Exhibit (b)(2)
PROJECT FOREST
Discussion Materials Prepared for
The Special Committee of the Board of Directors of PINE
--------------------
ALEX. BROWN & SONS
INCORPORATED
August 28, 1995
-------------------
PROJECT FOREST
Table of Contents
------------------------------------------------------------------------------------------------------------
Tab
---
SUMMARY OF THE PROPOSED TRANSACTION .................................................................... 1
-----------------------------------
ANALYSIS OF PINE
----------------
* Common Stock Price and Volume History ....................................................... 2
* Comparison with Selected Publicly Traded Companies .......................................... 3
* Summary of Research Analyst Coverage ........................................................ 4
* Summary PINE Historical and Projected Financial Information ................................. 5
PINE VALUATION ANALYSIS
-----------------------
* Summary of Valuation Methodologies .......................................................... 6
* Valuation Based on Selected Publicly Traded Companies ....................................... 7
* Valuation Based on Recent Alternate Site Mergers and Acquisitions ........................... 8
* Valuation Based on Premiums Paid in Recent Squeeze-Out and Health Care Services Transactions 9
* Discounted Cash Flow Analysis ............................................................... 10
* Summary Pricing Matrix ...................................................................... 11
BACKGROUND INFORMATION
----------------------
* PINE Historical and Projected Financial Information ..........................................12
* Selected Publicly Traded Companies ...........................................................13
* Recent Alternate Merger and Acquisition Transactions .........................................14
* Premiums Paid in Recent Squeeze-Out Transactions .............................................15
* Premiums Paid in Recent Health Care Services Transactions ....................................16
* PINE Ownership Profile .......................................................................17
* Analysis of Historical ASPEN Investments in PINE .............................................18
------------------------------------------------------------------------------------------------------------
PROJECT FOREST
Summary of the Proposed Transaction
(in thousands, except per share data)
--------------------------------------------------------------------------------
* On July 14, 1995 ASPEN made an $18.00 per share offer for the 47% of PINE
it does not currently own.
* Valuation:
Price Per Share $18.00
Common Shares Outstanding 18,921
In-the-Money Options & Warrants (a) 552
----------
Total Shares Outstanding 19,473
Aggregate Equity Value $350,509
less: Options Proceeds 5,720
----------
Implied Equity Purchase Price $344,790
plus: Net Debt 6,269
----------
Adjusted Purchase Price $351,059
Purchases Prices
* Multiples: PINE Multiples
---------- -----------
LTM Revenues (b) $151,422 2.3 x
LTM EBITDA (b) 31,761 11.1
LTM EBIT (b) 20,059 17.5
LTM Net Income 11,445 30.1
Calendar 1995 EPS (Company) $0.68 26.5
Calendar 1995 EPS (I/B/E/S) 0.68 26.5
Calendar 1996 EPS (Company) 0.98 18.4
Calendar 1996 EPS (I/B/E/S) 0.90 20.0
* Premium to Market: Premium
-----------
One Day Prior to Announcement $15.75 14.3 %
One Month Prior to Announcement 15.25 18.0
--------------------------------------------------------------------------------
Note: LTM as of 06/30/95
(a) Excludes 45,000 options with exercise prices above $18.00.
(b) Multiples calculated using adjusted purchase price
PROJECT FOREST
PINE Daily Price and Volume Data from 07/14/95 to 08/25/95
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
Pine Daily Price and Volume Data from 07/15/94 to 08/25/95
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
Weekly price and Volume Data from 12/01/89 to 08/25/95
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
Historical Forward Price to Earnings Trend
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
Weekly price data from 07/15/94 to 08/25/95
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
Weekly price data from 12/01/89 to 08/25/95
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
Summary of Analyst Estimates for PINE
-------------------------------------------------------------------------------------------------
Offer Price $18.00
1995 1996 3-5 Year 1996 P/E to
Firm EPS P/E EPS P/E Growth Rate Growth Rate
-------------------- ------------------ ------------------ ----------- -----------
Morgan Keegan $0.68 26.5 x $0.85 21.2 x 20 % 105.9 %
& Company, Inc.
J. C. Bradford 0.70 25.7 0.90 20.0 30 66.7
& Company, Inc.
UBS Securities Inc. 0.70 25.7 0.95 18.9 30 63.2
Equitable Securities 0.70 25.7 0.88 20.5 25 81.8
Corporation
Hilliad (J.J.B.) 0.60 30.0 NA NA 20 NA
W.L. Lyons Inc.
Mean: $0.68 26.5 x $0.90 20.0 x 25 % 79.4 %
-------------------------------------------------------------------------------------------------
Source: I/B/E/S and Research Reports.
PROJECT FOREST
Summary of Change in Analyst Estimates
--------------------------------------------------------------------------------
Consensus 1995 EPS Estimate (a) % Change Since
------------------------------------ ----------------
Jun-94 Dec-94 Current Jun-94 Dec-94
------ ------ ------- ------ ------
PINE $0.60 $0.66 $0.68 13.3 % 3.0 %
Renal Treatment Centers, Inc. 1.20 1.17 1.26 5.0 7.7
Vivra, Inc. 1.70 1.70 1.72 1.2 1.2
--------------------------------------------------------------------------------
(a) Source: I/B/E/S and Factset.
PROJECT FOREST
Summary of Analyst Comments on PINE
-------------------------------------------------------------------------------------------------------
Date Firm Price Rating Analyst Comment
-------- ------------- ------ ------ ----------------------------------------------
07/17/95 Morgan Keegan $19.25 4-4/V In our opinion Pine's Board of Directors will
& Company Inc. likely accept ASPEN's $18 per share offer and
we deem it highly unlikely a competing offer will
arise from another potential suitor.
06/21/95 J. C. Bradford 16.25 Buy We are leaving our estimates unchanged but
& Company, Inc. with the announcement of additional additive
transactions, the numbers may move higher. We
continue to rate PINE as one of our favorite
stocks and recommend purchase.
05/11/95 UBS Securities Inc. 15.88 Buy Recent clinic roll outs, continued strong new
patient growth, and dramatically improved
profitability in the company's laboratory
services segment are supporting earnings
advances above our aggressive estimates.
01/26/95 UBS Securities Inc. 13.75 Buy The key to investing in PINE hinges on low
investment community visibility, muted
expectations for near and longer term, and a
strong second phase of cost/profitablity
actions for longer term positioning.
10/31/94 Equitable Securities 12.50 Strong Buy We estimate that the demand for kidney
Corporation dialysis will grow 9-10% a year.
PINE's reputations as a high quality provider
should enhance their ability to access managed
care volume.
10/25/94 UBS Securities Inc. 11.00 Buy The Company's top line should grow 16%-18% as
de novo development and acquisitions augment
9%+ inherent industry patient growth.
Following a major turnaround in 1994, earnings
should grow roughly 40% in 1995 and 1996 and
level off to an annual 20% pace longer term.
09/08/94 J.C. Bradford 10.13 Buy PINE is now able to demonstrate lower-than-
& Company, Inc. average mortality and hospitalizations, key
indicators of clinical
effectiveness.
PROJECT FOREST
PINE Summary Historical and Projected Income Statement
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
PINE Historical and Projected Information
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
PINE Summary Projections
(in thousands, except per share and other data)
---------------------------------------------------------------------------------------------------------------------------------
Fiscal Year Ended December 31,
---------------------------------------------------------------------------------------------------------
1993 (a) 1994 1995 (E) 1996 (E) 1997 (E) 1998 (E) 1999 (E) 2000 (E)
-------- --------- --------- --------- --------- --------- --------- ---------
Revenue:
Dialysis $93,866 $120,428 $153,742 $183,758 $220,008 $264,383 $317,508 $378,601
Laboratory 11,322 11,386 13,529 16,171 19,361 23,266 27,941 33,317
-------- --------- --------- --------- --------- --------- --------- ---------
105,188 131,815 167,271 199,928 239,368 287,648 345,448 411,918
Gross Profit 48,479 63,433 80,042 97,965 118,487 143,680 172,551 205,753
EBITDA 12,157 25,800 36,265 45,484 55,653 66,389 79,729 95,071
EBIT 2,277 14,922 23,680 31,650 39,965 48,519 59,338 71,906
Net Income 794 8,511 13,034 18,766 24,738 30,810 38,004 46,861
EPS $0.04 $0.45 $0.68 $0.98 $1.29 $1.61 $1.98 $2.45
Weighted shares
outstanding 18,777 18,899 19,088 19,155 19,155 19,155 19,155 19,155
Margins:
---------------------------------------------------------------------------------------------------------------------------------
Gross Profit 46.1% 48.1% 47.9% 49.0% 49.5% 50.0% 50.0% 50.0%
EBITDA 11.6% 19.6% 21.7% 22.8% 23.3% 23.1% 23.1% 23.1%
EBIT 2.2% 11.3% 14.2% 15.8% 16.7% 16.9% 17.2% 17.5%
Net income 0.8% 6.5% 7.8% 9.4% 10.3% 10.7% 11.0% 11.4%
Growth Rates:
---------------------------------------------------------------------------------------------------------------------------------
Revenue (Dialysis) 28.3% 27.7% 19.5% 19.7% 20.2% 20.1% 19.2%
Revenue (Laboratory) 0.6% 18.8% 19.5% 19.7% 20.2% 20.1% 19.2%
Revenue (Total) 25.3% 26.9% 19.5% 19.7% 20.2% 20.1% 19.2%
EBITDA 112.2% 40.6% 25.4% 22.4% 19.3% 20.1% 19.2%
EBIT NM 58.7% 33.7% 26.3% 21.4% 22.3% 21.2%
Net income NM 53.2% 44.0% 31.8% 24.5% 23.4% 23.3%
EPS NM 51.6% 43.5% 31.8% 24.5% 23.4% 23.3%
Other Data:
---------------------------------------------------------------------------------------------------------------------------------
Avg. Patients 3,654 4,341 5,517 6,842 8,075 9,688 11,638 13,922
Treatment 545,495 646,952 805,431 998,903 1,178,994 1,414,419 1,699,119 2,032,638
Dialysis Rev. /
Treatment $172 $186 $191 $184 $187 $187 $187 $186
---------------------------------------------------------------------------------------------------------------------------------
(a) Excludes $7.8 million of extraordinary and non-recurring expenses. Assumes
a 41% incremental tax rate on add-backs.
