Becker's ASC Review

12 2016 ASC VALUATION SURVEY RESULTS How does your company adjust valuation models/pricing for out-of-network centers? 20 If applicable, what is the magnitude of the reduction to the multiple for a center with an out-of-network strategy (i.e. the center generally in not contracted with any commercial payors)? 21 What is the typical management fee rate your company charges for ASCs (% of net revenue)? 22a Convert Revenue To In-Network 63 % Apply Higher Risk Factor/ Discount Rate 5 % Adjust Multiples Downward Combination 5% Cannot Generalize 5% 16 % 5 % *Does not total 100% due to rounding Out of Network Adjustment Approach Reduce OON Revenue by 50% Then Apply Market Multiple 5 % 5 % *Does not total 100% due to rounding *Does not total 100% due to rounding < 0.5 Multiple 0.51 - 1.5 Multiple 1.51 - 2.0 Multiple > 2.0 Multiple 0 % 10 % 20 % 70 % Typical ASC Management Fee 3% 4% 5% 11 % 28 % 17 % 6% 7% 33 % 5 % Flat Fee 5 % Out-of-Network Multiple Adjustment Percentage of ASC Net Revenue 9 HEALTHCARE APPRAISERS, INCORPORATED How do you determine the purchase price for minority interest transactions (e.g., new or existing physician investors)? 12 Formula 47 % Independent FMV Opinion 16 % Other 37 % Minority Interest Valuation Method When selling minority interests to new physician investors, on average, how long does it take to identify the buyer and consummate the sale? 13a If you have sold a controlling interest in a center during the last year, approximately how long did it take to identify the buyer and consummate the sale? 13b If you have sold a controlling interest was the buyer of your interest? 13c < 3 Months 3-6 Months 6 Months - 1 Year > 1 Year 11 % 56 % 33 % 0 % < 3 Months 3-6 Months 6 Months - 1 Year > 1 Year 11 % 11 % 56 % 22 % 36 % 55 % 9 % Multiple Existing Owners Single Outside 3rd Party Hospital or Health System Single Existing Owner 0% Multiple Outside Parties 0% 9 HEALTHCARE APPRAISERS, INCORPORATED How do you determine the purchase price for minority interest transactions (e.g., new or existing physician investors)? 12 Formula 47 % Independent FMV Opinion 16 % Other 37 % Minority Interest Valuation Method When selling minority interests to new physician investors, on average, how long does it take to identify the buyer and consummate the sale? 13a If you have sold a controlling interest in a center during the last year, approximately how long did it take to identify the buyer and consummate the sale? 13b If you have sold a controlling interest was the buyer of your interest? 13c < 3 Months 3-6 Months 6 Months - 1 Year > 1 Year 11 % 56 % 33 % 0 % < 3 Months 3-6 Months 6 Months - 1 Year > 1 Year 11 % 11 % 56 % 22 % 36 % 55 % 9 % Multiple Existing Owners Single Outside 3rd Party Hospital or Health System Single Existing Owner 0% Multiple Outside Parties 0% Becker's has chosen a select 8 pages from the survey to highlight. For more information, please visit http://bit.ly/1TvKmVO

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