental expenses are paid for directly by patients. While 57% of Americans have dental insurance (as compared with 85% having medical insurance), patients ability to pay is tied to per capita disposable income, which is expected to increase in the improving economy. Cosmetic and elective services are most sensitive to fluctuations in patient discretionary income. - Demographics of Patients and Practitioners: Growth in the U.S. elderly population has increased the demand for dental implants, veneers, teeth whitening, and other cosmetic and restorative procedures. This increased demand is being served by a slowly expanding dentist population, 35% of whom are over 55 years of age. It is estimated that in the next five years, more dentists will retire from practicing than will graduate from dental school, creating downward pressure on the dentist-to-patient ratio. In conjunction with a recent trend of dentists working shorter weeks, dental practices will be under pressure to maximize the efficiency of patient care and control costs. - New Dental Technologies and Increase in Specialty Services: Technological advances in dental practice have increased dentists efficiency and fueled growth in cosmetic and other specialty procedures that are in high demand by aging Baby Boomers and other age groups. Examples include high-speed drills; better analgesics; new filling, bonding, and implant compounds; computer-imaging technology; and laser bleaching systems. - Expanding Success of Dental Practice Management Companies ( DPMCs ): As dentists face rising operational and practice start-up costs, joining DPMCs has become more attractive. DPMCs allow affiliated practices to focus on patient care while reducing administrative tasks and utilizing scale to mitigate increasing operational costs. Further, DPMCs capture higher margin revenue from previously referred specialty services. Dental Services Market Snapshot 2015 Dental Practice Breakdown by Size Single Practice 69% Dual Practice 20% Group Practice 12% $160.0 $140.0 $120.0 $100.0 $80.0 $ Industry Growth ($ in billions) '10 '11 '12 '13 '14 '15 '16 '17 '18 Dental Services Facts $123 billion industry projected to grow at a CAGR of 6% from 2015 to % of the U.S. population has dental health insurance 35% of independent practitioners are 55 years of age or older The American Dental Association (ADA) advises patients to visit the dentist twice a year Source: IBISWorld Reports

3 Dental Services Industry Competitive Landscape Dental practice management companies have experienced a wave of private equity investment in the last five years. The investment thesis rests on the available economies of scale, including lower average facility costs, improved utilization of staff, improved payor contracting, and greater marketing effectiveness. Practicing dentists are attracted to joining DPMCs by greater autonomy, freedom from practice worries, a better defined career path, and potential for greatly increased compensation. Leading private equity platforms include Smile Brands Group (Welsh Carson), Heartland Dental (Teachers Private Capital), Aspen Dental (American Securities), and Great Expressions (OMERS Private Equity). In a landscape that remains fragmented, we expect continued private equity investment in the sector, both through the establishment of new platforms and tuck-in acquisitions that increase the scale of existing companies. Dental Practice Management Industry Leaders Company Name Ownership # of Practices # of Dentists Invested Since Teacher's Private Capital Nov American Securities Apr Welsh, Carson, Anderson & Stowe 369 N/A Jan Caymus Equity Partners 350 N/A N/A JLL Partners, NB Alternatives, RCP Advisors 275 N/A Feb OMERS Private Equity Oct American Capital Nov New Mountain Capital Sep Private N/A MSD Capital, North Peak Capital Sep Dental Services Industry M&A Outlook We expect that M&A transaction activity in the dental sector will be impacted by the following factors: - Scarcity: Private equity firms have faced challenges in identifying DPM companies of investable size. This has had a positive effect on valuation multiples for high-quality companies that meet investment criteria. - Institutional Commitment to the Sector: Many private equity firms have specifically identified dental services as an attractive area for investment, dedicating time, operating partners, and other resources to the effort of finding a platform investment. - Precedents for Investment Success: Numerous private equity firms have successfully invested in, grown, and exited dental companies in the last five years. These success stories have fueled the interest of new entrants to the space. - Broad Investor Universe and Appetite: The synergies available in consolidation, low cyclicality, and lower relative stroke of the pen government reimbursement risk have attracted experienced healthcare investors and neophytes alike to dental services.