PROJECT FOREST
Summary of Valuation Methodologies
--------------------------------------------------------------------------------
* Publicly Traded Companies
* Merger and Acquisition Transactions
* Discounted Cash Flow Analysis
* Premiums to Market Price
PROJECT FOREST
Summary of Key Comparables
Geographic Locations
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
Summary of Key Comparables
(in millions, except per share data)
---------------------------------------------------------------------------------------------------------------------------------
PINE Renal Treatment Centers, Inc. Vivra, Inc.
--------------------------------------- ----------------------------------- ---------------------------------
1993 1994 1995E(b) 1996E(b) 1993 1994 1995E(c) 1996E(c) 1993 1994 1995E(d) 1996E(d)
------- ------- ---------- --------- ------ ------- --------- --------- ------ ------- --------- --------
Results (a):
---------------------------------------------------------------------------------------------------------------------------------
Revenue $105.2 $131.8 $167.3 $199.9 $62.0 $102.9 $144.6 $180.0 $218.0 $286.5 $350 $401.8
EBITDA 12.5 25.8 35.2 45.5 11.8 21.2 33.4 43.0 50.4 62.4 75.8 90.3
EBIT 2.3 14.9 22.6 31.6 7.9 13.9 22.3 29.0 42.0 50.9 61.8 74.2
Net Income 0.8 8.5 13.0 18.8 4.4 8.4 12.3 16.3 23.8 29.7 37.5 44.6
EPS $0.04 $0.45 $0.68 $0.98 $0.63 $0.85 $1.19 $1.56 $1.19 $1.45 $1.70 $1.98
Margins:
---------------------------------------------------------------------------------------------------------------------------------
EBITDA 11.9% 19.6% 21.0% 22.8% 19.1% 20.7% 23.1% 23.9% 23.1% 21.8% 21.6% 22.5%
EBIT 2.2% 11.3% 13.5% 15.8% 12.8% 13.5% 15.4% 16.1% 19.3% 17.8% 17.6% 18.5%
Net Income 0.8% 6.5% 7.8% 9.4% 7.1% 8.2% 8.5% 9.0% 10.9% 10.4% 10.7% 11.1%
Growth Rates:
---------------------------------------------------------------------------------------------------------------------------------
Revenue .... 25.3% 26.9% 19.5% .... 65.9% 40.6% 24.4% .... 31.4% 22.1% 14.8%
EBITDA .... 106.8% 36.3% 29.3% .... 79.4% 57.2% 28.6% .... 23.8% 21.4% 19.2%
EBIT .... 555.4% 51.5% 40.0% .... 75.5% 60.4% 29.6% .... 21.2% 21.3% 20.2%
Net Income .... 972.6% 53.2% 44.0% .... 90.6% 46.2% 31.7% .... 24.7% 26.0% 19.0%
EPS .... 965.7% 51.6% 43.5% .... 34.7% 39.9% 31.7% .... 21.8% 17.3% 16.8%
----------------------------------------------------------------------------------------------------------------------------------
(a) Financial information does not include non-recurring items and
subtracts pre-tax minority interest from EBIT and EBITDA.
(b) Source: Company estimates.
(c) Source: UBS Securities research "Dialysis Industry" dated May 11, 1995.
All data pro forma for the March 1995 acquisition of Healthcare Corporation.
(d) Source: UBS Securities research "Dialysis Industry" dated May 11, 1995.
EBITDA calculation assumes depreciation and amortization 4.0% of revenue
based on 1994 actual data.
PROJECT FOREST
Summary Valuation Comparison
--------------------------------------------------------------------------------
Renal Treatment
PINE Centers, Inc. Vivra, Inc.
-------- --------------- -----------
Day Prior to Announcement:
Stock Price as of 7/13/95 $15.75 $24.50 $27.88
1996 P/E (a) 17.5 x 15.3 x 13.9 x
1996 P/E to Growth Rate (b) 70.0 % 57.4 % 77.9 %
% Change Since Announcement:
Stock Price as of 8/25/95 $19.50 $31.50 $31.75
% Change Since Announcement 23.8 % 28.6 % 13.9 %
1996 P/E (a) 21.7 x 19.7 x 15.9 x
% Change Since Announcement 23.8 % 28.6 % 13.9 %
1996 P/E to Growth Rate (b) 86.7 % 73.7 % 88.7 %
--------------------------------------------------------------------------------
(a) Based on I/B/E/S consensus earnings estimates of $0.90, $1.60 and $2.00 per
share for PINE, Renal Treatment Centers, Inc. and Vivra, Inc. respectively.
(b) Based on I/B/E/S consensus growth rate estimates of 25.0%, 26.7%, and
17.9% for PINE, Renal Treatment Centers, Inc. and Vivra Inc. respectively.
PROJECT FOREST
PINE
Valuation Analysis Based On
Selected Publicly Traded Companies
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
PINE
Valuation Analysis Based On
Selected Publicly Traded Companies
(dollars in thousands, except per share data)
--------------------------------------------------------------------------------------------------------------------------
Implied Price Per Share (a)
---------------------------------------------------------------------
PINE Kidney Dialysis Companies Selected Alternate Site Companies (b)
-------------------------- ---------------------------------------
Statistics RXTC V Mean Range
------------ ------- ---------- ------ ---------------------------
Valuation Based on Latest Twelve Month Statistics
-------------------------------------------------
Revenues $151,422 $22.85 $16.96 $20.47 $10.47 - $28.74
Operating Cash Flow 31,761 21.49 16.89 16.86 14.46 - 21.49
Operating Income 20,059 20.42 12.97 14.72 12.08 - 20.42
Net Income 11,445 17.22 12.31 13.94 10.98 - 17.22
Valuation Based on Projected Statistics
---------------------------------------
Cal. 1995 Net Income (Company) $13,034 $17.17 $12.75 $13.88 $11.28 - $17.17
Cal. 1995 Net Income (I/B/E/S) 13,025 17.15 12.74 13.87 11.27 - 17.15
Cal. 1996 Net Income (Company) 18,766 19.42 15.71 16.31 13.49 - 19.42
Cal. 1996 Net Income (I/B/E/S) 17,239 17.87 14.46 15.01 12.42 - 17.87
--------------------------------------------------------------------------------------------------------------------------
Note: LTM as of 06/30/95.
(a) Implied valuation based on revenues, operating cash flow and operating
income are adjusted by subtracting net debt of $6.3 million.
(b) Alternate Site Companies include: American Medical Response, Inc. (EMT),
HEALTHSOUTH Corporation (HRC), Lincare Holdings, Inc. (LNCR),
Renal Treatment Centers, Inc. (RXTC), Surgical Care Affiliates, Inc. (SCA)
and Vivra Incorporated (V).
PROJECT FOREST
PINE
Valuation Analysis Based On
Selected Publicly Traded Companies
(dollars in thousands)
----------------------------------------------------------------------------------------------------------------------
PINE Kidney Dialysis Selected Alternate Site
--------------------
Multiples Company Multiples Company Multiples (a)
----------------- -----------------------------
Statistics @ $18.00 RXTC V Mean Range
---------- -------- ----- ------- ------ ------------------
Valuation Based on Latest Twelve Month Statistics
-------------------------------------------------
Revenues $151,422 2.3 x 2.9 x 2.2 x 2.6 x 1.3 x - 3.7 x
Operating Cash Flow 31,761 11.1 x 13.2 x 10.4 x 10.4 x 8.9 x - 13.2 x
Operating Income 20,059 17.5 x 19.8 x 12.6 x 14.3 x 11.7 x - 19.8 x
Net Income 11,445 30.1 x 28.8 x 20.4 x 23.2 x 18.1 x - 28.8 x
Valuation Based On Projected Statistics
---------------------------------------
Cal. 1995 Net Income (Company) $13,034 26.5 x 25.2 x 18.6 x 20.3 x 16.4 x - 25.2 x
Cal. 1995 Net Income (I/B/E/S) 13,025 26.5 x 25.2 x 18.6 x 20.3 x 16.4 x - 25.2 x
Cal. 1996 Net Income (Company) 18,766 18.4 x 19.8 x 16.0 x 16.6 x 13.7 x - 19.8 x
Cal. 1996 Net Income (I/B/E/S) 17,239 20.0 x 19.8 x 16.0 x 16.6 x 13.7 x - 19.8 x
Implied Equity Valuations (b)
-----------------------------------------------------
RXTC V Mean Range
-------- ------- -------- ----------------------
Valuation Based on Latest Twelve Month Statistics
-------------------------------------------------
Revenues $439,357 $324,401 $392,829 $198,072 - $554,427
Operating Cash Flow 412,799 323,028 322,521 275,547 - 412,799
Operating Income 391,901 246,613 280,650 229,098 - 391,901
Net Income 329,508 233,737 265,554 207,723 - 329,508
Valuation Based On Projected Statistics
---------------------------------------
Cal. 1995 Net Income (Company) $328,448 $242,150 $264,322 $213,559 - $328,448
Cal. 1995 Net Income (I/B/E/S) 328,219 241,981 264,138 213,410 - 328,219
Cal. 1996 Net Income (Company) 372,382 300,001 311,764 256,701 - 372,382
Cal. 1996 Net Income (I/B/E/S) 342,096 275,602 286,408 235,823 - 342,096
----------------------------------------------------------------------------------------------------------------------
Note: LTM as 06/30/95.
(a) Alternate Site Companies include: American Medical Response, Inc. (EMT),
HEALTHSOUTH Corporation (HRC), Lincare Holdings, Inc. (LNCR), Renal
Treatment Centers, Inc. (RXTC), Surgical Care Affiliates, Inc. (SCA) and
Vivra Incorporated (v).
