Q HEALTHCARE STAFFING MERGER & ACQUISITION ACTIVITY CONTACTS

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1 HEALTHCARE STAFFING CONTACTS Eric Williams Managing Director (215) Mark Surowiak Director (215) MERGER & ACQUISITION ACTIVITY The US Staffing Industry is projected to grow a healthy 7.0% in 2017 according to SIA. Much of this growth stems from greater health care utilization as the population ages coupled with a tight supply of qualified medical professionals. Global health care expenditures are expected to reach $8.7 trillion by 2020 from $7 trillion in 2015 (Deloitte) while The Bureau of Labor Statistics is projecting significant deficits of both physicians and nurses by As healthcare delivery organizations struggle to staff their facilities with properly credentialed clinicians, many are recognizing the flexibility, benefits, and effectiveness of an outsourced model and increasing their use of temporary labor. In a recent survey of healthcare facilities conducted by Medscape, 94% said they'd employed locum tenens physicians within the past 12 months compared to 74% in M&A activity has picked up through October and 2017 volume is projected to exceed the 25 transactions completed in Strategic buyers often looking to augment organic growth, diversify their client base and expand geographically have increased their share of acquisitions, accounting for 65.2% of deal volume year-to-date (YTD) compared to 48.0% of volume in All subsectors in the healthcare staffing industry have seen heightened M&A activity and attractive valuations. As detailed in the following chart, locum tenens has seen a flurry of activity accounting for nearly a third of completed deals. Public healthcare staffing companies are also at a median of 10.8x EBITDA, representing a strong premium over general staffing firms which are valued at a median of 9.9x EBITDA Staffing M & A Activity by Sector Locum Tenens 30.4% 30.4% BOSTON CHICAGO LONDON LOS ANGELES NEW YORK ORANGE COUNTY PHILADELPHIA SAN DIEGO SILICON VALLEY TAMPA Allied Nursing Travel Nursing Other 13.0% 17.4% 8.7% YTD ended October 1 Sources: Capital IQ and Capstone Partners LLC Research

2 Staffing NOTABLE TRANSACTIONS Several notable transactions were completed or announced in the Staffing industry through. Select transactions are outlined below, followed by a more comprehensive list in the following table. Cross Country acquires Advantage RN (June 2017) Cross Country (Cross Country), a leading provider of healthcare staffing, recruiting and workforce solutions, acquired Advantage RN for an enterprise value of $86.8 million at revenue and EBITDA multiples of 0.9x and 8.7x, respectively. Advantage RN is one of the largest independent travel nurse staffing firms in the US and will provide Cross Country with various synergies. William J. Grubbs, Cross Country s President and CEO, commented, The acquisition of Advantage s business represents a strategically compelling opportunity for Cross Country to increase our supply of healthcare professionals, expand our capture rate at our Managed Service Providers accounts, and expand our Workforce Solutions business by offering our full suite of services to certain of Advantage s clients. From a financial perspective, we expect this transaction to create significant value for our shareholders and meaningful earnings accretion in 2017 through increased scale and accelerated growth opportunities. Matthew Price, President and CEO of Advantage RN, commented, "Advantage RN has enjoyed a long and successful working relationship with Cross Country, and our cultures and goals are closely aligned - to deliver quality services to our customers, create more opportunities for our candidates, provide a great working environment for our employees, and ultimately, better patient care. While we retain the Advantage RN name and the recognition it carries in the industry, we now boast a new identity as part of the Cross Country family and the bright future we will build together." Platform Partners acquires General Resources (May 2017) Through its portfolio company GHR Acquisition, private equity firm Platform Partners acquired General Resources, a provider of nursing, therapy and healthcare related staffing services. Terms of the deal were not disclosed. General Resources was founded in 1993 and has headquarters in Plymouth Meeting, Pennsylvania. In addition to its staffing services, the company also provides permanent placement services. The add-on acquisition will provide GHR Acquisition with a clinical staffing foundation. "This is a real win-win situation," said Joe Kaplan, Chairman of the Board for GHR Acquisition. "Not only is General Resources a thriving, successful company today, but it allows us to combine their current business lines and infrastructure with the management experience of the RecruitIQ Staffing team, which includes our existing IT as well as our developing travel nursing division. Together, they create a robust platform for expansion and future growth." Capstone Partners LLC 2