4 Sector-Specific Valuation Drivers Coker Capital s experience in the dental sector provides us with insights into the company characteristics that typically lead to higher M&A transaction valuations. Among those characteristics are the following: - Scale and Infrastructure: Private equity sponsors seek dental businesses with scalable models that lead to increased bargaining power with payors and lower average costs. DPMCs with scale have plentiful resources to expend, providing the capital needed for business-building activities such as marketing, infrastructure, and acquisitions. Compared to the 2% of collections spent on marketing by traditional practices, DPMCs often spend 6 8%, enhancing brand recognition and widening their consumer reach. The power that comes with centralized organization and industry influence creates a key competitive advantage. - Attractive Geographies with Density: Practices located in geographic areas with low competition, high barriers to entry, good demographics, and good local payors are attractive to sponsors. Density of locations in a particular MSA or region creates competitive advantages in marketing to attract new patients and in negotiations to attain higher reimbursement rates with payors. Single-location practices typically do not have the marketing budgets or payor contracting resources to achieve these advantages. - Dental Services Mix: Practices that have a broad mix of specialty services beyond general dentistry are considered attractive. Stable preventive maintenance services drive core revenues and cash flow and are complemented by higher-margin specialty services such as periodontics, endodontics, etc. - Leadership Team: High-quality management teams that are clinically driven and have the depth and track record to identify and execute acquisitions often command higher valuations. Notable Dental Services (including DPMCs) M&A Activity Date Target Acquiror # of Offices # of Dentists Location Jul-15 Deca Dental Group Blue Sea Capital Dallas, TX Jul-15 Dental Care Alliance Harvest Partners Sarasota, FL Apr-15 Aspen Dental Management American Securities East Syracuse, NY Oct-13 My Dentist Holdings Heartland Dental Care Oklahoma City, OK May-13 Orthodontic Specialists Management Sebring Software (OTCPK:SMXI) Clearwater, FL Jan-13 Towncare Dental Partnership Dental Care Alliance Miami, FL Nov-12 Heartland Dental Care Teachers' Private Capital Effingham, IL Sep-12 Western Dental Services New Mountain Capital Orange, CA Aug-12 Interdent H.I.G. Capital Inglewood, CA May-12 Dental Care Alliance Quad C Management Sarasota, FL Feb-12 American Dental Partners JLL Partners 275 N/A Wakefield, MA Oct-11 Great Expressions (American Dental Group) OMERS Private Equity Bloomfield Hills, MI Apr-11 Midwest Dental FFL Partners 132 N/A Mondovi, WI Jan-11 Smile Brands Group Welsh, Carson, Anderson & Stowe 369 N/A Irvine, CA Aug-10 Aspen Dental Management Ares Management; Leonard Green & Partners East Syracuse, NY Sep-08 Dental One MSD Capital; North Peak Capital Dallas, TX Sep-07 Metropolitan Dental Holdings American Dental Partners 51 N/A Apple Valley, MN Nov-06 Affordable Care American Capital Strategies Raleigh, NC Sources: IBISWorld Reports and S&P Capital IQ

5 Enterprise Value / 2015P EBITDA Transaction Volume Transaction Value AUGUST 2015 Middle Market Healthcare M&A Activity Middle market healthcare transaction activity remains robust. Strategic acquirers continue to invest cash reserves built up during the recession into acquisitions, and private equity firms continue to seek opportunities to put uninvested capital to work. Favorable credit conditions and leverage levels continue to drive valuations for both buyer types. Within the healthcare industry, the services sector, including provider services and clinical support, remains the sector with the most transaction activity for strategic and financial investors alike. This is due to the fragmented nature of many services subsectors and the impact of legislative actions (both positive and negative) driving continued deal activity. Middle Market Healthcare M&A Volume by Deal Size Middle Market Healthcare M&A Value by Deal Size $40.0 $30.0 $20.0 $10.0 $13.8 $25.8 $36.3 $29.3 $23.4 $32.4 $ YTD $ YTD $25-150m $ m $ m Healthcare Public Equity Markets Update $25-150m $ m $ m Public equity market valuations remain strong for most healthcare subsectors. During the last 12 months, the S&P Global Healthcare Index outperformed the S&P 500 by 16.6%. Publicly Traded Healthcare Sector Valuations 25.0x 21.1x 20.0x 18.8x 17.3x 15.0x 15.0x 15.0x 14.4x 14.4x 14.1x 14.1x 13.6x 12.8x 12.6x 12.3x 12.0x 12.0x 11.7x 10.0x 10.2x 10.1x 9.7x 9.7x 9.3x 8.3x 6.8x 6.6x 5.0x 0.0x Source: S&P Capital IQ