(b) Implied valuation based on revenues, operating cash flow and operating
income are adjusted by subtracting net debt of $6.3 million
PROJECT FOREST
PINE
Valuation Analysis Based On
Recent Alternate Site Mergers and Acquisition
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
PINE
Valuation Analysis Based On
Recent Alternate Site Mergers and Acquisitions
(dollars in thousands, except per share data)
-------------------------------------------------------------------------------------------------
PINE Implied Price Per Share (a)
-------------------------------------
Statistics Mean Range
------------ ---------- ---------------------
Valuation Based on Latest Twelve Month Statistics
-------------------------------------------------
Revenues $151,422 $15.25 $4.20 - $29.64
Operating Cash Flow 31,761 23.74 13.47 - 48.87
Operating Income 20,059 23.56 11.71 - 50.70
Net Income 11,445 21.73 10.86 - 36.41
Valuation Based on Projected Statistics
---------------------------------------
Forward Net Income (Company) $16,787 $19.25 $13.68 - $30.00
Forward Net Income (I/B/E/S) 15,785 18.12 12.88 - 28.23
Valuation Based on Premiums Paid
--------------------------------
One Day Prior Price $15.75 $21.99 $15.89 - $32.95
One Month Prior Price 15.25 22.98 14.42 - 38.13
-------------------------------------------------------------------------------------------------
Note: LTM as of 06/30/95.
(a) Implied valuation based on revenues, operating cash flow and operating
income are adjusted by subtracting net debt of $6.3 million.
PROJECT FOREST
PINE
Valuation Analysis Based On
Recent Alternate Site Mergers and Acquisitions
(dollars in thousands, except per share data)
----------------------------------------------------------------------------------------------------
Recent Alternate Site
PINE Mergers and Acquisitions
--------------------------------
Statistics Mean Range
----------- -------- ---------------------
Valuation Based on Latest Twelve Month Statistics
-------------------------------------------------
Revenues $151.422 2.0 x 0.6 x - 3.8 x
Operating Cash Flow 31,761 14.6 x 8.3 x - 30.0 x
Operating Income 20,059 22.9 x 11.4 x - 49.3 x
Net Income 11,445 36.5 x 18.0 x - 61.5 x
Valuation Based on Projected Statistics
---------------------------------------
Forward Net Income (Company) $16,787 22.0 x 15.5 x - 34.5 x
Forward Net Income (I/B/E/S) 15,785 22.0 x 15.5 x - 34.5 x
Valuation Based on Premiums Paid
--------------------------------
One Day Prior Price $15.75 39.6 % 0.9 % - 109.2 %
One Month Prior Price 15.25 50.7 % (5.4)% - 150.0 %
Implied Equity Valuation (a)
------------------------------------
Mean Range
-------- -----------------------
Valuation Based on Latest Twelve Month Statistics
-------------------------------------------------
Revenues $290,987 $79,422 - $571,935
Operating Cash Flow 456,670 256,347 - 947,196
Operating Income 453,233 221,869 - 983,018
Net Income 417,535 205,564 - 704,035
Valuation Based on Projected Statistics
---------------------------------------
Forward Net Income (Company) $369,188 $260,340 - $578,994
Forward Net Income (I/B/E/S) 347,141 244,793 - 544,418
Valuation Based on Premiums Paid
--------------------------------
One Day Prior Price
One Month Prior Price
----------------------------------------------------------------------------------------------------
Note: LTM as of 06/30/95
(a) Implied valuation based on revenues, operating cash flow and operating
income are adjusted by subtracting net debt of $6.3 million.
PROJECT FOREST
Valuation Based on Premiums Paid in Recent Squeeze-Out and
Health Care Services Transactions
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
Valuation Based on Premiums Paid in Recent Squeeze-Out and Health
Care Services Transactions
----------------------------------------------------------------------------------------------------------------------------------
Squeeze-Out Transactions from 1/1/90 to Present (28)
PINE 50-70% Premium (All Deals) Implied Price Per Share
----------------------------- ------------------------------
Price Mean (a) Mean Range 50-70% Mean Range
------- -------- ------ ----------------- ------ ------ -------------------
One Day Prior $15.75 22.5 % 26.9 % (9.8)% - 66.7 % $19.30 $19.99 $14.21 - $26.26
One Month Prior $15.25 25.6 32.8 (16.5) - 88.6 19.16 20.25 12.73 - 28.76
Health Care Services Transactions from 1/1/92 to Present (39)
PINE Premium (All Deals) Implied Price Per Share
----------------------------- ------------------------------
Price Mean Range Mean Range
------- ------ ----------------- ------ -------------------
One Day Prior $15.75 41.0 % (8.3)% - 112.5 % $22.20 $14.44 $33.47
One Month Prior 15.25 52.2 (5.4) - 150.0 23.21 14.43 38.13
----------------------------------------------------------------------------------------------------------------------------------
(a) Includes Deals in which acquiror owned 50-70% of the target at announcement
of the transaction.
PROJECT FOREST
PINE Discounted Cash Flow Analysis - Base Case
Implied Equity Valuation Per Share
----------------------------------
Discount Multiple of 2000 EBITDA after MI ($91.9 million)
---------------------------------------------------
Rate 7 x 8 x 9 x
-------- -------- -------- --------
11.0% $22.18 $24.91 $27.63
13.0% $20.31 $22.79 $25.27
15.0% $18.63 $20.89 $23.15
PROJECT FOREST
Analysis of DCF Sensitivity to Revenue Per Treatment Assumption
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"
PROJECT FOREST
PINE Discounted Cash Flow Analysis - Base Case
(dollars in thousands, except per share data)
Fiscal Year Ended December 31, Q4 '95 (E) 1996 (E) 1997 (E) 1998 (E) 1999 (E) 2000 (E)
---------- --------- --------- -------- -------- --------
Revenue $42,925 $199,928 $239,368 $287,648 $345,448 $411,918
Growth Rate 19.5% 19.7% 20.2% 20.1% 19.2%
EBIT 6,413 31,650 39,965 48,519 59,338 71,906
EBIT Margin 14.9% 15.8% 16.7% 16.9% 17.2% 17.5%
EBIT After Tax (a) 3,784 18,673 23,579 28,626 35,009 42,424
plus: Depreciation & Amortization 3,260 13,834 15,688 17,870 20,391 23,165
less: Change in Non-Cash Working Capital 418 (b) 2,978 3,076 3,765 4,508 5,184
less: Minority Interest After-Tax 198 727 930 1,196 1,522 1,889
less: Total Capital Expenditures 3,250 (c) 13,555 22,701 27,514 32,234 35,268
-------- -------- -------- --------- -------- --------
Cash Flows to Capital $3,178 $15,247 $12,560 $14,021 $17,137 $23,249
======== ======== ======== ========= ======== ========
----------------------------------------------------------------------------------------------------------------------------
NPV of Terminal Value less:
Discount NPV Cash Multiple of 2000 EBITDA after MI ($91.9 million) Net Debt Implied Equity Valuation
------------------------------------------------ -------------------------------------
Rate (d) Flows 7 x 8 x 9 x @ 06/30/95 7 x 8 x 9 x
-------- -------- ------------------------------------------------ ---------- -------- -------- --------
11.0% $60,838 $371,813 $424,929 $478,045 $6,269 $426,381 $479,497 $532,613
13.0% $57,567 $338,538 $386,901 $435,264 $6,269 $389,837 $438,199 $486,562
15.0% $54,569 $308,749 $352,856 $396,963 $6,269 $357,049 $401,156 $445,263
Discount Implied Equity Valuation Per Share
-------------------------------------
Rate 7 x 8 x 9 x
-------- -------- -------- --------
11.0% $22.18 $24.91 $27.63
13.0% $20.31 $22.79 $25.27
15.0% $18.63 $20.89 $23.15
----------------------------------------------------------------------------------------------------------------------------------
(a) Assumes a 41.0% tax rate.
(b) Assumes 25% of projected annual change in non-cash working capital.
(c) Assumes 25% of total projected 1995 capital expenditures ($13.0 million)
spent in 4th Q.
(d) Discounted to September 30, 1995.
PROJECT FOREST
PINE
Summary Pricing Matrix
(dollars in thousands, except per share data)
Purchase Price Per Share $18.00 $19.00 $20.00 $21.00 $22.00 $23.00 $24.00
Premium to:
One Day Prior Price $15.75 14.3 % 20.6 % 27.0 % 33.3 % 39.7 % 46.0 % 52.4 %
One Month Prior Price 15.25 18.0 24.6 31.1 37.7 44.3 50.8 57.4
10 Trading Day Avg. 16.08 11.9 18.2 24.4 30.6 36.8 43.0 49.3
20 Trading Day Avg. 16.08 11.9 18.2 24.4 30.6 36.8 43.0 49.3
30 Trading Day Avg. 15.60 15.4 21.8 28.2 34.6 41.0 47.4 53.8
Past 6 Months Avg. 14.61 23.2 30.0 36.9 43.7 50.6 57.4 64.3
Equity Purchase Price $344,790 $364,262 $383,751 $403,268 $422,786 $442,304 $461,822
Adjusted Purchase Price (a) 351,059 370,531 390,020 409,537 429,055 448,573 468,091
PINE Adjusted Purchases Price Multiple of:
-------- -------------------------------------
LTM Revenues $151,422 2.3 x 2.4 x 2.6 x 2.7 x 2.8 x 3.0 x 3.1 x
LTM Operating Cash Flow 31,761 11.1 x 11.7 x 12.3 x 12.9 x 13.5 x 14.1 x 14.7 x
LTM Operating Income 20,059 17.5 x 18.5 x 19.4 x 20.4 x 21.4 x 22.4 x 23.3 x
Equity Purchase Price Multiple of:
----------------------------------
LTM Net Income $11,445 30.1 x 31.8 x 33.5 x 35.2 x 36.9 x 38.6 x 40.4 x
Cal. 1995 Net Income (Company) 13,034 26.5 x 27.9 x 29.4 x 30.9 x 32.4 x 33.9 x 35.4 x
Cal. 1995 Net Income (I/B/E/S) 13,025 26.5 x 28.0 x 29.5 x 31.0 x 32.5 x 34.0 x 35.5 x
Cal. 1996 Net Income (Company) 18,766 18.4 x 19.4 x 20.4 x 21.5 x 22.5 x 23.6 x 24.6 x
Cal. 1996 Net Income (I/B/E/S) 17,239 20.0 x 21.1 x 22.3 x 23.4 x 24.5 x 25.7 x 26.8 x
Forward Net Income (Company) 16,787 20.5 x 21.7 x 22.9 x 24.0 x 25.2 x 26.3 x 27.5 x
Forward Net Income (I/B/E/S) 15,785 21.8 x 23.1 x 24.3 x 25.5 x 26.8 x 28.0 x 29.3 x
EQUITY Purchase Price M&A
Adjusted Purchase Price (a) RXTC V Transactions
LTM Revenues 2.9 x 2.2 x 2.0 x
LTM Operating Cash Flow 13.2 x 10.4 x 14.6 x
LTM Operating Income 19.8 x 12.6 x 22.9 x
LTM Net Income 28.8 x 20.4 x 36.5 x
Cal. 1995 Net Income (Company) 25.2 x 18.6 x --
Cal. 1995 Net Income (I/B/E/S)
Cal. 1996 Net Income (Company) 19.8 x 16.0 x
Cal. 1996 Net Income (I/B/E/S)
Forward Net Income (Company) -- 22.0 x
Forward Net Income (I/B/E/S)
--------------------------------------------------------------------------------
Note: LTM as of 06/30/95.
