UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT UNDER SECTION 13(E)
OF THE SECURITIES EXCHANGE ACT OF 1934
SHARECARE, INC.
(Name of the Issuer)
Sharecare, Inc.
Impact Acquiror Inc.
Impact Merger Sub Inc.
Impact Aggregator
LP
Impact Upper Parent Inc.
Altaris LLC
Altaris Health Partners V, L.P.
AHP V GP, L.P.
Altaris Health
Partners V-A, L.P.
Claritas Capital Fund IV, LP
Claritas Dozoretz Partners, LLC
Claritas Irby, LLC
Claritas Opportunity Fund 2013, LP
Claritas Opportunity Fund II, LP
Claritas Sharecare CN Partners, LLC
Claritas Opportunity Fund IV, L.P.
Claritas Cornerstone Fund, LP
Claritas Sharecare 2018 Notes, LLC
Claritas Sharecare Notes, LLC
Claritas Sharecare 2019 Notes, LLC
Claritas Opportunity Fund V, LP
Claritas SC Bactes Partners, LLC
Claritas SC Partners, LLC
Claritas Sharecare F3 LLC
Claritas Sharecare-CS Partners, LLC
Claritas Frist Partners, LLC
Claritas Sharp Partners, LLC
Claritas Sharecare Partners, LLC
Claritas Irby Partners II, LLC
Claritas Capital SLP - V, GP
CC Partners IV, LLC
CC SLP IV, GP
Claritas Capital, LLC
CC SLP V, GP
Claritas SCB SLP, GP
CC Partners V, LLC
Claritas Capital EGF - V Partners, LLC
Claritas Capital EGF - IV Partners, LLC
Claritas SC SLP, GP
Claritas Opportunity Fund Partners
II, LLC
Claritas Capital Management Services, Inc.
John H. Chadwick
Jeffrey T. Arnold
Arnold Media Group, LLC
JT Arnold Enterprises, II LLLP.
(Names of Persons Filing Statement)
Common Stock,
par value $0.0001 per share
(Title of Class of Securities)
81948W104
(CUSIP Number of Class of Securities)
| Carrie
Ratliff Chief Legal Officer Sharecare, Inc. 255 East Paces Ferry Road NE, Suite 700 Atlanta, Georgia 30305 Tel: (404) 671-4000 |
Impact Acquiror Inc. Impact Merger Sub Inc. Impact Aggregator
LP Altaris LLC Altaris Health Partners V, L.P. AHP V GP, L.P. Altaris
Health Partners V-A, L.P. |
John
H. Chadwick Claritas Capital Fund IV, LP Claritas Dozoretz Partners, LLC Claritas Irby, LLC Claritas Opportunity Fund 2013, LP Claritas Opportunity Fund II, LP Claritas Sharecare CN Partners, LLC Claritas Opportunity Fund IV, L.P. Claritas Cornerstone Fund, LP Claritas Sharecare 2018 Notes, LLC Claritas Sharecare Notes, LLC Claritas Sharecare 2019 Notes, LLC Claritas Opportunity Fund V, LP Claritas SC Bactes Partners, LLC Claritas SC Partners, LLC Claritas Sharecare F3 LLC Claritas Sharecare-CS Partners, LLC Claritas Frist Partners, LLC Claritas Sharp Partners, LLC Claritas Sharecare Partners, LLC Claritas Irby Partners II, LLC Claritas Capital SLP - V, GP CC Partners IV, LLC CC SLP IV, GP Claritas Capital, LLC CC SLP V, GP Claritas SCB SLP, GP CC Partners V, LLC Claritas Capital EGF - V Partners, LLC Claritas Capital EGF - IV Partners, LLC Claritas SC SLP, GP Claritas Opportunity Fund Partners II, LLC Claritas Capital Management Services, Inc. c/o Claritas Capital 30 Burton Hills Blvd, Suite 500 Nashville, Tennessee 37215 Tel: 615-665-8250 |
Jeffrey T. Arnold Arnold Media Group, LLC JT Arnold
Enterprises, II LLLP. |
(Name, Address, and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Persons Filing Statement)
With copies to
| Mark Gordon Meng Lu Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Tel: (212) 403-1000 |
David Feirstein William Lay Kirkland & Ellis LLP 601 Lexington Avenue New York, New York 10022 Tel: (212) 446-4800 |
Jackie Cohen Carolyn Vardi Ropes & Gray LLP 1211 Avenue of the Americas New York, New York 10036 Tel: (212) 596-9000 |
Rahul Patel King & Spalding LLP 1180 Peachtree Street, NE Atlanta, Georgia 30309 Tel: (404) 572-4600 |
This statement is filed in connection with (check the appropriate box):
| a. | x | The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934. |
| b. | ¨ | The filing of a registration statement under the Securities Act of 1933. |
| c. | ¨ | A tender offer. |
| d. | ¨ | None of the above. |
Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: x
Check the following box if the filing is a final amendment reporting the results of the transaction: ☐
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of this transaction, passed upon the merits or fairness of this transaction, or passed upon the adequacy or accuracy of the disclosure in this transaction statement on Schedule 13E-3. Any representation to the contrary is a criminal offense.
TABLE OF CONTENTS
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INTRODUCTION
This Transaction Statement on Schedule 13E-3 (this “Transaction Statement”) is being filed with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), jointly by the following persons (each, a “Filing Person,” and collectively, the “Filing Persons”): (1) Sharecare, Inc., a Delaware corporation (“Sharecare” or the “Company”) and the issuer of the common stock, par value $0.0001 per share (the “Sharecare Common Stock”) that is the subject of the Rule 13e-3 transaction; (2) Impact Acquiror Inc. (“Parent”), a Delaware corporation and an affiliate of Altaris, LLC, a Delaware limited liability company (“Altaris”); (3) Impact Aggregator LP, a Delaware limited partnership and an affiliate of Altaris (“TopCo LP”); (4) Impact Upper Parent Inc., a Delaware corporation and an affiliate of Altaris (“TopCo Inc.”); (5) Impact Merger Sub Inc., a Delaware corporation, a wholly owned subsidiary of Parent and an affiliate of Altaris (“Merger Sub”, and together with Parent, the “Buyer Parties”); (6) each of the following Persons: (a) Altaris, (b) Altaris Health Partners V, L.P., a Delaware limited partnership, (c) AHP V GP, L.P., a Delaware limited partnership, and (d) Altaris Health Partners V-A, L.P., a Delaware limited partnership; (7) each of the following Persons: Claritas Capital SLP – V, GP, a Tennessee general partnership, CC Partners IV, LLC, a Delaware limited liability company, CC SLP IV, GP, a Tennessee general partnership, Claritas Capital, LLC, a Delaware limited liability company, CC SLP V, GP, a Tennessee general partnership, Claritas SCB SLP, GP, a Tennessee general partnership, CC Partners V, LLC, a Delaware limited liability company, Claritas Capital EGF – V Partners, LLC, a Delaware limited liability company, Claritas Capital EGF – IV Partners, LLC, a Delaware limited liability company, Claritas SC-SLP, GP, a Tennessee general partnership and Claritas Opportunity Fund Partners II, LLC, a Delaware limited liability company; and (8) each of the following Persons (each, a “Rollover Stockholder,” and collectively, the “Rollover Stockholders”): (a) John H. Chadwick; Claritas Capital Fund IV, LP, a Delaware limited partnership; Claritas Dozoretz Partners, LLC, a Delaware limited liability company; Claritas Irby, LLC, a Delaware limited liability company; Claritas Opportunity Fund 2013, LP, a Delaware limited partnership; Claritas Opportunity Fund II, LP, a Delaware limited partnership; Claritas Sharecare CN Partners, LLC, a Delaware limited liability company; Claritas Opportunity Fund IV, L.P., a Delaware limited partnership; Claritas Cornerstone Fund, LP, a Delaware limited partnership; Claritas Sharecare 2018 Notes, LLC, a Delaware limited liability company; Claritas Sharecare Notes, LLC, a Delaware limited liability company; Claritas Sharecare 2019 Notes, LLC, a Delaware limited liability company; Claritas Opportunity Fund V, LP, a Delaware limited partnership; Claritas SC Bactes Partners, LLC, a Delaware limited liability company; Claritas SC Partners, LLC, a Delaware limited liability company; Claritas Sharecare F3 LLC, a Delaware limited liability company; Claritas Sharecare-CS Partners, LLC, a Delaware limited liability company; Claritas Frist Partners, LLC, a Delaware limited liability company; Claritas Sharp Partners, LLC, a Delaware limited liability company; Claritas Sharecare Partners, LLC, a Delaware limited liability company; Claritas Irby Partners II, LLC, a Delaware limited liability company; and Claritas Capital Management Services, Inc., a Tennessee corporation (collectively, the “Claritas Rollover Stockholders”) and (b) Jeffrey T. Arnold, Arnold Media Group, LLC, a Delaware limited liability company, and JT Arnold Enterprises, II LLLP, a Georgia limited liability limited partnership.
This Transaction Statement relates to the Agreement and Plan of Merger, dated June 21, 2024 (including all exhibits and documents attached thereto, and as it may be amended, supplemented or modified, from time to time, the “Merger Agreement”), by and among Sharecare, Parent and Merger Sub. Pursuant to the Merger Agreement and subject to the terms and conditions set forth therein, Merger Sub will merge with and into Sharecare, with Sharecare surviving the Merger as a subsidiary of Parent (the “Merger”).
At the effective time of the Merger (the “Effective Time”), each share of Sharecare Common Stock issued and outstanding immediately prior to the Effective Time, other than the Excluded Shares (as defined below), will be cancelled and automatically converted into the right to receive cash in an amount equal to $1.43 per share, without interest (the “Merger Consideration”), subject to any applicable withholding taxes. Each share of Sharecare’s Series A convertible preferred stock, par value $0.0001 per share (the “Sharecare Preferred Stock”), issued and outstanding immediately prior to the Effective Time will not be converted into the right to receive the Merger Consideration and will remain issued and outstanding following the Effective Time. As a result of the Merger, Sharecare will cease to be a publicly traded company.
The “Excluded Shares” consists of: (i) any shares that are owned by Sharecare and not held on behalf of third parties; (ii) any shares that are owned by Merger Sub; (iii) any shares of Sharecare Preferred Stock; (iv) any shares that are held by Sharecare stockholders who have neither voted in favor of the Merger nor consented thereto in writing and who are entitled to exercise and have properly and validly exercised and not withdrawn their statutory rights of appraisal in respect of such shares of Sharecare Common Stock in accordance with Section 262 of the General Corporation Law of the State of Delaware (the “DGCL”) (the “Dissenting Shares”); (v) any shares that are owned by Parent; (vi) any shares subject to that certain Earnout Escrow Agreement, dated July 1, 2021, by and among Falcon Capital Acquisition Corp., Colin Daniel, Falcon Equity Investors LLC and Continental Stock Transfer & Trust Company (the “Earnout Shares”); and (vii) any Rollover Shares (as defined below), in each case, that are issued and outstanding immediately prior to the Effective Time.
In connection with execution of the Merger Agreement, (i) Mr. Arnold entered into a rollover agreement, dated June 21, 2024, with TopCo LP and TopCo Inc.; and (ii) the Claritas Rollover Stockholder, entered into a rollover agreement, dated June 25, 2024, with TopCo LP and TopCo Inc. (such rollover agreements, collectively, the “Rollover Agreements”), pursuant to which, among other things, such Rollover Stockholders agreed to vote all of their respective shares of Sharecare Common Stock (whether or not such shares constitute Rollover Shares that are rolled over pursuant to the Rollover Agreements) in favor of the adoption of the Merger Agreement, subject to certain terms and conditions contained in the applicable Rollover Agreements. In addition, pursuant to the Rollover Agreements, (1) immediately prior to the Effective Time, each of the Rollover Stockholders will, among other things, directly or indirectly through a series of related transactions contribute (the “TopCo Contribution and Exchange”) a portion of the shares of Sharecare Common Stock (the “Rollover Shares”) he or it respectively owns to TopCo Inc., the parent entity of Parent, in exchange for equity interests of TopCo Inc. (the “TopCo Shares”); (2) immediately following the TopCo Contribution and Exchange and immediately prior to the Effective Time, each of the Rollover Stockholders will contribute all of the TopCo Shares he or it respectively owns as a result of the TopCo Contribution and Exchange to TopCo LP, the parent entity of TopCo Inc., in exchange for equity interests of TopCo LP; and (3) immediately following the TopCo Contribution and Exchange and immediately prior to the Effective Time, TopCo Inc. will contribute the Rollover Shares to Parent, and each Rollover Share will automatically be converted into one share of common stock of the Surviving Corporation upon the consummation of the Merger. The Rollover Shares to be contributed by Mr. Arnold will consist of all shares of Sharecare Common Stock held by Mr. Arnold immediately prior to the Effective Time, provided that Mr. Arnold may, at his option, elect to reduce the number of Rollover Shares he contributes by up to 2,700,000 shares, and such shares that are not contributed will be converted into the right to receive the Merger Consideration at the Effective Time.
The board of directors of Sharecare (the “Board”) formed a special committee of the Board comprised solely of independent directors (the “Special Committee”) to, among other things, evaluate and make recommendations to the Board regarding proposals relating to the potential acquisition of Sharecare by potential counterparties. The Special Committee, as more fully described in the Company’s proxy statement (the “Proxy Statement”) filed concurrently with the filing of this Transaction Statement under Regulation 14A of the Exchange Act with the SEC, evaluated the Merger, with the assistance of its own independent financial and legal advisors. After careful consideration, the Special Committee, pursuant to resolutions adopted at a meeting of the Special Committee held on June 21, 2024, unanimously (1) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to and in the best interests of Sharecare and its stockholders (other than the Rollover Stockholders), which group the Special Committee considered to be situated substantially similarly to, and include, Sharecare’s “unaffiliated security holders” (as defined in Rule 13e-3(a)(4) (“Rule 13e-3) under the Securities Act of 1934, as amended (the “Exchange Act”)), (2) determined that it is in the best interests of Sharecare and declared it advisable to enter into the Merger Agreement and (3) recommended that the Board approve and authorize the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger.
The Board (acting upon the recommendation of the Special Committee), by unanimous vote of Sharecare’s directors (other than Mr. Arnold and Mr. Chadwick, who recused themselves due to the status of each as a Rollover Stockholder or a potential Rollover Stockholder, as applicable), (1) determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, Sharecare and its stockholders (other than the Rollover Stockholders), which group the Sharecare Board considered to be situated substantially similarly to, and include, Sharecare’s “unaffiliated security holders” (as defined in Rule 13e-3 under the Exchange Act), (2) determined that it is in the best interests of Sharecare and its stockholders (other than the Rollover Stockholders) and declared it advisable to enter into the Merger Agreement, (3) approved the execution and delivery by Sharecare of the Merger Agreement, the performance by Sharecare of its covenants and agreements contained in the Merger Agreement and the consummation of the Merger and any other transactions contemplated thereby upon the terms and subject to the conditions contained in the Merger Agreement, and (4) resolved to recommend that Sharecare’s stockholders vote to adopt and approve the Merger Agreement, in each case on the terms and subject to the conditions set forth in the Merger Agreement.
The Merger cannot be completed without the affirmative vote of the holders representing a majority of the aggregate voting power of the outstanding shares of Sharecare Common Stock and Sharecare Preferred Stock entitled to vote thereon, voting together as a single class, to adopt the Merger Agreement.
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The Company is filing the Proxy Statement with the SEC concurrently with the filing of this Transaction Statement under Regulation 14A of the Exchange Act, pursuant to which the Company is soliciting proxies from the Company’s stockholders in connection with the Merger. The Proxy Statement is attached hereto as Exhibit (a)(1). A copy of the Merger Agreement is attached to the Proxy Statement as Annex A. Copies of the Rollover Agreements are attached to the Proxy Statement as Annexes D and E. As of the date hereof, the Proxy Statement is in preliminary form, and is subject to completion or amendment. Terms used but not defined in this Transaction Statement have the meanings assigned to them in the Proxy Statement.
Pursuant to General Instruction F to Schedule 13E-3, the information in the Proxy Statement, including all annexes thereto, is expressly incorporated by reference herein in its entirety, and responses to each item herein are qualified in their entirety by the information contained in the Proxy Statement. The cross-references below are being supplied pursuant to General Instruction G to Schedule 13E-3 and show the location in the Proxy Statement of the information required to be included in response to the items of Schedule 13E-3.
The information concerning the Company contained in, or incorporated by reference into, this Transaction Statement and the Proxy Statement was supplied by the Company. Similarly, all information concerning each other Filing Person contained in, or incorporated by reference into, this Transaction Statement and the Proxy Statement was supplied by such Filing Person. No Filing Person, including the Company, is responsible for the accuracy of any information supplied by any other Filing Person.
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SCHEDULE 13E-3 ITEMS
| Item 1. | Summary Term Sheet |
The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
| Item 2. | Subject Company Information |
(a) Name and address. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet—The Parties to the Merger”
“Questions and Answers”
“The Parties to the Merger—Sharecare”
“Important Information Regarding Sharecare”
“Where You Can Find Additional Information”
(b) Securities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet—The Special Meeting—Record Date; Shares Entitled to Vote; Quorum”
“Questions and Answers”
“The Special Meeting—Record Date; Shares Entitled to Vote; Quorum”
“Important Information Regarding Sharecare—Security Ownership of Certain Beneficial Owners and Management”
(c) Trading market and price. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
“Important Information Regarding Sharecare—Market Price of Sharecare Common Stock”
(d) Dividends. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
“Important Information Regarding Sharecare—Dividends”
(e) Prior public offerings. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
“Important Information Regarding Sharecare—Prior Public Offerings”
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(f) Prior stock purchases. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Important Information Regarding Sharecare
“Transactions in Sharecare Common Stock”
“Important Information Regarding Sharecare—Past Contracts, Transactions, Negotiations and Agreements”
| Item 3. | Identity and Background of Filing Person |
(a) – (c) Name and address; Business and background of entities; Business and background of natural persons. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet—The Parties to the Merger”
“Questions and Answers”
“The Parties to the Merger”
“Important Information Regarding Sharecare”
“Important Information Regarding the Purchaser Filing Parties”
“Where You Can Find Additional Information”
| Item 4. | Terms of the Transaction |
(a)-(1) Material terms. Tender offers. Not applicable
(a)-(2) Material terms. Mergers or similar transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Plans for Sharecare After the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Certain Effects on Sharecare if the Merger Is Not Completed”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
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“Special Factors—Accounting Treatment”
“Special Factors—Material U.S. Federal Income Tax Consequences of the Merger”
“The Special Meeting—Votes Required”
“The Merger Agreement—Effect of the Merger”
“The Merger Agreement—Merger Consideration”
“The Merger Agreement—Exchange and Payment Procedures”
“The Merger Agreement—Conditions to the Closing of the Merger”
Annex A—Agreement and Plan of Merger
(c) Different terms. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
“Special Factors—Limited Guarantee”
“Special Factors—Financing of the Merger—Rollover Equity”
“The Merger Agreement—Merger Consideration”
“The Merger Agreement—Exchange and Payment Procedures”
“The Merger Agreement—Employee Matters”
“The Merger Agreement—Indemnification and Insurance”
“The Rollover Agreements”
“Proposal 2: The Compensation Proposal”
Annex A—Agreement and Plan of Merger
Annex D—Arnold Rollover Agreement
Annex E—Claritas Rollover Agreement
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(d) Appraisal rights. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet—Appraisal Rights”
“Questions and Answers”
“The Special Meeting—Appraisal Rights”
“Special Factors—Certain Effects of the Merger”
“Appraisal Rights”
(e) Provisions for unaffiliated security holders. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Provisions for Unaffiliated Sharecare Stockholders”
(f) Eligibility for listing or trading. Not applicable.
| Item 5. | Past Contacts, Transactions, Negotiations and Agreements |
(a)(1) – (2) Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Special Factors—Background of the Merger”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
“Special Factors—Limited Guarantee”
“Special Factors—Financing of the Merger”
“The Rollover Agreements”
“Important Information Regarding Sharecare—Prior Public Offerings”
“Important Information Regarding Sharecare—Transactions in Sharecare Common Stock”
“Important Information Regarding Sharecare—Past Contracts, Transactions, Negotiations and Agreements”
“Important Information Regarding the Purchaser Filing Parties”
“Proposal 2: The Compensation Proposal”
Annex D—Arnold Rollover Agreement
Annex E—Claritas Rollover Agreement
(b) – (c) Significant corporate events; Negotiations or contacts. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
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“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Plans for Sharecare After the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
“The Merger Agreement”
“The Rollover Agreements”
Annex A—Agreement and Plan of Merger
Annex D—Arnold Rollover Agreement
Annex E—Claritas Rollover Agreement
(e) Agreements involving the subject company’s securities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Background of the Merger”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Certain Effects on Sharecare if the Merger Is Not Completed”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
“Special Factors—Financing of the Merger”
“Special Factors—Limited Guarantee”
“The Merger Agreement”
“The Special Meeting—Votes Required”
“The Rollover Agreements”
“Proposal 2: The Compensation Proposal”
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Annex A—Agreement and Plan of Merger
Annex D—Arnold Rollover Agreement
Annex E—Claritas Rollover Agreement
| Item 6. | Purposes of the Transaction and Plans or Proposals |
(b) Use of securities acquired. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Delisting and Deregistration of Sharecare Common Stock”
“Special Factors—Financing of the Merger”
“The Merger Agreement—Effect of the Merger”
“The Merger Agreement—Merger Consideration”
Annex A—Agreement and Plan of Merger
(c)(1) – (8) Plans. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – Houlihan Lokey”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – MTS Securities”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Plans for Sharecare After the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Certain Effects of the Merger”
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“Special Factors—Certain Effects on Sharecare if the Merger Is Not Completed”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
“Special Factors—Financing of the Merger”
“Special Factors—Limited Guarantee”
“The Merger Agreement—Effect of the Merger”
“The Merger Agreement— Certificate of Incorporation; Bylaws; Directors and Officers”
“The Merger Agreement—Merger Consideration”
“The Merger Agreement—Exchange and Payment Procedures”
“The Rollover Agreements”
“Important Information Regarding Sharecare”
Annex A—Agreement and Plan of Merger
Annex B—Opinion of Houlihan Lokey
Annex C—Opinion of MTS Securities
| Item 7. | Purposes, Alternatives, Reasons and Effects |
(a) Purposes. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – Houlihan Lokey”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – MTS Securities”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Plans for Sharecare After the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Certain Effects of the Merger”
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“Special Factors—Certain Effects on Sharecare if the Merger Is Not Completed”
Annex B—Opinion of Houlihan Lokey
Annex C—Opinion of MTS Securities
(b) Alternatives. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – Houlihan Lokey”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – MTS Securities”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Plans for Sharecare After the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Certain Effects on Sharecare if the Merger Is Not Completed”
Annex B—Opinion of Houlihan Lokey
Annex C—Opinion of MTS Securities
(c) Reasons. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – Houlihan Lokey”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – MTS Securities”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Plans for Sharecare After the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
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“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Certain Effects on Sharecare if the Merger Is Not Completed”
“Special Factors—Unaudited Prospective Financial Information”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
Annex B—Opinion of Houlihan Lokey
Annex C—Opinion of MTS Securities
(d) Effects. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – Houlihan Lokey”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – MTS Securities”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Plans for Sharecare After the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Certain Effects on Sharecare if the Merger Is Not Completed”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
“Special Factors—Material U.S. Federal Income Tax Consequences of the Merger”
“Special Factors—Financing of the Merger”
“Special Factors—Limited Guarantee”
“Special Factors—Fees and Expenses”
“Special Factors—Delisting and Deregistration of Sharecare Common Stock”
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“The Merger Agreement—Effect of the Merger”
“The Merger Agreement— Certificate of Incorporation; Bylaws; Directors and Officers”
“The Merger Agreement—Merger Consideration”
“The Merger Agreement—Indemnification and Insurance”
“The Merger Agreement—Employee Matters”
“The Rollover Agreements”
“Appraisal Rights”
“Proposal 2: The Compensation Proposal”
Annex A—Agreement and Plan of Merger
Annex B—Opinion of Houlihan Lokey
Annex C—Opinion of MTS Securities
Annex D—Arnold Rollover Agreement
Annex E—Claritas Rollover Agreement
| Item 8. | Fairness of the Transaction |
(a) – (b) Fairness; Factors considered in determining fairness. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – Houlihan Lokey”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – MTS Securities”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Plans for Sharecare After the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Certain Effects of the Merger”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
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“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
Annex B—Opinion of Houlihan Lokey
Annex C—Opinion of MTS Securities
(c) Approval of security holders. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Reasons for the Merger; Recommendations of the Special Committee and the Sharecare Board”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Plans for Sharecare After the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“The Special Meeting—Record Date; Shares Entitled to Vote; Quorum”
“The Special Meeting—Votes Required”
“The Special Meeting—Voting of Proxies”
“The Special Meeting—Revocability of Proxies”
“The Merger Agreement—Conditions to the Closing of the Merger”
“Proposal 1: The Merger Proposal”
Annex A—Agreement and Plan of Merger
(d) Unaffiliated representative. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – Houlihan Lokey”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – MTS Securities”
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Annex B—Opinion of Houlihan Lokey
Annex C—Opinion of MTS Securities
(e) Approval of directors. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
(f) Other offers. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
| Item 9. | Reports, Opinions, Appraisals and Negotiations |
(a) – (b) Report, opinion or appraisal; Preparer and summary of the report, opinion or appraisal. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – Houlihan Lokey”
“Special Factors—Opinion of the Financial Advisors to the Special Committee – MTS Securities”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
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“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Where You Can Find Additional Information”
Annex B—Opinion of Houlihan Lokey
Annex C—Opinion of MTS Securities
(c) Availability of documents. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:
“Where You Can Find Additional Information”
The reports, opinions or appraisals referenced in this Item 9 will be made available for inspection and copying at the principal executive offices of the Company during its regular business hours by any interested equity holder of Sharecare Common Stock or by a representative who has been so designated in writing.
| Item 10. | Source and Amounts of Funds or Other Consideration |
(a) – (b), (d) Source of funds; Conditions; Borrowed funds. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Special Factors—Financing of the Merger”
“Special Factors—Limited Guarantee”
“The Merger Agreement—Other Covenants”
“The Merger Agreement—Conditions to the Closing of the Merger”
“The Merger Agreement—Conduct of Business Pending the Merger”
Annex A—Agreement and Plan of Merger
(c) Expenses. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Certain Effects on Sharecare if the Merger Is Not Completed”
“Special Factors—Fees and Expenses”
“The Special Meeting—Solicitation of Proxies”
“The Merger Agreement—Other Covenants”
“The Merger Agreement—Company Termination Fee”
“The Merger Agreement—Fees and Expenses”
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“The Merger Agreement—Indemnification and Insurance”
Annex A—Agreement and Plan of Merger
| Item 11. | Interest in Securities of the Subject Company |
(a) Securities ownership. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
“The Rollover Agreements”
“Important Information Regarding Sharecare—Security Ownership of Certain Beneficial Owners and Management”
“Important Information Regarding the Purchaser Filing Parties”
Annex D—Arnold Rollover Agreement
Annex E—Claritas Rollover Agreement
(b) Securities transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Special Factors—Background of the Merger”
“The Merger Agreement”
“The Rollover Agreements”
“Important Information Regarding Sharecare—Prior Public Offerings”
“Important Information Regarding Sharecare—Transactions in Sharecare Common Stock”
Annex A—Agreement and Plan of Merger
Annex D—Arnold Rollover Agreement
Annex E—Claritas Rollover Agreement
| Item 12. | The Solicitation or Recommendation |
(d) Intent to tender or vote in a going-private transaction. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
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“Special Factors—Background of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Intent of Certain Stockholders to Vote in Favor of the Merger”
“The Special Meeting—Votes Required”
“The Rollover Agreements”
Annex D—Arnold Rollover Agreement
Annex E—Claritas Rollover Agreement
(e) Recommendation of others. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Purposes and Reasons of the Purchaser Filing Parties”
“Special Factors—Purposes and Reasons of the Rollover Filing Parties”
“Proposal 1: The Merger Proposal”
| Item 13. | Financial Statements |
(a) Financial information. The audited consolidated financial statements set forth in Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and the unaudited financial statements set forth in Item 1 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024 are incorporated herein by reference.
The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Special Factors—Certain Effects of the Merger”
“Special Factors—Unaudited Prospective Financial Information”
“Important Information Regarding Sharecare—Selected Historical Consolidated Financial Data”
“Important Information Regarding Sharecare—Book Value Per Share”
“Where You Can Find Additional Information”
(b) Pro forma information. Not applicable.
-18-
| Item 14. | Persons/Assets, Retained, Employed, Compensated or Used |
(a) – (b) Solicitations or recommendations; Employees and corporate assets. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Questions and Answers”
“Special Factors—Background of the Merger”
“Special Factors—Reasons for the Merger; Recommendation of the Special Committee and the Sharecare Board”
“Special Factors—Position of the Altaris Filing Parties and Parent Entities as to the Fairness of the Merger”
“Special Factors—Position of the Rollover Filing Parties as to the Fairness of the Merger”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“Special Factors—Fees and Expenses”
“The Special Meeting—Solicitation of Proxies”
| Item 15. | Additional Information |
(b) Golden Parachute Compensation. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:
“Summary Term Sheet”
“Special Factors—Interests of Sharecare’s Directors and Executive Officers in the Merger”
“The Merger Agreement—Merger Consideration”
“Proposal 2: The Compensation Proposal”
Annex A—Agreement and Plan of Merger
(c) Other material information. The information set forth in the Proxy Statement, including all annexes thereto, is incorporated herein by reference.
| Item 16. | Exhibits |
The following exhibits are filed herewith:
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-20-
-21-
16(f) Section 262 of the Delaware General Corporation Law.
| * | Certain portions of this exhibit have been redacted and separately filed with the SEC pursuant to a request for confidential treatment. |
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SIGNATURES
After due inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: August 5, 2024
SHARECARE, INC.
| By: | /s/ Carrie Ratliff | |
| Name: Carrie Ratliff | ||
| Title: Chief Legal Officer |
[Signature Page to Schedule 13E-3]
After due inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: August 5, 2024
| IMPACT ACQUIROR INC. | ||
| By: | /s/ Nicholas Fulco | |
| Name: Nicholas Fulco | ||
| Title: President | ||
| IMPACT MERGER SUB INC. | ||
| By: | /s/ Nicholas Fulco | |
| Name: Nicholas Fulco | ||
| Title: President | ||
[Signature Page to Schedule 13e-3]
After due inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: August 5, 2024
| ALTARIS, LLC | ||
| By: | /s/ George E. Aitken-Davies | |
| Name: George E. Aitken-Davies | ||
| Title: Managing Director | ||
| ALTARIS HEALTH PARTNERS V, L.P. | ||
| By: | /s/ George E. Aitken-Davies | |
| Name: George E. Aitken-Davies | ||
| Title: Manager | ||
| ALTARIS HEALTH PARTNERS V-A, L.P. | ||
| By: | /s/ George E. Aitken-Davies | |
| Name: George E. Aitken-Davies | ||
| Title: Manager | ||
[Signature Page to Schedule 13e-3]
After due inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: August 5, 2024
| JEFF ARNOLD | ||
| By: | /s/ Jeff Arnold | |
| Name: Jeff Arnold | ||
| ARNOLD MEDIA GROUP, LLC | ||
| By: | ||
| By: | /s/ Jeff Arnold | |
| Name: Jeff Arnold | ||
| Title: Manager | ||
| JT ARNOLD ENTERPRISES, II LLLP. | ||
| By: | ||
| By: | /s/ Jeff Arnold | |
| Name: Jeff Arnold | ||
| Title: General Partner | ||
[Signature Page to Schedule 13e-3]
After due inquiry and to the best of the undersigned’s knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: August 5, 2024
| JOHN H. CHADWICK | |||
| By: | /s/ John H. Chadwick | ||
| Name: John H. Chadwick | |||
| CLARITAS CAPITAL FUND IV, LP | |||
| By: Claritas Capital EGF – IV Partners, LLC, its General Partner | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS DOZORETZ PARTNERS, LLC | |||
| By: Claritas Capital SLP – V, GP, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
| CLARITAS IRBY, LLC | |||
| By: Claritas Capital SLP – V, GP, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
| CLARITAS OPPORTUNITY FUND 2013, LP | |||
| By: Claritas Capital EGF – V Partners, LLC, its General Partner | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS OPPORTUNITY FUND II, LP | |||
| By: Claritas Opportunity Fund Partners II, LLC, its General Partner | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS SHARECARE CN PARTNERS, LLC | |||
| By: Claritas Capital SLP – V, GP, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
[Signature Page to Schedule 13e-3]
| CLARITAS OPPORTUNITY FUND IV, L.P. | |||
| By: CC Partners IV, LLC, its General Partner | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS CORNERSTONE FUND, LP | |||
| By: CC Partners IV, LLC, its General Partner | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS SHARECARE 2018 NOTES, LLC | |||
| By: CC SLP V, GP, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
| CLARITAS SHARECARE NOTES, LLC | |||
| By: CC SLP V, GP, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: John H. Chadwick | |||
| Title: Partner | |||
| CLARITAS SHARECARE 2019 NOTES, LLC | |||
| By: CC SLP V, GP, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
| CLARITAS OPPORTUNITY FUND V, LP | |||
| By: CC Partners V, LLC, its General Partner | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS SC BACTES PARTNERS, LLC | |||
| By: Claritas SCB SLP, GP, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
| CLARITAS SC PARTNERS, LLC | |||
| By: Claritas SC-SLP, GP, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
[Signature Page to Schedule 13e-3]
| CLARITAS SHARECARE F3 LLC | |||
| By: Claritas Capital, LLC, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS SHARECARE-CS PARTNERS, LLC | |||
| By: CC SLP IV, GP, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
| CLARITAS FRIST PARTNERS, LLC | |||
| By: CC Partners IV, LLC, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS SHARP PARTNERS, LLC | |||
| By: Claritas Capital, LLC, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS SHARECARE PARTNERS, LLC | |||
| By: Claritas Capital EGF – IV Partners, LLC, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS IRBY PARTNERS II, LLC | |||
| By: Claritas Capital, LLC, its Managing Member | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS CAPITAL MANAGEMENT SERVICES, INC. | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | President | ||
[Signature Page to Schedule 13e-3]
| CLARITAS CAPITAL SLP - V, GP | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
| CC PARTNERS IV, LLC | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CC SLP IV, GP | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
| CLARITAS CAPITAL LLC | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CC SLP V, GP | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
| CLARITAS SCB SLP, GP | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
| CC PARTNERS V, LLC | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS CAPITAL EGF - V PARTNERS, LLC | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS CAPITAL EGF - IV PARTNERS, LLC | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
| CLARITAS SC-SLP, GP | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Partner | ||
| CLARITAS OPPORTUNITY FUND PARTNERS II, LLC | |||
| By: | /s/ John H. Chadwick | ||
| Name: | John H. Chadwick | ||
| Title: | Managing Member | ||
[Signature Page to Schedule 13e-3]
Exhibit 16(b)(i)
EXECUTION VERSION
Confidential
ALTARIS HEALTH PARTNERS V, L.P.
ALTARIS HEALTH PARTNERS V-A, L.P.
10 E. 53rd Street, 31st Floor
New York, NY 10022
June 21, 2024
Impact Acquiror Inc.
c/o Altaris, LLC
10 East 53rd Street, 31st Floor
New York, NY 10022
Re: Equity Commitment
Ladies and Gentlemen:
Altaris Health Partners V, L.P., a Delaware limited partnership, and Altaris Health Partners V-A, L.P., a Delaware limited partnership (the foregoing together, the “Investors”, and each of the Investors individually, an “Investor”), are pleased to make, subject to and on the terms and conditions hereof, the Commitment (as defined below) to Impact Acquiror Inc., a Delaware corporation (“Parent”), which has been formed in connection with the entry into that certain Agreement and Plan of Merger, dated as of the date hereof (as it may be amended, supplemented or modified from time to time, the “Merger Agreement”), by and among Parent, Impact Merger Sub Inc. a Delaware corporation and wholly-owned Subsidiary of Parent (“Merger Sub”), and Sharecare, Inc., a Delaware corporation (the “Company”). Capitalized terms used but not defined in this letter agreement shall have the meanings ascribed to such terms in the Merger Agreement.
| 1. | Each Investor, severally (and not jointly or jointly and severally), hereby agrees that, subject only to and on the terms and conditions set forth in this letter agreement, such Investor shall, or shall cause one or more of its assignees permitted in accordance with Section 4 hereof (“permitted assignees”) to, contribute to Parent the amount set forth beside such Investor’s name on Schedule A hereto (for each Investor, such Investor’s “Commitment”), solely for the purpose of allowing Parent and/or Merger Sub to fund (i) all of the amounts required to be paid by Parent at the Closing pursuant to, and in accordance with, Article IV of the Merger Agreement and (ii) the payment of all fees, costs and expenses required to be paid by Parent or Merger Sub at or prior to the Closing in connection with the transactions contemplated by the Merger Agreement (clauses (i) and (ii), collectively, the “Transaction Payments”). Each Investor may effect its contribution of the Commitment to Parent directly or indirectly through one or more Affiliates, and any Investor may allocate a portion of the Commitment to co-investors, including such Investor’s Affiliates; provided that such allocation shall not relieve such Investor of its obligations hereunder and such Investor shall remain liable for any portion of its Commitment except to the extent (and only to the extent) any such Affiliate actually funds any portion of such Investor’s Commitment when required pursuant to this letter agreement. No Investor shall, under any circumstances, be obligated to contribute to Parent more than such Investor’s respective Commitment (and only on and subject to the terms and conditions contained herein), and the cumulative liability of each Investor under this letter agreement shall not exceed such Investor’s respective Commitment. The amount of the Commitment to be funded by each Investor under this letter agreement at or immediately prior to the Closing may be reduced pro rata on a dollar-for-dollar basis solely to the extent that Parent does not require such amount to fund a portion of the Transaction Payments by reason of Parent having obtained funds from other sources (including cash held by the Company and its Subsidiaries at Closing); provided, in each case, that any such reduction shall occur solely in connection with, and subject to, the Closing and the simultaneous payment of all Transaction Payments required to be paid by Parent and/or Merger Sub. In no event shall any Investor or its permitted assignees have any obligation to contribute or otherwise provide any funds to Parent, the Company or any other Person, except as provided in this letter agreement or in the Guarantee, in each case, subject to the terms, conditions and limitations set forth herein and therein, as applicable. |
| 2. | Each Investor’s several (and not joint or joint and several) obligation under this letter agreement to, or to cause one or more of its permitted assignees to, fund its respective Commitment is subject to (a) the satisfaction or waiver (to the extent permitted by the Merger Agreement) of each of the conditions to the Parties’ obligations to consummate the transactions contemplated by the Merger Agreement set forth in Article VII (other than those conditions that by their nature are to be satisfied at or immediately prior to the Closing; provided, that those other conditions would be capable of being satisfied at the Closing and subject to the satisfaction or waiver of such conditions at Closing), and (b) the substantially concurrent consummation of the Closing in accordance with the terms of the Merger Agreement, including Section 1.2 of the Merger Agreement. For the avoidance of doubt, the obligations of Parent under the Merger Agreement shall be determined in accordance with the terms thereof, and nothing in this letter agreement shall amend, modify, or waive any of the terms of the Merger Agreement or any defenses that Parent may have to any assertion of liability or obligation against it under the Merger Agreement. |
| 3. | Each Investor’s obligation under this letter agreement to, or to cause one or more of its permitted assignees to, fund its respective Commitment shall automatically and immediately terminate upon the earliest to occur of (a) the consummation of the Closing and the payment of the Transaction Payments in accordance with the Merger Agreement (at which time the obligation shall be discharged in full), (b) the valid termination of the Merger Agreement in accordance with Section 8.1 thereof (provided, that, for the avoidance of doubt, if, prior to any purported termination, the Company shall have commenced an action seeking specific enforcement of the obligations of Parent to consummate the Closing in accordance with the Merger Agreement or any Investor to fund its Commitment hereunder, the termination shall not be deemed a valid termination hereunder unless and until so determined in a final, non-appealable resolution of such action), (c) a Chosen Court (as defined below) having declined in a final and non-appealable decision to specifically enforce the obligations of Parent and/or Merger Sub to cause the Commitment to be funded or to effect the Closing pursuant to a claim of specific performance or other equitable relief brought against Parent and/or Merger Sub pursuant to Section 9.5(b) of the Merger Agreement or (d) the Company or any of its controlled Affiliates asserting or filing, directly or indirectly, any claim under or action against any Investor or any Investor Affiliate (as defined below) in connection with the Merger Agreement, this letter agreement, the Guarantee or any transaction contemplated hereby or thereby, other than as expressly permitted by Section 6 of this letter agreement or Section 8 of the Guarantee. Notwithstanding anything that may be expressed or implied in this letter agreement, in no event shall any Investor have any obligation to fund its Commitment hereunder, or any amounts in respect thereof, at any time after the Company or any of its Affiliates have actually received any monetary damages in immediately available funds from Parent, the Investors or their respective Affiliates (other than in connection with matters unrelated to the transactions contemplated by the Merger Agreement). |
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| 4. | Neither the rights nor the obligations of the Company, any Investor or Parent under this letter agreement may be assigned, transferred or delegated, in whole or in part, directly or indirectly, by operation of Law or otherwise, without the prior written consent of the Company (as a third-party beneficiary hereof), each Investor and Parent, except as provided in the following sentence. Any attempted assignment, transfer or delegation in violation of this section shall be null and void and of no force or effect. Notwithstanding the foregoing, the obligation of any Investor under this letter agreement to fund one or more portions of its respective Commitment may be assigned by such Investor to any equity co-investor and/or its Affiliates (other than, for the avoidance of doubt, any portfolio companies of such Investor or Parent (or any subsidiary thereof)); provided that any such assignment shall not relieve such Investor of its obligations under this letter agreement or be permitted (i) in violation of applicable Law or (ii) if such assignment would (x) require any additional regulatory consent or other regulatory proceeding to be obtained by any of the Investors, Parent, Merger Sub or the Company (the “Transaction Parties”); or (y) cause any statement made or information provided to a regulatory authority prior to such assignment to become materially untrue or misleading (other than any statement made or information provided related solely to the identity of such Investor); provided, further, that (A) such assignment would not reasonably be expected to delay the Closing or prevent the conditions to the Closing set forth in the Merger Agreement from being satisfied and (B) the assignee is capable of performing its obligations under this letter agreement, including having the financial capacity necessary to fund the full amount of the Commitment that is being assigned. Each Investor acknowledges that the Company has entered into the Merger Agreement in reliance upon, among other things, the Commitments set forth herein. This letter agreement (including any document or instrument delivered in connection herewith), together with the Guarantee, the Merger Agreement and the Confidentiality Agreement constitute the entire agreement among the parties hereto and supersede any prior understandings, agreements or representations by or among the parties hereto, written or oral, with respect to the subject matter hereof, and the parties hereto specifically disclaim reliance on any such prior understandings, agreements or representations to the extent not embodied in this letter agreement or the other documents identified above. |
| 5. | Notwithstanding anything to the contrary that may be expressed or implied in this letter agreement or any document or instrument delivered in connection herewith, each party hereto, by its acceptance of the benefits hereof, covenants, agrees and acknowledges that no Person, other than the Investors and their respective permitted assignees, has liabilities, commitments or other obligations hereunder and that, notwithstanding that each Investor is a limited partnership, no Person has any remedy, recourse or right of recovery hereunder (or any document or instrument delivered in connection herewith or in connection with the Merger Agreement) or in respect of any oral or written representation made or alleged to be made in connection herewith (or therewith) against, or contribution hereunder from, any Investor Affiliate (as defined below), through any Investor, Parent, Merger Sub or otherwise, whether by or through attempted piercing of the corporate (or limited liability company or partnership) veil or similar action, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Law, by or through a claim by or on behalf of any Investor, Parent or Merger Sub against any Investor or any Investor Affiliate, or otherwise, except for Parent’s right to be capitalized by each Investor under and to the extent provided in this letter agreement, on the terms and subject to the conditions hereof. Notwithstanding the foregoing, in the event any Investor (i) consolidates with or merges with any other Person and is not the continuing or surviving entity of such consolidation or merger or (ii) transfers or conveys all or a substantial portion of its properties and other assets to any Person such that the sum of such Investor’s remaining net assets plus uncalled capital is less than such Investor’s Commitment hereunder, then Parent may seek recourse, whether by the enforcement of any judgment or assessment or by any legal or equitable proceeding or by virtue of any statute, regulation or other applicable Law, against such continuing or surviving entity or such transferee Person, as the case may be, but only to the extent of the obligations of such Investor hereunder and subject to the limitations herein. For purposes of this letter agreement, the term “Investor Affiliate” means any past, present or future director, officer, employee, incorporator, member, general or limited partner, manager, direct or indirect equityholder, management company, controlling Person, Affiliate, agent, attorney, or representative of, and any financial advisor or lender to, any Investor or of any of the foregoing (it being understood that the term Investor Affiliate shall not include Parent, Merger Sub or any of their respective subsidiaries or any Rollover Stockholder or any Investor or any assignees permitted in accordance with Section 4 hereof (in their capacity as such)). For the avoidance of doubt, neither Investor nor any Investor Affiliate is a party to, or has any obligations under, the Merger Agreement. Without limiting the generality of this Section 5, Parent shall not have any remedies against any Investor or any Investor Affiliate for any loss, damage or recovery of any kind (including consequential, indirect or punitive damages, and whether at Law, in equity, based on contract, tort or otherwise) arising under or in connection with any breach of the Merger Agreement or the failure of the transactions contemplated thereby to be consummated or otherwise in connection with the transactions contemplated thereby or in respect of any oral representations made or alleged to be made in connection therewith; provided, however, that the foregoing shall not limit Parent’s or the Company’s rights and remedies (i) to enforce the express terms of this letter agreement against the Investors pursuant to and to the extent permitted by Section 6 or (ii) pursuant to and to the extent permitted under the terms of the Guarantee. |
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6.
| a) | Except as otherwise set forth in Section 6(b), (i) the Permitted Claims (as defined in the Guarantee), and (ii) the remedies of the Company under the Confidentiality Agreement against the counterparty thereto, shall be the sole and exclusive remedies available to the Company and all of its Affiliates against any Investor or any Investor Affiliate in respect of any liabilities or obligations arising under, or in connection with, the Merger Agreement, or the transactions contemplated thereby, whether or not Parent’s breach is caused by any Investor’s breach of its obligations under this letter agreement. Except as otherwise set forth in Section 6(b), this letter agreement is solely for the benefit of Parent and is not intended to, nor does it, confer any benefits on, or create any rights or remedies in favor of, any Person other than Parent. Except as set forth in Section 6(b), this letter agreement may only be enforced by Parent. In no event shall any of Parent’s creditors have any right to enforce this letter agreement or to cause Parent to enforce this letter agreement. Notwithstanding anything to the contrary herein, the Company is intended to be, and is hereby made, a third party beneficiary of this letter agreement, and shall have an explicit right to enforce this letter agreement, solely for the purpose of causing each Investor to fund its respective Commitment (subject to the limitations set forth in Section 1) and only to the extent that the conditions to the funding of such Commitment set forth in Section 2 are satisfied and the Company is entitled to specific performance, injunction or other equitable relief in accordance with Section 9.5(b) of the Merger Agreement, which right of enforcement may be sought directly against such Investor irrespective of whether Parent pursues any specific performance, injunction or other equitable remedies, and for no other purpose whatsoever (including, without limitation, any claim for monetary damages under the Merger Agreement or Guarantee or any other document or instrument delivered in connection therewith or based on any theory, whether in law, equity, contract or tort). |
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| b) | The exercise by Parent or the Company of any right to enforce this letter agreement pursuant to this Section 6 does not give rise to any other remedies, monetary or otherwise, such remedies being limited, as described in this letter agreement, to those provided under the Merger Agreement and this letter agreement; provided, that in no event shall any rights of the Company under this Section 6 limit the Company’s right to enforce any other agreement to which an Investor is a party with respect to the Merger (subject to the limitations set forth herein and in such agreement). |
| 7. | Other than as required by Law or the rules of any national securities exchange or in connection with the enforcement of, or any claims or causes of action related to or arising in connection with, this letter agreement in accordance with the terms hereof or the Merger Agreement, each of the parties hereto agrees that it will not, nor will it permit its respective advisors or Affiliates to, disclose to any Person the contents of this letter agreement without the consent of the Company or the other parties hereto, other than to the respective advisors or Affiliates of the parties hereto (including, as regards any Investor, such Investor’s Investor Affiliates), which advisors or Affiliates (or, as regards any Investor, such Investor’s Investor Affiliates) shall be required to maintain the confidentiality of this letter agreement in accordance herewith. Without limiting the foregoing, each Investor and Investor Affiliate shall have the right to make such disclosures as are required by any Governmental Authority having jurisdiction over such Investor or its Investor Affiliates, and such Investor or Investor Affiliate shall not be required to provide any notice of such disclosure. |
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| 8. | Each Investor hereby represents and warrants to Parent severally (and not jointly or jointly and severally) as to itself that: (a) such Investor is a limited partnership duly organized, validly existing and in good standing under the Laws of the State of Delaware, and such Investor has all requisite organizational power and authority to execute, deliver and perform its obligations under this letter agreement, (b) the execution, delivery and performance of this letter agreement have been duly and validly authorized by all necessary action and do not contravene any provision of such Investor’s partnership agreement or similar organizational documents or any Law or contractual restriction binding on such Investor or its assets, (c) except for such consents, approvals, authorizations, permits of, filings with and notifications to, any Governmental Authority contemplated by the Merger Agreement to be obtained or made after the date hereof, all consents, approvals, authorizations, permits of, filings with and notifications to, any Governmental Authority necessary for the due execution, delivery and performance of this letter agreement by such Investor have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any Governmental Authority is required in connection with the execution, delivery or performance of this letter agreement, (d) this letter agreement has been duly and validly executed and constitutes a legal, valid and binding obligation of such Investor enforceable against such Investor in accordance with its terms, subject to the Bankruptcy and Equity Exception, (e) such Investor has, and will continue to have for so long as this letter agreement remains in effect, sufficient liquid and unencumbered assets and the financial capacity to pay and perform its obligations under this letter agreement, including to fulfill such Investor’s Commitment shall be available to such Investor at such time as such Investor’s Commitment becomes due and payable hereunder and (f) such Investor’s Commitment is less than the maximum amount that such Investor is permitted to invest in any one portfolio investment pursuant to the terms of its constituent documents or otherwise. |
| 9. | This letter agreement, and all claims or causes of action (whether at Law, in contract or in tort or otherwise) that may be based upon, arise out of or relate to this letter agreement or the negotiation, execution or performance hereof, shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. |
| 10. | Each of the parties hereto irrevocably agrees that this letter agreement and any action (whether at law, in contract or in tort) that may directly or indirectly be based upon, relate to or arise out of this letter agreement or any transaction contemplated hereby, or the negotiation, execution or performance hereunder shall be governed by, and construed and enforced in accordance with, the Laws of the State of Delaware, without regard to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. In addition, each of the parties hereto (a) expressly submits to the personal jurisdiction and venue of the courts of the State of Delaware and the federal courts of the United States of America located in the State of Delaware (the “Chosen Courts”), in the event any dispute between the parties hereto (whether in contract, tort or otherwise) arises out of this letter agreement or the transactions contemplated hereby, (b) expressly waives any claim of lack of personal jurisdiction or improper venue and any claims that such courts are an inconvenient forum with respect to such a claim, and (c) agrees that it shall not bring any claim, action or proceeding against any other Parties relating to this Agreement or the transactions contemplated hereby in any court other than the Chosen Courts. To the fullest extent permitted by applicable Law, each of the parties hereto hereby irrevocably consents to process being served by any party hereto in any suit, action or proceeding by delivery of a copy thereof in accordance with the provisions of Section 9.6 of the Merger Agreement (and the address for delivery to each Investor shall be the address for Parent as set forth in Section 9.6 of the Merger Agreement). |
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| 11. | EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES HERETO CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS LETTER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11. |
| 12. | This letter agreement may not be amended, and no provision of this letter agreement may be waived or modified, without the prior written consent of each party hereto and of the Company (as a third-party beneficiary hereof), and any attempted amendment, waiver or modification hereof without such prior written consent shall be null and void and of no force or effect. The parties hereto hereby acknowledge and agree that: (x) the conditions set forth in Section 2 hereof and the limitations set forth in Section 1 hereof in this letter agreement are an integral part of the transactions contemplated hereby; (y) without such agreements, the Investors would not have entered into this letter agreement; and therefore (z) this letter agreement may not be enforced without giving effect to such limitations. |
| 13. | This letter agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered (by telecopy, electronic delivery or otherwise) to the other parties. Signatures to this letter agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature. The parties irrevocably and unreservedly agree that this letter agreement may be executed by way of electronic signatures and the parties agree that this letter, or any part thereof, shall not be challenged or denied any legal effect, validity and/or enforceability solely on the ground that it is in the form of an electronic record. |
[signature page follows]
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If this letter agreement is agreeable to you, please so indicate by signing in the space indicated below.
| Very truly yours, | ||
| INVESTORS: | ||
| ALTARIS HEALTH PARTNERS V, L.P. | ||
| By: | AHP V GP, L.P., its general partner | |
| By: | Altaris Partners, LLC, its general partner | |
| By: | /s/ George E. Aitken-Davies | |
| Name: | George E. Aitken-Davies | |
| Title: | Manager | |
| ALTARIS HEALTH PARTNERS V-A, L.P. | ||
| By: | AHP V GP, L.P., its general partner | |
| By: | Altaris Partners, LLC, its general partner | |
| By: | /s/ George E. Aitken-Davies | |
| Name: | George E. Aitken-Davies | |
| Title: | Manager | |
| AHP V GP, L.P. | ||
| By: | Altaris Partners, LLC, its general partner | |
| By: | /s/ George E. Aitken-Davies | |
| Name: | George E. Aitken-Davies | |
| Title: | Manager | |
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Accepted and agreed as of
the date first written above:
PARENT:
IMPACT ACQUIROR INC.
