M&A Update2020Healthcare IT &Revenue Cycle Management301-576-4000

M&A Update – 2020HCIT & RCMINTRODUCTIONMergers and acquisitions (M&A) within RevenueCycle Management (RCM) and Healthcare IT (HCIT)tallied 199 transactions representing 18.5 billion indeal value in 2020. The market acceleratedthroughout the second half of 2020 (2H 2020), withseveral billion-dollar transactions completed and / orannounced, signifying substantial investor confidence.Greenberg Advisors (GA) was at the forefront of thisactivity, representing sellers and buyers in fivetransactions involving offerings that include ment, insurance follow up, receivablesmanagement, and revenue integrity.With two vaccines approved by the US Food andDrug Administration in December, and healthcarebeing at the forefront of industries responding to thechallenges brought about by the pandemic, there isconsiderable optimism in the M&A market for 2021,a view which we also share. In that same vein, weexpect the trends from 2H 2020 to continue into2021.SELECTED GATRANSACTIONSwas acquired bya portfolio company ofSell-Side AdvisorALN Medical Managementwas acquired byNexus Healthcare SolutionsBuy-Side Advisorwas acquired bya portfolio company ofSell-Side AdvisorAll statistics and market data in this document are from GA’sproprietary M&A database. May contain estimates.2Proven. Focused. Trusted.

M&A Update – 2020HCIT & RCMKEY TAKEAWAYS1It’s a V!We’ll let the economists debate which letter best describes the economicrecovery, but we see a V-shaped recovery occurring in the RCM and HCIT M&Amarket. With deal value decreasing to 6.8 billion in 1H 2020 from 16.7 billion inthe prior period (2H 2019) and then increasing to 11.7 billion in 2H 2020, we areamidst a significant rebound that we project will continue into 2021.2020 closed with one of the more prolific six-month periods in recent history. Theelevated deal value was bolstered by many transactions exceeding 100 million,which constituted 24% of all transactions, the highest percentage for any sixmonth period in the past five years. In terms of deal volume, Q4 2020 had 63transactions, the highest quarterly activity in the past three years.TRANSACTION VALUE & VOLUME: THE COVID-19 RECOVERYDeal ValueDeal Volume( in billions)112110 16.7107107 11.7 10.5 7.7 6.8 6.089821H 20182H 20181H 20192H 201931H 20202H 2020Proven. Focused. Trusted.

M&A Update – 2020HCIT & RCMKEY TAKEAWAYS2Spotlight on Long-Term Care11% of transactions in 2020 involved sellers that provided a service or technologyto the Long-Term Care industry – up from 6% in 2019 and 9% in 2018. The USpopulation is aging, and by 2030, it’s expected that 20% of Americans will be 65 years-old.1 In our view, specialists will always command a premium value in M&Atransactions but those specializing in markets with attractive tailwinds typicallygarner even more interest. Are you interested to know what other segmentsinvestors are buzzing about? Contact us to find out.LONG-TERM CARE RCM & HCIT M&A ACTIVITY3rd21 most active specialty transactions closedThe Most Popular Offerings Are #3PopulationHealthTechnologyWith Notable Deals Including Optum acquiresnaviHealthOPTION01OPTION01NetSmart acquiresQIRT1 Sandra Colby and Jennifer Ortman. “Projections of the Size and Composition of the U.S. Population: 2014 to2060.” U.S. Census Bureau, Mar. 2015.4Proven. Focused. Trusted.

M&A Update – 2020HCIT & RCMKEY TAKEAWAYS3The Strategics Come Back!The buyer composition in 2020 was similar to prior years, with 57% of acquirersbeing strategics and 43% being financial buyers (i.e. private equity firms). This issurprising, as financial buyers led in 1H 2020 when they represented 52% oftransactions. The level of private equity (PE) involvement amongst buyers hasremained consistent over the years, and has continuously outpaced PE-backedsellers. The resulting competition among PE firms, combined with that from largeand mid-sized strategics, has produced a favorable dynamic for sellers, who arebenefitting from higher valuations and more attractive deal structures.BUYER COMPOSITION: STRATEGIC VS. FINANCIALDEAL VOLUMEBY BUYER TYPE57%(% of total deals)43%Strategic Buyers 0 - 25 25 - 50BUYER TYPEBY DEAL SIZE( in millions)59%41% 0 - 2541%59% 25 - 505Financial Buyers 100 50 - 10058%42% 50 - 10061%39% 100 Proven. Focused. Trusted.