(a) Define as Equity Purchase Price plus net debt $6.3 million.
PROJECT FOREST
PINE Historical and Projected Income Statements
(in thousands, except per share amounts)
1993 (a) 1994 1995 (E) 1996 (E) 1997 (E) 1998 (E) 1999 (E) 2000 (E)
--------- -------- -------- -------- -------- --------- --------- ---------
Revenue:
Dialysis services $93 866 $120,428 $153,742 $183,758 $220,008 $264,383 $317,508 $378,601
Laboratory services 11,322 11,386 13,529 16,171 19,361 23,266 27,941 33,317
-------- -------- -------- -------- -------- -------- -------- --------
105,188 131,815 167,271 199,928 239,368 287,648 345,448 411,918
-------- -------- -------- -------- -------- -------- -------- --------
Prime labor 24,777 28,669 35,032 40,985 47,874 57,530 69,090 82,384
Prime supplies 29,403 36,700 48,233 57,779 69,177 81,980 98,453 117,397
-------- -------- -------- -------- -------- -------- -------- --------
54,179 65,369 83,265 98,765 117,051 139,509 167,542 199,780
Direct sales commissions 0 38 268 200 239 144 173 206
-------- -------- -------- -------- -------- -------- -------- --------
Contribution I 51,009 66,408 83,738 100,964 122,078 147,995 177,733 211,932
-------- -------- -------- -------- -------- -------- -------- --------
Other variable cost 2,530 2,975 3,696 2,999 3,591 4,315 5,182 6,179
-------- -------- -------- -------- -------- -------- -------- --------
Contribution II 48,479 63,433 80,042 97,965 118,487 143,680 172,551 205,753
-------- -------- -------- -------- -------- -------- -------- --------
Bad debts 2,042 2,823 3,385 3.959 4,739 5,695 6,840 8,156
Other ops expense 721 153 (310) 320 383 460 553 659
Profit sharing 0 198 384 460 551 662 795 947
G&A 15,834 11,084 11,508 13,755 16,469 21,574 25,909 30,894
Capacity cost 17,724 23,374 28,810 33,988 40,693 48,900 58,726 70,026
-------- -------- -------- -------- -------- -------- -------- --------
EBITDA 12,157 25,800 36,265 45,484 55,653 66,389 79,729 95,071
-------- -------- -------- -------- -------- -------- -------- --------
Depreciation 5,639 6,089 7,637 8,619 9,933 11,435 13,146 15,039
Amortization 4,242 4,790 4,948 5,215 5,755 6,435 7,245 8,126
-------- -------- -------- -------- -------- -------- -------- --------
EBIT 2,277 14,922 23,680 31,650 39,965 48,519 59,338 71,906
-------- -------- -------- -------- -------- -------- -------- --------
Net interest (revenue) expense 550 841 513 (1,388) (3,540) (5,728) (7,656) (10,720)
Income before min. int. & taxes 1,727 14,081 23,167 33,038 43,505 54,247 66,994 82,626
-------- -------- -------- -------- -------- -------- -------- --------
Income tax expense 933 5,570 9,498 13,545 17,837 22,241 27,468 33,877
Minority interest after tax 0 0 635 727 930 1,196 1,522 1,889
-------- -------- -------- -------- -------- -------- -------- --------
Net income $794 $8,511 $13,034 $18,766 $24,738 $30,810 $38,004 $46,861
======== ======== ======== ======== ======== ======== ======== ========
EPS $0.04 $0.45 $0.68 $0.98 $1.29 $1.61 $1.98 $2.45
======== ======== ======== ======== ======== ======== ======== ========
Weighted shares outstanding 18,777 18,899 19,088 19,155 19,155 19,155 19,155 19,155
Margins
-----------------------------------------------------------------------------------------------------------------------------------
Contribution II (Gross) 46.1% 48.1% 47.9% 49.0% 49.5% 50.0% 50.0% 50.0%
EBITDA 11.6% 19.6% 21.7% 22.8% 23.3% 23.1% 23.1% 23.1%
EBIT 2.2% 11.3% 14.2% 15.8% 16.7% 16.9% 17.2% 17.5%
Net income 0.8% 6.5% 7.8% 9.4% 10.3% 10.7% 11.0% 11.4%
Growth Rates:
-----------------------------------------------------------------------------------------------------------------------------------
Revenue (Dialysis) 28.3% 27.7% 19.5% 19.7% 20.2% 20.1% 19.2%
Revenue (Laboratory) 0.6% 18.8% 19.5% 19.7% 20.2% 20.1% 19.2%
Revenue (Total) 25.3% 26.9% 19.5% 19.7% 20.2% 20.1% 19.2%
EBITDA 112.2% 40.6% 25.4% 22.4% 19.3% 20.1% 19.2%
EBIT NM 58.7% 33.7% 26.3% 21.4% 22.3% 21.2%
Net income NM 53.2% 44.0% 31.8% 24.5% 23.4% 23.3%
EPS NM 51.6% 43.5% 31.8% 24.5% 23.4% 23.3%
-----------------------------------------------------------------------------------------------------------------------------------
(a) Excludes $ 7.8 million of extraordinary and non-recurring expenses. Assumes
a 41% incremental tax rate on add-backs.
PROJECT FOREST
PINE Projected Balance Sheets
(dollars in thousands)
-------------------------------------------------------------------------------------------------------------------------
1995 (E) 1996 (E) 1997 (E) 1998 (E) 1999 (E) 2000 (E)
--------- -------- --------- --------- --------- ---------
Assets:
Cash $6,884 $23,676 $39,255 $57,852 $81,028 $122,490
Accounts receivable 27,497 32,865 39,348 47,285 56,786 67,713
Inventories 4,117 4,778 5,720 6,874 8,255 9,844
Other current assets 5,438 5,438 5,438 5,438 5,438 5,438
--------- -------- --------- --------- --------- ---------
Total current assets 43,935 66,757 89,762 117,449 151,507 195,485
Intangibles 51,512 52,978 60,727 71,291 84,303 98,195
Other assets 8,162 8,162 8,162 8,162 8,162 8,162
PP&E 48,279 46,534 45,798 44,879 43,710 41,921
--------- -------- --------- --------- --------- ---------
Total assets $151,888 $174,432 $204,450 $241,781 287,682 $343,763
========= ======== ========= ========= ========= =========
Total Liabilities & Equity
Short term debt 87 87 87 87 87 87
Operating liabilities 19,000 22,051 26,401 31,726 38,101 45,432
--------- -------- --------- --------- --------- ---------
Total current liabilities 19,087 22,138 26,488 31,813 38,188 45,519
--------- -------- --------- --------- --------- ---------
Long term debt 0 0 0 0 0 0
Minority interest 635 1,362 2,292 3,488 5,010 6,899
Deferred taxes 4,389 4,389 4,389 4,389 4,389 4,389
Equity 127,777 146,543 171,281 202,091 240,095 286,955
--------- -------- --------- --------- --------- ---------
Total liabilities & equity $151,888 $174,432 $204,450 $241,781 $287,682 $343,763
========= ======== ========= ========= ========= =========
Selected Financial Data:
-------------------------------------------------------------------------------------------------------------------------
Current Ratio 2.3 x 3.0 x 3.4 x 3.7 x 4.0 x 4.3 x
Working Capital $24,848 $44,619 $63,274 $85,636 $113,319 $149,965
Non-Cash Working Capital $18,051 $21,030 $24,105 $27,871 $32,378 $37,562
Debt to Equity 0.1% 0.1% 0.1% 0.0% 0.0% 0.0%
Debt to Total Capitalization 0.1% 0.1% 0.1% 0.0% 0.0% 0.0%
Tangible Book Value $76,265 $93,565 $110,554 $130,799 $155,792 $188,760
Accounts Receivable Days Sales Outstanding 60.0 60.0 60.0 60.0 60.0 60.0
-------------------------------------------------------------------------------------------------------------------------
PROJECT FOREST
PINE Projected Cash Flow Statements
(in thousands)
-------------------------------------------------------------------------------------------------------------
1995 (E) 1996 (E) 1997 (E) 1998 (E) 1999 (E) 2000 (E)
-------- -------- -------- -------- -------- --------
Beginning cash $644 $6,884 $23,676 $39,255 $57,852 $81,028
Net income 13,034 18,766 24,738 30,810 38,004 46,861
Depreciation 7,637 8,619 9,933 11,435 13,146 15,039
Amortization 4,948 5,215 5,755 6,435 7,245 8,126
Minority interest 635 727 930 1,196 1,522 1,889
-------- -------- -------- -------- -------- --------
Operating cash flows 26,254 33,326 41.356 49,876 59,918 71,914
-------- -------- -------- -------- -------- --------
Change in A/R (5,186) (5,368) (6,483) (7,936) (9,501) (10,927)
Change in inventory (735) (661) (943) (1,154) (1,381) (1,588)
Change in operating liabilities 4,249 3,051 4,350 5,325 6,375 7,331
Change in other assets (5,000) 0 0 0 0 0
-------- -------- -------- -------- -------- --------
Net operating cash flows 19,583 30,348 38,280 46,111 55,410 66,730
-------- -------- -------- -------- -------- --------
Baseline cap. ex. (3,000) (3,000) (3,000) (3,000) (3,000) (3,000)
Same center equipment adds. 0 (1,958) (2,639) (3,063) (3,667) (4,406)
-------- -------- -------- -------- -------- --------
Free cash flow 16,583 25,389 32,641 40,048 48,743 59,324
-------- -------- -------- -------- -------- --------
Acquisition intangles (9,000) (6,681) (13,504) (16,999) (20,256) (22,019)