| By: | /s/ Nicholas Fulco | |
| Name: Nicholas Fulco | ||
| Title: President |
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Schedule A
| Investor | Commitment | |||
| Altaris Health Partners V, L.P. | $ | 382,599,222 | ||
| Altaris Health Partners V-A, L.P. | $ | 178,600,778 | ||
| Total: | $ | 561,200,000 | ||
Exhibit 16(c)(iii)
| HIGHLY CONFIDENTIAL Project Savanna DISCUSSION MATERIALS FOR THE BOARD OF DIRECTORS JUNE 2 1 , 2024 HIGHLY CONFIDENTIAL |
| HIGHLY CONFIDENTIAL This presentation, and any supplemental information (written or oral) or other documents provided in connection therewith (collectively, the “materials”), are provided solely for the information of the Board of Directors (the “Board”) of Sharecare, Inc. (the “Company”) by Houlihan Lokey in connection with the Board’s consideration of a potential transaction (the “Transaction”) involving the Company. This presentation is incomplete without reference to, and should be considered in conjunction with, any supplemental information provided by and discussions with Houlihan Lokey in connection therewith. Any defined terms used herein shall have the meanings set forth herein, even if such defined terms have been given different meanings elsewhere in the materials. The materials are for discussion purposes only. Houlihan Lokey expressly disclaims any and all liability, whether direct or indirect, in contract or tort or otherwise, to any person in connection with the materials. The materials were prepared for specific persons familiar with the business and affairs of the Company for use in a specific context and were not prepared with a view to public disclosure or to conform with any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and none of the Board, the Company or Houlihan Lokey takes any responsibility for the use of the materials by persons other than the Board. The materials are provided on a confidential basis solely for the information of the Board and may not be disclosed, summarized, reproduced, disseminated or quoted or otherwise referred to, in whole or in part, without Houlihan Lokey’s express prior written consent. Notwithstanding any other provision herein, the Company (and each employee, representative or other agent of the Company) may disclose to any and all persons without limitation of any kind, the tax treatment and tax structure of any transaction and all materials of any kind (including opinions or other tax analyses, if any) that are provided to the Company relating to such tax treatment and structure. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, the tax treatment of a transaction is the purported or claimed U.S. income or franchise tax treatment of the transaction and the tax structure of a transaction is any fact that may be relevant to understanding the purported or claimed U.S. income or franchise tax treatment of the transaction. If the Company plans to disclose information pursuant to the first sentence of this paragraph, the Company shall inform those to whom it discloses any such information that they may not rely upon such information for any purpose without Houlihan Lokey’s prior written consent. Houlihan Lokey is not an expert on, and nothing contained in the materials should be construed as advice with regard to, legal, accounting, regulatory, insurance, tax or other specialist matters. Houlihan Lokey’s role in reviewing any information was limited solely to performing such a review as it deemed necessary to support its own advice and analysis and was not on behalf of the Board. The materials necessarily are based on financial, economic, market and other conditions as in effect on, and the information available to Houlihan Lokey as of, the date of the materials. Although subsequent developments may affect the contents of the materials, Houlihan Lokey has not undertaken, and is under no obligation, to update, revise or reaffirm the materials, except as may be expressly contemplated by Houlihan Lokey’s engagement letter. The materials are not intended to provide the sole basis for evaluation of the Transaction and do not purport to contain all information that may be required. The materials do not address the underlying business decision of the Company or any other party to proceed with or effect the Transaction, or the relative merits of the Transaction as compared to any alternative business strategies or transactions that might be available for the Company or any other party. The materials do not constitute any opinion, nor do the materials constitute a recommendation to the Board, the Company, any security holder of the Company or any other party as to how to vote or act with respect to any matter relating to the Transaction or otherwise or whether to buy or sell any assets or securities of any company. Houlihan Lokey’s only opinion is the opinion, if any, that is actually delivered to the Board. In preparing the materials Houlihan Lokey has acted as an independent contractor and nothing in the materials is intended to create or shall be construed as creating a fiduciary or other relationship between Houlihan Lokey and any party. The materials may not reflect information known to other professionals in other business areas of Houlihan Lokey and its affiliates. The preparation of the materials was a complex process involving quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaption and application of these methods to the unique facts and circumstances presented and, therefore, is not readily susceptible to partial analysis or summary description. Furthermore, Houlihan Lokey did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. Accordingly, the analyses contained in the materials must be considered as a whole. Selecting portions of the analyses, analytic methods and factors without considering all analyses and factors could create a misleading or incomplete view. The materials reflect judgments and assumptions with regard to industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are beyond the control of the participants in the Transaction. Any estimates of value contained in the materials are not necessarily indicative of actual value or predictive of future results or values, which may be significantly more or less favorable. Any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which any assets, businesses or securities may actually be sold. The materials do not constitute a valuation opinion or credit rating. The materials do not address the consideration to be paid or received in, the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Transaction or otherwise. Furthermore, the materials do not address the fairness of any portion or aspect of the Transaction to any party. In preparing the materials, Houlihan Lokey has not conducted any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (contingent or otherwise) of the Company or any other party and has no obligation to evaluate the solvency of the Company or any other party under any law. All budgets, projections, estimates, financial analyses, reports and other information with respect to operations reflected in the materials have been prepared by management of the relevant party or are derived from such budgets, projections, estimates, financial analyses, reports and other information or from other sources, which involve numerous and significant subjective determinations made by management of the relevant party and/or which such management has reviewed and found reasonable. The budgets, projections and estimates contained in the materials may or may not be achieved and differences between projected results and those actually achieved may be material. Houlihan Lokey has relied upon representations made by management of the Company that such budgets, projections and estimates have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management (or, with respect to information obtained from public sources, represent reasonable estimates), and Houlihan Lokey expresses no opinion with respect to such budgets, projections or estimates or the assumptions on which they are based. The scope of the financial analysis contained herein is based on discussions with the Company (including, without limitation, regarding the methodologies to be utilized), and Houlihan Lokey does not make any representation, express or implied, as to the sufficiency or adequacy of such financial analysis or the scope thereof for any particular purpose. Houlihan Lokey has assumed and relied upon the accuracy and completeness of the financial and other information provided to, discussed with or reviewed by it without (and without assuming responsibility for) independent verification of such information, makes no representation or warranty (express or implied) in respect of the accuracy or completeness of such information and has further relied upon the assurances of the Company that it is not aware of any facts or circumstances that would make such information inaccurate or misleading. In addition, Houlihan Lokey has relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company or any other participant in the Transaction since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to, discussed with or reviewed by Houlihan Lokey that would be material to its analyses, and that the final forms of any draft documents reviewed by Houlihan Lokey will not differ in any material respect from such draft documents. The materials are not an offer to sell or a solicitation of an indication of interest to purchase any security, option, commodity, future, loan or currency. The materials do not constitute a commitment by Houlihan Lokey or any of its affiliates to underwrite, subscribe for or place any securities, to extend or arrange credit, or to provide any other services. In the ordinary course of business, certain of Houlihan Lokey’s affiliates and employees, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold or sell, long or short positions, or trade or otherwise effect transactions, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company, any Transaction counterparty, any other Transaction participant, any other financially interested party with respect to any transaction, other entities or parties that are mentioned in the materials, or any of the foregoing entities’ or parties’ respective affiliates, subsidiaries, investment funds, portfolio companies and representatives (collectively, the “Interested Parties”), or any currency or commodity that may be involved in the Transaction. Houlihan Lokey provides mergers and acquisitions, restructuring and other advisory and consulting services to clients, which may have in the past included, or may currently or in the future include, one or more Interested Parties, for which services Houlihan Lokey has received, and may receive, compensation. Although Houlihan Lokey in the course of such activities and relationships or otherwise may have acquired, or may in the future acquire, information about one or more Interested Parties or the Transaction, or that otherwise may be of interest to the Board, or the Company, Houlihan Lokey shall have no obligation to, and may not be contractually permitted to, disclose such information, or the fact that Houlihan Lokey is in possession of such information, to the Board, or the Company or to use such information on behalf of the Board, or the Company. Houlihan Lokey’s personnel may make statements or provide advice that is contrary to information contained in the materials. Disclaimer 2 |
| Page 1. Preliminary Financial Analyses 3 2. Preliminary Selected Public Market Observations 18 3. Appendix 26 |
| HIGHLY CONFIDENTIAL Historical and Projected Financial Data Management Projections Source: Company filings, management projections. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. A refers to Actual; CAGR refers to Compound Annual Growth Rate; E refers to Estimated; NMF refers to not meaningful figure; SBC refers to stock-based compensation. Note: Segment revenue may not sum to total revenue due to rounding. 4 ($ in millions, except per share data) CAGR 21A-23A 24E-27E Revenue 4% 19% Adj. EBITDA (22%) 72% NMF Adj. EBITDA – Capex NMF NMF Adj. EBITDA – Capex – SBC NMF Enterprise Provider Life Sciences $243 $259 $244 $207 $283 $369 $436 $91 $104 $119 $123 $138 $150 $160 $78 $80 $82 $86 $91 $98 $104 $413 $442 $445 $416 $512 $617 $700 2021A 2022A 2023A 2024E 2025E 2026E 2027E $27 $6 $16 $22 $62 $92 $110 2021A 2022A 2023A 2024E 2025E 2026E 2027E ($14) ($39) ($12) ($2) $38 $68 $85 2021A 2022A 2023A 2024E 2025E 2026E 2027E ($61) ($108) ($59) ($46) $7 $36 $54 2021A 2022A 2023A 2024E 2025E 2026E 2027E |
| HIGHLY CONFIDENTIAL Illustrative Benchmarking Management Projections vs. Digital Health Companies Source: Company filings, management projections, FactSet, Capital IQ, Bloomberg as of 6/18/2024. A refers to Actual; CAGR refers to Compound Annual Growth Rate; E refers to Estimated. (1) On 1/20/23, Evolent Health completed the acquisition of National Imaging Associates, Inc. Historical figures do not reflect results pro forma for the acquisition. (2) On 3/20/24, Alight, Inc. announced an agreement to sell its payroll and professional services business, which it classified as discontinued operations. Results include contributions from discontinued operations. 5 ($ in millions, except per share data) [1] Savanna 32% 30% 19% 13% 11% 8% 4% 1% [2] Savanna 22% 18% 18% 18% 15% 12% 4% 4% [2] 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 2021A – 2023A Revenue CAGR (Descending Order) 2024E – 2026E Revenue CAGR (Descending Order) |
| HIGHLY CONFIDENTIAL Financial Projections Comparison: Management Projections vs. Consensus 6 ($ in millions, except per share data) Source: Management projections. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. E refers to Estimated; NA refers to not available; YoY refers to Year over Year. (1) Only Morgan Stanley forecasts out to 2026E. Management Revenue Projections Consensus Revenue Estimates Management Adj. EBITDA Projections Consensus Adj. EBITDA Estimates YoY Growth Enterprise Provider Life Sciences Adj. EBITDA Margin Adj. EBITDA 15% (6%) 23% 20% 5% 12% $22 $62 $92 $110 2024E 2025E 2026E 2027E $207 $283 $369 $436 $123 $138 $150 $160 $86 $91 $98 $104 $416 $512 $617 $700 2024E 2025E 2026E 2027E 14% 16% (12%) 9% 6% 0% 3% 10% $198 $216 $233 $120 $132 $142 $75 $81 $81 $393 $429 $456 2024E 2025E 2026E 2027E NA $2 $12 $44 2024E 2025E 2026E 2027E NA (1) (1) |
| HIGHLY CONFIDENTIAL Sources: Company filings, management projections. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. E refers to Estimated. 7 ($ in millions) Revenue Adj. EBITDA Adj. EBITDA – Capex Historical and Projected Financial Data Management Projections from 2021 – 2024 vs Actual Performance $413 $442 $445 $396 $512 $629 $443 $532 $620 $455 $487 $521 $416 $512 $617 $700 $350 $400 $450 $500 $550 $600 $650 $700 $750 2021E 2022E 2023E 2024E 2025E 2026E 2027E Actuals 2021 Forecast 2022 Forecast 2023 Forecast 2024 Forecast $31 $60 $100 $16 $41 $83 $29 $54 $64 $22 $62 $92 $110 $27 $6 $16 $0 $20 $40 $60 $80 $100 $120 2021E 2022E 2023E 2024E 2025E 2026E 2027E ($26) $6 $45 ($3) $22 $32 ($2) $38 $68 $85 ($14) ($39) ($12) ($60) ($20) $20 $60 2021E 2022E 2023E 2024E 2025E 2026E 2027E |
| HIGHLY CONFIDENTIAL 8 Market Backdrop Since Closing of de-SPAC Transaction (7/2/21) Digital Health Valuation Multiples: EV / NTM Revenue Revenue multiples have normalized at significantly lower levels since Savanna went public in 2021 Source: Capital IQ as of 6/18/24. Note: Figures shown on this page are sourced directly from Capital IQ for illustrative purposes and therefore may differ from figures shown on other pages. Note: Multiples <0x or >25x considered NMF. EV refers to Enterprise Value; NMF refers to not meaningful figure; NTM refers to Next Twelve Months. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) Includes ACCD, ALIT, AMWL, EVH, HCAT, PHR, and TDOC. 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Sharecare, Inc. Selected Companies Index² Since Two-Year One-Year YTD Current de-SPAC¹ Average Average Average (6/18/24) Sharecare, Inc. 1.6x 0.9x 0.6x 0.6x 0.6x Selected Companies Index² 3.0x 1.9x 1.7x 1.6x 1.1x |
| HIGHLY CONFIDENTIAL 9 Market Backdrop Since Closing of de-SPAC Transaction (7/2/21) Digital Health Valuation Multiples: EV / NTM EBITDA EBITDA multiples have normalized at significantly lower levels since Savanna went public in 2021 Source: Capital IQ as of 6/18/24. Note: Figures shown on this page are sourced directly from Capital IQ for illustrative purposes and therefore may differ from figures shown on other pages. Note: Multiples <0x or >100x considered NMF. Note: Since reporting first quarter earnings on 5/9/24, Sharecare consensus NTM EBITDA estimates fell to ($7.2) million, resulting in a not meaningful multiple. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. EV refers to Enterprise Value; NMF refers to not meaningful figure; NTM refers to Next Twelve Months. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) Includes ACCD, ALIT, AMWL, EVH, HCAT, PHR, and TDOC. 0.0x 20.0x 40.0x 60.0x 80.0x 100.0x 120.0x Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Sharecare, Inc. Selected Companies Index² Since Two-Year One-Year YTD Current de-SPAC¹ Average Average Average (6/18/24) Sharecare, Inc. 22.9x 14.9x 9.3x 8.9x NMF Selected Companies Index² 23.5x 17.3x 14.6x 14.0x 11.1x |
| HIGHLY CONFIDENTIAL Enterprise Value(1) $284 $487 $6,859 -$166 $3,255 $307 $1,153 $2,286 Market Cap.(1) $334 $515 $4,319 $130 $2,656 $406 $1,216 $1,845 LTM Share Perf. (53%) (54%) (19%) (84%) (23%) (49%) (39%) (59%) Inst. Ownership 35% 79% 82% 38% 109% 88% 94% 74% Preliminary Digital Health Industry Benchmarking Valuation Metrics EV / 2024E Revenue EV / 2024E Revenue / 2023A – 2024E Revenue Growth Source: Capital IQ as of 6/18/2024, Wall Street research. Multiples <0x or >100x considered NMF. Note: Savanna metrics based on Street consensus estimates; A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Based on diluted shares. Based on closing prices as of 6/18/2024. (2) Median excludes Savanna. EV / 2024E EBITDA 10 Savanna Consensus Savanna Consensus Savanna Consensus Median(2): 1.1x Median(2): 0.20x Median(2): 10.6x Savanna Savanna Management Savanna Management Savanna Management ($ in millions, except per share data) 0.7x 0.7x 2.8x 2.0x 1.3x 1.0x 1.0x 0.9x NMF NMF NMF 0.82x 0.40x 0.25x 0.15x 0.06x 0.04x NMF NMF 14.4x 13.2x 12.4x 8.8x 6.2x NMF NMF NMF |
| HIGHLY CONFIDENTIAL 44% 46% 71% 71% 50% 49% 35% 34% 19% 0% 5% 22% 14% 10% 8% 4% 3% (60%) $393 $416 $3,492 $2,659 $2,576 $478 $415 $308 $261 Enterprise Value(1) $284 $487 $6,859 -$166 $3,255 $307 $1,153 $2,286 Market Cap.(1) $334 $515 $4,319 $130 $2,656 $406 $1,216 $1,845 Preliminary Digital Health Industry Benchmarking Operating Metrics Source: Capital IQ as of 6/18/2024. Wall Street research. Metrics <0 considered NM. Note: Savanna metrics based on Street consensus estimates; A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Based on diluted shares. Based on closing prices as of 6/18/2024. (2) Median excludes Savanna. (3) Reflects gross margin estimate for fiscal year ending February 2025. 2024E Revenue & 2024E / 2025E Revenue Growth 2024E Gross Profit & Gross Margin 2024E Adj. EBITDA & Adj. EBITDA Margin 11 (12%) / 9% 2% / 6% 2% / 4% 30% / 15% 18% / 18% 19% / 18% 4% / 12% 1% / 24% $173 $295 $1,881 $154 $232 $92 $1,197 $487 $2 $783 $366 $247 $25 $18 $13 ($158) Savanna Median(2): $478 4% / 15% Median(2): 8% / $25 Median(2): 49% / $295 Savanna Consensus Savanna Consensus Savanna Consensus Savanna Management Savanna Management Savanna Management $22 $192 (6%) / 23% ($ in millions, except per share data) (3) |
| HIGHLY CONFIDENTIAL Summary of Preliminary Financial Analysis Implied Prices Per Share Source: Company filings, Savanna management projections. 12 PRESENT VALUE Current Share Price (6/18/2024): $0.80 Preliminary Discounted Cash Flow Analysis ‒ Terminal EBITDA multiple: 6.0x – 9.0x ‒ WACC: 11.5% – 12.5% ‒ Present values as of 6/19/24 Preliminary Selected Companies Analysis (2025E Revenue Multiples) ‒ 0.75x – 1.25x 2025E Revenue Preliminary Selected Companies Analysis (2024E Revenue Multiples) ‒ 1.00x – 1.75x 2024E Revenue Preliminary Selected Companies Analysis (2025E EBITDA Multiples) ‒ 7.0x – 10.0x 2025E Adj. EBITDA Preliminary Selected Companies Analysis (2024E EBITDA Multiples) ‒ 11.0x – 13.0x 2024E Adj. EBITDA $1.16 $1.08 $0.97 $0.64 $1.04 $1.75 $1.60 $1.65 $0.88 $1.82 Altaris Proposal (6/20/2024): $1.43 |
| HIGHLY CONFIDENTIAL Illustrative Analysis at Various Prices 13 Source: Company filings, Savanna management projections, Capital IQ as of 6/18/2024. Metrics <0 considered NM. Note: A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Savanna Management estimates; (2) Non-Controlling Interest reflects a minimum of $0. Non-Controlling Interest as of 3/31/24 is ($0.3) million, per Savanna management; (3) Based on U.S. announced software transactions since June 2023, 25th – 75th percentile of 1-month premiums. ($ and shares in millions, except per share data) Digital Health Median 2024E Revenue Multiple Premiums Paid – U.S. Public Tech Companies, LTM(3) Digital Health Median 2024E EBITDA Multiple $0.99 - $1.24 $1.17 $0.62 Altaris Proposal: $1.43 24% 55% 2024E Median: 10.6x 2024E Median: 1.14x Current Illustrative Share Prices Price Per Share $0.80 $1.20 $1.30 $1.40 $1.43 $1.50 $1.60 $1.70 $1.80 $1.90 Fully Diluted Shares (6/6/2024A)(1) 440.8 444.3 446.1 447.7 448.2 450.5 454.2 457.5 460.4 463.0 Equity Value $353 $533 $580 $627 $641 $676 $727 $778 $829 $880 Less: Net Cash (4/30/2023A) (94) (94) (94) (94) (94) (94) (94) (94) (94) (94) Plus: Minority Interest (4/30/2023A)(2) - - - - - - - - - - Plus: Preferred Equity (4/30/2023A) 50 50 50 50 50 50 50 50 50 50 Enterprise Value $308.7 $489.2 $536.1 $582.9 $597.0 $631.9 $682.9 $733.9 $784.9 $835.9 Premium / (Discount) to: Metric Current Share Price (6/18/2024) $0.80 - 50% 63% 75% 79% 88% 100% 113% 125% 138% 52-Week High (7/17/2023) $1.80 (56%) (33%) (28%) (22%) (21%) (17%) (11%) (6%) 0% 6% 52-Week Low (4/1/2024) $0.48 66% 149% 170% 191% 197% 212% 233% 253% 274% 295% EV / Revenue 2024E(1) $416 0.7x 1.2x 1.3x 1.4x 1.4x 1.5x 1.6x 1.8x 1.9x 2.0x 2025E(1) $512 0.6x 1.0x 1.0x 1.1x 1.2x 1.2x 1.3x 1.4x 1.5x 1.6x EV / Adj. EBITDA 2024E(1) $22 14.4x 22.8x 24.9x 27.1x 27.8x 29.4x 31.8x 34.1x 36.5x 38.9x 2025E(1) $62 5.0x 7.9x 8.7x 9.4x 9.7x 10.2x 11.1x 11.9x 12.7x 13.5x |
| HIGHLY CONFIDENTIAL 14 Preliminary Financial Analysis Summary (cont’d) Source: Savanna management. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; PV refers to Present Value. (1) Per Savanna management. (2) Based on the present value of future Federal and State net operating loss usage discounted at a cost of equity of 13.5%. Per Savanna management, there are $439.0 million of Federal NOLs and $418.2 million of State NOLs outstanding as of 12/31/23. Of the $439.0 million of Federal NOLs, Savanna management has indicated that $45.7 million are subject to Section 382 limitations. For purposes of the Discounted Cash Flow Analysis, NOLs are applied during the period from 2024E to 2027E to reduce tax payments to $0. The implied value attributable to the remaining balance of the NOLs is then discounted to present value for the high end of the range. For purposes of the Selected Companies Analysis, the low end and high end of the multiples approaches have been sensitized to include 0% of the value at the low end and 100% of the implied present value at the high end. (3) Represents liquidation preference of Series A redeemable preferred stock, convertible above $10.00 per share. (4) Non-Controlling Interest reflects a minimum of $0. Non-Controlling Interest as of 3/31/24 is ($0.3) million, per Savanna management. (5) Based on (i) ~362.4 million gross common shares outstanding less ~3.2 million shares subject to an earnout with a hurdle of $12.00 per share, (ii) ~89.4 million options to purchase common stock (to the extent in the money, based on the treasury method), (iii) ~70.4 million restricted stock units, and (iv) ~10.9 million performance stock units as of 6/6/24, per Savanna management. ($ in millions, except per share data) Selected Companies Selected Companies Selected Companies Selected Companies Discounted Cash Flow Analysis Analysis Analysis Analysis Analysis CY 2024E CY 2024E CY 2025E CY 2025E Terminal EBITDA Multiple Total Revenue Adjusted EBITDA Total Revenue Adjusted EBITDA 6.0x -- 9.0x Discount Rate Corresponding Base Amount $416.4 $21.5 $512.3 $61.7 11.5% -- 12.5% Selected Multiples Range 1.00x -- 1.75x 11.0x -- 13.0x 0.75x -- 1.25x 7.0x -- 10.0x Implied Enterprise Value Reference Range $416.4 -- $728.6 $236.5 -- $279.5 $384.2 -- $640.3 $431.9 -- $617.1 $469.7 -- $709.3 Cash & Cash Equivalents as of 4/30/24 [1] 94.6 -- 94.6 94.6 -- 94.6 94.6 -- 94.6 94.6 -- 94.6 94.6 -- 94.6 PV of Net Operating Losses as of 6/19/24 [2] 0.0 -- 66.3 0.0 -- 66.3 0.0 -- 66.3 0.0 -- 66.3 0.0 -- 48.9 Implied Total Enterprise Value Reference Range $511.0 -- $889.6 $331.1 -- $440.4 $478.8 -- $801.3 $526.5 -- $778.0 $564.3 -- $852.8 Total Debt as of 4/30/24 [1] (0.7) -- (0.7) (0.7) -- (0.7) (0.7) -- (0.7) (0.7) -- (0.7) (0.7) -- (0.7) Preferred Stock as of 4/30/24 [1] [3] (50.0) -- (50.0) (50.0) -- (50.0) (50.0) -- (50.0) (50.0) -- (50.0) (50.0) -- (50.0) Non-Controlling Interest as of 4/30/24 [1] [4] 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 Implied Total Equity Value Reference Range $460.3 -- $838.9 $280.4 -- $389.7 $428.1 -- $750.6 $475.8 -- $727.3 $513.6 -- $802.1 Shares Outstanding [1] [5] 440.9 -- 461.0 440.8 -- 440.8 440.8 -- 455.8 441.6 -- 454.3 443.4 -- 459.0 Implied Per Share Reference Range $1.04 -- $1.82 $0.64 -- $0.88 $0.97 -- $1.65 $1.08 -- $1.60 $1.16 -- $1.75 |
| HIGHLY CONFIDENTIAL 15 Preliminary Selected Savanna Historical and Projected Financial Data Source: Savanna management. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non-recurring items. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CAGR refers to Compound Annual Growth Rate; E refers to Estimated; LTM refers to Latest 12 Months; NMF refers to not meaningful figure; R&D refers to Research & Development. (1) Total Adjustments: (2) Reflects purchase of property and equipment and capitalized internal-use software costs. ($ in millions) Calendar Year Ended December 31, LTM Ended Calendar Year Ending December 31, CAGR 2021 2022 2023 3/31/2024 2024E 2025E 2026E 2027E 2023 to 2027E Total Revenue $412.9 $442.5 $445.3 $419.6 $416.4 $512.3 $616.8 $700.1 12.0% Growth % 25.6% 7.2% 0.6% -6.5% 23.0% 20.4% 13.5% Cost of Revenue (202.9) (234.8) (249.5) (233.1) (224.5) (261.9) (316.6) (362.9) Gross Profit $210.0 $207.7 $195.8 $186.5 $191.9 $250.4 $300.2 $337.2 Margin % 50.9% 46.9% 44.0% 44.4% 46.1% 48.9% 48.7% 48.2% Sales & Marketing (47.8) (50.4) (48.4) (45.7) (45.5) (51.3) (55.1) (62.2) General & Administrative (77.9) (88.9) (83.4) (81.3) (79.3) (92.6) (103.0) (111.2) Product & Technology (57.3) (56.4) (46.0) (45.3) (45.3) (44.8) (50.0) (53.8) Total Operating Expenses (183.0) (195.8) (177.8) (172.3) (170.0) (188.7) (208.0) (227.3) Other 0.0 (6.1) (1.6) (1.0) (0.3) 0.0 0.0 0.0 Adjusted EBITDA [1] $27.0 $5.8 $16.5 $13.1 $21.5 $61.7 $92.2 $109.9 60.7% Margin % 6.5% 1.3% 3.7% 3.1% 5.2% 12.0% 14.9% 15.7% Growth % 273.2% -78.5% 183.9% 30.5% 187.0% 49.4% 19.2% Stock-Based Compensation (46.8) (69.6) (46.9) (50.6) (44.4) (31.5) (31.5) (31.5) Depreciation & Amortization (32.6) (45.3) (61.2) (59.8) (50.3) (36.8) (27.3) (25.3) Adjusted EBIT ($52.4) ($109.1) ($91.7) ($97.2) ($73.2) ($6.6) $33.4 $53.1 NMF Margin % -12.7% -24.7% -20.6% -23.2% -17.6% -1.3% 5.4% 7.6% Growth % NMF NMF NMF NMF NMF NMF 59.1% Additional Financial Information Capital Expenditures [2] ($40.8) ($44.4) ($28.8) ($28.8) ($23.4) ($23.7) ($24.3) ($24.7) Acquisitions ($71.6) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Change in Net Working Capital ($21.2) ($9.2) $15.6 $6.4 ($9.5) ($3.5) ($10.4) ($7.6) Depreciation & Amortization $32.6 $45.3 $61.2 $59.8 $50.3 $36.8 $27.3 $25.3 Stock-Based Compensation 46.8 69.6 46.9 50.6 44.4 31.5 31.5 31.5 Warrants Issued with Revenue Contracts 0.1 0.1 0.0 0.1 Amortization of Non-Cash Payment for R&D 1.2 2.5 4.8 3.6 Non-Operating, Non-Recurring Costs 10.6 11.1 5.9 6.3 16.8 2.0 2.0 2.0 Reorganizational and Severance Costs 1.5 10.8 32.0 26.3 1.5 1.0 1.0 1.0 Acquisition-Related Costs 19.7 5.8 1.7 2.5 Total Adjustments $112.5 $145.1 $152.5 $149.1 $113.0 $71.3 $61.8 $59.8 |
| HIGHLY CONFIDENTIAL 16 Preliminary Selected Companies Analysis Source: Company filings, Capital IQ as of 6/18/24, Bloomberg, Wall Street research. Multiples <0x or >20x considered NMF. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; NMF refers to not meaningful figure. (1) Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalents. (2) Based on closing prices as of 6/18/24. (3) Based on diluted shares. (4) Multiples based on forward looking financial information have been calendarized to the Company’s fiscal year end of December 31st. (5) Results include contributions from discontinued operations, following announcement of the sale of the payroll and professional services business on May 20, 2024. ($ in millions, except per share data) Share Equity Market Enterprise Enterprise Value [1] to Revenue Enterprise Value [1] to Adjusted EBITDA Selected Company Price [2] Value [2] [3] Value [2] [3] CY 2024E [4] CY 2025E [4] CY 2026E [4] CY 2024E [4] CY 2025E [4] CY 2026E [4] Accolade, Inc. $6.15 514.8 486.7 1.02x 0.87x 0.74x NMF 14.8x 8.5x Alight, Inc. [5] $7.37 4,319.3 6,859.3 1.96x 1.86x 1.80x 8.8x 7.9x 7.2x American Well Corporation $0.37 129.5 (166.4) NMF NMF NMF NMF NMF NMF Evolent Health, Inc. $22.07 2,655.9 3,255.4 1.26x 1.10x 0.96x 13.2x 10.1x 8.4x Health Catalyst, Inc. $6.34 406.3 306.9 1.00x 0.89x 0.79x 12.4x 8.2x 5.9x Phreesia, Inc. $19.50 1,215.8 1,152.7 2.78x 2.35x 2.01x NMF NMF 16.4x Teladoc Health, Inc. $10.09 1,844.8 2,286.4 0.86x 0.83x 0.80x 6.2x 5.5x 5.1x Low 0.86x 0.83x 0.74x 6.2x 5.5x 5.1x High 2.78x 2.35x 2.01x 13.2x 14.8x 16.4x Median 1.14x 0.99x 0.88x 10.6x 8.2x 7.8x Mean 1.48x 1.32x 1.18x 10.1x 9.3x 8.6x Savanna $0.80 $334.5 $284.4 0.72x 0.66x 0.62x NMF 22.8x 6.4x |
| HIGHLY CONFIDENTIAL 17 Preliminary Discounted Cash Flow Analysis Source: Savanna management projections. Note: Present values as of 6/19/24; mid-year convention applied. Refer to WACC calculation for derivation of discount rate. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non-recurring items. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; PV refers to Present Value; Q refers to Quarter. (1) Represents 66.7% of Q2 2024E projections, plus the remaining 6 months of CY 2024E projected information, per Savanna management. (2) Cash Taxes paid assumed to be offset by tax benefit from net operating losses in CY 2026E and CY 2027E, per Savanna management. (3) Implied from corresponding discount rate and 2027E Adjusted EBITDA multiple. ($ in millions) Projected Calendar Year Ending December 31, 2024E [1] 2025E 2026E 2027E Total Revenue $295.0 $512.3 $616.8 $700.1 Growth % 23.0% 20.4% 13.5% Cost of Revenue (157.6) (261.9) (316.6) (362.9) Discount Rate 6.0x 7.5x 9.0x Sales & Marketing (30.2) (51.3) (55.1) (62.2) 11.50% 5.4% 6.5% 7.3% General & Administrative (53.6) (92.6) (103.0) (111.2) 11.75% 5.6% 6.8% 7.6% Product & Technology (29.5) (44.8) (50.0) (53.8) 12.00% 5.8% 7.0% 7.8% Other (0.1) 0.0 0.0 0.0 12.25% 6.0% 7.2% 8.0% Adjusted EBITDA $24.0 $61.7 $92.2 $109.9 12.50% 6.3% 7.5% 8.3% Margin % 8.1% 12.0% 14.9% 15.7% Depreciation & Amortization (32.5) (36.8) (27.3) (25.3) Stock-Based Compensation (26.9) (31.5) (31.5) (31.5) Adjusted EBIT ($35.5) ($6.6) $33.4 $53.1 Taxes [2] 0.0 0.0 0.0 0.0 Discount Rate 6.0x 7.5x 9.0x Unlevered Earnings ($35.5) ($6.6) $33.4 $53.1 11.50% 92.6% 94.0% 94.9% Depreciation & Amortization 32.5 36.8 27.3 25.3 11.75% 92.6% 94.0% 94.9% Capital Expenditures (16.2) (23.7) (24.3) (24.7) 12.00% 92.6% 94.0% 94.9% Change in Net Working Capital (2.5) (3.5) (10.4) (7.6) 12.25% 92.6% 94.0% 94.9% Unlevered Free Cash Flows ($21.5) $3.0 $26.1 $46.2 12.50% 92.6% 94.0% 95.0% Present Value PV of Terminal Value of Cash Flows as a Multiple of Implied Enterprise Value (2024E - 2027E) 2027E Adjusted EBITDA Discount Rate 6.0x 7.5x 9.0x 6.0x 7.5x 9.0x 11.50% $35.9 $448.9 $561.2 $673.4 $484.9 $597.1 $709.3 11.75% $35.6 $445.4 $556.7 $668.1 $481.0 $592.4 $703.7 12.00% $35.3 + $441.9 $552.4 $662.8 = $477.2 $587.7 $698.1 12.25% $35.0 $438.4 $548.0 $657.6 $473.4 $583.0 $692.6 12.50% $34.7 $435.0 $543.7 $652.5 $469.7 $578.4 $687.2 Implied Perpetual Growth Rate [3] PV of Terminal Value as a % of Enterprise Value |
| Page 1. Preliminary Financial Analyses 3 2. Preliminary Selected Public Market Observations 18 3. Appendix 26 |
| HIGHLY CONFIDENTIAL 19 Trading Market Snapshot Public Market Trading Overview 1-Day 5-Day 10-Day 20-Day 30-Day 1-Month 3-Month 6-Month 9-Month 12-Month $0.80 $0.82 $0.84 $0.83 $0.81 $0.83 $0.76 $0.82 $0.87 $0.94 Historical VWAP10 (As of 6/18/24) Sources: Bloomberg, Capital IQ, and public filings. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; NMF refers to not meaningful figure. (1) Per the Company's Form 10-Q for the period ended 3/31/24. (2) Reflects dilutive impact of (i) ~18.7 million warrants to purchase common stock as of 3/31/24 (to the extent in the money, based on the treasury method), (ii) ~89.5 million options to purchase common stock as of 3/31/24 (to the extent in the money, based on the treasury method), and (iii) ~55.8 million restricted stock units as of 3/31/24. (3) Reflects book value, net of debt discount and deferred financing costs. (4) Assumes conversion of Series A preferred stock to common stock. The aggregate liquidation preference of the Series A preferred stock is $50 million. (5) Per Capital IQ. (6) Per Bloomberg. (7) Per public filings. (8) Represents common shares outstanding excluding those held by current and former directors and executive officers. Does not reflect share acquisitions or disposals not publicly disclosed as of 6/18/24. (9) Reflects consensus analyst estimates per Bloomberg. (10) VWAP based on cumulative trading activity over designated number of trading days (based on intraday trading) per Bloomberg as of 6/18/24. (shares outstanding and $ in millions, except per share data and where otherwise noted) ($ per share in actuals) Public Market Enterprise Value Derivation Selected Market Information as of June 18, 2024 Closing Stock Price as of June 18, 2024 $0.80 1-Month Average [5] $0.84 Common Shares Outstanding [1] 362.4 3-Month Average [5] $0.78 Dilutive Shares [1] [2] 55.8 6-Month Average [5] $0.90 Fully Diluted Shares 418.2 52-Week High (7/17/23) [5] $1.80 Market Value of Equity $334.5 52-Week Low (4/1/24) [5] $0.48 Debt [1] [3] 0.6 Preferred Stock [4] 50.0 90-Day Average Daily Trading Volume (in millions) [5] 2.5 Non-Controlling Interest [1] (0.3) % of Total Shares Outstanding 0.7% Total Cash and Cash Equivalents [1] (100.3) 90-Day Average Daily Trading Value (in millions) [5] $1.88 Public Market Enterprise Value $284.4 % of Market Value of Equity 0.6% Number of Analysts Covering the Company [6] 4 Total Public Float [7] [8] 344.0 % of Total Shares Outstanding 94.9% Implied Multiples CY 2024E [9] CY 2025E [9] CY 2026E [9] Enterprise Value / Total Revenue 0.72x 0.66x 0.62x Enterprise Value / Adjusted EBITDA NMF 22.8x 6.4x |
| HIGHLY CONFIDENTIAL Selected Events 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Daily Trading Volume Sharecare, Inc. Current Stock Price [2] Closing Stock Price (dollars per share) Daily Volume (millions) Timeline and Stock Trading History Since Closing of de-SPAC Transaction (7/2/21)1 20 Event Date Comment A 7/2/21 Sharecare, Inc. begins trading on the Nasdaq after completing the acquisition of Falcon Capital Acquisition Corp. in a reverse merger transaction. B 8/11/21 The Company announces the acquisition of CareLinx, a nationwide home care platform. Concurrently, the Company announces Q2 CY 2021 earnings, reporting $98.5 million of revenue (vs. $78.2 million in the prior year period) and adjusted EBITDA of $6.6 million (vs. $7.9 million in the prior year period). C 11/10/21 The Company announces Q3 CY 2021 earnings, reporting $105.6 million of revenue (vs. $80.2 million in the prior year period) and adjusted EBITDA of $7.9 million (vs. $13.3 million in the prior year period). D 3/31/22 The Company announces Q4 and full CY 2021 earnings, achieving full year revenue of $412.8 million (vs. $328.8 million in the prior year period) and adjusted EBITDA of $27.0 million (vs. $32.3 million in the prior year period). E 5/12/22 The Company announces Q1 CY 2022 earnings, reporting $100.7 million of revenue (vs. $90.2 million in the prior year period) and adjusted EBITDA of $0.2 million (vs. $7.1 million in the prior year period). Concurrently, the Company announces a $50 million share repurchase program. F 8/10/22 The Company announces the initiation of a strategic review of its non-enterprise businesses concurrently with Q2 CY 2022 earnings, reporting $103.8 million of revenue (vs. $98.5 million in the prior year period) and adjusted EBITDA of $2.1 million (vs. $6.6 million in the prior year period). Withdraws CY 2022 guidance. G 11/10/22 The Company announces Q3 CY 2022 earnings, reporting $114.6 million of revenue (vs. $105.6 million in the prior year period) and adjusted EBITDA of $7.2 million (vs. $7.9 million in the prior year period). H 3/29/23 The Company announces Q4 and full CY 2022 earnings, achieving full year revenue of $442.4 million (vs. $412.8 million in the prior year period) and adjusted EBITDA of $5.8 million (vs. $27.0 million in the prior year period). The Company provides CY 2023 revenue and adjusted EBITDA guidance of $450 to $460 million and $25 to $30 million, respectively. A B C F D E Current Stock Price2: $0.80 Event Date Comment I 5/10/23 The Company announces Q1 CY 2023 earnings, reporting $116.3 million of revenue (vs. $100.7 million in the prior year period) and adjusted EBITDA of $2.1 million (vs. $0.2 million in the prior year period). J 5/31/23 The Company announces that it completed the strategic review process initiated in 2022, concluding to continue executing on the Company's strategic plan to drive growth and efficiencies across all three business channels. The Board re-authorizes a $50 million stock repurchase program. K 8/9/23 The Company announces Q2 CY 2023 earnings, reporting $110.4 million of revenue (vs. $103.8 million in the prior year period) and adjusted EBITDA of $3.8 million (vs. $2.1 million in the prior year period). L 10/12/23 The Company announces the receipt of an unsolicited preliminary non-binding proposal from Claritas Capital to acquire all of the outstanding shares of common stock of the Company, not already beneficially owned by Claritas Capital and its affiliated funds, for cash consideration of between $1.35 and $1.80 per share. M 11/9/23 The Company announces Q3 CY 2023 earnings, reporting $113.3 million of revenue (vs. $114.6 million in the prior year period) and adjusted EBITDA of $9.6 million (vs. $5.2 million3 in the prior year period). Announces new CEO beginning 1/2/24. N 3/12/24 The Company announces it will delay Q4 and full CY 2023 earnings from 3/13/24 to 3/28/24 and that its Board formed a special committee of independent directors to evaluate multiple proposals for a potential sale and other alternatives. O 3/28/24 The Company announces Q4 and full CY 2023 earnings, achieving full year revenue of $445.3 million (vs. $442.4 million in the prior year period) and adjusted EBITDA of $16.5 million (vs. $5.8 million in the prior year period). P 5/9/24 The Company announces it is conducting a strategic review, which includes discussions with multiple bidders for a potential sale. Concurrently, the Company announces Q1 CY 2024 earnings, reporting $90.9 million of revenue (vs. $116.3 million in the prior year period) and adjusted EBITDA of ($2.7) million (vs. $0.6 million in the prior year period). G H I K J L M Sources: Capital IQ and public filings. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; Q refers to Quarter. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) As of 6/18/24 close. (3) Q3 CY 2022 Adjusted EBITDA was recasted from $7.2 million to $5.2 million, reflecting the Company’s updated computation methodology effective 9/30/23. N O P |
| HIGHLY CONFIDENTIAL Last Twelve Months Last Nine Months Last Six Months Last Three Months 21 Selected Historical Trading Activity As of 6/18/24 Volume: 381.7 million VWAP1: $0.94 Volume: 264.9 million VWAP1: $0.87 Volume: 203.3 million VWAP1: $0.82 Volume: 151.5 million VWAP1: $0.76 16.9% 54.9% 19.5% 3.6% 4.8% 0.1% $0.50- $0.75 $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 24.4% 55.7% 19.9% 0.0% 0.0% 0.0% $0.50- $0.75 $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 31.8% 55.1% 13.1% 0.0% 0.0% 0.0% $0.50- $0.75 $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 42.7% 57.3% 0.0% 0.0% 0.0% 0.0% $0.50- $0.75 $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 Source: Bloomberg as of 6/18/24. VWAP refers to Volume Weighted Average Price. (1) Based on VWAP over specified period (last twelve months, last nine months, last six months, or last three months). Reference to “Month” is based on Calendar months. VWAP in dollars. |
| HIGHLY CONFIDENTIAL 22 Relative Total Shareholder Return Information Since Closing of de-SPAC Transaction (7/2/21)1 32.0% 24.9% -64.3% -91.4% -100% -75% -50% -25% 0% 25% 50% Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Sharecare, Inc. S&P 500 Index (Total Return) Nasdaq Composite Index (Total Return) Selected Companies Index² Source: Capital IQ as of 6/18/24. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) Includes ACCD, ALIT, AMWL, EVH, HCAT, PHR, and TDOC. Since Two-Year One-Year de-SPAC1 Return Return Sharecare, Inc. -91.4% -59.4% -52.9% S&P 500 Index (Total Return) 32.0% 50.5% 26.9% Nasdaq Composite Index (Total Return) 24.9% 64.1% 31.7% Selected Companies Index² -64.3% -33.4% -46.6% |
| HIGHLY CONFIDENTIAL $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Mean Analyst Price Target Share Price 23 Savanna Analyst Perspectives Wall Street Price Targets Consensus Price Targets vs. Stock Price Analyst Recommendation $1.92 $0.80 Premium to Current: 140.0% # of Ratings 5 5 4 4 4 4 4 4 4 4 4 4 4 4 4 4 Sources: Bloomberg, Capital IQ, and Wall Street research as of 6/18/24. E refers to Estimated; EV refers to Enterprise Value; NA refers to not available. (1) CG uses a sum-of-the-parts analysis consisting of a 1.7x multiple to 2024E revenue on the Enterprise segment, a 1.7x multiple to 2024E revenue on the Life Sciences segment and a 1.5x multiple to 2024E revenue on the Provider segment. (2) BTIG does not provide price targets for neutral-rated stocks. Therefore, methodology is not applicable. (3) Houlihan Lokey does not have access to equity research reports published by certain analysts including Nephron Research. 4 60% 60% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 50% 50% 50% 40% 40% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 50% 50% 50% Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Buy Hold 4 4 Broker Date Rating Price Target Methodology CG 5/20/24 Buy $2.00 SOTP1 MS 5/13/24 Equalweight $1.00 0.7x EV / '25E Rev. BTIG 5/10/24 Neutral NA NA2 Nephron 5/9/24 Buy $2.75 NA3 Median $2.00 Mean $1.92 4 |
| HIGHLY CONFIDENTIAL Selected Wall Street Analyst Commentary 24 Analyst Date of Report Recommendation Comments Canaccord Genuity 5/20/24 Buy “In our opinion, there are positive signs that Sharecare is turning the business around and has potential for sustained, profitable growth under new CEO Brent Layton. With the strategic review ongoing, which could potentially result in the sale of parts or all of the business and that management expects to conclude in the next 30-45 days at the time of the earnings release, we continue to believe there is value in shares of Sharecare at current levels. We maintain our BUY rating and $2 price target backed by a sum-of-the-parts valuation.” Morgan Stanley 5/13/24 Equalweight “The company is seeing broad-based weakness across the business, further compounded by ongoing litigation with a large enterprise customer. While Sharecare has been able to soften the blow to EBITDA, nonetheless the company will need to reaccelerate growth to drive better profitability. […] The platform has potential, but execution and new proof points will be key.” “We view the hire of healthcare industry veteran Brent Layton as CEO as a positive, but meaningful negative estimate revisions are weighing on the stock's valuation. The Board is undergoing its 2nd Strategic review of the business within the past year. The development, as well as Sharecare's ability to reaccelerate growth are important dynamics to watch for the stock.” BTIG 5/10/24 Neutral “While we had anticipated that the contract dispute may not be resolved in 1Q:24, we were negatively surprised to see a slowdown in the Provider and Consumer divisions as well. We like how management is orienting the business with a value-based care approach that is focused on health outcomes, but the steps it is taking will take time and SHCR has near-term challenges.” “Our view is that the high recurring revenue stream, with a PMPM-based model for the majority of revenue, is good especially given expected margin expansion. While these are positives, in each of the past ~2 years there have been significant challenges in the Enterprise Division, due to COVID, some plans seeking to save money, and most recently a contract dispute with a large client. While Provider and Consumer revenue growth may be healthy, the inconsistent performance in Enterprise cause us to rate SHCR Neutral.” Source: Wall Street Research. Note: Houlihan Lokey does not have access to equity research reports published by certain analysts including Nephron Research. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. PMPM refers to Per Member Per Month; Q refers to Quarter. |
| HIGHLY CONFIDENTIAL 25 Ownership Summary (shares in millions) Sources: Capital IQ and public filings as of 6/18/24. designates holdings excluded from public float computations. Common Stock Holder Shares % Outstanding Claritas Capital Management Services, Inc. 36.9 10.2% BlackRock, Inc. (NYSE:BLK) 22.7 6.3% The Vanguard Group, Inc. 17.2 4.7% Hearst Corporation 16.2 4.5% Samjo Management, LLC 10.5 2.9% Private Management Group Inc 9.3 2.6% Allspring Global Investments, LLC 7.7 2.1% Geode Capital Management, LLC 6.8 1.9% Pennsylvania Capital Management, Inc. 6.6 1.8% State Street Global Advisors, Inc. 6.1 1.7% Current / Former Directors and Executive Officers 18.4 5.1% Other 204.1 56.3% Total 362.4 100.0% |
| Page 1. Preliminary Financial Analyses 3 2. Preliminary Selected Public Market Observations 18 3. Appendix 26 Preliminary Selected Benchmarking Data 27 Preliminary Weighted Average Cost of Capital Analysis 30 |
| Page 1. Preliminary Financial Analyses 3 2. Preliminary Selected Public Market Observations 18 3. Appendix 26 Preliminary Selected Benchmarking Data 27 Preliminary Weighted Average Cost of Capital Analysis 30 |
| HIGHLY CONFIDENTIAL 28 Preliminary Benchmarking Data Sources: Bloomberg, Capital IQ, Savanna management and public filings. Note: No company shown for comparative purposes is identical to Savanna. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; EV refers to Enterprise Value. LTM refers to the most recently completed 12-month period for which financial information has been made public, other than for the Company, in which case LTM refers to Latest 12 Months. NMF refers to not meaningful figure. (1) Based on public trading prices of common stock. (2) Based on public filings, market data and other public information as of 6/18/24. (3) On 3/20/24, Alight, Inc. announced an agreement to sell its payroll and professional services business, which it classified as discontinued operations. Results include contributions from discontinued operations. (4) On 1/20/23, Evolent Health completed the acquisition of National Imaging Associates, Inc. Historical figures do not reflect results pro forma for the acquisition. ($ in millions) Size Size [1] Leverage [1] Liquidity (LTM Revenue, millions) (Enterprise Value as of 6/18/24, millions) (Debt to EV as of 6/18/24) (Current Ratio as of 6/18/24) Alight, Inc. [3] $3,395.0 Alight, Inc. $6,859.3 Health Catalyst, Inc. 74.4% Health Catalyst, Inc. 4.3 Teladoc Health, Inc. $2,619.3 Evolent Health, Inc. $3,255.4 Teladoc Health, Inc. 67.3% Teladoc Health, Inc. 3.8 Evolent Health, Inc. $2,168.2 Teladoc Health, Inc. $2,286.4 Accolade, Inc. 42.9% American Well Corporation 3.8 Savanna $419.6 Phreesia, Inc. $1,152.7 Alight, Inc. 40.6% Accolade, Inc. 2.6 Accolade, Inc. $414.3 Accolade, Inc. $486.7 Evolent Health, Inc. 18.4% Savanna 2.1 Phreesia, Inc. $373.7 Health Catalyst, Inc. $306.9 Phreesia, Inc. 1.4% Phreesia, Inc. 1.8 Health Catalyst, Inc. $296.8 Savanna [2] $284.4 Savanna [2] 0.2% Alight, Inc. 1.6 American Well Corporation $254.6 American Well Corporation ($166.4) American Well Corporation 0.0% Evolent Health, Inc. 1.0 Historical Growth Projected Growth Projected Growth Projected Growth (CY 2022 to CY 2023 Revenue) (CY 2023 to CY 2024E Revenue) (CY 2023 to CY 2025E Revenue) (CY 2023 to CY 2026E Revenue) Phreesia, Inc. 27.2% Evolent Health, Inc. 30.4% Evolent Health, Inc. 22.6% Evolent Health, Inc. 19.6% Evolent Health, Inc. 22.9% Phreesia, Inc. 18.7% Phreesia, Inc. 18.4% Phreesia, Inc. 17.9% Accolade, Inc. 14.5% Accolade, Inc. 17.7% Accolade, Inc. 17.6% Accolade, Inc. 17.6% Alight, Inc. 8.9% Health Catalyst, Inc. 4.1% American Well Corporation 11.8% American Well Corporation 12.3% Teladoc Health, Inc. 8.1% Alight, Inc. 2.4% Health Catalyst, Inc. 7.8% Savanna 11.5% Health Catalyst, Inc. 7.1% Teladoc Health, Inc. 2.2% Savanna 7.3% Health Catalyst, Inc. 9.4% Savanna 0.6% American Well Corporation 0.9% Alight, Inc. 4.1% Alight, Inc. 3.7% American Well Corporation -6.5% Savanna -6.5% Teladoc Health, Inc. 2.9% Teladoc Health, Inc. 3.2% Projected Growth Projected Growth Projected Growth Historical Growth (CY 2024E to CY 2025E Revenue) (CY 2024E to CY 2026E Revenue) (CY 2025E to CY 2026E Revenue) (CY 2022 to CY 2023 Adjusted EBITDA) American Well Corporation 23.9% Savanna 21.7% Savanna 20.4% Savanna 183.9% Savanna 23.0% American Well Corporation 18.5% Accolade, Inc. 17.6% Evolent Health, Inc. [4] 83.1% Phreesia, Inc. 18.2% Accolade, Inc. 17.6% Phreesia, Inc. 17.0% Teladoc Health, Inc. 33.1% Accolade, Inc. 17.5% Phreesia, Inc. 17.6% Evolent Health, Inc. 14.0% Alight, Inc. 12.1% Evolent Health, Inc. 15.2% Evolent Health, Inc. 14.6% American Well Corporation 13.2% Accolade, Inc. NMF Health Catalyst, Inc. 11.7% Health Catalyst, Inc. 12.2% Health Catalyst, Inc. 12.8% American Well Corporation NMF Alight, Inc. 5.8% Alight, Inc. 4.4% Teladoc Health, Inc. 3.9% Health Catalyst, Inc. NMF Teladoc Health, Inc. 3.6% Teladoc Health, Inc. 3.8% Alight, Inc. 3.0% Phreesia, Inc. NMF Projected Growth Projected Growth Projected Growth Projected Growth (CY 2023 to CY 2024E Adjusted EBITDA) (CY 2023 to CY 2025E Adjusted EBITDA) (CY 2023 to CY 2026E Adjusted EBITDA) (CY 2024E to CY 2025E Adjusted EBITDA) Health Catalyst, Inc. 124.8% Savanna 93.5% Savanna 77.5% Savanna 187.0% Savanna 30.5% Health Catalyst, Inc. 84.5% Health Catalyst, Inc. 67.5% Accolade, Inc. 158.9% Evolent Health, Inc. [4] 26.8% Evolent Health, Inc. [4] 28.6% Evolent Health, Inc. [4] 25.8% Phreesia, Inc. 153.5% Teladoc Health, Inc. 11.5% Teladoc Health, Inc. 12.8% Teladoc Health, Inc. 11.1% Health Catalyst, Inc. 51.4% Alight, Inc. 6.0% Alight, Inc. 8.7% Alight, Inc. 8.6% Evolent Health, Inc. 30.5% Accolade, Inc. NMF Accolade, Inc. NMF Accolade, Inc. NMF Teladoc Health, Inc. 14.0% American Well Corporation NMF American Well Corporation NMF American Well Corporation NMF Alight, Inc. 11.5% Phreesia, Inc. NMF Phreesia, Inc. NMF Phreesia, Inc. NMF American Well Corporation NMF |
| HIGHLY CONFIDENTIAL 29 Preliminary Benchmarking Data (cont’d) Sources: Bloomberg, Capital IQ, Savanna management and public filings. Note: No company shown for comparative purposes is identical to Savanna. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; Depr. refers to Depreciation; E refers to Estimated; EV refers to Enterprise Value; FYE refers to the most recently completed fiscal year for which financial information has been made public. LTM refers to the most recently completed 12-month period for which financial information has been made public, other than for the Company, in which case LTM refers to Latest 12 Months. NMF refers to not meaningful figure; NOL refers to Net Operating Loss. (1) On 1/20/23, Evolent Health completed the acquisition of National Imaging Associates, Inc. Historical figures do not reflect results pro forma for the acquisition. (2) Based on public trading prices of common stock. (3) Based on public filings, market data and other public information as of 6/18/24. ($ in millions) Projected Growth Projected Growth Profitability Profitability (CY 2024E to CY 2026E Adjusted EBITDA) (CY 2025E to CY 2026E Adjusted EBITDA) (CY 2024E Adjusted EBITDA to CY 2024E Revenue) (CY 2025E Adjusted EBITDA to CY 2025E Revenue) Accolade, Inc. 112.4% Accolade, Inc. 74.2% Alight, Inc. 22.4% Alight, Inc. 23.6% Savanna 107.1% Phreesia, Inc. 52.0% Teladoc Health, Inc. 13.8% Teladoc Health, Inc. 15.1% Phreesia, Inc. 96.3% Savanna 49.4% Evolent Health, Inc. 9.6% Savanna 12.0% Health Catalyst, Inc. 44.6% Health Catalyst, Inc. 38.1% Health Catalyst, Inc. 8.0% Health Catalyst, Inc. 10.9% Evolent Health, Inc. 25.4% Evolent Health, Inc. 20.4% Savanna 5.2% Evolent Health, Inc. 10.9% Teladoc Health, Inc. 10.8% Alight, Inc. 8.5% Phreesia, Inc. 4.4% Phreesia, Inc. 9.4% Alight, Inc. 10.0% Teladoc Health, Inc. 7.7% Accolade, Inc. 2.7% Accolade, Inc. 5.9% American Well Corporation NMF American Well Corporation NMF American Well Corporation NMF American Well Corporation NMF Profitability Relative Depreciation Internal Investment Net Operating Losses (CY 2026E Adjusted EBITDA to CY 2026E Revenue) (LTM Depr. to LTM Adjusted EBITDA) (LTM Capital Expenditures to LTM Revenue) (FYE Federal and State NOL) Alight, Inc. 24.9% Alight, Inc. 58.0% Accolade, Inc. 1.2% Teladoc Health, Inc. $3,728.7 Teladoc Health, Inc. 15.7% Evolent Health, Inc. [1] 59.2% Evolent Health, Inc. 1.2% Health Catalyst, Inc. $1,108.1 Savanna 14.9% Teladoc Health, Inc. 107.9% Health Catalyst, Inc. 4.3% Accolade, Inc. $950.1 Health Catalyst, Inc. 13.4% Health Catalyst, Inc. 384.5% Alight, Inc. 4.4% American Well Corporation $907.8 Phreesia, Inc. 12.3% Savanna 454.6% American Well Corporation 4.5% Savanna $857.2 Evolent Health, Inc. 11.5% Accolade, Inc. NMF Teladoc Health, Inc. 5.6% Phreesia, Inc. $599.0 Accolade, Inc. 8.7% American Well Corporation NMF Phreesia, Inc. 6.5% Evolent Health, Inc. $361.6 American Well Corporation NMF Phreesia, Inc. NMF Savanna 6.9% Alight, Inc. $165.0 Net Operating Losses [2] (FYE Federal and State NOL % of EV) Health Catalyst, Inc. 361.0% Savanna [3] 301.4% Accolade, Inc. 195.2% Teladoc Health, Inc. 163.1% Phreesia, Inc. 52.0% Evolent Health, Inc. 11.1% Alight, Inc. 2.4% American Well Corporation NMF |
| Page 1. Preliminary Financial Analyses 3 2. Preliminary Selected Public Market Observations 18 3. Appendix 26 Preliminary Selected Benchmarking Data 27 Preliminary Weighted Average Cost of Capital Analysis 30 |
| HIGHLY CONFIDENTIAL 31 Preliminary Weighted Average Cost of Capital Analysis Source: Company filings, Capital IQ as of 6/18/24, Bloomberg, Wall Street research, 2023 Duff & Phelps Valuation Handbook. Notes: No company used in this calculation for comparative purposes is identical to the Company; *excluded from median and mean data; NA refers to not available. (1) Total Cap refers to total capitalization, which equals Equity Market Value + Total Debt + Pfd. Stock. (2) Total Debt refers to total debt amount based on most recent public filings as of 6/18/24. (3) Dd refers to Implied Tax-Deductible Debt, which equals the lesser of (a) 30% of Adjusted Taxable Income/Cost of Debt, or (b) Total Debt; LTM Adjusted EBITDA based on most recent public filings as of 6/18/24, is assumed to be a valid proxy for Adjusted Taxable Income for the selected companies. (4) Dnd refers to Implied Non-Tax-Deductible Debt, which equals Total Debt minus Dd. (5) Equity Market Value based on closing price on 6/18/24 and on diluted shares as of 6/18/24. (6) Pfd. Stock refers to preferred stock, which is the amount as stated in most recent public filings as of 6/18/24. (7) Based on actual levered beta per Bloomberg 5-year weekly as of 6/18/24. (8) Unlevered Beta = Levered Beta/(1 + ((1 – tax rate) * Dd to Equity Market Value) + (Dnd to Equity Market Value) + (Pfd. Stock to Equity Market Value)). (9) Based on review of studies measuring the historical returns between stocks and bonds, theoretical models such as supply-side and demand-side models and other materials. (10) Kroll Cost of Capital Navigator ("Navigator"). (11) Cost of Equity = Risk-Free Rate of Return + (Levered Beta * Equity Risk Premium) + Size Premium. Risk-Free Rate of Return as of 6/18/24, based on 20-year U.S. Treasury Bond Yield. (12) Based on selected company weighted average interest rate per most recent public filings, unless the selected company has publicly traded debt, in which case the cost of debt is based on the market-based yield to maturity for such securities as of 6/18/24. (13) Based on selected company weighted average preferred dividend per most recent public filings 6/18/24. Total Debt to Dd to Dnd to Total Debt to Dd to Equity Dnd to Equity Pfd. Stock to Equity Market Pfd. Stock to Total Cap Total Cap Total Cap Equity Market Market Value Market Value Total Cap Value to Total Equity Market Selected Company [1] [2] [1] [3] [1] [4] Value [2] [5] [3] [5] [4] [5] [1] [6] Cap [1] [5] Value [5] [6] Accolade, Inc. 28.9% 0.0% 28.9% 40.6% 0.0% 40.6% 0.0% 71.1% 0.0% Alight, Inc. 39.2% 39.2% 0.0% 64.5% 64.5% 0.0% 0.0% 60.8% 0.0% American Well Corporation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% Evolent Health, Inc. 17.4% 17.4% 0.0% 22.5% 22.5% 0.0% 5.1% 77.5% 6.6% Health Catalyst, Inc. 36.0% 7.9% 28.1% 56.2% 12.3% 43.9% 0.0% 64.0% 0.0% Phreesia, Inc. 1.3% 0.0% 1.3% 1.4% 0.0% 1.4% 0.0% 98.7% 0.0% Teladoc Health, Inc. 45.5% 43.6% 1.9% 83.5% 80.0% 3.5% 0.0% 54.5% 0.0% Median 28.9% 7.9% 1.3% 40.6% 12.3% 1.4% 0.0% 71.1% 0.0% Mean 24.0% 15.4% 8.6% 38.4% 25.6% 12.8% 0.7% 75.2% 0.9% Savanna 0.2% 0.2% 0.0% 0.2% 0.2% 0.0% 13.0% 86.9% 14.9% Levered Unlevered Equity Risk Size Cost of Cost of Cost of Pfd. Selected Company Beta [7] Beta [8] Premium [9] Premium [10] Equity [11] Debt [12] Stock [13] WACC Accolade, Inc. 2.12 1.50 5.75% 1.99% 18.6% 7.3% NA 15.3% Alight, Inc. 1.08 0.74 5.75% 0.95% 11.6% 7.3% NA 9.1% American Well Corporation 1.82 1.82 5.75% 4.70% 19.6% NA NA 19.6% Evolent Health, Inc. 1.25 1.02 5.75% 1.21% 12.9% 3.6% * 11.4% 11.0% * Health Catalyst, Inc. 1.13 0.74 5.75% 1.99% 12.9% 6.1% NA 10.4% Phreesia, Inc. 1.29 1.27 5.75% 1.39% 13.3% 7.9% NA 13.2% Teladoc Health, Inc. 1.11 0.69 5.75% 1.39% 12.3% 6.9% NA 9.0% Median 1.25 1.02 12.9% 7.3% 11.4% 11.8% Mean 1.40 1.11 14.5% 7.1% 11.4% 12.8% Savanna 0.97 0.84 5.75% 1.99% 12.0% 7.1% NA 10.5% |
| HIGHLY CONFIDENTIAL 32 Preliminary Weighted Average Cost of Capital Analysis (cont’d) Source: Company filings, Capital IQ as of 6/18/24, Bloomberg, Wall Street research, 2023 Duff & Phelps Valuation Handbook. (1) Risk-Free Rate of Return as of 6/18/24, based on 20-year U.S. Treasury Bond Yield. (2) Based on a review of studies measuring the historical returns between stocks and bonds, theoretical models such as supply side and demand side models and other materials. (3) Navigator. (4) Forward tax rate, per Savanna management. (5) Savanna 2024E Adjusted EBITDA is assumed to be a valid proxy for Savanna Adjusted Taxable Income. (6) Savanna Total Debt refers to total debt amount of Savanna as of 6/18/24. (7) Savanna Dd refers to Implied Tax-Deductible Debt of Savanna, which equals the lesser of (a) 30% of Savanna Adjusted Taxable Income/Cost of Debt, or (b) Savanna Total Debt. Based on Capital Structure Assumptions. (8) Savanna Dnd refers to Implied Non-Tax-Deductible Debt of Savanna, which equals Savanna Total Debt minus Savanna Dd. (9) Based on review of corresponding metrics of selected companies listed on previous page. (10) Based on the Company's Dd and Dnd and the Capital Structure Assumptions regarding Total Debt to Total Capitalization and Equity Market Value to Total Capitalization. (11) Based on review of selected companies’ unlevered betas listed on previous page. (12) Computed Levered Beta = Selected Unlevered Beta * (1 + ((1 – Tax Rate) * Dd to Equity Market Value) + (Dnd to Equity Market Value) + (Preferred Stock to Equity Market Value)); based on Market and Capital Structure Assumptions. (13) Cost of Equity = Risk-Free Rate of Return + (Computed Levered Beta * Equity Risk Premium) + Size Premium. Based on Market Assumptions. ($ in millions) Market Capital Structure Cost of Equity for Assumptions Assumptions Computed WACC Risk-Free Rate of Return [1] 4.47% Savanna Adjusted Taxable Income [5] $21.5 Selected Unlevered Beta [11] 1.02 Equity Risk Premium [2] 5.75% Savanna Total Debt [6] $0.7 Computed Levered Beta [12] 1.32 Size Premium [3] 1.99% Savanna Dd [7] $0.7 Cost of Equity [13] 14.0% Tax Rate [4] 28.17% Savanna Dnd [8] $0.0 Total Debt to Total Capitalization [9] 28.9% Dd to Total Capitalization [10] 28.9% Dnd to Total Capitalization [10] 0.0% Total Debt to Equity Market Value 40.6% Dd to Equity Market Value [10] 40.6% Dnd to Equity Market Value [10] 0.0% Preferred Stock to Total Capitalization [9] 0.0% Equity Market Value to Total Capitalization [9] 71.1% Preferred Stock to Equity Market Value NA Cost of Debt [9] 7.3% Cost of Preferred Stock [9] 11.4% Computed Weighted Average Cost of Capital 11.5% Selected Weighted Average Cost of Capital Range 11.5% -- 12.5% |
| 33 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCIAL AND VALUATION ADVISORY HL.com |
Exhibit 16(c)(iv)
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna DISCUSSION MATERIALS FOR THE BOARD OF DIRECTORS JUNE 17, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 5 pages, confidential information filed separately with the SEC |
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Disclaimer 2 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Source: Proposal letters from and Altaris; discussions with Savanna management. Situation Overview ƒ On June 10th, the Company received two proposals: » Altaris submitted a proposal to acquire the business for $1.375 per share » submitted a proposal to acquire the business for $1.38 per share » Claritas and did not submit proposals: » Claritas (through counsel) indicated they were unable to submit a bid compliant with the process instructions, implying they did not have financing commitments; Claritas remains interested in rolling over their existing equity stake » declined to submit a proposal ƒ Altaris and were subsequently asked to submit revised proposals by June 14th » Altaris requested and received approval to discuss potential equity rollover with Claritas and Jeff Arnold ƒ On June 14th, the Company received two proposals: » Altaris submitted a proposal to acquire the business for $1.425 per share » submitted a proposal to acquire the business for $1.45 per share 3 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Bids Received Since October 2023 October 2023 February 2024 Early March 2024 Late March 2024 April / May 2024 June 2024 Source: Proposal letters from , Altaris, Claritas Capital, , and ; discussions with Savanna management. - $1.95 - $2.05 - - $1.22 (WholeCo) $0.42 (Enterprise) $1.45 Altaris - - - - $1.35 $1.425 Claritas Capital $1.35 - $1.80 $1.60 - $2.00 $1.80 - $2.00 $1.80 - $2.00 $1.50 - $1.60 - - - $1.40 - $1.90 $1.40 - $1.90 $1.28 - $1.50 - - - - - 4 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Communication with Parties Engaged in 2023 ƒ Each of the parties that had engaged with the Company during the 2023 process have declined to engage following Claritas’ 13D filing and company’s public statements regarding a potential transaction » » In September 2023, merged its business with » has indicated that they no longer wish to acquire the business either as a whole, or the Provider business individually » » has indicated that the business lacks the scale to serve as an independent platform investment » » Following Claritas’ 13D filing, submitted a proposal to acquire Savanna for $1.50 per share and subsequently indicated they could bid $1.75 per share » After learning of the dispute in March 2024, indicated that they would disengage due to the performance of the business and the customer churn Source: Discussions with company management. 5 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals (1 of 2) » Price and Structure ƒ $1.45 per share ƒ 80% premium to closing price as of June 14 ƒ 87% premium to the average closing price of Savanna stock over the last 60 trading days ending June 14, 2024 ƒ $1.425 per share ƒ 77% premium to closing price as of June 13 ƒ 76% premium to the 30-day VWAP (from June 13, 2024) » Financing ƒ Sufficient cash on balance sheet to complete a transaction; do not require any new financing; no financing condition ƒ Interested in discussing terms of a rollover by certain key management of their equity interests in the Company ƒ Proposing to finance the Transaction with 100% equity ƒ [Conditional on completion of rollover negotiations with Jeff Arnold] ƒ Not conditional on completing rollover and equity agreement negotiations with Claritas before signing » Assumptions ƒ Share count of 384,807,205 (assuming a closing date of September 30, 2024) ƒ Series A convertible preferred stock is able to be cashed out in the Transaction on an as-converted basis ƒ Unvested equity awards are not accelerated (other than pursuant to pre-existing contractual acceleration rights) ƒ Fully diluted share count of 379,197,006 using the treasury stock method based on information provided by the Company ƒ The Series A convertible preferred stock remains outstanding following the closing of the Transaction ƒ Participants in the Change in Control Plan (“CIC Plan”) will receive replacement equity awards (either cash- or equity-based) for their unvested equity awards. Anticipate allowing certain key members of senior management in the CIC Plan to rollover their non-vested equity awards and convert those awards into a new equity instrument ƒ All other non-vested equity awards will be canceled at closing. The merger agreement contains a non-enforceable commitment to grant cash-based awards to non-CIC Plan participants based on the value of the forfeited awards, with such new awards subject to new vesting terms determined by Altaris, including achievement of minimum EBITDA thresholds and extended service vesting date ƒ Out-of-the-money options will be canceled for no consideration Source: Proposal letters from and Altaris; discussions with Savanna management. 6 (6/14/2024) Altaris (6/14/2024) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals (2 of 2) » Due Diligence, Timing and Approvals ƒ Diligence is substantially complete ƒ Would work in good faith to complete and sign definitive transaction documentation as soon as June 17, 2024 ƒ Execution of definitive documentation will require approval from ’ Board; have previewed proposal with Board committee, which is supportive ƒ Subject to any necessary regulatory approvals ƒ Have obtained all necessary approvals ƒ Finalize financial (including review of April and May 2024 financial results), legal, and tax diligence ƒ Can sign definitive documentation within 5 days after receiving formal feedback from the Special Committee » Other ƒ Plan to provide a long-term incentive plan for management and key employees ƒ Requested an exclusivity period through the earliest to occur of the date of execution of a definitive agreement or June 20, 2024 ƒ Continue to be interested in working with Claritas, and view their participation as highly important. Would like to to engage in substantive discussions with Claritas before signing Source: Proposal letters from and Altaris; discussions with Savanna management. 7 (6/14/2024) Altaris (6/14/2024) *Confidential treatment requested |
Exhibit 16(c)(v)
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals (1 of 2) » Price and Structure ƒ $1.45 per share ƒ 80% premium to closing price as of June 14 ƒ 87% premium to the average closing price of Savanna stock over the last 60 trading days ending June 14, 2024 ƒ $1.425 per share ƒ 77% premium to closing price as of June 13 ƒ 76% premium to the 30-day VWAP (from June 13, 2024) » Financing ƒ Sufficient cash on balance sheet to complete a transaction; do not require any new financing; no financing condition ƒ Interested in discussing terms of a rollover by certain key management of their equity interests in the Company ƒ Proposing to finance the Transaction with 100% equity ƒ [Conditional on completion of rollover negotiations with Jeff Arnold] ƒ Not conditional on completing rollover and equity agreement negotiations with Claritas before signing » Assumptions ƒ Share count of 384,807,205 (assuming a closing date of September 30, 2024) ƒ Series A convertible preferred stock is able to be cashed out in the Transaction on an as-converted basis ƒ Unvested equity awards are not accelerated (other than pursuant to pre-existing contractual acceleration rights) ƒ Fully diluted share count of 379,197,006 using the treasury stock method based on information provided by the Company ƒ The Series A convertible preferred stock remains outstanding following the closing of the Transaction ƒ Participants in the Change in Control Plan (“CIC Plan”) will receive replacement equity awards (either cash- or equity-based) for their unvested equity awards. Anticipate allowing certain key members of senior management in the CIC Plan to rollover their non-vested equity awards and convert those awards into a new equity instrument ƒ All other non-vested equity awards will be canceled at closing. The merger agreement contains a non-enforceable commitment to grant cash-based awards to non-CIC Plan participants based on the value of the forfeited awards, with such new awards subject to new vesting terms determined by Altaris, including achievement of minimum EBITDA thresholds and extended service vesting date ƒ Out-of-the-money options will be canceled for no consideration Source: Proposal letters from and Altaris; discussions with Savanna management. 1 (6/14/2024) Altaris (6/14/2024) Confidential Treatment Requested on 2 pages, confidential information filed separately with the SEC *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals (2 of 2) » Due Diligence, Timing and Approvals ƒ Diligence is substantially complete ƒ Would work in good faith to complete and sign definitive transaction documentation as soon as June 17, 2024 ƒ Execution of definitive documentation will require approval from ’ Board; have previewed proposal with Board committee, which is supportive ƒ Subject to any necessary regulatory approvals ƒ Need to finalize certain confirmatory financial, legal, and tax diligence items prior to signing ƒ Can sign definitive documentation within 5 days after receiving formal feedback from the Special Committee ƒ Other than customary regulatory approvals, do not require any third-party approvals or consents to consummate the Transaction » Other ƒ Plan to provide a long-term incentive plan for management and key employees ƒ Requested an exclusivity period through the earliest to occur of the date of execution of a definitive agreement or June 20, 2024 ƒ Continue to be interested in working with Claritas, and view their participation as highly important. Would like to engage in substantive discussions with Claritas before signing Source: Proposal letters from and Altaris; discussions with Savanna management. 2 (6/14/2024) Altaris (6/14/2024) *Confidential treatment requested |
Exhibit 16(c)(vi)
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna DISCUSSION MATERIALS FOR THE SPECIAL COMMITTEE JUNE 12, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 5 pages, confidential information filed separately with the SEC |