3 HEALTHCARE STAFFING: SELECT M&A TRANSACTIONS Staffing Enterprise EV / LTM Ann. Date Target Acquirer Target Business Description Value (mm) Revenue EBITDA 08/16/17 08/08/17 07/13/17 07/10/17 07/06/17 07/05/17 BrightStar Group's Plano Franchise RN & Allied Specialties Concepts Health Search New England Expedient Medstaff Accountable Staffing 06/13/17 Advantage RN 05/11/17 05/08/17 General Medical Solutions 05/03/17 Thaxton Barabe 05/02/17 ThreeWire Individual Investors Offers home care and medical staffing services. Aya Provides nurse and allied staffing services. Exact Recruiting Jordan Search Consultants American Staffing Provides executive recruitment services in the home care and hospice industry. A search firm specializing in the recruitment of healthcare providers throughout the Northeast. Offers staffing, talent acquisition and workforce services for the healthcare industry. Mitsui & Co. Provider of nurse staffing services in the US. Cross Country Offers nurses and healthcare professionals for travel assignments at hospitals in the United States. $ x 8.7x Platform Partners Provides healthcare staffing services for hospitals. TPG Growth Offers interim clinical staffing. American Staffing WIRB Copernicus Group A provider of interim healthcare leadership services. Provides customized clinical trial recruitment, enrollment and retention services. 05/01/17 The Columbus Organization HealthEdge Investment Engages in staffing speech pathologists, psychologists, occupational therapists, physical therapists and nurses. 04/25/17 FQHC Associates Germain & Co. Offers healthcare consulting services. 04/18/17 03/09/17 03/01/17 02/03/17 02/02/17 02/01/17 12/07/16 12/02/16 10/31/16 10/05/16 Exact Recruiting Solutions Kirby Bates Associates Allied Health Professionals Staffing 360 Staffing Simione Consultants Jackson RCM Technologies Novation Companies Prof. Placement Resources American BelHealth Inv. HealthCare Staffing Partners MedPro Staffing Euromedica Executive Search Team Health Holdings The Execu Search Group Harren Equity Partners Walter James Blackstone Group New Heritage Capital 06/15/16 Amsurg Envision Provides recruiting services for the home care and hospice industry. Offers nursing executive retained search, interim management and coaching/consulting services. Provides jobs for physical therapists, occupational therapists and speech therapists. Offers medical staffing services. $ x 7.5x Provides interim, temp-to-hire, and executive search services to post-acute care facilities. A medical staffing firm focused on placing pharmacy professionals and travel nurses into healthcare facilities. A provider of diversified medical staffing services to healthcare providers throughout the United States. Offers executive search services to the life science industry. Provides outsourced healthcare professional staffing and administrative services to healthcare providers. Offers customized executive recruiting and staffing solutions to a range of industries including healthcare. Provides outsourced physician services in multiple specialties to hospitals and other healthcare facilities. $6, x 15.0x $7, x 10.6x 11/17/15 B.E. Smith AMN Offers executive leadership solutions for the healthcare industry. $ x 10.7x Capstone Partners LLC 3