Acquisition tangibles (1,000) (742) (1,500) (1,889) (2,251) (2,447)
Acquisition upgrades 0 (644) (1,302) (1,640) (1,954) (2,124)
Development tangibles 0 (530) (755) (924) (1,107) (1,273)
-------- -------- -------- -------- -------- --------
Net change in cash 6,583 16,793 15,579 18,597 23,176 31,463
-------- -------- -------- -------- -------- --------
Borrowing (repayment) (343) 0 0 0 0 0
Ending cash (loan) $6,884 $23,676 $39,255 $57,852 $81,028 $112,490
======== ======== ======== ======== ======== ========
PROJECT FOREST
PINE Quarterly Historical & Projected Financial Statements
(in thousands, except per share data)
1993 1994
----------------------------------------------- --------------------------------------------------
Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year
------- ------- ------- -------- --------- ------- ------- ------- ------- ----------
Results (a) :
Total Revenue $25,475 $26,296 $23,229 $30,187 $105,188 $30,287 $31,638 $34,123 $35,767 $131,815
Dialysis Services Revenue 22,825 23,491 20,361 27,189 93,866 27,437 28,872 31,250 32,870 120,428
Laboratory Services Revenue 2,650 2,805 2,868 2,998 11,322 2,850 2,766 2,873 2,897 11,386
EBITDA (c) 5,032 4,883 (2,470) 4,712 12,156 4,845 5,964 7,395 7,597 25,801
EBIT 2,818 2,587 (5,100) 1,970 2,276 2,251 3,288 4,665 4,717 14,922
Net Income 1,631 1,287 (3,173) 1,048 793 1,238 1,885 2,666 2,722 8,511
EPS 0.09 0.07 -0.17 0.06 0.04 0.07 0.10 0.14 0.14 0.45
Shares Outstanding 18,725 18,676 18,832 18,805 18,777 18,858 18,886 18,907 18,903 18,899
Other Data:
------------------------------------------------------------------------------ --------------------------------------------------
Treatments 122,319 130,099 142,550 150,527 545,495 151,098 159,416 165,649 170,789 646,952
Dialysis Revenue per
Treatment $187 $181 $143 $181 $172 $182 $181 $189 $192 $186
Margins:
------------------------------------------------------------------------------ --------------------------------------------------
Gross Margin 33.2 % 31.9 % 12.4 % 27.9 % 26.7% 28.3 % 28.9 % 32.1% 32.7 % 30.6 %
EBIT Margin 11.1 9.8 -22.0 6.5 2.2 7.4 10.4 13.7 13.2 11.3
EBITDA Margin (c) 19.8 18.6 -10.6 15.6 11.6 16.0 18.8 21.7 21.2 19.6
Net Margin 64 4.9 -13.7 3.5 0.8 4.1 6.0 7.8 7.6 6.5
Growth Rates:
------------------------------------------------------------------------------ ---------------------------------------------------
Year over Year
Revenue --- --- --- --- --- 18.9 % 20.3 % 46.9 % 18.5 % 25.3 %
EBITDA (c) --- --- --- --- --- -3.7 22.1 NM 61.2 112.2
EBIT --- --- --- --- --- -20.1 27.1 NM 139.4 555.5
Net Income --- --- --- --- --- -24.0 46.4 NM 159.7 973.1
EPS --- --- --- --- --- -24.6 44.8 NM 158.4 966.2
Current over Prior Quarter
Revenue --- 3.2 % -11.7 % 30.0 % --- 0.3% 4.5 % 7.9 % 4.8 % ---
EBITDA (c) --- -3.0 NM NM --- 2.8 23.1 24.0 2.7 ---
EBIT --- -8.2 NM NM --- 14.3 46.1 41.9 1.1 ---
Net Income --- -21.1 NM NM --- 18.2 52.2 41.4 2.1 ---
EPS --- -20.9 NM NM --- 17.8 52.0 41.3 2.1 ---
1995
------------------------------------------------------
Q1 Q2 Q3E(b) Q4E(b) Full Year E(b)
------------------------------------------------------
Results (a) :
Total Revenue $38,614 $42,918 $42,871 $42,925 $167,328
Dialysis Services Revenue 35,079 38,714 39,404 39,453 152,650
Laboratory Services Revenue 3,535 4,204 3,467 3,472 14,678
EBITDA (c) 7,936 8,811 9,156 9,337 35,241
EBIT 5,074 5,604 5,906 6,077 22,662
Net Income 2,873 3,184 3,425 3,586 13,068
EPS 0.15 0.17 0.18 0.19 0.68
Shares Outstanding 19,016 19,028 19,155 19,155 19,088
Other Data:
-----------------------------------------------------------------------------------------
Treatments 184,516 209,670 NA NA 805,431
Dialysis Revenue per
Treatment $190 $185 NA NA $190
Margins:
-----------------------------------------------------------------------------------------
Gross Margin 29.7 % 29.9 50.4 % 50.4 % 12.9 %
EBIT Margin 13.1 13.1 13.8 14.2 13.5
EBITDA Margin (c) 20.6 20.5 21.4 21.8 21.1
Net Margin 7.4 7.4 8.0 8.4 7.8
Growth Rates:
-----------------------------------------------------------------------------------------
Year over Year
Revenue 27.5 % 35.7 % 25.6 % 20.0 % 26.9 %
EBITDA (c) 63.8 47.7 26.1 22.9 36.6
EBIT 125.4 70.4 20.7 28.8 51.9
Net Income 132.0 68.9 23.8 31.7 53.5
EPS 130.1 67.7 26.6 31.9 52.0
Current over Prior Quarter
Revenue 8.0 % 11.1 -0.1 % 0.1% ---
EBITDA (c) 4.5 11.0 3.9 2.0 ---
EBIT 6 10.4 5.4 2.9 ---
Net Income 5.5 10.8 7.6 4.7 ---
EPS 4.9 10.8 7.6 5.6 ---
-----------------------------------------------------------------------------------------
(a) Financial Information does not include non-recurring items and subtracts
pre-tax minority interest expense from EBIT and EBITDA.
(b) Source: Company estimates.
(c) EBITDA is shown net of Amortization of unearned stock grant compensation.
PROJECT FOREST
Summary Market Statistics
(dollars in millions, except for per share data)
Market Statistics
Valuation
Benchmarks
Current Enterprise
Stock Price 52 - Week Price as a % Market Enterprise Value as a Multiple of
----------- -----------------------
Company 08/25/95 High Low of High Value Value Revenue Cash Flow(a)
--------------------------------- ----------- ----------- ------------ ------ ---------- ------- --------------
American Medical Response, Inc. $28.00 $29.38 $21.50 95.3% $556.0 $524.2 1.3 x 9.9 x
HEALTHSOUTH Corporation $23.63 $24.00 $16.13 98.4% $2,067.7 $3,349.1 2.2 x 10.0 x
Lincare Holdings Inc. $29.00 $35.25 $22.00 82.3% $841.2 $875.7 3.7 x 8.9 x
Renal Treatment Centers, Inc. $31.75 $31.75 $16.50 100.0% $355.8 $389.4 2.9 x 13.2 x
Surgical Care Affiliates, Inc. $21.50 $24.75 $16.25 86.9% $842.9 $880.2 3.4 x 9.8 x
Vivra Incorporated $32.00 $35.88 $23.13 89.2% $809.3 $717.5 2.2 x 10.4 x
Mean: 92.0% 2.6 x 10.4 x
PINE at market price $19.63 $20.00 $9.25 98.1% $376.4 $382.7 2.5 x 12.0 x
PINE at offer price $18.00 $20.00 $9.25 90.0% $344.8 $351.1 2.3 x 11.1 x
1996 P/E as
Market Value Multiple of a % of
Company Trailing EPS Cal' 95 EPS Cal' 96 EPS Growth Rate
--------------------------------- ------------ ----------- ----------- -----------
American Medical Response, Inc. 24.3 x 21.2 x 17.1 x 73.3%
HEALTHSOUTH Corporation 27.5 x 22.1 x 17.6 x 80.9%
Lincare Holdings Inc. 18.1 x 16.4 x 13.7 x 65.8%
Renal Treatment Centers, Inc. 28.8 x 25.2 x 19.8 x 74.3%
Surgical Care Affiliates, Inc. 20.1 x 18.2 x 15.5 x 90.5%
Vivra Incorporated 20.4 x 18.6 x 16.0 x 89.3%
Mean: 23.2 x 20.3 x 16.6 x 79.0%
PINE at market price 32.7 x 28.9 x 21.8 x 87.2%
PINE at offer price 30.0 x 26.5 x 20.0 x 80.0%
Growth Rates Margins(LTM)
-------------------------------------------------------------- ------------------------------
Historical (Most Recent Stub) Projected Cash Operating Net
----------------------------- ------------------------------
Company Revenue EPS Fwd. Cal' Year(b) 3-5 Year Flow (a) Income (a) Income
--------------------------- ------------ -------------- ----------------- -------- -------- ---------- ------
American Medical Response, Inc. 53.4% 20.5% 24.2% 23.3% 13.6% 9.5% 4.6%
HEALTHSOUTH Corporation 22.7% 29.3% 25.2% 21.8% 22.2% 14.5% 4.9%
Lincare Holdings Inc. 37.9% 42.7% 19.8% 20.8% 41.7% 31.6% 19.2%
Renal Treatment Centers, Inc. 71.9% 83.2% 27.0% 26.7% 22.3% 14.8% 8.6%
Surgical Care Affiliates, Inc. 18.2% 47.8% 17.8% 17.1% 35.0% 28.0% 16.3%
Vivra Incorporated 31.4% 17.1 % 16.2% 17.9% 21.1% 17.3% 10.5%
Mean: 39.2% 40.1% 21.7% 21.3% 26.0% 19.3% 10.7%
PINE at market price 31.7% 88.2% 32.4% 25.0% 21.0% 13.2% 7.6%
PINE at offer price 31.7% 88.2% 32.4% 25.0% 21.0% 13.2% 7.6%
Returns Debt Divided by
--------------------- --------------------------------
Return on Return on Book Cash
Company Assets Equity Value Capitalization flow
-------------------------------- --------- --------- ----- -------------- -----
American Medical Response, Inc. 5.7% 7.5% 6.0% 5.6% 26.7%
HEALTHSOUTH Corporation 3.6% 14.2% 262.0% 72.4% 403.9%
Lincare Holdings Inc. 18.4% 23.8% 18.5% 15.6% 35.8%
Renal Treatment Centers, Inc. 8.1% 12.0% 37.1% 27.1% 119.5%
Surgical Care Affiliates, Inc. 11.3% 19.0% 33.1% 24.8% 80.8%
Vivra Incorporated 9.4% 11.2% 1.1% 1.1% 5.0%
Mean: 9.4% 14.6% 59.6% 24.4% 112.0%
PINE at market price 7.6% 9.4% 5.3% 5.0% 20.0%
PINE at offer price 7.6% 9.4% 5.3% 5.0% 20.0%
(a) After minority interest.