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| Page 1. Executive Summary 3 2. Summary of Selected Changes from Prior Materials 8 3. Preliminary Financial Analyses 14 4. Preliminary Selected Public Market Observations 24 5. Appendix 36 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Source: Proposal letters from and Altaris; discussions with Savanna management. Situation Overview ƒ On June 10th, the Company received two proposals: » Altaris submitted a proposal to acquire the business for $1.375 per share » submitted a proposal to acquire the business for $1.38 per share ƒ Claritas and did not submit proposals: » Claritas (through counsel) indicated they were unable to submit a bid compliant with the process instructions, implying they did not have financing commitments. However, Claritas remains interested in rolling over their existing equity stake, if requested » declined to submit a proposal 4 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals Received on June 10th (1 of 2) » Price and Structure ƒ $1.38 per share ƒ 60% premium to closing price as of June 10 ƒ 76% premium to the average closing price of Savanna stock over the last 60 trading days ending June 7, 2024 ƒ $1.375 per share ƒ 60% premium to closing price as of June 10 ƒ 73% premium to the 30-day VWAP (from June 7, 2024) » Financing ƒ Sufficient cash on balance sheet to complete a transaction; do not require any new financing ƒ Interested in discussing terms of a rollover by certain key management of their equity interests in the Company ƒ Proposing to finance the Transaction with 100% equity ƒ At the appropriate time, would welcome the opportunity to discuss rollover and/or new investment with other investors and members of management ƒ To date, have been working under the assumption that Claritas would be an investor alongside Altaris in this Transaction » Assumptions ƒ Share count of 383,768,828 (assuming a closing date of September 30, 2024) ƒ Series A convertible preferred stock is able to be cashed out in the Transaction on an as-converted basis ƒ Unvested equity awards are not accelerated (other than pursuant to pre-existing contractual acceleration rights) ƒ Fully-diluted share count of 378,440,349 using the treasury stock method ƒ The Series A convertible preferred stock remains outstanding following the closing of the Transaction ƒ Participants in the Change in Control Plan (“CIC Plan”) will receive replacement equity awards (either cash- or equity-based) for their unvested equity awards. Anticipate allowing certain key members of senior management in the CIC Plan to rollover their non-vested equity awards and convert those awards into a new equity instrument ƒ All other non-vested equity awards will be canceled at closing. The merger agreement contains a non-enforceable commitment to grant cash-based awards to non-CIC Plan participants based on the value of the forfeited awards, with such new awards subject to new vesting terms determined by Altaris, including achievement of minimum EBITDA thresholds and extended service vesting date ƒ Out-of-the-money options will be canceled for no consideration Source: Proposal letters from and Altaris; discussions with Savanna management. 5 (6/10/2024) Altaris (6/10/2024) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals Received on June 10th (2 of 2) » Due Diligence, Timing and Approvals ƒ Diligence is substantially complete ƒ Would plan to complete legal review and, assuming that the parties reach agreement on key terms by June 12, 2024, sign definitive transaction documentation by June 19, 2024 ƒ Require approval from ’ Board; have previewed proposal with Board committee, which is supportive ƒ Have obtained all necessary approvals ƒ Finalize financial (including review of April and May 2024 financial results), legal, and tax diligence ƒ Anticipates confirmatory due diligence can be completed by June 13, and can negotiate and execute transaction documentation by June 17, 2024 » Other ƒ Ask that the Company enter into an exclusivity period through June 19, 2024, with automatic one-day extensions should be working in good faith towards signing ƒ Requesting approval to negotiate rollover and equity agreements with Claritas Capital and Jeff Arnold Source: Proposal letters from and Altaris; discussions with Savanna management. 6 (6/10/2024) Altaris (6/10/2024) *Confidential treatment requested |
| Page 1. Executive Summary 3 2. Summary of Selected Changes from Prior Materials 8 3. Preliminary Financial Analyses 14 4. Preliminary Selected Public Market Observations 24 5. Appendix 36 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 8 Summary of Selected Changes From Prior Materials Dated March 15, 2024 The following changes have been made relative to the prior materials dated 3/15/24: ƒ The financial analyses were updated to reflect the following additional updated financial information provided by Savanna management or contained within public filings: ƒ Historical financial information (including LTM ended 3/31/24 revenue, Adjusted EBITDA and balance sheet items) based on 3/31/24 figures per Savanna management (previously, 12/31/23 figures per Savanna management). ƒ Projected financial information has been revised by Savanna management. Among other changes, it reflects the CY 2024E to CY 2027E period (previously, CY 2023E to CY 2026E period). Refer to page 12 for additional selected projections comparison information. ƒ The Company’s basic share count and dilutive securities have been updated to reflect the latest information made available as of 6/6/24 (previously, as of 1/19/24). ƒ The present value of NOLs in the current materials utilize Federal and State actual amounts from Savanna management (previously, reflected estimated amounts from Savanna management as of 12/31/23). The present value of NOLs has been sensitized to include 100% of the value on the high end and 0% on the low end. ƒ Per the revised projections provided by Savanna management, the present value of has been reduced to only include the impact it has on Q1 and Q2 of 2024E, which is about $9.4 million of EBITDA. ƒ Selected Companies Analysis: ƒ The selected companies analysis was updated to reflect stock prices and other publicly available financial information as of 6/10/24 (previously, as of 3/12/24 market close). See page 9 for further detail on observed multiples. ƒ Relative to the prior materials, the selected multiples ranges were decreased. Refer to page 10 for additional information on Selected Companies Analysis and multiple selection. ƒ The selected companies analysis now includes capitalizing CY 2024E Adjusted EBITDA as an approach in the current materials. Refer to page 10 for additional information on Selected Companies Analysis and approaches utilized. ƒ Selected Transactions Analysis: ƒ The selected transactions analysis approach is no longer utilized in the current materials. Refer to page 11 for additional information on Selected Transactions Analysis. ƒ Discounted Cash Flow Analysis: ƒ Stock prices, betas, risk-free rates and other public information utilized in discount rate calculations have been updated to market close on 6/10/24 (previously, as of 3/12/24 market close). ƒ The Weighted Average Cost of Capital Range was increased by 0.50% on the low and high end. Refer to page 11 for additional information on discount rate selection. ƒ The selected terminal multiple range utilized in the exit multiple DCF analysis was reduced by 3.0x on the low and high end. Refer to page 11 for additional information on DCF and discount rate selection. *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 9 Summary of Selected Changes From Prior Materials Selected Companies Multiple Changes Information ($ in millions, except per share data) Revenue Multiples Adjusted EBITDA Multiples Source: Company filings, Capital IQ, Bloomberg, Wall Street research. Multiples <0x or >20x considered NMF. A refers to Actual; Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; NA refers to not available; NMF refers to not meaningful figure. (1) Computed as Current Materials dated June 11, 2024 less Prior Materials dated March 15, 2024. (2) Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalents. (3) Multiples based on forward looking financial information have been calendarized to the Company’s fiscal year end of December 31st. (4) In the Current Materials, results include contributions from discontinued operations, following announcement of the sale of the payroll and professional services business on May 20, 2024. Included in Prior Materials Included in Current Materials (3/15/24) (6/11/24) Market Data as of 3/12/24 Market Data as of 6/10/24 Enterprise Value [2] to Revenue Enterprise Value [2] to Revenue Enterprise Value [2] to Revenue Selected Company CY 2023E [3] CY 2024E [3] CY 2025E [3] CY 2023A CY 2024E [3] CY 2025E [3] CY 2023 CY 2024E [3] CY 2025E [3] Accolade, Inc. 1.88x 1.59x 1.34x 1.32x 1.12x 0.95x -0.56x -0.47x -0.39x Alight, Inc. [4] 2.38x 2.27x 2.13x 2.03x 1.98x 1.87x -0.35x -0.28x -0.26x American Well Corporation NMF NMF NMF NMF NMF NMF NA NA NA Evolent Health, Inc. 2.33x 1.86x 1.61x 1.75x 1.34x 1.16x -0.58x -0.52x -0.44x Health Catalyst, Inc. 1.40x 1.34x 1.20x 1.11x 1.07x 0.96x -0.29x -0.28x -0.24x Phreesia, Inc. 3.83x 3.17x 2.66x 3.39x 2.86x 2.42x -0.44x -0.31x -0.24x Teladoc Health, Inc. 1.21x 1.18x 1.14x 0.92x 0.90x 0.87x -0.29x -0.28x -0.27x Low 1.21x 1.18x 1.14x 0.92x 0.90x 0.87x -0.58x -0.52x -0.44x High 3.83x 3.17x 2.66x 3.39x 2.86x 2.42x -0.29x -0.28x -0.24x Median 2.11x 1.73x 1.47x 1.54x 1.23x 1.06x -0.39x -0.30x -0.26x Mean 2.17x 1.90x 1.68x 1.75x 1.55x 1.37x -0.42x -0.36x -0.31x Savanna 0.66x 0.61x 0.55x 0.70x # 0.79x # 0.73x # 0.03x 0.18x 0.17x Change Versus Prior Materials [1] Included in Prior Materials Included in Current Materials (3/15/24) (6/11/24) Market Data as of 3/12/24 Market Data as of 6/10/24 Enterprise Value [2] to Adjusted EBITDA Enterprise Value [2] to Adjusted EBITDA Enterprise Value [2] to Adjusted EBITDA Selected Company CY 2023E [3] CY 2024E [3] CY 2025E [3] CY 2023A CY 2024E [3] CY 2025E [3] CY 2023 CY 2024E [3] CY 2025E [3] Accolade, Inc. NMF NMF 24.6x NMF NMF 16.3x NA NA -8.3x Alight, Inc. [4] 11.0x 10.1x 9.1x 9.4x 8.8x 7.9x -1.6x -1.2x -1.1x American Well Corporation NMF NMF NMF NMF NMF NMF NA NA NA Evolent Health, Inc. 23.7x 18.2x 14.1x 17.7x 14.0x 10.7x -5.9x -4.2x -3.4x Health Catalyst, Inc. NMF 16.7x 11.1x NMF 13.3x 8.8x NA -3.5x -2.3x Phreesia, Inc. NMF NMF NMF NMF NMF NMF NA NA NA Teladoc Health, Inc. 9.6x 8.6x 7.7x 7.3x 6.5x 5.7x -2.3x -2.1x -2.0x Low 9.6x 8.6x 7.7x 7.3x 6.5x 5.7x -5.9x -4.2x -8.3x High 23.7x 18.2x 24.6x 17.7x 14.0x 16.3x -1.6x -1.2x -1.1x Median 11.0x 13.4x 11.1x 9.4x 11.1x 8.8x -2.3x -2.8x -2.3x Mean 14.7x 13.4x 13.3x 11.5x 10.7x 9.9x -3.3x -2.7x -3.4x Savanna 12.4x 6.6x 5.2x 18.9x # NMFMF 24.9x # 6.5x NA 19.8x Change Versus Prior Materials [1] |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE Summary of Selected Changes From Prior Materials FOR INFORMATIONAL PURPOSES ONLY Selected Changes to Financial Analyses 10 Sources: Savanna management and public filings. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; NA refers to not available; Q refers to Quarter. (1) Computed as Current Materials dated June 11, 2024 less Prior Materials dated March 15, 2024. (2) Current Forecast contemplates $9.4 million of Adjusted EBITDA from in Q1 and Q2 of 2024E, but not beyond. (3) Reflects the range of values included in the analysis and treatment of NOLs varies based on valuation indication utilized. ($ and shares in millions, except per share data) Prior Materials Current Materials Change Since (3/15/24) (6/11/24) Prior Materials [1] Low High Low High Low High Balance Sheet Information Present Value of Contribution Corresponding Base Amount $20.4 -- $20.6 $0.0 -- $0.0 [2] ($20.4) -- ($20.6) Present Value of NOLs Corresponding Base Amount $47.5 -- $50.3 $0.0 -- $66.2 [3] ($47.5) -- $15.9 Cash & Cash Equivalents $129.0 $94.6 ($34.4) Total Debt $0.5 $0.7 $0.3 Preferred Stock $50.0 $50.0 $0.0 Non-Controlling Interest $0.0 $0.0 $0.0 Common Shares 355.1 359.2 4.1 Options 90.7 89.4 (1.3) Restricted Stock Units 66.9 70.4 3.6 Performance Stock Units 0.0 10.9 10.9 Selected Companies Analysis CY 2024E Revenue Corresponding Base Amount $417.4 $416.4 ($1.0) Selected Multiple 1.00x -- 2.00x 1.00x -- 1.75x 0.00x -- (0.25x) CY 2024E Adjusted EBITDA Corresponding Base Amount NA $21.5 NA Selected Multiple NA -- NA 11.0x -- 13.0x NA -- NA CY 2025E Revenue Corresponding Base Amount $512.3 $512.3 ($0.0) Selected Multiple 0.75x -- 1.50x 0.75x -- 1.25x 0.00x -- (0.25x) CY 2025E Adjusted EBITDA Corresponding Base Amount $61.7 $61.7 $0.0 Selected Multiple 9.0x -- 12.0x 7.0x -- 10.0x (2.0x) -- (2.0x) Implied Enterprise Value Reference Ranges CY 2024E Revenue $614.3 -- $1,034.6 $511.0 -- $889.4 ($103.3) -- ($145.2) CY 2024E Adjusted EBITDA NA -- NA $331.1 -- $440.3 NA -- NA CY 2025E Revenue $581.1 -- $968.3 $478.8 -- $801.1 ($102.3) -- ($167.2) CY 2025E Adjusted EBITDA $752.2 -- $940.2 $526.5 -- $777.8 ($225.7) -- ($162.4) Implied Per Share Value Reference Ranges CY 2024E Revenue $1.32 -- $2.18 $1.04 -- $1.82 ($0.28) -- ($0.36) CY 2024E Adjusted EBITDA NA -- NA $0.64 -- $0.88 NA -- NA CY 2025E Revenue $1.24 -- $2.05 $0.97 -- $1.65 ($0.27) -- ($0.40) CY 2025E Adjusted EBITDA $1.61 -- $1.99 $1.08 -- $1.60 ($0.53) -- ($0.39) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE Summary of Selected Changes From Prior Materials FOR INFORMATIONAL PURPOSES ONLY (cont’d) Selected Changes to Financial Analyses (cont’d) 11 Sources: Savanna management and public filings. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; NA refers to not available. (1) Computed as Current Materials dated June 11, 2024 less Prior Materials dated March 15, 2024. ($ in millions, except per share data) Prior Materials Current Materials Change Since (3/15/24) (6/11/24) Prior Materials [1] Low High Low High Low High Selected Transaction Analysis (Sum-of-the-Parts) Enterprise 2024E Revenue Corresponding Base Amount $208.7 NA NA Selected Multiple 1.50x -- 2.50x NA -- NA NA -- NA Provider 2024E Adjusted EBITDA Corresponding Base Amount $29.2 NA NA Selected Multiple 8.0x -- 15.0x NA -- NA NA -- NA Life Sciences 2024E Adjusted EBITDA Corresponding Base Amount $21.2 NA NA Selected Multiple 10.0x -- 14.0x NA -- NA NA -- NA Implied Enterprise Value Reference Range Sum-of-the-Parts $561.6 -- $984.7 NA -- NA NA -- NA Implied Per Share Value Reference Range Sum-of-the-Parts $1.20 -- $2.08 NA -- NA NA -- NA Discounted Cash Flow Terminal Period Adjusted EBITDA $92.0 $109.9 $17.9 Selected Terminal Multiple 9.0x -- 12.0x 6.0x -- 9.0x (3.0x) -- (3.0x) Selected Discount Rate 11.0% -- 12.0% 11.5% -- 12.5% 0.5% -- 0.5% Implied Per Share Value Reference Range Terminal Multiple Approach $1.66 -- $2.12 $1.16 -- $1.74 ($0.50) -- ($0.38) |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE Summary of Selected Changes From Prior Materials FOR INFORMATIONAL PURPOSES ONLY (cont’d) Selected Financial Projections Comparison Information 12 ($ in millions, except per share data) Source: Savanna management. A refers to Actual; Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non-recurring items. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. E refers to Estimated; NA refers to not available; NMF refers to not meaningful figure. (1) Positive figures reflect positive variance in the prior forecast versus the current forecast while negative figures reflect negative variance. Prior Materials (3/15/24) Current Materials (6/11/24) Prior Forecast Current Forecast (2/20/24) (6/8/24) 2023E 2024E 2025E 2026E 2027E 2023A 2024E 2025E 2026E 2027E 2023 2024E 2025E 2026E 2027E Total Revenue $459.5 $417.4 $512.3 $618.9 NA $445.3 $416.4 $512.3 $616.8 $700.1 ($14.2) ($1.0) ($0.0) ($2.1) NA Growth % 3.9% -9.2% 22.7% 20.8% NA 0.6% -6.5% 23.0% 20.4% 13.5% -3.2% 2.7% 0.3% -0.4% NA Cost of Revenue (257.5) (223.8) (261.9) (318.5) NA (249.5) (224.5) (261.9) (316.6) (362.9) 8.0 (0.6) 0.0 1.9 NA Gross Profit $202.1 $193.5 $250.4 $300.4 NA $195.8 $191.9 $250.4 $300.2 $337.2 ($6.3) ($1.6) $0.0 ($0.2) NA Margin % 44.0% 46.4% 48.9% 48.5% NA 44.0% 46.1% 48.9% 48.7% 48.2% 0.0% -0.3% 0.0% 0.1% NA Sales & Marketing (48.9) (46.2) (51.3) (55.1) NA (48.4) (45.5) (51.3) (55.1) (62.2) 0.5 0.7 0.0 0.1 NA General & Administrative (82.2) (82.6) (92.6) (103.1) NA (83.4) (79.3) (92.6) (103.0) (111.2) (1.2) 3.3 0.0 0.1 NA Product & Technology (46.6) (42.6) (44.8) (50.1) NA (46.0) (45.3) (44.8) (50.0) (53.8) 0.6 (2.7) 0.0 0.1 NA Total Operating Expenses (177.6) (171.3) (188.7) (208.4) NA (177.8) (170.0) (188.7) (208.0) (227.3) (0.2) 1.3 0.0 0.3 NA Other (0.9) 0.0 0.0 0.0 NA (1.6) (0.3) 0.0 0.0 0.0 (0.7) (0.3) 0.0 0.0 NA Adjusted EBITDA $23.6 $22.2 $61.7 $92.0 NA $16.5 $21.5 $61.7 $92.2 $109.9 ($7.1) ($0.7) $0.0 $0.2 NA Margin % 5.1% 5.3% 12.0% 14.9% NA 3.7% 5.2% 12.0% 14.9% 15.7% -1.4% -0.2% 0.0% 0.1% NA Growth % 304.9% -5.8% 178.0% 49.1% NA 183.9% 30.5% 187.0% 49.4% 19.2% -121.0% 36.3% 9.0% 0.2% NA Stock-Based Compensation (47.1) (37.5) (31.5) (31.5) NA (46.9) (44.4) (31.5) (31.5) (31.5) 0.1 (6.9) 0.0 0.0 NA Depreciation & Amortization NA (55.5) (42.0) (32.5) NA (61.2) (50.3) (36.8) (27.3) (25.3) NA 5.1 5.1 5.1 NA Adjusted EBIT NA ($70.7) ($11.7) $28.1 NA ($91.7) ($73.2) ($6.6) $33.4 $53.1 NA ($2.5) $5.1 $5.3 NA Margin % NA -16.9% -2.3% 4.5% NA -20.6% -17.6% -1.3% 5.4% 7.6% NA -0.6% 1.0% 0.9% NA Growth % NA NMF NMF NMF NA NMF NMF NMF NMF 59.1% NA NA NA NA NA Additional Financial Information Capital Expenditures $29.1 $23.8 $23.7 $24.3 NA $28.8 $23.4 $23.7 $24.3 $24.7 ($0.3) ($0.4) $0.0 ($0.0) NA Change in Net Working Capital $11.9 ($8.1) ($4.2) ($7.5) NA $15.6 ($9.5) ($3.5) ($10.4) ($7.6) $3.7 ($1.3) $0.7 ($2.8) NA Difference [1] |
| Page 1. Executive Summary 3 2. Summary of Selected Changes from Prior Materials 8 3. Preliminary Financial Analyses 14 4. Preliminary Selected Public Market Observations 24 5. Appendix 36 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE Historical and Projected Financial Data FOR INFORMATIONAL PURPOSES ONLY Management Projections Source: Company filings, management projections.. Note: Segment revenue may not sum to total revenue due to rounding 14 ($ in millions, except per share data) CAGR 21A-23A GR 24E-27E Revenue 4% 19% Adj. EBITDA (22%) 72% NMF Adj. EBITDA – Capex NMF NMF Adj. EBITDA – Capex – SBC NMF Enterprise Provider Life Sciences $243 $259 $244 $207 $283 $369 $436 $91 $104 $119 $123 $138 $150 $160 $78 $80 $82 $86 $91 $98 $104 $413 $442 $445 $416 $512 $617 $700 2021A 2022A 2023A 2024E 2025E 2026E 2027E $27 $6 $16 $22 $62 $92 $110 2021A 2022A 2023A 2024E 2025E 2026E 2027E ($14) ($39) ($12) ($2) $38 $68 $85 2021A 2022A 2023A 2024E 2025E 2026E 2027E ($61) ($108) ($59) ($46) $7 $36 $54 2021A 2022A 2023A 2024E 2025E 2026E 2027E |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE Financial Projections Comparison: FOR INFORMATIONAL PURPOSES ONLY Management Projections vs. Consensus 15 ($ in millions, except per share data) Source: Management projections. (1) Only Morgan Stanley forecasts out to 2026E. Management Revenue Projections Consensus Revenue Estimates Management Adj. EBITDA Projections Consensus Adj. EBITDA Estimates YoY Growth Enterprise Provider Life Sciences Adj. EBITDA Margin Adj. EBITDA 15% (6%) 23% 20% 5% 12% $22 $62 $92 $110 2024E 2025E 2026E 2027E $207 $283 $369 $436 $123 $138 $150 $160 $86 $91 $98 $104 $416 $512 $617 $700 2024E 2025E 2026E 2027E 14% 16% (12%) 9% 6% 0% 3% 10% $198 $216 $233 $120 $132 $142 $75 $81 $81 $394 $429 $456 2024E 2025E 2026E 2027E N/A $2 $12 $44 2024E 2025E 2026E 2027E N/A (1) (1) |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Illustrative Benchmarking Management Projections vs. Digital Health Companies Source: Company filings, management projections, FactSet, Capital IQ, Bloomberg as of 6/4/2024. (1) On 1/20/23, Evolent Health completed the acquisition of National Imaging Associates, Inc. Historical figures do not reflect results pro forma for the acquisition. (2) On 3/20/24, Alight, Inc. announced an agreement to sell its payroll and professional services business, which it classified as discontinued operations. Results include contributions from discontinued operations. 16 ($ in millions, except per share data) [1] Savanna 32% 30% 19% 13% 11% 8% 4% 1% [2] Savanna 22% 18% 18% 18% 15% 12% 4% 4% [2] 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 2021A – 2023A Revenue CAGR (Descending Order) 2024E – 2026E Revenue CAGR (Descending Order) |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Sources: Company filings, management projections. 17 ($ in millions) Revenue Adj. EBITDA Adj. EBITDA – Capex Historical and Projected Financial Data Management Projections from 2021 – 2024 vs Actual Performance $413 $442 $445 $396 $512 $629 $443 $532 $620 $455 $487 $521 $416 $512 $617 $700 $350 $400 $450 $500 $550 $600 $650 $700 $750 2021E 2022E 2023E 2024E 2025E 2026E 2027E Actuals 2021 Forecast 2022 Forecast 2023 Forecast 2024 Forecast $31 $60 $100 $16 $41 $83 $29 $54 $64 $22 $62 $92 $110 $27 $6 $16 $0 $20 $40 $60 $80 $100 $120 2021E 2022E 2023E 2024E 2025E 2026E 2027E ($26) $6 $45 ($3) $22 $32 ($2) $38 $68 $85 ($14) ($39) ($12) ($60) ($20) $20 $60 2021E 2022E 2023E 2024E 2025E 2026E 2027E |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE Summary of Preliminary Financial Analysis FOR INFORMATIONAL PURPOSES ONLY Implied Prices Per Share Source: Company filings, Savanna management projections. 18 PRESENT VALUE Current Share Price (6/10/2024): $0.86 Preliminary Discounted Cash Flow Analysis Terminal EBITDA multiple: 6.0x – 9.0x WACC: 11.5% – 12.5% Present values as of 6/11/24 Preliminary Selected Companies Analysis (2025E Revenue Multiples) 0.75x – 1.25x 2025E Revenue Preliminary Selected Companies Analysis (2024E Revenue Multiples) 1.00x – 1.75x 2024E Revenue Preliminary Selected Companies Analysis (2025E EBITDA Multiples) 7.0x – 10.0x 2025E Adj. EBITDA Preliminary Selected Companies Analysis (2024E EBITDA Multiples) 11.0x – 13.0x 2024E Adj. EBITDA $1.16 $1.08 $0.97 $0.64 $1.04 $1.74 $1.60 $1.65 $0.88 $1.82 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 19 Preliminary Financial Analysis Summary (cont’d) Source: Savanna management. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; PV refers to Present Value. (1) Per Savanna management. (2) Based on the present value of future Federal and State net operating loss usage discounted at a cost of equity of 13.5%. Per Savanna management, there are $439.0 million of Federal NOLs and $418.2 million of State NOLs outstanding as of 12/31/23. Of the $439.0 million of Federal NOLs, Savanna management has indicated that $45.7 million are subject to Section 382 limitations. For purposes of the Discounted Cash Flow Analysis, NOLs are applied during the period from 2024E to 2027E to reduce tax payments to $0. The implied value attributable to the remaining balance of the NOLs is then discounted to present value for the high end of the range. For purposes of the Selected Companies Analysis, the low end and high end of the multiples approaches have been sensitized to include 0% of the value at the low end and 100% of the implied present value at the high end. (3) Represents liquidation preference of Series A redeemable preferred stock, convertible above $10.00 per share. (4) Non-Controlling Interest reflects a minimum of $0. Non-Controlling Interest as of 3/31/24 is ($0.3) million, per Savanna management. (5) Based on (i) ~362.4 million gross common shares outstanding less ~3.2 million shares subject to an earnout with a hurdle of $12.00 per share, (ii) ~89.4 million options to purchase common stock (to the extent in the money, based on the treasury method), (iii) ~70.4 million restricted stock units, and (iv) ~10.9 million performance stock units as of 6/6/24, per Savanna management. ($ in millions, except per share data) Selected Companies Selected Companies Selected Companies Selected Companies Discounted Cash Flow Analysis Analysis Analysis Analysis Analysis CY 2024E CY 2024E CY 2025E CY 2025E Terminal EBITDA Multiple Total Revenue Adjusted EBITDA Total Revenue Adjusted EBITDA 6.0x -- 9.0x Discount Rate Corresponding Base Amount $416.4 $21.5 $512.3 $61.7 11.5% -- 12.5% Selected Multiples Range 1.00x -- 1.75x 11.0x -- 13.0x 0.75x -- 1.25x 7.0x -- 10.0x Implied Enterprise Value Reference Range $416.4 -- $728.6 $236.5 -- $279.5 $384.2 -- $640.3 $431.9 -- $617.1 $468.4 -- $707.6 Cash & Cash Equivalents as of 4/30/24 [1] 94.6 -- 94.6 94.6 -- 94.6 94.6 -- 94.6 94.6 -- 94.6 94.6 -- 94.6 PV of Net Operating Losses as of 6/11/24 [2] 0.0 -- 66.2 0.0 -- 66.2 0.0 -- 66.2 0.0 -- 66.2 0.0 -- 48.7 Implied Total Enterprise Value Reference Range $511.0 -- $889.4 $331.1 -- $440.3 $478.8 -- $801.1 $526.5 -- $777.8 $563.0 -- $851.0 Total Debt as of 4/30/24 [1] (0.7) -- (0.7) (0.7) -- (0.7) (0.7) -- (0.7) (0.7) -- (0.7) (0.7) -- (0.7) Preferred Stock as of 4/30/24 [1] [3] (50.0) -- (50.0) (50.0) -- (50.0) (50.0) -- (50.0) (50.0) -- (50.0) (50.0) -- (50.0) Non-Controlling Interest as of 4/30/24 [1] [4] 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 Implied Total Equity Value Reference Range $460.3 -- $838.7 $280.4 -- $389.6 $428.1 -- $750.4 $475.8 -- $727.1 $512.3 -- $800.3 Shares Outstanding [1] [5] 440.9 -- 461.0 440.8 -- 440.8 440.8 -- 455.8 441.6 -- 454.3 443.4 -- 458.8 Implied Per Share Reference Range $1.04 -- $1.82 $0.64 -- $0.88 $0.97 -- $1.65 $1.08 -- $1.60 $1.16 -- $1.74 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 20 Preliminary Selected Savanna Historical and Projected Financial Data Source: Savanna management. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non-recurring items. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CAGR refers to Compound Annual Growth Rate; E refers to Estimated; LTM refers to Latest 12 Months; NMF refers to not meaningful figure; R&D refers to Research & Development. (1) Total Adjustments: (2) Reflects purchase of property and equipment and capitalized internal-use software costs. ($ in millions) Calendar Year Ended December 31, LTM Ended Calendar Year Ending December 31, CAGR 2021 2022 2023 3/31/2024 2024E 2025E 2026E 2027E 2023 to 2027E Total Revenue $412.9 $442.5 $445.3 $419.6 $416.4 $512.3 $616.8 $700.1 12.0% Growth % 25.6% 7.2% 0.6% -6.5% 23.0% 20.4% 13.5% Cost of Revenue (202.9) (234.8) (249.5) (233.1) (224.5) (261.9) (316.6) (362.9) Gross Profit $210.0 $207.7 $195.8 $186.5 $191.9 $250.4 $300.2 $337.2 Margin % 50.9% 46.9% 44.0% 44.4% 46.1% 48.9% 48.7% 48.2% Sales & Marketing (47.8) (50.4) (48.4) (45.7) (45.5) (51.3) (55.1) (62.2) General & Administrative (77.9) (88.9) (83.4) (81.3) (79.3) (92.6) (103.0) (111.2) Product & Technology (57.3) (56.4) (46.0) (45.3) (45.3) (44.8) (50.0) (53.8) Total Operating Expenses (183.0) (195.8) (177.8) (172.3) (170.0) (188.7) (208.0) (227.3) Other 0.0 (6.1) (1.6) (1.0) (0.3) 0.0 0.0 0.0 Adjusted EBITDA [1] $27.0 $5.8 $16.5 $13.1 $21.5 $61.7 $92.2 $109.9 60.7% Margin % 6.5% 1.3% 3.7% 3.1% 5.2% 12.0% 14.9% 15.7% Growth % 273.2% -78.5% 183.9% 30.5% 187.0% 49.4% 19.2% Stock-Based Compensation (46.8) (69.6) (46.9) (50.6) (44.4) (31.5) (31.5) (31.5) Depreciation & Amortization (32.6) (45.3) (61.2) (59.8) (50.3) (36.8) (27.3) (25.3) Adjusted EBIT ($52.4) ($109.1) ($91.7) ($97.2) ($73.2) ($6.6) $33.4 $53.1 NMF Margin % -12.7% -24.7% -20.6% -23.2% -17.6% -1.3% 5.4% 7.6% Growth % NMF NMF NMF NMF NMF NMF 59.1% Additional Financial Information Capital Expenditures [2] ($40.8) ($44.4) ($28.8) ($28.8) ($23.4) ($23.7) ($24.3) ($24.7) Acquisitions ($71.6) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Change in Net Working Capital ($21.2) ($9.2) $15.6 $6.4 ($9.5) ($3.5) ($10.4) ($7.6) Depreciation & Amortization $32.6 $45.3 $61.2 $59.8 $50.3 $36.8 $27.3 $25.3 Stock-Based Compensation 46.8 69.6 46.9 50.6 44.4 31.5 31.5 31.5 Warrants Issued with Revenue Contracts 0.1 0.1 0.0 0.1 Amortization of Non-Cash Payment for R&D 1.2 2.5 4.8 3.6 Non-Operating, Non-Recurring Costs 10.6 11.1 5.9 6.3 16.8 2.0 2.0 2.0 Reorganizational and Severance Costs 1.5 10.8 32.0 26.3 1.5 1.0 1.0 1.0 Acquisition-Related Costs 19.7 5.8 1.7 2.5 Total Adjustments $112.5 $145.1 $152.5 $149.1 $113.0 $71.3 $61.8 $59.8 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 21 Preliminary Selected Companies Analysis Source: Company filings, Capital IQ as of 6/10/24, Bloomberg, Wall Street research. Multiples <0x or >20x considered NMF. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; NMF refers to not meaningful figure. (1) Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalents. (2) Based on closing prices as of 6/10/24. (3) Based on diluted shares. (4) Multiples based on forward looking financial information have been calendarized to the Company’s fiscal year end of December 31st. (5) Results include contributions from discontinued operations, following announcement of the sale of the payroll and professional services business on May 20, 2024. ($ in millions, except per share data) Share Equity Market Enterprise Enterprise Value [1] to Revenue Enterprise Value [1] to Adjusted EBITDA Selected Company Price [2] Value [2] [3] Value [2] [3] CY 2024E [4] CY 2025E [4] CY 2026E [4] CY 2024E [4] CY 2025E [4] CY 2026E [4] Accolade, Inc. $6.74 564.2 536.1 1.12x 0.95x 0.81x NMF 16.3x 9.3x Alight, Inc. [5] $7.48 4,383.8 6,923.8 1.98x 1.87x 1.82x 8.8x 7.9x 7.3x American Well Corporation $0.41 144.4 (151.6) NMF NMF NMF NMF NMF NMF Evolent Health, Inc. $23.72 2,855.2 3,454.7 1.34x 1.16x 1.02x 14.0x 10.7x 8.9x Health Catalyst, Inc. $6.68 428.1 328.7 1.07x 0.96x 0.85x 13.3x 8.8x 6.3x Phreesia, Inc. $20.05 1,250.3 1,187.2 2.86x 2.42x 2.07x NMF NMF 16.8x Teladoc Health, Inc. $10.66 1,949.0 2,390.6 0.90x 0.87x 0.83x 6.5x 5.7x 5.3x Low 0.90x 0.87x 0.81x 6.5x 5.7x 5.3x High 2.86x 2.42x 2.07x 14.0x 16.3x 16.8x Median 1.23x 1.06x 0.93x 11.1x 8.8x 8.1x Mean 1.55x 1.37x 1.23x 10.7x 9.9x 9.0x Savanna $0.86 $361.0 $311.0 0.79x 0.73x 0.68x NMF 24.9x 7.1x |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 22 Preliminary Discounted Cash Flow Analysis Source: Savanna management projections. Note: Present values as of 6/11/24; mid-year convention applied. Refer to WACC calculation for derivation of discount rate. Adjusted EBIT refers to Earnings Before Interest and Taxes, adjusted for certain non-recurring items. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; PV refers to Present Value; Q refers to Quarter. (1) Represents 66.7% of Q2 2024E projections, plus the remaining 6 months of CY 2024E projected information, per Savanna management. (2) Cash Taxes paid assumed to be offset by tax benefit from net operating losses in CY 2026E and CY 2027E, per Savanna management. (3) Implied from corresponding discount rate and 2027E Adjusted EBITDA multiple. ($ in millions) Projected Calendar Year Ending December 31, 2024E [1] 2025E 2026E 2027E Total Revenue $295.0 $512.3 $616.8 $700.1 Growth % 23.0% 20.4% 13.5% Cost of Revenue (157.6) (261.9) (316.6) (362.9) Discount Rate 6.0x 7.5x 9.0x Sales & Marketing (30.2) (51.3) (55.1) (62.2) 11.50% 5.3% 6.5% 7.3% General & Administrative (53.6) (92.6) (103.0) (111.2) 11.75% 5.5% 6.7% 7.5% Product & Technology (29.5) (44.8) (50.0) (53.8) 12.00% 5.7% 6.9% 7.7% Other (0.1) 0.0 0.0 0.0 12.25% 6.0% 7.2% 8.0% Adjusted EBITDA $24.0 $61.7 $92.2 $109.9 12.50% 6.2% 7.4% 8.2% Margin % 8.1% 12.0% 14.9% 15.7% Depreciation & Amortization (32.5) (36.8) (27.3) (25.3) Stock-Based Compensation (26.9) (31.5) (31.5) (31.5) Adjusted EBIT ($35.5) ($6.6) $33.4 $53.1 Taxes [2] 0.0 0.0 0.0 0.0 Discount Rate 6.0x 7.5x 9.0x Unlevered Earnings ($35.5) ($6.6) $33.4 $53.1 11.50% 92.6% 94.0% 94.9% Depreciation & Amortization 32.5 36.8 27.3 25.3 11.75% 92.6% 94.0% 94.9% Capital Expenditures (16.2) (23.7) (24.3) (24.7) 12.00% 92.6% 94.0% 94.9% Change in Net Working Capital (2.5) (3.5) (10.4) (7.6) 12.25% 92.6% 94.0% 95.0% Unlevered Free Cash Flows ($21.5) $3.0 $26.1 $46.2 12.50% 92.6% 94.0% 95.0% Present Value PV of Terminal Value of Cash Flows as a Multiple of Implied Enterprise Value (2024E - 2027E) 2027E Adjusted EBITDA Discount Rate 6.0x 7.5x 9.0x 6.0x 7.5x 9.0x 11.50% $35.8 $447.9 $559.8 $671.8 $483.7 $595.7 $707.6 11.75% $35.5 $444.3 $555.4 $666.5 $479.8 $590.9 $702.0 12.00% $35.2 + $440.8 $551.0 $661.2 = $476.0 $586.2 $696.4 12.25% $34.9 $437.3 $546.6 $656.0 $472.2 $581.5 $690.9 12.50% $34.6 $433.9 $542.3 $650.8 $468.4 $576.9 $685.4 Implied Perpetual Growth Rate [3] PV of Terminal Value as a % of Enterprise Value |
| Page 1. Executive Summary 3 2. Summary of Selected Changes from Prior Materials 8 3. Preliminary Financial Analyses 14 4. Preliminary Selected Public Market Observations 24 5. Appendix 36 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 24 Trading Market Snapshot Public Market Trading Overview 1-Day 5-Day 10-Day 20-Day 30-Day 1-Month 3-Month 6-Month 9-Month 12-Month $0.86 $0.84 $0.82 $0.82 $0.79 $0.81 $0.76 $0.82 $0.87 $0.96 Historical VWAP10 (As of 6/10/24) Sources: Bloomberg, Capital IQ, and public filings. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; NMF refers to not meaningful figure. (1) Per the Company's Form 10-Q for the period ended 3/31/24. (2) Reflects dilutive impact of (i) ~18.7 million warrants to purchase common stock as of 3/31/24 (to the extent in the money, based on the treasury method), (ii) ~89.5 million options to purchase common stock as of 3/31/24 (to the extent in the money, based on the treasury method), and (iii) ~55.8 million restricted stock units as of 3/31/24. (3) Reflects book value, net of debt discount and deferred financing costs. (4) Assumes conversion of Series A preferred stock to common stock. The aggregate liquidation preference of the Series A preferred stock is $50 million. (5) Per Capital IQ. (6) Per Bloomberg. (7) Per public filings. (8) Represents common shares outstanding excluding those held by current and former directors and executive officers. Does not reflect share acquisitions or disposals not publicly disclosed as of 6/10/24. (9) Reflects consensus analyst estimates per Bloomberg. (10) VWAP based on cumulative trading activity over designated number of trading days (based on intraday trading) per Bloomberg as of 6/10/24. (shares outstanding and $ in millions, except per share data and where otherwise noted) ($ per share in actuals) Public Market Enterprise Value Derivation Selected Market Information as of June 10, 2024 Closing Stock Price as of June 10, 2024 $0.86 1-Month Average [5] $0.82 Common Shares Outstanding [1] 362.4 3-Month Average [5] $0.79 Dilutive Shares [1] [2] 55.8 6-Month Average [5] $0.90 Fully Diluted Shares 418.2 52-Week High (7/17/23) [5] $1.80 Market Value of Equity $361.0 52-Week Low (4/1/24) [5] $0.48 Debt [1] [3] 0.6 Preferred Stock [4] 50.0 90-Day Average Daily Trading Volume (in millions) [5] 2.5 Non-Controlling Interest [1] (0.3) % of Total Shares Outstanding 0.7% Total Cash and Cash Equivalents [1] (100.3) 90-Day Average Daily Trading Value (in millions) [5] $1.89 Public Market Enterprise Value $311.0 % of Market Value of Equity 0.5% Number of Analysts Covering the Company [6] 4 Total Public Float [7] [8] 344.7 % of Total Shares Outstanding 95.1% Implied Multiples CY 2024E [9] CY 2025E [9] CY 2026E [9] Enterprise Value / Total Revenue 0.79x 0.73x 0.68x Enterprise Value / Adjusted EBITDA NMF 24.9x 7.1x |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Selected Events 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Daily Trading Volume Sharecare, Inc. Current Stock Price [2] Closing Stock Price (dollars per share) Daily Volume (millions) Timeline and Stock Trading History Since Closing of de-SPAC Transaction (7/2/21)1 25 Event Date Comment A 7/2/21 Sharecare, Inc. begins trading on the Nasdaq after completing the acquisition of Falcon Capital Acquisition Corp. in a reverse merger transaction. B 8/11/21 The Company announces the acquisition of CareLinx, a nationwide home care platform. Concurrently, the Company announces Q2 CY 2021 earnings, reporting $98.5 million of revenue (vs. $78.2 million in the prior year period) and adjusted EBITDA of $6.6 million (vs. $7.9 million in the prior year period). C 11/10/21 The Company announces Q3 CY 2021 earnings, reporting $105.6 million of revenue (vs. $80.2 million in the prior year period) and adjusted EBITDA of $7.9 million (vs. $13.3 million in the prior year period). D 3/31/22 The Company announces Q4 and full CY 2021 earnings, achieving full year revenue of $412.8 million (vs. $328.8 million in the prior year period) and adjusted EBITDA of $27.0 million (vs. $32.3 million in the prior year period). E 5/12/22 The Company announces Q1 CY 2022 earnings, reporting $100.7 million of revenue (vs. $90.2 million in the prior year period) and adjusted EBITDA of $0.2 million (vs. $7.1 million in the prior year period). Concurrently, the Company announces a $50 million share repurchase program. F 8/10/22 The Company announces the initiation of a strategic review of its non-enterprise businesses concurrently with Q2 CY 2022 earnings, reporting $103.8 million of revenue (vs. $98.5 million in the prior year period) and adjusted EBITDA of $2.1 million (vs. $6.6 million in the prior year period). Withdraws CY 2022 guidance. G 11/10/22 The Company announces Q3 CY 2022 earnings, reporting $114.6 million of revenue (vs. $105.6 million in the prior year period) and adjusted EBITDA of $7.2 million (vs. $7.9 million in the prior year period). H 3/29/23 The Company announces Q4 and full CY 2022 earnings, achieving full year revenue of $442.4 million (vs. $412.8 million in the prior year period) and adjusted EBITDA of $5.8 million (vs. $27.0 million in the prior year period). The Company provides CY 2023 revenue and adjusted EBITDA guidance of $450 to $460 million and $25 to $30 million, respectively. A B C F D E Current Stock Price2: $0.86 Event Date Comment I 5/10/23 The Company announces Q1 CY 2023 earnings, reporting $116.3 million of revenue (vs. $100.7 million in the prior year period) and adjusted EBITDA of $2.1 million (vs. $0.2 million in the prior year period). J 5/31/23 The Company announces that it completed the strategic review process initiated in 2022, concluding to continue executing on the Company's strategic plan to drive growth and efficiencies across all three business channels. The Board re-authorizes a $50 million stock repurchase program. K 8/9/23 The Company announces Q2 CY 2023 earnings, reporting $110.4 million of revenue (vs. $103.8 million in the prior year period) and adjusted EBITDA of $3.8 million (vs. $2.1 million in the prior year period). L 10/12/23 The Company announces the receipt of an unsolicited preliminary non-binding proposal from Claritas Capital to acquire all of the outstanding shares of common stock of the Company, not already beneficially owned by Claritas Capital and its affiliated funds, for cash consideration of between $1.35 and $1.80 per share. M 11/9/23 The Company announces Q3 CY 2023 earnings, reporting $113.3 million of revenue (vs. $114.6 million in the prior year period) and adjusted EBITDA of $9.6 million (vs. $5.2 million3 in the prior year period). Announces new CEO beginning 1/2/24. N 3/12/24 The Company announces it will delay Q4 and full CY 2023 earnings from 3/13/24 to 3/28/24 and that its Board formed a special committee of independent directors to evaluate multiple proposals for a potential sale and other alternatives. O 3/28/24 The Company announces Q4 and full CY 2023 earnings, achieving full year revenue of $445.3 million (vs. $442.4 million in the prior year period) and adjusted EBITDA of $16.5 million (vs. $5.8 million in the prior year period). P 5/9/24 The Company announces it is conducting a strategic review, which includes discussions with multiple bidders for a potential sale. Concurrently, the Company announces Q1 CY 2024 earnings, reporting $90.9 million of revenue (vs. $116.3 million in the prior year period) and adjusted EBITDA of ($2.7) million (vs. $0.6 million in the prior year period). G H I K J L M Sources: Capital IQ and public filings. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; Q refers to Quarter. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) As of 6/10/24 close. (3) Q3 CY 2022 Adjusted EBITDA was recasted from $7.2 million to $5.2 million, reflecting the Company’s updated computation methodology effective 9/30/23. N O P |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Last Twelve Months Last Nine Months Last Six Months Last Three Months 26 Selected Historical Trading Activity As of 6/10/24 Volume: 384.9 million VWAP1: $0.96 Volume: 269.3 million VWAP1: $0.87 Volume: 202.7 million VWAP1: $0.82 Volume: 151.6 million VWAP1: $0.76 16.8% 52.7% 19.4% 3.6% 7.3% 0.1% $0.50- $0.75 $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 24.0% 56.4% 19.6% 0.0% 0.0% 0.0% $0.50- $0.75 $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 31.9% 54.9% 13.2% 0.0% 0.0% 0.0% $0.50- $0.75 $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 42.7% 57.3% 0.0% 0.0% 0.0% 0.0% $0.50- $0.75 $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 Source: Bloomberg as of 6/10/24. VWAP refers to Volume Weighted Average Price. (1) Based on VWAP over specified period (last twelve months, last nine months, last six months, or last three months). Reference to “Month” is based on Calendar months. VWAP in dollars. |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 44% 46% 71% 71% 50% 49% 35% 34% 19% 0% 5% 22% 14% 10% 8% 4% 3% (60%) $393 $416 $3,492 $2,659 $2,576 $478 $415 $308 $261 Enterprise Value(1) $311 $536 $6,924 -$152 $3,455 $329 $1,187 $2,391 Market Cap.(1) $361 $564 $4,384 $144 $2,855 $428 $1,250 $1,949 Preliminary Digital Health Industry Benchmarking Operating Metrics Source: Capital IQ as of 6/10/2024. Wall Street research. Metrics <0 considered NM. Note: Savanna metrics based on Street consensus estimates; A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Based on diluted shares. Based on closing prices as of 6/10/2024. (2) Median excludes Savanna. (3) Reflects gross margin estimate for fiscal year ending February 2025. 2024E Revenue & 2024E / 2025E Revenue Growth 2024E Gross Profit & Gross Margin 2024E Adj. EBITDA & Adj. EBITDA Margin 27 (12%) / 9% 2% / 6% 2% / 4% 30% / 15% 18% / 18% 19% / 18% 4% / 12% 1% / 24% $173 $295 $154 $232 $92 $1,197 $1,881 $487 $2 $783 $366 $247 $25 $18 $13 ($158) Savanna Median(2): $478 4% / 15% Median(2): 8% / $25 Median(2): 49% / $295 Savanna Consensus Savanna Consensus Savanna Consensus Savanna Management Savanna Management Savanna Management $22 $192 (6%) / 23% ($ in millions, except per share data) (3) |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY NMF NMF 0.83x 0.41x 0.26x 0.15x 0.06x 0.04x NMF Enterprise Value(1) $311 $536 $6,924 -$152 $3,455 $329 $1,187 $2,391 Market Cap.(1) $361 $564 $4,384 $144 $2,855 $428 $1,250 $1,949 LTM Share Perf. (45%) (50%) (17%) (83%) (24%) (43%) (39%) (56%) Inst. Ownership 35% 79% 82% 38% 99% 88% 94% 74% Preliminary Digital Health Industry Benchmarking Valuation Metrics EV / 2024E Revenue EV / 2024E Revenue / 2023A – 2024E Revenue Growth Source: Capital IQ as of 6/10/2024, Wall Street research. Multiples <0x or >100x considered NMF. Note: Savanna metrics based on Street consensus estimates; A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Based on diluted shares. Based on closing prices as of 6/10/2024. (2) Median excludes Savanna. EV / 2024E EBITDA 28 Savanna Consensus Savanna Consensus Savanna Consensus Median(2): 1.2x Median(2): 0.21x Median(2): 11.1x Savanna Savanna Management Savanna Management Savanna Management ($ in millions, except per share data) NMF 15.7x 14.0x 13.3x 8.8x 6.5x NMF NMF NMF 0.8x 0.8x 2.9x 2.0x 1.3x 1.1x 1.1x 0.9x NMF |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 29 Relative Total Shareholder Return Information Since Closing of de-SPAC Transaction (7/2/21)1 28.6% 20.2% -62.5% -90.7% -100% -75% -50% -25% 0% 25% 50% Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Sharecare, Inc. S&P 500 Index (Total Return) Nasdaq Composite Index (Total Return) Selected Companies Index² Source: Capital IQ as of 6/10/24. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) Includes ACCD, ALIT, AMWL, EVH, HCAT, PHR, and TDOC. Since Two-Year One-Year de-SPAC1 Return Return Sharecare, Inc. -90.7% -58.9% -45.4% S&P 500 Index (Total Return) 28.6% 41.6% 25.1% Nasdaq Composite Index (Total Return) 20.2% 54.2% 28.7% Selected Companies Index² -62.7% -30.6% -44.6% |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 30 Market Backdrop Since Closing of de-SPAC Transaction (7/2/21) Digital Health Valuation Multiples: EV / NTM Revenue Revenue multiples have normalized at significantly lower levels since Savanna went public in 2021 Source: Capital IQ as of 6/10/24. Note: Figures shown on this page are sourced directly from Capital IQ for illustrative purposes and therefore may differ from figures shown on other pages. Note: Multiples <0x or >25x considered NMF. EV refers to Enterprise Value; NMF refers to not meaningful figure; NTM refers to Next Twelve Months. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) Includes ACCD, ALIT, AMWL, EVH, HCAT, PHR, and TDOC. 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Sharecare, Inc. Selected Companies Index² Since Two-Year One-Year YTD Current de-SPAC¹ Average Average Average (6/10/24) Sharecare, Inc. 1.6x 0.9x 0.6x 0.6x 0.7x Selected Companies Index² 3.0x 1.9x 1.7x 1.6x 1.2x |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 31 Market Backdrop Since Closing of de-SPAC Transaction (7/2/21) Digital Health Valuation Multiples: EV / NTM EBITDA EBITDA multiples have normalized at significantly lower levels since Savanna went public in 2021 Source: Capital IQ as of 6/10/24. Note: Figures shown on this page are sourced directly from Capital IQ for illustrative purposes and therefore may differ from figures shown on other pages. Note: Multiples <0x or >20x considered NMF. Note: Since reporting first quarter earnings on 5/9/24, Sharecare consensus NTM EBITDA estimates fell to ($7.2) million, resulting in a not meaningful multiple. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. EV refers to Enterprise Value; NMF refers to not meaningful figure; NTM refers to Next Twelve Months. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) Includes ACCD, ALIT, AMWL, EVH, HCAT, PHR, and TDOC. 0.0x 20.0x 40.0x 60.0x 80.0x 100.0x 120.0x Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Sharecare, Inc. Selected Companies Index² Since Two-Year One-Year YTD Current de-SPAC¹ Average Average Average (6/10/24) Sharecare, Inc. 22.9x 14.8x 9.5x 8.9x NMF Selected Companies Index² 23.6x 17.4x 14.8x 14.1x 11.8x |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Mean Analyst Price Target Share Price 32 Savanna Analyst Perspectives Wall Street Price Targets Consensus Price Targets vs. Stock Price Analyst Recommendation $1.92 $0.86 Premium to Current: 122.4% # of Ratings 5 5 4 4 4 4 4 4 4 4 4 4 4 4 4 4 Sources: Bloomberg, Capital IQ, and Wall Street research as of 6/10/24. E refers to Estimated; EV refers to Enterprise Value; NA refers to not available. (1) CG uses a sum-of-the-parts analysis consisting of a 1.7x multiple to 2024E revenue on the Enterprise segment, a 1.7x multiple to 2024E revenue on the Life Sciences segment and a 1.5x multiple to 2024E revenue on the Provider segment. (2) BTIG does not provide price targets for neutral-rated stocks. Therefore, methodology is not applicable. (3) Houlihan Lokey does not have access to equity research reports published by certain analysts including Nephron Research. 4 60% 60% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 50% 50% 50% 40% 40% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 50% 50% 50% Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Buy Hold 4 4 Broker Date Rating Price Target Methodology CG 5/20/24 Buy $2.00 SOTP1 MS 5/13/24 Equalweight $1.00 0.7x EV / '25E Rev. BTIG 5/10/24 Neutral NA NA2 Nephron 5/9/24 Buy $2.75 NA3 Median $2.00 Mean $1.92 4 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Selected Wall Street Analyst Commentary 33 Analyst Date of Report Recommendation Comments Canaccord Genuity 5/20/24 Buy “In our opinion, there are positive signs that Sharecare is turning the business around and has potential for sustained, profitable growth under new CEO Brent Layton. With the strategic review ongoing, which could potentially result in the sale of parts or all of the business and that management expects to conclude in the next 30-45 days at the time of the earnings release, we continue to believe there is value in shares of Sharecare at current levels. We maintain our BUY rating and $2 price target backed by a sum-of-the-parts valuation.” Morgan Stanley 5/13/24 Equalweight “The company is seeing broad-based weakness across the business, further compounded by ongoing litigation with a large enterprise customer. While Sharecare has been able to soften the blow to EBITDA, nonetheless the company will need to reaccelerate growth to drive better profitability. […] The platform has potential, but execution and new proof points will be key.” “We view the hire of healthcare industry veteran Brent Layton as CEO as a positive, but meaningful negative estimate revisions are weighing on the stock's valuation. The Board is undergoing its 2nd Strategic review of the business within the past year. The development, as well as Sharecare's ability to reaccelerate growth are important dynamics to watch for the stock.” BTIG 5/10/24 Neutral “While we had anticipated that the contract dispute may not be resolved in 1Q:24, we were negatively surprised to see a slowdown in the Provider and Consumer divisions as well. We like how management is orienting the business with a value-based care approach that is focused on health outcomes, but the steps it is taking will take time and SHCR has near-term challenges.” “Our view is that the high recurring revenue stream, with a PMPM-based model for the majority of revenue, is good especially given expected margin expansion. While these are positives, in each of the past ~2 years there have been significant challenges in the Enterprise Division, due to COVID, some plans seeking to save money, and most recently a contract dispute with a large client. While Provider and Consumer revenue growth may be healthy, the inconsistent performance in Enterprise cause us to rate SHCR Neutral.” Source: Wall Street Research. Note: Houlihan Lokey does not have access to equity research reports published by certain analysts including Nephron Research. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. PMPM refers to Per Member Per Month; Q refers to Quarter. |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 34 Ownership Summary (shares in millions) Sources: Capital IQ and public filings as of 6/10/24. designates holdings excluded from public float computations. Common Stock Holder Shares % Outstanding Claritas Capital 36.9 10.2% BlackRock, Inc. (NYSE:BLK) 22.7 6.3% The Vanguard Group, Inc. 17.2 4.7% Hearst Corporation 16.2 4.5% Samjo Management, LLC 10.5 2.9% Private Management Group Inc 9.3 2.6% Allspring Global Investments, LLC 7.7 2.1% Geode Capital Management, LLC 6.8 1.9% Pennsylvania Capital Management, Inc. 6.6 1.8% State Street Global Advisors, Inc. 6.1 1.7% Current / Former Directors and Executive Officers 17.7 4.9% Other 204.8 56.5% Total 362.4 100.0% |
| Page 1. Executive Summary 3 2. Summary of Selected Changes from Prior Materials 8 3. Preliminary Financial Analyses 14 4. Preliminary Selected Public Market Observations 24 5. Appendix 36 Preliminary Selected Benchmarking Data 37 Preliminary Weighted Average Cost of Capital Analysis 40 |
| Page 1. Executive Summary 3 2. Summary of Selected Changes from Prior Materials 8 3. Preliminary Financial Analyses 14 4. Preliminary Selected Public Market Observations 24 5. Appendix 36 Preliminary Selected Benchmarking Data 37 Preliminary Weighted Average Cost of Capital Analysis 40 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 37 Preliminary Benchmarking Data Sources: Bloomberg, Capital IQ, Savanna management and public filings. Note: No company shown for comparative purposes is identical to Savanna. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; EV refers to Enterprise Value. LTM refers to the most recently completed 12-month period for which financial information has been made public, other than for the Company, in which case LTM refers to Latest 12 Months. NMF refers to not meaningful figure. (1) Based on public trading prices of common stock. (2) Based on public filings, market data and other public information as of 6/10/24. (3) On 3/20/24, Alight, Inc. announced an agreement to sell its payroll and professional services business, which it classified as discontinued operations. Results include contributions from discontinued operations. (4) On 1/20/23, Evolent Health completed the acquisition of National Imaging Associates, Inc. Historical figures do not reflect results pro forma for the acquisition. ($ in millions) Size Size [1] Leverage [1] Liquidity (LTM Revenue, millions) (Enterprise Value as of 6/10/24, millions) (Debt to EV as of 6/10/24) (Current Ratio as of 6/10/24) Alight, Inc. [3] $3,395.0 Alight, Inc. $6,923.8 Health Catalyst, Inc. 69.5% Health Catalyst, Inc. 4.3 Teladoc Health, Inc. $2,619.3 Evolent Health, Inc. $3,454.7 Teladoc Health, Inc. 64.4% Teladoc Health, Inc. 3.8 Evolent Health, Inc. $2,168.2 Teladoc Health, Inc. $2,390.6 Alight, Inc. 40.3% American Well Corporation 3.8 Savanna $419.6 Phreesia, Inc. $1,187.2 Accolade, Inc. 39.0% Accolade, Inc. 2.6 Accolade, Inc. $414.3 Accolade, Inc. $536.1 Evolent Health, Inc. 17.3% Savanna 2.1 Phreesia, Inc. $373.7 Health Catalyst, Inc. $328.7 Phreesia, Inc. 1.4% Phreesia, Inc. 1.8 Health Catalyst, Inc. $296.8 Savanna [2] $311.0 Savanna [2] 0.2% Alight, Inc. 1.6 American Well Corporation $254.6 American Well Corporation ($151.6) American Well Corporation 0.0% Evolent Health, Inc. 1.0 Historical Growth Projected Growth Projected Growth Projected Growth (CY 2022 to CY 2023 Revenue) (CY 2023 to CY 2024E Revenue) (CY 2023 to CY 2025E Revenue) (CY 2023 to CY 2026E Revenue) Phreesia, Inc. 27.2% Evolent Health, Inc. 30.4% Evolent Health, Inc. 22.6% Evolent Health, Inc. 19.6% Evolent Health, Inc. 22.9% Phreesia, Inc. 18.7% Phreesia, Inc. 18.4% Phreesia, Inc. 17.9% Accolade, Inc. 14.5% Accolade, Inc. 17.7% Accolade, Inc. 17.6% Accolade, Inc. 17.6% Alight, Inc. 8.9% Health Catalyst, Inc. 4.1% American Well Corporation 11.8% American Well Corporation 12.3% Teladoc Health, Inc. 8.1% Alight, Inc. 2.4% Health Catalyst, Inc. 7.8% Savanna 11.5% Health Catalyst, Inc. 7.1% Teladoc Health, Inc. 2.2% Savanna 7.3% Health Catalyst, Inc. 9.4% Savanna 0.6% American Well Corporation 0.9% Alight, Inc. 4.1% Alight, Inc. 3.7% American Well Corporation -6.5% Savanna -6.5% Teladoc Health, Inc. 2.9% Teladoc Health, Inc. 3.3% Projected Growth Projected Growth Projected Growth Historical Growth (CY 2024E to CY 2025E Revenue) (CY 2024E to CY 2026E Revenue) (CY 2025E to CY 2026E Revenue) (CY 2022 to CY 2023 Adjusted EBITDA) American Well Corporation 23.9% Savanna 21.7% Savanna 20.4% Savanna 183.9% Savanna 23.0% American Well Corporation 18.5% Accolade, Inc. 17.6% Evolent Health, Inc. [4] 83.1% Phreesia, Inc. 18.2% Accolade, Inc. 17.6% Phreesia, Inc. 17.0% Teladoc Health, Inc. 33.1% Accolade, Inc. 17.5% Phreesia, Inc. 17.6% Evolent Health, Inc. 14.0% Alight, Inc. 12.1% Evolent Health, Inc. 15.2% Evolent Health, Inc. 14.6% American Well Corporation 13.2% Accolade, Inc. NMF Health Catalyst, Inc. 11.7% Health Catalyst, Inc. 12.2% Health Catalyst, Inc. 12.8% American Well Corporation NMF Alight, Inc. 5.8% Alight, Inc. 4.4% Teladoc Health, Inc. 3.9% Health Catalyst, Inc. NMF Teladoc Health, Inc. 3.6% Teladoc Health, Inc. 3.8% Alight, Inc. 3.0% Phreesia, Inc. NMF Projected Growth Projected Growth Projected Growth Projected Growth (CY 2023 to CY 2024E Adjusted EBITDA) (CY 2023 to CY 2025E Adjusted EBITDA) (CY 2023 to CY 2026E Adjusted EBITDA) (CY 2024E to CY 2025E Adjusted EBITDA) Health Catalyst, Inc. 124.8% Savanna 93.5% Savanna 77.5% Savanna 187.0% Savanna 30.5% Health Catalyst, Inc. 84.5% Health Catalyst, Inc. 67.5% Accolade, Inc. 158.9% Evolent Health, Inc. [4] 26.8% Evolent Health, Inc. [4] 28.6% Evolent Health, Inc. [4] 25.8% Phreesia, Inc. 153.9% Teladoc Health, Inc. 11.6% Teladoc Health, Inc. 12.8% Teladoc Health, Inc. 11.0% Health Catalyst, Inc. 51.4% Alight, Inc. 6.0% Alight, Inc. 8.7% Alight, Inc. 8.6% Evolent Health, Inc. 30.5% Accolade, Inc. NMF Accolade, Inc. NMF Accolade, Inc. NMF Teladoc Health, Inc. 14.1% American Well Corporation NMF American Well Corporation NMF American Well Corporation NMF Alight, Inc. 11.5% Phreesia, Inc. NMF Phreesia, Inc. NMF Phreesia, Inc. NMF American Well Corporation NMF |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 38 Preliminary Benchmarking Data (cont’d) Sources: Bloomberg, Capital IQ, Savanna management and public filings. Note: No company shown for comparative purposes is identical to Savanna. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; Depr. refers to Depreciation; E refers to Estimated; EV refers to Enterprise Value; FYE refers to the most recently completed fiscal year for which financial information has been made public. LTM refers to the most recently completed 12-month period for which financial information has been made public, other than for the Company, in which case LTM refers to Latest 12 Months. NMF refers to not meaningful figure; NOL refers to Net Operating Loss. (1) On 1/20/23, Evolent Health completed the acquisition of National Imaging Associates, Inc. Historical figures do not reflect results pro forma for the acquisition. (2) Based on public trading prices of common stock. (3) Based on public filings, market data and other public information as of 6/10/24. ($ in millions) Projected Growth Projected Growth Profitability Profitability (CY 2024E to CY 2026E Adjusted EBITDA) (CY 2025E to CY 2026E Adjusted EBITDA) (CY 2024E Adjusted EBITDA to CY 2024E Revenue) (CY 2025E Adjusted EBITDA to CY 2025E Revenue) Accolade, Inc. 112.4% Accolade, Inc. 74.2% Alight, Inc. 22.4% Alight, Inc. 23.6% Savanna 107.1% Phreesia, Inc. 52.0% Teladoc Health, Inc. 13.8% Teladoc Health, Inc. 15.2% Phreesia, Inc. 96.5% Savanna 49.4% Evolent Health, Inc. 9.6% Savanna 12.0% Health Catalyst, Inc. 44.6% Health Catalyst, Inc. 38.1% Health Catalyst, Inc. 8.0% Health Catalyst, Inc. 10.9% Evolent Health, Inc. 25.4% Evolent Health, Inc. 20.4% Savanna 5.2% Evolent Health, Inc. 10.9% Teladoc Health, Inc. 10.7% Alight, Inc. 8.5% Phreesia, Inc. 4.4% Phreesia, Inc. 9.4% Alight, Inc. 10.0% Teladoc Health, Inc. 7.3% Accolade, Inc. 2.7% Accolade, Inc. 5.9% American Well Corporation NMF American Well Corporation NMF American Well Corporation NMF American Well Corporation NMF Profitability Relative Depreciation Internal Investment Net Operating Losses (CY 2026E Adjusted EBITDA to CY 2026E Revenue) (LTM Depr. to LTM Adjusted EBITDA) (LTM Capital Expenditures to LTM Revenue) (FYE Federal and State NOL) Alight, Inc. 24.9% Alight, Inc. 58.0% Accolade, Inc. 1.2% Teladoc Health, Inc. $3,728.7 Teladoc Health, Inc. 15.6% Evolent Health, Inc. [1] 59.2% Evolent Health, Inc. 1.2% Health Catalyst, Inc. $1,108.1 Savanna 14.9% Teladoc Health, Inc. 107.9% Health Catalyst, Inc. 4.3% Accolade, Inc. $950.1 Health Catalyst, Inc. 13.4% Health Catalyst, Inc. 384.5% Alight, Inc. 4.4% American Well Corporation $907.8 Phreesia, Inc. 12.3% Savanna 454.6% American Well Corporation 4.5% Savanna $857.2 Evolent Health, Inc. 11.5% Accolade, Inc. NMF Teladoc Health, Inc. 5.6% Phreesia, Inc. $599.0 Accolade, Inc. 8.7% American Well Corporation NMF Phreesia, Inc. 6.5% Evolent Health, Inc. $361.6 American Well Corporation NMF Phreesia, Inc. NMF Savanna 6.9% Alight, Inc. $165.0 Net Operating Losses [2] (FYE Federal and State NOL % of EV) Health Catalyst, Inc. 337.1% Savanna [3] 275.7% Accolade, Inc. 177.2% Teladoc Health, Inc. 156.0% Phreesia, Inc. 50.5% Evolent Health, Inc. 10.5% Alight, Inc. 2.4% American Well Corporation NMF |
| Page 1. Executive Summary 3 2. Summary of Selected Changes from Prior Materials 8 3. Preliminary Financial Analyses 14 4. Preliminary Selected Public Market Observations 24 5. Appendix 36 Preliminary Selected Benchmarking Data 37 Preliminary Weighted Average Cost of Capital Analysis 40 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 40 Preliminary Weighted Average Cost of Capital Analysis Source: Company filings, Capital IQ as of 6/10/24, Bloomberg, Wall Street research, 2023 Duff & Phelps Valuation Handbook. Notes: No company used in this calculation for comparative purposes is identical to the Company; *excluded from median and mean data; NA refers to not available. (1) Total Cap refers to total capitalization, which equals Equity Market Value + Total Debt + Pfd. Stock. (2) Total Debt refers to total debt amount based on most recent public filings as of 6/10/24. (3) Dd refers to Implied Tax-Deductible Debt, which equals the lesser of (a) 30% of Adjusted Taxable Income/Cost of Debt, or (b) Total Debt; LTM Adjusted EBITDA based on most recent public filings as of 6/10/24, is assumed to be a valid proxy for Adjusted Taxable Income for the selected companies. (4) Dnd refers to Implied Non-Tax-Deductible Debt, which equals Total Debt minus Dd. (5) Equity Market Value based on closing price on 6/10/24 and on diluted shares as of 6/10/24. (6) Pfd. Stock refers to preferred stock, which is the amount as stated in most recent public filings as of 6/10/24. (7) Based on actual levered beta per Bloomberg 5-year weekly as of 6/10/24. (8) Unlevered Beta = Levered Beta/(1 + ((1 – tax rate) * Dd to Equity Market Value) + (Dnd to Equity Market Value) + (Pfd. Stock to Equity Market Value)). (9) Based on review of studies measuring the historical returns between stocks and bonds, theoretical models such as supply-side and demand-side models and other materials. (10) Kroll Cost of Capital Navigator ("Navigator"). (11) Cost of Equity = Risk-Free Rate of Return + (Levered Beta * Equity Risk Premium) + Size Premium. Risk-Free Rate of Return as of 6/10/24, based on 20-year U.S. Treasury Bond Yield. (12) Based on selected company weighted average interest rate per most recent public filings, unless the selected company has publicly traded debt, in which case the cost of debt is based on the market-based yield to maturity for such securities as of 6/10/24. (13) Based on selected company weighted average preferred dividend per most recent public filings 6/10/24. Total Debt to Dd to Dnd to Total Debt to Dd to Equity Dnd to Equity Pfd. Stock to Equity Market Pfd. Stock to Total Cap Total Cap Total Cap Equity Market Market Value Market Value Total Cap Value to Total Equity Market Selected Company [1] [2] [1] [3] [1] [4] Value [2] [5] [3] [5] [4] [5] [1] [6] Cap [1] [5] Value [5] [6] Accolade, Inc. 27.0% 0.0% 27.0% 37.0% 0.0% 37.0% 0.0% 73.0% 0.0% Alight, Inc. 38.9% 38.9% 0.0% 63.6% 63.6% 0.0% 0.0% 61.1% 0.0% American Well Corporation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% Evolent Health, Inc. 16.5% 16.5% 0.0% 20.9% 20.9% 0.0% 4.8% 78.7% 6.1% Health Catalyst, Inc. 34.8% 8.2% 26.6% 53.4% 12.6% 40.8% 0.0% 65.2% 0.0% Phreesia, Inc. 1.3% 0.0% 1.3% 1.3% 0.0% 1.3% 0.0% 98.7% 0.0% Teladoc Health, Inc. 44.1% 40.4% 3.8% 79.0% 72.3% 6.7% 0.0% 55.9% 0.0% Median 27.0% 8.2% 1.3% 37.0% 12.6% 1.3% 0.0% 73.0% 0.0% Mean 23.2% 14.8% 8.4% 36.5% 24.2% 12.3% 0.7% 76.1% 0.9% Savanna 0.1% 0.1% 0.0% 0.2% 0.2% 0.0% 12.1% 87.7% 13.9% Levered Unlevered Equity Risk Size Cost of Cost of Cost of Pfd. Selected Company Beta [7] Beta [8] Premium [9] Premium [10] Equity [11] Debt [12] Stock [13] WACC Accolade, Inc. 2.13 1.55 5.75% 1.14% 18.1% 7.9% NA 15.3% Alight, Inc. 1.09 0.75 5.75% 0.95% 11.9% 7.8% NA 9.5% American Well Corporation 1.82 1.82 5.75% 4.70% 19.8% NA NA 19.8% Evolent Health, Inc. 1.26 1.04 5.75% 1.21% 13.2% 3.3% * 11.4% 11.3% * Health Catalyst, Inc. 1.13 0.75 5.75% 1.99% 13.2% 5.7% NA 10.4% Phreesia, Inc. 1.29 1.27 5.75% 1.39% 13.5% 7.9% NA 13.4% Teladoc Health, Inc. 1.13 0.71 5.75% 1.21% 12.4% 7.2% NA 9.3% Median 1.26 1.04 13.2% 7.8% 11.4% 11.9% Mean 1.41 1.13 14.6% 7.3% 11.4% 12.9% Savanna 0.98 0.86 5.75% 1.99% 12.3% 7.1% NA 10.8% |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 41 Preliminary Weighted Average Cost of Capital Analysis (cont’d) Source: Company filings, Capital IQ as of 6/10/24, Bloomberg, Wall Street research, 2023 Duff & Phelps Valuation Handbook. (1) Risk-Free Rate of Return as of 6/10/24, based on 20-year U.S. Treasury Bond Yield. (2) Based on a review of studies measuring the historical returns between stocks and bonds, theoretical models such as supply side and demand side models and other materials. (3) Navigator. (4) Forward tax rate, per Savanna management. (5) Savanna 2024E Adjusted EBITDA is assumed to be a valid proxy for Savanna Adjusted Taxable Income. (6) Savanna Total Debt refers to total debt amount of Savanna as of 6/10/24. (7) Savanna Dd refers to Implied Tax-Deductible Debt of Savanna, which equals the lesser of (a) 30% of Savanna Adjusted Taxable Income/Cost of Debt, or (b) Savanna Total Debt. Based on Capital Structure Assumptions. (8) Savanna Dnd refers to Implied Non-Tax-Deductible Debt of Savanna, which equals Savanna Total Debt minus Savanna Dd. (9) Based on review of corresponding metrics of selected companies listed on previous page. (10) Based on the Company's Dd and Dnd and the Capital Structure Assumptions regarding Total Debt to Total Capitalization and Equity Market Value to Total Capitalization. (11) Based on review of selected companies’ unlevered betas listed on previous page. (12) Computed Levered Beta = Selected Unlevered Beta * (1 + ((1 – Tax Rate) * Dd to Equity Market Value) + (Dnd to Equity Market Value) + (Preferred Stock to Equity Market Value)); based on Market and Capital Structure Assumptions. (13) Cost of Equity = Risk-Free Rate of Return + (Computed Levered Beta * Equity Risk Premium) + Size Premium. Based on Market Assumptions. ($ in millions) Market Capital Structure Cost of Equity for Assumptions Assumptions Computed WACC Risk-Free Rate of Return [1] 4.68% Savanna Adjusted Taxable Income [5] $21.5 Selected Unlevered Beta [11] 1.04 Equity Risk Premium [2] 5.75% Savanna Total Debt [6] $0.7 Computed Levered Beta [12] 1.32 Size Premium [3] 1.99% Savanna Dd [7] $0.7 Cost of Equity [13] 14.3% Tax Rate [4] 28.17% Savanna Dnd [8] $0.0 Total Debt to Total Capitalization [9] 27.0% Dd to Total Capitalization [10] 27.0% Dnd to Total Capitalization [10] 0.0% Total Debt to Equity Market Value 37.0% Dd to Equity Market Value [10] 37.0% Dnd to Equity Market Value [10] 0.0% Preferred Stock to Total Capitalization [9] 0.0% Equity Market Value to Total Capitalization [9] 73.0% Preferred Stock to Equity Market Value NA Cost of Debt [9] 7.8% Cost of Preferred Stock [9] 11.4% Computed Weighted Average Cost of Capital 11.9% Selected Weighted Average Cost of Capital Range 11.5% -- 12.5% |
| 42 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCIAL AND VALUATION ADVISORY HL.com |
Exhibit 16(c)(vii)
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna PROCESS UPDATE JUNE 3, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 5 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY ƒ Claritas: 6:30pm dinner with May 20 ƒ Claritas: 9am diligence meeting with ƒ Deliverable: databook with monthly 2024 Income Statement, Cash Flow, and Balance Sheet May 21 ƒ Altaris: 11:30am K&E legal diligence session, 2:30pm K&E call, 3:30pm Life Sciences call ƒ Claritas: 2pm Liberty IT diligence meeting ƒ Deliverables: Enterprise build showing pricing and margin, LTM capex by channel May 22 ƒ Altaris: 8am Crosslake Tech diligence session, 3pm EY Financial diligence session ƒ Deliverable: master employee census data May 23 ƒ Altaris: 2:30pm EY Tax diligence session ƒ Deliverable: AR/AP Aging May 24 May 27 ƒ Altaris: 10am Crosslake technology diligence session, 11am Aon benefits/insurance diligence session ƒ Claritas: 4:30pm Grant Thornton tax basis session May 28 ƒ Altaris: Dinner with Jeff and Brent ƒ Claritas: 2:30pm Grant Thornton Financial diligence session ƒ : Legal call with Carrie and Lynn May 29 ƒ Altaris: Morning working session with Jeff, Brent, Justin, and Dawn, 2:30pm EY Financial ƒ : 4:30pm Deloitte Financial diligence session May 30 ƒ Altaris: 10am Crosslake technology diligence session, 3:30pm EY Financial follow-up diligence session ƒ Claritas: tentative 1pm diligence tracker sync May 31 ƒ Sunday (6/2) : 80-min call on Carefirst with Jeff & Dawn ƒ Altaris: 1pm EY Tax Sync, Audit workpaper review June 3 ƒ Altaris: 10am Product Demo, 3pm EY Follow-Up Session ƒ : Audit workpaper review [To be scheduled] June 4 ƒ /Deloitte: Financial Follow-Up [10am/11am ET to be confirmed] ƒ Altaris/EY: Follow-Up Tax call [To be scheduled] June 5 ƒ Altaris/Crosslake: Live code review (2pm–4pm ET) ƒ /Deloitte: Tax call [To be scheduled] June 6 June 7 ƒ Bid deadline June 10 Altaris: & Preferred Claritas: & Preferred Review 24/25 Pipeline : & Preferred : K&E Legal, Deloitte Operating, & Preferred Calls to be scheduled ƒ Latest cap table ƒ Transaction expenses Key deliverables 2 Monday Tuesday Wednesday Thursday Friday Timeline to June 10th *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Altaris 3 ƒ Altaris/EY Follow-up Financial Due Diligence Session (scheduled for 6/4 3:00–5:00pm ET) 2 hours to cover additional questions after the audit workpaper review on 6/3 ƒ Product Demo (scheduled for 6/4 10:00–11:00am ET) ƒ EY Follow-Up Tax Session (to be scheduled) 90 minutes to address follow-up questions from EY ƒ Crosslake Technology Session IV (scheduled for 6/6 2:00–4:00pm ET) Detailed live code-review with management. Altaris has flagged this is their last critical IT diligence question before the 10th ƒ & Preferred (to be scheduled) To discuss the litigation and conversion of the preferred ƒ Altaris has stated they do not require calls related to insurance, benefits, and ESG ƒ Altaris Diligence Request List: Updated cap table (in process) Estimated transaction expenses estimated for 5/24 (in process) Details on KPIs for CareLinx (in process) Monthly April P&L and BS results (in process) ƒ EY Financial and Tax Request List: Deferred / unearned revenue roll forward at BU level (posted) US General and Federal Tax (Wednesday call to be scheduled following up on Provider basis) ƒ Aon Insurance & Benefits Diligence List: Altaris deal team has indicated that no further calls or information are required to close out needed materials before the 10th ƒ K&E Legal Diligence List: K&E has outlined 13 high priority items before the 10th (in process) Labor, executive compensation, employee benefits, real estate, environmental reports, IP, healthcare, historical M&A activity and pipeline, and supplier, customer, and employee contracts ƒ Crosslake Technology Diligence List: Detailed live code-review with management. Altaris has flagged this is their last critical IT diligence question before the 10th ƒ ERM ESG Diligence List: Altaris deal team has indicated that no further calls or information are required to close out needed materials before the 10th Diligence Calls Items in Process *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Claritas Capital 4 ƒ Call to review 2024/2025 pipeline (to be scheduled) Offered times to Claritas / ƒ & Preferred (to be scheduled) To discuss the litigation and conversion of the preferred ƒ Claritas Diligence Question List: Capitalization table and Change in Control agreements (in process) ƒ Grant Thornton Financial & Tax Diligence: Audit workpaper review (with Claritas to sign) ƒ Ropes & Gray Legal Diligence (201 open items): Corporate Records and Organization Financing and Indebtedness Litigation, Government and Regulatory Issues Commercial Arrangements Real Property; Environmental Matters; Personal Property Intellectual Property and Information Technology Data Privacy Employment, Executive Compensation, and Benefits Antitrust Compliance, Risk Management and Auditors Updated cap table and estimated transaction expenses Equity award agreements (included in new cap table) and all material contracts/agreements after 1/1/24 Diligence Calls Items in Process *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 5 ƒ & Preferred (to be scheduled) To discuss the litigation and conversion of the preferred Diligence Calls ƒ Diligence List: Monthly balance sheet and cash flow forecast for the balance of 2024 (TBD) Items in Process *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 6 ƒ & Preferred (to be scheduled) To discuss the litigation and conversion of the preferred ƒ K&E Legal Diligence (to be scheduled) Corporate, tech & IP and benefits matters ƒ Enterprise Session (to be scheduled) Call with Brent to discuss 2024/2025 pipeline ƒ Deloitte Financial Session Follow-up (to be scheduled) ƒ Deloitte Operating Session (to be scheduled) Discussion focused on operating model and allocations ƒ Deloitte Follow-Up Tax Session (to be scheduled) ƒ Deloitte Financial, Tax, and Operations Request List: Audit workpaper review (in process) Underlying supporting calculations and assumptions used for the Mar-24 TTM corporate allocations between the channels (posted) Monthly schedule of historical and forecasted capitalized labor amounts for Mar-24 TTM and FY 2024 forecast (posted) Monthly spend related to offshore vendor spend that is replacing the on-shore personnel costs (in process) Vendor spend on a monthly basis for FY22, FY23 and YTD Mar-24 (posted) Globalization / cost savings detail (posted) Detailed monthly/quarterly summary of deferred revenue and contract liabilities by customer / project (posted) Related party and transfer pricing studies (posted) Supporting calculations for Carelinx section 382 limitation (in process) Tax basis balance sheet (tax matters in process) Overview of Sales & Marketing organization and go-to-market across segments (posted) Information on payroll, benefits, employee issues (legal), and HRIS (posted) ƒ K&E Legal Diligence: Detail on employee litigation (in process) Detail on the Carelinx California Employment Development Dept. Audit (in process) Diligence Calls Items in Process *Confidential treatment requested |