4 Staffing HEALTHCARE STAFFING: PUBLIC COMPANY TRADING & OPERATING DATA Price % 52 Wk Market Enterprise LTM EV/LTM Company 10/11/17 High Cap Value Revenue EBITDA Margin Revenue EBITDA AMN Services Inc. $ % $2,018.6 $2,333.2 $1,945.5 $ % 1.2x 9.9x Cross Country, Inc. $ % $492.3 $494.4 $854.4 $ % 0.6x 12.7x Envision Corporation $ % $5,054.4 $11,811.4 $6,038.4 $1, % 2.0x 11.8x MEDNAX, Inc. $ % $3,985.4 $5,707.0 $3,337.3 $ % 1.7x 9.0x EV = enterprise value; LTM = last twelve months $ in millions, except per share data NM = Not Meaningful; NA = Not Available Mean 13.1% 1.4x 10.9x Median 14.4% 1.5x 10.8x Harmonic Mean 9.6% 1.1x 10.7x Last Twelve Month Margin Performance Gross Margin % EBITDA Margin 35% 30% 32.7% 26.4% 29.6% 31.9% 25% 20% 15% 12.1% 16.6% 18.9% 10% 5% 4.5% 0% AMN Cross Country Envision MEDNAX Last Twelve Month 1-Year Revenue Growth 135% 115% 112.8% 95% 75% 55% 35% 15% 12.6% 8.9% 11.7% -5% AMN Cross Country Envision MEDNAX Source: Capital IQ as of October 11, 2017 Capstone Partners LLC 4

5 Staffing GENERAL STAFFING: PUBLIC COMPANY TRADING & OPERATING DATA Price % 52 Wk Market Enterprise LTM EV/LTM Company 10/11/17 High Cap Value Revenue EBITDA Margin Revenue EBITDA Adecco Group AG $ % $13,351.6 $14,446.4 $27,608.9 $1, % 0.5x 9.9x Kelly Services, Inc. $ % $984.3 $924.2 $5,175.5 $ % 0.2x 9.2x Kforce Inc. $ % $518.4 $642.5 $1,336.8 $ % 0.5x 8.7x ManpowerGroup Inc. $ % $8,207.7 $8,612.6 $19,976.3 $ % 0.4x 10.1x On Assignment Inc. $ % $2,946.5 $3,507.3 $2,530.1 $ % 1.4x 13.3x Robert Half International Inc. $ % $6,481.8 $6,184.9 $5,199.4 $ % 1.2x 10.5x TrueBlue, Inc. $ % $877.6 $959.7 $2,610.4 $ % 0.4x 6.9x EV = enterprise value; LTM = last twelve months $ in millions, except per share data NM = Not Meaningful; NA = Not Available Mean 6.3% 0.7x 9.8x Median 5.3% 0.5x 9.9x Harmonic Mean 4.7% 0.4x 9.5x Last Twelve Month Margin Performance 45% Gross Margin % EBITDA Margin 41.1% 40% 35% 30% 25% 20% 18.7% 17.5% 30.4% 16.8% 32.3% 25.1% 15% 10% 5% 0% 5.3% 1.9% 5.5% 4.3% 10.4% 11.4% 5.3% Adecco Kelly Kforce ManpowerGroup On Assignment Robert Half TrueBlue Last Twelve Month 1-Year Revenue Growth 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% 8.1% 4.5% 0.8% 2.3% -1.2% Adecco Kelly Services Kforce ManpowerGroup On Assignment Robert Half TrueBlue Source: Capital IQ as of October 11, 2017 Capstone Partners LLC 5

6 Staffing CAPSTONE PARTNERS: COMPLETED HEALTH & MEDICAL TRANSACTIONS Capstone Partners has successfully advised on a number of transactions related to the sale of healthcare staffing and talent management firms. Capstone s health & medical transactions are shown below. Capstone s experience in the sector provides us with insight into the valuable attributes and likely valuation of target companies, the active buyers and the nuances of transactions in the space. CONFIDENTIAL CONFIDENTIAL is pursuing a corporate sale is pursuing a corporate sale PEDIATRIC NURSE STAFFING ALLIED HEALTHCARE STAFFING has recapitalized with A PRIVATE INVETSMENT GROUP a portfolio company of AUDAX GROUP, INC. has divested assets to has acquired CERTIFIED IT & ITRICITY FREEDOM DATA has divested assets to has secured financing from Capstone Partners LLC 6