(b) Forward calendar growth rate represents growth from Cal' 95 to Cal' 96 EPS.
PROJECT FOREST
Summary Market Statistics
Enterprise Value Multiple of
Latest Twelve Months Market Value Multiple of 1996 P/E as
--------------------------------- ----------------------------------
Cash Operating Book LTM Cal' 95 Cal' 96 a % of
Company Revenues Flow (a) Income (a) Value EPS EPS EPS Growth Rate
------------------------------ -------- -------- ---------- ----- ------ ------- ------- ------------
American Medical Response, Inc. 1.3 x 9.9 x 14.2 x 2.3 x 24.3 x 21.2 x 17.1 x 73.3%
HEALTHSOUTH Corporation 2.2 x 10.0 x 15.2 x 4.0 x 27.5 x 22.1 x 17.6 x 80.9%
Lincare Holdings Inc. 3.7 x 8.9 x 11.7 x 4.4 x 18.1 x 16.4 x 13.7 x 65.8%
Renal Treatment Centers, Inc. 2.9 x 13.2 x 19.8 x 3.7 x 28.8 x 25.2 x 19.8 x 74.3%
Surgical Care Affiliates, Inc. 3.4 x 9.8 x 12.2 x 3.8 x 20.1 x 18.2 x 15.5 x 90.5%
Vivra Incorporated 2.2 x 10.4 x 12.6 x 2.6 x 20.4 x 18.6 x 16.0 x 89.3%
Mean: 2.6 x 10.4 x 14.3 x 3.5 x 23.2 x 20.3 x 16.6 x 79.0%
PINE at market price 2.5 x 12.0 x 19.1 x 3.1 x 32.7 x 28.9 x 21.8 x 87.2%
PINE at offer price 2.3 x 11.1 x 17.5 x 2.8 x 30.0 x 26.5 x 20.0 x 80.0%
* estimate extrapolated from the 3-5 year growth rate.
(a) After minority interest.
Caption>
PROJECT FOREST
Recent Mergers and Acquisitions of Alternate Site Companies, 1/1/90 to Present
(purchase price in thousands)
Aggregate Purchase Price
Equity Aggregate as a Multiple of Trailing:
------------------------------
Date Target Company Purchase Purchase Cash Oper.
Ann. Acquiror Price Price [a] Revenue Flow Income
------- ----------------------------------------------- ------------ ------------- -------- ------- ---------
Apr-95 Rehability Corporation $93,508 $126,653 0.7 x 11.8 x 20.3 x
Living Centers of American Inc.
Apr-95 The Hillhaven Corporation $1,065,994 $1,645,413 1.1 x 10.0 x 15.1 x
Vencor, Inc.
Mar-95 Abbey Healthcare Group Incorporated[1] $405,922 $691,449 1.6 x 8.7 x 15.6 x
Homedco Group, Inc.
Jan-95 Surgical Health Corporation[2] $151,105 $237,939 2.2 x 11.6 x 27.2 x
HEALTHSOUTH Corporation
Sep-94 ReLife, Inc. $181,336 $200,631 1.8 x 10.0 x 12.5 x
HEALTHSOUTH Rehabilitation Corp.
Mar-94 Home Nutritional Services, Inc. [3] $93,355 $109,240 0.8 x 18.9 x 49.3 x
W.R. Grace & Co.
Oct-93 RehabClinics, Inc.[4] $195,362 $244,458 3.6 x 22.6 x 33.7 x
NovaCare, Inc.
Sep-93 Total Pharmaceutical Care, Inc. $199,751 $185,962 2.3 x 11.2 x 14.2 x
Abbey Healthcare Group Incorporated
May-93 Lifetime Corporation[5] $368,425 $511,305 0.6 x 8.3 x 11.4 x
The Olsten Corporation
Apr-93 Home Intensive Care, Inc.[6] $105,982 $105,852 1.1 x 14.7 x 25.0 x
W.R. Grace & Co.
Jun-92 Critical Care America, Inc. $871,755 $798,786 3.0 x 14.5 x 16.4 x
Medical Care America, Inc.
Nov-91 Orthopaedic Services, Inc.[7] $252,212 $251,130 3.8 x 30.0 x 36.6 x
NovaCare, Inc.
Dec-90 Care Plus, Inc. $137,083 $137,699 2.8 x 17.2 x 20.6 x
New England Critical Care, Inc.
--------------------------------------------------------------------------------
MEAN: $317,061 $403,578 2.0 x 14.6 x 22.9 x
MEDIAN: $195,362 $237,939 1.8 x 11.9 x 20.3 x
--------------------------------------------------------------------------------
LOW: $93,355 $105,852 0.6 x 8.3 x 11.4 x
HIGH: $1,065,994 $1,645,413 3.8 x 30.0 x 49.3 x
--------------------------------------------------------------------------------
PROJECT FOREST
Recent Mergers and Acquisitions of Alternate Site Companies, 1/1/90 to Present
(purchase price in thousands)
Equity Purchase Price
as a Multiple of: Premium to Market
--------------------------------------- ---------------------
Trailing Forward Latest Day Month
Net Inc. Net Inc. Bk. Value Prior Prior Target Business Description
----------- ------------ ----------- -------- --------- ----------------------------------
34.5 x 17.2 x 10.6 x 12.2% 15.0% Provides comprehensive outpatinet
rehabilitation services.
18.0 x 20.9 x 2.8 x 41.0% 54.5% Provides long-term care, sub-acute
and rehabilitation services.
43.9 x 16.0 x 2.5 x 23.7% 28.2% Provides home health care services
and products.
NM NA 4.4 x NA NA Operates outpatient surgery
centers.
21.3 x 15.5 x 2.8 x 32.2% 65.5% Provides rehabilitation services in a
system with 46 facilities in 12 states.
NM 31.4 x 1.6 x 79.2% 57.0% Provides home infusion therapy
services.
53.5 x 30.3 x 2.8 x 8.6% 15.8% Provides therapy services at 180
outpatient clinics in 22 states.
24.1 x 17.1 x 2.3 x 73.6% 76.9% Provides home infusion therapy
services in 12 states.
27.4 x 20.2 x 2.6 x 109.2% 150.0% Delivery of home health care and
supplemental health care staffing.
51.6 x 18.9 x 4.2 x 53.1% 73.2% Home infusion therapy and kidney
dialysis services.
28.3 x 21.9 x 3.9 x 0.9% -5.4% Provides home infusion therapy
services.
61.5 x 34.5 x 4.2 x 10.6% 7.8% Provides orthotic and prosthetic
rehabilitation services.
37.3 x 20.0 x 4.9 x 31.1% 69.7% Home infusion therapy services.
-----------------------------------------------------------------
MEAN: 36.5 x 22.0 x 3.8 x 39.6% 50.7%
MEDIAN: 34.5 x 20.1 x 2.8 x 31.6% 55.7%
-----------------------------------------------------------------
LOW: 18.0 x 15.5 x 1.6 x 0.9% -5.4%
HIGH: 61.5 x 34.5 x 10.6 x 109.2% 150.0%
-----------------------------------------------------------------
------------------------------------------------------------------
[a] Defined as Equity Purchase Price plus debt less cash and
equivalents.
PROJECT FOREST
Recent Mergers and Acquisitions of Alternate Site Companies, 1/1/90 to Present
(dollars in thousands)
Equity Aggregate
Date Target Company Purchase Total Purchase
Ann. Acquiror Price Debt Cash Price [a]
--------- ------------------------------------- ------------ ---------- ---------- ----------
Apr-95 Rehability Corporation $93,508 $36,808 $3,663 $126,653
Living Centers of America, Inc.
Apr-95 The Hillhaven Corporation $1,065,994 $628,384 $48,965 $1,645,413
Vencor, Inc.
Mar-95 Abbey Healthcare Group Incorporated[1] $405,922 $286,829 $1,302 $691,449
Homedco Group, Inc.
Jan-95 Surgical Health Corporation [2] $151,105 $89,620 $2,786 $237,939
HEALTHSOUTH Corporation
Sep-94 ReLife, Inc. $181,336 $30,156 $10,861 $200,631
HEALTHSOUTH Rehabilitation Corp.
Mar-94 Home Nutritional Services, Inc. [3] $93,355 $21,233 $5,348 $109,240
W.R. Groupe & Co.
Oct-93 RehabClinics, Inc.[4] $195,362 $56,120 $7,024 $244,458
NovaCare, Inc.
Sep-93 Total Pharmaceutical Care, Inc. $199,751 $0 $13,789 $185,962
Abbey Healthcare Group Incorporated
May-93 Lifetime Corporation [5] $368,425 160,759 $17,879 $511,305
The Olsten Corporation
Apr-93 Home IntensiveCare, Inc.[6] $105,982 $7,280 $7,410 $105,852
W.R. Grace & Co.
Jun-92 Critical Care America, Inc. $871,755 $4,337 $77,306 $798,786
Medical Care America, Inc.
Nov-91 Orthopaedic Services, Inc.[7] $252,212 $10,746 $11,828 $251,130
NovaCare, Inc.
Dec-90 Care Plus, Inc. $137,083 $1,461 $845 $137,699
New England Critical Care, Inc.
MEAN: $317,061 $111,144 $16,077 $403,578
MEDIAN: $195,362 $33,482 $7,410 $237,939
LOW: $93,355 $1,461 $845 $105,852
HIGH: $1,065,994 $628,384 $77,306 $1,645,413
PROJECT FOREST
Recent Mergers and Acquisitions of Alternate Site Companies, 1/1/90 to Present
(dollars in thousands)
Trailing
---------------------------------------------
Date Target Company Cash Oper. Net Forward Book
Ann. Acquiror Revenues Flow Income Income Income Value
--------- ------------------------------------- ------------ --------- -------- -------- --------- -------
Apr-95 Rehability Corporation $169,524 $10,709 $6,242 $2,714 $5,448 $8,837
Living Centers of America, Inc.