Exhibit 16(c)(viii)
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna PROCESS UPDATE MAY 31, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 4 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY ƒ Claritas: 6:30pm dinner with May 20 ƒ Claritas: 9am diligence meeting with ƒ Deliverable: databook with monthly 2024 Income Statement, Cash Flow, and Balance Sheet May 21 ƒ Altaris: 11:30am K&E legal diligence session, 2:30pm K&E call, 3:30pm Life Sciences call ƒ Claritas: 2pm Liberty IT diligence meeting ƒ Deliverables: Enterprise build showing pricing and margin, LTM capex by channel May 22 ƒ Altaris: 8am Crosslake Tech diligence session, 3pm EY Financial diligence session ƒ Deliverable: master employee census data May 23 ƒ Altaris: 2:30pm EY Tax diligence session ƒ Deliverable: AR/AP Aging May 24 May 27 ƒ Altaris: 10am Crosslake technology diligence session, 11am Aon benefits/insurance diligence session ƒ Claritas: 4:30pm Grant Thornton tax basis session May 28 ƒ Altaris: Dinner with Jeff and Brent ƒ Claritas: 2:30pm Grant Thornton Financial diligence session ƒ : Legal call with Carrie and Lynn May 29 ƒ Altaris: Morning working session with Jeff, Brent, Justin, and Dawn, 2:30pm EY Financial ƒ : 4:30pm Deloitte Financial diligence session May 30 ƒ Altaris: 10am Crosslake technology diligence session, 3:30pm EY Financial follow-up diligence session ƒ Claritas: tentative 1pm diligence tracker sync May 31 June 3 ƒ Altaris: 10am Product Demo June 4 June 5 June 6 June 7 ƒ Bid deadline June 10 Altaris: Altaris Databook Review, ERM ESG, EY Tax Session Claritas: Dinner with : Tax Diligence (tentative), Data & Governance, : , K&E Legal, Life Sciences, Enterprise, Provider, Deloitte Operating, Deloitte Tax, Deloitte Financial Follow-up Calls to be scheduled ƒ Latest cap table ƒ Transaction expenses ƒ Audit workpaper review Key deliverables 2 Monday Tuesday Wednesday Thursday Friday Timeline to June 10th *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Altaris 3 ƒ Crosslake Technology Session III (scheduled for 5/31 10:00am-12:00pm ET) ‒ Additional 2 hours with management to discuss remaining technology/software items, including Provider and Life Sciences platform overviews ƒ EY Follow-up Financial Due Diligence Session (scheduled for 5/31 3:30-5:00pm ET) ‒ 1.5-2 hours to cover certain items related to the P&L and Balance Sheet ƒ Product Demo (scheduled for 6/4 10:00-11:00am ET) ƒ EY Tax Session (to be scheduled) ‒ 30 minutes to ensure EY is focusing / prioritizing on the right things ƒ Altaris Databook Review (to be scheduled) ‒ 45 minutes to discuss questions Altaris had following their review of the databook ƒ ERM ESG Diligence Session (to be scheduled) ƒ Altaris Diligence Request List: ‒ Capex detail by segment for 2022, similar to what was already provided for LTM Q1 2024 ‒ Updated cap table and estimated transaction expenses estimated for 5/24 ‒ Details on KPIs for Life Sciences and CareLinx ƒ EY Financial and Tax Request List: ‒ Audit workpaper review ‒ Deferred / unearned revenue roll forward at BU level ‒ US General and Federal Tax ƒ Aon Insurance & Benefits Diligence List: ‒ Insurance policies, claims data, cyber risk, collateral, US workers compensation ‒ Retirement, detailed benefit plans, employee census, independent contractor agreements ƒ K&E Legal Diligence List: ‒ Labor, executive compensation, employee benefits, real estate, environmental reports, IP, healthcare, historical M&A activity and pipeline, and supplier, customer, and employee contracts ƒ Crosslake Technology Diligence List: ‒ Security assessments and audit reports of the product software, data integration documentation, backup plan ‒ Software architecture, software development lifecycle, inventory of critical enterprise systems ƒ ERM ESG Diligence List: ‒ Environmental, Social, and Governance initiatives and policies ‒ Diversity, Equity, and Inclusion strategy and policies Diligence Calls Diligence Requests |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Claritas Capital 4 ƒ Dinner (with Jeff) (to be scheduled) ƒ Claritas Diligence Question List: ‒ Financial diligence, remaining open items focused on capitalization table and Change in Control agreements ƒ Data Request List: ‒ Revenue bridge between 2023A to Q1 2024 actuals to 2024E to 2025E by segment, with as much supporting pipeline detail as possible; highlighting impact from existing customers, expected churn, expected new customers (signed deals / go live dates), and go get ‒ Detailed market sizing by segment/customer type as well as market share for key competitors ‒ Detailed 5-year P&L and quarterly revenue forecasted by customer (back-up, formulaic model in Excel) ‒ Potential buyers for Provider and Life Sciences ƒ Grant Thornton Financial & Tax Diligence: ‒ Reviewing the latest databook and may have additional follow-up Quality of Earnings questions ‒ Audit workpaper review ‒ Detail on 1099 audit in CA and copies of 1099s ‒ International tax (Brazil, Ireland, Germany) ƒ Ropes & Gray Legal Diligence: ‒ Corporate Records and Organization ‒ Financing and Indebtedness ‒ Litigation, Government and Regulatory Issues ‒ Commercial Arrangements ‒ Real Property; Environmental Matters; Personal Property ‒ Intellectual Property and Information Technology ‒ Data Privacy ‒ Employment, Executive Compensation, and Benefits ‒ Antitrust ‒ Compliance, Risk Management and Auditors ‒ Updated cap table and estimated transaction expenses ‒ Equity award agreements (included in new cap table) and all material contracts/agreements after 1/1/24 Diligence Calls Diligence Requests *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 5 ƒ Data & Governance Call (to be scheduled) ‒ Call with CISO to get voiceover on deidentification process, data warehousing/clean room process, and data permissioning ƒ Tax Diligence Call (tentative) ƒ (to be scheduled) Diligence ‒ To discuss the litigation Calls ƒ Diligence List: ‒ Access to the full VDR ‒ Monthly P&L including Revenue Detail (i.e. by segment and product) and Expense Detail - 2022 through YTD 2024 including an April flash ‒ Monthly balance sheet and cash flow forecast for the balance of 2024. ‒ Summary of pending or threatened disputes, claims or litigation related to Company or its business, including (i) the dispute with , (ii) any shareholder litigation, and (iii) any alleged claim or threatened claim by current or former Diligence employees or alleged infringement (provide copies of any related legal documents) Requests Discuss information to provide to *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 6 ƒ (to be scheduled) ‒ Discuss the litigation ƒ K&E Legal Diligence (to be scheduled) ‒ Separation issues, including corporate, tech & IP and benefits matters ƒ Life Sciences Session (to be scheduled) ‒ 45 minutes to discuss pipeline and revenue tracking update, operational flow, and cashflow dynamics / bad debt ƒ Provider Session (to be scheduled) ‒ 30 minutes to discuss pipeline and revenue tracking update ƒ Enterprise Session (to be scheduled) ‒ 90 minutes to discuss pipeline, top clients, future salesforce and capex strategy, and costs (Shannon’s findings and detail around future savings opportunities) ƒ Deloitte Financial Session Follow-up (to be scheduled) ƒ Deloitte Operating Session (to be scheduled) ‒ Discussion focused on operating model and allocations ƒ Deloitte Tax Session (to be scheduled) ƒ Deloitte Financial, Tax, and Operations Request List: ‒ Audit workpaper review ‒ Detailed monthly trail balances at the GL account level by channel ‒ underlying supporting calculations and assumptions used for the Mar-24 TTM corporate allocations between the channels ‒ Bridge/cross walk for EBITDA adjustments to understand each adjustment on a monthly basis by channel ‒ Monthly schedule of historical and forecasted capitalized labor amounts for Mar-24 TTM and FY 2024 forecast ‒ Monthly spend related to offshore vendor spend that is replacing the on-shore personnel costs ‒ Vendor spend on a monthly basis for FY22, FY23 and YTD Mar-24 ‒ Globalization / cost savings detail ‒ Detailed monthly/quarterly summary of deferred revenue and contract liabilities by customer / project ‒ Related party and transfer pricing studies ‒ Supporting calculations for Carelinx section 382 limitation ‒ Tax basis balance sheet ‒ Overview of Sales & Marketing organization and go-to-market across segments ‒ Information on payroll, benefits, employee issues (legal), and HRIS ƒ K&E Legal Diligence: ‒ Detail on employee litigation ‒ Detail on the Carelinx California Employment Development Dept. Audit Diligence Calls Diligence Requests *Confidential treatment requested |
Exhibit 16(c)(ix)
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna PROCESS UPDATE MAY 28, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 3 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY ƒ Claritas: 6:30pm dinner with May 20 ƒ Claritas: 9am diligence meeting with ƒ Deliverable: databook with monthly 2024 Income Statement, Cash Flow, and Balance Sheet May 21 ƒ Altaris: 11:30am K&E legal diligence session, 2:30pm K&E call, 3:30pm Life Sciences call ƒ Claritas: 2pm Liberty IT diligence meeting ƒ Deliverables: Enterprise build showing pricing and margin, LTM capex by channel May 22 ƒ Altaris: 8am Crosslake Tech diligence session, 3pm EY Financial diligence session ƒ Deliverable: master employee census data May 23 ƒ Altaris: 2:30pm EY Tax diligence session ƒ Deliverable: AR/AP Aging May 24 May 27 ƒ Altaris: 10am Crosslake technology diligence session, 11am Aon benefits/insurance diligence session ƒ Claritas: 4:30pm Grant Thornton tax basis session May 28 ƒ Altaris: Dinner with Jeff, Brent, Justin, and Dawn May 29 ƒ Altaris: Morning working session with Jeff, Brent, Justin, and Dawn May 30 ƒ Altaris: 10am Crosslake technology diligence session May 31 June 3 June 4 June 5 June 6 June 7 ƒ Bid deadline June 10 Altaris: Product Demo, Altaris Databook Review, ERM ESG, EY Financial Due Diligence Follow-up Session Claritas: Grant Thornton Financial, Dinner with : Tax diligence (tentative), Data & Governance Calls to be scheduled ƒ Latest cap table ƒ Transaction expenses Key deliverables 2 Monday Tuesday Wednesday Thursday Friday Timeline to June 10th *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Altaris 3 ƒ Aon Benefits and Insurance Introductory Diligence Session (scheduled for 5/28 11:00am-12:00pm ET) ƒ Crosslake Technology Session II (scheduled for 5/28 10:00am-12:00pm ET) ‒ Additional 2 hours with management to discuss the Company’s infrastructure/security with the CISO ƒ Crosslake Technology Session III (scheduled for 5/31 10:00am-12:00pm ET) ‒ Additional 2 hours with management to discuss remaining technology/software items, including Provider and Life Sciences platform overviews ƒ EY Follow-up Financial Due Diligence Session (to be scheduled) ‒ 1.5-2 hours to cover certain items related to the P&L and Balance Sheet ƒ Product Demo (to be scheduled) ƒ Altaris Databook Review (to be scheduled) ‒ 45 minutes to discuss questions Altaris had following their review of the databook ƒ ERM ESG Diligence Session (to be scheduled) ƒ Altaris Diligence Request List: ‒ Capex detail by segment for 2021-2023 and FY 2024E, similar to what was already provided for LTM Q1 2024 ‒ Updated cap table and estimated transaction expenses estimated for 5/24 ‒ Description of services for key vendors ‒ Details on KPIs for Life Sciences and CareLinx ƒ EY Financial and Tax Request List: ‒ Deferred / unearned revenue roll forward at BU level ‒ Executive compensation ‒ US General and Federal Tax ƒ Aon Insurance & Benefits Diligence List: ‒ Insurance policies, claims data, cyber risk, collateral, US workers compensation ‒ Retirement, detailed benefit plans, employee census, independent contractor agreements ƒ K&E Legal Diligence List: ‒ Labor, executive compensation, employee benefits, real estate, environmental reports, IP, healthcare, historical M&A activity and pipeline, and supplier, customer, and employee contracts ƒ Crosslake Technology Diligence List: ‒ Security assessments and audit reports of the product software, data integration documentation, backup plan ‒ Software architecture, software development lifecycle, inventory of critical enterprise systems ƒ ERM ESG Diligence List: ‒ Environmental, Social, and Governance initiatives and policies ‒ Diversity, Equity, and Inclusion strategy and policies Diligence Calls Diligence Requests |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Claritas Capital 4 ƒ Grant Thornton Tax Basis Call (scheduled 5/28 4:40-5:30pm) ‒ To discuss and walk through GT’s Excel spreadsheet and finalize any assumptions ƒ Dinner (with Jeff) (to be scheduled) ƒ Grant Thornton Financial Due Diligence Call (to be scheduled) ‒ To discuss the updated databook and open questions from Grant Thornton ƒ Claritas Diligence Question List: ‒ Financial diligence, remaining open items focused on capitalization table and Change in Control agreements ƒ Data Request List: ‒ Revenue bridge between 2023A to Q1 2024 actuals to 2024E to 2025E by segment, with as much supporting pipeline detail as possible; highlighting impact from existing customers, expected churn, expected new customers (signed deals / go live dates), and go get ‒ Detailed market sizing by segment/customer type as well as market share for key competitors ‒ Detailed 5-year P&L and quarterly revenue forecasted by customer (back-up, formulaic model in Excel) ‒ Potential buyers for Provider and Life Sciences ƒ Grant Thornton Financial & Tax Diligence: ‒ Reviewing the latest databook and may have additional follow-up Quality of Earnings questions ‒ Audit workpaper review ‒ Detail on 1099 audit in CA and copies of 1099s ‒ International tax (Brazil, Ireland, Germany) ƒ Ropes & Gray Legal Diligence: ‒ Corporate Records and Organization ‒ Financing and Indebtedness ‒ Litigation, Government and Regulatory Issues ‒ Commercial Arrangements ‒ Real Property; Environmental Matters; Personal Property ‒ Intellectual Property and Information Technology ‒ Data Privacy ‒ Employment, Executive Compensation, and Benefits ‒ Antitrust ‒ Compliance, Risk Management and Auditors ‒ Updated cap table and estimated transaction expenses ‒ Equity award agreements (included in new cap table) and all material contracts/agreements after 1/1/24 Diligence Calls Diligence Requests *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 5 ƒ Data & Governance Call (to be scheduled) ‒ Call with CISO to get voiceover on deidentification process, data warehousing/clean room process, and data permissioning ƒ Tax Diligence Call (tentative) Diligence Calls ƒ Diligence List: ‒ Access to the full VDR ‒ 2020-2024YTD Annual Provider Client Level Detail including contract start date, renewal date, cancel date (if applicable), and revenue ‒ Updated view on client adds, cancels in Enterprise and Life Sciences 2024 YTD (by client, product, and spend) ‒ Monthly P&L including Revenue Detail (i.e. by segment and product) and Expense Detail - 2022 through YTD 2024 including an April flash ‒ Monthly balance sheet and cash flow forecast for the balance of 2024. ‒ Summary of pending or threatened disputes, claims or litigation related to Company or its business, including (i) the dispute with , (ii) any shareholder litigation, and (iii) any alleged claim or threatened claim by current or former employees or alleged infringement (provide copies of any related legal documents) ‒ HITRUST Renewal Documentation Diligence Requests Discuss information to provide to *Confidential treatment requested |
Exhibit 16(c)(x)
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna PROCESS UPDATE MAY 24, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 3 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY ƒ Claritas: 6:30pm dinner with May 20 ƒ Claritas: 9am diligence meeting with ƒ Deliverable: databook with monthly 2024 Income Statement, Cash Flow, and Balance Sheet May 21 ƒ Altaris: 11:30am K&E legal diligence session, 2:30pm K&E call, 3:30pm Life Sciences call ƒ Claritas: 2pm Liberty IT diligence meeting ƒ Deliverables: Enterprise build showing pricing and margin, LTM capex by channel May 22 ƒ Altaris: 8am Crosslake Tech diligence session, 3pm EY Financial diligence session ƒ Deliverable: master employee census data May 23 ƒ Altaris: 2:30pm EY Tax diligence session ƒ Deliverables: updated cap table, transaction expenses May 24 May 27 ƒ Altaris: 10am Crosslake technology diligence session May 28 May 29 May 30 ƒ Altaris: 10am Crosslake technology diligence session May 31 June 3 June 4 June 5 June 6 June 7 ƒ Bid deadline June 10 Altaris: Product Demo, Altaris Databook Review, Aon Insurance, Aon Benefits, ERM ESG Claritas: Grant Thornton Financial, Grant Thornton Tax Basis, Dinner with : Tax diligence (tentative), Data & Governance Calls to be scheduled ƒ Latest cap table ƒ Transaction expenses ƒ AR/AP Aging Key deliverables 2 Monday Tuesday Wednesday Thursday Friday Timeline to June 10th *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Altaris 3 ƒ EY Tax (scheduled for 5/24 2:30-4:30pm ET) ‒ Discussion of general tax matters, US federal income tax matters, and state and local income and non-income matters ƒ Crosslake Technology Session II (scheduled for 5/28 10:00am-12:00pm ET) ‒ Additional 2 hours with management to discuss the Company’s infrastructure/security with the CISO ƒ Crosslake Technology Session III (scheduled for 5/31 10:00am-12:00pm ET) ‒ Additional 2 hours with management to discuss remaining technology/software items, including Provider and Life Sciences platform overviews ƒ Product Demo (to be scheduled) ƒ Altaris Databook Review (to be scheduled) ‒ 30 minutes to discuss questions Altaris had following their review of the databook ƒ Aon Insurance Introductory Diligence Session (to be scheduled) ƒ Aon Benefits Introductory Diligence Session (to be scheduled) ƒ ERM ESG Diligence Session (to be scheduled) ƒ Altaris Diligence Request List: ‒ Updated cap table and estimated transaction expenses estimated for 5/24 ‒ Description of services for key vendors ƒ EY Financial and Tax Request List: ‒ Deferred / unearned revenue roll forward at BU level ‒ Executive compensation ‒ AR/AP Aging ‒ US General and Federal Tax ƒ Aon Insurance & Benefits Diligence List: ‒ Insurance policies, claims data, cyber risk, collateral, US workers compensation ‒ Retirement, detailed benefit plans, employee census, independent contractor agreements ƒ K&E Legal Diligence List: ‒ Labor, executive compensation, employee benefits, real estate, environmental reports, IP, healthcare, historical M&A activity and pipeline, and supplier, customer, and employee contracts ‒ Additional follow-up questions following legal sessions held Wednesday 5/22 to be provided ƒ Crosslake Technology Diligence List: ‒ Security assessments and audit reports of the product software, data integration documentation, backup plan ‒ Software architecture, software development lifecycle, inventory of critical enterprise systems ƒ ERM ESG Diligence List: ‒ Environmental, Social, and Governance initiatives and policies ‒ Diversity, Equity, and Inclusion strategy and policies Diligence Calls Diligence Requests |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Claritas Capital 4 ƒ Dinner (with Jeff) (to be scheduled) ƒ Grant Thornton Tax Basis Call (to be scheduled) ‒ Once Grant Thornton provides their Excel spreadsheet with the tax basis framework, including the source documents and assumptions, a call will be scheduled to walk through ƒ Grant Thornton Financial Due Diligence Call (to be scheduled) ‒ To discuss the updated databook and open questions from Grant Thornton ƒ Claritas Diligence Question List: ‒ Financial and Commercial diligence, remaining open items focused on capitalization table and Change in Control agreements ƒ Data Request List: ‒ Initial set of questions responded to and covered during the meeting on 5/21 ‒ Additional questions to be provided after the 5/21 meeting (by Friday May 24th) ƒ Grant Thornton Financial & Tax Diligence: ‒ Reviewing the latest databook and may have additional follow-up Quality of Earnings questions ‒ Audit workpaper review ‒ AR/AP Aging ‒ Detail on 1099 audit in CA and copies of 1099s ƒ Ropes & Gray Legal Diligence: ‒ Corporate Records and Organization ‒ Financing and Indebtedness ‒ Litigation, Government and Regulatory Issues ‒ Commercial Arrangements ‒ Real Property; Environmental Matters; Personal Property ‒ Intellectual Property and Information Technology ‒ Data Privacy ‒ Employment, Executive Compensation, and Benefits ‒ Antitrust ‒ Compliance, Risk Management and Auditors ‒ Updated cap table and estimated transaction expenses ‒ Equity award agreements (included in new cap table) and all material contracts/agreements after 1/1/24 Diligence Calls Diligence Requests *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 5 ƒ Data & Governance Call (to be scheduled) ‒ Call with CISO to get voiceover on deidentification process, data warehousing/clean room process, and data permissioning ƒ Tax Diligence Call (tentative) Diligence Calls ƒ Diligence List: ‒ Access to the full VDR ‒ 2020-2024YTD Annual Provider Client Level Detail including contract start date, renewal date, cancel date (if applicable), and revenue ‒ Updated view on client adds, cancels in Enterprise and Life Sciences 2024 YTD (by client, product, and spend) ‒ Monthly P&L including Revenue Detail (i.e. by segment and product) and Expense Detail - 2022 through YTD 2024 including an April flash ‒ Monthly balance sheet and cash flow forecast for the balance of 2024. ‒ Summary of pending or threatened disputes, claims or litigation related to Company or its business, including (i) the dispute with , (ii) any shareholder litigation, and (iii) any alleged claim or threatened claim by current or former employees or alleged infringement (provide copies of any related legal documents) ‒ HITRUST Renewal Documentation Diligence Requests Discuss information to provide to *Confidential treatment requested |
Exhibit 16(c)(xi)
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna PROCESS UPDATE MAY 21, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 4 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY ƒ Claritas: 6:30pm dinner with May 20 ƒ Claritas: 9am diligence meeting with ƒ Deliverable: databook with monthly 2024 Income Statement, Cash Flow, and Balance Sheet May 21 ƒ Altaris: 11:30am K&E legal diligence session ƒ Claritas: 2pm Liberty IT diligence meeting ƒ Altaris: 2:30pm K&E call ƒ Altaris: 3:30pm Life Sciences follow-up May 22 ƒ Altaris: 8am Crosslake Tech diligence session May 23 ƒ Diligence deliverable: updated cap table ƒ Diligence deliverable: transaction expenses May 24 May 27 May 28 May 29 May 30 May 31 June 3 June 4 June 5 June 6 June 7 ƒ Bid deadline June 10 Altaris: EY Financial, EY Tax, Product Demo Claritas: Grant Thornton Financial, Grant Thornton Tax Basis, Dinner w/ : Tax, Simpson Thacher Legal Calls to be scheduled ƒ Updated financial workbook ƒ Projected balance sheet and transaction exp. ƒ Latest cap table ƒ Final master employee census ƒ Capex detail by channel, by project ƒ Enterprise build showing pricing and margin Diligence items to be delivered 2 Monday Tuesday Wednesday Thursday Friday Timeline to June 10th *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Claritas Capital 3 ƒ Management Call (scheduled for 5/21 9:00am-2:00pm ET in Savanna Atlanta office) Deep dive into each segment (Enterprise, Provider, Life Sciences) ƒ Liberty IT Call (scheduled for 5/22 2:00-3:30pm ET) WeCare Medicaid Application Development Deep Dive (30 minutes) SDLC process/governance in the context of the WeCare platform build (15 minutes) IT Organization & Vendors (15 minutes) Technology Financials (15 minutes) ƒ Dinner (with Jeff) (scheduled for 5/28) ƒ Grant Thornton Tax Basis Call (to be scheduled) Once Grant Thornton provides their Excel spreadsheet with the tax basis framework, including the source documents and assumptions, a call will be scheduled to walk through ƒ Grant Thornton Financial Due Diligence Call (to be scheduled) Once the workbook is completed and provided, management to discuss with Grant Thornton ƒ Claritas Diligence Question List: Financial and Commercial diligence ƒ Data Request List: Top 20 current customers (contract value, historical and forecasted revenue, renewal date, KPIs, and outlook) Lookback on Top 20 customers from 2021 and 2022 (contract value, historical and forecasted revenue, renewal date, KPIs, and outlook) Top 15 pipeline customers (features to be contracted, forecasted revenue, contract value, and renewal date) Detailed market sizing by segment/customer type as well as market share for key competitors Detailed 5-year P&L and quarterly revenue forecasted by customer Potential buyers for Provider and Life Sciences Additional questions to be provided after the 5/21 meeting (by Friday May 24th) ƒ Grant Thornton Financial & Tax Diligence: Updated databook with monthly 2024 income statement, cash flow, and balance sheet Vendor line item tagging for EBITDA adjustments Transfer pricing questions ƒ Liberty IT Diligence: Product & technology org chart Product & technology financials ƒ Ropes & Gray Legal Diligence: Updated cap table and estimated transaction expenses Equity award agreements (included in new cap table) and all material contracts/agreements after 1/1/24 Diligence Calls Diligence Requests *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Altaris 4 ƒ K&E Legal Diligence Call (scheduled for 5/22 11:30am-1:00pm) 90-minute call to discuss critical items with management including HR Matters, Intellectual Property, Healthcare, and Corporate topics ƒ K&E Call (scheduled for 5/22 2:30-3:30pm) Call with Quinn Emanuel and management to address any questions on the litigation ƒ Life Sciences Follow Up Discussion (scheduled for 5/22 3:30-4:30pm ET) Follow-up discussion to cover the Life Sciences segment in detail ƒ Crosslake Technology Deep Dive Call (scheduled for 5/23 8:00-10:00am ET) 2-hour call with management to discuss the Company’s software and technology ƒ Product Demo (to be scheduled) ƒ Altaris Diligence Request List: Updated cap table and estimated transaction expenses estimated for 5/24 Enterprise segment pricing/margin analysis ƒ EY Financial and Tax Request List: Updated databook with monthly 2024 income statement, cash flow, and balance sheet Deferred / unearned revenue roll forward at BU level ƒ Aon Insurance & Benefits Diligence List: Insurance policies, claims data, cyber risk, collateral, US workers compensation Retirement, detailed benefit plans, employee census, independent contractor agreements ƒ K&E Legal Diligence List: Labor, executive compensation, employee benefits, real estate, environmental reports, IP, healthcare, historical M&A activity and pipeline Supplier, customer, and employee contracts ƒ Crosslake Technology Diligence List: Security assessments and audit reports of the product software, data integration documentation, backup plan Software architecture, software development lifecycle, inventory of critical enterprise systems Technology org chart Diligence Calls Diligence Requests *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 5 ƒ Simpson Thacher Legal Diligence Call (to be scheduled) To discuss outstanding legal issues covering regulatory, security and data integrity matters - to be scheduled following receipt of requests ƒ Tax Diligence Call (to be scheduled) Diligence Tentative based on information received Calls ƒ Diligence List: Form agreements that are typically signed by employees and independent contractors (e.g. confidentiality, assignment of inventions, arbitration, etc.) Updated databook Monthly balance sheet and cash flow forecast for the balance of 2024 Schedule of net operating losses and credit carryovers, including detail of when the NOLs were incurred by year (not just in total) Tax provision workpapers (2021-2023) Federal tax returns (2021-2023) Change of control, 382 analysis Inside asset basis calculation Summary of pending or threatened disputes, claims or litigation related to Company or its business, including (i) the dispute with , (ii) any shareholder litigation, and (iii) any alleged claim or threatened claim by current or former employees or alleged infringement (provide copies of any related legal documents) A summary of any security or compliance related issues from 2022-2024 YTD Diligence Requests *Confidential treatment requested |
Exhibit 16(c)(xii)
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna PROCESS UPDATE MAY 14, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 1 page, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Executive Summary ƒ Claritas / » meeting early week of 5/20; remaining diligence in commercial, finance, insurance, benefits, IT ƒ » Submitted a limited set of additional requests (commercial, finance/tax, legal, employee) ƒ Altaris » In-person commercial diligence session scheduled for 5/15; remaining diligence in commercial, finance, insurance, benefits, IT ƒ » Weighing next steps in light of feedback Party Status Next Steps ƒ HL to distribute a process letter to each of the four parties: » Communicate intention to announce transaction by Monday, June 24th (45 days post May 9th earnings) » Final bid deadline to be set for Monday, June 10th, after which Company intends to select a single party with which to negotiate definitive agreements ƒ In the interim 3.5 weeks prior to the June 10th bid deadline: » Management and HL to facilitate all remaining diligence » WLRK to progress negotiation of contract with opposing counsels ƒ Between June 10th and June 24th: » Potential to quickly finalize negotiation if proposals are undifferentiated » Select party with which to negotiate definitive agreements » Enable winning party to engage with certain existing shareholders and customers » Finalize negotiation of contract with opposing counsel 2 *Confidential treatment requested |
Exhibit 16(c)(xiii)
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna DISCUSSION MATERIALS FOR THE SPECIAL COMMITTEE MAY 3, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 5 pages, confidential information filed separately with the SEC |
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Disclaimer 2 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Source: Discussions with company management. Situation Overview ƒ On April 29th and April 30th, the Company received three proposals: » Claritas submitted a revised proposal to acquire the business for $1.50 - $1.60 per share » Altaris submitted a proposal to acquire the business for $1.35 per share » submitted a proposal to acquire the business for $1.22 per share » Alternatively, to partner with a third party to acquire the Enterprise business for $0.42 per share » Alternatively, to partner with a third party to acquire both the Enterprise and Life Sciences businesses at an unspecified price ƒ On May 1st, submitted a proposal: » $450 million Enterprise Value, with deductions for indebtedness and liabilities equal to $134 million implying an Equity Value of $316 million » bid would equal $0.75 per share (using share count) or $0.86 (using the company’s share count) » Including $100M of cash on balance sheet, the bid would equal $0.98 (using share count) or $1.12 per share (using the company’s share count) 3 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals (1 of 3) » Price and Structure ƒ $1.50 – $1.60 per share ƒ 102% – 116% premium to closing price as of May 2 ƒ 85% – 98% premium to closing price as of April 26 ƒ 105% – 119% premium to 30-day VWAP (as at bid date) of $0.73 ƒ $1.22 per share ƒ 64% premium to closing price as of May 2 ƒ 51% premium to closing price as of April 26 ƒ 67% premium to 30-day VWAP (as at bid date) of $0.73 ƒ Alternatively, to partner with a third party to acquire the Enterprise business at $0.42 per share ƒ Alternatively, to partner with a third party to acquire both the Enterprise and Life Sciences businesses at an unspecified price ƒ Enterprise Value of $450 million ƒ Expect ~$134m of indebtedness and liabilities to be subtracted from the Enterprise Value, resulting in $316m of Equity Value ƒ Based on the 424M share count referenced by , the proposal would imply: ‒ $0.75 per share ‒ $0.98 per share, assuming $100m in balance sheet cash ƒ Based on share count provided by management, the proposal would imply: ‒ $0.86 per share ‒ $1.12 per share, assuming $100M in balance sheet cash ƒ $1.35 per share ƒ 82% premium to closing price as of May 2 ƒ 67% premium to closing price as of April 26 ƒ 82% premium to 30-day VWAP (as at bid date) of $0.73 » Financing ƒ $90m of equity consisting of Claritas’ current equity in the Company and additional equity investment of $25m (basis for $90m unclear) ƒ $200-300m equity commitment from Altaris Capital Partners or (currently uncommitted) ƒ Minority investments from each of and (currently uncommitted) ƒ Anticipate that rollover equity from other existing stockholders will equal $75 -100m ƒ Option to fund a portion of the transaction with up to $150m of debt. Have a proposal for a $150m first lien term loan from ƒ Sufficient cash on balance sheet to complete a transaction; do not require any new financing ƒ Interested in discussing terms of a rollover by certain key management of their equity interests in the Company ƒ Expects to fund the proposed transaction through a combination of equity from funds and third-party debt financing ƒ No third-party debt sources identified ƒ The proposed transaction will not be subject to a financing condition ƒ No financing plan or evidence of capacity offered ƒ Not subject to any financing contingency ƒ At the appropriate time and, to the extent necessary, with the approval of the special committee, would welcome the opportunity to discuss rollover considerations with existing shareholders, including members of management Source: Proposal letters from , Claritas Capital, ; and Altaris Capital; discussions with Savanna management. Claritas Capital (4/29/2024) (4/30/2024) (5/1/2024) Altaris Capital (4/29/2024) 4 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals (2 of 3) » Assumptions ƒ Fully diluted share count not specified (to be in line with capitalization information set forth on the schedule of outstanding equity interests made available in the virtual data room) ƒ Including $50m payout to Series A Convertible Preferred ƒ Not expressly addressed ƒ Share count of 423,851,217 ƒ Indebtedness and liabilities to be subtracted from the Enterprise Value (including $50m for Series A Convertible Preferred) ƒ $31m of 2024 forecasted Provider EBITDA, $21m of 2024 forecasted Life Sciences EBITDA, and $25m of free cash at the Enterprise business segment at close ƒ Fully-diluted share count of 375,558,741 using the treasury stock method ƒ Cash and debt not specified (to be consistent with the amounts set forth in the information provided in the virtual data room) ƒ The Series A Convertible Preferred Stock is redeemed by the Company for $50m prior to Closing ƒ The Company is on track to achieve its 2024 forecast and that the Provider business can be separated from Sharecare in an efficient manner » Due Diligence, Timing and Approvals ƒ Anticipates that it and its financing partners will be in a position to complete diligence, deliver commitment letters and negotiate a definitive agreement within 2-3 weeks from the date of its proposal ƒ Proposal is contingent upon satisfactory completion of due diligence ƒ Execution of the definitive agreement is subject to the final approval of the investment committee of Claritas ƒ Confident in ability to complete remaining confirmatory diligence expeditiously and sign a definitive agreement in advance of the Company’s next earnings announcement date ƒ Anticipates completion of diligence and definitive agreements no later than 4 weeks after being granted exclusivity and the access it needs ƒ Anticipates due diligence and negotiation of transaction documentation can be completed within 30 days Source: Proposal letters from , Claritas Capital, ; and Altaris Capital; discussions with Savanna management. Claritas Capital (4/29/2024) (4/30/2024) Altaris Capital (4/29/2024) 5 (5/1/2024) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals (3 of 3) Source: Proposal letters from , Claritas Capital, ; and Altaris Capital; discussions with Savanna management. » Other ƒ Requesting permission to engage in transaction discussions with Jeff Arnold, ƒ N/A ƒ Ask that the Company promptly enter into a thirty day exclusivity agreement with ƒ Remains open to working with Claritas Capital on this transaction » Merger Agreement Mark-up ƒ General. Heavy on legal comments. Probably manageable / negotiable to reasonable result. (Though relatively less friendly than mark-up). ƒ Reps/Warranties/IOCs. Significant expansion of representations / warranties and interim operating covenants. ƒ Financing. Significantly watered-down Claritas’ obligation to obtain (or replace, if necessary) necessary financing. Significantly reduced reverse break fee Claritas would pay in the event of a financing failure (down to $25mm from $75mm). ƒ Antitrust. Weakened antitrust efforts provisions, eliminated antitrust-related reverse break fee and effectively put antitrust risk on Sharecare. ƒ General. Moderately heavy on legal comments, but appears manageable / negotiable to reasonable result. ƒ Reps/Warranties/IOCs. Significant expansion of representations / warranties and interim operating covenants. ƒ Financing. Introduced some minor concerns about reliability of ability to finance, but counsel has signaled willingness to address. ƒ Antitrust. Introduced some minor concerns around antitrust risk, but counsel has signaled willingness to address. ƒ Unvested Incentive Equity. Treatment of unvested incentive equity is an open question. ƒ Provided an issues list, but has not provided a mark-up. The issues list appears manageable, but impossible to compare to other bidders prior to receiving a mark-up. ƒ None provided (did not receive merger agreement form until 4/29) Claritas Capital (4/29/2024) (4/30/2024) Altaris Capital (4/29/2024) 6 (5/1/2024) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Claritas Proposed Sources and Uses Source: Proposal letter from Claritas Capital. * Basis for $90M unclear. (currently uncommitted) (currently uncommitted) (currently uncommitted) * * 7 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY – Implied Price per Share Source: Proposal letter from . Share count provided by Savanna management. 8 $ in millions Enterprise Value $450.0 Series A Convertible Preferred Stock $50.0 De-SPAC Warrants $1.0 Outstanding Options $0.5 Employer portion payroll taxes on employee equity payments $6.0 Company's letters of credit $0.0 Maximum severance payment amount payable to the participants in the Change in Control Plan $34.5 Company’s transaction expenses and fees $15.0 D&O Tail Policy $5.0 transaction expenses and fees $22.0 Equity Value of the Company $316.0 Shares Common Stock 355,075,660 Company RSUs held by Change in Control Plan Participants 13,280,190 Company RSUs held by employees of the Company who are not Change in Control Plan Participants 17,251,912 Company RSUs already granted in 2024 16,250,000 Company RSUs to be granted in 2024 17,500,000 Company PSUs held by Change in Control Plan Participants 3,995,302 Company PSUs held by employees of the Company who are not Change in Control Plan Participants 498,153 Total Shares 423,851,217 Per Share Price $0.75 Per Share Price (inc. Cash on Balance Sheet, Assuming $100M Balance) $0.98 Price per share, assuming share count provided by management Per Share Price $0.86 Per Share Price (inc. Cash on Balance Sheet, Assuming $100M Balance) $1.12 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Illustrative Analysis at Various Prices 9 Source: Company filings, Savanna management projections, Capital IQ as of 5/2/2024. Metrics <0 considered NM. Note: A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Savanna Management estimates; (2) Non-Controlling Interest reflects a minimum of $0. Non-Controlling Interest as of 9/30/23 is ($0.5) million, per Savanna management; (3) Based on U.S. announced software transactions since April 2023, 25th – 75th percentile of 1-month premiums. ($ and shares in millions, except per share data) Digital Health Median 2024E Revenue Multiple Premiums Paid – U.S. Public Tech Companies, LTM(3) Digital Health Median 2024E EBITDA Multiple $0.94 - $1.15 $1.60 $0.77 Range of Current Proposals: $0.75 – $1.60 27% 55% 2024E Median: 11.2x 2024E Median: 1.48x Current Illustrative Share Prices Price Per Share $0.74 $1.20 $1.30 $1.40 $1.50 $1.60 $1.70 $1.80 $1.90 $2.00 Fully Diluted Shares (1/1/2024A)(1) 422.3 425.8 427.6 429.2 432.0 435.8 439.1 442.0 444.6 447.0 Equity Value $313 $511 $556 $601 $648 $697 $746 $796 $845 $894 Less: Net Cash (12/31/2023A) (128) (128) (128) (128) (128) (128) (128) (128) (128) (128) Plus: Minority Interest (12/31/2023A)(2) - - - - - - - - - - Plus: Preferred Equity (12/31/2023A) 50 50 50 50 50 50 50 50 50 50 Enterprise Value $236 $433 $478 $523 $570 $620 $669 $718 $767 $816 Premium / (Discount) to: Metric Current Share Price (5/2/2024) $0.74 - 62% 75% 89% 102% 116% 129% 142% 156% 169% 52-Week High (7/17/2023) $1.80 (59%) (33%) (28%) (22%) (17%) (11%) (6%) 0% 6% 11% 52-Week Low (4/1/2024) $0.48 54% 149% 170% 191% 212% 233% 253% 274% 295% 316% EV / Revenue 2024E(1) $417 0.6x 1.0x 1.1x 1.3x 1.4x 1.5x 1.6x 1.7x 1.8x 2.0x 2025E(1) $512 0.5x 0.8x 0.9x 1.0x 1.1x 1.2x 1.3x 1.4x 1.5x 1.6x EV / Adj. EBITDA 2024E(1) $22 10.6x 19.5x 21.5x 23.6x 25.7x 27.9x 30.1x 32.3x 34.6x 36.8x 2025E(1) $62 3.8x 7.0x 7.8x 8.5x 9.2x 10.0x 10.8x 11.6x 12.4x 13.2x |
| 10 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCIAL AND VALUATION ADVISORY HL.com |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna DISCUSSION MATERIALS FOR THE SPECIAL COMMITTEE MAY 1, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 5 pages, confidential information filed separately with the SEC |
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Disclaimer 2 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Source: Discussions with company management. Situation Overview ƒ On April 29th and April 30th, the Company received [three] proposals: » Claritas submitted a revised proposal to acquire the business for $1.50 - $1.60 per share » Altaris submitted a proposal to acquire the business for $1.35 per share » submitted a proposal to acquire the business for $1.22 per share » Alternatively, to partner with a third party to acquire the Enterprise business for $0.42 per share » Alternatively, to partner with a third party to acquire both the Enterprise and Life Sciences businesses at an unspecified price » [ has communicated that they intend to submit a proposal on May 1st] 3 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals (1 of 3) » Price and Structure ƒ $1.50 – $1.60 per share ƒ 85% – 98% premium to closing price as of April 26 ƒ 105% – 119% premium to 30- day VWAP of $0.73 ƒ $1.22 per share ƒ 51% premium to closing price as of April 26 ƒ 67% premium to 30-day VWAP ƒ Alternatively, to partner with a third party to acquire the Enterprise business at $0.42 per share ƒ Alternatively, to partner with a third party to acquire both the Enterprise and Life Sciences businesses at an unspecified price ƒ $1.35 per share ƒ 66.7% premium to closing price as of April 26 ƒ 82.3% premium to 30-day VWAP » Financing ƒ $90m of equity consisting of Claritas’ current equity in the Company and additional equity investment of $25m (basis for $90m unclear) ƒ $200-300m equity commitment from Altaris Capital Partners or (currently uncommitted) ƒ Minority investments from each of and (currently uncommitted) ƒ Anticipate that rollover equity from other existing stockholders will equal $75 -100m ƒ Option to fund a portion of the transaction with up to $150m of debt. Have a proposal for a $150m first lien term loan from ƒ Sufficient cash on balance sheet to complete a transaction; do not require any new financing ƒ Interested in discussing terms of a rollover by certain key management of their equity interests in the Company ƒ No financing plan or evidence of capacity offered ƒ Not subject to any financing contingency ƒ At the appropriate time and, to the extent necessary, with the approval of the special committee, would welcome the opportunity to discuss rollover considerations with existing shareholders, including members of management Source: Proposal letters from , Claritas Capital, ; and Altaris Capital; discussions with Savanna management. Claritas Capital (4/29/2024) (4/30/2024) (TBU) Altaris Capital (4/29/2024) Awaiting proposal from 4 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals (2 of 3) » Assumptions ƒ Fully diluted share count not specified (to be in line with capitalization information set forth on the schedule of outstanding equity interests made available in the virtual data room) ƒ Including $50m payout to Series A ƒ Not expressly addressed ƒ Fully-diluted share count of 375,558,741 using the treasury stock method ƒ Cash and debt not specified (to be consistent with the amounts set forth in the information provided in the virtual data room) ƒ The Series A Convertible Preferred Stock is redeemed by the Company for $50 million prior to Closing ƒ The Company is on track to achieve its 2024 forecast and that the Provider business can be separated from Sharecare in an efficient manner » Due Diligence, Timing and Approvals ƒ Anticipates that it and its financing partners will be in a position to complete diligence, deliver commitment letters and negotiate a definitive agreement within 2-3 weeks from the date of its proposal ƒ Proposal is contingent upon satisfactory completion of due diligence ƒ Execution of the definitive agreement is subject to the final approval of the investment committee of Claritas ƒ Confident in ability to complete remaining confirmatory diligence expeditiously and sign a definitive agreement in advance of the Company’s next earnings announcement date ƒ Anticipates due diligence and negotiation of transaction documentation can be completed within 30 days Source: Proposal letters from , Claritas Capital, ; and Altaris Capital; discussions with Savanna management. Claritas Capital (4/29/2024) (4/30/2024) (TBU) Altaris Capital (4/29/2024) Awaiting proposal from 5 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Proposals (3 of 3) Source: Proposal letters from , Claritas Capital, ; and Altaris Capital; discussions with Savanna management. » Other ƒ Requesting permission to engage in transaction discussions with , Jeff Arnold, ƒ N/A ƒ Remains open to working with Claritas Capital on this transaction » Merger Agreement Mark-up ƒ General. Heavy on legal comments. Probably manageable / negotiable to reasonable result. (Though relatively less friendly than ’ mark-up). ƒ Reps/Warranties/IOCs. Significant expansion of representations / warranties and interim operating covenants. ƒ Financing. Significantly watered-down Claritas’ obligation to obtain (or replace, if necessary) necessary financing. Significantly reduced reverse break fee Claritas would pay in the event of a financing failure (down to $25mm from $75mm). ƒ Antitrust. Weakened antitrust efforts provisions, eliminated antitrust-related reverse break fee and effectively put antitrust risk on Sharecare. ƒ General. Moderately heavy on legal comments, but appears manageable / negotiable to reasonable result. ƒ Reps/Warranties/IOCs. Significant expansion of representations / warranties and interim operating covenants. ƒ Financing. Introduced some minor concerns about reliability of ability to finance, but counsel has signaled willingness to address. ƒ Antitrust. Introduced some minor concerns around antitrust risk, but counsel has signaled willingness to address. ƒ Unvested Incentive Equity. Treatment of unvested incentive equity is an open question. ƒ None provided (did not receive merger agreement form until 4/29) Claritas Capital (4/29/2024) (4/30/2024) (TBU) Altaris Capital (4/29/2024) Awaiting proposal from 6 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Claritas Proposed Sources and Uses Source: Proposal letter from Claritas Capital. * Basis for $90M unclear. (currently uncommitted) (currently uncommitted) (currently uncommitted) * * 7 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Illustrative Analysis at Various Prices 8 Source: Company filings, Savanna management projections, Capital IQ as of 4/29/2024. Metrics <0 considered NM. Note: A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Savanna Management estimates; (2) Non-Controlling Interest reflects a minimum of $0. Non-Controlling Interest as of 9/30/23 is ($0.5) million, per Savanna management; (3) Based on U.S. announced software transactions since April 2023, 25th – 75th percentile of 1-month premiums. ($ and shares in millions, except per share data) Digital Health Median 2024E Revenue Multiple Premiums Paid – U.S. Public Tech Companies, LTM(3) Digital Health Median 2024E EBITDA Multiple $0.95 - $1.16 $1.60 $0.77 Range of Current Proposals: $1.22 – $1.60 27% 55% 2024E Median: 11.2x 2024E Median: 1.48x TBU - Awaiting proposal from Current Illustrative Share Prices Price Per Share $0.75 $1.20 $1.30 $1.40 $1.50 $1.60 $1.70 $1.80 $1.90 $2.00 Fully Diluted Shares (1/1/2024A)(1) 422.3 425.8 427.6 429.2 432.0 435.8 439.1 442.0 444.6 447.0 Equity Value $315 $511 $556 $601 $648 $697 $746 $796 $845 $894 Less: Net Cash (12/31/2023A) (128) (128) (128) (128) (128) (128) (128) (128) (128) (128) Plus: Minority Interest (12/31/2023A)(2) - - - - - - - - - - Plus: Preferred Equity (12/31/2023A) 50 50 50 50 50 50 50 50 50 50 Enterprise Value $237 $433 $478 $523 $570 $620 $669 $718 $767 $816 Premium / (Discount) to: Metric Current Share Price (4/29/2024) $0.75 - 61% 74% 88% 101% 114% 128% 141% 155% 168% 52-Week High (7/17/2023) $1.80 (59%) (33%) (28%) (22%) (17%) (11%) (6%) 0% 6% 11% 52-Week Low (4/1/2024) $0.48 55% 149% 170% 191% 212% 233% 253% 274% 295% 316% EV / Revenue 2024E(1) $417 0.6x 1.0x 1.1x 1.3x 1.4x 1.5x 1.6x 1.7x 1.8x 2.0x 2025E(1) $512 0.5x 0.8x 0.9x 1.0x 1.1x 1.2x 1.3x 1.4x 1.5x 1.6x EV / Adj. EBITDA 2024E(1) $22 10.7x 19.5x 21.5x 23.6x 25.7x 27.9x 30.1x 32.3x 34.6x 36.8x 2025E(1) $62 3.8x 7.0x 7.8x 8.5x 9.2x 10.0x 10.8x 11.6x 12.4x 13.2x *Confidential treatment requested |
| 9 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCIAL AND VALUATION ADVISORY HL.com |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna PROCESS UPDATE APRIL 19, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 4 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Executive Summary ƒ Management has continued to facilitate diligence for Claritas Capital, and ƒ Each party has been informed of the upcoming process milestones: Final proposals due April 29th; contract markups due April 22nd ƒ Each of the parties that had engaged with the Company during the 2023 process ( ) have declined to engage following the Claritas’ 13D filing and company’s public statements regarding a potential transaction Situation Update Next Steps ƒ Claritas Management continues to address open information requests and hold diligence calls within functional diligence areas (finance, accounting, tax, tech, HR, insurance, etc.) Management has been facilitating diligence calls with Claritas’ potential equity sources ƒ Currently no open requests ƒ Management addressing open information requests and scheduling diligence calls within segment and functional diligence areas (finance, accounting, tax, HR, insurance, etc.) ƒ On Friday, April 19th, management intends to complete a financial datapack containing the following information, after which financial due diligence calls will be held with buyers and their advisors Monthly 2022 – February 2024 financials by segment / consolidated, reported and adjusted Cash flow by segment 2 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Claritas Capital 3 ƒ Follow-up calls with equity partners (Altaris, ) Altaris follow-up 60-minute call to discuss Enterprise (scheduled for 4/23, 3:00-4:00pm ET) Meeting between Brent and (to be scheduled) ƒ Financial diligence calls (Grant Thornton) Financial diligence 3-4 hour call with Savanna management (to be scheduled) ƒ Technology diligence calls (Liberty IT) Additional Technology call(s) to be held following compilation of Technology information pack, with targeted completion by early the week of 4/22 Diligence Calls Diligence Requests ƒ Claritas: Financial and commercial diligence questions ƒ Altaris: Business and finance data requests ƒ Grant Thornton: Financial and tax diligence ƒ Liberty: Technology diligence ƒ Hub International: HR diligence (focus on benefits and 401(k) plans) ƒ Ropes & Gray: Legal diligence *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE NFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 4 Diligence Calls Diligence Requests ƒ : Business separation / segment interdependencies ƒ Deloitte: Financial, tax, and operational diligence ƒ Arthur Gallagher: Human capital and property & casualty insurance diligence ƒ K&E: Legal diligence ƒ McDermott: Regulatory diligence ƒ Background checks of key management (to be performed week of 4/15 or 4/22) ƒ Life Sciences In-person session (scheduled for 4/23, starting at 9:00am ET) ƒ Provider In-person session (scheduled for 4/24, starting at 9:00am ET) ƒ Enterprise Call to discuss Enterprise segment: top customers, cost structure, sales, and pipeline (to be scheduled) ƒ Financial + Tax diligence calls (Deloitte) Financial diligence: financial diligence call following receipt of updated databook (to be scheduled) Tax diligence: 90-minute call with management and EY (to be scheduled) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 5 ƒ None currently open Diligence Calls ƒ None currently open Diligence Requests *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna PROCESS UPDATE APRIL 12, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 4 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 2 Executive Summary ƒ Each party has been informed of the April 29th bid date ƒ Contract markups have been requested by April 22nd ƒ Management has been facilitating diligence calls and providing responses to information requests Situation Update Next Steps ƒ Claritas ‒ Management addressing open information requests and scheduling diligence calls within functional diligence areas (finance, accounting, tax, tech, HR, insurance, etc.) ‒ Management has been facilitating business overview calls with Claritas’ potential equity sources (Altaris, ) ƒ ‒ Management scheduling a follow-up diligence call to discuss key Coaching / Marketplace clients ‒ Otherwise currently no open information requests ƒ ‒ Management addressing open information requests and scheduling diligence calls within segment and functional diligence areas (finance, accounting, tax, HR, insurance, etc.) ƒ Management is working with FTI to produce by next week a ‘QoE-lite’ data package ‒ Providing monthly 2023 financials by segment / consolidated, reported and adjusted ‒ Detailed working capital and capex schedule by segment ‒ Following completion and delivery of the package, management will schedule Financial due diligence calls with buyers *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Claritas Capital 3 ƒ Equity partner calls (Altaris, ) ‒ Altaris follow-up 90-minute call to discuss the Provider segment (to be scheduled) ‒ Altaris follow-up 60-minute call to discuss the Enterprise segment (to be scheduled) ‒ Claritas has flagged that equity partners will likely require follow-up calls as diligence progresses ƒ Financial diligence calls (Grant Thornton) ‒ Financial diligence 3-4 hour call with Savanna management (to be scheduled) ‒ Claritas has flagged that there may be additional Financial due diligence follow-up calls ƒ Technology diligence calls (Liberty IT) ‒ 2-hour call to discuss company overview and application landscape (to be scheduled) ‒ Proprietary technology assessments and product demos (to be scheduled) ‒ 90-minute call to discuss software/application development processes, IT roadmap, IT organization and vendors, and technology financials Diligence Calls Diligence Requests ƒ Claritas: Financial and commercial diligence questions ƒ Altaris: Business and finance data requests ƒ Grant Thornton: Financial and tax diligence ƒ Liberty: Technology diligence ƒ Hub International: HR diligence (focus on benefits and 401(k) plans) ƒ Ropes & Gray: Legal diligence *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE NFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 4 Diligence Calls Diligence Requests ƒ Priority diligence requests ‒ 2023 FY actual and 2024 YTD actual financials ‒ 2023 audit workpapers ‒ Full Provider revenue cube ‒ Unblinded customer lists ƒ Deloitte: Financial, tax, and operational diligence ƒ Arthur Gallagher: Human capital and property & casualty insurance diligence ƒ K&E: Legal diligence (questions / tracker to be provided week of 4/8) ƒ Background checks of key management (to be performed week of 4/15 or 4/22) ƒ Provider calls ‒ Virtual 90-minute call (tentatively scheduled for 4/18, 1:30-3:00pm ET) ‒ In-person session (tentatively scheduled for 4/24, starting at 9:00am ET) ƒ Life Sciences calls ‒ Virtual 90-minute call (tentatively scheduled for 4/18, 3:00-4:30pm ET) ‒ In-person session (tentatively scheduled for 4/23, starting at 9:00am ET) ƒ Enterprise call ‒ Virtual call to discuss Enterprise segment: top customers, cost structure, sales, and pipeline (to be scheduled) ƒ Financial + Tax diligence calls (Deloitte) ‒ Financial diligence: 1-hour kick-off call with Savanna management (to be scheduled) ‒ Follow-up financial diligence call following receipt of updated databook (to be scheduled) ‒ Tax diligence: 90-minute call with management and EY (to be scheduled) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 5 ƒ Business Diligence call with Savanna management (scheduled for Friday 4/12, 2:00-2:30pm ET) ‒ ‘More detailed’ discussion of key Coaching / Marketplace clients ( ) ‒ Relative revenue size of the various types of programs being offered to each client by coaching/marketplace segment (i.e., lifestyle coaching, disease management, fitness, screenings, condition-specific programs such as diabetes, anxiety, eat right now, tobacco, financial well-being, etc.). ‒ Program performance trends (in terms of # of engaged members vs. # of eligible members), additional clarity on how engagement is defined (telephonic vs. digital) and tied to pricing conventions for each customer ‒ Pricing conventions - engagement vs. eligibility pricing models; additional specificity on how each model is structured ‒ Performance Guarantee/ROI measures being provided; average fees at risk, historical fees paid out annually Diligence Calls ƒ None currently open Diligence Requests *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna PROCESS UPDATE APRIL 8, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 4 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 2 Executive Summary ƒ Each party has been informed of the April 29th bid date ƒ Management has been facilitating diligence calls and providing responses to information requests Situation Update Next Steps ƒ Claritas Management addressing open information requests and scheduling diligence calls within functional diligence areas (finance, accounting, tax, HR, insurance, etc.) Management has been facilitating business overview calls with Claritas’ potential equity sources (Altaris, ) ƒ Management scheduling diligence calls to discuss the current deals and key Coaching / Marketplace clients Otherwise currently no open information requests ƒ Management addressing open information requests and scheduling diligence calls within segment and functional diligence areas (finance, accounting, tax, HR, insurance, etc.) ƒ Management is working with FTI to produce by next week a ‘QoE-lite’ data package Providing monthly 2023 financials by segment / consolidated, reported and adjusted Detailed working capital and capex schedule by segment *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: Claritas Capital 3 ƒ Equity partner calls (Altaris, ) Altaris follow-up 60-minute call to cover Life Sciences and cost savings / margin profile (to be scheduled) initial 60-minute call to discuss Enterprise channel with Brent (scheduled for 4/9) Claritas has flagged that equity partners will likely require follow-up calls as diligence progresses ƒ Financial + Tax diligence calls (Grant Thorton) Financial diligence 3-hour call with Savanna management (to be scheduled) Tax diligence 2-hour call with Savanna management and external tax advisor (to be scheduled) Claritas has flagged that there may be additional Financial DD follow-up calls ƒ Technology diligence calls (Liberty IT) Technology diligence 2-hour call with Product & Technology team (scheduled for 4/10) Claritas has flagged that Liberty will require 4 hours of additional time to complete all diligence topics Diligence Calls Diligence Requests ƒ Claritas: Financial and commercial diligence questions ƒ Grant Thornton: Financial and tax diligence ƒ Liberty: Technology diligence ƒ Hub International: HR diligence (focus on benefits and 401(k) plans) ƒ Ropes & Gray: Legal diligence *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE NFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 4 ƒ Cost Structure + Pipeline call with Savanna management (to be scheduled) Discuss operational action plans, leases, employee census, overall SG&A, and pipeline ƒ Provider overview call to do a further deep dive into the channel (to be scheduled) ƒ Life Sciences call to do a further deep dive into the channel (to be scheduled) ƒ Financial diligence call to discuss financial accounting policies and financial performance / trends (to be scheduled) ƒ Tax diligence call to discuss the Company’s tax matters (to be scheduled) Diligence Calls Diligence Requests ƒ Priority diligence requests 2023 FY and 2024 YTD actual financials ƒ Deloitte: Financial, tax, and operational diligence ƒ Arthur Gallagher: Human capital and property & casualty insurance diligence ƒ K&E: Legal diligence (questions / tracker to be provided early the week of 4/8) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Open Diligence Requirements: 5 ƒ Business Diligence calls with Savanna management (first scheduled for 4/9) Discussion of current deals ( , , ) Nature of the performance segment metrics (number, type) How will the metrics be measured? By whom? How often? How often could payment level be adjusted? How were targets established? What actuarial analysis has been done so far? What was the nature of the negotiation with the State’s about the performance segments and targets? Did your historical (or other MCO) works include performance metrics? Were they similar or different? How so? ‘More detailed’ discussion of key Coaching / Marketplace clients ( ) Relative revenue size of the various types of programs being offered to each client by coaching/marketplace segment (i.e. lifestyle coaching, disease management, fitness, screenings, condition-specific programs such as diabetes, anxiety, eat right now, tobacco, financial well-being, etc.). Program performance trends (in terms of # of engaged members vs. # of eligible members), additional clarity on how engagement is defined (telephonic vs. digital) and tied to pricing conventions for each customer Pricing conventions - engagement vs. eligibility pricing models; additional specificity on how each model is structured Performance Guarantee/ROI measures being provided; average fees at risk, historical fees paid out annually Diligence Calls ƒ None currently open Diligence Requests *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna SUMMARY OF LATEST PROPOSALS AND DILIGENCE PROGRESS MARCH 24, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 3 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Latest Proposals (1 of 2) 2 » Price ƒ $1.80 – $2.00 per share ƒ 93.4% – 114.9% premium to closing price as of March 22 ƒ 78.4% – 98.2% premium to 30-day VWAP of $1.01 ƒ $1.40 – $1.90 per share ƒ 46% – 98% premium to closing price as of March 21 ƒ 39% – 88% premium to 3-month VWAP ƒ 37% – 86% premium to 6-month VWAP ƒ $1.95 – $2.05 per share ƒ 90% – 100% premium to trailing 180- day closing price » Financing ƒ Claritas intends to invest $100M of equity in the transaction, including by rolling Claritas’ current equity and funding additional equity in cash ƒ Will finance the remainder of the transaction with either a combination of equity and debt or solely with equity, including a potential for a rollover from existing stockholders ‒ Equity funding will come in part or whole from Altaris Capital Partners or ‒ , and other investors are interested in a sizeable minority stake ƒ May fund a portion of the transaction with up to $200M of debt ‒ Have a proposal for a $150M first lien term loan from ‒ Seeking an additional $50M mezzanine debt through one of ƒ No financing conditionality expected ƒ Expect to fund the proposed transaction through a combination of equity from funds and third-party debt financing ƒ Proposed transaction will not be subject to any financing contingency ‒ funds to provide “equity backstop” for the full purchase price (less balance sheet cash) ƒ No new financing required to complete the transaction Claritas Capital (3/22/2024) (3/22/2024) Source: Proposal letters from Claritas Capital, , and ; discussions with Savanna management. (2/2/2024) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 3 » Assumptions ƒ Fully diluted share count in line with capitalization information set forth on the schedule of outstanding equity interests made available in the virtual data room and is subject to alignment with Savanna and its counsel on appropriate treatment of Savanna’s outstanding warrants, escrowed earnout shares and Series A Preferred Shares ƒ Savanna will not pay a dividend to shareholders prior to transaction closing ƒ Fully diluted share count (shares converting to common stock in a transaction) of 376,322,754 – 391,096,075 ƒ The cost to mandatorily redeem the Series A Preferred Stock will be $50M ƒ No shares of common stock will be issuable as of or prior to the closing of the transaction pursuant to warrants, earn-outs or other contractual agreements with milestones, contingent equity or the Series A Preferred Stock, and all such instruments will be cancelled with no ongoing obligations (either in the form of equity or cash) as of the closing of the transaction (other than $50M cost to redeem the Series A Preferred Stock) ƒ Fully diluted share count (shares converting to common stock in a transaction) in the range of 395M, plus or minus 1% or 2% ƒ Elevance redemption rights on a change of control settled without cash or share dilution beyond the 5M common units that have been issued » Due Diligence, Timing and Approvals ƒ Proposal is contingent upon satisfactory completion of due diligence ƒ Execution of definitive agreement subject to final approval of the investment committee, expected to be obtained upon completion of due diligence and negotiation of definitive agreement ƒ Expect to be in a position to secure financing, complete diligence, and negotiate a definitive agreement within 4-5 weeks from the date of this Proposal ƒ Entering into definitive agreements remains subject to completion of due diligence and receipt of final internal investment committee approval ƒ Confident that the parties will be able to finalize transaction terms efficiently and be ready to sign definitive documents no later than 4 weeks after being granted the access needed ƒ Assuming imminent access to data room and management, able to complete due diligence and sign a definitive agreement expeditiously; would work in good faith to do so in advance of Savanna’s next earnings announcement date ƒ Board is highly supportive of the acquisition and this letter; required approvals not addressed Claritas Capital (3/22/2024) (3/22/2024) (2/2/2024) Summary of Latest Proposals (2 of 2) Source: Proposal letters from Claritas Capital, , and ; discussions with Savanna management. *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 4 Claritas Capital Proposal Dated 3/22/2024 Illustrative Sources and Uses Source: Proposal letter from Claritas Capital |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Buyer Due Diligence Progress 5 Initial VDR Access 1/18 2/6 3/4 Due Diligence Meetings ƒ 12/19: 2-hour initial management presentation ƒ 1/26: 3-hour DD session covering historical and projected financials, cost savings, and top customers ƒ 1/30: 1-hour financial DD session ƒ 1/31: 30-minute Provider / CareLinx DD session ƒ 3/14: 1-hour Grant Thornton financial DD call ƒ 3/21: 30-minute call on priority outstanding DD on cost take-outs and unallocated corporate expenses ƒ 3/21: 30-minute Grant Thornton tax DD call ƒ 12/20: 3-hour initial mgmt presentation / product demo ƒ 2/7: 1.5-hour DD session covering top clients by segment, Provider / Life Sciences, and cap table ƒ 2/16: 2-hour DD session covering follow-ups from prior session (top clients product breakout, 23E-24E revenue bridge, Enterprise pipeline, etc.) ƒ 2/23: 1.5-hour DD session covering pipeline and account management ƒ 3/1: 1-hour DD session ƒ 3/18: 1-hour DD session covering contract and Elevance redemption rights ƒ Pre-3/18: Introductory discussions with management ƒ 3/18: 1-hour Life Sciences DD session ƒ 3/20: 2-hour Provider and CareLinx DD session Key VDR Documents and Other Information Provided ƒ 1/18: Enterprise, Provider and Life Sciences Data Cubes; Provider Channel Overview; Life Sciences Channel Overview; 21-23 Historical Quarterly P&L ƒ 1/21: Payroll Register ƒ 1/25: Sharecare Overview / MP; Sharecare Product & Platform Overview ƒ 1/26: Cap Table / Share Calculator ƒ 1/29: Channel Level Financial Illustration ƒ 1/30: Model Assumptions (consolidated company and segment revenues, including key assumptions / KPIs); 2023E Tax NOL Summary ƒ 1/31: CareLinx Executive Summary ƒ 2/27: Presentation covering financials, customer case studies, KPIs, and retention, each by segment ƒ 2/29: Project Impact Forecast Databook providing detail on Adj. EBITDA by segment, YoY bridges, annual cost take-outs, reported to adjusted IS, and financials, and balance sheet ƒ 3/6-3/8: Key Customer Contracts by Segment ƒ 3/14: 382 Study and supporting workbooks; Enterprise Data Cube including 23E and 24E forecasts ƒ 3/16: Monthly add-backs detail; Enterprise + Corporate OpEx detail ƒ 2/6: Cap Table / Share Calculator, Subcontract Agreement, Provider Channel PF Financials + Redacted Provider IOI, Anthem Master Agreement & Side Letter, Employee Leasing Agreement, SaaS Agreement ƒ 2/27: Provider Revenue Summary; Employee Org Chart + W2 Summary Headcount & Annual Expense ƒ 2/28: Life Sciences Follow-Up Materials ƒ 2/29: Enterprise Revenue Cube & Summary ƒ 3/4: 02-23-2024 Discussion deck related to pipeline and account management review ƒ 3/6: Corporate Org. Structure, Litigation Schedule, Acquisition Agreements ƒ 3/13: Adjusted Financial Workbook (similar to Forecast Databook provided to Claritas but excluding Doc.ai); Enterprise Gross Margin GAAP 2022-2024; Home Health 2023 Summary P&L ƒ 3/14: 382 Study and supporting workbooks ƒ 3/17: Agreements ƒ 3/4: Received access to all information provided to Claritas in VDR ƒ 3/20: Provider and CareLinx presentation decks Claritas Capital *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna SUMMARY OF LATEST PROPOSALS MARCH 22, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 2 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Latest Proposals (1 of 2) 2 » Price ƒ $1.80 – $2.00 per share ƒ 93.4% – 114.9% premium to closing price as of March 22 ƒ 78.4% – 98.2% premium to 30-day VWAP of $1.01 ƒ $1.40 – $1.90 per share ƒ 46% – 98% premium to closing price as of March 21 ƒ 39% – 88% premium to 3-month VWAP ƒ 37% – 86% premium to 6-month VWAP ƒ $1.95 – $2.05 per share ƒ 90% – 100% premium to trailing 180- day closing price » Financing ƒ Claritas intends to invest $100M of equity in the transaction, including by rolling Claritas’ current equity and funding additional equity in cash ƒ Will finance the remainder of the transaction with either a combination of equity and debt or solely with equity, including a potential for a rollover from existing stockholders Equity funding will come in part or whole from Altaris Capital Partners or , , and other investors are interested in a sizeable minority stake ƒ May fund a portion of the transaction with up to $200M of debt Have a proposal for a $150M first lien term loan from Seeking an additional $50M mezzanine debt through one of , , or ƒ No financing conditionality expected ƒ Expect to fund the proposed transaction through a combination of equity from funds and third-party debt financing ƒ Proposed transaction will not be subject to any financing contingency funds to provide “equity backstop” for the full purchase price (less balance sheet cash) ƒ No new financing required to complete the transaction Claritas Capital (3/22/2024) (3/22/2024) Source: Proposal letters from Claritas Capital, , and ; discussions with Savanna management. (2/2/2024) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 3 » Assumptions ƒ Fully diluted share count in line with capitalization information set forth on the schedule of outstanding equity interests made available in the virtual data room and is subject to alignment with Savanna and its counsel on appropriate treatment of Savanna’s outstanding warrants, escrowed earnout shares and Series A Preferred Shares ƒ Savanna will not pay a dividend to shareholders prior to transaction closing ƒ Fully diluted share count (shares converting to common stock in a transaction) of 376,322,754 – 391,096,075 ƒ The cost to mandatorily redeem the Series A Preferred Stock will be $50M ƒ No shares of common stock will be issuable as of or prior to the closing of the transaction pursuant to warrants, earn-outs or other contractual agreements with milestones, contingent equity or the Series A Preferred Stock, and all such instruments will be cancelled with no ongoing obligations (either in the form of equity or cash) as of the closing of the transaction (other than $50M cost to redeem the Series A Preferred Stock) ƒ Fully diluted share count (shares converting to common stock in a transaction) in the range of 395M, plus or minus 1% or 2% ƒ Elevance redemption rights on a change of control settled without cash or share dilution beyond the 5M common units that have been issued » Due Diligence, Timing and Approvals ƒ Proposal is contingent upon satisfactory completion of due diligence ƒ Execution of definitive agreement subject to final approval of the investment committee, expected to be obtained upon completion of due diligence and negotiation of definitive agreement ƒ Expect to be in a position to secure financing, complete diligence, and negotiate a definitive agreement within 4-5 weeks from the date of this Proposal ƒ Entering into definitive agreements remains subject to completion of due diligence and receipt of final internal investment committee approval ƒ Confident that the parties will be able to finalize transaction terms efficiently and be ready to sign definitive documents no later than 4 weeks after being granted the access needed ƒ Assuming imminent access to data room and management, able to complete due diligence and sign a definitive agreement expeditiously; would work in good faith to do so in advance of Savanna’s next earnings announcement date ƒ Board is highly supportive of the acquisition and this letter; required approvals not addressed Claritas Capital (3/22/2024) (3/22/2024) (2/2/2024) Summary of Latest Proposals (2 of 2) Source: Proposal letters from Claritas Capital, , and ; discussions with Savanna management. *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 4 Claritas Capital Proposal dated 3/22/2024 Illustrative Sources and Uses Source: Proposal letter from Claritas Capital |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna DISCUSSION MATERIALS FOR THE SPECIAL COMMITTEE MARCH 15, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 8 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY This presentation, and any supplemental information (written or oral) or other documents provided in connection therewith (collectively, the “materials”), are provided solely for the information of the Board of Directors (the “Board”) of Sharecare, Inc. (the “Company”) by Houlihan Lokey in connection with the Board’s consideration of a potential transaction (the “Transaction”) involving the Company. This presentation is incomplete without reference to, and should be considered in conjunction with, any supplemental information provided by and discussions with Houlihan Lokey in connection therewith. Any defined terms used herein shall have the meanings set forth herein, even if such defined terms have been given different meanings elsewhere in the materials. The materials are for discussion purposes only. 