6 ($ in millions) PUBLICLY-TRADED HEALTHCARE COMPANIES Market Data Financial Information Trading Multiples Price as of: % 52wk Market Enterprise Cash and Cash Total 2015P 2015P EV (P) / 2015 Company 08/04/15 High Cap Value Equivalents Debt Revenue EBITDA Revenue EBITDA Provider Services Acute-Care Hospitals Community Health $ % $6,991.5 $24,170.5 $365.0 $16,937.0 $19,883.0 $3, x 7.9x HCA % 38, , , , , x 8.8x Lifepoint % 3, , , , x 8.0x Tenet % 5, , , , , x 9.6x Weighted Average 1.6x 8.7x Median 1.2x 8.4x Assisted Living Brookdale Capital Senior % 5, , , , x 14.1x Capital Senior Living % , x 16.3x Five Star % , x 7.3x Weighted Average 2.4x 14.1x Median 2.4x 14.1x Ambulatory Surgery Centers Amsurg % 3, , , , x 13.6x SCAI % 1, , , x 14.9x Weighted Average 2.6x 14.0x Median 2.6x 14.2x Behavioral Health AAC % x 11.7x Acadia % 5, , , , x 18.8x UHS % 14, , , , , x 10.5x Weighted Average 2.5x 12.8x Median 2.4x 11.7x Dialysis DaVita Healthcare % 17, , , , , x 10.2x Fresenius % 23, , , , , x 10.4x Weighted Average 1.9x 10.3x Median 1.9x 10.3x Physician Services and Management IPC Healthcare % 1, , x 20.5x Mednax % 7, , , , x 14.5x Weighted Average 3.1x 15.4x Median 2.6x 17.5x Long Term Care and Rehab Ensign Group % 1, , , x 9.7x Healthsouth % 4, , , , x 9.9x Kindred % 1, , , , x 8.0x National Healthcare Group % N/A N/A Select Medical % 1, , , , x 8.5x US Physical Therapy % x 14.8x Weighted Average 1.4x 8.8x Median 1.0x 9.7x Hospice and Home Care Addus % x 10.0x AFAM % x 12.9x Amedisys % 1, , , x 14.9x Chemed % 2, , , x 11.8x LHC Group % x 10.4x Weighted Average 1.4x 12.5x Median 1.0x 11.8x Imaging Alliance Healthcare % N/A N/A Radnet % x 7.1x Varian % 8, , , x 12.2x Weighted Average 2.5x 12.0x Median 1.8x 9.7x Source: S&P Capital IQ

7 ($ in millions) PUBLICLY-TRADED HEALTHCARE COMPANIES Market Data Financial Information Trading Multiples Price as of: % 52wk Market Enterprise Cash and Cash Total 2015P 2015P EV (P) / 2015 Company 08/04/15 High Cap Value Equivalents Debt Revenue EBITDA Revenue EBITDA Products Medical Devices and Products 3M $ % $93,961.6 $99,030.6 $2,983.0 $8,517.0 $30,785.0 $8, x 11.5x Abbot % 75, , , , , , x 14.6x Baxter % 21, , , , , , x 18.5x Boston Scientific % 22, , , , , x 13.8x CR Bard % 14, , , , , , x 14.5x Danaher % 62, , , , , , x 13.4x DENTSPLY % 7, , , , x 14.6x Hanger % , , x 6.8x Hologic % 11, , , , x 15.1x Hospira % 15, , , , , x 15.9x JNJ % 276, , , , , , x 11.1x K2M Group % x NM Medtronic % 109, , , , , , x 13.7x Sirona Dental Systems % 5, , , x 15.5x Stryker % 38, , , , , , x 14.0x Teleflex % 5, , , , x 13.0x Zimmer % 20, , , , , , x 13.3x Weighted Average 3.7x 12.8x Median 3.6x 13.9x Durable Medical Equipment Hill-Rom % 3, , , x 11.8x Invacare % , x NM ResMed % 7, , , x 15.2x Weighted Average 3.5x 13.5x Median 1.9x 13.5x Distribution and Supplies AmerisourceBergen % 23, , , , , , x 12.0x Cardinal Health % 28, , , , , , x 10.4x HenrySchein % 12, , , x 14.6x McKesson % 51, , , , , , x 11.5x Owens and Minor % 2, , , x 9.2x Patterson % 5, , , x 11.8x Weighted Average 0.4x 11.6x Median 0.3x 11.6x Information Technology and Solutions Enterprise Solutions Allscripts Healthcare % 2, , , x 13.5x Cerner % 24, , , , x 16.3x Computer Programs and Systems % x 12.4x McKesson % 51, , , , , , x 11.5x Weighted Average 1.9x 13.0x Median 2.4x 12.9x Ambulatory Solutions Athenahealth % 5, , x 32.2x Quality Systems % x 8.8x Weighted Average 5.3x 29.2x Median 3.6x 20.5x RCM Solutions Accretive % x 5.3x MedAssets % 1, , x 9.0x Streamline % x N/A Weighted Average 2.4x 8.2x Median 2.1x 7.2x Data Analytics and ehealth Castlight Health % x N/A Inovalon Holdings % 3, , x 20.2x National Research Corp. - 0% x 11.9x WebMD % 1, , x 9.7x Weighted Average 6.0x 14.9x Median 5.0x 11.9x Other HCIT Services Advisory Board % 2, , x 17.7x Healthstream % x 22.9x HMS Holdings % x 7.4x Medidata % 2, , x 30.7x Omnicell % 1, , x 13.7x Vocera % x N/A Weighted Average 4.5x 20.4x Median 3.0x 17.7x Source: S&P Capital IQ