Apr-95 The Hillhaven Corporation $1,449,403 $164,896 $108,879 $59,350 $50,903 $375,592
Vencor, Inc.
Mar-95 Abbey Healthcare Group Incorporated[1] $443,838 $79,232 $44,358 $9,249 $25,335 $164,721
Homedco Group, Inc.
Jan-95 Surgical Health Corporation [2] $108,258 $20,483 $8,755 $779 NA $34,183
HEALTHSOUTH Corporation
Sep-94 ReLife, Inc. $114,541 $20,072 $16,091 $8,527 $11,693 $64,355
HEALTHSOUTH Rehabilitation Corp.
Mar-94 Home Nutritional Services, Inc. [3] $132,030 $5,788 $2,215 ($340) $2,973 $58,144
W.R. Groupe & Co.
Oct-93 RehabClinics, Inc.[4] $67,339 $10,803 $7,260 $3,651 $6,457 $68,787
NovaCare, Inc.
Sep-93 Total Pharmaceutical Care, Inc. $79,703 $16,665 $13,089 $8,274 $11,681 $87,521
Abbey Healthcare Group Incorporated
May-93 Lifetime Corporation [5] $903,511 $61,837 $44,957 $13,455 $18,205 $141,410
The Olsten Corporation
Apr-93 Home IntensiveCare, Inc.[6] $94,210 $7,205 $4,242 $2,053 $5,620 $25,138
W.R. Grace & Co.
Jun-92 Critical Care America, Inc. $264,081 $55,232 $48,649 $30,836 $39,716 $221,711
Medical Care America, Inc.
Nov-91 Orthopaedic Services, Inc.[7] $65,767 $8,365 $6,865 $4,100 $7,313 $59,726
NovaCare, Inc.
Dec-90 Care Plus, Inc. $49,056 $7,988 $6,673 $3,676 $6,862 $27,723
New England Critical Care, Inc.
MEAN: $303,174 $36,098 $24,483 $11,256 $16,017 $102,912
MEDIAN: $114,541 $16,665 $8,755 $4,100 $9,497 $64,355
LOW: $49,056 $5,788 $2,215 ($340) $2,973 $8,837
HIGH: $1,449,403 $164,896 $108,879 $59,350 $50,903 $375,592
[a] Defined as Equity Purchase Price plus debt less cash and equivalent.
PROJECT FOREST
Recent Mergers and Acquisitions of Alternate Site Companies, 1/1/90 to Present
Footnotes
1 One day prior price based on 1/30/95 closing stock price. LTM source: Abbey
S-4 registration statement of 3/27/95.
2 EBIT and EBITDA are after minority interests. All numbers exclude merger cost
and net income is fully taxed at 40%.
3 Healthdyne announced on 01/06/94 that it plans to start a partial exchange
offer for 2.15 million shares of the outstanding common stock of Home
Nutritional Services.
4 Assumes 500,000 warrants to buy RehabClinics at an exercise price of $17.10.
5 Lifetime originally approached by Abbey Healthcare Group 03/23/93 and it
closed at $17.63 1 day prior to this initial proposal.
6 W.R. Grace & Co. made original offer on 01/14/93.
7 Orthopaedic Services income data extrapolated from nine months ended 09/91.
PROJECT FOREST
Premiums Paid in Recent Squeeze-Out Transactions (a)
Percentage Shares Purchase Deal Premium Paid
--------------------------------- ------------
Ownership Post- Price Value One One
At Deal per Day Month
Announced Target Acquiror Ann. Acquired Sought Ownership Share ($ mil) Prior Prior
--------- ------- -------- ------- -------- ------ --------- ------ ------- ----- -----
Squeeze-Outs with Acquiror Ownership At Announcement 50-70%
-----------------------------------------------------------
01/24/90 Copperweld Corp(Imetal SA) Imetal SA 55.6% 44.36% 44.4% 100.0% $17.00 $78.0 47.8% 33.3%
03/02/90 Shearson Lehman Brothers Hldgs American Express Co 68.4 39.00 31.6 100.0 12.90 360.0 (0.8) 7.5
07/06/90 Mack Trucks Inc Renault Vehicules Industriels 60.4 40.00 39.6 100.0 6.25 103.7 19.0 22.0
08/16/90 Academy Insurance Group Inc Academy Mergerco Inc 50.0 50.00 50.0 100.0 1.33 46.8 21.1 21.1
10/23/90 ERC Environmental and Energy Ogden Corp 61.2 38.80 38.8 100.0 15.13 33.6 37.5 44.1
01/03/91 Ocean Drilling & Exploration Murphy Oil Corp 61.1 39.00 38.9 100.0 19.39 391.8 14.0 9.2
02/06/91 Hamilton Oil Corp BHP Hldgs(USA)Inc(Broken Hill) 51.7 48.30 48.3 100.0 40.00 524.3 18.5 31.1
05/01/91 United Artists Entertainment Tele-Communications Inc 53.2 46.00 44.8 97.9 16.19 1,189.0 19.9 25.7
06/13/91 Weigh-Tronix(Staveley Indus) Staveley Industries PLC 55.8 44.25 44.2 97.8 22.00 25.3 41.9 44.3
08/17/92 PHLCORP Inc Leucadia National Corp 63.1 36.90 36.9 100.0 25.78 139.9 12.1 28.9
06/17/93 Hadson Energy Resources Corp Apache Corp 61.8 33.50 38.2 100.0 15.00 39.3 26.3 25.0
10/13/93 Medical Marketing Group Inc Medco Containment Services Inc 51.5 45.80 48.5 100.0 27.75 122.5 (9.8)(b)(16.5)(b)
07/29/94 Intergroup Healthcare Corp Foundation Health Corp 62.6 37.40 37.4 100.0 69.18 255.7 45.6 57.2
Squeeze-Outs with Acquiror Ownership At Announcement 70-90%
-----------------------------------------------------------
05/17/90 DST Systems Inc Kansas City Southern Inds Inc 87.1% 11.50% 12.9% 98.6% $15.85 $39.1 24.3% 51.0%
07/12/90 TVX Broadcast Group Inc Paramount Communications 79.0 21.00 21.0 100.0 9.50 61.4 26.7 85.4
07/31/90 Freeport-McMoRan Oil and Gas Freeport McMoRan Inc 81.5 18.50 18.5 100.0 10.88 46.2 36.0 47.5
03/01/91 Metcalf & Eddy Cos Inc Air & Water Technologies Corp 82.0 18.00 18.0 100.0 19.25 51.0 22.2 24.2
09/18/91 Arkla Exploration Co Arkla Inc 82.0 18.00 18.0 100.0 15.44 92.6 22.3 31.4
10/16/91 America Television & Commun Time Warner 81.9 18.00 18.1 100.0 82.50 1,699.5 66.7 88.6
02/06/92 Spelling Entertainment Inc Charter Co(American Financial) 82.3 18.00 17.7 100.0 7.25 43.0 52.6 45.0
03/02/92 Grace Energy Corp WR Grace & Co 83.4 16.60 16.6 100.0 19.00 77.3 24.6 7.8
04/26/93 Southeastern Public Services Co DWG Corp(Triarc Companies Inc) 71.0 29.00 29.0 100.0 25.60 86.1 65.2 61.3
02/17/94 Scripps Howard Broadcasting Co EW Scripps(Edward Scripps Tr) 86.0 14.00 14.0 100.0 82.80 115.9 5.5 10.4
06/06/94 Ogden Projects lnc(Ogden Corp) Ogden Corp 84.2 15.80 15.8 100.0 18.38 110.3 5.8 20.5
07/28/94 Chemical Waste Management Inc WMX Technologies Inc 78.5 21.40 21.5 100.0 8.85 397.4 10.6 1.1
08/24/94 Castle & Cooke Homes Inc Dole Food Co Inc 81.7 17.00 18.3 100.0 15.75 81.5 35.5 55.6
09/08/94 Contel Cellular Inc(Contel) GTE Corp 90.0 10.00 10.0 100.0 25.50 254.3 43.7 36.0
12/28/94 Fleet Mortgage Group Inc Fleet Financial Group Inc 81.0 19.00 19.0 100.0 20.00 188.1 19.4 18.5
Mean (# of deals):
50-70% (13) 22.5% 25.6%
All Deals (28) 26.9 32.8
Maximum (# of deals):
50-70% (13) 45.6% 57.2%
All Deals (28) 66.7 88.6
Minimum (# of deals):
50-70% (13) (9.8)% (16.5)%
All Deals (28) (9.8) (16.5)
(a) Source: Securities Data Corporation. Includes squeeze-out transactions
greater than $25 million since 1990 in which acquiror owned between
50-90% of target prior to transaction and sought a post-deal ownership of
at least 97%.
(b) Based on one day and one month prior prices from date of announcement of
Merck/Medco merger.