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| Page 1. Situation Overview 3 2. Management Projections and Financial Analyses 7 3. Appendix 22 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Source: Discussions with company management. 4 ƒ In October 2023, Sharecare received proposals from Claritas Capital and » On October 3rd, Claritas Capital submitted a proposal to acquire the business for $1.35 – $1.80 per share » On October 8th, submitted a proposal to acquire the business for $1.50 per share » On October 11th, Claritas filed an amended 13D statement, publicly disclosing its offer ƒ Following inbound inquires, Savanna management has also engaged with , owner of , backed by and , as well as private equity firm » On February 2nd, 2024, submitted a proposal to acquire the business for $1.95 – $2.05 per share » On February 3rd, Claritas submitted a revised proposal to acquire the business for $1.60 – $2.00 per share » On March 5th, indicated that they would decline to engage further » On March 6th, Claritas submitted a revised proposal to acquire the business for $1.80 – $2.00 per share » On March 9th, submitted a proposal to acquire the business for $1.40 – $1.90 per share Situation Overview Process Developments Since October 2023 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Latest Proposals (1 of 2) 5 » Price ƒ $1.40 – $1.90 per share ƒ 49% – 102% premium to closing price as of March 7 ƒ 38% – 88% premium to 3-month VWAP ƒ 38% – 87% premium to 6-month VWAP ƒ $1.80 – $2.00 per share ƒ 100.5% – 122.8% premium to closing price as of March 6 ƒ 74.3% – 93.7% premium to 30-day VWAP of $1.03 ƒ $1.95 – $2.05 per share ƒ 90% – 100% premium to trailing 180- day closing price » Financing ƒ Expect to fund the proposed transaction through a combination of equity from funds and third-party debt financing ƒ Proposed transaction will not be subject to any financing contingency ‒ funds to provide “equity backstop” for the full purchase price (less balance sheet cash) ƒ Intend to raise up to $200M of debt from a limited group of direct lenders ƒ Remaining consideration would be funded with a fungible mix of new equity and rollover from existing stockholders ‒ In discussions with various parties for new equity investment ‒ Claritas may invest new equity in addition to rolling its current equity ‒ Sources of rolled equity not yet identified; not assuming that management or insiders other than Claritas will roll ƒ Potential equity and lending partners include: ƒ No financing conditionality expected ƒ No new financing required to complete the transaction (3/9/2024) Claritas Capital (3/6/2024) Source: Proposal letters from , Claritas Capital, and ; discussions with Savanna management. (2/2/2024) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 6 » Assumptions ƒ Savanna will not pay a dividend to shareholders prior to transaction closing ƒ Fully diluted share count (shares converting to common stock in a transaction) of 376,322,754 – 391,096,075 ƒ The cost to mandatorily redeem the Series A Preferred Stock will be $50M ƒ No shares of common stock will be issuable as of or prior to the closing of the transaction pursuant to warrants, earn-outs or other contractual agreements with milestones, contingent equity or the Series A Preferred Stock, and all such instruments will be cancelled with no ongoing obligations (either in the form of equity or cash) as of the closing of the transaction (other than $50M cost to redeem the Series A Preferred Stock) ƒ Fully diluted share count (shares converting to common stock in a transaction) of 388.6M – 393.4M shares ƒ Fully diluted share count (shares converting to common stock in a transaction) in the range of 395M, plus or minus 1% or 2% ƒ Elevance redemption rights on a change of control settled without cash or share dilution beyond the 5M common units that have been issued » Due Diligence, Timing and Approvals ƒ Entering into definitive agreements remains subject to completion of due diligence and receipt of final internal investment committee approval ƒ Confident that the parties will be able to finalize transaction terms efficiently and be ready to sign definitive documents no later than 4 weeks after being granted the access needed ƒ Proposal is contingent upon satisfactory completion of due diligence ƒ Execution of the definitive agreement is subject to the final approval of the investment committee; expect approval to be obtained upon completion of due diligence and negotiation of the definitive agreement ƒ Assuming imminent access to data room and management, able to complete due diligence and sign a definitive agreement expeditiously; would work in good faith to do so in advance of Savanna’s next earnings announcement date ƒ Board is highly supportive of the acquisition and this letter; required approvals not addressed (3/9/2024) Claritas Capital (3/6/2024) (2/2/2024) Summary of Latest Proposals (2 of 2) Source: Proposal letters from , Claritas Capital, and ; discussions with Savanna management. *Confidential treatment requested |
| Page 1. Situation Overview 3 2. Management Projections and Financial Analyses 7 3. Appendix 22 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE Historical and Projected Financial Data FOR INFORMATIONAL PURPOSES ONLY Management Projections (including doc.ai) Source: Company filings, management projections, FactSet, Capital IQ as of 3/12/2024. Note: Segment revenue may not sum to total revenue due to rounding 8 ($ in millions, except per share data) CAGR 21A-23E 24E-26E Revenue 6% 19% Adj. EBITDA (7%) 58% $22 $15 $62 $15 $27 $6 $24 $37 $77 $92 2021A 2022A 2023E 2024E 2025E 2026E NMF Adj. EBITDA – Capex 126% NMF Adj. EBITDA – Capex – SBC NMF ($14) ($39) ($6) $13 $53 $68 2021A 2022A 2023E 2024E 2025E 2026E ($61) ($108) ($53) ($24) $21 $36 2021A 2022A 2023E 2024E 2025E 2026E Enterprise Provider Life Sciences doc.ai $243 $259 $258 $209 $283 $369 $91 $104 $119 $123 $138 $152 $78 $80 $82 $86 $91 $98 $19 $413 $442 $19 $460 $436 $531 $619 2021A 2022A 2023E 2024E 2025E 2026E |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Sources: Company filings, management projections. 9 ($ in millions) Revenue Adj. EBITDA Adj. EBITDA – Capex $31 $60 $100 $16 $41 $83 $29 $54 $64 $37 $77 $92 $27 $6 $24 $0 $20 $40 $60 $80 $100 $120 2021E 2022E 2023E 2024E 2025E 2026E ($26) $6 $45 ($3) $22 $32 $13 $53 $68 ($14) ($39) ($6) ($60) ($20) $20 $60 2021E 2022E 2023E 2024E 2025E 2026E $413 $442 $460 $396 $512 $629 $443 $532 $620 $455 $487 $521 $436 $531 $619 $350 $400 $450 $500 $550 $600 $650 $700 2021E 2022E 2023E 2024E 2025E 2026E Actuals 2021 Forecast 2022 Forecast 2023 Forecast 2024 Forecast Historical and Projected Financial Data Management Projections from 2021 – 2024 vs Actual Performance |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Illustrative Benchmarking Management Projections vs. Digital Health Companies Source: Company filings, management projections, FactSet, Capital IQ, Bloomberg as of 3/12/2024. Note: A figure is shown as NA if it is not available or not meaningful. (1) Refers to CY 2023 actuals. 10 ($ in millions, except per share data) Top-line Growth CY21A-CY23E Revenue Grow th CAGR Name Value Evolent Health, Inc. 32% Phreesia, Inc. 30% Accolade, Inc. 19% Teladoc Health, Inc. 13% Health Catalyst, Inc. 11% Alight, Inc. 8% Savanna (with doc.ai) 6% American Well Corporation 1% Revenue Growth Adj. EBITDA Growth Top-line Growth CY24E-CY26E Revenue Grow th CAGR Name Value Accolade, Inc. 20% Savanna (with doc.ai) 19% American Well Corporation 18% Phreesia, Inc. 17% Evolent Health, Inc. 15% Health Catalyst, Inc. 12% Alight, Inc. 6% Teladoc Health, Inc. 4% Profitability Growth CY21A-CY23E EBITDA Grow th CAGR Name Value Evolent Health, Inc. 71% Teladoc Health, Inc. 11% Savanna (with doc.ai) (7%) Alight, Inc. NA Accolade, Inc. NA American Well Corporation NA Health Catalyst, Inc. NA Phreesia, Inc. NA Profitability Growth CY24E-CY26E EBITDA Grow th CAGR Name Value Savanna (with doc.ai) 58% Health Catalyst, Inc. 46% Evolent Health, Inc. 23% Alight, Inc. 11% Teladoc Health, Inc. 10% Accolade, Inc. NA American Well Corporation NA Phreesia, Inc. NA [1] [1] [1] [1] [1] [1] [1] [1] [1] [1] |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Financial Projections Comparison: Management vs. Consensus Source: Company filings, management projections, FactSet, Capital IQ as of 3/12/2024. Note: Segment revenue may not sum to total revenue due to rounding and different broker segment share of total revenues. (1) CG as of 1/3/2024, other brokers as of November 2023. 11 Consensus Revenue Projections(1) (Feb-24) Consensus Adj. EBITDA Projections(1) (Feb-24) YoY Growth Enterprise Provider Life Sciences 3% 9% 10% Adj. EBITDA Margin Adj. EBITDA 5% 9% 11% ($ in millions, except per share data) Management Revenue Projections (With doc.ai) Management Adj. EBITDA Projections (With doc.ai) (5%) 22% 8% 17% 14% $258 $228 $302 $369 $119 $123 $138 $152 $82 $86 $91 $98 $460 $436 $531 $619 2023E 2024E 2025E 2026E 4% $24 $37 $77 $92 2023E 2024E 2025E 2026E 5% 15% $258 $279 $305 $120 $134 $151 $77 $82 $454 $89 $495 $545 2023E 2024E 2025E 2026E $24 $46 $59 2023E 2024E 2025E 2026E N/A N/A Consensus estimates do not reflect loss of consensus 2024E revenue is 14% higher than management plan 2025E management plan Adj. EBITDA is 31% higher than consensus *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE Market Backdrop Since Closing of de-SPAC Transaction (7/2/21) FOR INFORMATIONAL PURPOSES ONLY Digital Health Valuation Multiples: EV / NTM Revenue 12 Revenue multiples have normalized at significantly lower levels since Savanna went public in 2021 Source: Capital IQ as of 3/12/2024. Note: Figures shown on this page are sourced directly from Capital IQ for illustrative purposes and therefore may differ from figures shown on other pages. Note: Multiples <0x or >25x considered NMF. EV refers to Enterprise Value; NMF refers to Not Meaningful Figure; NTM refers to Next Twelve Months. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) Includes ACCD, ALIT, AMWL, EVH, HCAT, PHR, and TDOC. (3) Alight, Inc. went public via de-SPAC transaction on 7/6/21. Availability of Wall Street analyst consensus commences on 8/16/21. Source: Capital IQ as of 3/12/2024 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 Sharecare, Inc. Accolade Alight³ Amwell Evolent Health Health Catalyst Phreesia Teladoc Health Selected Companies Index² Since Two-Year One-Year YTD de-SPAC¹ Average Average Average Sharecare, Inc. 1.7x 1.0x 0.8x 0.6x Selected Companies Index² 3.1x 2.0x 1.9x 1.9x |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE Market Backdrop Since Closing of de-SPAC Transaction (7/2/21) FOR INFORMATIONAL PURPOSES ONLY Digital Health Valuation Multiples: EV / NTM EBITDA 13 EBITDA multiples have normalized at significantly lower levels since Savanna went public in 2021 Source: Capital IQ as of 3/12/2024. Note: Figures shown on this page are sourced directly from Capital IQ for illustrative purposes and therefore may differ from figures shown on other pages. Note: Multiples <0x or >100x considered NMF. EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization. EV refers to Enterprise Value; NMF refers to Not Meaningful Figure; NTM refers to Next Twelve Months. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) Includes ACCD, ALIT, AMWL, EVH, HCAT, PHR, and TDOC. (3) Alight, Inc. went public via de-SPAC transaction on 7/6/21. Availability of Wall Street analyst consensus commences on 8/16/21. S Note: Figures shown on this page are sourced directly from Capital IQ for illustrative purposes and therefore may differ from figures shown on other pages 0.0x 10.0x 20.0x 30.0x 40.0x 50.0x 60.0x 70.0x 80.0x Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 Sharecare, Inc. Alight³ Evolent Health Health Catalyst Teladoc Health Selected Companies Index² Since Two-Year One-Year YTD de-SPAC¹ Average Average Average Sharecare, Inc. 23.6x 15.7x 11.2x 7.2x Selected Companies Index² 24.5x 19.1x 16.0x 14.9x |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 14 Relative Total Shareholder Return Information Since Closing of de-SPAC Transaction (7/2/21)1 24.1% 13.5% -50.6% -89.8% -100% -75% -50% -25% 0% 25% 50% Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Sharecare, Inc. S&P 500 Index (Total Return) Nasdaq Composite Index (Total Return) Selected Companies Index² Source: Capital IQ as of 3/12/2024. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) Includes ACCD, ALIT, AMWL, EVH, HCAT, PHR, and TDOC. Since Two-Year One-Year de-SPAC1 Return Return Sharecare, Inc. -89.8% -64.7% -56.3% S&P 500 Index (Total Return) 24.1% 28.1% 36.4% Nasdaq Composite Index (Total Return) 13.5% 31.5% 46.5% Selected Companies Index² -50.6% -28.8% -23.6% |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE Summary of Preliminary Financial Analysis FOR INFORMATIONAL PURPOSES ONLY Implied Prices Per Share – Present Value as of 3/12/2024 15 Source: Company filings, Savanna management projections, Wall Street research, Capital IQ as of 3/12/2024. (1) Future share price ranges shown reflect share prices projected at 12/31/2025 discounted to 3/12/2024 at Savanna’s 13.3% estimated cost of equity. (2) Provider Divestiture assumes: gross sale price based on a multiple of Provider 2024E Adj. EBITDA; NOL tax shield on gain (per management guidance); transaction occurs on 6/30/2024E; and SBC, D&A, and Change in Net Working Capital allocated to the Provider division based on share of revenue from 2024E-2026E. CapEx for RemainCo provided by Savanna management. PRESENT VALUE Current Share Price (3/12/2024): $0.95 Preliminary Selected Transactions Analysis – “Sum-of-the-Parts” ‒ Enterprise (1.50x – 2.50x 2024E Revenue): Implied Segment EV of $313M – $522M ‒ Provider (8.0x – 15.0x 2024E Adj. EBITDA): Implied Segment EV of $233M – $437M ‒ Life Sciences (10.0x – 14.0x 2024E Adj. EBITDA): Implied Segment EV of $212M – $297M ‒ Corporate overhead valued assuming perpetual growth rate of 1% – 2% and WACC of 11.0% – 12.0% PRESENT / FUTURE SHARE PRICES Preliminary Discounted Cash Flow Analysis ‒ Terminal EBITDA multiple: 9.0x – 12.0x ‒ WACC: 11.0% – 12.0% Preliminary Selected Companies Analysis (2025E Revenue Multiples) ‒ 0.75x – 1.50x 2025E Revenue Preliminary Selected Companies Analysis (2024E Revenue Multiples) ‒ 1.00x – 2.00x 2024E Revenue Preliminary Selected Companies Analysis (2025E EBITDA Multiples) ‒ 9.0x – 12.0x 2025E Adj. EBITDA Claritas Capital Offer Price (3/6/2024): $1.80 – $2.00 Offer Price (2/2/2024): $1.95 – $2.05 Offer Price (3/9/2024): $1.40 – $1.90 Illustrative Provider Divestiture (EBITDA Multiples)(1)(2) ‒ Assuming NTM Adj. EBITDA multiple range of 6.6x (current Savanna consensus multiple) – 13.4x (median Digital Health multiple) ‒ Assuming Provider segment sold for 8.0x – 15.0x 2024E Adj. EBITDA ($233M – $437M) Illustrative Provider Divestiture with Share Repurchase (EBITDA Mult.)(1)(2) ‒ Assuming NTM Adj. EBITDA multiple range of 6.6x (current Savanna consensus multiple) – 13.4x (median Digital Health multiple) ‒ Assuming Provider segment sold for 8.0x – 15.0x 2024E Adj. EBITDA ($233M – $437M) ‒ Assumes Savanna repurchases $100M – $300M of shares in 2024 at weighted average price of $1.00 – $1.20 per share Illustrative Status Quo (EBITDA Multiples)(1) ‒ Assuming NTM Adj. EBITDA multiple range of 6.6x (current Savanna consensus multiple) – 13.4x (median Digital Health multiple) Illustrative Implied Future Share Prices at 12/31/25E a M 7 – C M M u Offer Price (2/2/2024): $1 95 $2 05 u M T u M e u t h $1.12 $1.05 $1.24 $1.20 $1.66 $1.61 $1.24 $1.32 $2.81 $1.87 $2.25 $2.08 $2.12 $1.99 $2.05 $2.18 Savanna Current Multiple Selected Companies Median Mult. $1.55 $2.82 - $1.31 $2.34 - $1.40 $3.51 - *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE Preliminary Selected Transactions Analysis FOR INFORMATIONAL PURPOSES ONLY Sum-of-the-Parts 16 Source: Savanna management. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. E refers to Estimated. NA refers to not available. (1) Does not reflect doc.ai contribution. (2) Reflects the present value of corporate overhead expenses based on a perpetual growth rate of 1.0% on the low end and 2.0% on the high end discounted at 11.0% on the low end and 12.0% on the high end. (3) Per Savanna management. (4) Based on the present value of (i) $14.9 million of Adjusted EBITDA in 2024E and 2025E, (ii) less taxes in 2025E based on a 28.2% tax rate, and (iii) the impact of the change in net working capital of ($3.3) million and $0.2 million in 2024E and 2025E, respectively, discounted at 11.0% on the low end and 12.0% on the high end. (5) Represents liquidation preference of Series A redeemable preferred stock, convertible above $10.00 per share. (6) Non-Controlling Interest reflects a minimum of $0. Non-Controlling Interest as of 9/30/23 is ($0.5) million, per Savanna management. (7) Based on (i) ~355.1 million common shares outstanding, (ii) ~90.7 million options to purchase common stock (to the extent in the money, based on the treasury method), and (iii) ~66.9 million restricted stock units, as of 1/19/24, per Savanna management. ($ in millions, except per share data) Business Segment Basis Metric [1] Multiple Range Implied Value Enterprise 2024E Revenue $208.7 1.50x -- 2.50x $313.1 -- $521.8 Provider 2024E Adj. EBITDA $29.2 8.0x -- 15.0x $233.2 -- $437.3 Life Sciences 2024E Adj. EBITDA $21.2 10.0x -- 14.0x $212.1 -- $297.0 Corporate Overhead Discounted Cash Flow Analysis ($35.6) NA -- NA ($346.3) -- ($420.9) [2] Implied Enterprise Value Reference Range $412.2 -- $835.1 Plus: Cash & Cash Equivalents as of 12/31/2023 [3] 129.0 -- 129.0 Plus: Present Value of doc.ai Contribution as of 3/15/24 [4] 20.4 -- 20.6 Less: Total Debt as of 12/31/2023 [3] (0.5) -- (0.5) Less: Preferred Stock as of 12/31/2023 [3][5] (50.0) -- (50.0) Less: Non-Controlling Interest as of 12/31/2023 [3][6] 0.0 -- 0.0 Implied Total Equity Value Reference Range $511.1 -- $934.3 Shares Oustanding [3][7] 425.8 -- 448.8 Implied Per Share Reference Range $1.20 -- $2.08 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 17 Preliminary Selected Transactions Analysis (cont’d) Source: Capital IQ, public filings and press releases. Note: No company used in this analysis for comparative purposes is identical to the Company, and no transaction used in this analysis for comparative purposes is identical to the Transaction. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. LTM refers to Latest 12 Months; NA refers to not available; NFY refers to Next Fiscal Year; NMF refers to not meaningful figure. (1) Transaction Value refers to the implied enterprise value of target company, based on the announced transaction equity price and other public information available at the time of the announcement. (2) Based on reported metric for the most recent LTM period prior to the announcement of the transaction. (3) Based on reported metric for the most recent NFY period prior to the announcement of the transaction. ($ in millions) Transaction Value / LTM Adjusted NFY Adjusted Transaction LTM NFY LTM Adjusted NFY Adjusted EBITDA EBITDA Announced Effective Target Acquiror Value [1] Revenue [2] Revenue [3] EBITDA [2] EBITDA [3] Margin % [2] Margin % [3] Selected Enterprise Transactions 12/19/2023 Health Trio/Decision Point mPulse Mobile, Inc. NA NA NA NA NA NA NA 11/7/2023 HealthComp, LLC Virgin Pulse, Inc. $3,000.0 NA NA NA NA NA NA 6/21/2023 Valenz Kelso & Company, L.P. NA NA NA NA NA NA NA 8/9/2023 Limeade, Inc. WebMD Health Services Group, Inc. $72.9 1.26x 1.21x NMF NMF NA NA 6/13/2023 Apixio, Inc. New Mountain Capital, L.L.C. NA NA NA NA NA NA NA 5/1/2023 Oak Street Health, Inc. CVS Health Corporation $10,825.4 5.01x 3.52x NMF NMF NA NA 1/24/2023 Benefitfocus.com, Inc. Voya Financial, Inc. $612.9 2.46x NA 14.9x NA 16.5% NA 3/29/2023 Signify Health, Inc. CVS Pharmacy, Inc. $7,594.8 9.01x 8.08x NMF NMF NA NA 2/22/2023 1Life Healthcare, Inc. Amazon.com, Inc. $3,672.5 3.84x 3.40x NMF NMF NA NA 9/1/2022 LifeWorks Inc. TELUS Corporation $2,139.7 2.71x 2.61x 13.6x 14.0x 19.9% 18.7% 6/28/2022 Tivity Health, Inc. Stone Point Capital LLC $1,940.3 3.88x 3.45x 11.9x 11.9x 32.6% 29.0% 4/6/2022 SOC Telemed, Inc. Patient Square Capital, LP $359.8 3.81x 3.02x NMF NMF NA NA 2/16/2022 Castlight Health, Inc. Vera Whole Health Inc. $303.7 2.13x 2.17x NMF NMF NA NA 9/1/2021 Iora Health, Inc. 1Life Healthcare, Inc. $1,998.2 8.99x 6.66x NMF NA NA NA 6/9/2021 PlushCare, Inc. Accolade, Inc. $380.0 10.86x NA NA NA NA NA 7/2/2021 Foley Trasimene Acquisition Corp. Alight, Inc. $7,471.0 2.74x NA 13.2x NA 20.7% NA 4/1/2021 HMS Holdings Corp. Gainwell Technologies LLC $3,399.3 5.29x 5.00x 21.1x 19.0x 25.0% 26.3% 6/22/2021 West Health Advocate Solutions, Inc. Teleperformance SE $690.0 4.93x NA 13.8x NA 35.7% NA 8/30/2019 WageWorks, Inc. HealthEquity, Inc. $1,289.0 2.78x 2.69x 11.8x 9.6x 23.6% 28.0% 8/27/2018 Cotiviti Holdings, Inc. Verscend Technologies Inc. $4,889.5 6.63x 6.16x 17.8x 14.2x 37.2% 43.5% 9/14/2017 WebMD Health Corp. Internet Brands $2,689.4 3.79x NA 11.8x NA 32.2% NA 7/14/2017 Best Doctors, Inc. Teladoc, Inc. (nka:Teladoc Health, Inc.) $440.0 4.48x NA NMF NA NA NA Low $72.9 1.26x 1.21x 11.8x 9.6x 16.5% 18.7% High $10,825.4 10.86x 8.08x 21.1x 19.0x 37.2% 43.5% Median $1,998.2 3.86x 3.42x 13.6x 14.0x 25.0% 28.0% Mean $2,829.9 4.70x 4.00x 14.4x 13.7x 27.0% 29.1% 6/19/2017 10/27/2020 7/24/2017 4/29/2019 6/19/2018 12/21/2020 9/27/2023 2/8/2023 6/21/2023 5/3/2023 9/5/2022 1/5/2022 1/25/2021 2/3/2022 6/8/2023 11/1/2022 7/21/2022 6/7/2021 4/23/2021 6/16/2022 4/5/2022 12/19/2023 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 18 Preliminary Selected Transactions Analysis (cont’d) Source: Capital IQ, public filings and press releases. Note: No company used in this analysis for comparative purposes is identical to the Company, and no transaction used in this analysis for comparative purposes is identical to the Transaction. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. LTM refers to Latest 12 Months; NA refers to not available; ND refers to Not Disclosed; NFY refers to Next Fiscal Year; NMF refers to not meaningful figure. (1) Transaction Value refers to the implied enterprise value of target company, based on the announced transaction equity price and other public information available at the time of the announcement. (2) Based on reported metric for the most recent LTM period prior to the announcement of the transaction. (3) Based on reported metric for the most recent NFY period prior to the announcement of the transaction. ($ in millions) Transaction Value / LTM Adjusted NFY Adjusted Transaction LTM NFY LTM Adjusted NFY Adjusted EBITDA EBITDA Announced Effective Target Acquiror Value [1] Revenue [2] Revenue [3] EBITDA [2] EBITDA [3] Margin % [2] Margin % [3] Selected Provider Transactions 1/17/2024 Acclara Solutions, LLC R1 RCM Inc. $675.0 2.25x NA NMF NA NA NA 11/9/2023 NextGen Healthcare, Inc. Thoma Bravo $1,752.6 2.58x 2.44x 14.7x 13.8x 17.6% 17.7% 8/8/2023 Syntellis Performance Solutions, LLC Strata Decision Technology, L.L.C. $1,250.0 NA 6.76x NA 14.7x NA 45.9% 4/13/2023 ScanSTAT Technologies, LLC Verisma Systems, Inc. NA NA NA ND NA NA NA 5/2/2022 AllScripts Hospitals & Physician Practices N. Harris Computer Corporation $670.0 0.72x NA NA NA NA NA 7/27/2021 CIOX Health Datavant, Inc. $7,000.0 NA NA NA NA NA NA 7/12/2021 Sentry Data Systems, Inc. Craneware plc $400.0 4.35x NA 17.4x NA 25.0% NA 10/3/2022 Change Healthcare Inc. Optum, Inc. $12,672.0 4.12x 4.13x 13.7x 14.1x 30.1% 29.4% 12/21/2020 e-MDs, Inc. Compugroup Holding Usa, Inc. $230.0 2.39x NA 16.2x NA 14.8% NA 10/28/2019 MRO Corporation Parthenon Capital Group ND ND NA ND NA NA NA 5/8/2018 Intermedix Corporation R1 RCM Inc. $460.0 2.38x NA 9.6x NA 24.9% NA Low ND 0.72x 2.44x ND 13.8x 14.8% 17.7% High $12,672.0 4.35x 6.76x 17.4x 14.7x 30.1% 45.9% Median $672.5 2.39x 4.13x 13.7x 14.1x 21.2% 29.4% Mean $2,533.8 2.61x 4.44x 13.2x 14.2x 21.6% 31.0% Selected Life Sciences Transactions 8/14/2023 CorEvitas, LLC Thermo Fisher Scientific Inc. $912.5 NA NA NA NA NA NA 9/28/2023 Syneos Health, Inc. Veritas / Elliott / Patient Square $7,121.5 1.32x 1.40x 9.1x 10.2x 14.4% 13.7% 8/16/2021 Inizio Clayton, Dubilier & Rice $3,881.3 3.11x 2.81x 18.5x 16.2x 16.8% 17.4% 4/1/2021 Cerner Enviza LLC Cerner Corporation $375.0 2.50x NA 16.5x NA 15.2% NA 8/11/2020 Cello Health plc (nka:Cello Health Limited) Value Demonstration UK Holdings Limited $220.4 1.07x NA 12.3x NA 8.7% NA 5/1/2020 Huntsworth plc (nka:Huntsworth Limited) Clayton, Dubilier & Rice $670.2 1.98x 1.88x 10.8x 8.9x 18.3% 21.1% Low $220.4 1.07x 1.40x 9.1x 8.9x 8.7% 13.7% High $7,121.5 3.11x 2.81x 18.5x 16.2x 18.3% 21.1% Median $791.3 1.98x 1.88x 12.3x 10.2x 15.2% 17.4% Mean $2,196.8 2.00x 2.03x 13.5x 11.8x 14.7% 17.4% All Selected Transactions Low $72.9 0.72x 1.21x ND 8.9x 8.7% 13.7% High $12,672.0 10.86x 8.08x 21.1x 19.0x 37.2% 45.9% Median $1,250.0 2.78x 3.21x 13.6x 14.0x 20.3% 26.3% Mean $2,636.8 3.72x 3.74x 13.8x 13.3x 22.3% 26.4% 3/2/2022 11/23/2020 6/7/2021 9/6/2023 4/13/2023 8/8/2023 12/6/2023 1/6/2021 6/9/2021 10/28/2019 7/1/2020 5/12/2021 12/16/2020 2/26/2018 5/10/2023 7/6/2023 3/3/2020 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY $0.95 $1.42 $1.53 $1.92 $2.16 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 Current 12/31/2024 12/31/2025 Current Savanna NTM EBITDA Multiple: 6.6x Current Selected Companies Median NTM EBITDA Multiple: 13.4x Illustrative Future Share Price Analysis – EBITDA Multiples 19 ($ and shares in millions, except per share data) Status Quo Divest Provider at 6/30/2024E for 11.5x 2024E EBITDA(1) Source: Savanna management projections, Company filings, Wall Street research, Capital IQ as of 3/12/2024. Note: Fully-diluted share count as estimated by Savanna Management. Includes all outstanding common stock, RSUs, and options as of 1/1/2024. Options converted to effective shares using treasury stock method. (1) Provider Divestiture assumptions as follows: $335M gross sale price (based on 11.5x Provider 2024E Adj. EBITDA), no tax leakage due to NOL tax shield on gain (per management guidance), transaction occurring on 6/30/2024E, and SBC, D&A, and Change in Net Working Capital allocated to the Provider division based on share of revenue from 2024E-2026E. CapEx for RemainCo provided by Savanna management. Current Savanna NTM EBITDA Multiple Current 12/31/2024 12/31/2025 NTM EBITDA $36 $45 NTM EBITDA Multiple 6.6x 6.6x 6.6x Implied TEV $235 $299 (+) Cash (Excluding SBC) 458 471 (-) Cumulative SBC (32) (55) (-) NCI 0 0 (-) Preferred Stock (50) (50) (-) Debt (0) (0) Implied Total Equity Value $611 $664 FDSO 429.5 433.3 Implied Future Share Price $0.95 $1.42 $1.53 PV of Future Share Price at 3/12/2024 $1.29 $1.23 Current Selected Companies Median NTM EBITDA Multiple Current 12/31/2024 12/31/2025 Implied Future Share Price $1.92 $2.16 PV of Future Share Price at 3/12/2024 $1.73 $1.72 $0.95 $1.29 $1.55 $2.36 $2.82 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 Current 12/31/2024 12/31/2025 Current Savanna NTM EBITDA Multiple: 6.6x Current Selected Companies Median NTM EBITDA Multiple: 13.4x Current Savanna NTM EBITDA Multiple Current 12/31/2024 12/31/2025 NTM EBITDA $77 $92 NTM EBITDA Multiple 6.6x 6.6x 6.6x Implied TEV $507 $609 (+) Cash (Excluding SBC) 134 182 (-) Cumulative SBC (37) (69) (-) NCI 0 0 (-) Preferred Stock (50) (50) (-) Debt (0) (0) Implied Total Equity Value $553 $672 FDSO 427.5 433.9 Implied Future Share Price $0.95 $1.29 $1.55 PV of Future Share Price at 3/12/2024 $1.17 $1.24 Current Selected Companies Median NTM EBITDA Multiple Current 12/31/2024 12/31/2025 Implied Future Share Price $2.36 $2.82 PV of Future Share Price at 3/12/2024 $2.14 $2.25 Provider Sale NTM EBITDA Multiple Savanna 1 8.0x 11.5x 15.0x NTM 6.6x $1.31 $1.53 $1.72 EBITDA Mult. 13.4x $1.95 $2.16 $2.34 Illustrative Future Share Price at 12/31/2025E |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Provider Sale NTM EBITDA Multiple 1 8.0x 11.5x 15.0x Total Share $100 $1.40 $1.67 $1.90 Repurchase $200 $1.46 $1.79 $2.08 $300 $1.46 $1.88 $2.25 Illustrative Future Share Price Analysis – EBITDA Multiples (cont’d) 20 ($ and shares in millions, except per share data) Source: Savanna management projections, Company filings, Wall Street research, Capital IQ as of 3/12/2024. Note: Fully-diluted share count as estimated by Savanna Management. Includes all outstanding common stock, RSUs, and options as of 1/1/2024. Options converted to effective shares using treasury stock method. (1) Provider Divestiture assumes: gross sale price based on a multiple of Provider 2024E Adj. EBITDA; NOL tax shield on gain (per management guidance); transaction occurs on 6/30/2024E; and SBC, D&A, and Change in Net Working Capital allocated to the Provider division based on share of revenue from 2024E-2026E. CapEx for RemainCo provided by Savanna management. (2) Assumes total share repurchase of $100M is executed at weighted average price of $1.00 per share, total share repurchase of $200M is executed at weighted average price of $1.10 per share, and total share repurchase of $300M is executed at weighted average price of $1.20 per share. Divest Provider at 6/30/2024E for 11.5x 2024E EBITDA With a $200M Share Repurchase @ $1.10 / Share [1] $0.95 $1.61 $1.79 $2.39 $2.78 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 Current 12/31/2024 12/31/2025 Current Savanna NTM EBITDA Multiple: 6.6x Current Selected Companies Median NTM EBITDA Multiple: 13.4x Illustrative Future Share Price at 12/31/2025E at Selected Companies Median NTM EBITDA Mult. (13.4x) Current Savanna NTM EBITDA Multiple Current 12/31/2024 12/31/2025 NTM EBITDA $36 $45 NTM EBITDA Multiple 6.6x 6.6x 6.6x Implied TEV $235 $299 (+) Cash (Excluding SBC) 258 271 (-) Cumulative SBC (32) (55) (-) NCI 0 0 (-) Preferred Stock (50) (50) (-) Debt (0) (0) Implied Total Equity Value $411 $464 FDSO 254.5 259.8 Implied Future Share Price $0.95 $1.61 $1.79 PV of Future Share Price at 3/12/2024 $1.46 $1.43 Current Selected Companies Median NTM EBITDA Multiple Current 12/31/2024 12/31/2025 Implied Future Share Price $2.39 $2.78 PV of Future Share Price at 3/12/2024 $2.17 $2.22 Illustrative Future Share Price at 12/31/2025E at Current Savanna NTM EBITDA Multiple (6.6x) [2] [2] Provider Sale NTM EBITDA Multiple 1 8.0x 11.5x 15.0x Total Share $100 $2.19 $2.45 $2.68 Repurchase $200 $2.45 $2.78 $3.07 $300 $2.73 $3.15 $3.51 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 2024E Median: 1.72x Illustrative Analysis at Various Prices 21 Digital Health Median 2024E Revenue Multiple Premiums Paid – U.S. Public Tech Companies, Last 12 Months(4) 40% 55% Digital Health Median 2024E EBITDA Multiple 2024E Median: 13.4x $1.31 - $1.45 $1.87 $1.34 Source: Company filings, Savanna management projections, Capital IQ as of 3/12/2024. Metrics <0 considered NM. Note: A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Savanna Management estimates, 2023E EBITDA does not include bonus accrual; still to be determined; (2) Non-Controlling Interest reflects a minimum of $0. Non-Controlling Interest as of 9/30/23 is ($0.5) million, per Savanna management; (3) Unaffected share price as of the last close before Claritas’ 13D filing (10/10/2023); (4) Based on U.S. announced software transactions since February 2023, 25th – 75th percentile of 1-month premiums Current Illustrative Share Prices Price Per Share $0.95 $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 $2.50 Fully Diluted Shares (1/1/2024A)(1) 422.3 422.3 426.7 432.0 440.6 447.0 452.0 456.0 Equity Value $402 $422 $533 $648 $771 $894 $1,017 $1,140 Less: Net Cash (12/31/2023E)(1) (129) (129) (129) (129) (129) (129) (129) (129) Plus: Minority Interest (12/31/2023E)(2) - - - - - - - - Plus: Preferred Equity (12/31/2023E)(1) 50 50 50 50 50 50 50 50 Enterprise Value $323 $344 $455 $569 $692 $815 $938 $1,061 Premium / (Discount) to: Metric Current Share Price (3/12/2024) $0.95 - 5% 31% 58% 84% 110% 136% 163% Unaffected Share Price (10/10/23)(3) $0.94 2% 7% 34% 60% 87% 114% 141% 167% 52-Week High (3/14/2023) $2.35 (59%) (57%) (47%) (36%) (26%) (15%) (4%) 6% 52-Week Low (8/29/2023) $0.77 24% 30% 62% 95% 127% 160% 192% 225% EV / Revenue 2023E(1) $460 0.7x 0.7x 1.0x 1.2x 1.5x 1.8x 2.0x 2.3x 2024E(1) $436 0.7x 0.8x 1.0x 1.3x 1.6x 1.9x 2.2x 2.4x EV / Adj. EBITDA 2023E(1) $24 13.7x 14.6x 19.3x 24.2x 29.4x 34.6x 39.8x 45.0x 2024E(1) $37 8.7x 9.3x 12.3x 15.4x 18.7x 22.0x 25.3x 28.6x Illustrative Premia / Multiple Ranges Implied Price Range ($ and shares in millions, except per share data) Range of Current Proposals: $1.40 – $2.05 |
| Page 1. Situation Overview 3 2. Management Projections and Financial Analyses 7 3. Appendix 22 Preliminary Financial Analyses (With doc.ai) 23 Preliminary Selected Public Market Observations 32 Preliminary Selected Benchmarking Data 43 Preliminary Weighted Average Cost of Capital Analysis 48 |
| Page 1. Situation Overview 3 2. Management Projections and Financial Analyses 7 3. Appendix 22 Preliminary Financial Analyses (With doc.ai) 23 Preliminary Selected Public Market Observations 32 Preliminary Selected Benchmarking Data 43 Preliminary Weighted Average Cost of Capital Analysis 48 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 24 Preliminary Financial Analysis Summary (cont’d) Source: Savanna management. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated. (1) Reflects sum-of-the-parts analysis. Refer to page 16 for further information on the sum-of-the-parts calculation of enterprise value. (2) Per Savanna management. (3) Based on the present value of future Federal and State net operating loss usage discounted at a cost of equity range of 12.5% on the low end and 13.5% on the high end. Per Savanna management, there are $411.6 million of Federal NOLs and $342.1 million of State NOLs outstanding as of 12/31/23. Of the $411.6 million of Federal NOLs, Savanna management has indicated that $47.2 million are subject to Section 382 limitations. (4) Based on the present value of (i) $14.9 million of Adjusted EBITDA in 2024E and 2025E (reflecting earnings relating to doc.ai that are non-recurring), (ii) less taxes in 2025E based on a 28.2% tax rate, and (iii) the impact of the change in net working capital of ($3.3) million and $0.2 million in 2024E and 2025E, respectively, discounted at 11.0% on the low end and 12.0% on the high end. (5) Represents liquidation preference of Series A redeemable preferred stock, convertible above $10.00 per share. (6) Non-Controlling Interest reflects a minimum of $0. Non-Controlling Interest as of 9/30/23 is ($0.5) million, per Savanna management. (7) Based on (i) ~355.1 million common shares outstanding, (ii) ~90.7 million options to purchase common stock (to the extent in the money, based on the treasury method), and (iii) ~66.9 million restricted stock units, as of 1/19/24, per Savanna management. ($ in millions, except per share data) Selected Companies Selected Companies Selected Companies Selected Transactions Discounted Cash Flow Analysis Analysis Analysis Analysis Analysis CY 2024E CY 2025E CY 2025E CY 2024E Terminal EBITDA Multiple Total Revenue (w.o. doc.ai) Total Revenue (w.o. doc.ai) Adjusted EBITDA (w.o. doc.ai) Sum-of-the-Parts [1] 9.0x -- 12.0x Discount Rate Corresponding Base Amount $417.4 $512.3 $61.7 11.0% -- 12.0% Selected Multiples Range 1.00x -- 2.00x 0.75x -- 1.50x 9.0x -- 12.0x Implied Enterprise Value Reference Range $417.4 -- $834.7 $384.2 -- $768.4 $555.3 -- $740.4 $412.2 -- $835.1 $602.5 -- $824.3 Cash & Cash Equivalents as of 12/31/23 [2] 129.0 -- 129.0 129.0 -- 129.0 129.0 -- 129.0 129.0 -- 129.0 129.0 -- 129.0 Present Value of Net Operating Losses as of 3/15/24 [3] 47.5 -- 50.3 47.5 -- 50.3 47.5 -- 50.3 0.0 -- 0.0 47.5 -- 50.3 Present Value of doc.ai Contribution as of 3/15/24 [4] 20.4 -- 20.6 20.4 -- 20.6 20.4 -- 20.6 20.4 -- 20.6 0.0 -- 0.0 Implied Total Enterprise Value Reference Range $614.3 -- $1,034.6 $581.1 -- $968.3 $752.2 -- $940.2 $561.6 -- $984.7 $778.9 -- $1,003.6 Total Debt as of 12/31/23 [2] (0.5) -- (0.5) (0.5) -- (0.5) (0.5) -- (0.5) (0.5) -- (0.5) (0.5) -- (0.5) Preferred Stock as of 12/31/23 [2] [5] (50.0) -- (50.0) (50.0) -- (50.0) (50.0) -- (50.0) (50.0) -- (50.0) (50.0) -- (50.0) Non-Controlling Interest as of 12/31/23 [2] [6] 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 0.0 -- 0.0 Implied Total Equity Value Reference Range $563.8 -- $984.1 $530.7 -- $917.9 $701.7 -- $889.8 $511.1 -- $934.3 $728.5 -- $953.2 Shares Outstanding [2] [7] 427.9 -- 450.8 426.6 -- 448.1 436.1 -- 446.8 425.8 -- 448.8 437.9 -- 449.5 Implied Per Share Reference Range $1.32 -- $2.18 $1.24 -- $2.05 $1.61 -- $1.99 $1.20 -- $2.08 $1.66 -- $2.12 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 25 Preliminary Selected Savanna Historical and Projected Financial Data Source: Savanna management. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CAGR refers to Compound Annual Growth Rate; CY refers to Calendar Year; E refers to Estimated; NMF refers to not meaningful figure; SBC refers to Stock-Based Compensation. (1) 2022 Adjusted EBITDA has subsequently been revised by the Company as compared to the public filing due to certain discussions around accepted add-backs with the SEC. (2) 2024E and 2025E Revenue and Adjusted EBITDA include contracted revenue / earnings relating to doc.ai that are non-recurring. ($ in millions) CY Ended December 31, Calendar Year Ending December 31, CAGR 2021 2022 2023E 2024E 2025E 2026E 2022 to 2026E Total Revenue $412.8 $442.4 $459.5 $436.2 $531.2 $618.9 8.8% Growth % 25.6% 7.2% 3.9% -5.1% 21.8% 16.5% Cost of Revenue (202.8) (234.7) (257.5) (223.8) (261.9) (318.5) Gross Profit $210.0 $207.7 $202.1 $212.4 $269.3 $300.4 Margin % 50.9% 47.0% 44.0% 48.7% 50.7% 48.5% Sales & Marketing (47.8) (50.7) (48.9) (46.2) (51.3) (55.1) General & Administrative (77.9) (92.7) (82.2) (82.6) (92.6) (103.1) Product & Technology (57.3) (58.5) (46.6) (46.6) (48.8) (50.1) Total Operating Expenses (183.0) (201.9) (177.6) (175.3) (192.7) (208.4) Other 0.0 0.0 (0.9) 0.0 0.0 0.0 Adjusted EBITDA [1] $27.0 $5.8 $23.6 $37.1 $76.6 $92.0 99.4% Margin % 6.5% 1.3% 5.1% 8.5% 14.4% 14.9% Growth % 273.2% -78.5% 304.9% 57.3% 106.6% 20.2% Stock-Based Compensation (46.8) (69.6) (47.1) (37.5) (31.5) (31.5) Adjusted EBITDA less SBC ($19.7) ($63.8) ($23.5) ($0.4) $45.1 $60.6 NMF Margin % -4.8% -14.4% -5.1% -0.1% 8.5% 9.8% Growth % NMF NMF NMF NMF NMF 34.2% Illustrative Selected Savanna Historical and Projected Financial Data without doc.ai Total Revenue $459.5 $417.4 $512.3 $618.9 Growth % 3.9% -9.2% 22.7% 20.8% Adjusted EBITDA $23.6 $22.2 $61.7 $92.0 Margin % 5.1% 5.3% 12.0% 14.9% Growth % 304.9% -5.8% 178.0% 49.1% Adjusted EBITDA less SBC ($23.5) ($15.3) $30.2 $60.6 Margin % -5.1% -3.7% 5.9% 9.8% Growth % NMF NMF NMF 100.3% [2] |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY CY Ended December 31, Calendar Year Ending December 31, CAGR 2021 2022 2023E 2024E 2025E 2026E 2024E to 2026E Enterprise Revenue 243.4 258.6 258.2 227.6 301.9 368.8 27.3% Growth % 29.2% 6.3% -0.2% -11.9% 32.6% 22.2% Provider Revenue 90.9 104.2 119.3 122.7 137.8 152.2 11.4% Growth % 14.6% 14.6% 14.6% 2.8% 12.3% 10.5% Life Sciences Revenue 78.5 79.6 82.0 85.9 91.5 97.9 6.7% Growth % 28.4% 1.4% 3.0% 4.8% 6.5% 7.0% Total Revenue $412.8 $442.4 $459.5 $436.2 $531.2 $618.9 19.1% Growth % 25.6% 7.2% 3.9% -5.1% 21.8% 16.5% Cost of Revenue (202.8) (234.7) (257.5) (223.8) (261.9) (318.5) Enterprise 107.2 109.9 149.4 169.5 24.2% Margin % 41.5% 48.3% 49.5% 46.0% Growth % 2.5% 36.0% 13.5% Provider 52.6 58.3 72.8 80.5 17.5% Margin % 44.1% 47.5% 52.8% 52.9% Growth % 10.9% 24.8% 10.6% Life Sciences 42.3 44.3 47.1 50.4 6.7% Margin % 51.6% 51.5% 51.5% 51.4% Growth % 4.6% 6.4% 7.0% Gross Profit $210.0 $207.7 $202.1 $212.4 $269.3 $300.4 18.9% Margin % 50.9% 47.0% 44.0% 48.7% 50.7% 48.5% Enterprise Adjusted EBITDA 10.7 23.6 51.8 63.4 64.1% Margin % 4.1% 10.4% 17.2% 17.2% Growth % 120.0% 119.9% 22.5% Provider Adjusted EBITDA 17.6 28.5 41.0 46.8 28.1% Margin % 14.8% 23.3% 29.8% 30.7% Growth % 61.9% 43.7% 14.1% Life Sciences Adjusted EBITDA 19.7 21.1 23.2 25.8 10.6% Margin % 24.0% 24.6% 25.3% 26.3% Growth % 7.3% 9.9% 11.3% Corporate Overhead (23.5) (36.1) (39.4) (44.0) Other (0.9) 0.0 0.0 0.0 Adjusted EBITDA [1] $27.0 $5.8 $23.6 $37.1 $76.6 $92.0 57.6% Margin % 6.5% 1.3% 5.1% 8.5% 14.4% 14.9% Growth % 273.2% -78.5% 304.9% 57.3% 106.6% 20.2% 26 Preliminary Selected Savanna Historical and Projected Financial Data (cont’d) Segmented Source: Savanna management. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CAGR refers to Compound Annual Growth Rate; CY refers to Calendar Year; E refers to Estimated. 2024E and 2025E Revenue and Adjusted EBITDA include contracted revenue / earnings relating to doc.ai that are non-recurring. (1) 2022 Adjusted EBITDA has subsequently been revised by the Company as compared to the public filing due to certain discussions around accepted add-backs with the SEC. ($ in millions) |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Enterprise Channel – Revenue Detail 27 ($ in millions) Source: Management projections and commentary. ($m) 2023E 2024E 23E-24E Growth Digital $54 $36 (33%) Coaching / Advocacy* $91 $69 (24%) Marketplace $16 $13 (19%) Blue Zones $19 $14 (26%) Home Health $44 $46 5% Other* $34 $10 (71%) Booked $258 $188 (27%) Go-Get $0 $21 Total $258 $209 (19%) *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Provider Channel – Revenue Detail 28 ($ in millions) Source: Management projections and commentary. Selected Highlights & Assumptions – Per Company Management *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Life Sciences Channel – Revenue Detail 29 ($ in millions) Source: Management projections and commentary. Selected Highlights & Assumptions – Per Company Management *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 30 Preliminary Selected Companies Analysis Source: Company filings, Capital IQ as of 3/12/2024, Bloomberg, Wall Street research. Multiples <0x or >25x considered NMF. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; NMF refers to not meaningful figure. (1) Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalents. (2) Based on closing prices as of 3/12/2024. (3) Based on diluted shares. (4) Multiples based on forward looking financial information have been calendarized to the Company’s fiscal year end of December 31st. (5) CY 2023E revenue and adjusted EBITDA reflects actual results for the period ended 12/31/23. ($ in millions, except per share data) Share Equity Market Enterprise Enterprise Value [1] to Revenue Enterprise Value [1] to Adjusted EBITDA Selected Company Price [2] Value [2] [3] Value [2] [3] CY 2023E [4] CY 2024E [4] CY 2025E [4] CY 2023E [4] CY 2024E [4] CY 2025E [4] Accolade, Inc. $9.41 783.3 761.5 1.88x 1.59x 1.34x NMF NMF 24.6x Alight, Inc. [5] $9.00 5,392.8 8,108.8 2.38x 2.27x 2.13x 11.0x 10.1x 9.1x American Well Corporation [5] $0.91 307.9 (49.3) NMF NMF NMF NMF NMF NMF Evolent Health, Inc. [5] $33.65 4,201.8 4,606.0 2.33x 1.86x 1.61x 23.7x 18.2x 14.1x Health Catalyst, Inc. [5] $8.15 504.2 414.5 1.40x 1.34x 1.20x NMF 16.7x 11.1x Phreesia, Inc. $23.25 1,427.0 1,337.3 3.83x 3.17x 2.66x NMF NMF NMF Teladoc Health, Inc. [5] $15.37 2,735.0 3,150.0 1.21x 1.18x 1.14x 9.6x 8.6x 7.7x Low 1.21x 1.18x 1.14x 9.6x 8.6x 7.7x High 3.83x 3.17x 2.66x 23.7x 18.2x 24.6x Median 2.11x 1.73x 1.47x 11.0x 13.4x 11.1x Mean 2.17x 1.90x 1.68x 14.7x 13.4x 13.3x Savanna $0.95 $379.9 $301.8 0.66x 0.61x 0.55x 12.4x 6.6x 5.2x |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 31 Preliminary Discounted Cash Flow Analysis – Adjusted EBITDA Source: Savanna management projections. Note: Present values as of 3/15/24; mid-year convention applied. Refer to WACC calculation for derivation of discount rate. Adjusted EBIT refers to Earnings Before Interest and Taxes and Stock-Based Compensation Expense, adjusted for certain non-recurring items. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated; PV refers to Present Value. (1) Tax at 28.2%, per Savanna management. (2) Implied from corresponding discount rate and 2026E Adjusted EBITDA multiple. ($ in millions) Projected CY Ending December 31, 2024E 2025E 2026E Total Revenue $436.2 $531.2 $618.9 Growth % -5.1% 21.8% 16.5% Cost of Revenue (223.8) (261.9) (318.5) Discount Rate 9.0x 10.5x 12.0x Sales & Marketing (46.2) (51.3) (55.1) 11.00% 8.4% 8.8% 9.1% General & Administrative (82.6) (92.6) (103.1) 11.25% 8.7% 9.0% 9.3% Product & Technology (46.6) (48.8) (50.1) 11.50% 8.9% 9.3% 9.6% Adjusted EBITDA $37.1 $76.6 $92.0 11.75% 9.2% 9.5% 9.8% Margin % 8.5% 14.4% 14.9% 12.00% 9.4% 9.8% 10.0% Depreciation & Amortization (55.5) (42.0) (32.5) Stock-Based Compensation (37.5) (31.5) (31.5) Adjusted EBIT ($55.8) $3.2 $28.1 Taxes [1] 0.0 (0.9) (7.9) Unlevered Earnings ($55.8) $2.3 $20.2 Discount Rate 9.0x 10.5x 12.0x Depreciation & Amortization 55.5 42.0 32.5 11.00% 100.1% 100.0% 100.0% Capital Expenditures (23.8) (23.7) (24.3) 11.25% 100.1% 100.1% 100.1% Change in Net Working Capital (8.1) (4.2) (7.5) 11.50% 100.1% 100.1% 100.1% Unlevered Free Cash Flows ($32.3) $16.3 $20.8 11.75% 100.1% 100.1% 100.1% 12.00% 100.1% 100.1% 100.1% Present Value PV of Terminal Value of Cash Flows as a Multiple of Implied Enterprise Value (2024E - 2026E) 2026E Adjusted EBITDA Discount Rate 9.0x 10.5x 12.0x 9.0x 10.5x 12.0x 11.00% ($0.3) $618.5 $721.6 $824.7 $618.2 $721.3 $824.3 11.25% ($0.4) $614.6 $717.1 $819.5 $614.2 $716.6 $819.1 11.50% ($0.5) + $610.8 $712.6 $814.4 = $610.2 $712.0 $813.8 11.75% ($0.6) $607.0 $708.1 $809.3 $606.3 $707.5 $808.7 12.00% ($0.7) $603.2 $703.7 $804.2 $602.5 $703.0 $803.5 Implied Perpetual Growth Rate [2] PV of Terminal Value as a % of Enterprise Value |
| Page 1. Situation Overview 3 2. Management Projections and Financial Analyses 7 3. Appendix 22 Preliminary Financial Analyses (With doc.ai) 23 Preliminary Selected Public Market Observations 32 Preliminary Selected Benchmarking Data 43 Preliminary Weighted Average Cost of Capital Analysis 48 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 33 Trading Market Snapshot Public Market Trading Overview 1-Day 5-Day 10-Day 20-Day 30-Day 1-Month 3-Month 6-Month 9-Month 12-Month $0.97 $0.95 $0.96 $0.99 $1.02 $0.99 $1.01 $1.02 $1.10 $1.23 Historical VWAP10 (As of 3/12/2024) Sources: Bloomberg, Capital IQ, and public filings. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; E refers to Estimated. (1) Per the Company’s Form 10-Q for the period ended 9/30/23. (2) Reflects dilutive impact of (i) ~18.6 million warrants to purchase common stock as of 9/30/23 (to the extent in the money, based on the treasury method), (ii) ~96.9 million options to purchase common stock as of 9/30/23 (to the extent in the money, based on the treasury method), and (iii) ~46.7 million restricted stock units as of 9/30/23. (3) Reflects book value, net of debt discount and deferred financing costs. (4) Assumes conversion of Series A preferred stock to common stock. The aggregate liquidation preference of the Series A preferred stock is $50 million. (5) Per Capital IQ. (6) Per Bloomberg. (7) Per public filings. (8) Represents common shares outstanding excluding those held by current and former directors and executive officers. Does not reflect share acquisitions or disposals not publicly disclosed as of 3/12/2024. (9) Reflects consensus analyst estimates per Bloomberg. (10) VWAP based on cumulative trading activity over designated number of trading days (based on intraday trading) per Bloomberg as of 3/12/2024. (shares outstanding and $ in millions, except per share data and where otherwise noted) ($ per share in actuals) Public Market Enterprise Value Derivation Selected Market Information as of March 12, 2024 Closing Stock Price as of March 12, 2024 $0.95 1-Month Average [5] $0.99 Common Shares Outstanding [1] 352.4 3-Month Average [5] $1.02 Dilutive Shares [1] [2] 46.7 6-Month Average [5] $1.01 Fully Diluted Shares 399.1 52-Week High (3/14/23) [5] $2.35 Market Value of Equity $379.9 52-Week Low (8/29/23) [5] $0.77 Debt [1] [3] 0.5 Preferred Stock [4] 50.0 90-Day Average Daily Trading Volume (in millions) [5] 0.9 Non-Controlling Interest [1] (0.5) % of Total Shares Outstanding 0.3% Total Cash and Cash Equivalents [1] (128.0) 90-Day Average Daily Trading Value (in millions) [5] $0.9 Public Market Enterprise Value $301.8 % of Market Value of Equity 0.2% Number of Analysts Covering the Company [6] 4 Total Public Float [7] [8] 335.8 % of Total Shares Outstanding 95.3% Implied Multiples CY 2023E [9] CY 2024E [9] CY 2025E [9] Enterprise Value / Total Revenue 0.66x 0.61x 0.55x Enterprise Value / Adjusted EBITDA 12.4x 6.6x 5.2x |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 Daily Trading Volume Sharecare, Inc. Current Stock Price [2] Closing Stock Price (dollars per share) Daily Volume (millions) Timeline and Stock Trading History Since Closing of de-SPAC Transaction (7/2/21)1 34 Selected Events Event Date Comment A 7/2/2021 Sharecare, Inc. begins trading on the Nasdaq after completing the acquisition of Falcon Capital Acquisition Corp. in a reverse merger transaction. B 8/11/2021 The Company announces the acquisition of CareLinx, a nationwide home care platform. Concurrently, the Company announces Q2 CY 2021 earnings, reporting $98.5 million of revenue (versus $78.2 million in the prior year period) and adjusted EBITDA of $6.6 million (versus $7.9 million in the prior year period). C 11/10/2021 The Company announces Q3 CY 2021 earnings, reporting $105.6 million of revenue (versus $80.2 million in the prior year period) and adjusted EBITDA of $7.9 million (versus $13.3 million in the prior year period). D 3/31/2022 The Company announces Q4 and full CY 2021 earnings, achieving full year revenue of $412.8 million (versus $328.8 million in the prior year period) and adjusted EBITDA of $27.0 million (versus $32.3 million in the prior year period). E 5/12/2022 The Company announces Q1 CY 2022 earnings, reporting $100.7 million of revenue (versus $90.2 million in the prior year period) and adjusted EBITDA of $0.2 million (versus $7.1 million in the prior year period). Concurrently, the Company announces a $50 million share repurchase program. F 8/10/2022 The Company announces the initiation of a strategic review of its non-enterprise businesses concurrently with Q2 CY 2022 earnings, reporting $103.8 million of revenue (versus $98.5 million in the prior year period) and adjusted EBITDA of $2.1 million (versus $6.6 million in the prior year period). Withdraws CY 2022 guidance. G 11/10/2022 The Company announces Q3 CY 2022 earnings, reporting $114.6 million of revenue (versus $105.6 million in the prior year period) and adjusted EBITDA of $7.2 million (versus $7.9 million in the prior year period). A B C F D E Current Stock Price2: $0.95 Event Date Comment H 3/29/2023 The Company announces Q4 and full CY 2022 earnings, achieving full year revenue of $442.4 million (versus $412.8 million in the prior year period) and adjusted EBITDA of $15.8 million (versus $27.0 million in the prior year period). The Company provides CY 2023 revenue and adjusted EBITDA guidance of $450 to $460 million and $25 to $30 million, respectively. I 5/10/2023 The Company announces Q1 CY 2023 earnings, reporting $116.3 million of revenue (versus $100.7 million in the prior year period) and adjusted EBITDA of $2.1 million (versus $0.2 million in the prior year period). J 5/31/2023 The Company announces that it completed the strategic review process initiated in 2022, concluding to continue executing on the Company's strategic plan to drive growth and efficiencies across all three business channels. The Board re-authorizes a $50 million stock repurchase program. K 8/9/2023 The Company announces Q2 CY 2023 earnings, reporting $110.4 million of revenue (versus $103.8 million in the prior year period) and adjusted EBITDA of $3.8 million (versus $2.1 million in the prior year period). L 10/12/2023 The Company announces the receipt of an unsolicited preliminary non-binding proposal from Claritas Capital to acquire all of the outstanding shares of common stock of the Company, not already beneficially owned by Claritas Capital and its affiliated funds, for cash consideration of between $1.35 and $1.80 per share. M 11/9/2023 The Company announces Q3 CY 2023 earnings, reporting $113.3 million of revenue (versus $114.6 million in the prior year period) and adjusted EBITDA of $9.6 million (versus $5.2 million3 in the prior year period). Announces new CEO beginning 1/2/24. N 3/12/2024 The Company announces it will delay Q4 and full CY 2023 earnings from 3/13/24 to 3/28/24 and that its Board formed a special committee of independent directors to evaluate multiple proposals for a potential sale and other alternatives. G H I K J L M Sources: Capital IQ and public filings. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; Q refers to quarter. (1) The Company completed the de-SPAC transaction on 7/1/21 and began trading on the Nasdaq under ticker “SHCR” on 7/2/21. (2) As of 3/12/2024 close. (3) Q3 CY 2022 Adjusted EBITDA was recasted from $7.2 million to $5.2 million, reflecting the Company’s updated computation methodology effective 9/30/23. N |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Fiscal Year Ends December 31 2021A 2022A 2023A Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Total Revenue $90.2 $98.5 $105.6 $118.5 $100.7 $103.8 $114.6 $123.3 $116.3 $110.4 $113.3 Guidance (Low) 96.5 103.0 120.3 95.0 101.0 111.0 109.5 111.0 Guidance (High) 98.5 105.0 121.3 98.0 103.0 113.0 110.5 113.0 % Beat / (Miss) 1.0% 1.6% (1.9%) 4.4% 1.8% 3.8% 0.3% 1.2% Consensus GM (%) 51.5% 49.2% 52.0% 51.0% 49.5% 49.5% 46.7% 47.7% 41.6% 44.2% Actual (GAAP) GM (%) 50.8% 50.6% 51.5% 50.3% 48.9% 48.7% 47.4% 40.6% 41.6% 43.0% 43.2% Difference (0.9%) 2.3% (1.7%) (2.1%) (0.7%) (2.1%) (6.1%) (6.0%) 1.4% (1.0%) As Reported Adj. EBITDA $6.5 $6.6 $7.9 $5.4 $0.2 $2.1 $7.2 $4.6 $2.1 $3.8 $9.6 Guidance (Low) 6.5 6.0 8.0 0.0 1.0 1.0 2.5 8.0 Guidance (High) 6.5 7.0 9.0 0.0 2.0 2.0 3.5 10.0 % Beat / (Miss) 2.3% 21.6% (37.0%) NA 42.3% 40.3% 27.2% 6.7% Restated Adj. EBITDA $7.1 $6.6 $7.9 $5.4 ($1.3) ($0.6) $5.2 $2.5 $0.6 $3.3 $9.6 Historical Performance vs. Guidance and Consensus Source: Company press releases, filings, Savanna Management, FactSet, Capital IQ as of 3/12/2024. (1) Sourced directly from each quarter’s press release. Guidance sourced from the prior quarter’s press release. (2) Adjusted EBITDA has subsequently been revised by the Company as compared to the public filing due to certain discussions around accepted add-backs with the SEC. 35 ($ in millions, except per share data) 2021 2022 2023 $408 $415 $415 $413 $415 $31 $29 $30 $29 $30 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 6/1/2021 8/11/2021 11/10/2021 $485 $485 $488 $476 $445 $444 $33 $33 $31 $31 $11 $14 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 3/31/2022 5/12/2022 8/10/2022 11/10/2022 $455 $456 $456 $456 $460 $460 $483 $479 $28 $28 $28 $24 $30 $27 $24 $24 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 3/29/2023 5/4/2023 8/9/2023 11/9/2023 Revenue Mgmt. Guidance Revenue Consensus EBITDA Mgmt. Guidance EBITDA Consensus (1) (2) Guidance withdrawn Withdrawn Withdrawn |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Last Twelve Months Last Nine Months Last Six Months Last Three Months 36 Selected Historical Trading Activity As of 3/12/2024 Volume: 323.8 million VWAP1: $1.23 Volume: 236.0 million VWAP1: $1.10 Volume: 119.1 million VWAP1: $1.02 Volume: 53.3 million VWAP1: $1.01 36.7% 23.0% 17.9% 20.2% 0.2% 1.0% 1.1% $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 $2.00- $2.25 $2.25- $2.50 50.3% 31.6% 5.9% 12.0% 0.2% 0.0% 0.0% $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 $2.00- $2.25 $2.25- $2.50 55.8% 44.2% 0.0% 0.0% 0.0% 0.0% 0.0% $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 $2.00- $2.25 $2.25- $2.50 49.9% 50.1% 0.0% 0.0% 0.0% 0.0% 0.0% $0.75- $1.00 $1.00- $1.25 $1.25- $1.50 $1.50- $1.75 $1.75- $2.00 $2.00- $2.25 $2.25- $2.50 Source: Bloomberg as of 3/12/2024. VWAP refers to Volume Weighted Average Price. (1) Based on VWAP over specified period (last twelve months, last nine months, last six months, or last three months). Reference to “Month” is based on Calendar months. VWAP in dollars. |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY $0.00 $1.00 $2.00 $3.00 $4.00 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mean Analyst Price Target Share Price Savanna Analyst Perspectives 37 Wall Street Price Targets Consensus Price Targets vs. Stock Price Analyst Recommendations $2.81 $0.95 Premium to Current: 195.8% # of Ratings 5 5 4 4 4 4 4 4 4 4 4 4 4 4 4 4 Sources: Bloomberg, Capital IQ, and Wall Street research as of 3/12/2024. E refers to Estimated; EV refers to Enterprise Value; NA refers to Not Available. (1) Houlihan Lokey does not have access to equity research reports published by certain analysts including Nephron Research. Selected Wall Street Analyst Commentary Analyst Report Date and Rating Comments BTIG 1/31/24 Buy “We like that SHCR “advocates” for its members and takes an extensive and personalized view on each member to deliver proven outcomes. Its value-based approach should be attractive to health plans and providers who are looking for actual health and well-being weight loss changes that can also help manage costs.” “SHCR reported good results in 3Q:23, and re-affirmed full-year 2023E revenue guidance and its expectation to be cash-flow break-even by year-end.. EBITDA for the company is reaching an inflection point, and we expect momentum to continue.” Canaccord Genuity 1/3/24 Buy “The stock currently trades at a deeply discounted valuation, likely due to lack of action from the strategic initiative earlier in 2023, some questioning of the logic behind the synergies the three business generate, and customer Koch Industries selling its stake in the business. Further, the offshoring cost initiatives do provide some risks, particularly as the company approaches free cash flow breakeven. With adj-EBITDA now shored up to SEC guidelines, solid cash position of ~$128M at the end of 3Q, and we believe a clear line of sight to free cash flow breakeven, we have greater confidence in the longer term outlook of the business.” Morgan Stanley 12/15/23 Equal Weight “Valuation looks attractive relative to peers, but we see limited upside to estimates, which may cap any potential re-rating in the shares near term…Management discontinued the COVID vaccine assistant and health passport program and is retooling the legacy patient-centered medical home business from Healthways, while stepping up investments in Enterprise. The company recently finalized a strategic review and the Board opted to continue operating 3 segments, raising the bar to deliver on its vision.” Broker Date Rating Price Target Methodology CG 3/12/24 Buy $2.00 14.7x EV / '24E Adj. EBITDA BTIG 1/31/24 Buy $5.00 2.9x EV / '25E Rev. MS 12/15/23 Equalweight $1.50 0.8x EV / '24E Rev. Nephron 12/13/23 Buy $2.75 NA¹ Median $2.38 Mean $2.81 60% 60% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 75% 40% 40% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% Buy Hold 4 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 38 Canaccord Genuity Sum-of-the-Parts Analysis Source: Canaccord Genuity research report dated 3/12/2024. Analyst Report Date and Rating Comments Canaccord Genuity 3/12/2024 Buy “Evaluating the company from a sum-of-the-parts perspective backs the conclusion that shares are undervalued. Assuming a 2.8x 2023 revenue multiple, in line with the employer and health plan peer group, for Sharecare's Enterprise business implies $714.9 million value for the division. Applying a 3.3x 2023 revenue multiple, a 50% discount to the pharma marketing and commercialization peer group, to the Life Sciences business derives a $252.5 million value for the pharma marketing business. Finally, assuming a 2.3x 2023 revenue multiple for the Provider business (medical records), in line with provider-focused technology peer group, yields a $277.9 million value for the segment. In total, the implied enterprise value for these businesses is $1.245 billion. Adding 127.6 million net cash exiting 3Q'23, subtracting $50 million liquidation preference for Series A preferred shares, and assuming 398.2 million fully diluted shares yields a $3.32 per share value. This is well above our current $2 price target, further implying our view that Sharecare is undervalued at current levels." |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Savanna: Wall Street Consensus Fiscal Year Estimates Detail (Post-Q3’23 Earnings Release) Source: Wall Street research, Savanna management. (1) Management guidance as of Sharecare Q3 2023 earnings release, November 9, 2023. (2) Management forecast as of 2/20/2024 (includes doc.ai). 39 ($ millions) FY 2023E BTIG CG MS Wall Street Avg. CapIQ Guidance Range(1) Mgmt Forecast(2) Enterprise $255 $257 $260 $258 $258 Provider 121 123 116 120 119 Consumer 77 77 77 77 82 Total Revenue $453 $457 $454 $454 $455 $452.5 - $460 $460 Adj. EBITDA $23 $26 $24 $24 $24 $21 - $26 $24 % Margin 5.6% 5.1% 5.3% 5.3% 5.3% 4.6% - 5.7% 5.2% FY 2024E BTIG CG MS Wall Street Avg. CapIQ Mgmt Forecast(2) Enterprise $273 $275 $287 $279 $228 Provider 134 141 128 134 123 Consumer 81 85 81 82 86 Total Revenue $488 $501 $496 $495 $495 $436 Adj. EBITDA $42 $47 $48 $46 $46 $37 % Margin 9.3% 8.5% 9.8% 9.2% 9.2% 8.5% FY 2025E BTIG CG MS Wall Street Avg. CapIQ Mgmt Forecast(2) Enterprise $294 $303 $318 $305 $302 Provider 151 162 141 151 138 Consumer 87 93 85 89 91 Total Revenue $558 $532 $544 $545 $545 $531 Adj. EBITDA $57 $55 $64 $59 $59 $77 % Margin 10.2% 10.2% 11.8% 10.7% 10.7% 14.5% |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 40 Ownership Summary (shares in millions) Sources: Capital IQ and public filings as of 3/12/2024. designates holdings excluded from public float computations. Common Stock Holder Shares % Outstanding Claritas Capital 36.7 10.4% BlackRock, Inc. (NYSE:BLK) 23.6 6.7% The Vanguard Group, Inc. 17.0 4.8% Hearst Corporation 16.2 4.6% Samjo Management, LLC 13.1 3.7% Allspring Global Investments, LLC 7.7 2.2% Geode Capital Management, LLC 6.8 1.9% Pennsylvania Capital Management, Inc. 6.6 1.9% State Street Global Advisors, Inc. 6.0 1.7% Cowen Prime Advisors LLC 5.9 1.7% Current / Former Directors and Executive Officers 16.7 4.7% Other 196.4 55.7% Total 352.4 100.0% |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Savanna Institutional Shareholder Evolution Source: Capital IQ as of 3/12/2024. The analysis below estimates the average cost basis of Savanna’s top institutional shareholders based on when they bought shares Increased position Decreased position 41 3-Month VWAP $1.02 $1.20 $1.55 $2.26 Current % Delta (6.4%) (20.5%) (38.8%) (57.8%) Investor Current % Held Estimated Cost Basis Wtd. Avg. Current % Prem. / (Disc.) vs. Basis Dec-23 Sep-23 Jun-23 Mar-23 Claritas Capital 10.4% NA (Low) NA 36,692,258 36,857,499 36,857,499 36,857,499 BlackRock, Inc. (NYSE:BLK) 6.7% $2.87 (66.9%) 23,576,926 22,299,511 22,680,449 20,613,029 The Vanguard Group, Inc. 4.8% $3.50 (72.8%) 16,962,031 16,588,526 16,267,951 15,050,804 Hearst Corporation 4.6% NA (Low) NA 16,194,139 16,194,139 16,194,139 16,194,139 Samjo Management, LLC 3.7% $1.50 (36.6%) 13,074,000 16,401,000 6,200,000 3,750,000 Allspring Global Investments, LLC 2.2% $1.03 (7.4%) 7,658,126 40,371 40,371 - Geode Capital Management, LLC 1.9% $4.09 (76.7%) 6,755,599 6,473,040 6,414,881 6,073,401 Pennsylvania Capital Management, Inc. 1.9% $1.20 (20.8%) 6,648,333 6,648,333 - 17,260 State Street Global Advisors, Inc. 1.7% $2.81 (66.2%) 5,980,710 6,768,139 6,707,009 6,508,793 Cowen Prime Advisors LLC 1.7% $2.07 (54.0%) 5,861,000 5,861,000 5,861,000 4,650,600 Mudrick Capital Management, L.P. 1.4% $1.75 (45.6%) 4,853,800 4,853,800 6,250,000 6,250,000 Private Management Group Inc 1.2% $1.03 (7.2%) 4,083,276 - - - ExodusPoint Capital Management, LP 1.1% $1.18 (19.3%) 3,892,046 3,390,127 - - Northern Trust Global Investments 0.8% $2.84 (66.5%) 2,655,403 2,801,700 2,884,732 2,486,297 Charles Schwab Investment Management, Inc. 0.6% $5.24 (81.9%) 2,246,383 2,231,954 2,375,354 2,323,419 Aflac Asset Management LLC 0.6% $1.75 (45.6%) 2,208,644 2,208,644 2,208,644 2,208,644 Kennedy Capital Management LLC 0.5% $1.79 (47.0%) 1,884,925 1,912,900 1,907,928 1,732,364 Swiss Re Asset Management (Americas) Inc. 0.4% $2.46 (61.2%) 1,391,647 1,391,647 1,391,647 1,391,647 Teachers Insurance and Annuity Association-College Retirement Equities 0.4% $1.73 (44.9%) 1,327,804 1,324,271 960,860 717,384 BNY Mellon Asset Management 0.4% $3.00 (68.2%) 1,266,424 1,056,516 1,053,654 1,023,194 Top 20 Institutions 46.9% $1.65 (42.3%) 165,213,474 155,303,117 136,256,118 127,848,474 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Illustrative Premiums Paid Select Public Target Software Deals, Last 12 Months 42 (2) (3) Source: Capital IQ as of 3/13/24. Note: The analysis includes 20 software take-private transactions completed or announced since 3/12/23. (1) Premiums based on unaffected share price due to rumors / leaks prior to announcement. (2) “NM” indicates an EV / NTM EBITDA multiple >= 40.0x. (3) “NM” indicates a New Debt / NTM EBITDA multiple <=0.0x or >= 10.0x. Date Rev Growth EV EV / Rev EV / EBITDA Offer Premium vs. Average Stock Price New Debt New Debt / Target Buyer Announced NTM USD (M) NTM NTM 1-Day 30-Day 60-Day 90-Day 180-Day USD (M) NTM EBITDA ZeroFox Holdings, Inc. Haveli Investment Management 1/28/2024 2.4% 322 1.4x NA 31% 55% 67% 58% 28% N/A N/A Everbridge, Inc. Thoma Bravo 2/4/2024 2.9% 1,800 3.9x 17.6x 47% 54% 58% 61% 47% N/A N/A ANSYS, Inc. Synopsys 1/15/2024 6.0% 32,437 13.5x 28.6x 6% 14% 21% 21% 18% 16,000 NM Pagero Group AB (publ) Thomson Reuters Corporation 1/11/2024 (1.7%) 821 8.8x NM 141% 158% 186% 200% 215% N/A N/A Alteryx, Inc. Clearlake Capital, Insight Partners 12/18/2023 11.4% 4,393 4.3x 27.2x 59% 49% 28% 27% 2% N/A N/A Rover Group, Inc. Blackstone 11/29/2023 21.7% 2,152 8.1x 37.7x 29% 48% 60% 65% 95% N/A N/A EQS Group AG Thoma Bravo 11/16/2023 20.7% 462 5.0x 28.8x 53% 63% 56% 52% 57% N/A N/A Q4 Inc. Sumeru Equity Partners 11/13/2023 11.8% 163 2.5x NM 37% 47% 47% 48% 61% N/A N/A EngageSmart, Inc. Vista Equity 10/23/2023 14.8% 3,523 8.4x NM 14% 21% 27% 26% 25% N/A N/A Tribal Group plc Elucian Company 10/5/2023 (0.4%) 211 2.1x 13.8x 42% 51% 61% 67% 65% N/A N/A LiveVox Holdings, Inc. NICE 10/3/2023 6.9% 427 2.8x 38.6x 14% 14% 20% 25% 31% N/A N/A Splunk Inc. Cisco 9/21/2023 8.5% 28,550 6.8x 28.0x 31% 39% 44% 48% 57% N/A N/A SUSE S.A. EQT 8/17/2023 4.0% 3,453 4.9x 14.3x 58% 48% 31% 21% 4% N/A N/A New Relic, Inc. TPG, Francisco Partners 7/30/2023 7.7% 6,597 6.4x 33.8x 14% 20% 20% 25% 37% 2,650 NM Kahoot! ASA Goldman Sachs Asset Management 7/12/2023 12.6% 1,636 9.2x 33.2x 84% 84% 88% 90% 158% N/A N/A Absolute Software Corporation Crosspoint 5/10/2023 11.1% 868 3.5x 14.8x 34% 40% 40% 23% 15% N/A N/A Software AG Silver Lake 4/21/2023 5.5% 2,779 2.5x 15.0x 57% 57% 57% 45% 41% 1,057 5.7x Cvent Holding Corp. Blackstone, ADIA 3/14/2023 11.7% 4,577 6.5x 35.9x 24% 50% 52% 52% 54% 1,000 7.8x Momentive Global Inc. Symphony Technology Group 3/13/2023 3.0% 1,561 3.2x 17.0x 46% 52% 36% 22% (18%) 450 4.9x Qualtrics International Inc. Silver Lake, Canada Pension Plan 3/12/2023 14.1% 10,911 6.6x NM 62% 73% 73% 72% 53% 1,200 4.9x Upper Quartile 11.8% 4,176 6.9x 33.5x 57% 56% 61% 63% 57% 1,563 5.7x Median 9.4% 1,976 5.0x 28.0x 44% 50% 54% 50% 44% 1,028 4.9x Mean 8.9% 5,064 5.5x 25.6x 45% 52% 54% 53% 52% 2,869 4.9x Lower Quartile 4.4% 833 3.2x 16.0x 30% 42% 33% 25% 26% 525 4.9x (1) (1) (1) (1) (1) (1) |