M&A Update – 2020HCIT & RCMKEY TAKEAWAYS4Buyers Get SpecificAs the pandemic forced healthcare providers to fight for their very survival insome cases, investors took note of the very clear business case to be made forpromoting solutions that maximize providers’ cash flow. As such, technologybuyers favored companies providing analytics or patient engagement solutions,as sellers that provided these offerings represented 41% and 38% of all 2020transactions, respectively. This is not surprising, given the focus providers placeon big data and how it can be utilized to operate more efficiently and providebetter treatment for patients.On the services side, billing and denials management solutions were the mostfrequently-acquired offerings. While these are always highly sought-after servicesin the M&A market, the demand only increased as a result of the pandemic, ascash constraints weighed heavily on providers and these services improvereimbursement.A Note on ValuationsMost senior executives with an interest in M&A are wondering “What arevaluations today?” While we addressed this in our 1H 2020 M&A Update,providing context in light of the pandemic, the topic deserves an update. Therehas not been any notable decline in valuation multiples for RCM and HCITcompanies when compared to pre-COVID-19 multiples. For companiessignificantly impacted by COVID-19, buyers have utilized deal structure enablingsellers to earn full value when their company recovers to pre-COVID-19 levels ofperformance, while still providing appropriate down-side protection for the buyer.Reach out to us if you’d like to learn more about the valuation or deal structuretrends that we’re seeing in the market. Contact [email protected] schedule a call.6Proven. Focused. Trusted.

M&A Update – 2020HCIT & RCMLOOKING AHEAD2020 was a challenging year from so many perspectives.Despite headwinds from the pandemic, there are many reasons to be optimisticfor the future of the RCM and HCIT industries. These companies overcamehurdles ranging from operational challenges (e.g. work-from-home requirements),to regulatory changes involving care and reimbursement guidelines, all whilehelping healthcare providers focus on giving care in a time when it was mostcritical.Moving forward, the election of Joe Biden coupled with a democratic-controlledCongress will likely bring additional funding and focus to the healthcare industry,which should be a net-positive for RCM and HCIT companies. With that said,many questions remain regarding potential tax changes, including corporate andlong-term capital gains taxes, and how changes might impact the M&A market.There is light at the end of this tunnel and many investors, cognizant of that fact,will continue to invest into the outstanding companies in these very attractivemarkets.RESOURCES FOR OWNERSGA PUBLICATION: The Real Deal with Kristeen Coronado of EnhancedRevenue SolutionsSURVEY RESULTS: Understand COVID-19’s early impact on RCM &HCITDEAL ANNOUNCEMENT: ALN Medical Management acquires NexusHealthcare SolutionsDEAL ANNOUNCEMENT: Praxis Healthcare Solutions was acquired byRevint Solutions7Proven. Focused. Trusted.

M&A Update – 2020HCIT & RCMABOUT GREENBERG ADVISORSContact Us:(301) 576-4000Brian GreenbergEmailZach EisenbergEmailCasey KraskoEmailDan MillerEmailConnect onLinkedIn:Greenberg Advisors, LLC (GA) is one of the most active M&Aadvisors specializing in Revenue Cycle Management (RCM)and Healthcare IT (HCIT) sectors.GA’s perspective provides clients with unique value thatcomes from a comprehensive understanding of thehealthcare ecosystem, having worked with a wide variety ofbusinesses across the RCM and HCIT sectors. GA'sunmatched depth and its proprietary data assets proveinvaluable to clients seeking to determine the optimal pathforward.The firm’s RCM and HCIT expertise spans nearly all caredelivery methods and specialties across the following IT andservice offerings, as well as many others. Analytics CDI Contract Management Consulting Credentialing Utilization Review Eligibility Patient Engagement Patient Finance Patient Scheduling Prior Authorization Telehealth Billing / Coding Denials Management Payment Integrity Payor Reimbursement Revenue Integrity Self-Pay Receivables AI / ML API’s / Interoperability Blockchain EHR / EMR Population Health Practice ManagementNote: This update is for informational use only. Information contained in this update is based on data obtained from sources believed to be reliable, and in someinstances contains estimates. Data may include sellers that generate some non-RCM and / or non-HCIT revenue. Nothing in this publication is intended asinvestment advice. Use of any of the included proprietary information for any purpose without the written permission of Greenberg Advisors is prohibited.8Proven. Focused. Trusted.

M&A Update – 2020HCIT & RCMSELECTED RCM & HCIT TRANSACTIONS2020 TransactionsALN Medical Managementwas acquired bywas acquired bya portfolio company ofa portfolio company ofacquiredNexus Healthcare Solutions(not yet announced)a private equity-backedRCM firmwas acquired byacquiredacquiredan RCM firma portfolio company ofa portfolio company ofwas acquired byhas merged withacquired the earlyout assets ofa portfolio company ofa portfolio company of9Proven. Focused. Trusted.

Greenberg Advisors (GA) was at the forefront of this activity, representing sellers and buyers in five . has not been any notable decline in valuation multiples for RCM and HCIT companies when compared to pre-COVID-19 multiples. For companies significantly impacted by COVID-19, buyers have utilized deal structure enabling .