8 ($ in millions) PUBLICLY-TRADED HEALTHCARE COMPANIES Market Data Financial Information Trading Multiples Price as of: % 52wk Market Enterprise Cash and Cash Total 2015P 2015P EV (P) / 2015 Company 08/04/15 High Cap Value Equivalents Debt Revenue EBITDA Revenue EBITDA Clinical and Patient Support Services Clinical Laboratories Bio-Reference Laboratories $ % $1,223.3 $1,268.0 $25.1 $69.8 $948.0 $ x 10.1x Labcorp % 12, , , , , x 11.0x Quest Diagnostics % 10, , , , , x 9.5x Weighted Average 2.0x 10.3x Median 1.9x 10.1x Contract Research Organizations Albany Moelcular % x 13.8x Charles River % 3, , , x 13.1x Icon Public % 4, , , x 14.1x INC Reaseach % 2, , x 15.7x Parexel % 3, , , x 12.2x PRA Health % 2, , , x 14.4x Quintiles Transnational % 9, , , , x 14.3x Weighted Average 2.7x 13.9x Median 2.6x 14.1x Disease Management Alere % 4, , , , x 13.2x Healthways % x 11.0x Weighted Average 2.8x 13.0x Median 1.9x 12.1x Staffing and Transportation Services Airmethods % 1, , , x 7.9x AMN Health Services % 1, , , x 11.5x Cross Country Healthcare % x 13.8x Envision Healthcare % 8, , , , x 15.9x On Assignment % 2, , , x 12.0x Team Health % 4, , , x 14.6x Weighted Average 1.7x 14.1x Median 1.5x 12.9x Commercial Payors Aetna % 40, , , , , , x 8.6x Anthem % 39, , , , , , x 10.9x Cigna % 37, , , , , , x 10.1x Health Net % 5, , , x 9.0x Humana % 27, , , , , , x 10.2x United % 115, , , , , , x 9.8x Weighted Average 0.8x 9.8x Median 0.8x 9.9x Government Payors Centene % 8, , , , , x 9.8x Molina % 4, , , , x 6.3x Wellcare % 3, , , , , x 6.3x Weighted Average 0.3x 8.1x Median 0.2x 6.3x Specialty Pharmacy Services Diplomat % 3, , , x 40.8x Expressscripts % 60, , , , , x 10.9x Omnicare % 9, , , , x 14.3x PharMerica % 1, , , x 9.6x Weighted Average 0.9x 12.6x Median 0.9x 12.6x Source: S&P Capital IQ

9 ABOUT OUR FIRM CONTACT US Coker Capital Advisors is a healthcare-focused investment banking firm. With offices in Atlanta, Charlotte, and New York, we provide mergers and acquisitions, capital raising, and strategic advisory services to middle market healthcare companies. Our team combines investment banking, private equity, legal, and management consulting experience within the healthcare industry. Our senior professionals average more than a decade of healthcare transaction experience and have completed over 200 transactions across a wide range of healthcare subsectors with an aggregate transaction value in excess of $25 billion. For more information on market activity throughout the healthcare industry, or to discuss how Coker Capital Advisors may be able to add value to your company, please contact any member of our team: Atlanta 2400 Lakeview Parkway, Suite 400 Alpharetta, GA (678) Charlotte 121 W. Trade Street, Suite 2175 Charlotte, NC (704) New York 125 Park Avenue, 25 th Floor New York, NY (212)