7 Staffing THE HEALTHCARE STAFFING TEAM Eric Williams, Managing Director (215) Eric serves as Managing Director and Head of the Atlantic Region for Capstone, based out of Philadelphia. Prior to Capstone, Eric was responsible for managing the Eastern region for Morgan Stanley Smith Barney s Capital Strategies Group and its predecessor, Citi Capital Strategies. Eric has more than 20 years of experience managing strategic sale assignments and leveraged recapitalizations for owners of privately held companies. He is head of Capstone s Health and Medical practice and has successfully completed over 100 transactions in a wide range of industries including medical device, contract manufacturing, pharmaceutical outsourcing, health care services and education and training. In 2016, he received the USA Deal of the Year at the M&A Atlas Awards for his work on the acquisition of Progressus Therapy, LLC and in 2014 was awarded both M&A North American Middle Market Deal of the Year at the M&A Atlas Awards and Cross Border Deal of the Year from the M&A Advisor for his work on the sale of T-DOC Company LLC. Eric has executed complex cross-border transactions with foreign buyers based in London, Germany, Sweden and Switzerland and has structured deals with leading private equity groups and strategic corporate buyers. He graduated cum laude from the University of California and is a Series 7 and 63 Registered Securities Representative as well as a Series 24 Registered Securities Principal. Mark Surowiak, Director msurowiak@capstonellc.com (215) Mark is a Director in the Philadelphia office, supporting the management of the Atlantic Region. Previously, Mark served over 10 years as a senior investment banking professional in Morgan Stanley Smith Barney s Capital Strategies Group. Over his career, Mark has focused on developing deep credentials and expertise in the sale and recapitalization of privately held businesses. Prior to investment banking, Mark enjoyed a career in the social services field. Mark is a graduate of Illinois State University with a BS in Business Administration. He is a Series 7 and 63 Registered Securities Representative US MIDDLE MARKET INVESTMENT BANK OF THE YEAR USA MID-MARKET INVESTMENT BANKING FIRM OF THE YEAR MIDDLE MARKET INVESTMENT BANKING FIRM OF THE YEAR Capstone Partners LLC 7

8 CAPSTONE S OFFICE LOCATIONS BOSTON 176 Federal Street 3rd Floor Boston, MA (617) CHICAGO 200 South Wacker Drive Suite 3100 Chicago, IL (312) LONDON 42 Brook Street London W1K 5DB United Kingdom +44 (0) LOS ANGELES 401 Wilshire Suite 1200 Santa Monica, CA (858) NEW YORK 340 Madison Avenue 10 th Floor New York, NY (212) ORANGE COUNTY Avenida de la Carlota Suite 600 Laguna Hills, CA (949) PHILADELPHIA 1515 Market Street 12th Floor Philadelphia, PA (215) SAN DIEGO High Bluff Drive Suite 200 San Diego, CA (858) SILICON VALLEY 228 Hamilton Avenue 3rd Floor Palo Alto, CA (650) TAMPA 1550 W Cleveland Street Suite 10 Tampa, FL (813) ABOUT CAPSTONE PARTNERS Capstone Partners LLC is an award-winning investment banking firm dedicated to serving the corporate finance needs of middle market business owners, investors and creditors. Over the past 15 years, Capstone has earned a reputation as one of the most innovative firms in the industry, offering corporate sale & divestiture, merger & acquisition, private placement, corporate restructuring, valuation and financial advisory services. The firm maintains seven industry practices, including: Business Services, Consumer Products, Education & Training, Government & Defense Services, Health & Medical, Industrial & Manufacturing, and Technology & Telecom. Headquartered in Boston, Capstone has offices in Chicago, London, Los Angeles, New York, Orange County, Philadelphia, San Diego, Silicon Valley and Tampa with an international presence that spans 450+ professionals in 70 offices across 31 countries. For more information about our expertise, please visit World Class Wall Street Expertise. Built for the Middle Market Capstone Partners LLC. All rights reserved.