| Page 1. Situation Overview 3 2. Management Projections and Financial Analyses 7 3. Appendix 22 Preliminary Financial Analyses (With doc.ai) 23 Preliminary Selected Public Market Observations 32 Preliminary Selected Benchmarking Data 43 Preliminary Weighted Average Cost of Capital Analysis 48 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 43% 44% 71% 66% 49% 47% 37% 33% 24% 5% 5% 22% 13% 10% 4% (3%) (12%) (64%) $455 $460 $3,410 $2,602 $1,975 $405 $349 $296 $259 Enterprise Value(1) $302 $762 $8,109 ($49) $4,606 $414 $1,337 $3,150 Market Cap.(1) $380 $783 $5,393 $308 $4,202 $504 $1,427 $2,735 Preliminary Digital Health Industry Benchmarking Operating Metrics Source: Capital IQ as of 3/12/2024. Wall Street research. Metrics <0 considered NM. Note: Savanna metrics based on Street consensus estimates; A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Based on diluted shares. Based on closing prices as of 3/12/2024. (2) Median excludes Savanna. (3) Reflects gross margin estimate for fiscal year ending February 2024. 2023E Revenue & 2023E / 2024E Revenue Growth 2023E Gross Profit & Gross Margin 2023E Adj. EBITDA & Adj. EBITDA Margin 44 3% / 9% 9% / 5% 8% / 2% 23% / 25% 14% / 18% 27% / 21% 7% / 4% (7%) / 1% $195 $1,843 $230 $145 $192 $95 $1,140 $465 $24 $739 $328 $195 $11 ($13) ($43) ($165) Savanna Median(2): $405 9% / 5% Median(2): 4% / $11 Median(2): 47% / $230 Savanna Consensus Savanna Consensus Savanna Consensus Savanna Management Savanna Management Savanna Management $24 $202 4% / (5%) ($ in millions, except per share data) (3) |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Enterprise Value(1) $302 $762 $8,109 ($49) $4,606 $414 $1,337 $3,150 Market Cap.(1) $380 $783 $5,393 $308 $4,202 $504 $1,427 $2,735 LTM Share Perf. (56%) (21%) 4% (63%) 11% (30%) (30%) (37%) Inst. Ownership 37% 77% 71% 38% 98% 81% 96% 73% Preliminary Digital Health Industry Benchmarking Valuation Metrics EV / 2024E Revenue EV / 2024E Revenue / 2023E – 2024E Revenue Growth Source: Capital IQ as of 3/12/2024, Wall Street research. Multiples <0x or >100x considered NMF. Note: Savanna metrics based on Street consensus estimates; A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Based on diluted shares. Based on closing prices as of 3/12/2024. (2) Median excludes Savanna. EV / 2024E EBITDA 45 Savanna Consensus Savanna Consensus Savanna Consensus Median(2): 1.7x Median(2): 0.23x Median(2): 13.4x Savanna Savanna Management Savanna Management Savanna Management ($ in millions, except per share data) Savanna Savanna 6.6x 8.7x 18.2x 16.7x 10.1x 8.6x NMF NMF NMF M di (2) 0.6x 0.7x 3.2x 2.3x 1.9x 1.6x 1.3x 1.2x NMF Savanna Savanna 0.07x NMF 0.48x 0.46x 0.31x 0.15x 0.09x 0.07x NMF |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 46 Preliminary Benchmarking Data Sources: Bloomberg, Capital IQ, Savanna management and public filings. Note: No company shown for comparative purposes is identical to the Company. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items; CY refers to Calendar Year; E refers to Estimated; EV refers to Enterprise Value; LTM refers to the most recently completed 12-month period for which financial information has been made public, other than for the Company, in which case LTM refers to Latest 12 Months; NA refers to not available; NMF refers to not meaningful figure. (1) Based on public trading prices of common stock. (2) Based on public filings, market data and other public information as of 3/12/2024. (3) Refers to CY 2023 actuals. (4) On 7/2/21, Alight completed its Business Combination with Foley Trasimene Acquisition Corp. Adjusted EBITDA pro forma for the acquisition is not available. (5) On 1/20/23, Evolent Health completed the acquisition of National Imaging Associates, Inc. Historical figures do not reflect results pro forma for the acquisition. ($ in millions) Size Size [1] Leverage [1] Liquidity (LTM Revenue, millions) (Enterprise Value as of 3/12/24, millions) (Debt to EV as of 3/12/24) (Current Ratio as of 3/12/24) Alight, Inc. $3,410.0 Alight, Inc. $8,108.8 Health Catalyst, Inc. 55.0% American Well Corporation 4.8 Teladoc Health, Inc. $2,602.4 Evolent Health, Inc. $4,606.0 Teladoc Health, Inc. 48.8% Health Catalyst, Inc. 4.4 Evolent Health, Inc. $1,975.3 Teladoc Health, Inc. $3,150.0 Alight, Inc. 34.5% Teladoc Health, Inc. 3.5 Savanna (with doc.ai) $463.2 Phreesia, Inc. $1,337.3 Accolade, Inc. 27.3% Savanna (with doc.ai) 2.4 Savanna (without doc.ai) $463.2 Accolade, Inc. $761.5 Evolent Health, Inc. 13.0% Savanna (without doc.ai) 2.4 Accolade, Inc. $388.5 Health Catalyst, Inc. $414.5 Phreesia, Inc. 1.0% Accolade, Inc. 2.4 Phreesia, Inc. $337.9 Savanna (with doc.ai) [2] $301.8 Savanna (with doc.ai) [2] 0.1% Phreesia, Inc. 2.0 Health Catalyst, Inc. $295.9 Savanna (without doc.ai) [2] $301.8 Savanna (without doc.ai) [2] 0.1% Alight, Inc. 1.3 American Well Corporation $259.0 American Well Corporation ($49.3) American Well Corporation 0.0% Evolent Health, Inc. 1.0 Historical Growth Projected Growth Projected Growth Projected Growth (CY 2021 to CY 2022 Revenue) (CY 2022 to CY 2023E Revenue) (CY 2022 to CY 2024E Revenue) (CY 2022 to CY 2025E Revenue) Evolent Health, Inc. 41.6% Phreesia, Inc. 26.7% Evolent Health, Inc. 24.0% Phreesia, Inc. 22.2% Phreesia, Inc. 32.4% Evolent Health, Inc. [3] 22.9% Phreesia, Inc. 23.8% Evolent Health, Inc. 21.3% Accolade, Inc. 23.6% Accolade, Inc. 14.3% Accolade, Inc. 16.3% Accolade, Inc. 17.0% Teladoc Health, Inc. 18.4% Alight, Inc. [3] 8.9% Alight, Inc. 6.9% Health Catalyst, Inc. 7.7% Health Catalyst, Inc. 14.2% Teladoc Health, Inc. [3] 8.1% Health Catalyst, Inc. 5.7% Alight, Inc. 6.7% American Well Corporation 9.7% Health Catalyst, Inc. [3] 7.1% Teladoc Health, Inc. 5.2% Savanna (with doc.ai) 6.3% Alight, Inc. 7.4% Savanna (with doc.ai) 3.9% Savanna (with doc.ai) -0.7% American Well Corporation 5.2% Savanna (with doc.ai) 7.2% Savanna (without doc.ai) 3.9% American Well Corporation -2.8% Savanna (without doc.ai) 5.0% Savanna (without doc.ai) 7.2% American Well Corporation [3] -6.5% Savanna (without doc.ai) -2.9% Teladoc Health, Inc. 4.7% Projected Growth Projected Growth Projected Growth Historical Growth (CY 2023E to CY 2024E Revenue) (CY 2023E to CY 2025E Revenue) (CY 2024E to CY 2025E Revenue) (CY 2021 to CY 2022 Adjusted EBITDA) Evolent Health, Inc. [3] 25.1% Evolent Health, Inc. [3] 20.4% American Well Corporation 23.1% Evolent Health, Inc. [5] 60.3% Phreesia, Inc. 21.0% Phreesia, Inc. 20.0% Savanna (without doc.ai) 22.7% Teladoc Health, Inc. -8.0% Accolade, Inc. 18.4% Accolade, Inc. 18.4% Savanna (with doc.ai) 21.8% Savanna (with doc.ai) -78.5% Alight, Inc. [3] 4.9% American Well Corporation [3] 11.6% Phreesia, Inc. 19.0% Savanna (without doc.ai) -78.5% Health Catalyst, Inc. [3] 4.3% Health Catalyst, Inc. [3] 8.0% Accolade, Inc. 18.3% Alight, Inc. [4] NA Teladoc Health, Inc. [3] 2.5% Savanna (with doc.ai) 7.5% Evolent Health, Inc. 16.0% Accolade, Inc. NMF American Well Corporation [3] 1.1% Alight, Inc. [3] 5.6% Health Catalyst, Inc. 11.8% American Well Corporation NMF Savanna (with doc.ai) -5.1% Savanna (without doc.ai) 5.6% Alight, Inc. 6.3% Health Catalyst, Inc. NMF Savanna (without doc.ai) -9.2% Teladoc Health, Inc. [3] 3.1% Teladoc Health, Inc. 3.7% Phreesia, Inc. NMF Projected Growth Projected Growth Projected Growth Projected Growth (CY 2022 to CY 2023E Adjusted EBITDA) (CY 2022 to CY 2024E Adjusted EBITDA) (CY 2022 to CY 2025E Adjusted EBITDA) (CY 2023E to CY 2024E Adjusted EBITDA) Savanna (with doc.ai) 304.9% Savanna (with doc.ai) 152.4% Savanna (with doc.ai) 136.1% Health Catalyst, Inc. [3] 124.6% Savanna (without doc.ai) 304.9% Savanna (without doc.ai) 95.3% Savanna (without doc.ai) 119.7% Savanna (with doc.ai) 57.3% Evolent Health, Inc. [3] [5] 83.1% Evolent Health, Inc. [5] 54.3% Evolent Health, Inc. [5] 45.2% Evolent Health, Inc. [3] [5] 30.1% Teladoc Health, Inc. [3] 33.1% Teladoc Health, Inc. 21.9% Teladoc Health, Inc. 18.5% Teladoc Health, Inc. [3] 11.7% Alight, Inc. [3] 12.1% Alight, Inc. 10.5% Alight, Inc. 10.7% Alight, Inc. [3] 8.9% Accolade, Inc. NMF Accolade, Inc. NMF Accolade, Inc. NMF Savanna (without doc.ai) -5.8% American Well Corporation [3] NMF American Well Corporation NMF American Well Corporation NMF Accolade, Inc. NMF Health Catalyst, Inc. [3] NMF Health Catalyst, Inc. NMF Health Catalyst, Inc. NMF American Well Corporation [3] NMF Phreesia, Inc. NMF Phreesia, Inc. NMF Phreesia, Inc. NMF Phreesia, Inc. NMF |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 47 Preliminary Benchmarking Data (cont’d) Sources: Bloomberg, Capital IQ, Savanna management and public filings. Note: No company shown for comparative purposes is identical to the Company. Adjusted EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation Expense, adjusted for certain non-recurring items. CY refers to Calendar Year; Depr. refers to Depreciation; E refers to Estimated; EV refers to Enterprise Value; FYE refers to the most recently completed fiscal year for which financial information has been made public. LTM refers to the most recently completed 12-month period for which financial information has been made public, other than for the Company, in which case LTM refers to Latest 12 Months. NMF refers to not meaningful figure; NOL refers to Net Operating Loss. (1) Refers to CY 2023 actuals. (2) On 1/20/23, Evolent Health completed the acquisition of National Imaging Associates, Inc. Historical figures do not reflect results pro forma for the acquisition. (3) Refers to CY 2024 estimates. (4) Refers to CY 2023 estimates. (5) Based on public trading prices of common stock. (6) Based on public filings, market data and other public information as of 3/12/2024. ($ in millions) Projected Growth Projected Growth Profitability Profitability (CY 2023E to CY 2025E Adjusted EBITDA) (CY 2024E to CY 2025E Adjusted EBITDA) (CY 2023E Adjusted EBITDA to CY 2023E Revenue) (CY 2024E Adjusted EBITDA to CY 2024E Revenue) Health Catalyst, Inc. [1] 84.4% Phreesia, Inc. 368.0% Alight, Inc. [1] 21.7% Alight, Inc. 22.5% Savanna (with doc.ai) 80.3% Accolade, Inc. 200.2% Teladoc Health, Inc. [1] 12.6% Teladoc Health, Inc. 13.7% Savanna (without doc.ai) 61.8% Savanna (without doc.ai) 178.0% Evolent Health, Inc. [1] [2] 9.9% Evolent Health, Inc. 10.2% Evolent Health, Inc. [1] [2] 29.4% Savanna (with doc.ai) 106.6% Savanna (with doc.ai) 5.1% Savanna (with doc.ai) 8.5% Teladoc Health, Inc. [1] 11.8% Health Catalyst, Inc. 51.5% Savanna (without doc.ai) 5.1% Health Catalyst, Inc. 8.0% Alight, Inc. [1] 10.0% Evolent Health, Inc. 28.7% Health Catalyst, Inc. [1] 3.7% Savanna (without doc.ai) 5.3% Accolade, Inc. NMF Teladoc Health, Inc. 12.0% Accolade, Inc. NMF Accolade, Inc. 2.1% American Well Corporation [1] NMF Alight, Inc. 11.1% American Well Corporation [1] NMF Phreesia, Inc. 1.9% Phreesia, Inc. NMF American Well Corporation NMF Phreesia, Inc. NMF American Well Corporation NMF Profitability Relative Depreciation Internal Investment Net Operating Losses (CY 2025E Adjusted EBITDA to CY 2025E Revenue) (LTM Depr. to LTM Adjusted EBITDA) (LTM Capital Expenditures to LTM Revenue) (FYE Federal and State NOL) Alight, Inc. 23.5% Alight, Inc. 57.0% Accolade, Inc. 1.1% Teladoc Health, Inc. $3,728.7 Teladoc Health, Inc. 14.8% Evolent Health, Inc. 63.4% Evolent Health, Inc. 1.5% Health Catalyst, Inc. $1,108.1 Savanna (with doc.ai) 14.4% Teladoc Health, Inc. 102.7% Health Catalyst, Inc. 4.5% American Well Corporation $907.8 Savanna (without doc.ai) 12.0% Savanna (with doc.ai) [3] 149.6% Alight, Inc. 4.7% Accolade, Inc. $875.8 Evolent Health, Inc. 11.4% Savanna (without doc.ai) [3] 249.8% American Well Corporation 5.9% Savanna (with doc.ai) $697.2 Health Catalyst, Inc. 10.9% Health Catalyst, Inc. 383.1% Teladoc Health, Inc. 6.0% Savanna (without doc.ai) $697.2 Phreesia, Inc. 7.6% Accolade, Inc. NMF Savanna (with doc.ai) [4] 6.3% Phreesia, Inc. $493.3 Accolade, Inc. 5.5% American Well Corporation NMF Savanna (without doc.ai) [4] 6.3% Evolent Health, Inc. $361.6 American Well Corporation NMF Phreesia, Inc. NMF Phreesia, Inc. 7.1% Alight, Inc. $165.0 Net Operating Losses [5] (FYE Federal and State NOL % of EV) Health Catalyst, Inc. 267.3% Savanna (with doc.ai) [6] 231.0% Savanna (without doc.ai) [6] 231.0% Teladoc Health, Inc. 118.4% Accolade, Inc. 115.0% Phreesia, Inc. 36.9% Evolent Health, Inc. 7.9% Alight, Inc. 2.0% American Well Corporation NMF |
| Page 1. Situation Overview 3 2. Management Projections and Financial Analyses 7 3. Appendix 22 Preliminary Financial Analyses (With doc.ai) 23 Preliminary Selected Public Market Observations 32 Preliminary Selected Benchmarking Data 43 Preliminary Weighted Average Cost of Capital Analysis 48 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 49 Preliminary Weighted Average Cost of Capital Analysis Source: Company filings, Capital IQ as of 3/12/2024, Bloomberg, Wall Street research, 2022 Duff & Phelps Valuation Handbook. Notes: No company used in this calculation for comparative purposes is identical to the Company; *excluded from median and mean data; NA refers to not available. (1) Total Cap refers to total capitalization, which equals Equity Market Value + Total Debt + Pfd. Stock. (2) Total Debt refers to total debt amount based on most recent public filings as of 3/12/2024. (3) Dd refers to Implied Tax-Deductible Debt, which equals the lesser of (a) 30% of Adjusted Taxable Income/Cost of Debt, or (b) Total Debt; LTM Adjusted EBITDA based on most recent public filings as of 3/12/2024, is assumed to be a valid proxy for Adjusted Taxable Income for the selected companies. (4) Dnd refers to Implied Non-Tax-Deductible Debt, which equals Total Debt minus Dd. (5) Equity Market Value based on closing price on 3/12/2024 and on diluted shares as of 3/12/2024. (6) Pfd. Stock refers to preferred stock, which is the amount as stated in most recent public filings as of 3/12/2024. (7) Based on actual levered beta per Bloomberg 5-year weekly as of 3/12/2024. (8) Unlevered Beta = Levered Beta/(1 + ((1 – tax rate) * Dd to Equity Market Value) + (Dnd to Equity Market Value) + (Pfd. Stock to Equity Market Value)). (9) Based on review of studies measuring the historical returns between stocks and bonds, theoretical models such as supply-side and demand-side models and other materials. (10) Kroll Cost of Capital Navigator ("Navigator"). (11) Cost of Equity = Risk-Free Rate of Return + (Levered Beta * Equity Risk Premium) + Size Premium. Risk-Free Rate of Return as of 3/12/2024, based on 20-year U.S. Treasury Bond Yield. (12) Based on selected company weighted average interest rate per most recent public filings, unless the selected company has publicly traded debt, in which case the cost of debt is based on the market-based yield to worst for such securities as of 3/12/2024. (13) Based on selected company weighted average preferred dividend per most recent public filings 3/12/2024. Total Debt to Dd to Dnd to Total Debt to Dd to Equity Dnd to Equity Pfd. Stock to Equity Market Pfd. Stock to Total Cap Total Cap Total Cap Equity Market Market Value Market Value Total Cap Value to Total Equity Market Selected Company [1] [2] [1] [3] [1] [4] Value [2] [5] [3] [5] [4] [5] [1] [6] Cap [1] [5] Value [5] [6] Accolade, Inc. 21.0% 0.0% 21.0% 26.6% 0.0% 26.6% 0.0% 79.0% 0.0% Alight, Inc. 34.1% 34.1% 0.0% 51.8% 51.8% 0.0% 0.0% 65.9% 0.0% American Well Corporation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% Evolent Health, Inc. 8.9% 8.9% 0.0% 10.2% 10.2% 0.0% 3.6% 87.5% 4.2% Health Catalyst, Inc. 31.1% 5.6% 25.6% 45.2% 8.1% 37.1% 0.0% 68.9% 0.0% Phreesia, Inc. 0.9% 0.0% 0.9% 1.0% 0.0% 1.0% 0.0% 99.1% 0.0% Teladoc Health, Inc. 36.0% 35.4% 0.7% 56.3% 55.2% 1.0% 0.0% 64.0% 0.0% Median 21.0% 5.6% 0.7% 26.6% 8.1% 1.0% 0.0% 79.0% 0.0% Mean 18.9% 12.0% 6.9% 27.3% 17.9% 9.4% 0.5% 80.6% 0.6% Savanna 0.1% 0.1% 0.0% 0.1% 0.1% 0.0% 11.6% 88.3% 13.2% Levered Unlevered Equity Risk Size Cost of Cost of Cost of Pfd. Selected Company Beta [7] Beta [8] Premium [9] Premium [10] Equity [11] Debt [12] Stock [13] WACC Accolade, Inc. 2.22 1.76 5.75% 1.14% 18.3% 7.6% NA 16.1% Alight, Inc. 1.10 0.80 5.75% 0.64% 11.4% 7.9% NA 9.4% American Well Corporation 1.84 1.84 5.75% 1.99% 17.0% NA NA 17.0% Evolent Health, Inc. 1.25 1.12 5.75% 0.95% 12.6% 1.4% * 11.4% 11.5% * Health Catalyst, Inc. 1.10 0.77 5.75% 1.99% 12.7% 8.1% NA 11.2% Phreesia, Inc. 1.29 1.28 5.75% 1.39% 13.2% 7.3% NA 13.2% Teladoc Health, Inc. 1.11 0.79 5.75% 1.21% 12.0% 6.5% NA 9.4% Median 1.25 1.12 12.7% 7.6% 11.4% 12.2% Mean 1.42 1.19 13.9% 7.5% 11.4% 12.7% Savanna 0.90 0.79 5.75% 1.99% 11.6% 7.1% NA 10.2% |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 50 Preliminary Weighted Average Cost of Capital Analysis (cont’d) Source: Company filings, Capital IQ as of 3/12/2024, Bloomberg, Wall Street research, 2022 Duff & Phelps Valuation Handbook. (1) Risk-Free Rate of Return as of 3/12/2024, based on 20-year U.S. Treasury Bond Yield. (2) Based on a review of studies measuring the historical returns between stocks and bonds, theoretical models such as supply side and demand side models and other materials. (3) Navigator. (4) Forward tax rate, per Company management. (5) Savanna 2023E Adjusted EBITDA is assumed to be a valid proxy for Sharecare, Inc. Adjusted Taxable Income. (6) Savanna Total Debt refers to total debt amount of Savanna as of 3/12/2024. (7) Savanna Dd refers to Implied Tax-Deductible Debt of Savanna, which equals the lesser of (a) 30% of Savanna Adjusted Taxable Income/Cost of Debt, or (b) Savanna Total Debt. Based on Capital Structure Assumptions. (8) Savanna Dnd refers to Implied Non-Tax-Deductible Debt of Savanna, which equals Savanna Total Debt minus Savanna Dd. (9) Based on review of corresponding metrics of selected companies listed on previous page. (10) Based on the Company's Dd and Dnd and the Capital Structure Assumptions regarding Total Debt to Total Capitalization and Equity Market Value to Total Capitalization. (11) Based on review of selected companies’ unlevered betas listed on previous page. (12) Computed Levered Beta = Selected Unlevered Beta * (1 + ((1 – Tax Rate) * Dd to Equity Market Value) + (Dnd to Equity Market Value) + (Preferred Stock to Equity Market Value)); based on Market and Capital Structure Assumptions. (13) Cost of Equity = Risk-Free Rate of Return + (Computed Levered Beta * Equity Risk Premium) + Size Premium. Based on Market Assumptions. ($ in millions) Market Capital Structure Cost of Equity for Assumptions Assumptions Computed WACC Risk-Free Rate of Return [1] 4.42% Savanna Adjusted Taxable Income [5] $23.6 Selected Unlevered Beta [11] 1.12 Equity Risk Premium [2] 5.75% Savanna Total Debt [6] $0.5 Computed Levered Beta [12] 1.34 Size Premium [3] 1.14% Savanna Dd [7] $0.5 Cost of Equity [13] 13.3% Tax Rate [4] 28.17% Savanna Dnd [8] $0.0 Total Debt to Total Capitalization [9] 21.0% Dd to Total Capitalization [10] 21.0% Dnd to Total Capitalization [10] 0.0% Total Debt to Equity Market Value 26.6% Dd to Equity Market Value [10] 26.6% Dnd to Equity Market Value [10] 0.0% Preferred Stock to Total Capitalization [9] 0.0% Equity Market Value to Total Capitalization [9] 79.0% Preferred Stock to Equity Market Value NA Cost of Debt [9] 7.6% Cost of Preferred Stock [9] 11.4% Computed Weighted Average Cost of Capital 11.6% Selected Weighted Average Cost of Capital Range 11.0% -- 12.0% |
| 51 CORPORATE FINANCE FINANCIAL RESTRUCTURING FINANCIAL AND VALUATION ADVISORY HL.com |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna BOARD DISCUSSION MATERIALS MARCH 11, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 2 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Summary of Latest Proposals 2 » Price ƒ $1.40 – $1.90 per share ƒ 49% – 102% premium to closing price as of March 7 ƒ 38% – 88% premium to 3-month VWAP ƒ 38% – 87% premium to 6-month VWAP ƒ $1.80 – $2.00 per share ƒ 100.5% – 122.8% premium to closing price as of March 6 ƒ 74.3% – 93.7% premium to 30-day VWAP of $1.03 ƒ $1.95 – $2.05 per share ƒ 90% – 100% premium to trailing 180- day closing price » Form of Consideration ƒ Cash ƒ Cash ƒ Cash » Financing ƒ Expect to fund the proposed transaction through a combination of equity from funds and third-party debt financing ƒ Proposed transaction will not be subject to any financing contingency ‒ funds to provide “equity backstop” for the full purchase price (less balance sheet cash) ƒ Intend to raise up to $200M of debt from a limited group of direct lenders ƒ Remaining consideration would be funded with a fungible mix of new equity and rollover from existing stockholders ‒ In discussions with various parties for new equity investment ‒ Claritas may invest new equity in addition to rolling its current equity ‒ Sources of rolled equity not yet identified; not assuming that management or insiders other than Claritas will roll ƒ No financing conditionality expected ƒ No new financing required to complete the transaction (3/9/2024) Claritas Capital (3/6/2024) Source: Proposal letters from , Claritas Capital, and ; discussions with Savanna management. (2/2/2024) &RQILGHQWLDO WUHDWPHQW UHTXHVWHG |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY 3 » Assumptions ƒ Savanna will not pay a dividend to shareholders prior to transaction closing ƒ Fully diluted share count (shares converting to common stock in a transaction) of 376,322,754 – 391,096,075 ƒ The cost to mandatorily redeem the Series A Preferred Stock will be $50M ƒ No shares of common stock will be issuable as of or prior to the closing of the transaction pursuant to warrants, earn-outs or other contractual agreements with milestones, contingent equity or the Series A Preferred Stock, and all such instruments will be cancelled with no ongoing obligations (either in the form of equity or cash) as of the closing of the transaction (other than $50M cost to redeem the Series A Preferred Stock) ƒ Fully diluted share count (shares converting to common stock in a transaction) of 388.6M – 393.4M shares ƒ Fully diluted share count (shares converting to common stock in a transaction) in the range of 395M, plus or minus 1% or 2% ƒ Elevance redemption rights on a change of control settled without cash or share dilution beyond the 5M common units that have been issued » Due Diligence, Timing and Approvals ƒ Entering into definitive agreements remains subject to completion of due diligence and receipt of final internal investment committee approval ƒ Confident that the parties will be able to finalize transaction terms efficiently and be ready to sign definitive documents no later than 4 weeks after being granted the access needed ƒ Proposal is contingent upon satisfactory completion of due diligence ƒ Execution of the definitive agreement is subject to the final approval of the investment committee; expect approval to be obtained upon completion of due diligence and negotiation of the definitive agreement ƒ Assuming imminent access to data room and management, able to complete due diligence and sign a definitive agreement expeditiously; would work in good faith to do so in advance of Savanna’s next earnings announcement date ƒ Board is highly supportive of the acquisition and this letter; required approvals not addressed (3/9/2024) Claritas Capital (3/6/2024) (2/2/2024) Summary of Latest Proposals (cont’d) Source: Proposal letters from , Claritas Capital, and ; discussions with Savanna management. &RQILGHQWLDO WUHDWPHQW UHTXHVWHG |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna DISCUSSION MATERIALS FOR THE BOARD OF DIRECTORS FEBRUARY 8, 2024 HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 2 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey This presentation, and any supplemental information (written or oral) or other documents provided in connection therewith (collectively, the “materials”), are provided solely for the information of the Board of Directors (the “Board”) of Sharecare, Inc. (the “Company”) by Houlihan Lokey in connection with the Board’s consideration of a potential transaction (the “Transaction”) involving the Company. This presentation is incomplete without reference to, and should be considered in conjunction with, any supplemental information provided by and discussions with Houlihan Lokey in connection therewith. Any defined terms used herein shall have the meanings set forth herein, even if such defined terms have been given different meanings elsewhere in the materials. The materials are for discussion purposes only. Houlihan Lokey expressly disclaims any and all liability, whether direct or indirect, in contract or tort or otherwise, to any person in connection with the materials. The materials were prepared for specific persons familiar with the business and affairs of the Company for use in a specific context and were not prepared with a view to public disclosure or to conform with any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and none of the Board, the Company or Houlihan Lokey takes any responsibility for the use of the materials by persons other than the Board. The materials are provided on a confidential basis solely for the information of the Board and may not be disclosed, summarized, reproduced, disseminated or quoted or otherwise referred to, in whole or in part, without Houlihan Lokey’s express prior written consent. Notwithstanding any other provision herein, the Company (and each employee, representative or other agent of the Company) may disclose to any and all persons without limitation of any kind, the tax treatment and tax structure of any transaction and all materials of any kind (including opinions or other tax analyses, if any) that are provided to the Company relating to such tax treatment and structure. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, the tax treatment of a transaction is the purported or claimed U.S. income or franchise tax treatment of the transaction and the tax structure of a transaction is any fact that may be relevant to understanding the purported or claimed U.S. income or franchise tax treatment of the transaction. If the Company plans to disclose information pursuant to the first sentence of this paragraph, the Company shall inform those to whom it discloses any such information that they may not rely upon such information for any purpose without Houlihan Lokey’s prior written consent. Houlihan Lokey is not an expert on, and nothing contained in the materials should be construed as advice with regard to, legal, accounting, regulatory, insurance, tax or other specialist matters. Houlihan Lokey’s role in reviewing any information was limited solely to performing such a review as it deemed necessary to support its own advice and analysis and was not on behalf of the Board. The materials necessarily are based on financial, economic, market and other conditions as in effect on, and the information available to Houlihan Lokey as of, the date of the materials. Although subsequent developments may affect the contents of the materials, Houlihan Lokey has not undertaken, and is under no obligation, to update, revise or reaffirm the materials, except as may be expressly contemplated by Houlihan Lokey’s engagement letter. The materials are not intended to provide the sole basis for evaluation of the Transaction and do not purport to contain all information that may be required. The materials do not address the underlying business decision of the Company or any other party to proceed with or effect the Transaction, or the relative merits of the Transaction as compared to any alternative business strategies or transactions that might be available for the Company or any other party. The materials do not constitute any opinion, nor do the materials constitute a recommendation to the Board, the Company, any security holder of the Company or any other party as to how to vote or act with respect to any matter relating to the Transaction or otherwise or whether to buy or sell any assets or securities of any company. Houlihan Lokey’s only opinion is the opinion, if any, that is actually delivered to the Board. In preparing the materials Houlihan Lokey has acted as an independent contractor and nothing in the materials is intended to create or shall be construed as creating a fiduciary or other relationship between Houlihan Lokey and any party. The materials may not reflect information known to other professionals in other business areas of Houlihan Lokey and its affiliates. The preparation of the materials was a complex process involving quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytic methods employed and the adaption and application of these methods to the unique facts and circumstances presented and, therefore, is not readily susceptible to partial analysis or summary description. Furthermore, Houlihan Lokey did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. Accordingly, the analyses contained in the materials must be considered as a whole. Selecting portions of the analyses, analytic methods and factors without considering all analyses and factors could create a misleading or incomplete view. The materials reflect judgments and assumptions with regard to industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are beyond the control of the participants in the Transaction. Any estimates of value contained in the materials are not necessarily indicative of actual value or predictive of future results or values, which may be significantly more or less favorable. Any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which any assets, businesses or securities may actually be sold. The materials do not constitute a valuation opinion or credit rating. The materials do not address the consideration to be paid or received in, the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Transaction or otherwise. Furthermore, the materials do not address the fairness of any portion or aspect of the Transaction to any party. In preparing the materials, Houlihan Lokey has not conducted any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (contingent or otherwise) of the Company or any other party and has no obligation to evaluate the solvency of the Company or any other party under any law. All budgets, projections, estimates, financial analyses, reports and other information with respect to operations reflected in the materials have been prepared by management of the relevant party or are derived from such budgets, projections, estimates, financial analyses, reports and other information or from other sources, which involve numerous and significant subjective determinations made by management of the relevant party and/or which such management has reviewed and found reasonable. The budgets, projections and estimates contained in the materials may or may not be achieved and differences between projected results and those actually achieved may be material. Houlihan Lokey has relied upon representations made by management of the Company that such budgets, projections and estimates have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management (or, with respect to information obtained from public sources, represent reasonable estimates), and Houlihan Lokey expresses no opinion with respect to such budgets, projections or estimates or the assumptions on which they are based. The scope of the financial analysis contained herein is based on discussions with the Company (including, without limitation, regarding the methodologies to be utilized), and Houlihan Lokey does not make any representation, express or implied, as to the sufficiency or adequacy of such financial analysis or the scope thereof for any particular purpose. Houlihan Lokey has assumed and relied upon the accuracy and completeness of the financial and other information provided to, discussed with or reviewed by it without (and without assuming responsibility for) independent verification of such information, makes no representation or warranty (express or implied) in respect of the accuracy or completeness of such information and has further relied upon the assurances of the Company that it is not aware of any facts or circumstances that would make such information inaccurate or misleading. In addition, Houlihan Lokey has relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company or any other participant in the Transaction since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to, discussed with or reviewed by Houlihan Lokey that would be material to its analyses, and that the final forms of any draft documents reviewed by Houlihan Lokey will not differ in any material respect from such draft documents. The materials are not an offer to sell or a solicitation of an indication of interest to purchase any security, option, commodity, future, loan or currency. The materials do not constitute a commitment by Houlihan Lokey or any of its affiliates to underwrite, subscribe for or place any securities, to extend or arrange credit, or to provide any other services. In the ordinary course of business, certain of Houlihan Lokey’s affiliates and employees, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold or sell, long or short positions, or trade or otherwise effect transactions, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company, any Transaction counterparty, any other Transaction participant, any other financially interested party with respect to any transaction, other entities or parties that are mentioned in the materials, or any of the foregoing entities’ or parties’ respective affiliates, subsidiaries, investment funds, portfolio companies and representatives (collectively, the “Interested Parties”), or any currency or commodity that may be involved in the Transaction. Houlihan Lokey provides mergers and acquisitions, restructuring and other advisory and consulting services to clients, which may have in the past included, or may currently or in the future include, one or more Interested Parties, for which services Houlihan Lokey has received, and may receive, compensation. Although Houlihan Lokey in the course of such activities and relationships or otherwise may have acquired, or may in the future acquire, information about one or more Interested Parties or the Transaction, or that otherwise may be of interest to the Board, or the Company, Houlihan Lokey shall have no obligation to, and may not be contractually permitted to, disclose such information, or the fact that Houlihan Lokey is in possession of such information, to the Board, or the Company or to use such information on behalf of the Board, or the Company. Houlihan Lokey’s personnel may make statements or provide advice that is contrary to information contained in the materials. Disclaimer 2 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Situation Overview 3 ƒ Since the last Board discussion on January 24th, the Company received proposals from on February 2nd and Claritas Capital on February 3rd ƒ has indicated that they remain interested in pursuing an acquisition ƒ This presentation summarizes these proposals and presents illustrative financial analysis to provide context with respect to the valuation outlined in the proposals *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Summary of Proposals Received 4 » Price ƒ $1.95 to $2.05 per share ƒ 90% - 100% premium to trailing 180-day closing price ƒ $1.60 – $2.00 per share ƒ 52% – 90% premium to closing price as of February 2 ƒ 37% – 71% premium to 30-day VWAP of $1.05 » Form of Consideration ƒ Cash ƒ Cash » Financing ƒ No new financing required to complete the transaction ƒ Transaction to be financed with a combination of equity and debt ‒ Approximately $125M to $150M of debt to be provided by a limited group of direct lenders ‒ Claritas may invest new equity and roll its current equity ‒ Potential to partner with other equity investors ƒ No financing conditionality expected » Assumptions ƒ Fully diluted share count (shares converting to common stock in a transaction) in the range of 395M, plus or minus 1% or 2% ƒ Elevance redemption rights on a change of control settled without cash or share dilution beyond the 5M common units that have been issued ƒ Fully diluted share count (shares converting to common stock in a transaction) of 382.6M – 393.4M shares » Due Diligence, Timing and Approvals ƒ Assuming imminent access to data room and management, able to complete due diligence and sign a definitive agreement expeditiously; would work in good faith to do so in advance of Savanna’s next earnings announcement date ƒ Board is highly supportive of the acquisition and this letter; required approvals not addressed ƒ Assuming prompt access to management and responses to diligence requests, able to complete due diligence in ~5 to ~6 weeks ƒ Investment committee approval required following completion of due diligence and negotiation of the Definitive Agreement (2/2/2024) Claritas Capital (2/3/2024) Source: Proposal letters from and Claritas Capital; discussions with Savanna management. *Confidential treatment requested |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Analysis at Various Prices Company Perspective – Fully Diluted Shares Source: Company filings, Management estimates, Capital IQ as of 2/7/2024. Metrics <0 considered NM. Note: A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Savanna Management estimates; (2) Unaffected share price as of the last close before Claritas’ 13D filing (10/10/2023); (3) Based on U.S. announced software transactions since February 2023, 25th – 75th percentile of 1-month premiums; (4) Range from 2/7/2023 to 2/7/2024 (5) Range represents 25th – 75th percentile of relevant transactions. 5 ($ and shares in millions, except per share data) Savanna NTM Revenue Multiples – Last 12 Months(4) Savanna NTM EBITDA Multiples – Last 12 Months(4) Digital Health NTM Revenue Multiples – Last 12 Months(4) Illustrative Transactions (LTM EBITDA) – Enterprise(5) Illustrative Transactions (LTM EBITDA) – Life Sciences(5) Premiums Paid – U.S. Public Tech Companies, Last 12 Months(3) Illustrative Transactions (LTM EBITDA) – Provider(5) 35% 0.4x 1.6x 1.0x 2.0x 5.9x 33.0x 13.7x 30.9x 11.2x 17.2x 10.8x 16.5x 55% 2024E Median: 2.0x Median Digital Health NTM EBITDA Multiples – Last 12 Months(4) 8.0x 30.0x 12.3x 16.5x 2024E Median: 16.5x 16.5x Current Illustrative Share Prices Price Per Share $1.06 $1.50 $1.75 $2.00 $2.25 $2.50 $2.75 $3.00 Fully Diluted Shares (1/1/2024A)(1) 422.6 432.0 440.6 447.0 452.0 456.0 459.2 462.0 Equity Value $448 $648 $771 $894 $1,017 $1,140 $1,263 $1,386 Less: Net Cash (12/31/2023E)(1) (129) (129) (129) (129) (129) (129) (129) (129) Plus: Minority Interest (12/31/2023E)(1) (1) (1) (1) (1) (1) (1) (1) (1) Plus: Preferred Equity (12/31/2023E)(1) 50 50 50 50 50 50 50 50 Enterprise Value $369 $569 $692 $815 $938 $1,061 $1,184 $1,307 Premium / (Discount) to: Metric Current Share Price (2/7/2024) $1.06 - 42% 65% 89% 112% 136% 159% 183% Unaffected Share Price (10/10/23)(2) $0.94 13% 60% 87% 114% 141% 167% 194% 221% 52-Week High (2/8/2023) $2.70 (61%) (44%) (35%) (26%) (17%) (7%) 2% 11% 52-Week Low (8/29/2023) $0.77 38% 95% 127% 160% 192% 225% 257% 290% EV / Revenue 2023E $454 0.8x 1.3x 1.5x 1.8x 2.1x 2.3x 2.6x 2.9x 2024E $417 0.9x 1.4x 1.7x 2.0x 2.2x 2.5x 2.8x 3.1x EV / Adj. EBITDA 2023E $23 16.0x 24.7x 30.1x 35.4x 40.8x 46.1x 51.5x 56.8x 2024E $22 16.8x 25.9x 31.5x 37.0x 42.6x 48.2x 53.8x 59.4x Illustrative Premia / Multiple Ranges Implied Price Range $1.26 - $1.45 $0.58 - $1.70 $1.16 - $2.04 $0.49 - $1.82 $0.60 - $1.69 $0.90 - $1.73 $0.77 - $1.08 $0.75 - $1.05 |
| HIGHLY CONFIDENTIAL DRAFT FOR DISCUSSION SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Summary of Financial Projections Source: Company filings, management projections, FactSet, Capital IQ as of 1/29/2024. Note: Segment revenue may not sum to total revenue due to rounding and different broker segment share of total revenues. (1) CG as of 1/3/2024, other brokers as of November 2023. Please see Appendix for further detail. 6 Consensus Revenue Projections(1) Management Revenue Projections (Feb-24) (Feb-24) Consensus Adj. EBITDA Projections(1) Management EBITDA Projections (Feb-24) (Feb-24) YoY Growth Enterprise Provider Life Sciences 3% (8%) 23% 3% 9% 10% Adj. EBITDA Margin Adj. EBITDA 5% 5% 15% 5% 9% 11% ($ in millions, except per share data) $258 $279 $305 $120 $134 $151 $77 $82 $454 $89 $495 $545 2023E 2024E 2025E $24 $46 $59 2023E 2024E 2025E ( ) $254 $209 $283 $368 $119 $123 $138 $151 $81 $86 $91 $98 $454 $417 $512 $616 2023E 2024E 2025E 2026E Adj EBIT $23 $22 $62 $92 2023E 2024E 2025E 2026E 20% 12% |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna DISCUSSION MATERIALS JANUARY 24, 2024 HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 1 page, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Situation Overview 2 ƒ Sharecare received proposals from Claritas Capital on October 3rd and on October 8th, 2023 ƒ On October 11th, Claritas filed an amended 13D statement, publicly disclosing its offer ƒ Following an inbound inquiry in early November, management has also engaged with the leadership of , owner of , backed by and Acquisition Proposals Shareholder Feedback ƒ Several shareholders have communicated to management their desire for greater transparency around Sharecare’s consideration of the Claritas proposal ƒ Certain shareholders have indicated that they may potentially seek to nominate a slate of Board directors during the upcoming proxy window Q4 Earnings ƒ Impact of the discussions may need to be disclosed with Q4 earnings, tentatively scheduled for March 13th, potentially introducing additional pressure on the Company’s share price Objectives ƒ Considering the above, and subject to Board approval, management intends to: » Request proposals from Claritas and which would then be reviewed with the Board in comparison to the various alternatives available to the Company, at which point the Board could decide on next steps Should the Board elect to proceed in sale discussions, management would endeavor to engage with potential buyers at a pace that would position the Company to announce a transaction concurrently with Q4 earnings Subject to the Board’s decision on next steps, management and Houlihan Lokey would develop a plan to engage with shareholders In case a sale transaction could not be announced with Q4 earnings, management and HL would work to cultivate an option whereby the company could potentially raise capital to fund a share repurchase or tender offer, thereby supporting the share price following earnings *Confidential treatment requested |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Process Timeline 3 January February March Week of: 22 29 5 12 19 26 4 11 18 Receive proposals Review proposals and alternatives with Board Facilitate diligence Circulate draft contract and request issues list prior to bid deadline Receive final proposals Review final proposals and alternatives with Board Finalize negotiations Sign definitive agreements and announce transaction Management would continually update Board throughout process |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Appendix |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Market Backdrop Digital Health Valuation Multiples: EV / NTM Revenue Source: Capital IQ as of 1/22/2024. Note: Figures shown on this page are sourced directly from Capital IQ for illustrative purposes and therefore may differ from figures shown on other pages. 5 Valuation multiples have normalized at significantly lower levels since Sharecare went public in 2021 3.2x 2.2x 1.9x 2.0x 1.4x NMF 0.6x 1.5x LTM Current Avg. 3.6x 2.2x 1.9x 2.1x 1.7x NMF 0.9x 1.7x 6/1/22 – Current Delta +0.8x (0.4x) +1.1x (0.3x) (0.9x) (0.5x) (1.0x) 0.0x NMF 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Market Backdrop Digital Health SPAC Performance Since July 2021 Source: Capital IQ as of 1/22/2024. Note: Figures shown on this page are sourced directly from Capital IQ for illustrative purposes and therefore may differ from figures shown on other pages. 6 Healthcare companies listing via SPAC have underperformed in the public markets, largely trading at a fraction of their issuance price 7/2/21 – Current Delta (4%) (70%) (89%) (91%) (92%) (93%) (95%) (99%) (100%) (100%) (100%) ALIT TALK SHCR BFLY CLOV ME OWLT WGS UPHL CANO BBLNF (100.0%) (80.0%) (60.0%) (40.0%) (20.0%) 0.0% 20.0% 40.0% 60.0% Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Alight (ALIT) Butterfly Network (BFLY) Talkspace (TALK) 23andMe (ME) Cano Health (CANO) Owlet Baby Care (OWLT) Sema4 (WGS) UpHealth (UPHL) Babylon (BBLNF) Clover Health (CLOV) Sharecare (SHCR) |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Public Revenue Projections at Go-Public Actual Perf. / Current Estimates Stock Price Perf. Year 2021E 2022E 2023E 2021A 2022A 2023E 2021A 2022A 2023E Since Going Public Savanna 2021 $396 $512 $629 $413 $442 $455 4% (14%) (28%) (90%) Selected SPACs: Alight (ALIT) 2021 $2,720 $2,909 $3,235 $2,873 $3,089 $3,483 6% 6% 8% (13%) Butterfly Network (BFLY) 2021 78 138 235 63 73 65 (20%) (47%) (73%) (89%) Talkspace (TALK) 2021 125 205 285 114 120 146 (9%) (42%) (49%) (77%) 23andMe (ME) 2021 256 317 400 272 299 298 6% (6%) (25%) (93%) Cano Health (CANO) 2021 1,565 2,524 3,293 1,609 2,739 3,140 3% 9% (5%) (100%) Owlet Baby Care (OWLT) 2021 107 175 316 76 69 54 (29%) (60%) (83%) (95%) Sema4 (WGS) 2021 265 360 504 212 235 193 (20%) (35%) (62%) (99%) UpHealth (UPHL) 2021 194 346 377 124 159 146 (36%) (54%) (61%) (100%) Babylon (BBLNF) 2021 321 710 1,484 321 1,110 NA (0%) 56% NA (100%) Median of Selected SPACs (excl. Saturn) (9%) (35%) (55%) (95%) Average of Selected SPACs (excl. Saturn) (11%) (19%) (44%) (85%) Selected IPOs: Doximity (DOCS) 2021 $278 $364 $465 $344 $419 $418 24% 15% (10%) 21% Accolade (ACCD) 2020 257 364 473 275 358 $364 7% (2%) (23%) (45%) AmWell (AMWL) 2020 258 331 429 253 277 $259 (2%) (16%) (40%) (94%) Median of Selected IPOs 7% (2%) (23%) (45%) Average of Selected IPOs 10% (1%) (24%) (39%) Median of Selected SPACs and IPOs (excl. Saturn) (1%) (11%) (40%) (93%) Average of Selected SPACs and IPOs (excl. Saturn) (6%) (15%) (38%) (74%) % Overperformance / (Underperf.) Market Backdrop Digital Health SPAC Performance vs. Initial Projections 7 ($ in millions) Source: Capital IQ, public filings and press releases. SPAC revenue projections at go-public sourced from SPAC investor presentations when the transactions were announced. Actual Performance / Current Estimates and current share price from Capital IQ as of 1/22/2024. IPO price from press releases. (1) Revenue projections at go-public per research as of 8/17/21 (2 months following SPAC transaction close) to capture the impact of material acquisitions (University Health Care and DMC). (2) UpHealth did not provide 2023 projections in its SPAC investor presentation; 2023E revenue projection at go-public per research as of 7/13/21 (1 month following SPAC transaction close). (3) Babylon 2023E current estimated revenue as of 5/15/23, prior to the last two coverage banks dropping coverage. (4) Revenue projections at go-public as of 7/24/21 (1 month following IPO). Note that revenue figures reflect FYE March 2022, March 2023, and March 2024, respectively. (5) Revenue projections at go-public per research as of 6/17/21 (12 months following IPO) to capture the impact of material acquisitions (2nd.MD and PlushCare). (6) Revenue projections at go-public as of 10/13/20 (1 month following IPO). (4) (5) (6) (2) (1) (3) Healthcare companies listing via SPAC or IPO in 2020 – 2021 have largely missed both management and consensus projections and are trading at a fraction of their issuance price |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Management Guidance vs. Actual Performance Source: Capital IQ and FactSet as of 1/22/2024. Note: Figures shown on this page are sourced directly from Capital IQ and FactSet for illustrative purposes and therefore may differ from figures shown on other pages. 8 Sharecare’s share price has continued to decline despite the Company beating guidance ($ in millions, except per share data) Fiscal Year Ends December 31 2023A Q1-23 Q2-23 Q3-23 Savanna Quarterly Performance vs. Guidance & Street Consensus Total Revenue $116.3 $110.4 $113.3 YoY Growth % 15.5% 6.3% (1.1%) Guidance (Low) 111.0 109.5 111.0 Guidance (High) 113.0 110.5 113.0 % Beat / (Miss) 3.8% 0.4% 1.2% Adjusted EBITDA $2.1 $3.8 $9.6 EBITDA Margin % 1.8% 3.4% 8.5% Guidance (Low) 1.0 2.5 8.0 Guidance (High) 2.0 3.5 10.0 % Beat / (Miss) 40.0% 26.7% 6.7% Total Revenue $116.3 $110.4 $113.3 Street Consensus Pre-Earnings Announcement 111.0 109.8 113.1 % Beat / (Miss) 4.8% 0.5% 0.2% Adjusted EBITDA $2.1 $3.8 $9.6 Street Consensus Pre-Earnings Announcement 1.2 3.0 9.0 % Beat / (Miss) 75.0% 26.7% 6.7% Share Price Pre-Announcement $1.50 $1.23 $1.07 1-Day Share Price Impact 6.0% (3.3%) (2.8%) 7-Day Share Price Impact (6.7%) (11.4%) (15.5%) 21-Day Share Price Impact 10.0% (29.1%) (9.5%) |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Project Savanna DISCUSSION MATERIALS OCTOBER 2023 HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Confidential Treatment Requested on 3 pages, confidential information filed separately with the SEC |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Page 1. Situation Overview 2 2. Summary of Proposals Received 4 3. Summary of Illustrative Financial Analysis 6 4. Process Considerations 13 5. Appendix 17 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Situation Overview 3 » Saturn has received two preliminary indications of interest, summarized herein » From Claritas Capital (October 3rd) and (October 8th) » On October 11th, Claritas filed an amended 13D statement, thereby publicly disclosing its offer » This presentation summarizes these proposals as well as an illustrative valuation analysis based on two illustrative forecast scenarios developed by Saturn management *Confidential treatment requested |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Page 1. Situation Overview 2 2. Summary of Proposals Received 4 3. Summary of Illustrative Financial Analysis 6 4. Process Considerations 13 5. Appendix 17 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Summary of Proposals Received 5 » Offer Price ƒ $1.35 – $1.80 per share ƒ $1.50 per share » Consideration ƒ All cash ƒ All cash » Financing ƒ Not specified ƒ Claritas Capital would lead the transaction ƒ Combination of equity capital and debt financing ƒ No financing contingency » Due Diligence / Timeline ƒ Four to six weeks to conduct confirmatory due diligence ƒ Four weeks to complete due diligence including: – Meetings with Company’s management team to review product offerings and key functional areas – Review and validation of Company’s historical performance as well as strategic, financial, and operational plans for future growth – Review of current cost structure and public company operating costs – Review of Company’s technology platform and IP – Customary confirmatory accounting, legal, tax, HR, and insurance due diligence ƒ Finalize definitive agreement and announce transaction within two weeks of concluding diligence Claritas Capital (10/3/2023) (10/8/2023) Source: Claritas Capital proposal received 10/3/2023, proposal received 10/8/2023. *Confidential treatment requested |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Page 1. Situation Overview 2 2. Summary of Proposals Received 4 3. Summary of Illustrative Financial Analysis 6 4. Process Considerations 13 5. Appendix 17 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Management Projections vs. Current Street Consensus Estimates Illustrative 5% Growth Case 7 ($ in millions, except per share data) Illustrative 9% Growth Case Source: Saturn management; FactSet Forecast 2024E 2025E 2026E 2027E 2028E $497 $542 $590 $644 $702 10% 9% 9% 9% 9% $55 $67 $80 $88 $96 11% 12% 14% 14% 14% $55 $67 $80 $88 $96 (51) (45) (43) (43) (43) $4 $22 $37 $45 $53 ($1) ($6) ($11) ($13) ($15) $3 $16 $26 $32 $37 $51 $45 $43 $43 $43 (3) (3) (3) (3) (3) (30) (30) (30) (30) (30) $21 $28 $36 $42 $47 Forecast 2024E 2025E 2026E 2027E 2028E Total Revenue $473 $496 $521 $547 $574 % Growth 5% 5% 5% 5% 5% Adj. EBITDA $47 $61 $70 $75 $78 % Margin 10% 12% 14% 14% 14% Unlevered Free Cash Flow Adj. EBITDA $47 $61 $70 $75 $78 Less: Depreciation & Amortization (51) (45) (43) (43) (43) EBIT ($4) $16 $27 $32 $35 Less: Cash Taxes @ 29.2% $0 ($5) ($8) ($9) ($10) NOPAT ($4) $12 $19 $22 $25 Plus: Depreciation & Amortization $51 $45 $43 $43 $43 Less: Increase in Net Working Capital (3) (3) (3) (3) (3) Less: Capital Expenditures (30) (30) (30) (30) (30) Unlevered Free Cash Flow $14 $24 $29 $32 $35 Consensus Revenue Projections (Oct-23) $268 $300 $350 $115 $130 $73 $145 $79 $88 $458 $511 $578 2023E 2024E 2025E Consensus Adj. EBITDA Projections (Oct-23) $26 $47 $60 2023E 2024E 2025E 6% 11% 12% 6% 9% 10% |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Summary of Illustrative Financial Analysis 8 Source: Company filings, Saturn management projections, Wall Street research, Capital IQ as of 10/6/2023. Note: Fully-diluted share count calculated using treasury stock method, based on publicly disclosed information as of 2Q 2023 10-Q (357.125M basic shares outstanding, 48.470M RSUs, and 101.779M options at a weighted average exercise price of $2.90). Implied Price Per Share (Present Value as of 12/31/2023) LBO ANALYSIS DCF ANALYSIS 9% Growth Case ‒ 2028E Exit EV / Forward Revenue multiple: 0.5x – 1.5x ‒ Target IRR: 20% – 30% 5% Growth Case ‒ 2028E Exit EV / Forward Revenue multiple: 0.5x – 1.5x ‒ Target IRR: 20% – 30% FUTURE SHARE PRICE Current Share Price (10/6/2023): $0.89 5% Growth Case ‒ Forward Revenue multiple: 0.6x – 1.5x 9% Growth Case ‒ Forward Revenue multiple: 0.6x – 1.5x 5% Growth Case ‒ Terminal Forward Revenue multiple: 0.5x – 1.5x ‒ WACC: 11.5% – 12.5% 9% Growth Case ‒ Terminal Forward Revenue multiple: 0.5x – 1.5x ‒ WACC: 11.5% – 12.5% Claritas Capital Offer Price (10/3/2023): $1.35 – $1.80 Offer Price (10/8/2023): $1.50 Future share price ranges shown reflect share prices projected at 12/31/2028 discounted to 12/31/2023 at Saturn’s 14.0% estimated cost of equity e $0.97 $0.77 $1.14 $0.94 $0.49 $0.41 $1.76 $1.45 $2.27 $1.82 $1.43 $1.15 *Confidential treatment requested |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Analysis at Various Prices – Saturn Source: Company filings, Capital IQ as of 10/6/2023. Note: A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Fully-diluted share count calculated using treasury stock method, based on publicly disclosed information as of 2Q 2023 10-Q (357.125M basic shares outstanding, 48.470M RSUs, and 101.779M options at a weighted average exercise price of $2.90). 9 Wall Street consensus estimates ($ in millions, except per share data) Current Illustrative Value of Saturn Price Per Share $0.89 $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 $2.50 Fully Diluted Shares (M)(1) 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 Equity Value $360 $406 $507 $608 $710 $811 $913 $1,014 Less: Net Cash (6/30/2023A) (144) (144) (144) (144) (144) (144) (144) (144) Plus: Minority Interest (6/30/2023A) 0 0 0 0 0 0 0 0 Plus: Preferred Equity (6/30/2023A) 50 50 50 50 50 50 50 50 Enterprise Value $267 $312 $414 $515 $616 $718 $819 $921 Premium / (Discount) to: Metric Current Share Price (10/6/2023) $0.89 - 13% 41% 69% 97% 125% 154% 182% 52-Week High (2/3/2023) $2.71 (67%) (63%) (54%) (45%) (35%) (26%) (17%) (8%) 52-Week Low (8/29/2023) $0.77 15% 30% 62% 95% 127% 160% 192% 225% EV / Revenue 2023E $457 0.6x 0.7x 0.9x 1.1x 1.3x 1.6x 1.8x 2.0x 2024E $510 0.5x 0.6x 0.8x 1.0x 1.2x 1.4x 1.6x 1.8x EV / Revenue (Growth Adj.) 2024E (Street Case) 12% 0.04x 0.05x 0.07x 0.09x 0.10x 0.12x 0.14x 0.16x 2024E (Management High Case) 10% 0.05x 0.06x 0.08x 0.10x 0.12x 0.14x 0.16x 0.18x 2024E (Management Low Case) 5% 0.10x 0.12x 0.16x 0.20x 0.24x 0.28x 0.32x 0.36x EV / Adj. EBITDA 2023E $26 10.2x 12.0x 15.9x 19.8x 23.6x 27.5x 31.4x 35.3x 2024E $46 5.7x 6.7x 8.9x 11.1x 13.3x 15.4x 17.6x 19.8x |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x 18.0x Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Market Backdrop Digital Health Valuation Multiples: EV / NTM Revenue Source: Capital IQ as of 10/6/2023. Note: Figures shown on this page are sourced directly from Capital IQ for illustrative purposes and therefore may differ from figures shown on other pages. 10 » Valuation multiples of Digital Health companies have normalized at much lower levels versus 2021 » A majority of companies in the space are not expected to generate positive EBITDA in 2023 » Several companies in the space have missed estimates and lowered or withdrawn guidance Digital Health Average (7/2/21): 9.3x Digital Health Average (10/6/23): 1.7x 82% multiple compression 2.2x 1.9x 1.7x 1.4x 1.5x NMF 0.6x 1.4x YTD Current Avg. 4.1x 2.3x 1.9x 2.2x 1.9x NMF 1.0x 1.8x Saturn |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey 6% 21% 12% 10% 4% (6%) (17%) (62%) 44% 70% 63% 49% 46% 40% 33% 25% $457 $3,498 $2,634 $1,950 $404 $348 $294 $260 Enterprise Value(1) $267 $668 $6,918 ($76) $3,870 $491 $1,004 $3,889 Market Cap.(1) $360 $678 $3,941 $365 $3,204 $607 $1,117 $3,311 Digital Health Industry Benchmarking Operating Metrics Source: Capital IQ as of 10/6/2023, Wall Street research. Metrics <0 considered NM. Note: Saturn metrics based on Street consensus estimates; A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Based on diluted shares. Based on closing prices as of 10/6/23. (2) Median excludes Saturn. 2023E Revenue & 2023E / 2024E Revenue Growth 2023E Gross Profit & Gross Margin 2023E Adj. EBITDA & Adj. EBITDA Margin 11 3% / 12% Saturn 12% / 7% 9% / 8% 44% / 20% 14% / 19% 26% / 27% 6% / 12% (6%) / 9% Saturn $199 $1,856 $219 $145 $185 $103 $1,169 $488 Saturn $26 $740 $310 $193 $11 ($26) ($60) ($162) Saturn Median(2): $404 12% / 12% Median(2): 4% / $11 ($ in millions, except per share data) Median(2): 46% / $219 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey 0.5x 2.3x 1.9x 1.7x 1.5x 1.4x 1.4x (0.3x) Enterprise Value(1) $267 $668 $6,918 ($76) $3,870 $491 $1,004 $3,889 Market Cap.(1) $360 $678 $3,941 $365 $3,204 $607 $1,117 $3,311 YTD Share Perf. (45%) 5% (21%) (62%) (4%) (7%) (44%) (21%) Inst. Ownership 33% 75% 68% 42% 98% 91% 94% 75% Digital Health Industry Benchmarking Valuation Metrics EV / 2024E Revenue EV / 2024E Revenue / 2023E – 2024E Revenue Growth Source: Capital IQ as of 10/6/2023, Wall Street research. Metrics <0 considered NM. Note: Saturn metrics based on Street consensus estimates; A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. (1) Based on diluted shares. Based on closing prices as of 10/6/23. (2) Median excludes Saturn. EV / 2024E EBITDA 12 Saturn Saturn Saturn Median(2): 1.5x Median(2): 0.11x Median(2): 14.8x Saturn EV / 2024E EBITDA Saturn 5.7x 59.0x 25.3x 14.8x 11.1x 8.4x NMF NMF Saturn 0.04x 0.28x 0.17x 0.12x 0.09x 0.08x 0.08x NMF |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Page 1. Situation Overview 2 2. Summary of Proposals Received 4 3. Summary of Illustrative Financial Analysis 6 4. Process Considerations 13 5. Appendix 17 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Process Considerations Broad Process Targeted Process Negotiated Sale Buyers ƒ Large group of qualified buyers ƒ Select group of relevant and qualified buyers ƒ One or a few strong and clearly identifiable buyers Confidentiality ƒ Process likely to become public ƒ Contained ƒ Highly contained Speed of Execution ƒ Seller has significant control of timing ƒ Seller has significant control of timing ƒ Seller has limited control of timing Advantages ƒ Maximizes competition ƒ Provides early insight into value perspectives, structure and issues ƒ Two-stage process limits access to sensitive information to “serious buyers” and eliminates “tire kickers” ƒ Signals credible alternatives to buyers ƒ Provides flexibility in timing and buyer selection ƒ Limits disruption to business ƒ Can reduce risk of failed process ƒ Effectively managed process supports perception of broad auction and competition ƒ Least disruptive to business ƒ Opportunity to capture preemptive value ƒ Greatest level of confidentiality ƒ Maximizes future alternatives if process is not successful Disadvantages ƒ Higher degree of operational disruption ƒ Some buyers may refuse to participate in auction ƒ Competitive sensitivity to broad dissemination of information ƒ May omit certain potential buyers ƒ Can be more time consuming if several negotiations occur simultaneously ƒ Risk of disclosing confidential information to “tire kickers” ƒ Most buyers will delay decision for as long as possible ƒ Risk of not receiving highest value ƒ Difficult to create competitive pressure ƒ Can be more management intensive A targeted process would provide control of process timing and dynamics, but also facilitate competition among key potential buyers 14 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Process Timeline – For Discussion 15 Process Preparation: October Initial Due Diligence and Bids: October thru November Earnings Due Diligence + Negotiation: November thru Early December Sign / Announce: December Closing: Q1 2024 » Update virtual data room » Update diligence and presentation materials » Finalize list of potential counterparties » Contact selected counterparties, assess level of interest, sign NDAs » Open virtual data room and facilitate first phase of due diligence » Communicate process instructions » Following [Nov. 9] earnings, receive initial indications of interest from counterparties » Review proposals with Board; decide whether/how to move forward » Facilitate second phase of diligence » Saturn counsel to draft contract; distribute contract to counterparties » Receive firm indications of interest and contract markups from counterparties » Review proposals with Board; decide whether/how to move forward » Finalize negotiation » Finalize confirmatory diligence » Finalize Board review and approval » Sign contract » Announce transaction prior to holidays » HSR review » File proxy with SEC, address staff comments and complete SEC review » Shareholder outreach » Shareholder vote » Close transaction October November December SMTWT F S SMTWT F S SMTWT F S 1234567 1234 12 8 9 10 11 12 13 14 56789 10 11 3456789 15 16 17 18 19 20 21 12 13 14 15 16 17 18 10 11 12 13 14 15 16 22 23 24 25 26 27 28 19 20 21 22 23 24 25 17 18 19 20 21 22 23 29 30 31 26 27 28 29 30 24 25 26 27 28 29 30 31 » Given the extensive previous dialogue and process preparation, a targeted process could be designed to culminate in announcement of a transaction prior to year end, with the option to extend timing to culminate prior to Q1 earnings if sufficient interest from additional parties who require additional time to perform diligence |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey New Mountain Capital Preliminary Potential Partners – For Discussion 16 Digital Health Health Plans Big Tech Financial Sponsors International Value-Based Care General Atlantic Warburg Pincus Great Hill Partners CD&R Marlin Equity TBD |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Page 1. Situation Overview 2 2. Summary of Proposals Received 4 3. Summary of Illustrative Financial Analysis 6 4. Process Considerations 13 5. Appendix 17 Illustrative Discounted Cash Flow Analysis 18 Illustrative Take-Private Analysis 22 Illustrative Future Share Price Analysis 28 WACC Analysis, Market Backdrop, and Peer Benchmarking Analysis 30 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Page 1. Situation Overview 2 2. Summary of Proposals Received 4 3. Summary of Illustrative Financial Analysis 6 4. Process Considerations 13 5. Appendix 17 Illustrative Discounted Cash Flow Analysis 18 Illustrative Take-Private Analysis 22 Illustrative Future Share Price Analysis 28 WACC Analysis, Market Backdrop, and Peer Benchmarking Analysis 30 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Discounted Cash Flow Analysis – Terminal Multiple Method – 5% Growth Case 19 DCF Analysis (12/31/2023 Valuation Date) Implied DCF Value Per Share Note: Analysis assumes valuation date of 12/31/2023. A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. Projected net cash balance at 12/31/2023E based on management guidance as of 10/10/2023. Source: Saturn management projections, Company filings, Wall Street research, Capital IQ as of 10/6/2023. (1) Based on latest reported federal and state net operating loss carryforwards of approximately $372M and $325M, respectively, as of 12/31/2022, projected taxable income, and assumed statutory tax rates of 21% (federal) and 8.2% (state). (2) Fully-diluted share count calculated using treasury stock method, based on publicly disclosed information as of 2Q 2023 10-Q (357.125M basic shares outstanding, 48.470M RSUs, and 101.779M options at a weighted average exercise price of $2.90). Implied DCF Value/Share Sensitivity Analysis (1) (2) ($ in millions, except per share data) WACC $1 11.5% 12.0% 12.5% Terminal 0.5x $0.96 $0.95 $0.94 NTM Revenue 1.0x $1.39 $1.37 $1.35 Multiple 1.5x $1.82 $1.79 $1.76 NPV of Cash Flows @ 12.0% WACC $98 Terminal Value @ Terminal Rev. Mult. of 1.0x $603 NPV of Terminal Value @ 12.0% WACC $342 NPV of NOLs @ Cost of Equity of 14.0% $56 Implied Enterprise Value $497 Plus: Net Cash (as of 12/31/2023E) $110 Less: Preferred Stock (as of 12/31/2023E) (50) Less: NCI (as of 12/31/2023E) (0) Implied Equity Value $556 Diluted Shares Outstanding 405.6 Implied Share Price $1.37 Implied Terminal Growth Rate 5.9% Forecast Revenue Multiple Method 2024E 2025E 2026E 2027E 2028E Total Revenue $473 $496 $521 $547 $574 % Growth 5% 5% 5% 5% 5% Adj. EBITDA $47 $61 $70 $75 $78 % Margin 10% 12% 14% 14% 14% Unlevered Free Cash Flow Adj. EBITDA $47 $61 $70 $75 $78 Less: Depreciation & Amortization (51) (45) (43) (43) (43) EBIT ($4) $16 $27 $32 $35 Less: Cash Taxes @ 29.2% $0 ($5) ($8) ($9) ($10) NOPAT ($4) $12 $19 $22 $25 Plus: Depreciation & Amortization $51 $45 $43 $43 $43 Less: Increase in Net Working Capital (3) (3) (3) (3) (3) Less: Capital Expenditures (30) (30) (30) (30) (30) Unlevered Free Cash Flow $14 $24 $29 $32 $35 Discount Period 0.5 1.5 2.5 3.5 4.5 PV of Cash Flows @ 12.0% WACC $13 $20 $22 $22 $21 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Discounted Cash Flow Analysis – Terminal Multiple Method – 9% Growth Case 20 DCF Analysis (12/31/2023 Valuation Date) Implied DCF Value Per Share Implied DCF Value/Share Sensitivity Analysis Note: Analysis assumes valuation date of 12/31/2023. A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. Projected net cash balance at 12/31/2023E based on management guidance as of 10/10/2023. Source: Saturn management projections, Company filings, Wall Street research, Capital IQ as of 10/6/2023. (1) Based on latest reported federal and state net operating loss carryforwards of approximately $372M and $325M, respectively, as of 12/31/2022, projected taxable income, and assumed statutory tax rates of 21% (federal) and 8.2% (state). (2) Fully-diluted share count calculated using treasury stock method, based on publicly disclosed information as of 2Q 2023 10-Q (357.125M basic shares outstanding, 48.470M RSUs, and 101.779M options at a weighted average exercise price of $2.90). (1) (2) ($ in millions, except per share data) NPV of Cash Flows @ 12.0% WACC $126 Terminal Value @ Terminal Rev. Mult. of 1.0x $765 NPV of Terminal Value @ 12.0% WACC $434 NPV of NOLs @ Cost of Equity of 14.0% $67 Implied Enterprise Value $628 Plus: Net Cash (as of 12/31/2023E) $110 Less: Preferred Stock (as of 12/31/2023E) (50) Less: NCI (as of 12/31/2023E) (0) Implied Equity Value $687 Diluted Shares Outstanding 405.6 Implied Share Price $1.69 Implied Terminal Growth Rate 5.5% Revenue Multiple Method WACC $2 11.5% 12.0% 12.5% Terminal 0.5x $1.18 $1.16 $1.14 NTM Revenue 1.0x $1.72 $1.69 $1.67 Multiple 1.5x $2.27 $2.23 $2.19 Forecast 2024E 2025E 2026E 2027E 2028E Total Revenue $497 $542 $590 $644 $702 % Growth 10% 9% 9% 9% 9% Adj. EBITDA $55 $67 $80 $88 $96 % Margin 11% 12% 14% 14% 14% Unlevered Free Cash Flow Adj. EBITDA $55 $67 $80 $88 $96 Less: Depreciation & Amortization (51) (45) (43) (43) (43) EBIT $4 $22 $37 $45 $53 Less: Cash Taxes @ 29.2% ($1) ($6) ($11) ($13) ($15) NOPAT $3 $16 $26 $32 $37 Plus: Depreciation & Amortization $51 $45 $43 $43 $43 Less: Increase in Net Working Capital (3) (3) (3) (3) (3) Less: Capital Expenditures (30) (30) (30) (30) (30) Unlevered Free Cash Flow $21 $28 $36 $42 $47 Discount Period 0.5 1.5 2.5 3.5 4.5 PV of Cash Flows @ 12.0% WACC $20 $23 $27 $28 $28 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Preliminary Maximum Potential NOL Valuation 21 5% Growth Case 9% Growth Case ($ in millions, except per share data) Note: Analysis assumes valuation date of 12/31/2023. A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. Source: Saturn management projections, Company filings, Wall Street research, Capital IQ as of 10/6/2023. NOL balances based on latest reported federal and state net operating loss. carryforwards of approximately $372M and $325M, respectively, as of 12/31/2022 and assumed statutory tax rates of 21% (federal) and 8.2% (state). NOLs generated in 1H 2023 are assumed to be equivalent to 1H 2023A GAAP EBT loss; NOLs generated in 2H 2023 based on Wall Street research estimates; NOL analysis is preliminary and subject to material change. NOL Schedule (Federal) @Close 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E 2036E Beginning Balance $372 $492 $496 $479 $452 $421 $385 $346 $303 $255 $203 $147 $85 $18 Plus: NOLs Generated 120 4 - - - - - - - - - - - - Less: NOL Usage - - (16) (27) (32) (35) (39) (43) (48) (52) (57) (62) (67) (18) Ending Balance $492 $496 $479 $452 $421 $385 $346 $303 $255 $203 $147 $85 $18 - Federal Tax Savings @ 21.0% Tax Rate - $3 $6 $7 $7 $8 $9 $10 $11 $12 $13 $14 $4 NOL Schedule (State) @Close 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E 2036E Beginning Balance $325 $445 $449 $432 $405 $374 $338 $299 $256 $208 $156 $100 $38 - Plus: NOLs Generated 120 4 - - - - - - - - - - - - Less: NOL Usage - - (16) (27) (32) (35) (39) (43) (48) (52) (57) (62) (38) - Ending Balance $445 $449 $432 $405 $374 $338 $299 $256 $208 $156 $100 $38 - - State Tax Savings @ 8.2% Tax Rate - $1 $2 $3 $3 $3 $4 $4 $4 $5 $5 $3 - Total Tax Savings - $5 $8 $9 $10 $11 $13 $14 $15 $17 $18 $17 $4 Discount Period 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5 10.5 11.5 12.5 PV of Tax Savings @ 14.0% Cost of Equity - $4 $6 $6 $6 $6 $5 $5 $5 $5 $5 $4 $1 NPV of Tax Savings at 12/31/2023 $56 $56 NOL Schedule (Federal) @Close 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E 2036E Beginning Balance $372 $492 $488 $466 $429 $385 $332 $271 $200 $120 $28 - - - Plus: NOLs Generated $120 - - - - - - - - - - - - - Less: NOL Usage - (4) (22) (37) (45) (53) (61) (71) (81) (92) (28) - - - Ending Balance $492 $488 $466 $429 $385 $332 $271 $200 $120 $28 - - - - Federal Tax Savings @ 21.0% Tax Rate $1 $5 $8 $9 $11 $13 $15 $17 $19 $6 - - - NOL Schedule (State) @Close 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E 2036E Beginning Balance $325 $445 $441 $419 $382 $338 $285 $224 $153 $73 - - - - Plus: NOLs Generated $120 - - - - - - - - - - - - - Less: NOL Usage - (4) (22) (37) (45) (53) (61) (71) (81) (73) - - - - Ending Balance $445 $441 $419 $382 $338 $285 $224 $153 $73 - - - - - State Tax Savings @ 8.2% Tax Rate $0 $2 $3 $4 $4 $5 $6 $7 $6 - - - - Total Tax Savings $1 $6 $11 $13 $15 $18 $21 $24 $25 $6 $0 $0 $0 Discount Period 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5 10.5 11.5 12.5 PV of Tax Savings @ 14.0% Cost of Equity $1 $5 $8 $8 $9 $9 $9 $9 $8 $2 $0 $0 $0 NPV of Tax Savings at 12/31/2023 $67 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Page 1. Situation Overview 2 2. Summary of Proposals Received 4 3. Summary of Illustrative Financial Analysis 6 4. Process Considerations 13 5. Appendix 17 Illustrative Discounted Cash Flow Analysis 18 Illustrative Take-Private Analysis 22 Illustrative Future Share Price Analysis 28 WACC Analysis, Market Backdrop, and Peer Benchmarking Analysis 30 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Take-Private Analysis – 5% Growth Case Assumptions ƒ Illustrative purchase price per share of $0.85 (implying entry NTM revenue multiple of 0.6x, a 4% discount), 50% existing shareholder rollover, no synergies, and exit NTM revenue multiple of 1.0x ‒ These assumptions are sensitized on the following page ƒ $50M Revolver @ SOFR + 350 bps and 2.0% OID ‒ $10M drawn at closing; remains drawn as incentive for lender ƒ Transaction expenses totaling $20M ƒ Minimum cash balance of $50M ƒ Illustrative transaction closing date of 12/31/2023 and exit date of 12/31/2028 Sources & Uses Cash Flow Summary Returns Analysis (12/31/28 Exit) Note: A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. Source: Saturn management projections, Company filings, Wall Street research, Capital IQ as of 10/6/2023. (1) Based on latest reported federal and state net operating loss carryforwards of approximately $372M and $325M, respectively, as of 12/31/2022, projected taxable income, and assumed statutory tax rates of 21% (federal) and 8.2% (state). NOL utilization subject to Section 382 limitation upon change of control. (2) Inclusive of capitalized software expenditures. 