PROJECT FOREST
Premiums Paid Analysis
Recent Health Care Services Transactions Greater than $50 Million since 1992
Premium
Deal Paid
Date Value One Day
Announced Target Acquiror Target Business Description ($ mil) Prior
--------- ------ -------- --------------------------- ------- -------
06/17/92 Critical Care America Inc Medical Care International Inc Provide infusion therapies $846.3 0.9%
07/13/92 Century MediCorp Inc Foundation Health Corp Operate medical centers 164.1 66.3
07/15/92 Basic American Medical Inc Columbia Hospital Corp Own and operate hospitals 150.4 1.6
08/17/92 American Biodyne Inc. Medco Containment Services Inc Outpatient administrative services 120.2 37.8
01/14/93 Home Intensive Care Inc WR Grace & Co Provide home health care services 103.7 53.1
05/10/93 Lifetime Corp Olsten Corp Provide home health care services 607.0 109.2
05/13/93 HMO America Inc United HealthCare Corp Own and operate HMOs 372.2 33.9
06/10/93 Galen Health Care Inc Columbia Hospital Corp Own and operate hospitals 4,187.7 31.7
06/14/93 Vari-Care Inc Living Centers of America Inc Own and operate nursing homes 70.9 39.1
08/02/93 Greenery Rehabilitation Group Horizon Healthcare Corp Own and operating rehabilitation centers 88.0 71.1
09/07/93 Total Pharmaceutical Care Inc Abbey Healthcare Group Inc Provide pharmaceutical care services 185.6 73.6
09/23/93 Preferred Health Care Ltd Value Health Inc(Warburg Pine) Operate mental health centers 386.7 49.8
10/03/93 HCA-Hospital Corp of America Columbia Healthcare Corp Own and operate hospitals 5,605.0 39.6
10/21/93 RehabClinics Inc NovaCare Inc Own and operated physical therapy clinics 192.5 8.6
11/18/93 American Healthcare Management OrNda HealthCorp Operate health care facilities 403.1 21.1
12/02/93 Summit Health Ltd OrNda HealthCorp Own and operate hospitals 350.8 (8.3)
12/21/93 Care Enterprises Inc Regency Health Services Inc Nursing care facilities 120.0 40.6
01/04/94 Mediplex Group Inc Sun Healthcare Group Inc Operate specialty hospitals 320.0 14.1
01/10/94 TakeCare Inc FHP lnternational Corp Own and operate HMO's 1,033.0 60.5
02/07/94 Medisys, HealthInfusion 1 Other T2 Medical Inc Provides home health care services 549.0 27.9
02/15/94 Ramsay-HMO United HealthCare Corp Own and operate HM0s 564.9 62.7
03/04/94 Home Nutritional Services Inc WR Grace & Co Home infusion therapy services 90.8 79.2
05/23/94 Medical Care America Inc Columbia Healthcare Corp Provides outpatient health services 875.6 55.7
06/13/94 Hallmark Healthcare Corp Community Health Systems Inc Own and operate hospitals 161.7 81.1
07/22/94 AdvaCare Inc Medaphis Corp Information retreival services 106.4 11.1
09/12/94 Gencare Health Systems United HealthCare Corp Provide health insurance services 512.2 20.3
09/18/94 ReLife, Inc HEALTHSOUTH Rehabilitation Corp Provide rehabilitation services 181.3 32.2
10/03/94 CareNetwork Inc Humana Inc Medical health care services plan 120.3 112.5
10/05/94 HealthTrust Inc-The Hospital Columbia/HCA Healthcare Corp Own and operates hospitals 5,212.7 17.6
10/28/94 Pharmacy Management Services Beverly Enterprises Inc Medical cost containment services 146.7 22.2
11/16/94 MEDSTAT Group Inc Thomson Corp Database services; develops software 305.7 56.5
01/26/95 Hillhaven Corp Vencor Inc Own and operate nursing homes 1,889.2 41.0
03/02/95 Abbey Healthcare Group lnc Homedco Group Inc Provide home infusion services 658.7 23.7
03/08/95 Health Systems International Wellpoint Health Networks Inc Own and operate HMO's 1,676.0 19.6
03/31/95 Continental Medical Systems Horizon Healthcare Corp Medical rehabilitation services 578.6 110.2
04/12/95 Rehability Corp Living Centers of America Inc Own, op rehabilitation centers 120.3 12.2
05/03/95 Evergreen HealthCare Ltd GranCare Inc Own and opecate nursing homes 162.3 (1.9)
07/17/95 CliniCom Inc HBO & Co Provide integrated systems design 202.3 37.6
07/18/95 CareLine Inc (Care Group Inc) Laidlaw Inc Provide infusion therapy services 341.5 31.6
Premium
Paid
Date One Month
Announced Target Acquiror Target Business Description Prior
--------- ------ -------- --------------------------- ---------
06/17/92 Critical Care America Inc Medical Care International Inc Provide infusion therapies (5.4)%
07/13/92 Century MediCorp Inc Foundation Health Corp Operate medical centers 127.8
07/15/92 Basic American Medical Inc Columbia Hospital Corp Own and operate hospitals (0.5)
08/17/92 American Biodyne Inc. Medco Containment Services Inc Outpatient administrative services 47.0
01/14/93 Home Intensive Care Inc WR Grace & Co Provide home health care services 73.2
05/10/93 Lifetime Corp Olsten Corp Provide home health care services 150.0
05/13/93 HMO America Inc United HealthCare Corp Own and operate HMOs 88.7
06/10/93 Galen Health Care Inc Columbia Hospital Corp Own and operate hospitals 49.2
06/14/93 Vari-Care Inc Living Centers of America Inc Own and operate nursing homes 14.3
08/02/93 Greenery Rehabilitation Group Horizon Healthcare Corp Own and operating rehabilitation centers 71.1
09/07/93 Total Pharmaceutical Care Inc Abbey Healthcare Group Inc Provide pharmaceutical care services 76.9
09/23/93 Preferred Health Care Ltd Value Health Inc(Warburg Pine) Operate mental health centers 39.8
10/03/93 HCA-Hospital Corp of America Columbia Healthcare Corp Own and operate hospitals 59.8
10/21/93 RehabClinics Inc NovaCare Inc Own and operated physical therapy clinics 15.8
11/18/93 American Healthcare Management OrNda HealthCorp Operate health care facilities 45.0
12/02/93 Summit Health Ltd OrNda HealthCorp Own and operate hospitals 22.2
12/21/93 Care Enterprises Inc Regency Health Services Inc Nursing care facilities 55.9
01/04/94 Mediplex Group Inc Sun Healthcare Group Inc Operate specialty hospitals 28.5
01/10/94 TakeCare Inc FHP lnternational Corp Own and operate HMO's 56.7
02/07/94 Medisys, HealthInfusion 1 Other T2 Medical Inc Provides home health care services 32.1
02/15/94 Ramsay-HMO United HealthCare Corp Own and operate HM0s 81.0
03/04/94 Home Nutritional Services Inc WR Grace & Co Home infusion therapy services 57.0
05/23/94 Medical Care America Inc Columbia Healthcare Corp Provides outpatient health services 66.6
06/13/94 Hallmark Healthcare Corp Community Health Systems Inc Own and operate hospitals 123.3
07/22/94 AdvaCare Inc Medaphis Corp Information retreival services 2.2
09/12/94 Gencare Health Systems United HealthCare Corp Provide health insurance services 38.7
09/12/94 ReLife, Inc HEALTHSOUTH Rehabilitation Corp Provide rehabilitation services 65.5
10/03/94 CareNetwork Inc Humana Inc Medical health care services plan 119.6
10/05/94 HealthTrust Inc-The Hospital Columbia/HCA Healthcare Corp Own and operates hospitals 24.9
10/28/94 Pharmacy Management Services Beverly Enterprises Inc Medical cost containment services 38.9
11/16/94 MEDSTAT Group Inc Thomson Corp Database services; develops software 56.5
01/26/95 Hillhaven Corp Vencor Inc Own and operate nursing homes 54.5
03/02/95 Abbey Healthcare Group lnc Homedco Group Inc Provide home infusion services 28.2
03/08/95 Health Systems International Wellpoint Health Networks Inc Own and operate HMO's 23.4
03/31/95 Continental Medical Systems Horizon Healthcare Corp Medical rehabilitation services 121.9
04/12/95 Rehability Corp Living Centers of America Inc Own, op rehabilitation centers 15.0
05/03/95 Evergreen HealthCare Ltd GranCare Inc Own and opecate nursing homes 3.0
07/17/95 CliniCom Inc HBO & Co Provide integrated systems design 41.8
07/18/95 CareLine Inc (Care Group Inc) Laidlaw Inc Provide infusion therapy services 25.9
Mean 41.0% 52.2%
Maximum 112.5 150.0
Minimum (8.3) (5.4)
(a) Source: Securities Data Corporation and Alex. Brown & Sons.
PROJECT FOREST
Analysis of PINE Ownership
Percent of Percent of
Institutional Holdings (a) Shares Held Outstanding Inside Holdings (b) Shares Held (c) Outstanding
-------------------------- ----------- ----------- ------------------- --------------- -----------
Putnam Investment Mgmt 873,415 4.6% J. Kenneth Jacobs (Director) 76,100 0.4%
Wasatch Advisors Inc 695,281 3.7% Lawrence J. Centella (CEO) 5,666 0.0%
Nicholas-Applegate Cap. 326,300 1.7% Mats Wahlstrom (chairman) 2,500 0.0%
Wells Fargo Inst. Tr Na 169,981 0.9% Herbert S. Lawson (director) 1,500 0.0%
College Retire Equities 168,900 0.9% Ralph Z. Levy, Jr. (E-VP) 1,066 0.0%
Pilgrim Baxter & Assocs 148,700 0.8% M. Stephen Harrison (E-VP) 1,066 0.0%
RCM Capital Management 85,000 0.4% Lowell F. Martin (vp Managed Care) 881 0.0%
Lutheran Brotherhood 76,200 0.4% Bradley S. Wear (CFO) 416 0.0%
Bankers Trust N Y Corp 73,100 0.4% Others 10,000 0.1%
Mellon Bank Corporation 63,900 0.3%
Mackenzie Financial Corp 60,000 0.3% Total 99,195 0.5%
Conseco Inc 58,000 0.3%
Travelers Inc 57,004 0.3% Percent of
Southern Fiduciary Group 51,800 0.3% 5% Holders (b) Shares Held Outstanding
Rosenberg Inst. Eq. Mgmt 40,300 0.2%
First Union Corporation 40,000 0.2% COBE Laboratories, Inc. 10,036,221 53.0%
Calif Public Emp. Ret. 31,600 0.2%
Northern Trust Corp 29,700 0.2%
Others 287,888 1.5% Institutional Holdings 3,337,069 17.6%
Inside Holdings 99,195 0.5%
Total 3,337,069 17.6% 5% Holders 10,036,221 53.0%
Other Public Shares 5,448,686 28.8%
Total Shares Outstanding (d) 18,921,171 100.0%
(a) Source: Spectrum Institutional Filings as of 8/18/95.
(b) Source: Company Proxy dated April 18, 1995.
(c) Excludes outstanding options and warrants.
(d) Source: Company as of 8/O4/95 excludes 596,575 options and warrants
outstanding.
PROJECT FOREST
Analysis of ASPEN Investment in PINE from 12/01/89 - 08/25/95
"PLOT POINTS FOR GRAPH TO BE SUPPLIED"