23 ($ in millions, except per share data) (1) (2) Forecast 2024E 2025E 2026E 2027E 2028E Total Revenue $496 $473 $521 $547 $574 Growth 5% 5% 5% 5% 5% Adj. EBITDA $61 $47 $70 $75 $78 Margin 10% 12% 14% 14% 14% Less: Depreciation & Amortization (45) (51) (43) (43) (43) Less: Interest (1) (1) (1) (1) (1) Less: Taxes @ 29.2% (5) (8) - (9) (10) Plus: § 382 NOL Savings 4 4 - 4 4 Plus: Depreciation & Amortization 45 51 43 43 43 Less: Increase in Net Working Capital (3) (3) (3) (3) (3) Less: Capital Expenditures (30) (30) (30) (30) (30) Levered Free Cash Flow $13 $27 $32 $35 $38 Debt 10 10 10 10 10 Cash 63 90 122 158 196 Sources Amount % Existing Saturn BS Cash $110 26.5% Existing Shareholders Rollover Equity $172 41.6% External Equity Capital Required $122 29.5% New Revolver $10 2.4% Total Sources $415 100.0% Uses Amount % Saturn Equity Purchase Price $345 83.1% Transaction Expenses $20 4.8% Minimum Cash Balance $50 12.1% Total Uses $415 100.0% Exit Revenue (2029E) $603 Exit NTM Multiple 1.0x Exit Enterprise Value $603 Less: Debt ($10) Less: Preferred Stock ($50) Plus: Cash $192 Exit Equity Value $735 Sponsor Portion of Exit Equity Value $305 IRR 20.0% MOIC 2.5x |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Exit EV / NTM Revenue 0 0.5x 1.0x 1.5x Saturn $0.75 11.3% 23.7% 32.5% Purchase $1.00 4.0% 15.6% 23.9% Price Per $1.25 (1.1%) 10.0% 17.8% Share $1.50 (4.9%) 5.6% 13.2% $1.75 (8.1%) 2.2% 9.5% Illustrative Take-Private Analysis – 5% Growth Case (cont’d) (1) Note: A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. 24 Implied Purchase Price Per Share (@ $0 Run-Rate EBITDA Synergy) Implied IRR (@ $0 Run-Rate EBITDA Synergy) Ability-to-Pay Sensitivity Returns Sensitivity Implied Purchase Price Per Share (@ Target IRR of 20.0%) Implied IRR (@ $0.85 Purchase Price Per Share) ($ in millions, except per share data) Exit EV / NTM Revenue 0 0.5x 1.0x 1.5x $0.0 8.0% 20.0% 28.6% Run-Rate $5.0 9.6% 21.7% 30.3% EBITDA $10.0 11.1% 23.2% 31.9% Synergy $15.0 12.5% 24.6% 33.4% $20.0 13.8% 26.0% 34.8% Exit EV / NTM Revenue 1 0.5x 1.0x 1.5x $0.0 $0.55 $0.85 $1.15 Run-Rate $5.0 $0.58 $0.90 $1.22 EBITDA $10.0 $0.62 $0.95 $1.29 Synergy $15.0 $0.65 $1.00 $1.35 $20.0 $0.68 $1.05 $1.42 Exit EV / NTM Revenue 1 0.5x 1.0x 1.5x 20.0% $0.55 $0.85 $1.15 Target 22.5% $0.51 $0.78 $1.05 IRR % 25.0% $0.47 $0.72 $0.96 27.5% $0.44 $0.66 $0.88 30.0% $0.41 $0.61 $0.81 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Take-Private Analysis – 9% Growth Case Assumptions ƒ Illustrative purchase price per share of $1.05 (implying entry NTM revenue multiple of 0.7x, a 18% premium), 50% existing shareholder rollover, no synergies, and exit NTM revenue multiple of 1.0x ‒ These assumptions are sensitized on the following page ƒ $50M Revolver @ SOFR + 350 bps and 2.0% OID ‒ $10M drawn at closing; remains drawn as incentive for lender ƒ Transaction expenses totaling $20M ƒ Minimum cash balance of $50M ƒ Illustrative transaction closing date of 12/31/2023 and exit date of 12/31/2028 Sources & Uses Cash Flow Summary Returns Analysis (12/31/28 Exit) Note: A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. Source: Saturn management projections, Company filings, Wall Street research, Capital IQ as of 10/6/2023. (1) Based on latest reported federal and state net operating loss carryforwards of approximately $372M and $325M, respectively, as of 12/31/2022, projected taxable income, and assumed statutory tax rates of 21% (federal) and 8.2% (state). NOL utilization subject to Section 382 limitation upon change of control. (2) Inclusive of capitalized software expenditures. 25 ($ in millions, except per share data) (1) (2) Forecast 2024E 2025E 2026E 2027E 2028E Total Revenue $542 $497 $590 $644 $702 Growth 10% 9% 9% 9% 9% Adj. EBITDA $67 $55 $80 $88 $96 Margin 11% 12% 14% 14% 14% Less: Depreciation & Amortization (45) (51) (43) (43) (43) Less: Interest (1) (1) (1) (1) (1) Less: Taxes @ 29.2% (6) (11) (1) (13) (15) Plus: § 382 NOL Savings 4 4 1 4 4 Plus: Depreciation & Amortization 45 51 43 43 43 Less: Increase in Net Working Capital (3) (3) (3) (3) (3) Less: Capital Expenditures (30) (30) (30) (30) (30) Levered Free Cash Flow $21 $32 $40 $46 $51 Debt 10 10 10 10 10 Cash 71 103 143 188 239 Sources Amount % Existing Saturn BS Cash $110 22.2% Existing Shareholders Rollover Equity $213 42.9% External Equity Capital Required $163 32.9% New Revolver $10 2.0% Total Sources $496 100.0% Uses Amount % Saturn Equity Purchase Price $426 85.9% Transaction Expenses $20 4.0% Minimum Cash Balance $50 10.1% Total Uses $496 100.0% Exit Revenue (2029E) $765 Exit NTM Multiple 1.0x Exit Enterprise Value $765 Less: Debt ($10) Less: Preferred Stock ($50) Plus: Cash $235 Exit Equity Value $939 Sponsor Portion of Exit Equity Value $407 IRR 20.1% MOIC 2.5x |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Take-Private Analysis – 9% Growth Case (cont’d) Note: A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. 26 Ability-to-Pay Sensitivity Returns Sensitivity ($ in millions, except per share data) (1) Implied Purchase Price Per Share (@ $0 Run-Rate EBITDA Synergy) Implied IRR (@ $0 Run-Rate EBITDA Synergy) Implied Purchase Price Per Share (@ Target IRR of 20.1%) Implied IRR (@ $1.05 Purchase Price Per Share) Exit EV / NTM Revenue 0 0.5x 1.0x 1.5x Saturn $1.00 9.4% 21.4% 30.0% Purchase $1.25 4.0% 15.5% 23.7% Price Per $1.50 (0.1%) 11.0% 18.8% Share $1.85 (4.5%) 6.0% 13.5% $2.00 (6.1%) 4.3% 11.7% Exit EV / NTM Revenue 0 0.5x 1.0x 1.5x $0.0 8.2% 20.1% 28.6% Run-Rate $5.0 9.4% 21.4% 29.9% EBITDA $10.0 10.6% 22.6% 31.2% Synergy $15.0 11.6% 23.7% 32.4% $20.0 12.7% 24.8% 33.5% Exit EV / NTM Revenue 1 0.5x 1.0x 1.5x $0.0 $0.67 $1.05 $1.43 Run-Rate $5.0 $0.70 $1.10 $1.50 EBITDA $10.0 $0.74 $1.15 $1.56 Synergy $15.0 $0.77 $1.20 $1.63 $20.0 $0.80 $1.25 $1.70 Exit EV / NTM Revenue 1 0.5x 1.0x 1.5x 20.0% $0.67 $1.05 $1.43 Target 22.5% $0.62 $0.96 $1.30 IRR % 25.0% $0.57 $0.88 $1.19 27.5% $0.53 $0.81 $1.09 30.0% $0.49 $0.75 $1.00 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Preliminary NOL Detail (LBO Analysis) 27 5% Growth Case NOL Schedule and Annual Limitation Calculation 9% Growth Case NOL Schedule and Annual Limitation Calculation ($ in millions, except per share data) Note: Analysis assumes valuation date of 12/31/2023. A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items. Source: Saturn management projections, Company filings, Wall Street research, Capital IQ as of 10/6/2023. NOL balances based on latest reported federal and state net operating loss. carryforwards of approximately $372M and $325M, respectively, as of 12/31/2022 and assumed statutory tax rates of 21% (federal) and 8.2% (state). NOLs generated in 1H 2023 are assumed to be equivalent to 1H 2023A GAAP EBT loss; NOLs generated in 2H 2023 based on Wall Street research estimates; NOL analysis is preliminary and subject to material change. @ Close 2024E 2025E 2026E 2027E 2028E Federal Balance Beginning Balance $372 $492 $497 $488 $479 $470 Plus: NOLs Generated 120 5 - - - - Less: NOL Usage - - (9) (9) (9) (9) Ending Balance $497 $492 $488 $479 $470 $461 Federal Tax Savings @ 21.0% Tax Rate - $2 $2 $2 $2 State Balance Beginning Balance $325 $445 $450 $441 $432 $423 Plus: NOLs Generated 120 5 - - - - Less: NOL Usage - - (9) (9) (9) (9) Ending Balance $450 $445 $441 $432 $423 $414 State Tax Savings @ 8.2% Tax Rate - $1 $1 $1 $1 Total Tax Savings - $3 $3 $3 $3 Equity Purchase Price $345 Section 382 Annual NOL Limitation 2.6% Annual NOL Limitation for LBO Analysis $9 @ Close 2024E 2025E 2026E 2027E 2028E Federal Balance Beginning Balance $372 $492 $489 $478 $467 $456 Plus: NOLs Generated 120 - - - - - Less: NOL Usage - (3) (11) (11) (11) (11) Ending Balance $489 $492 $478 $467 $456 $445 Federal Tax Savings @ 21.0% Tax Rate $1 $2 $2 $2 $2 State Balance Beginning Balance $325 $445 $442 $431 $420 $409 Plus: NOLs Generated 120 - - - - - Less: NOL Usage - (3) (11) (11) (11) (11) Ending Balance $442 $445 $431 $420 $409 $398 State Tax Savings @ 8.2% Tax Rate $0 $1 $1 $1 $1 Total Tax Savings $1 $3 $3 $3 $3 Equity Purchase Price $426 Section 382 Annual NOL Limitation 2.6% Annual NOL Limitation for LBO Analysis $11 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Page 1. Situation Overview 2 2. Summary of Proposals Received 4 3. Summary of Illustrative Financial Analysis 6 4. Process Considerations 13 5. Appendix 17 Illustrative Discounted Cash Flow Analysis 18 Illustrative Take-Private Analysis 22 Illustrative Future Share Price Analysis 28 WACC Analysis, Market Backdrop, and Peer Benchmarking Analysis 30 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative Future Share Price Analysis 29 ($ and shares in millions, except per share data) Source: Saturn management projections, Company filings, Wall Street research, Capital IQ as of 10/6/2023. Note: Fully-diluted share count calculated using treasury stock method, based on publicly disclosed information as of 2Q 2023 10-Q (357.125M basic shares outstanding, 48.470M RSUs, and 101.779M options at a weighted average exercise price of $2.90). 5% Growth Case 9% Growth Case Current Forward Revenue Multiple (0.6x) 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028 Forward Revenue $473 $496 $521 $547 $574 $603 $497 $542 $590 $644 $702 $765 Forward Revenue Multiple 0.6x 0.6x 0.6x 0.6x 0.6x 0.6x 0.6x 0.6x 0.6x 0.6x 0.6x 0.6x Implied TEV $294 $309 $325 $341 $358 $376 $310 $338 $368 $401 $437 $476 (+) Cash $110.0 $124.3 $152.6 $190.0 $231.5 $276.7 $110.0 $132.0 $165.9 $212.7 $267.4 $329.9 (-) NCI ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) (-) Preferred Stock ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) (-) Debt $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Implied Total Equity Value $354 $383 $427 $480 $539 $602 $369 $419 $483 $563 $654 $756 FDSO 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 Implied Future Share Price $0.87 $0.94 $1.05 $1.18 $1.33 $1.48 $0.91 $1.03 $1.19 $1.39 $1.61 $1.86 PV of Future Share Price at Dec-23 $0.87 $0.83 $0.81 $0.80 $0.79 $0.77 $0.91 $0.91 $0.92 $0.94 $0.96 $0.97 Forward Revenue Multiple (1.0x) 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028 Forward Revenue $473 $496 $521 $547 $574 $603 $497 $542 $590 $644 $702 $765 Forward Revenue Multiple 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x 1.0x Implied TEV $473 $496 $521 $547 $574 $603 $497 $542 $590 $644 $702 $765 (+) Cash $110.0 $124.3 $152.6 $190.0 $231.5 $276.7 $110.0 $132.0 $165.9 $212.7 $267.4 $329.9 (-) NCI ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) (-) Preferred Stock ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) (-) Debt $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Implied Total Equity Value $532 $570 $623 $687 $755 $829 $557 $623 $706 $806 $919 $1,044 FDSO 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 Implied Future Share Price $1.31 $1.41 $1.54 $1.69 $1.86 $2.04 $1.37 $1.54 $1.74 $1.99 $2.26 $2.57 PV of Future Share Price at Dec-23 $1.31 $1.23 $1.18 $1.14 $1.10 $1.06 $1.37 $1.35 $1.34 $1.34 $1.34 $1.34 Forward Revenue Multiple (1.5x) 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028 Forward Revenue $473 $496 $521 $547 $574 $603 $497 $542 $590 $644 $702 $765 Forward Revenue Multiple 1.5x 1.5x 1.5x 1.5x 1.5x 1.5x 1.5x 1.5x 1.5x 1.5x 1.5x 1.5x Implied TEV $709 $744 $781 $820 $861 $905 $746 $813 $886 $965 $1,052 $1,147 (+) Cash $110.0 $124.3 $152.6 $190.0 $231.5 $276.7 $110.0 $132.0 $165.9 $212.7 $267.4 $329.9 (-) NCI ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) ($0.4) (-) Preferred Stock ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) ($50.0) (-) Debt $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Implied Total Equity Value $768 $818 $884 $960 $1,043 $1,131 $805 $894 $1,001 $1,128 $1,269 $1,427 FDSO 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 405.6 411.7 420.4 Implied Future Share Price $1.89 $2.02 $2.18 $2.37 $2.57 $2.79 $1.99 $2.20 $2.47 $2.78 $3.08 $3.39 PV of Future Share Price at Dec-23 $1.89 $1.77 $1.68 $1.60 $1.52 $1.45 $1.99 $1.93 $1.90 $1.88 $1.83 $1.76 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Page 1. Situation Overview 2 2. Summary of Proposals Received 4 3. Summary of Illustrative Financial Analysis 6 4. Process Considerations 13 5. Appendix 17 Illustrative Discounted Cash Flow Analysis 18 Illustrative Take-Private Analysis 22 Illustrative Future Share Price Analysis 28 WACC Analysis, Market Backdrop, and Peer Benchmarking Analysis 30 |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative WACC Analysis Source: Company filings, Capital IQ as of 10/6/2023, Bloomberg, Wall Street research, 2022 Duff & Phelps Valuation Handbook. Notes: No company used in this calculation for comparative purposes is identical to the Company; NA refers to not available. (1) Total Cap refers to total capitalization, which equals Equity Market Value + Total Debt + Pfd. Stock. (2) Total Debt refers to total debt amount based on most recent public filings as of 10/6/23. (3) Dd refers to Implied Tax-Deductible Debt, which equals the lesser of (a) 30% of Adjusted Taxable Income/Cost of Debt, or (b) Total Debt; LTM Adjusted EBITDA based on most recent public filings as of 10/6/23, is assumed to be a valid proxy for Adjusted Taxable Income for the selected companies. (4) Dnd refers to Implied Non-Tax-Deductible Debt, which equals Total Debt minus Dd. (5) Equity Market Value based on closing price on 10/6/23 and on diluted shares as of 10/6/23. (6) Pfd. Stock refers to preferred stock, which is the amount as stated in most recent public filings as of 10/6/23. (7) Based on actual levered beta per Bloomberg 5-year weekly as of 10/6/23. (8) Unlevered Beta = Levered Beta/(1 + ((1 – tax rate) * Dd to Equity Market Value) + (Dnd to Equity Market Value) + (Pfd. Stock to Equity Market Value)). (9) Based on review of studies measuring the historical returns between stocks and bonds, theoretical models such as supply-side and demand-side models and other materials. (10) Kroll Cost of Capital Navigator ("Navigator"). (11) Cost of Equity = Risk-Free Rate of Return + (Levered Beta * Equity Risk Premium) + Size Premium. Risk-Free Rate of Return as of 10/6/23, based on 20-year U.S. Treasury Bond Yield. (12) Based on selected company weighted average interest rate per most recent public filings, unless the selected company has publicly traded debt, in which case the cost of debt is based on the market-based yield to worst for such securities as of 10/6/23. (13) Based on selected company weighted average preferred dividend per most recent public filings 10/6/23. 31 Total Debt to Dd to Dnd to Total Debt to Dd to Equity Dnd to Equity Pfd. Stock to Equity Market Pfd. Stock to Total Cap Total Cap Total Cap Equity Market Market Value Market Value Total Cap Value to Total Equity Market Selected Company [1] [2] [1] [3] [1] [4] Value [2] [5] [3] [5] [4] [5] [1] [6] Cap [1] [5] Value [5] [6] Accolade, Inc. 29.5% 0.0% 29.5% 41.8% 0.0% 41.8% 0.0% 70.5% 0.0% Alight, Inc. 41.6% 37.1% 4.5% 71.3% 63.6% 7.7% 0.0% 58.4% 0.0% American Well Corporation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% Evolent Health, Inc. 15.8% 14.6% 1.2% 19.8% 18.3% 1.4% 4.4% 79.9% 5.5% Health Catalyst, Inc. 27.2% 1.5% 25.7% 37.4% 2.1% 35.4% 0.0% 72.8% 0.0% Phreesia, Inc. 1.3% 0.0% 1.3% 1.4% 0.0% 1.4% 0.0% 98.7% 0.0% Teladoc Health, Inc. 31.7% 21.1% 10.6% 46.4% 30.9% 15.5% 0.0% 68.3% 0.0% Median 27.2% 1.5% 4.5% 37.4% 2.1% 7.7% 0.0% 72.8% 0.0% Mean 21.0% 10.6% 10.4% 31.1% 16.4% 14.7% 0.6% 78.4% 0.8% Levered Unlevered Equity Risk Size Cost of Cost of Cost of Pfd. Selected Company Beta [7] Beta [8] Premium [9] Premium [10] Equity [11] Debt [12] Stock [13] WACC Accolade, Inc. 2.20 1.55 5.75% 1.18% 19.0% 9.2% NA 16.1% Alight, Inc. 1.10 0.71 5.75% 0.58% 12.0% 8.2% NA 9.6% American Well Corporation 1.74 1.74 5.75% 2.15% 17.3% NA NA 17.3% Evolent Health, Inc. 1.26 1.04 5.75% 0.93% 13.3% 8.1% 11.3% 12.1% Health Catalyst, Inc. 1.06 0.78 5.75% 1.18% 12.4% 6.1% NA 10.7% Phreesia, Inc. 1.17 1.15 5.75% 1.37% 13.2% 7.1% NA 13.1% Teladoc Health, Inc. 1.23 0.89 5.75% 0.93% 13.1% 7.9% NA 11.0% Median 1.23 1.04 13.2% 8.0% 11.3% 12.1% Mean 1.39 1.12 14.3% 7.8% 11.3% 12.9% |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Illustrative WACC Analysis (cont’d) Source: Company filings, Capital IQ as of 10/6/2023, Bloomberg, Wall Street research, 2022 Duff & Phelps Valuation Handbook. (1) Risk-Free Rate of Return as of 10/6/23, based on 20-year U.S. Treasury Bond Yield. (2) Based on a review of studies measuring the historical returns between stocks and bonds, theoretical models such as supply side and demand side models and other materials. (3) Navigator. (4) Forward tax rate, per Company management. (5) Sharecare, Inc. LTM EBITDA is assumed to be a valid proxy for Sharecare, Inc. Adjusted Taxable Income. (6) Sharecare, Inc. Total Debt refers to total debt amount of Sharecare, Inc. as of 10/6/23. (7) Sharecare, Inc. Dd refers to Implied Tax-Deductible Debt of Sharecare, Inc., which equals the lesser of (a) 30% of Sharecare, Inc. Adjusted Taxable Income/Cost of Debt, or (b) Sharecare, Inc. Total Debt. Based on Capital Structure Assumptions. (8) Sharecare, Inc. Dnd refers to Implied Non-Tax-Deductible Debt of Sharecare, Inc., which equals Sharecare, Inc. Total Debt minus Sharecare, Inc. Dd. (9) Based on review of corresponding metrics of selected companies listed on previous page. (10) Based on the Company's Dd and Dnd and the Capital Structure Assumptions regarding Total Debt to Total Capitalization and Equity Market Value to Total Capitalization. (11) Based on review of selected companies’ unlevered betas listed on previous page. (12) Computed Levered Beta = Selected Unlevered Beta * (1 + ((1 – Tax Rate) * Dd to Equity Market Value) + (Dnd to Equity Market Value) + (Preferred Stock to Equity Market Value)); based on Market and Capital Structure Assumptions. (13) Cost of Equity = Risk-Free Rate of Return + (Computed Levered Beta * Equity Risk Premium) + Size Premium. Based on Market Assumptions. 32 Market Capital Structure Cost of Equity for Assumptions Assumptions Computed WACC Risk-Free Rate of Return [1] 5.13% Sharecare, Inc. Adjusted Taxable Income [5] $17.7 Selected Unlevered Beta [11] 1.04 Equity Risk Premium [2] 5.75% Sharecare, Inc. Total Debt [6] $0.4 Computed Levered Beta [12] 1.33 Size Premium [3] 1.18% Sharecare, Inc. Dd [7] $0.4 Cost of Equity [13] 14.0% Tax Rate [4] 26.00% Sharecare, Inc. Dnd [8] $0.0 Total Debt to Total Capitalization [9] 27.2% Dd to Total Capitalization [10] 27.2% Dnd to Total Capitalization [10] 0.0% Total Debt to Equity Market Value 37.4% Dd to Equity Market Value [10] 37.4% Dnd to Equity Market Value [10] 0.0% Preferred Stock to Total Capitalization [9] 0.0% Equity Market Value to Total Capitalization [9] 72.8% Preferred Stock to Equity Market Value 0.0% Cost of Debt [9] 8.0% Cost of Preferred Stock [9] 11.3% Computed Weighted Average Cost of Capital 11.8% Selected Weighted Average Cost of Capital Range 11.5% -- 12.5% ($ in millions, except per share data) |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Digital Health Industry Benchmarking 33 Note: A refers to Actual; E refers to Estimated; Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization, adjusted for certain non-recurring items; NMF refers to not meaningful figure. Source: Company filings, Capital IQ as of 10/6/2023, Management projections, Wall Street research. Multiples <0x or >100x considered NMF. (1) Enterprise Value equals equity market value + debt outstanding + preferred stock + minority interests – cash and cash equivalents. (2) Based on closing prices as of 10/6/23. (3) Based on diluted shares. (4) Multiples based on forward looking financial information have been calendarized to the Company’s fiscal year end of December 31st. ($ in millions, except per share data) Based on Street consensus estimates Stock Price [2] Equity Enterprise EV / Revenue [1] EV / Revenue / Growth [1] EV / EBITDA [1] Revenue Growth GM EBITDA Margin Debt / Company 10/6/2023 Value [2] [3] Value [2] [3] CY23E [4] CY24E [4] CY23E [4] CY24E [4] CY23E [4] CY24E [4] 23E / 22A 24E / 23E CY23E CY23E 23E EBITDA Select Companies Accolade, Inc. $8.20 $678 $668 1.7x 1.4x 0.12x 0.08x NMF 59.0x 14% 19% 46% (6%) NMF Alight, Inc. $6.59 $3,941 $6,918 2.0x 1.9x 0.17x 0.28x 9.4x 8.4x 12% 7% 33% 21% 3.8x American Well Corporation $1.08 $365 -$76 (0.3x) (0.3x) NMF NMF NMF NMF (6%) 9% 40% (62%) NMF Evolent Health, Inc. $26.98 $3,204 $3,870 2.0x 1.7x 0.04x 0.09x 20.1x 14.8x 44% 20% 25% 10% 3.3x Health Catalyst, Inc. $9.85 $607 $491 1.7x 1.5x 0.26x 0.12x 44.4x 25.3x 6% 12% 49% 4% 20.6x Phreesia, Inc. $18.26 $1,117 $1,004 2.9x 2.3x 0.11x 0.08x NMF NMF 26% 27% 63% (17%) NMF Teladoc Health, Inc. $18.70 $3,311 $3,889 1.5x 1.4x 0.16x 0.17x 12.5x 11.1x 9% 8% 70% 12% 5.0x Select Companies 25th Percentile: 1.5x 1.4x 0.09x 0.08x 10.1x 9.7x 6% 8% 33% (17%) 3.4x Mean: 1.6x 1.4x 0.14x 0.14x 21.6x 23.7x 15% 14% 47% (6%) 8.2x Median: 1.7x 1.5x 0.14x 0.11x 16.3x 14.8x 12% 12% 46% 4% 4.4x 75th Percentile: 2.0x 1.9x 0.19x 0.20x 38.4x 42.1x 26% 20% 63% 12% 16.7x Saturn $0.89 $360 $267 0.6x 0.5x 0.17x 0.04x 10.2x 5.7x 3% 12% 44% 6% 0.0x Operating Metrics |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey -1.0x 1.0x 3.0x 5.0x 7.0x 9.0x 11.0x 13.0x 15.0x Nextech Systems Net Assets of Allscripts Hospitals and Large Physician Practices Business Segment Sentry Data Systems, Inc. e-MDs, Inc. eSolutions, Inc. athenahealth, Inc. Intermedix Corporation CorEvitas Syneos Health UDG Healthcare Limited Cerner Enviza LLC Cello Health plc (nka:Cello Health Limited) Huntsworth plc (nka:Huntsworth Limited) EV / Revenue LTM Median: 3.4x NFY Median: 4.2x Enterprise Transactions (EV / Revenue) Target Acquirer Date Jun-23 May-23 Feb-23 Nov-22 Sep-22 Jul-22 Jun-22 Apr-22 Feb-22 Jan-22 Jun-21 Apr-21 Jan-21 Dec-20 Oct-20 Apr-19 Jun-18 Jul-17 Jun-17 EV ($M) NA NA $10,825 $613 $7,595 $3,673 $2,140 $1,940 $360 $304 $1,998 $380 $7,471 $3,399 $690 $1,289 $4,889 $2,689 $440 EV / EBITDA (LTM / NFY) NA / NA NA / NA NMF / NMF 34.2x / NA 57.0x / 34.0x NMF / NA 15.8x / 14.0x 12.8x / 11.9x NMF / NMF NMF / 77.6x NA / NA NA / NA 17.1x / NA 27.5x / 19.0x 13.8x / NA 13.4x / 9.6x 16.5x / 14.2x 13.6x / NA 55.2x / NA EBITDA Margin (LTM / NFY) NA / NA NA / NA NMF / NMF 7.2% / NA 15.8% / 23.8% NA / NA 17.1% / 18.7% 30.2% / 29.0% NA / NA NA / 2.8% NA / NA NA / NA 16.1% / NA 19.2% / 26.3% 35.7% / NA 20.7% / 28.0% 40.1% / 43.5% 27.9% / NA 8.1% / NA LTM (Median: 3.9x) NFY (Median: 3.4x) EV / Revenue Provider Transactions (EV / Revenue) Life Sciences Transactions (EV / Revenue) EV / Revenue LTM Median: 1.6x NFY Median: 1.9x Select Industry Transactions 34 Jan 21 Target Acquirer Date Jul-23 Mar-22 Jun-21 Nov-20 Aug-20 Nov-18 Feb-18 Jul-23 May-23 May-21 Dec-20 Jul-20 Mar-20 EV ($M) $1,400 $670 $400 $230 $1,350 $5,649 $460 $913 $7,122 $3,881 $375 $220 $670 EV / EBITDA (LTM / NFY) NA / NA 4.6x / NA 17.4x / NA 16.2x / NA 20.0x / NA 16.8x / 15.4x 9.6x / NA NA / NA 9.9x / 10.2x 18.8x / 16.2x 16.5x / NA 12.3x / NA 10.8x / 8.9x EBITDA Margin (LTM / NFY) NA / NA 15.6% / NA 25.0% / NA 14.8% / NA 50.0% / NA 25.6% / 27.3% 24.9% / NA NA / NA 13.3% / 13.7%16.6% / 17.4% NA / NA 8.7% / NA 18.3% / 21.1% Hospitals and Large Physicians Practices EV / EBITDA LTM Median: 16.5x NFY Median: 15.4x EV / EBITDA LTM Median: 12.3x NFY Median: 10.2x LTM (Median: 16.5x) NFY (Median: 14.2x) EV / EBITDA Source: Capital IQ, public filings and press releases. -1.0x 1.0x 3.0x 5.0x 7.0x 9.0x 11.0x 13.0x 15.0x Valenz Health Apixio Oak Street Health Benefitfocus, Inc. Signify Health, Inc. 1Life Healthcare, Inc. LifeWorks Inc. Tivity Health, Inc. SOC Telemed, Inc. Castlight Health, Inc. Iora Health, Inc. PlushCare, Inc. Alight Holding Company, LLC HMS Holdings Corp. West Health Advocate Solutions, Inc. WageWorks, Inc. Cotiviti Holdings, Inc. WebMD Health Corp. Best Doctors, Inc. |
| HIGHLY CONFIDENTIAL PRELIMINARY WORKING DRAFT FOR DISCUSSION – SUBJECT TO CHANGE FOR INFORMATIONAL PURPOSES ONLY Houlihan Lokey Saturn Analyst Price Targets & Recommendations $3.00 $0.89 Premium to Current: 238.0% Wall Street Price Targets Consensus Price Targets vs. Stock Price Source: Capital IQ as of 10/6/2023, Wall Street research. 35 Broker Date Rating Price Target Methodology BTIG 9/5/2023 Buy $5.00 3.2x EV / '24E Rev. CG 8/29/2023 Buy $3.00 1.9x EV / '24E Rev. MS 8/14/2023 Hold $2.00 1.1x EV / '24E Rev. Median $3.00 1.9x EV / '24E Rev. Mean $3.33 1.9x EV / '24E Rev. 3 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 Oct-22 Dec-22 Feb-23 Apr-23 Jun-23 Aug-23 Oct-23 Median Analyst Price Target Share Price 50% 50% 50% 67% 67% 67% 67% 67% 67% 67% 67% 67% 67% 50% 50% 50% 33% 33% 33% 33% 33% 33% 33% 33% 33% 33% Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Buy Hold Analyst Recommendation Breakdown # of Ratings 4 4 4 3 3 3 3 3 3 3 3 3 3 |
| Fairness Presentation Prepared for Savanna Special Committee June 21, 2024 Regarding Project Impact [****] indicates information has been omitted on the basis of a confidential treatment request pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. This information has been filed separately with the Securities Exchange Commission. |
| 2 Disclaimer The following pages contain material provided to the Special Committee of the Board of Directors of Sharecare, Inc., in its capacity as such (the “Special Committee”), of Sharecare Inc (“Savanna”, or the “Company”) by MTS Health Securities, LLC (“MTS”, “we” or “our”) as part of a presentation being made in support of our opinion as to the fairness, from a financial point of view, to the holders of the Company’s Common Stock, par value $.001 per share (other than certain holders as provided therein), of the consideration to be received by such holders in the proposed acquisition of the Company by Impact Acquiror, Inc. (“Parent,” or “Altaris”) (the “Transaction”). They contain a summary of the material financial analyses employed by MTS in arriving at our opinion. These materials do not, however, constitute our opinion and are provided for informational purposes only. Our opinion is limited to our manually signed opinion letter that we are delivering to you on or about the date hereof. These materials were prepared on a confidential basis in connection with our oral presentation to the Special Committee and not with a view toward complying with the disclosure standards under state or federal securities laws. These materials were prepared solely for the use of the Special Committee in connection with its consideration of the Transaction. These materials may not be disclosed, copied, reproduced or distributed to, or used or relied upon by any other person or entity or for any other purpose without MTS’s prior written consent. Without limiting the foregoing, this presentation is not for the benefit of, and does not convey any rights or remedies to, any holder of securities of Savanna or any other person, except that the Board of Directors of the Company may be provided with a copy of the letter in its entirety and may rely on the opinion set forth in the letter and a copy of the letter may be included in its entirety in any filing the Company is required to make with the Securities and Exchange Commission in connection with the Merger if such inclusion is required by applicable law. Accordingly, neither MTS nor any of its affiliates, nor any of their respective employees, advisors or representatives, takes any responsibility nor shall any of them have any liability for the information contained herein to the extent used by any such other person or entity or for any such other purpose. The information contained in these materials was based solely on publicly available information or information furnished to MTS. MTS has, with the Special Committee’s consent, relied, without independent investigation or verification, on the accuracy, completeness and fair presentation of all such information and these materials assume that such information (whether written or oral) is accurate, complete and fairly presented in all material respects, and MTS makes no representation or warranty in respect of the accuracy, completeness or fair presentation of such information. Any estimates and projections contained herein have been based upon the estimates and projections provided to MTS by Savanna and there is no assurance that such estimates and projections will be realized. To the extent such information includes estimates and forecasts of future financial performance prepared by the management of Savanna or obtained from public sources, MTS has assumed that such estimates and forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of such management or, with respect to estimates and forecasts obtained from public sources, represent reasonable estimates. Except where otherwise indicated, the analyses and information presented in these materials speak as of the date hereof. Under no circumstances should the delivery of these materials or MTS’s opinion imply that the analyses or information presented herein or therein would be the same if made as of any other date or based upon any other information. MTS does not have or assume any obligation to update or otherwise revise the materials contained herein or its opinion. MTS expresses no view as to Savanna’s underlying business decision to effect the Transaction, the relative merits of the Transaction as compared to other business strategies or transactions that might be available to Savanna or to any other aspect or implication of the Transaction or any other agreement, arrangement or understanding entered into in connection with the Transaction or otherwise. MTS did not attribute any particular weight to any analysis, methodology or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, MTS’s analyses must be considered as a whole. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying the conclusions expressed herein. These materials are subject to the assumptions, qualifications and limitations set forth herein and in MTS’s opinion letter delivered to the Special Committee and does not constitute a recommendation by MTS to the Special Committee or any other person on how to act with respect to the Transaction. MTS does not address any legal, regulatory, tax or accounting effects of the Transaction, and nothing contained in these materials or in MTS’s opinion shall be deemed to constitute any legal, regulatory, tax or accounting advice. |
| 1. Situation Overview 2. Management Projections 3. Savanna Valuation Appendix – Discounted Cash Flow Analysis – Valuation Support – Historical EBITDA Estimate Revisions Table of Contents |
| 1. Situation Overview |
| 5 Public Market Overview (1) Consists of 360.892mm basic shares outstanding (excludes earnout shares and per management as of 06/13/24), 18.712mm public warrants priced at $0.02 per Black–Scholes calculation provided by management, 2.762mm RSUs vested or expected to vest, 27.299mm RSUs/PSUs that vest upon change in control (as of 06/13/24), 0.125mm inducement grants, and options vesting at various strike prices accounted for using the Treasury Stock Method based on Savanna’s stock price as of 06/20/24. (2) Includes $50mm Series A Convertible Preferred aggregate liquidation preference (5.000mm Units which convert to common stock on a 1:1 basis at $10.00 per share entirely held by Elevance Health, Inc. (ELV)). (3) Includes $0.586mm of long-term debt associated with a senior secured revolving credit facility with Wells Fargo. (4) Management’s estimated cash balance as of valuation date of 09/30/24. (5) Capital IQ research estimates. (6) 2023A P&L adjusted to account for contract termination with Elevance. (7) Multiples reflect enterprise value assuming Series A received liquidation preference. “NM” denotes EBITDA multiples >50.0x. Note: $ in millions, except per share data. Source(s): Capital IQ, Company website, press releases and filings as of 06/20/24. Current Valuation Trading Multiples Price Per Share (06/20/24) $0.77 52 Week High: 1.80 52 Week Low: 0.48 Diluted Shares Outstanding (mm)(1) 391.854 Fully Diluted Market Cap: $303 Plus: Preferred Liquidation Preference(2) 50 Plus: Debt (03/31/24)(3) 1 Less: Cash & Equivalents (09/30/2024)(4) (87) Enterprise Value: $267 $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Stock Price Performance $0.77 07/01/21: closed business combination with Falcon Capital Acquisition Corp. 11/10/21: announced third quarter 2021 financial results and operational highlights 11/09/23: appointed Brent Layton as next CEO; founder Jeff Arnold to serve as executive chairman 02/12/21: Savanna and Falcon Capital Acquisition Corp. reached agreement to combine; company expected to have an initial enterprise value of $3.9bn 08/11/21: entered home health market with acquisition of CareLinx 08/10/22: initiated a strategic review of its non-enterprise businesses 03/12/24: Savanna announced that is has been evaluating a range of options including a potential sale of the Company 10/12/23: received an unsolicited preliminary non-binding proposal from Claritas Capital to acquire the Company 05/31/23: concluded strategic review and announced share repurchase program Internal Mgmt. Projections 2023A⁽⁶⁾ 2024E 2025E 2024E 2025E Revenue $401 $394 $429 $416 $512 EV / Revenue⁽⁷⁾ 0.7x 0.7x 0.6x 0.7x 0.5x Adj. EBITDA 9 2 12 22 62 EV / EBITDA⁽⁷⁾ 30.7x NM 21.7x 12.6x 4.4x Analyst Consensus ⁽⁵⁾ [****] |
| 6 Summary of Final Proposal (1) Per management, assumes liquidation preference of $50mm, net debt of $86.2mm as of 09/30/24 and fully diluted shares as of 06/13/24 using treasury stock method, including shares triggered by a change in control. Received on 6/20/24 Offer Price Per Share $1.430 Premium to Current ($0.77 as of 06/20/24) 84.7% Premium to 30-day VWAP ($0.80 as of 06/20/24) 78.3% Consideration for Shareholders - Implied Enterprise Value ($ in mm)(1) $534.3 EV / 2024E Base Case Revenue 1.3x EV / 2025E Base Case Revenue 1.0x EV / 2024E Base Case Adj. EBITDA 24.9x EV / 2025E Base Case Adj. EBITDA 8.7x Financing Sources - Assumptions - - Series A Convertible Preferred Stock remains outstanding following the closing of the Transaction Participants in the Change in Control Plan to receive replacement equity awards for their unvested equity awards 100% cash for non-rolling shareholders 100% equity for cash needs and insider shareholders, Claritas Capital and Jeff Arnold, rolling shares into NewCo |
| 2.Management Projections |
| 8 Savanna Projections Per Management Income Statement (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Source(s): Management projections, as of 06/20/24. 2023A 2024E 2025E 2026E 2027E Enterprise $200.1 $207.5 $283.0 $368.8 $436.4 Provider 119.3 122.9 137.8 150.1 159.8 Life Sciences 82.0 86.0 91.4 97.9 103.9 '23A - '24E '24E - '27E Add Back EBITDA (Warrant Revenue) (0.0) – – – – Growth Rate CAGR Total Revenue $401.3 $416.4 $512.3 $616.8 $700.1 3.7% 18.9% % Growth 3.7% 23.0% 20.4% 13.5% Enterprise $88.8 $88.7 $130.4 $171.5 $200.8 Provider 52.6 59.0 72.8 78.4 83.0 Life Sciences 42.3 44.2 47.2 50.3 53.4 '23A - '24E '24E - '27E Add Back EBITDA Adjustments (5.2) (1.2) (0.8) (0.8) (0.8) Growth Rate CAGR Total Gross Margin $178.5 $190.7 $249.6 $299.4 $336.4 6.8% 20.8% % Margin 44.5% 45.8% 48.7% 48.5% 48.0% Sales and Marketing ($57.3) ($50.1) ($54.7) ($58.5) ($65.6) General & Administrative (135.0) (127.3) (112.3) (122.7) (130.9) Product and Technology (69.4) (54.8) (55.3) (60.5) (64.4) Adjustments – (0.1) – – – Total Costs (Incl. Allocations) ($261.8) ($232.3) ($222.3) ($241.7) ($260.9) EBITDA (as defined) ($83.3) ($41.6) $27.2 $57.7 $75.5 % Growth NM NM 111.9% 30.7% (1) [****] |
| 9 Savanna Projections Per Management Adjusted EBITDA Walk (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Source(s): Management projections, as of 06/20/24. Non-Allocated Adjustments Severance $5.2 $1.5 $1.0 $1.0 $1.0 Other Expenses (0.8) – – – – SBC 46.9 44.4 31.5 31.5 31.5 '23A - '24E '24E - '27E Other Non-Operating Expenses 40.7 17.2 2.0 2.0 2.0 Growth Rate CAGR Adjusted EBITDA $8.8 $21.5 $61.7 $92.2 $109.9 144.1% 72.3% % Growth 144.1% 187.0% 49.4% 19.2% (1) 2023A 2024E 2025E 2026E 2027E [****] |
| 10 Enterprise Segment Projections Per Management Enterprise Segment Income Statement (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Source(s): Management projections, as of 06/20/24. 2023A 2024E 2025E 2026E 2027E '23A - '24E '24E - '27E Growth Rate CAGR Enterprise Revenue $200.1 $207.5 $283.0 $368.8 $436.4 3.7% 28.1% % Growth 4% 36% 30% 18% Cost of Goods Sold ($111.3) ($118.8) ($152.6) ($197.3) ($235.5) Total Gross Margin $88.8 $88.7 $130.4 $171.5 $200.8 NM 31.3% % Margin 44% 43% 46% 46% 46% Less: Direct Overhead Costs (48.4) (47.8) (59.0) (66.7) (77.8) '23A - '24E '24E - '27E Less: Allocated Overhead (43.4) (31.7) (35.8) (39.3) (40.9) Growth Rate CAGR Adjusted EBITDA ($3.0) $9.2 $35.7 $65.5 $82.1 NM 107.5% (1) [****] |
| Savanna Valuation ` 3. |
| 12 Overview of Valuation Methodologies MTS did not attribute any particular weight to any analysis, methodology or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor; accordingly, MTS’ analyses must be considered as a whole. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view. Discounted Cash Flow (DCF) Comparable Public Companies Precedent M&A Transactions • Analysis of future unlevered free cash flows through 2027E • Cash flows discounted back to 09/30/24 using weighted-average cost of capital (WACC) calculations o 11% WACC based on comparable publicly traded companies; sensitized from 11% – 15% • Terminal value calculated by perpetual growth rate method – sensitized 2.0% - 3.0% • Per management, net debt of ($86.2mm) subtracted from implied enterprise value to calculate implied equity value and per share value on a fully diluted basis, including vested change in control shares as of 06/13/24 • Assumes Series A Preferred stock receives liquidation preference of $50mm • Evaluation of comparable publicly traded provider, payor/employer & pharma-tech companies • Applies upper and lower quartile of 2024E Adjusted EBITDA multiples (11.7x – 18.3x) and upper and lower quartile of 2025E Adjusted EBITDA multiples (9.0x – 14.2x) from the comparable company set to Savanna’s 2024E Adjusted EBITDA of $21.5mm and 2025E Adjusted EBITDA of $61.7mm to arrive at implied enterprise value • Per management, net debt of ($86.2mm) subtracted from implied enterprise value to calculate implied equity value and per share value on a fully diluted basis, including vested change in control shares as of 06/13/24 • Assumes Series A Preferred stock receives liquidation preference of $50mm • Evaluation of provider, payor/employer & pharma-tech precedent M&A transactions • Applies upper and lower quartile of Adjusted LTM EBITDA multiples (12.3x – 16.3x) from the precedent M&A transaction set to Savanna’s 2024E Adjusted EBITDA of $21.5mm to arrive at implied enterprise value • Per management, net debt of ($86.2mm) subtracted from implied enterprise value to calculate implied equity value and per share value on a fully diluted basis, including vested change in control shares as of 06/13/24 • Assumes Series A Preferred stock receives liquidation preference of $50mm • The Special Committee is considering a whole company transaction thus all valuation methodologies are solely focused on the value of the company as a whole • As a result of prior discussions, the Special Committee determined that individual segment sale transactions came with a high degree of execution risk and unquantifiable considerations to splitting up the business • Accordingly, prior preliminary valuation analysis did include sum-of-the-parts (“SOTP”) valuation methodologies based on the Special Committee’s consideration of all strategic alternatives at that time, including the contemplation of individual segment sales |
| 13 Management Assumptions of Financial Projections General – 2024E-2027E projection model provided by management – Valuation date as of 09/30/24 • 09/30/24 projected net debt of ($86.2mm), per Savanna management – 2023A P&L is adjusted to account for termination of contract with Elevance (~$40mm of revenue) Revenue and Expenses – Projections provided by Savanna management through 2027E Series A Shares – Series A receives liquidation preference of $50mm Net Working Capital – Projections provided by Savanna management through 2027E Capital Expenditures – Projections provided by Savanna management through 2027E Taxes – Corporate tax rate of 26.8% – NOL balance of $757mm as of YE ’23 provided by management, subject to 80% Section 382 limitation, using implied offer value Terminal Value – Calculated via perpetual growth rate method and sensitized from 2.0% to 3.0% WACC – 11% based on comparable publicly traded companies and sensitized up to 15% given high execution risk of the Enterprise business segment [****] |
| 14 Summary of Valuation Analysis Implied Enterprise Value of Savanna’s Consolidated Business (1) LTM trading range for informational purposes only. (2) Per share values are based on equity value and include the $86.8mm in estimated cash per management as of 09/30/24, $0.5mm in debt and $50.0mm in liquidation preference associated with the entire company (per management as of 06/20/24); Consists of 360.892mm basic shares outstanding (excludes earnout shares and per management as of 06/13/24) and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. Per share values rounded to the nearest $0.05, except for market data over selected trading dates, implied per share offer values and current share price. Enterprise value ranges rounded to the nearest ten million, except for market data over selected trading dates and current equity values. Source(s): Management projections and Capital IQ, as of 06/20/24. WholeCo Discounted Cash Flow WholeCo Trading Comps WholeCo Txn. Comps LTM Trading Range(1) WACC // Terminal Growth Rate 2024E 2025E 2024E Metric 52-Wk Range EBITDA Multiple LTM EBITDA Multiple $0.48 - $1.80 WACC: 11% - 15% '24E Adj. EBITDA: $21.5 '25E Adj. EBITDA: $61.7 '24E Adj. EBITDA: $21.5 Terminal Growth Rate: 2% - 3% Multiple: 11.7x - 18.3x Multiple: 9.0x - 14.2x Multiple: 12.3x - 16.3x Enterprise Value Range $150 - $700 $420 - $690 $250 - $390 $550 - $870 $260 - $350 Per Share Value Range(2) $0.48 - $1.80 $1.15 - $1.75 $0.75 - $1.10 $1.45 - $2.15 $0.75 - $1.00 $150 $420 $250 $550 $260 $700 $690 $390 $870 $350 $- $200 $400 $600 $800 $1,000 Implied Enterprise Value Current EV: $267mm ($0.77/share) Offer Value: Offer: $534mm |
| 15 Summary of Valuation Analysis Implied Share Price of Savanna’s Consolidated Business (1) LTM trading range for informational purposes only. (2) Per share values are based on equity value and include the $86.8mm in estimated cash per management as of 09/30/24, $0.5mm in debt and $50.0mm in liquidation preference associated with the entire company (per management as of 06/20/24); Consists of 360.892mm basic shares outstanding (excludes earnout shares and per management as of 06/13/24) and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. Per share values rounded to the nearest $0.05, except for market data over selected trading dates, implied per share offer values and current share price. Enterprise value ranges rounded to the nearest ten million, except for market data over selected trading dates and current equity values. Source(s): Management projections and Capital IQ, as of 06/20/24. WholeCo Discounted Cash Flow WholeCo Trading Comps WholeCo Txn. Comps LTM Trading Range(1) WACC // Terminal Growth Rate 2024E 2025E 2024E Metric 52-Wk Range EBITDA Multiple LTM EBITDA Multiple $0.48 - $1.80 WACC: 11% - 15% '24E Adj. EBITDA: $21.5 '25E Adj. EBITDA: $61.7 '24E Adj. EBITDA: $21.5 Terminal Growth Rate: 2% - 3% Multiple: 11.7x - 18.3x Multiple: 9.0x - 14.2x Multiple: 12.3x - 16.3x Enterprise Value Range $150 - $700 $420 - $690 $250 - $390 $550 - $870 $260 - $350 Per Share Value Range(2) $0.48 - $1.80 $1.15 - $1.75 $0.75 - $1.10 $1.45 - $2.15 $0.75 - $1.00 $0.48 $1.15 $0.75 $1.45 $0.75 $1.80 $1.75 $1.10 $2.15 $1.00 $- $0.50 $1.00 $1.50 $2.00 $2.50 Per Share Price Current Share Price: $0.77 ($267mm EV) Per Share Offer Value: Offer: $1.43 |
| Appendix Discounted Cash Flow Analysis Valuation Support |
| Discounted Cash Flow Analysis |
| 18 Discounted Cash Flow Analysis Projects per Savanna Management (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Cash flows discounted back to 09/30/24 and a weighted average cost of capital of 11%. Source(s): Management projections and Capital IQ, as of 06/20/24. 2023A 2024E 2025E 2026E 2027E Adjusted EBITDA $8.8 $21.5 $61.7 $92.2 $109.9 Less: D&A (61.2) (50.3) (36.8) (27.3) (25.3) Adjusted EBIT ($52.4) ($28.8) $24.9 $64.9 $84.6 Less: Tax Expense – (6.7) (17.4) (22.7) Plus Tax Savings from NOLs – 5.2 5.2 5.2 Plus: D&A 50.3 36.8 27.3 25.3 Less: Δ in Net Working Capital (11.2) (3.5) (10.4) (7.6) Less: Capital Expenditures (23.4) (23.7) (24.3) (24.7) Projected Free Cash Flow ($13.1) $33.0 $45.3 $60.2 WACC: 11.0% PV of UFCF ($3.2) $30.5 $37.8 $45.2 Terminal Value Perpetual Growth Rate 2.5% Terminal Value $726.0 Terminal Value Perpetual Growth Rate Implied EBITDA Exit Multiple 6.6x 2.0% 2.5% 3.0% 11.0% $622.3 $655.1 $692.0 NPV of UFCF $110.3 WACC 13.0% 505.4 526.5 549.6 PV of Terminal Value 544.9 15.0% 424.6 439.2 454.9 Enterprise Value $655.1 (1) [****] |
| Valuation Support |
| 20 (1) Includes any preferred equity and non-controlling interests. (2) Given financial year end in January, 2023 actuals represent the period between February 2023 and January 2024, 2024 projections represent the period between February 2024 and January 2025, and 2025 projections represent the period between February 2025 and January 2026. (3) Net debt does not include Seller Earnouts. (4) Given financial year end in June, 2023 actuals represent the period between July 2023 and June 2024, 2024 projections represent the period between July 2024 and June 2025, and 2025 projections represent the period between July 2025 and June 2026. (5) Given financial year end in February, 2023 actuals represent the period between March 2023 and February 2024, 2024 projections represent the period between March 2024 and February 2025, and 2025 projections represent the period between March 2025 and February 2026. Note: $ in mm, except per share data. Companies sorted by market capitalization as of 06/20/24. Enterprise Value includes non-controlling interest and preferred equity. Source(s): Capital IQ and Company websites and filings as of 06/20/24. Share Price Equity Net Debt / Ent. EV / EBITDA Company Name 06/20/24 Mkt. Cap. Other(1) Value 2024E 2025E HealthEquity $82.26 $7,476 $851 $8,326 18.5x 15.4x R1 RCM 12.63 5,506 2,103 7,609 11.8x 9.9x Alight 7.54 4,419 2,540 6,959 8.9x 8.1x Evolent 22.03 2,592 627 3,219 13.0x 10.1x Progyny 25.34 2,429 (372) 2,058 9.4x 7.8x Craneware 29.15 1,043 (5) 1,038 18.1x 16.9x HealthStream 27.58 856 (84) 772 11.7x 11.0x Definitive Healthcare 5.44 682 293 975 11.8x 10.9x Accolade 5.96 499 (26) 473 27.8x 13.0x Health Catalyst 6.04 387 (98) 289 11.7x 7.8x OptimizeRx 10.73 204 21 225 19.4x 15.3x Upper Quartile 18.3x 14.2x Mean 14.7x 11.5x Median 11.8x 10.9x Lower Quartile 11.7x 9.0x Selected Comparable Public Companies Provider, Payor/Employer & Pharma-Tech Comparables (2) (3) (4) (5) |
| 21 TEV as a multiple of Date Ann. Target Acquiror TEV ($mm) LTM EBITDA 09/05/23 NextGen Healthcare Thoma Bravo 1,790 14.3x 11/01/22 Benefitfocus Voya Financial 570 13.9x 10/03/22 bswift Francisco Partners 735 14.7x 06/21/22 Convey Health Solutions TPG 1,072 16.3x 06/16/22 LifeWorks TELUS 2,097 16.3x 04/05/22 Tivity Health Stone Point Capital 1,921 12.5x 01/06/21 Change Healthcare Optum 13,008 12.3x 10/27/20 Health Advocate Teleperformance 690 13.8x 12/20/19 Care.com IAC 487 17.3x 07/24/17 WebMD KKR 2,675 11.7x 10/21/16 Everyday Health Ziff Davis 467 10.7x All Transactions (n=11) Upper Quartile $2,097 16.3x Mean 2,319 14.0x Median 1,072 13.9x Lower Quartile 570 12.3x Note: $ in mm. Deals sorted by announcement date. Assumes private companies were acquired on a debt free, cash free basis. Source(s): Capital IQ and Company websites and filings as of 06/20/24. Selected Precedent Transactions Provider, Payor/Employer & Pharma-Tech Transactions |
| 22 WACC Analysis (1) 2-year weekly historical beta. (2) Current 20-year US Treasury Spot yield used as a proxy for normalized long-term risk-free rate. (3) Expected Equity Risk Premium (ERP) per Kroll report as of Jun ‘24. (4) Per Kroll CRSP report as of Dec '23. Size premium represents companies with market caps between $213mm and $555mm. Note: $ in mm, except per share data. Companies sorted by market capitalization as of 06/20/24. Source(s): Capital IQ and Company websites and filings as of 06/20/24. Equity T otal T otal Debt / D/E Beta Debt Company Price Value Debt Cap. Cap. Ratio T ax Levered Unlevered Cost HealthEquity $82.26 $7,476 $1,101 $8,576 13% 0.1x 25.7% (0.02) (0.02) 5.3% R1 RCM 12.63 5,506 2,281 7,787 29% 0.4x 25.7% 0.63 0.48 6.8% Alight 7.54 4,419 2,787 7,206 39% 0.6x 30.5% 1.40 0.97 4.6% Evolent 22.03 2,592 611 3,203 19% 0.2x 27.0% 1.04 0.89 7.6% Progyny 25.34 2,429 - 2,429 0% 0.0x 28.3% 1.46 1.46 NM Craneware 29.15 1,043 59 1,102 5% 0.1x 25.0% (0.10) (0.09) 8.1% HealthStream 27.58 856 - 856 0% 0.0x 27.5% 0.55 0.55 NM Definitive Healthcare 5.44 682 253 935 27% 0.4x 29.0% 1.98 1.57 6.0% Accolade 5.96 499 211 710 30% 0.4x 21.0% 1.91 1.43 1.2% Health Catalyst 6.04 387 230 617 37% 0.6x 25.7% 2.25 1.56 3.2% OptimizeRx 10.73 204 36 240 15% 0.2x 29.0% 2.42 2.16 16.7% All companies (n=11) Top Quartile 9.1% 0.1x 25.7% 0.59 0.52 4.6% Mean 19.5% 0.3x 26.7% 1.23 1.00 6.6% Median 19.1% 0.2x 27.0% 1.40 0.97 6.0% Bottom Quartile 29.5% 0.4x 28.6% 1.95 1.51 7.6% Cost of Capital Contribution Weight Pre-T ax After-T ax to WACC Debt Capital 19.1% 6.0% 4.4% 0.8% Equity Capital 80.9% 12.2% 12.2% 9.9% Assumed Tax Rate 26.8% Implied WACC 10.7% Cost of Equity Calculation Unlevered Beta 0.97 Levered Beta 1.14 Normalized Risk-Free Rate(2) 4.5% Equity Market Risk Premium(3) 5.0% Company Size Premium(4) 2.0% Cost of Common Equity 12.2% |
| Historical EBITDA Estimate Revisions |
| 24 Historical EBITDA Estimate Revisions (1) Beginning in Sep '23, the company re-casted 2022 adjusted EBITDA following changes in their definition of adjusted EBITDA. Figures presented for FY 2022 are prior to the re-cast. (2) Guidance suspended in Q3 ’22 and again in 2024 while company awaits results of strategic review. (3) 2023 EBITDA does not adjust for contract termination with Elevance. Note: $ in mm. Source(s): Capital IQ, Company filings and press releases as of 06/20/24. Guidance vs. Analyst Estimates vs. Actuals (2021A – 2024E) 2022 EBITDA Estimate Revisions(1) $15.8 $33.0 – $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 7/29/21 11/29/21 3/29/22 7/29/22 11/29/22 2023 EBITDA Estimate Revisions $16.5 $23.5 – $20.0 $40.0 $60.0 $80.0 $100.0 1/5/22 5/5/22 9/5/22 1/5/23 5/5/23 9/5/23 Guidance Suspended(2) 2024 EBITDA Estimate Revisions (Year-to-Date) $1.9 $21.5 ($10.0) $10.0 $30.0 $50.0 $70.0 $90.0 $110.0 1/5/23 5/5/23 9/5/23 1/5/24 5/5/24 Guidance Suspended(2) Analyst Estimates Management Guidance Management Projections Actual Performance (3) [****] |
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| At your side. On your side. |
Exhibit 16(c)(xxvi)
| Preliminary Valuation Presentation Prepared for Savanna Special Committee June 2024 PRELIMINARY – DRAFT AND CONFIDENTIAL Regarding Project Impact [****] indicates information has been omitted on the basis of a confidential treatment request pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. This information has been filed separately with the Securities Exchange Commission. |
| 1. Situation Overview 2. Management Projections 3. Preliminary Savanna Valuation Appendix – Preliminary Discounted Cash Flow Analysis – Preliminary Valuation Support – Historical EBITDA Estimate Revisions Table of Contents |
| 1. Situation Overview |
| 4 Process Overview PRELIMINARY – DRAFT AND CONFIDENTIAL 02/12/21: Savanna and Falcon Capital Acquisition Corp. reached agreement to combine; expected to have an initial enterprise value of $3.9bn 07/01/21: Closed business combination with Falcon Capital Acquisition Corp. 08/10/22: Savanna initiated a strategic review of its non-enterprise businesses to enhance shareholder value, which management and the Board of Directors did not believe was reflected in the share price at that time 05/31/23: Savanna announced that its Board of Directors completed the strategic review process initiated in August 2022 – After evaluating several alternatives with the support of advisors, the Board unanimously concluded that the best way to maximize value for shareholders was to continue executing on the Company’s strategic plan to drive growth and efficiencies across its business channels – Simultaneously, the Board of Directors re-authorized a $50mm stock repurchase program 10/12/23: The Company received an unsolicited preliminary non-binding proposal from Claritas Capital to acquire the Company for cash consideration of between $1.35 and $1.80 per share 03/12/24: Savanna announced that it has been evaluating a range of options including a potential sale of the Company, as well as a reevaluation of potential carveout divestitures and an assessment of Savanna’s strategic direction and continuation as a standalone public company – At this time, Savanna disclosed that it has been interacting with interested parties, and the Board of Directors formed a special committee of independent directors to evaluate multiple proposals for a potential sale transaction and alternatives thereto 04/29/24 – 05/01/24: The Company received four proposals: – [Altaris] submitted a proposal to acquire the business for $1.35 per share – >3DUW\$@ submitted a proposal to acquire the business for $1.22 per share • Alternatively, to partner with a third party to acquire the Enterprise business for $0.42 per share or to partner with a third party to acquire both the Enterprise and Life Sciences businesses at an unspecified price – [Party %] submitted a proposal to acquire the business for $1.50 – $1.60 per share – [Party &] submitted a proposal to acquire the business for a per share consideration based on an enterprise value of $450mm 06/10/24: The Company received offers from [Altaris] and >3DUW\$@ for $1.375 and $1.380 per share for the entire company, respectively 06/18/24: [Altaris] and >3DUW\$@ revised their bids, offering $1.425 and $1.450 per share for the entire company, respectively |
| 5 Public Market Overview (1) Consists of 359.197mm basic shares outstanding (per management as of 06/18/24), 18.712mm public warrants priced at $0.02 per Black–Scholes calculation provided by management, 12.119mm RSUs vested or expected to vest, 23.856mm RSUs/PSUs that vest upon change in control (as of 09/30/24), 0.292mm inducement grants, and options vesting at various strike prices accounted for using the Treasury Stock Method based on Savanna’s stock price as of 06/18/24. (2) Includes $50mm Series A Convertible Preferred aggregate liquidation preference (5.000mm Units which convert to common stock on a 1:1 basis at $10.00 per share entirely held by Elevance Health, Inc. (ELV)). (3) Includes $0.586mm of long-term debt associated with a senior secured revolving credit facility with Wells Fargo. (4) Management’s estimated cash balance as of valuation date of 09/30/24. (5) Capital IQ research estimates. (6) 2023A P&L adjusted to account for contract termination with Elevance. (7) Multiples reflect enterprise value assuming Series A received liquidation preference. “NM” denotes EBITDA multiples >50.0x. Note: $ in millions, except per share data. Source(s): Capital IQ, Company website, press releases and filings as of 06/18/24. Current Valuation Trading Multiples Series A Series A Liq Pref. Converts Price Per Share (06/18/24) $0.80 $0.80 52 Week High: 1.80 1.80 52 Week Low: 0.48 0.48 Diluted Shares Outstanding (mm)(1) 396.229 401.229 Fully Diluted Market Cap: $317 $321 Plus: Preferred Liquidation Preference(2) 50 - Plus: Debt (03/31/24)(3) 1 1 Less: Cash & Equivalents (09/30/2024)(4) (87) (87) Enterprise Value: $281 $235 $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Stock Price Performance $0.80 07/01/21: closed business combination with Falcon Capital Acquisition Corp. 11/10/21: announced third quarter 2021 financial results and operational highlights 11/09/23: appointed Brent Layton as next CEO; founder Jeff Arnold to serve as executive chairman 02/12/21: Savanna and Falcon Capital Acquisition Corp. reached agreement to combine; company expected to have an initial enterprise value of $3.9bn 08/11/21: entered home health market with acquisition of CareLinx 08/10/22: initiated a strategic review of its non-enterprise businesses 03/12/24: Savanna announced that is has been evaluating a range of options including a potential sale of the Company 10/12/23: received an unsolicited preliminary non-binding proposal from Claritas Capital to acquire the Company 05/31/23: concluded strategic review and announced share repurchase program PRELIMINARY – DRAFT AND CONFIDENTIAL Internal Mgmt. Projections 2023A⁽⁶⁾ 2024E 2025E 2024E 2025E Revenue $401 $394 $429 $416 $512 EV / Revenue⁽⁷⁾ 0.7x 0.7x 0.7x 0.7x 0.5x Adj. EBITDA 9 2 12 22 62 EV / EBITDA⁽⁷⁾ 31.9x NM 22.5x 13.1x 4.5x Analyst Consensus ⁽⁵⁾ [****] |
| 6 Summary of Final Proposals Received PRELIMINARY – DRAFT AND CONFIDENTIAL (1) Per management, assumes liquidation preference of $50mm, net debt of $86.2mm and fully diluted shares as of 9/30/24 using treasury stock method, including shares triggered by a change in control. Received on 6/14/24 Received on 6/14/24 Offer Price Per Share $1.425 $1.450 Premium to Current ($0.80 as of 06/18/24) 78.1% 81.3% Premium to 30-day VWAP ($0.80 as of 06/18/24) 77.9% 81.0% Series A Receives Series A Converts Series A Receives Series A Converts Liquidation Preference to Common Liquidation Preference to Common Implied Enterprise Value ($ in mm)(1) $538.5 $495.6 $549.1 $506.4 EV / 2024E Base Case Revenue 1.3x 1.2x 1.3x 1.2x EV / 2025E Base Case Revenue 1.1x 1.0x 1.1x 1.0x EV / 2024E Base Case Adj. EBITDA 25.0x 23.1x 25.5x 23.6x EV / 2025E Base Case Adj. EBITDA 8.7x 8.0x 8.9x 8.2x Implied Enterprise Value ($ in mm) at Current Offer Structure(1) Financing Sources - - Structure - - Assumptions - - - - - - Timing - - Consideration for Shareholders - - Series A Convertible Preferred Stock remains outstanding following the closing of the Transaction Participants in the Change in Control Plan to receive replacement equity awards for their unvested equity awards All other non-vested equity awards to be canceled and replaced with a cash-based long-term incentive plan Out-of-the-money options will be canceled for no consideration Series A convertible preferred stock is able to be cashed out in the Transaction on an as-converted basis Unvested equity awards are not accelerated (other than pursuant to pre-existing contractual acceleration rights) Sign definitive transaction documentation within 5 days after receiving formal feedback from the Special Committee Sign definitive transaction documentation as soon as June 17th 100% cash for non-rolling shareholders (~89% of total FDSO) 100% cash At current structure, the implied enterprise value of $538.5 reflects the Series A Convertible Preferred receiving consideration for the liquidation preference, per Altaris’ assumption that the Series A Convertible Preferred remains outstanding following the closing of the transaction and will therefore have to be redeemed at par value in 2026 At current structure, the implied enterprise value of $506.4 reflects the Series A Convertible Preferred converting to common stock, per >3DUW\$@assumption that the the Series A convertible preferred stock is able to be cashed out in the Transaction on an as-converted basis 100% equity for cash needs and insider shareholders, Claritas Capital and Jeff Arnold, rolling shares into NewCo Cash on balance sheet; no financing condition to the consummation of the Transaction Purchase of the outstanding common stock of the company with insider rollover (Claritas Capital and Jeff Arnold) and the Series A convertible preferred stock remaining outstanding Purchase of 100% of the outstanding shares of common stock on a fully-diluted basis (including the Series A convertible preferred stock on an as-converted basis) Proposals Shown in Two Scenarios: Series A Receives Liquidation Preference & Series A Converts to Common [****] [****] [****] |
| 2.Management Projections |
| 8 Savanna Projections Per Management Income Statement (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Source(s): Management projections, as of 06/18/24. 2023A 2024E 2025E 2026E 2027E Enterprise $200.1 $207.5 $283.0 $368.8 $436.4 Provider 119.3 122.9 137.8 150.1 159.8 Life Sciences 82.0 86.0 91.4 97.9 103.9 '23A - '24E '24E - '27E Add Back EBITDA (Warrant Revenue) (0.0) – – – – Growth Rate CAGR Total Revenue $401.3 $416.4 $512.3 $616.8 $700.1 3.7% 18.9% % Growth 3.7% 23.0% 20.4% 13.5% Enterprise $88.8 $88.7 $130.4 $171.5 $200.8 Provider 52.6 59.0 72.8 78.4 83.0 Life Sciences 42.3 44.2 47.2 50.3 53.4 '23A - '24E '24E - '27E Add Back EBITDA Adjustments (5.2) (1.2) (0.8) (0.8) (0.8) Growth Rate CAGR Total Gross Margin $178.5 $190.7 $249.6 $299.4 $336.4 6.8% 20.8% % Margin 44.5% 45.8% 48.7% 48.5% 48.0% Sales and Marketing ($57.3) ($50.1) ($54.7) ($58.5) ($65.6) General & Administrative (135.0) (127.3) (112.3) (122.7) (130.9) Product and Technology (69.4) (54.8) (55.3) (60.5) (64.4) Adjustments – (0.1) – – – Total Costs (Incl. Allocations) ($261.8) ($232.3) ($222.3) ($241.7) ($260.9) EBITDA (as defined) ($83.3) ($41.6) $27.2 $57.7 $75.5 % Growth NM NM 111.9% 30.7% PRELIMINARY – DRAFT AND CONFIDENTIAL (1) [****] |
| 9 Savanna Projections Per Management Adjusted EBITDA Walk (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Source(s): Management projections, as of 06/18/24. PRELIMINARY – DRAFT AND CONFIDENTIAL Non-Allocated Adjustments Severance $5.2 $1.5 $1.0 $1.0 $1.0 Other Expenses (0.8) – – – – SBC 46.9 44.4 31.5 31.5 31.5 '23A - '24E '24E - '27E Other Non-Operating Expenses 40.7 17.2 2.0 2.0 2.0 Growth Rate CAGR Adjusted EBITDA $8.8 $21.5 $61.7 $92.2 $109.9 144.1% 72.3% % Growth 144.1% 187.0% 49.4% 19.2% (1) 2023A 2024E 2025E 2026E 2027E [****] |
| 10 Enterprise Segment Projections Per Management Enterprise Segment Income Statement (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Source(s): Management projections, as of 06/18/24. 2023A 2024E 2025E 2026E 2027E '23A - '24E '24E - '27E Growth Rate CAGR Enterprise Revenue $200.1 $207.5 $283.0 $368.8 $436.4 3.7% 28.1% % Growth 4% 36% 30% 18% Cost of Goods Sold ($111.3) ($118.8) ($152.6) ($197.3) ($235.5) Total Gross Margin $88.8 $88.7 $130.4 $171.5 $200.8 NM 31.3% % Margin 44% 43% 46% 46% 46% Less: Direct Overhead Costs (48.4) (47.8) (59.0) (66.7) (77.8) '23A - '24E '24E - '27E Less: Allocated Overhead (43.4) (31.7) (35.8) (39.3) (40.9) Growth Rate CAGR Adjusted EBITDA ($3.0) $9.2 $35.7 $65.5 $82.1 NM 107.5% PRELIMINARY – DRAFT AND CONFIDENTIAL (1) [****] |
| Preliminary Savanna Valuation Terms to be Provided in Updated Fairness Opinion Deck 3. |
| 12 Overview of Preliminary Valuation Methodologies MTS did not attribute any particular weight to any analysis, methodology or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor; accordingly, MTS’ analyses must be considered as a whole. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view. Discounted Cash Flow (DCF) Comparable Public Companies Precedent M&A Transactions • Preliminary analysis of future unlevered free cash flows through 2027E • Cash flows discounted back to 09/30/24 using weighted-average cost of capital (WACC) calculations o 11% WACC based on comparable publicly traded companies; sensitized from 11% – 15% • Terminal value calculated by perpetual growth rate method – sensitized 2.0% - 3.0% • Per management, net debt of ($86.2mm) subtracted from implied enterprise value to calculate implied equity value and per share value on a fully diluted basis, including vested change in control shares as of 09/30/24 with Series A Preferred stock shown in two different cases: One with the liquidation preference of $50mm as a reduction to equity value and the other showing the Series A on an as-converted basis of 5.0mm additional common shares • Evaluation of comparable publicly traded provider, payor/employer & pharma-tech companies • Applies upper and lower quartile of 2024E Adjusted EBITDA multiples (11.7x – 18.5x) and upper and lower quartile of 2025E Adjusted EBITDA multiples (9.1x – 14.4x) from the comparable company set to Savanna’s 2024E Adjusted EBITDA of $21.5mm and 2025E Adjusted EBITDA of $61.7mm to arrive at implied enterprise value • Per management, net debt of ($86.2mm) subtracted from implied enterprise value to calculate implied equity value and per share value on a fully diluted basis, including vested change in control shares as of 09/30/24 with Series A Preferred stock shown in two different cases: One with the liquidation preference of $50mm as a reduction to equity value and the other showing the Series A on an as-converted basis of 5.0mm additional common shares • Evaluation of provider, payor/employer & pharma-tech precedent M&A transactions • Applies upper and lower quartile of Adjusted LTM EBITDA multiples (12.3x – 16.3x) from the precedent M&A transaction set to Savanna’s 2024E Adjusted EBITDA of $21.5mm to arrive at implied enterprise value • Per management, net debt of ($86.2mm) subtracted from implied enterprise value to calculate implied equity value and per share value on a fully diluted basis, including vested change in control shares as of 09/30/24 with Series A Preferred stock shown in two different cases: One with the liquidation preference of $50mm as a reduction to equity value and the other showing the Series A on an as-converted basis of 5.0mm additional common shares PRELIMINARY – DRAFT AND CONFIDENTIAL • The Special Committee is considering a whole company transaction thus all valuation methodologies are solely focused on the value of the company as a whole • As a result of prior discussions, the Special Committee determined that individual segment sale transactions came with a high degree of execution risk and unquantifiable considerations to splitting up the business • Accordingly, prior preliminary valuation analysis did include sum-of-the-parts (“SOTP”) valuation methodologies based on the Special Committee’s consideration of all strategic alternatives at that time, including the contemplation of individual segment sales |
| 13 Management Assumptions of Financial Projections General – 2024E-2027E projection model provided by management – Valuation date as of 09/30/24 • 09/30/24 projected net debt of ($86.2mm), per Savanna management – 2023A P&L is adjusted to account for termination of contract with Elevance (~$40mm of revenue) Revenue and Expenses – Projections provided by Savanna management through 2027E Series A Shares – Preliminary valuation analysis considers two scenarios: one where Series A receives liquidation preference of $50mm and the other where the shares are converted to 5.00mm shares of common stock Net Working Capital – Projections provided by Savanna management through 2027E Capital Expenditures – Projections provided by Savanna management through 2027E Taxes – Corporate tax rate of 26.8% – NOL balance of $757mm as of YE ’23 provided by management, subject to 80% Section 382 limitation, using midpoint of offer values Terminal Value – Calculated via perpetual growth rate method and sensitized from 2.0% to 3.0% WACC – 11% based on comparable publicly traded companies and sensitized up to 15% given high execution risk of the Enterprise business segment PRELIMINARY – DRAFT AND CONFIDENTIAL [****] |
| 14 Summary of Preliminary Valuation Analysis Implied Enterprise Value of Savanna’s Consolidated Business PRELIMINARY – DRAFT AND CONFIDENTIAL (1) LTM trading range for informational purposes only. (2) Per share values are based on equity value and include the $86.8mm in estimated cash per management as of 09/30/24, $0.5mm in debt and $50.0mm in liquidation preference associated with the entire company (per management as of 06/18/24); Consists of 359.196mm basic shares outstanding (per management as of 06/18/24) and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. Per share values rounded to the nearest $0.05, except for market data over selected trading dates, implied per share offer values and current share price. Enterprise value ranges rounded to the nearest ten million, except for market data over selected trading dates and current equity values. Source(s): Management projections and Capital IQ, as of 06/18/24. Assumes Series A Receives Liquidation Preference WholeCo Discounted Cash Flow WholeCo Trading Comps WholeCo Txn. Comps LTM Trading Range(1) WACC // Terminal Growth Rate 2024E 2025E 2024E Metric 52-Wk Range EBITDA Multiple LTM EBITDA Multiple $0.48 - $1.80 WACC: 11% - 15% '24E Adj. EBITDA: $21.5 '25E Adj. EBITDA: $61.7 '24E Adj. EBITDA: $21.5 Terminal Growth Rate: 2% - 3% Multiple: 11.7x - 18.5x Multiple: 9.1x - 14.4x Multiple: 12.3x - 16.3x Enterprise Value Range $150 - $710 $430 - $700 $250 - $400 $560 - $890 $260 - $350 Per Share Value Range(2) $0.48 - $1.80 $1.15 - $1.75 $0.75 - $1.10 $1.45 - $2.20 $0.75 - $1.00 $150 $430 $250 $560 $260 $710 $700 $400 $890 $350 $- $200 $400 $600 $800 $1,000 Implied Enterprise Value Current EV: $281mm ($0.80/share) Implied Offer Value: High: $549mm Low: $539mm |
| 15 Summary of Preliminary Valuation Analysis Implied Share Price of Savanna’s Consolidated Business PRELIMINARY – DRAFT AND CONFIDENTIAL (1) LTM trading range for informational purposes only. (2) Per share values are based on equity value and include the $86.8mm in estimated cash per management as of 09/30/24, $0.5mm in debt and $50.0mm in liquidation preference associated with the entire company (per management as of 06/18/24); Consists of 359.196mm basic shares outstanding (per management as of 06/18/24) and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. Per share values rounded to the nearest $0.05, except for market data over selected trading dates, implied per share offer values and current share price. Enterprise value ranges rounded to the nearest ten million, except for market data over selected trading dates and current equity values. Source(s): Management projections and Capital IQ, as of 06/18/24. WholeCo Discounted Cash Flow WholeCo Trading Comps WholeCo Txn. Comps LTM Trading Range(1) WACC // Terminal Growth Rate 2024E 2025E 2024E Metric 52-Wk Range EBITDA Multiple LTM EBITDA Multiple $0.48 - $1.80 WACC: 11% - 15% '24E Adj. EBITDA: $21.5 '25E Adj. EBITDA: $61.7 '24E Adj. EBITDA: $21.5 Terminal Growth Rate: 2% - 3% Multiple: 11.7x - 18.5x Multiple: 9.1x - 14.4x Multiple: 12.3x - 16.3x Enterprise Value Range $150 - $710 $430 - $700 $250 - $400 $560 - $890 $260 - $350 Per Share Value Range(2) $0.48 - $1.80 $1.15 - $1.75 $0.75 - $1.10 $1.45 - $2.20 $0.75 - $1.00 $0.48 $1.15 $0.75 $1.45 $0.75 $1.80 $1.75 $1.10 $2.20 $1.00 $- $0.50 $1.00 $1.50 $2.00 $2.50 Implied Per Share Price Current Share Price: $0.80 ($281mm EV) Assumes Series A Receives Liquidation Preference Implied Per Share Offer Value: High: $1.450 Low: $1.4250 |
| 16 Summary of Preliminary Valuation Analysis Implied Enterprise Value of Savanna’s Consolidated Business PRELIMINARY – DRAFT AND CONFIDENTIAL (1) LTM trading range for informational purposes only. (2) Per share values are based on equity value and include the $86.8mm in estimated cash per management as of 09/30/24, $0.5mm in debt (per management as of 06/18/24); Consists of 359.196mm basic shares outstanding (per management as of 06/18/24), 5.0mm Series A Preferred Shares converted to common and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. Per share values rounded to the nearest $0.05, except for market data over selected trading dates, implied per share offer values and current share price. Enterprise value ranges rounded to the nearest ten million, except for market data over selected trading dates and current equity values. Source(s): Management projections and Capital IQ, as of 06/18/24. Assumes Series A Converts to Common Stock WholeCo Discounted Cash Flow WholeCo Trading Comps WholeCo Txn. Comps LTM Trading Range(1) WACC // Terminal Growth Rate 2024E 2025E 2024E Metric 52-Wk Range EBITDA Multiple LTM EBITDA Multiple $0.48 - $1.80 WACC: 11% - 15% '24E Adj. EBITDA: $21.5 '25E Adj. EBITDA: $61.7 '24E Adj. EBITDA: $21.5 Terminal Growth Rate: 2% - 3% Multiple: 11.7x - 18.5x Multiple: 9.1x - 14.4x Multiple: 12.3x - 16.3x Enterprise Value Range $100 - $660 $430 - $700 $250 - $400 $560 - $890 $260 - $350 Per Share Value Range(2) $0.48 - $1.80 $1.25 - $1.85 $0.85 - $1.20 $1.55 - $2.25 $0.85 - $1.10 $100 $430 $250 $560 $260 $660 $700 $400 $890 $350 $- $200 $400 $600 $800 $1,000 Implied Enterprise Value Current EV: $235mm ($0.80/share) Implied Offer Value: High: $506mm Low: $496mm |
| 17 Summary of Preliminary Valuation Analysis Implied Share Price of Savanna’s Consolidated Business PRELIMINARY – DRAFT AND CONFIDENTIAL Assumes Series A Converts to Common Stock (1) LTM trading range for informational purposes only. (2) Per share values are based on equity value and include the $86.8mm in estimated cash per management as of 09/30/24, $0.5mm in debt (per management as of 06/18/24); Consists of 359.196mm basic shares outstanding (per management as of 06/18/24), 5.0mm Series A Preferred Shares converted to common and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. Per share values rounded to the nearest $0.05, except for market data over selected trading dates, implied per share offer values and current share price. Enterprise value ranges rounded to the nearest ten million, except for market data over selected trading dates and current equity values. Source(s): Management projections and Capital IQ, as of 06/18/24. WholeCo Discounted Cash Flow WholeCo Trading Comps WholeCo Txn. Comps LTM Trading Range(1) WACC // Terminal Growth Rate 2024E 2025E 2024E Metric 52-Wk Range EBITDA Multiple LTM EBITDA Multiple $0.48 - $1.80 WACC: 11% - 15% '24E Adj. EBITDA: $21.5 '25E Adj. EBITDA: $61.7 '24E Adj. EBITDA: $21.5 Terminal Growth Rate: 2% - 3% Multiple: 11.7x - 18.5x Multiple: 9.1x - 14.4x Multiple: 12.3x - 16.3x Enterprise Value Range $100 - $660 $430 - $700 $250 - $400 $560 - $890 $260 - $350 Per Share Value Range(2) $0.48 - $1.80 $1.25 - $1.85 $0.85 - $1.20 $1.55 - $2.25 $0.85 - $1.10 $0.48 $1.25 $0.85 $1.55 $0.85 $1.80 $1.85 $1.20 $2.25 $1.10 $- $0.50 $1.00 $1.50 $2.00 $2.50 Implied Per Share Price Current Share Price: $0.80 ($235mm EV) Implied Per Share Offer Value: High: $1.450 Low: $1.4250 |
| Appendix Preliminary Discounted Cash Flow Analysis Preliminary Valuation Support |
| Preliminary Discounted Cash Flow Analysis |
| 20 Preliminary Discounted Cash Flow Analysis Projects per Savanna Management (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Cash flows discounted back to 09/30/24 and a weighted average cost of capital of 11%. Source(s): Management projections and Capital IQ, as of 06/18/24. PRELIMINARY – DRAFT AND CONFIDENTIAL 2023A 2024E 2025E 2026E 2027E Adjusted EBITDA $8.8 $21.5 $61.7 $92.2 $109.9 Less: D&A (61.2) (50.3) (36.8) (27.3) (25.3) Adjusted EBIT ($52.4) ($28.8) $24.9 $64.9 $84.6 Less: Tax Expense – (6.7) (17.4) (22.7) Plus Tax Savings from NOLs – 5.3 5.7 5.7 Plus: D&A 50.3 36.8 27.3 25.3 Less: Δ in Net Working Capital (11.2) (3.5) (10.4) (7.6) Less: Capital Expenditures (23.4) (23.7) (24.3) (24.7) Projected Free Cash Flow ($13.1) $33.2 $45.8 $60.7 WACC: 11.0% PV of UFCF ($3.2) $30.7 $38.2 $45.5 Terminal Value Perpetual Growth Rate 2.5% Terminal Value $731.7 Terminal Value Perpetual Growth Rate Implied EBITDA Exit Multiple 6.7x 2.0% 2.5% 3.0% 11.0% $627.3 $660.3 $697.5 NPV of UFCF $111.2 WACC 13.0% 509.5 530.7 554.0 PV of Terminal Value 549.2 15.0% 428.0 442.7 458.5 Enterprise Value $660.3 (1) [****] |
| Preliminary Valuation Support |
| 22 (1) Includes any preferred equity and non-controlling interests. (2) Given financial year end in January, 2023 actuals represent the period between February 2023 and January 2024, 2024 projections represent the period between February 2024 and January 2025, and 2025 projections represent the period between February 2025 and January 2026. (3) Net debt does not include Seller Earnouts. (4) Given financial year end in June, 2023 actuals represent the period between July 2023 and June 2024, 2024 projections represent the period between July 2024 and June 2025, and 2025 projections represent the period between July 2025 and June 2026. (5) Given financial year end in February, 2023 actuals represent the period between March 2023 and February 2024, 2024 projections represent the period between March 2024 and February 2025, and 2025 projections represent the period between March 2025 and February 2026. Note: $ in mm, except per share data. Companies sorted by market capitalization as of 06/18/24. Enterprise Value includes non-controlling interest and preferred equity. Source(s): Capital IQ and Company websites and filings as of 06/18/24. PRELIMINARY – DRAFT AND CONFIDENTIAL Share Price Equity Net Debt / Ent. EV / EBIT DA Com pany Nam e 06/18/24 Mkt. Cap. Other(1) Value 2024E 2025E HealthEquity $84.74 $7,702 $851 $8,552 19.0x 15.9x R1 RCM 12.52 5,457 2,103 7,560 11.7x 9.8x Alight 7.37 4,319 2,540 6,859 8.8x 8.0x Evolent 22.07 2,597 627 3,224 13.0x 10.1x Progyny 25.73 2,467 (372) 2,095 9.6x 8.0x Craneware 29.06 1,039 (5) 1,035 18.0x 16.8x HealthStream 27.60 857 (84) 773 11.7x 11.0x Definitive Healthcare 5.54 694 293 987 11.9x 11.0x Accolade 6.15 515 (26) 489 28.8x 13.4x Health Catalyst 6.34 406 (98) 309 12.5x 8.3x OptimizeRx 10.82 206 21 226 19.5x 15.4x Upper Quartile 18.5x 14.4x Mean 15.0x 11.6x Median 12.5x 11.0x Lower Quartile 11.7x 9.1x Preliminary Selected Comparable Public Companies Provider, Payor/Employer & Pharma-Tech Comparables (2) (3) (4) (5) |
| 23 TEV as a multiple of Date Ann. Target Acquiror TEV ($mm) LTM EBITDA 09/05/23 NextGen Healthcare Thoma Bravo 1,790 14.3x 11/01/22 Benefitfocus Voya Financial 570 13.9x 10/03/22 bswift Francisco Partners 735 14.7x 06/21/22 Convey Health Solutions TPG 1,072 16.3x 06/16/22 LifeWorks TELUS 2,097 16.3x 04/05/22 Tivity Health Stone Point Capital 1,921 12.5x 01/06/21 Change Healthcare Optum 13,008 12.3x 10/27/20 Health Advocate Teleperformance 690 13.8x 12/20/19 Care.com IAC 487 17.3x 07/24/17 WebMD KKR 2,675 11.7x 10/21/16 Everyday Health Ziff Davis 467 10.7x All Transactions (n=11) Upper Quartile $2,097 16.3x Mean 2,319 14.0x Median 1,072 13.9x Lower Quartile 570 12.3x Note: $ in mm. Deals sorted by announcement date. Assumes private companies were acquired on a debt free, cash free basis. Source(s): Capital IQ and Company websites and filings as of 06/18/24. PRELIMINARY – DRAFT AND CONFIDENTIAL Preliminary Selected Precedent Transactions Provider, Payor/Employer & Pharma-Tech Transactions |
| 24 Preliminary WACC Analysis (1) 2-year weekly historical beta. (2) Current 20-year US Treasury Spot yield used as a proxy for normalized long-term risk-free rate. (3) Expected Equity Risk Premium (ERP) per Kroll report as of Jun ‘24. (4) Per Kroll CRSP report as of Dec '23. Size premium represents companies with market caps between $213mm and $555mm. Note: $ in mm, except per share data. Companies sorted by market capitalization as of 06/18/24. Source(s): Capital IQ and Company websites and filings as of 06/18/24. Equity T otal T otal Debt / D/E Beta Debt Company Price Value Debt Cap. Cap. Ratio T ax Levered Unlevered Cost HealthEquity $84.74 $7,702 $1,101 $8,803 13% 0.1x 25.7% (0.05) (0.05) 5.3% R1 RCM 12.52 5,457 2,281 7,738 29% 0.4x 25.7% 0.70 0.53 6.8% Alight 7.37 4,319 2,787 7,106 39% 0.6x 30.5% 1.40 0.97 4.6% Evolent 22.07 2,597 611 3,208 19% 0.2x 27.0% 1.16 0.99 7.6% Progyny 25.73 2,467 - 2,467 0% 0.0x 28.3% 1.54 1.54 NM Craneware 29.06 1,039 59 1,099 5% 0.1x 25.0% (0.02) (0.02) 8.1% HealthStream 27.60 857 - 857 0% 0.0x 27.5% 0.63 0.63 NM Definitive Healthcare 5.54 694 253 947 27% 0.4x 29.0% 2.13 1.69 6.0% Accolade 6.15 515 211 726 29% 0.4x 21.0% 2.29 1.73 1.2% Health Catalyst 6.34 406 230 636 36% 0.6x 25.7% 2.51 1.76 3.2% OptimizeRx 10.82 206 36 242 15% 0.2x 29.0% 2.41 2.15 16.7% All companies (n=11) Top Quartile 8.9% 0.1x 25.7% 0.66 0.58 4.6% Mean 19.3% 0.3x 26.7% 1.34 1.08 6.6% Median 19.0% 0.2x 27.0% 1.40 0.99 6.0% Bottom Quartile 29.3% 0.4x 28.6% 2.21 1.71 7.6% Cost of Capital Contribution Weight Pre-T ax After-T ax to WACC Debt Capital 19.0% 6.0% 4.4% 0.8% Equity Capital 81.0% 12.3% 12.3% 9.9% Assumed Tax Rate 26.8% Implied WACC 10.8% Cost of Equity Calculation Unlevered Beta 0.99 Levered Beta 1.16 Normalized Risk-Free Rate(2) 4.5% Equity Market Risk Premium(3) 5.0% Company Size Premium(4) 2.0% Cost of Common Equity 12.3% PRELIMINARY – DRAFT AND CONFIDENTIAL |
| Historical EBITDA Estimate Revisions |
| 26 Historical EBITDA Estimate Revisions PRELIMINARY – DRAFT AND CONFIDENTIAL (1) Beginning in Sep '23, the company re-casted 2022 adjusted EBITDA following changes in their definition of adjusted EBITDA. Figures presented for FY 2022 are prior to the re-cast. (2) Guidance suspended in Q3 ’22 and again in 2024 while company awaits results of strategic review. (3) 2023 EBITDA does not adjust for contract termination with Elevance. Note: $ in mm. Source(s): Capital IQ, Company filings and press releases as of 06/18/24. Guidance vs. Analyst Estimates vs. Actuals (2021A – 2024E) 2022 EBITDA Estimate Revisions(1) $15.8 $33.0 – $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 7/29/21 11/29/21 3/29/22 7/29/22 11/29/22 2023 EBITDA Estimate Revisions $16.5 $23.5 – $20.0 $40.0 $60.0 $80.0 $100.0 1/5/22 5/5/22 9/5/22 1/5/23 5/5/23 9/5/23 Guidance Suspended(2) 2024 EBITDA Estimate Revisions (Year-to-Date) $1.9 $21.5 ($10.0) $10.0 $30.0 $50.0 $70.0 $90.0 $110.0 1/5/23 5/5/23 9/5/23 1/5/24 5/5/24 Guidance Suspended(2) Analyst Estimates Management Guidance Management Projections Actual Performance (3) [****] |
| Legal Notice Securities related transactions are provided exclusively by our affiliate, MTS Securities, LLC, a broker-dealer registered with the SEC and a member of FINRA and SIPC. This presentation has been prepared exclusively for the benefit and internal use of the recipient to whom it is addressed. This document may not be copied, reproduced or transmitted in whole or in part in any form, or by any means, whether electronic or otherwise, without first receiving written permission from MTS Health Partners, L.P. and/or its affiliated companies (collectively, "MTS"). The information contained herein has been obtained from sources believed to be reliable, but the accuracy and completeness of the information are not guaranteed. All products, names, logos and brand references are the property of their respective owners. All third-party company, product, and brand references used in this document are for identification purposes only. Use of these names, logos and brand references does not imply endorsement by MTS. The information in this document is not intended to constitute a recommendation upon which to base an investment decision. Neither MTS nor any of its associated persons are affiliated with the companies referenced in this publication. |
| At your side. On your side. |
Exhibit 16(c)(xxvii)
| Preliminary Valuation Presentation Prepared for Savanna Special Committee June 2024 PRELIMINARY – DRAFT AND CONFIDENTIAL Regarding Project Impact [****] indicates information has been omitted on the basis of a confidential treatment request pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. This information has been filed separately with the Securities Exchange Commission. |
| 1. Situation Overview 2. Preliminary Savanna Standalone Valuation Appendix – Preliminary Base Case Projections & Discounted Cash Flow – Preliminary 80% Case Projections & Discounted Cash Flow – Preliminary Valuation Support Table of Contents |
| 1. Situation Overview |
| 4 Public Market Overview (1) Consists of 359.197mm basic shares outstanding (per management as of 06/07/24), 18.712mm public warrants priced at $0.02 per Black–Scholes calculation provided by management, 12.119mm RSUs vested or expected to vest, 23.856mm RSUs/PSUs that vest upon change in control (as of 09/30/24), 0.292mm inducement grants, and options vesting at various strike prices accounted for using the Treasury Stock Method based on Savanna’s stock price as of 06/07/24. (2) Includes $50mm Series A Convertible Preferred aggregate liquidation preference (5.000mm Units which convert to common stock on a 1:1 basis at $10.00 per share entirely held by Elevance Health, Inc. (ELV)). (3) Includes $0.586mm of long-term debt associated with a senior secured revolving credit facility with Wells Fargo. (4) Management’s estimated cash balance as of valuation date of 09/30/24. Note: $ in millions, except per share data. Source(s): Capital IQ, Company website, press releases and filings as of 06/07/24. Current Valuation Trading Multiples Series A Series A Liq Pref. Converts Price Per Share (06/07/24) $0.84 $0.84 52 Week High: 1.80 1.80 52 Week Low: 0.48 0.48 Diluted Shares Outstanding (mm)(1) 396.214 401.214 Fully Diluted Market Cap: $332 $336 Plus: Preferred Liquidation Preference(2) 50 - Plus: Debt (03/31/24)(3) 1 1 Less: Cash & Equivalents (09/30/2024)(4) (87) (87) Enterprise Value: $296 $250 $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Stock Price Performance $0.84 2023A 2024E Revenue $401 $416 EV / Revenue 0.7x 0.7x Adj. EBITDA 9 22 EV / EBITDA 33.6x 13.8x 07/01/21: closed business combination with Falcon Capital Acquisition Corp. 11/10/21: announced third quarter 2021 financial results and operational highlights 11/09/23: appointed Brent Layton as next CEO; founder Jeff Arnold to serve as executive chairman 02/12/21: Savanna and Falcon Capital Acquisition Corp. reached agreement to combine; company expected to have an initial enterprise value of $3.9bn 08/11/21: entered home health market with acquisition of CareLinx 08/10/22: initiated a strategic review of its non-enterprise businesses 03/12/24: Savanna announced that is has been evaluating a range of options including a potential sale of the Company 10/12/23: received an unsolicited preliminary non-binding proposal from Claritas Capital to acquire the Company 05/31/23: concluded strategic review and announced share repurchase program PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 5 Summary of Final Proposals Received PRELIMINARY – DRAFT AND CONFIDENTIAL (1) Per management, assumes liquidation preference of $50mm, net debt of $86.2mm and fully diluted shares as of 9/30/24 using treasury stock method, including shares triggered by a change in control. Received on 6/10/24 Received on 6/10/24 Offer Price Per Share $1.375 $1.380 Premium to Current (as of 6/7/24) 64.1% 64.7% Premium to 30-day VWAP 75.5% 76.1% Series A Receives Series A Converts Series A Receives Series A Converts Liquidation Preference to Common Liquidation Preference to Common Implied Enterprise Value ($ in mm)(1) $517.3 $474.2 $519.4 $476.3 EV / 2024E Base Case Revenue 1.2x 1.1x 1.2x 1.1x EV / 2025E Base Case Revenue 1.0x 0.9x 1.0x 0.9x EV / 2024E Base Case Adj. EBITDA 24.1x 22.1x 24.2x 22.2x EV / 2025E Base Case Adj. EBITDA 8.4x 7.7x 8.4x 7.7x Financing Sources Structure Assumptions Timing Consideration for Shareholders Sign definitive transaction documentation by June 17th Sign definitive transaction documentation by June 19th 100% cash for non-rolling shareholders (~89% of total FDSO) 100% cash 100% equity for cash needs and insider shareholders, Claritas Capital and Jeff Arnold, rolling shares into NewCo Cash on balance sheet; no financing condition to the consummation of the Transaction Purchase of the outstanding common stock of the company with insider rollover (Claritas Capital and Jeff Arnold) and the Series A convertible preferred stock remaining outstanding Purchase of 100% of the outstanding shares of common stock on a fully-diluted basis (including the Series A convertible preferred stock on an as-converted basis) Series A Convertible Preferred Stock remains outstanding following the closing of the Transaction Participants in the Change in Control Plan to receive replacement equity awards for their unvested equity awards All other non-vested equity awards to be canceled and replaced with a cash-based long-term incentive plan Out-of-the-money options will be canceled for no consideration Series A convertible preferred stock is able to be cashed out in the Transaction on an as-converted basis Unvested equity awards are not accelerated (other than pursuant to pre-existing contractual acceleration rights) As of 06/11/24 [****] [****] [****] |
| Preliminary Savanna Standalone Valuation Terms to be Provided in Updated Fairness Opinion Deck 2. |
| 7 Overview of Preliminary Valuation Methodologies MTS did not attribute any particular weight to any analysis, methodology or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor; accordingly, MTS’ analyses must be considered as a whole. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view. Discounted Cash Flow (DCF) Comparable Public Companies Precedent M&A Transactions • Preliminary analysis of future unlevered free cash flows through 2027E • Cash flows discounted back to 09/30/24 using weighted-average cost of capital (WACC) calculations o 11% WACC based on comparable publicly traded companies; sensitized from 11% – 15% • Enterprise segment revenue from 2025E to 2027E sensitized by revenue achievement factor (RAF) of 80% – 100%, due to execution risk • Terminal value calculated by perpetual growth rate method – 2.5% perpetual growth • Per management, net debt ($86.2mm) and liquidation preference ($50mm) are subtracted from implied enterprise value to calculate implied equity value and per share value on a fully diluted basis, including vested change in control shares as of 9/30/24 • Evaluation of comparable publicly traded provider, payor/employer & pharma-tech companies • Applies upper and lower quartile of 2024E Adjusted EBITDA multiples (11.9x – 18.9x) and upper and lower quartile of 2025E Adjusted EBITDA multiples (9.3x – 15.2x) from the comparable company set to Savanna’s 2024E Adjusted EBITDA of $21.5mm and 2025E Adjusted EBITDA of $61.7mm to arrive at implied enterprise value o Enterprise segment 2025E revenue sensitized by RAF of 80% – 100%, due to execution risk • Per management, net debt ($86.2mm) and liquidation preference ($50mm) are subtracted from implied enterprise value to calculate implied equity value and per share value on a fully diluted basis, including vested change in control shares as of 9/30/24 • Evaluation of provider, payor/employer & pharma-tech precedent M&A transactions • Applies upper and lower quartile of Adjusted LTM EBITDA multiples (12.3x – 16.3x) from the precedent M&A transaction set to Savanna’s 2024E Adjusted EBITDA of $21.5mm to arrive at implied enterprise value • Per management, net debt ($86.2mm) and liquidation preference ($50mm) are subtracted from implied enterprise value to calculate implied equity value and per share value on a fully diluted basis, including vested change in control shares as of 9/30/24 PRELIMINARY – DRAFT AND CONFIDENTIAL • The Special Committee is considering a whole company transaction thus all valuation methodologies are solely focused on the value of the company as a whole • As a result of prior discussions, the Special Committee determined that individual segment sale transactions came with a high degree of execution risk and unquantifiable considerations to splitting up the business • Accordingly, prior preliminary valuation analysis did include sum-of-the-parts (“SOTP”) valuation methodologies based on the Special Committee’s consideration of all strategic alternatives at that time, including the contemplation of individual segment sales |
| 8 Management Assumptions of Financial Projections General – 2024E-2027E projection model provided by management – Valuation date as of 09/30/24 • 09/30/24 projected net debt of ($86.2mm), per Savanna management – 2023A P&L is adjusted to account for termination of contract with Elevance (~$40mm of revenue) Revenue and Expenses BASE CASE: – Projections provided by Savanna management through 2027E 80% CASE: – Assumes achievement of 80% of total Enterprise business segment revenue and total Enterprise business segment gross margin from 2025E – 2027E – Assumes 100% achievement of 2024E Enterprise segment financial performance – All other segment’s revenue and expense projections kept the same as Base Case projections – All other expenses kept the same as Base Case projections Series A Shares – Preliminary valuation analysis considers two scenarios: one where Series A receives liquidation preference of $50mm and the other where the shares are converted to 5.00mm shares of common stock Net Working Capital – Projections provided by Savanna management through 2027E Capital Expenditures – Projections provided by Savanna management through 2027E Taxes – Corporate tax rate of 26.8% – NOL balance of $757mm as of YE ’23 provided by management, subject to 80% Section 382 limitation Terminal Value – 2.5% perpetual growth rate WACC – 11% based on comparable publicly traded companies and sensitized up to 15% given high execution risk of the Enterprise business segment PRELIMINARY – DRAFT AND CONFIDENTIAL [****] |
| 9 Summary of Preliminary Valuation Analysis Implied Enterprise Value of Savanna’s Consolidated Business WholeCo WholeCo Trading Comps WholeCo Txn. Comps LTM Trading Range Discounted Cash Flow 2024E 2025E 2024E Metric 52-Week Trading Range WACC // Enterprise Revenue Achievement Factor '24 EBITDA Multiple '25 EBITDA Multiple LTM EBITDA Multiple $0.48 - $1.80 WACC: 11% - 15% '24E Adj. EBITDA: $21.5 '25E Adj. EBITDA: $61.7 '24E Adj. EBITDA: $21.5 '25E - '27E RAF: 80% - 100% '24 EBITDA Multiples: 11.9x - 18.9x 'Enterprise '25E RAF 80% - 100% '25 EBITDA Mult.: 9.3x - 15.2x '24 EBITDA Multiples: 12.3x - 16.3x Enterprise Value Range $150 - $710 $210 - $660 $260 - $410 $330 - $940 $260 - $350 Per Share Value Range $0.48 - $1.80 $0.65 - $1.65 $0.75 - $1.10 $0.95 - $2.30 $0.75 - $1.00 $150 $210 $260 $330 $260 $710 $660 $410 $940 $350 $- $200 $400 $600 $800 $1,000 Implied Enterprise Value Current EV: $296mm ($0.84/share) PRELIMINARY – DRAFT AND CONFIDENTIAL (1) LTM trading range for informational purposes only. (2) Per share values are based on equity value and include the $86.8mm in estimated cash per management as of 09/30/24, $0.5mm in debt and $50.0mm in liquidation preference associated with the entire company (per management as of 06/07/24); Consists of 359.196mm basic shares outstanding (per management as of 06/07/24) and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. Per share values rounded to the nearest $0.05, except for market data over selected trading dates, implied per share offer values and current share price. Enterprise value ranges rounded to the nearest ten million, except for market data over selected trading dates and current equity values. Source(s): Management projections and Capital IQ, as of 06/07/24. Implied Offer Value: High: $519mm Low: $517mm (2) (1) Assumes Series A Receives Liquidation Preference |
| 10 Summary of Preliminary Valuation Analysis Implied Share Price of Savanna’s Consolidated Business PRELIMINARY – DRAFT AND CONFIDENTIAL (1) LTM trading range for informational purposes only. (2) Per share values are based on equity value and include the $86.8mm in estimated cash per management as of 09/30/24, $0.5mm in debt and $50.0mm in liquidation preference associated with the entire company (per management as of 06/07/24); Consists of 359.196mm basic shares outstanding (per management as of 06/07/24) and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. Per share values rounded to the nearest $0.05, except for market data over selected trading dates, implied per share offer values and current share price. Enterprise value ranges rounded to the nearest ten million, except for market data over selected trading dates and current equity values. Source(s): Management projections and Capital IQ, as of 06/07/24. WholeCo WholeCo Trading Comps WholeCo Txn. Comps LTM Trading Range Discounted Cash Flow 2024E 2025E 2024E Metric 52-Week Trading Range WACC // Enterprise Revenue Achievement Factor '24 EBITDA Multiple '25 EBITDA Multiple LTM EBITDA Multiple $0.48 - $1.80 WACC: 11% - 15% '24E Adj. EBITDA: $21.5 '25E Adj. EBITDA: $61.7 '24E Adj. EBITDA: $21.5 '25E - '27E RAF: 80% - 100% '24 EBITDA Multiples: 11.9x - 18.9x 'Enterprise '25E RAF 80% - 100% '25 EBITDA Mult.: 9.3x - 15.2x '24 EBITDA Multiples: 12.3x - 16.3x Enterprise Value Range $150 - $710 $210 - $660 $260 - $410 $330 - $940 $260 - $350 Per Share Value Range $0.48 - $1.80 $0.65 - $1.65 $0.75 - $1.10 $0.95 - $2.30 $0.75 - $1.00 $0.48 $0.65 $0.75 $0.95 $0.75 $1.80 $1.65 $1.10 $2.30 $1.00 $- $0.50 $1.00 $1.50 $2.00 $2.50 Implied Per Share Price Current Share Price: $0.84 ($296mm EV) Implied Per Share Offer Value: High: $1.38 Low: $1.375 (1) Assumes Series A Receives Liquidation Preference (2) |
| 11 Summary of Preliminary Valuation Analysis Implied Enterprise Value of Savanna’s Consolidated Business WholeCo WholeCo Trading Comps WholeCo Txn. Comps LTM Trading Range Discounted Cash Flow 2024E 2025E 2024E Metric 52-Week Trading Range WACC // Enterprise Revenue Achievement Factor '24 EBITDA Multiple '25 EBITDA Multiple LTM EBITDA Multiple $0.48 - $1.80 WACC: 11% - 15% '24E Adj. EBITDA: $21.5 '25E Adj. EBITDA: $61.7 '24E Adj. EBITDA: $21.5 '25E - '27E RAF: 80% - 100% '24 EBITDA Multiples: 11.9x - 18.9x 'Enterprise '25E RAF 80% - 100% '25 EBITDA Mult.: 9.3x - 15.2x '24 EBITDA Multiples: 12.3x - 16.3x Enterprise Value Range $100 - $660 $210 - $650 $260 - $410 $330 - $940 $260 - $350 Per Share Value Range $0.48 - $1.80 $0.75 - $1.75 $0.85 - $1.20 $1.05 - $2.35 $0.85 - $1.10 $100 $210 $260 $330 $260 $660 $650 $410 $940 $350 $- $200 $400 $600 $800 $1,000 Current EV: Implied Enterprise Value $250mm ($0.84/share) PRELIMINARY – DRAFT AND CONFIDENTIAL (1) LTM trading range for informational purposes only. (2) Per share values are based on equity value and include the $86.8mm in estimated cash per management as of 09/30/24, $0.5mm in debt (per management as of 06/07/24); Consists of 359.196mm basic shares outstanding (per management as of 06/07/24), 5.0mm Series A Preferred Shares converted to common and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. Per share values rounded to the nearest $0.05, except for market data over selected trading dates, implied per share offer values and current share price. Enterprise value ranges rounded to the nearest ten million, except for market data over selected trading dates and current equity values. Source(s): Management projections and Capital IQ, as of 06/07/24. Implied Offer Value: High: $476mm Low: $474mm (1) Assumes Series A Converts to Common Stock (2) |
| 12 Summary of Preliminary Valuation Analysis Implied Share Price of Savanna’s Consolidated Business PRELIMINARY – DRAFT AND CONFIDENTIAL WholeCo WholeCo Trading Comps WholeCo Txn. Comps LTM Trading Range Discounted Cash Flow 2024E 2025E 2024E Metric 52-Week Trading Range WACC // Enterprise Revenue Achievement Factor '24 EBITDA Multiple '25 EBITDA Multiple LTM EBITDA Multiple $0.48 - $1.80 WACC: 11% - 15% '24E Adj. EBITDA: $21.5 '25E Adj. EBITDA: $61.7 '24E Adj. EBITDA: $21.5 '25E - '27E RAF: 80% - 100% '24 EBITDA Multiples: 11.9x - 18.9x 'Enterprise '25E RAF 80% - 100% '25 EBITDA Mult.: 9.3x - 15.2x '24 EBITDA Multiples: 12.3x - 16.3x Enterprise Value Range $100 - $660 $210 - $650 $260 - $410 $330 - $940 $260 - $350 Per Share Value Range $0.48 - $1.80 $0.75 - $1.75 $0.85 - $1.20 $1.05 - $2.35 $0.85 - $1.10 $0.48 $0.75 $0.85 $1.05 $0.85 $1.80 $1.75 $1.20 $2.35 $1.10 $- $0.50 $1.00 $1.50 $2.00 $2.50 Implied Per Share Price Current Share Price: $0.84 ($250mm EV) Implied Per Share Offer Value: High: $1.38 Low: $1.375 (1) Assumes Series A Converts to Common Stock (1) LTM trading range for informational purposes only. (2) Per share values are based on equity value and include the $86.8mm in estimated cash per management as of 09/30/24, $0.5mm in debt (per management as of 06/07/24); Consists of 359.196mm basic shares outstanding (per management as of 06/07/24), 5.0mm Series A Preferred Shares converted to common and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. Per share values rounded to the nearest $0.05, except for market data over selected trading dates, implied per share offer values and current share price. Enterprise value ranges rounded to the nearest ten million, except for market data over selected trading dates and current equity values. Source(s): Management projections and Capital IQ, as of 06/07/24. (2) |
| Appendix Preliminary Base Case Projections & Discounted Cash Flow Preliminary 80% Case Projections & Discounted Cash Flow Preliminary Valuation Support |
| Preliminary Base Case Projections & Discounted Cash Flow |
| 15 Preliminary Standalone Valuation BASE CASE: Savanna Management Projections – Forecasted P&L (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 06/07/24. 2023A 2024E 2025E 2026E 2027E Enterprise $200.1 $207.5 $283.0 $368.8 $436.4 Provider 119.3 122.9 137.8 150.1 159.8 Life Sciences 82.0 86.0 91.4 97.9 103.9 Add Back EBITDA (Warrant Revenue) (0.0) – – – – Total Revenue $401.3 $416.4 $512.3 $616.8 $700.1 % Growth 3.7% 23.0% 20.4% 13.5% Enterprise $88.8 $88.7 $130.4 $171.5 $200.8 Provider 52.6 59.0 72.8 78.4 83.0 Life Sciences 42.3 44.2 47.2 50.3 53.4 Add Back EBITDA Adjustments (5.2) (1.2) (0.8) (0.8) (0.8) Total Gross Margin $178.5 $190.7 $249.6 $299.4 $336.4 % Margin 44.5% 45.8% 48.7% 48.5% 48.0% Sales and Marketing ($57.3) ($50.1) ($54.7) ($58.5) ($65.6) General & Administrative (135.0) (127.3) (112.3) (122.7) (130.9) Product and Technology (69.4) (54.8) (55.3) (60.5) (64.4) Adjustments – (0.1) – – – Total Costs (Incl. Allocations) ($261.8) ($232.3) ($222.3) ($241.7) ($260.9) EBITDA (as defined) ($83.3) ($41.6) $27.2 $57.7 $75.5 PRELIMINARY – DRAFT AND CONFIDENTIAL (1) [****] |
| 16 Preliminary Standalone Valuation BASE CASE: Savanna Management Projections – Adjusted EBITDA Walk (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 06/07/24. Non-Allocated Adjustments Severance $5.2 $1.5 $1.0 $1.0 $1.0 Other Expenses (0.8) – – – – SBC 46.9 44.4 31.5 31.5 31.5 Other Non-Operating Expenses 40.7 17.2 2.0 2.0 2.0 Adjusted EBITDA $8.8 $21.5 $61.7 $92.2 $109.9 PRELIMINARY – DRAFT AND CONFIDENTIAL 2023A 2024E 2025E 2026E 2027E (1) [****] |
| 17 Preliminary Standalone Valuation BASE CASE: Discounted Cash Flow (DCF) Valuation (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Cash flows discounted back to 09/30/24 and a weighted average cost of capital of 11%. Source(s): Management projections and Capital IQ, as of 06/07/24. Adjusted EBITDA $8.8 $21.5 $61.7 $92.2 $109.9 Less: D&A (61.2) (50.3) (36.8) (27.3) (25.3) Adjusted EBIT ($52.4) ($28.8) $24.9 $64.9 $84.6 Less: Tax Expense – (6.7) (17.4) (22.7) Plus Tax Savings from NOLs – 5.3 5.4 5.4 Plus: D&A 50.3 36.8 27.3 25.3 Less: Δ in Net Working Capital (11.2) (3.5) (10.4) (7.6) Less: Capital Expenditures (23.4) (23.7) (24.3) (24.7) Projected Free Cash Flow ($13.1) $33.2 $45.6 $60.4 WACC: 11.0% PV of UFCF ($3.2) $30.7 $38.0 $45.4 Terminal Value Perpetual Growth Rate 2.5% Terminal Value $728.7 Enterprise Revenue Achievement Factor Implied EBITDA Exit Multiple 6.6x 80.0% 90.0% 100.0% 11.0% $325.7 $491.8 $657.7 NPV of UFCF $110.8 WACC 13.0% 259.6 394.1 528.6 PV of Terminal Value 546.9 15.0% 214.8 327.9 440.9 Enterprise Value $657.7 PRELIMINARY – DRAFT AND CONFIDENTIAL (1) 2023A 2024E 2025E 2026E 2027E [****] |
| Preliminary 80% Case Projections & Discounted Cash Flow |
| 19 Preliminary Standalone Valuation 80% CASE: Savanna Management Projections, Enterprise Revenue 80% Achieved from 2025E-2027E – Forecasted P&L (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 06/07/24. 2023A 2024E 2025E 2026E 2027E Enterprise $200.1 $207.5 $226.4 $295.0 $349.1 Provider 119.3 122.9 137.8 150.1 159.8 Life Sciences 82.0 86.0 91.4 97.9 103.9 Add Back EBITDA (Warrant Revenue) (0.0) – – – – Total Revenue $401.3 $416.4 $455.7 $543.1 $612.8 % Growth 3.7% 9.4% 19.2% 12.8% Enterprise $88.8 $88.7 $104.3 $137.2 $160.7 Provider 52.6 59.0 72.8 78.4 83.0 Life Sciences 42.3 44.2 47.2 50.3 53.4 Add Back EBITDA Adjustments (5.2) (1.2) (0.8) (0.8) (0.8) Total Gross Margin $178.5 $190.7 $223.5 $265.1 $296.2 % Margin 44.5% 45.8% 49.0% 48.8% 48.3% Sales and Marketing ($57.3) ($50.1) ($54.7) ($58.5) ($65.6) General & Administrative (135.0) (127.3) (112.3) (122.7) (130.9) Product and Technology (69.4) (54.8) (55.3) (60.5) (64.4) Adjustments – (0.1) – – – Total Costs (Incl. Allocations) ($261.8) ($232.3) ($222.3) ($241.7) ($260.9) EBITDA (as defined) ($83.3) ($41.6) $1.2 $23.4 $35.3 PRELIMINARY – DRAFT AND CONFIDENTIAL (1) [****] |
| 20 Preliminary Standalone Valuation 80% CASE: Savanna Management Projections, Enterprise Revenue 80% Achieved from 2025E-2027E – Adjusted EBITDA Walk (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 06/07/24. 2023A 2024E 2025E 2026E 2027E Non-Allocated Adjustments Severance $5.2 $1.5 $1.0 $1.0 $1.0 Other Expenses (0.8) – – – – SBC 46.9 44.4 31.5 31.5 31.5 Other Non-Operating Expenses 40.7 17.2 2.0 2.0 2.0 Adjusted EBITDA $8.8 $21.5 $35.6 $57.9 $69.8 PRELIMINARY – DRAFT AND CONFIDENTIAL (1) [****] |
| 21 Preliminary Standalone Valuation 80% CASE: Savanna Management Projections, Enterprise Revenue 80% Achieved from 2025E-2027E – DCF Valuation (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Cash flows discounted back to 09/30/24 and a weighted average cost of capital of 11%. Source(s): Management projections and Capital IQ, as of 06/07/24. Adjusted EBITDA $8.8 $21.5 $35.6 $57.9 $69.8 Less: D&A (61.2) (50.3) (36.8) (27.3) (25.3) Adjusted EBIT ($52.4) ($28.8) ($1.2) $30.6 $44.4 Less: Tax Expense – – (8.2) (11.9) Plus Tax Savings from NOLs – – 5.4 5.4 Plus: D&A 50.3 36.8 27.3 25.3 Less: Δ in Net Working Capital (11.2) (3.5) (10.4) (7.6) Less: Capital Expenditures (23.4) (23.7) (24.3) (24.7) Projected Free Cash Flow ($13.1) $8.4 $20.5 $31.0 WACC: 11.0% PV of UFCF ($3.2) $7.8 $17.0 $23.3 Terminal Value Perpetual Growth Rate 2.5% Terminal Value $374.2 Enterprise Revenue Achievement Factor Implied EBITDA Exit Multiple 5.4x 80.0% 90.0% 100.0% 11.0% $325.7 $491.8 $657.7 NPV of UFCF $44.9 WACC 13.0% 259.6 394.1 528.6 PV of Terminal Value 280.8 15.0% 214.8 327.9 440.9 Enterprise Value $325.7 PRELIMINARY – DRAFT AND CONFIDENTIAL (1) 2023A 2024E 2025E 2026E 2027E [****] |
| Preliminary Valuation Support |
| 23 (1) Includes any preferred equity and non-controlling interests. (2) Given financial year end in January, 2023 actuals represent the period between February 2023 and January 2024, 2024 projections represent the period between February 2024 and January 2025, and 2025 projections represent the period between February 2025 and January 2026. (3) Net debt does not include Seller Earnouts. (4) Given financial year end in June, 2023 actuals represent the period between July 2023 and June 2024, 2024 projections represent the period between July 2024 and June 2025, and 2025 projections represent the period between July 2025 and June 2026. (5) Given financial year end in February, 2023 actuals represent the period between March 2023 and February 2024, 2024 projections represent the period between March 2024 and February 2025, and 2025 projections represent the period between March 2025 and February 2026. Note: $ in mm, except per share data. Companies sorted by market capitalization as of 06/07/24. Enterprise Value includes non-controlling interest and preferred equity. Source(s): Capital IQ and Company websites and filings as of 06/07/24. PRELIMINARY – DRAFT AND CONFIDENTIAL Share Price Equity Net Debt / Ent. EV / EBIT DA Com pany Nam e 06/07 /24 Mkt. Cap. Other(1) Value 2024E 2025E HealthEquity $85.25 $7,748 $851 $8,599 19.1x 16.0x R1 RCM 12.83 5,596 2,103 7,698 12.0x 10.0x Alight 7.50 4,396 2,540 6,936 8.9x 8.1x Evolent 23.48 2,763 627 3,390 13.7x 10.6x Progyny 27.60 2,646 (372) 2,274 10.4x 8.6x Craneware 30.28 1,084 (5) 1,079 18.8x 17.6x HealthStream 27.75 861 (84) 778 11.8x 11.1x Definitive Healthcare 5.59 701 293 993 12.0x 11.1x Accolade 6.68 559 (26) 533 31.4x 14.7x Health Catalyst 6.50 417 (98) 319 12.9x 8.6x OptimizeRx 11.12 211 21 232 20.0x 15.8x Upper Quartile 18.9x 15.2x Mean 15.5x 12.0x Median 12.9x 11.1x Lower Quartile 11.9x 9.3x Preliminary Selected Comparable Public Companies Provider, Payor/Employer & Pharma-Tech Comparables (2) (3) (4) (5) |
| 24 TEV as a multiple of Date Ann. Target Acquiror TEV ($mm) LTM EBITDA 09/05/23 NextGen Healthcare Thoma Bravo 1,790 14.3x 11/01/22 Benefitfocus Voya Financial 570 13.9x 10/03/22 bswift Francisco Partners 735 14.7x 06/21/22 Convey Health Solutions TPG 1,072 16.3x 06/16/22 LifeWorks TELUS 2,097 16.3x 04/05/22 Tivity Health Stone Point Capital 1,921 12.5x 01/06/21 Change Healthcare Optum 13,008 12.3x 10/27/20 Health Advocate Teleperformance 690 13.8x 12/20/19 Care.com IAC 487 17.3x 07/24/17 WebMD KKR 2,675 11.7x 10/21/16 Everyday Health Ziff Davis 467 10.7x All Transactions (n=11) Upper Quartile $2,097 16.3x Mean 2,319 14.0x Median 1,072 13.9x Lower Quartile 570 12.3x Note: $ in mm. Deals sorted by announcement date. Assumes private companies were acquired on a debt free, cash free basis. Source(s): Capital IQ and Company websites and filings as of 06/07/24. PRELIMINARY – DRAFT AND CONFIDENTIAL Preliminary Selected Precedent Transactions Provider, Payor/Employer & Pharma-Tech Transactions |
| 25 Preliminary WACC Analysis (1) 2-year weekly historical beta. (2) Current 20-year US Treasury Spot yield used as a proxy for normalized long-term risk-free rate. (3) Expected Equity Risk Premium (ERP) per Kroll report as of Jun ‘24. (4) Per Kroll CRSP report as of Dec '23. Size premium represents companies with market caps between $213mm and $555mm. Note: $ in mm, except per share data. Companies sorted by market capitalization as of 06/07/24. Source(s): Capital IQ and Company websites and filings as of 06/07/24. Equity T otal T otal Debt / D/E Beta Debt Company Price Value Debt Cap. Cap. Ratio T ax Levered Unlevered Cost HealthEquity $85.25 $7,748 $1,101 $8,849 12% 0.1x 25.7% (0.12) (0.11) 5.3% R1 RCM 12.83 5,596 2,281 7,876 29% 0.4x 25.7% 0.71 0.54 6.8% Alight 7.50 4,396 2,787 7,183 39% 0.6x 30.5% 1.42 0.98 4.6% Evolent 23.48 2,763 611 3,374 18% 0.2x 27.0% 1.13 0.97 7.6% Progyny 27.60 2,646 - 2,646 0% 0.0x 28.3% 1.51 1.51 NM Craneware 30.28 1,084 59 1,143 5% 0.1x 25.0% (0.13) (0.12) 8.1% HealthStream 27.75 861 - 861 0% 0.0x 27.5% 0.64 0.64 NM Definitive Healthcare 5.59 701 253 954 27% 0.4x 29.0% 1.93 1.54 6.0% Accolade 6.68 559 211 770 27% 0.4x 21.0% 2.26 1.74 1.2% Health Catalyst 6.50 417 230 647 36% 0.6x 25.7% 2.42 1.71 3.2% OptimizeRx 11.12 211 36 247 15% 0.2x 29.0% 2.23 1.99 16.7% All companies (n=11) Top Quartile 8.8% 0.1x 25.7% 0.67 0.59 4.6% Mean 18.9% 0.3x 26.7% 1.27 1.04 6.6% Median 18.1% 0.2x 27.0% 1.42 0.98 6.0% Bottom Quartile 28.2% 0.4x 28.6% 2.08 1.63 7.6% Cost of Capital Contribution Weight Pre-T ax After-T ax to WACC Debt Capital 18.1% 6.0% 4.4% 0.8% Equity Capital 81.9% 12.3% 12.3% 10.1% Assumed Tax Rate 26.8% Implied WACC 10.9% Cost of Equity Calculation Unlevered Beta 0.98 Levered Beta 1.14 Normalized Risk-Free Rate(2) 4.6% Equity Market Risk Premium(3) 5.0% Company Size Premium(4) 2.0% Cost of Common Equity 12.3% PRELIMINARY – DRAFT AND CONFIDENTIAL |
| Legal Notice Securities related transactions are provided exclusively by our affiliate, MTS Securities, LLC, a broker-dealer registered with the SEC and a member of FINRA and SIPC. This presentation has been prepared exclusively for the benefit and internal use of the recipient to whom it is addressed. This document may not be copied, reproduced or transmitted in whole or in part in any form, or by any means, whether electronic or otherwise, without first receiving written permission from MTS Health Partners, L.P. and/or its affiliated companies (collectively, "MTS"). The information contained herein has been obtained from sources believed to be reliable, but the accuracy and completeness of the information are not guaranteed. All products, names, logos and brand references are the property of their respective owners. All third-party company, product, and brand references used in this document are for identification purposes only. Use of these names, logos and brand references does not imply endorsement by MTS. The information in this document is not intended to constitute a recommendation upon which to base an investment decision. Neither MTS nor any of its associated persons are affiliated with the companies referenced in this publication. |
| At your side. On your side. |
Exhibit 16(c)(xxviii)
| Project Impact Discussion Materials May 2024 PRELIMINARY – DRAFT AND CONFIDENTIAL Prepared for The Special Committee of Savanna [****] indicates information has been omitted on the basis of a confidential treatment request pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. This information has been filed separately with the Securities Exchange Commission. |
| Table of Contents 1. Executive Summary 2. Preliminary Valuation Summary 3. Preliminary Consolidated Business Analysis 4. Preliminary Enterprise Segment Analysis 5. Preliminary Provider Segment Analysis 6. Preliminary Life Sciences Segment Analysis 7. Preliminary Corporate and Tax Analysis Appendix – Preliminary WACC Analysis – Selected Comparable Public Companies – Selected Precedent Transactions – Public Market Overview – Analysis at Various Offer Prices For WholeCo |
| 1. Executive Summary |
| 4 Executive Summary MTS appreciates the opportunity to work with the Special Committee of Savanna and the Company Over the past week, MTS has reviewed Savanna’s financial performance and held a series of conversations with management to learn more about the Company’s operations, financial performance and projections In light of the ongoing strategic process and inbound indications of interest, MTS has prepared a preliminary valuation analysis on Savanna and its various business segments, to assist the Special Committee in evaluating its options We have focused our evaluation of Savanna’s business segments on a sum-of-the-parts basis, to assist the Special Committee in considering the potential value of other strategic alternatives relative to the values indicated in the sale process undertaken by the Company and its financial advisor, including a segment sale / spinoff or a combination of offers / transactions – Segment level valuation methodologies include discounted cash flow analyses, comparable publicly traded company analyses, and precedent transactions analyses, as described in following pages • Valuation methodologies are focused on a sum-of-the-parts basis – Financial projections and assumptions have been provided by Savanna management PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 5 Review of Strategic Alternatives Status Quo WholeCo Transaction Segment Sale / Spinoff Description– Continue to operate company as it is today; do not transact – Sale of entire business to counterparty that has submitted an LOI – Sell or spinoff individual segments while maintaining ownership of remaining assets – Execute single or multiple transactions with existing and / or new parties Attractions – Maintain full ownership of the company – Provides time for growth story to develop – Can provide some value to shareholders via share repurchase program – Optionality for litigation CVR – Fastest timeline to close a transaction given stage of process – Provides near term return of capital to shareholders – Optionality for litigation CVR – Potential to capture greater value as market is likely undervaluing business as a whole today – Provides cash infusion for operations or to be provided to shareholders – Ability to redeploy capital to shareholders via share buyback and / or special dividend – Optionality for litigation CVR Considerations – Limited catalysts for market to react to – Requires cash on balance sheet to be used to fund near term losses in enterprise segment – Valuation of bids received for entire company vs potential value achieved in alternatives – Requires additional time to contact buyers interested in individual segments, which is mitigated if pursued in conjunction with any of the existing bidders PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 6 Strategic and Transaction Considerations Savanna Business Segments (1) Representative Enterprise Value Range based on preliminary valuation analyses, including precedent M&A transactions, comparable public companies and discounted cash flow (DCF); does not include unallocated overhead or tax assets. Source(s): Savanna management projections. Strategic Considerations Transaction Considerations Representative Enterprise Value Range(1) Enterprise 9 New management has already onboarded large gov’t accounts that are ramping into 2025 8 Core business has experienced revenue decline into 2024; Ongoing dispute with top customer resulting in $40mm revenue lost 8 Execution risk with pipeline 8 Segment is losing money when adjusted for lost / disputed contracts 9 Known buyer interest 9 Ability to engage new buyers following inbound interest 9 Selling asset would “stop the bleeding” of future losses; Sale provides cash savings in addition to proceeds 8 Buyers will likely discount segment due declining business and losses Provider 9 Demonstrated growth driver of overall business with 15% historical revenue growth 9 Recurring revenue streams 9 Profitable business today 8 Potential for future slow down as business matures 9 Broad, relevant buyer universe 9 Demonstrated buyer interest in space with recent transactions at 15-20x EBITDA 8 Segment is one of the profit drivers of overall business today – selling segment puts pressure on underperforming segments Life Sciences 9 Recurring revenue streams 9 Profitable business today 8 Potential for future slow down as business matures 9 Known buyer universe, however smaller list of companies that can leverage this capability 8 May require ongoing relationship with enterprise business 8 Segment is one of the profit drivers of overall business today – selling segment puts pressure on underperforming segments $- $200 $200 $200 $400 $300 PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 7 Strategic and Transaction Considerations Incremental Drivers of Value (1) Representative Enterprise Value Range based on preliminary valuation analysis. Source(s): Savanna management projections. Strategic Considerations Transaction Considerations Representative Enterprise Value Range(1) Taxes / NOL’s 9 Large NOL balance available that can be offset against future income and / or capital gains 8 Potential limitations to amount that can be used at segment level – further analysis required to determine availability 9 NOL balance can be used to offset capital gains 8 Potential limitations Corporate / Breakage Costs 8 Reduction or elimination of corporate overhead will be dependent on mix of remaining business 9 Potential to downsize cost structure if only select operating segments are carved out 8 May take considerable time to unwind in conjunction with segment sales 8 Additional costs will be incurred to unwind (Severance, termination costs, etc.) Litigation CVR 9 Potential for settlement proceeds in dispute 8 Potentially a lengthy and costly process to determine damages and receive proceeds 8 Does not solve for lost revenue on a recurring basis 9 If settlement results in compensation to Savanna, proceeds can be redistributed to share holders via share buyback and/or special dividend 8 Unknown value at this time $100 $(75) ? $150 $(25) PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 2.Preliminary Valuation Summary |
| 9 Overview of Preliminary Valuation Methodologies MTS did not attribute any particular weight to any analysis, methodology or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor; accordingly, MTS’ analyses must be considered as a whole. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view. Given the distinct operating models, execution risk and other factors associated which each business segment, this preliminary analysis values Savanna on a sum-of-the-parts (SOTP) basis rather than a consolidated basis Sum-of-the-Parts: Precedent M&A Transactions Sum-of-the-Parts: Comparable Public Companies Sum-of-the-Parts: Discounted Cash Flow (DCF) • Preliminary analysis of future unlevered free cash flows through 2028 of each of Savanna’s business segments • Individual business segments are summed together on a SOTP basis • Cash flows discounted back to 06/30/24 using unique weighted-average cost of capital (WACC) calculations for each business segment o WACC based upon comparable companies; see appendix for details • Cash flows are sensitized based on ranges of certain inputs, including WACC, perpetual growth rate, EBITDA exit multiple; see segment specific sections for details • Net debt and liquidation preference considered to calculate implied equity and per share value • Evaluation of comparable publicly traded companies for each individual business segment; see appendix for details • Applies 2024A EBITDA multiples from the comparable company sets to Savanna’s 2024A AEBITDA to arrive at implied enterprise value of each individual business segment • Individual business segments are summed together on a SOTP basis • Net debt and liquidation preference considered to calculate implied equity and per share value • Evaluation of precedent M&A transactions for each individual business segment; see appendix for details • Applies LTM EBITDA multiples from the precedent M&A transaction sets to Savanna’s 2023A AEBITDA to arrive at implied enterprise value of each individual business segment • Individual business segments are summed together on a SOTP basis • Net debt and liquidation preference considered to calculate implied equity and per share value PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 10 Preliminary Sum-of-the-Parts (SOTP) Precedent M&A Transaction Multiples Implied Enterprise Value of Savanna’s Business Segments (1) Per share values for each segment are based on equity value and include the $128mm in cash, $0.5mm in debt and $50.0mm in liquidation preference associated with the entire company; Consists of 355.076mm basic shares outstanding (as of 04/16/24) and applicable dilutive securities accounted for using the Treasury Stock Method. (2) See slide 43 for detail. Note: $ in mm, except per share data. All individual business segments valuations are shown tax-effected but without the impact of NOLs as those are captured at a WholeCo level. Source(s): Management projections and Capital IQ, as of 04/30/24. Implied Operating Segment Value Transaction Considerations $411 - $611 SOTP Corporate Implied Net Enterprise Provider Life Sciences Transaction Comps Tax Implications Breakage Costs Transaction Value Metric LTM EBITDA Multiple LTM EBITDA Multiple LTM EBITDA Multiple 10.0x - 20.0x 15.0x - 20.0x 10.0x - 14.0x '23 AEBITDA: (3.0) '23 AEBITDA: $18.2 '23 AEBITDA: $19.8 Enterprise Value Range ($60) - ($30) $273 - $365 $198 - $277 $411 - $611 ($60) $351 - $551 Per Share Value Range $1.23 - $1.68 $1.09 - $1.55 ($45) $319 $237 $511 ($60) $451 ($100) $- $100 $200 $300 $400 $500 $600 Base Scenario Implied Enterprise Value (1) ? PRELIMINARY – DRAFT AND CONFIDENTIAL Current EV: $281mm ($0.72/share) Tax implications of individual segment sales require further diligence – analysis assumes existing NOL balance is significant enough to offset any capital gains (2) |
| 11 Preliminary Sum-of-the-Parts (SOTP) Comparable Public Company Multiples Implied Enterprise Value of Savanna’s Business Segments (1) Per share values for each segment are based on equity value and include the $128mm in cash, $0.5mm in debt and $50.0mm in liquidation preference associated with the entire company; Consists of 355.076mm basic shares outstanding (as of 04/16/24) and applicable dilutive securities accounted for using the Treasury Stock Method. (2) See slide 43 for detail. Note: $ in mm, except per share data. All individual business segments valuations are shown tax-effected but without the impact of NOLs as those are captured at a WholeCo level. Source(s): Management projections and Capital IQ, as of 04/30/24. Implied Operating Segment Value Transaction Considerations $664 - $895 SOTP Corporate Implied Net Enterprise Provider Life Sciences Trading Comps Tax Implications Breakage Costs Transaction Value Metric '24 EBITDA Multiple '24 EBITDA Multiple '24 EBITDA Multiple 9.0x - 14.0x 11.0x - 14.0x 13.0x - 18.0x '24 AEBITDA: $7.5 '24 AEBITDA: $29.1 '24 AEBITDA: $21.2 Enterprise Value Range $67 - $105 $321 - $408 $276 - $382 $664 - $895 ($60) $604 - $835 Per Share Value Range $1.79 - $2.29 $1.66 - $2.16 $86 $364 $329 $779 ($60) $719 $- $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 Base Scenario Implied Enterprise Value (1) ? PRELIMINARY – DRAFT AND CONFIDENTIAL Current EV: $281mm ($0.72/share) Tax implications of individual segment sales require further diligence – analysis assumes existing NOL balance is significant enough to offset any capital gains (2) |
| 12 Preliminary Sum-of-the-Parts (SOTP) Discounted Cash Flow Analysis Implied Enterprise Value of Savanna’s Business Segments (1) Per share values for each segment are based on equity value and include the $128mm in cash, $0.5mm in debt and $50.0mm in liquidation preference associated with the entire company; Consists of 355.076mm basic shares outstanding (as of 04/16/24) and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. All individual business segments valuations are shown tax-effected but without the impact of NOLs as those are captured at a WholeCo level. Source(s): Management projections and Capital IQ, as of 04/30/24. Implied Operating Segment Value Implied Corporate and Tax $890 - $1,398 ($655) - ($427) SOTP Discounted Enterprise Provider Life Sciences NOLs Corporate Cash Flow WACC 15.0% - 25.0% 8.0% - 12.0% 13.0% - 17.0% 11.0% - 15.0% 11.0% - 15.0% Terminal Multiple/Growth Rate 0.0% - 5.0% 11.0x - 15.0x 10.0x - 14.0x N/A 11.0x - 15.0x Enterprise Value Range $99 - $241 $535 - $782 $256 - $376 $126 - $144 ($781) - ($571) $235 - $971 Per Share Value Range $0.80 - $2.45 $138 $651 $312 $134 ($670) $566 $- $250 $500 $750 $1,000 $1,250 $1,500 Base Scenario Implied Enterprise Value Current EV: $281mm ($0.72/share) (1) PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 13 Preliminary Summary Valuation Analysis WholeCo Business vs Sum-of-the-Parts (SOTP) Implied Enterprise Value of Savanna’s Consolidated Business (1) Per share values for each segment are based on equity value and include the $128mm in cash, $0.5mm in debt and $50.0mm in liquidation preference associated with the entire company; Consists of 355.076mm basic shares outstanding (as of 04/16/24) and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. All individual business segments valuations are shown tax-effected but without the impact of NOLs as those are captured at a WholeCo level. Source(s): Management projections and Capital IQ, as of 04/30/24. WholeCo SOTP Trading Comps SOTP Transaction Comps SOTP LTM Trading Range AVP Analysis 2023 2024 LTM Discounted Cash Flow Metric 52-Week Trading Range Illustrative Offer Prices '23 EBITDA Multiple '24 EBITDA Multiple LTM EBITDA Multiple WACC // Terminal EBITDA Multiple / Growth Rate $0.48 - $1.80 $0.75 - $1.60 See SOTP for Detail See SOTP for Detail See SOTP for Detail See SOTP for Detail Enterprise Value Range $111 - $667 $216 - $582 $447 - $602 $664 - $895 $411 - $611 $235 - $971 Per Share Value Range $0.48 - $1.80 $0.75 - $1.60 $1.32 - $1.66 $1.79 - $2.29 $1.23 - $1.68 $0.80 - $2.45 $111 $216 $447 $664 $411 $235 $667 $582 $602 $895 $611 $971 $- $250 $500 $750 $1,000 $1,250 Implied Enterprise Value Current EV: $281mm ($0.72/share) (1) PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 14 Preliminary Summary Valuation Analysis Comparison of Potential Strategic Options (1) Assumes sale of Enterprise segment based on basic shares outstanding. (2) Breakage costs allocated based on percent of revenue leaving the company. (3) Assume change of control in all scenarios. (4) Per share values for each segment are based on equity value and include the $128mm in cash, $0.5mm in debt and $50.0mm in liquidation preference associated with the entire company; Consists of 355.076mm basic shares outstanding (as of 04/16/24) and applicable dilutive securities accounted for using the Treasury Stock Method. Note: $ in mm, except per share data. All individual business segments valuations are shown tax-effected but without the impact of NOLs as those are captured at a WholeCo level. Source(s): Management projections and Capital IQ, as of 04/30/24. PRELIMINARY – DRAFT AND CONFIDENTIAL Sell Enterprise at $0.42 Sell Enterprise at $0.42 Sell Provider SOTP Precedent Value Sell Rest of Company at Sell Life Sciences Keep Enterprise WholeCo Sale and Sale SOTP Precedent Value Keep Provider Keep Life Sciences Low Mid High Low High Low High Low High Low High Transaction Value Enterprise – – – (60) (30) 149 149 149 149 – – Provider – – – 273 365 273 365 – – 273 365 Life Sciences – – – 198 277 198 277 198 277 – – Operating Segment Value – – – $411 $611 $620 $790 $347 $426 $273 $365 Less: Breakage Costs – – – (60) (60) (60) (60) (42) (42) (18) (18) Transaction Value $216 $406 $582 $351 $551 $560 $730 $306 $385 $256 $347 Plus: Cash 128 128 128 128 128 128 128 103 103 78 78 Less: Debt (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) Less: Liquidation Preference (50) (50) (50) (50) (50) (50) (50) (50) (50) (50) (50) Net Transaction Value $294 $484 $660 $429 $629 $638 $808 $358 $437 $284 $375 FDSO 392.518 396.944 412.352 393.742 405.458 406.198 417.513 407.706 418.511 396.266 408.838 Implied Value Per Share in Txn $0.75 $1.22 $1.60 $1.09 $1.55 $1.57 $1.94 $0.88 $1.05 $0.72 $0.92 Remaining Business Value Enterprise – – – – – – – – – (60) (30) Provider – – – – – – – 273 365 – – Life Sciences – – – – – – – – – 198 277 Corporate – – – – – – – TBD TBD TBD TBD Remaining Business Value – – – – – – – $273 $365 $138 $247 Plus: Remaining Cash – – – – – – – $25 $25 $50 $50 Net Remaining Business Value – – – – – – – $298 $390 $188 $297 FDSO 392.518 396.944 412.352 393.742 405.458 406.198 417.513 407.706 418.511 396.266 408.838 Implied Value Per Share Remaining – – – – – – – $0.73 $0.93 $0.47 $0.73 Total Value $294 $484 $660 $429 $629 $638 $808 $657 $827 $471 $672 FDSO 392.518 396.944 412.352 393.742 405.458 406.198 417.513 407.706 418.511 396.266 408.838 Implied Total Value Per Share $0.75 $1.22 $1.60 $1.09 $1.55 $1.57 $1.94 $1.61 $1.98 $1.19 $1.64 (1) (1) (2) (3) (4) |
| Preliminary Consolidated Business Analysis 3. |
| 16 Preliminary Assumptions Source(s): Savanna management projections. General – 2024-2026 projection model provided by management – 2026-2027 assumptions provided by management • 15% Enterprise revenue growth • 10% Provider and Life Sciences revenue growth • COGS margins of 46%, 53%, and 51% for Enterprise, Provider, and Life Sciences, respectively • 2024-2026 CAGR applied to costs associated with Product and Technology, General Administration and Sales and Marketing applied across business segments – Valuation date as of 06/30/24 Revenue – Projections provided by Savanna management through 2028 Allocations – 2024-2026 allocations provided by management – 2027-2028 total allocations projected using historical growth rates described below • Product and Technology: 8.5% • General Administration: 11.2% • Sales and Marketing: 5.6% Taxes – Corporate tax rate of 25% – NOL balance of $757mm as of YE ’23 provided by management, subject to 80% Section 382 limitation Terminal Value – Enterprise: 2.5% perpetual growth rate – Provider: 13.0x terminal year EBITDA exit multiple – Life Sciences: 12.0x terminal year EBITDA exit multiple – WholeCo/Corporate/NOLs: 13.0x terminal year EBITDA exit multiple WACC – WACC for each business segment based on comparable companies (see appendix for additional detail) • Enterprise: 20.0% • Provider: 10.0% • Life Sciences: 15.0% • WholeCo/Corporate/NOLs: 13.0% PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 17 Preliminary Consolidated Unadjusted Projections Savanna Management Projections – Forecasted P&L (1) 2023A P&L adjusted to account for contract termination with Elevance. See page 21 for detail. Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 04/30/24. Enterprise $200.1 $208.9 $283.0 $368.8 $424.1 $487.7 Provider 119.3 122.7 137.8 152.2 167.4 184.2 Life Sciences 82.0 85.9 91.5 97.9 107.7 118.5 Add Back EBITDA (Warrant Revenue) (0.0) – – – – – Total Revenue $401.3 $417.6 $512.3 $618.9 $699.2 $790.4 % Growth 4.0% 22.7% 20.8% 13.0% 13.0% Enterprise $88.8 $91.1 $130.5 $169.5 $195.0 $224.2 Provider 52.6 58.3 72.8 80.5 88.5 97.4 Life Sciences 42.3 44.3 47.1 50.4 55.4 60.9 Mapping Adjustments (5.2) (2.5) (0.8) (0.8) (0.8) (0.8) Total Gross Margin $178.5 $191.1 $249.6 $299.6 $338.1 $381.7 % Margin 44.5% 45.8% 48.7% 48.4% 48.3% 48.3% Product and Technology (Adj.) ($69.5) ($56.6) ($55.2) ($60.6) ($65.6) ($71.2) General Administration (Adj.) (134.8) (109.8) (112.0) (122.5) (134.7) (148.5) Sales and Marketing (Adj.) (57.8) (51.5) (54.6) (58.4) (64.0) (70.5) Allocated Overhead 0.2 – – – (0.4) (1.8) Mapping Adjustments (0.1) – – – – – Total Costs (Incl. Allocations) ($262.0) ($217.9) ($221.8) ($241.4) ($264.7) ($292.0) EBITDA (as defined) ($83.5) ($26.8) $27.8 $58.1 $73.3 $89.7 % Margin (46.8%) (14.0%) 11.1% 19.4% 21.7% 23.5% PRELIMINARY – DRAFT AND CONFIDENTIAL 2023A 2024E 2025E 2026E 2027E 2028E (1) [****] |
| 18 Preliminary Consolidated Adjusted Projections Savana Management Projections – Projected Free Cash Flow (1) 2023A P&L adjusted to account for contract termination with Elevance. See page 21 for detail. Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 04/30/24. 2023A 2024E 2025E 2026E 2027E 2028E EBITDA as defined ($83.5) ($26.8) $27.8 $58.1 $73.3 $89.7 Non-Allocated Adjustments Severance $5.2 $2.0 $1.0 $1.0 $1.0 $1.0 Other Expenses (2.8) – – – – – SBC 46.9 36.9 30.9 30.9 30.9 30.9 Other Non-Operating Expenses 40.7 10.2 2.0 2.0 2.0 2.0 Adjusted EBITDA $6.5 $22.3 $61.7 $92.0 $107.2 $123.6 Less: D&A (61.2) (67.5) (54.0) (44.5) (42.5) (42.5) Adjusted EBIT ($54.7) ($45.3) $7.7 $47.5 $64.7 $81.1 Less: Tax Expense – – (3.4) (7.7) (11.8) Plus Tax Savings from NOLs – 1.5 9.5 12.9 16.2 Plus: D&A 67.5 54.0 44.5 42.5 42.5 /HVVLQ1HW:RUNLQJ&DSLWDO (10.6) (4.3) (10.6) (12.1) (14.9) Less: Capital Expenditures (23.8) (23.7) (24.3) (24.7) (25.2) Projected Free Cash Flow ($12.1) $35.2 $63.2 $75.7 $87.9 PRELIMINARY – DRAFT AND CONFIDENTIAL (1) [****] |
| Preliminary Enterprise Segment Analysis 4. |
| 20 Enterprise Segment Summary Source(s): Sapphire management projections. PRELIMINARY – DRAFT AND CONFIDENTIAL The segment has experienced significant revenue decline over the past two years which has been exacerbated by the recent Elevance contract termination of $40mm of revenue – Core logo revenue has declined from $258mm of revenue in 2022 to an estimated $182mm in 2024 – The segment on a management adjusted basis and adjusted for Elevance, lost $3mm in 2023 In addition, the industry has become commoditized and new threats have emerged for commercial contracts Savanna’s recent strategy shift to focus on government contracts has been applauded by the street, however it comes with a high degree of execution risk over the next 5 years to be able to reverse the decline in the commercial business – The business plan needs time to prove itself out and to return Enterprise to a profitable segment Given the execution risk over the next 5 years, the market is likely discounting the Enterprise segment today Recent Revenue Declines Create High Execution Risk of Projected Financial Performance [****] [****] |
| 21 Historical and Preliminary Projected Financials Elevance Adjustment Impact on an Enterprise Segment Basis 2022 2023 2024 2025 2026 2027 2027 Enterprise Enterprise Less: Elevance Excl. Less: Elevance Excl. Enterprise Carelon Doc.ai Elevance Enterprise Carelon Doc.ai Elevance Enterprise Segment Enterprise Revenue $258.7 ($17.4) ($19.7) $221.6 $240.0 ($21.1) ($18.8) $200.1 $208.9 $283.0 $368.8 $424.1 $487.7 Cost of Goods Sold ($132.0) $16.1 $0.8 ($115.0) ($139.9) $28.6 ($0.0) ($111.3) ($117.9) ($152.5) ($199.3) ($229.1) ($263.5) Total Gross Margin $126.7 ($1.3) ($18.8) $106.6 $100.1 $7.5 ($18.8) $88.8 $91.1 $130.5 $169.5 $195.0 $224.2 % Margin 49% 8% 96% 48% 42% (36%) 100% 44% 44% 46% 46% 46% 46% Product & Technology ($10.3) $0.0 $2.3 ($8.0) ($3.8) $0.0 $0.6 ($3.2) ($2.3) ($2.6) ($3.0) ($4.4) ($6.1) General Administration (34.8) 1.7 3.6 (29.6) (29.7) 0.0 3.0 (26.7) (28.7) (33.3) (38.1) (44.2) (51.3) Sales and Marketing (20.1) 0.0 0.1 (20.0) (18.5) 0.0 0.1 (18.5) (18.9) (23.0) (25.7) (30.2) (35.4) Direct Overhead Costs ($65.2) $1.7 $5.9 ($57.6) ($52.0) $0.0 $3.7 ($48.4) ($50.0) ($59.0) ($66.7) ($78.7) ($92.7) Less: Allocated Overhead (38.2) (38.2) (43.4) (43.4) (33.6) (35.8) (39.4) (43.2) (48.1) Other Income Expense 0.0 0.0 (0.0) (0.0) (0.0) 0.0 (0.0) (0.0) Adj. EBITDA $23.3 $0.3 ($12.9) $10.7 $4.6 $7.5 ($15.2) ($3.0) $7.5 $35.8 $63.4 $73.0 $83.4 % Margin 9% (2%) 66% 5% 2% (36%) 81% (2%) 8% 27% 37% 37% 37% Note: $ in millions, except per share data. Source(s): Management projections as of April 2024. PRELIMINARY – DRAFT AND CONFIDENTIAL [****] [****] [****] [****] [****] [****] [****] [****] [****] |
| 22 Projected Enterprise Revenue Bridge FY2023 – 2024E Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 04/30/24. $244 ($40) ($10) ($8) ($2) ($3) $182 $9 $4 $3 $3 $2 $2 $1 $1 $1 $1 $209 FY 2023 Elevance Highmark , ;ƵĞƌŽƐ Ɛ Blue Shield DŝŶŶĞƐ ŽƚĂ ;ƵĞƌŽƐ Ɛ Blue Shield Of Arizona Ă ƌĞĮƌƐ ƚ tĞ;;ŶĞƐƐ 2024E džŝ ƐƟŶŐ>ŽŐŽƐ WeCare PSHP >ŽƵŝ ƐŝĂŶĂ Healthcare ŽŶŶĞĐƟŽŶƐ DŽŽƌŝŶŐƐWĂ ƌŬ PCMH VA WƌĞƐ ďLJƚĞƌŝĂŶ CareSource Molina United Other 2024E With EĞǁ>ŽŐŽƐ – $50 $100 $150 $200 $250 $300 Estimated net ($62mm) reduction of revenue in pre-existing Logos, primarily driven by Elevance termination of $40mm 2024 Growth relies on executing $48mm of pipeline Elevance termination of $40mm 2024 Go-Get Pipeline of $48mm EXECUTION RISK PRELIMINARY – DRAFT AND CONFIDENTIAL [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] |
| 23 Projected Enterprise Revenue Bridge 2024E – 2025E Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 04/30/24. $209 $9 $2 $6 $4 $5 $8 $6 $4 $6 $5 $5 $4 $10 $283 2024E With EĞǁ>ŽŐŽƐ Full Year Centene GA (PSHP) 100k Add';W,W>ŝǀĞƐ Full Year ĞŶƚĞŶĞ> Full Year Centene MS Full Year Stealth Full Year DŽƌƌŝŶŐƐWĂ ƌŬ Incremental CF (PCMH) />(&>DK) TX & ĂLJ;Žƌ, ĐŽƩĂŶĚtŚŝ ƚĞ CareSource Aetna Ardent VBC 2025E with EĞǁ>ŽŐŽƐ – $50 $100 $150 $200 $250 $300 Estimated increase of $74mm driven by increase in Centene Medicaid contracts (GA, LA, MS) and other ramping clients EXECUTION RISK PRELIMINARY – DRAFT AND CONFIDENTIAL [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] |
| 24 Preliminary Assumptions Enterprise Segment Management Assumptions General – 2024-2026 projection model provided by management – 2027-2028 assumptions provided by management • 15% revenue growth • COGS margins of 46% • 2024-2026 CAGR applied to costs associated with Product and Technology, General Administration and Sales and Marketing applied across business segments – Valuation date as of 06/30/24 – 2023 P&L is adjusted to account for termination of contract with Elevance Revenue – Projections provided by Savanna management through 2028 Allocations – 2024-2026 allocations provided by management – 2027-2028 total allocations projected using historical growth rates described below, and distributed across individual business segments based on historical distribution • Product and Technology: 8.5% • General Administration: 11.2% • Sales and Marketing: 5.6% Taxes – Corporate tax rate of 25% – Does not include impact of NOLs, which are accounted for only on a sum-of-the-parts basis Terminal Value – 2.5% perpetual growth rate – Sensitized from 0.0% to 5.0% WACC – 20.0% based on comparable publicly traded companies and adjusted given high execution risk of the enterprise business segment; see appendix for details – Sensitized from 15.0% to 25.0% PRELIMINARY – DRAFT AND CONFIDENTIAL [****] |
| 25 Preliminary Enterprise Segment Valuation Analysis Enterprise Segment Basis Implied Enterprise Value of Savanna’s Enterprise Segment Note: $ in mm, except per share data. All individual business segments valuations are shown tax-effected but without the impact of NOLs as those are captured at a WholeCo level. Source(s): Management projections and Capital IQ, as of 04/30/24. Enterprise Enterprise Trading Comps Transaction Comps Discounted Cash Flow 2023 2024 LTM Metric WACC // Perpetual Growth Rate 23 EBITDA Multiple 24 EBITDA Multiple LTM EBITDA Multiple 15% - 25% // 0% - 5% 10.0x - 15.0x 9.0x - 14.0x 10.0x - 20.0x '23 AEBITDA: (3.0) '24 AEBITDA: $7.5 LTM AEBITDA: (3.0) Enterprise Value Range $99 - $241 ($45) - ($30) $67 - $105 ($60) - ($30) $99 ($45) $67 ($60) $241 ($30) $105 ($30) ($200) $- $200 $400 $600 Enterprise Value PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 26 Preliminary Enterprise Segment Standalone Valuation Savanna Management Projections – Forecasted P&L (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 04/30/24. 2023A 2024E 2025E 2026E 2027E 2028E Total Revenue $200.1 $208.9 $283.0 $368.8 $424.1 $487.7 % Growth 4.4% 35.5% 30.3% 15.0% 15.0% Cost of Goods Sold (111.3) (117.9) (152.5) (199.3) ($229.1) ($263.5) Total Gross Margin $88.8 $91.1 $130.5 $169.5 $195.0 $224.2 % Margin 44.4% 43.6% 46.1% 46.0% 46.0% 46.0% Product and Technology ($3.2) ($2.3) ($2.6) ($3.0) ($4.4) ($6.1) General Administration (26.7) (28.7) (33.3) (38.1) (44.2) (51.3) Sales and Marketing (18.5) (18.9) (23.0) (25.7) (30.2) (35.4) Direct Overhead Costs ($48.4) ($50.0) ($59.0) ($66.7) ($78.7) ($92.7) Contribution Margin, Before Allo. $40.4 $41.0 $71.6 $102.8 $116.2 $131.5 % Margin 20.2% 19.6% 25.3% 27.9% 27.4% 27.0% Less: Allocated Overhead (43.4) (33.6) (35.8) (39.4) (43.2) (48.1) Adjusted EBITDA ($3.0) $7.5 $35.8 $63.4 $73.0 $83.4 PRELIMINARY – DRAFT AND CONFIDENTIAL (1) [****] |
| 27 Preliminary Enterprise Segment Standalone Valuation Discounted Cash Flow (DCF) Valuation (1) 2023A P&L adjusted to account for contract termination with Elevance. Note: $ in mm, except per share data. Cash flows discounted back to 06/30/24 and a weighted average cost of capital of 20%. Source(s): Management projections and Capital IQ, as of 04/30/24. 2023A 2024E 2025E 2026E 2027E 2028E Adjusted EBITDA ($3.0) $7.5 $35.8 $63.4 $73.0 $83.4 Less: Tax Expense (1.9) (8.9) (15.9) (18.3) (20.8) /HVV©LQ1HW:RUNLQJ&DSLWDO (10.8) (2.1) (8.5) (10.4) (13.1) Less: Capital Expenditures (3.9) (4.1) (4.3) (4.4) (4.6) Projected Free Cash Flow ($9.1) $20.7 $34.8 $39.9 $44.8 WACC: 20.0% PV of UFCF – ($8.7) $17.2 $24.2 $23.1 $21.6 Terminal Value Perpetual Growth Rate 2.5% Terminal Value $126.5 Terminal Perpetual Growth Rate Implied EBITDA Exit Multiple 1.5x 0.0% 2.5% 5.0% 15.0% $184.9 $207.4 $241.0 NPV of UFCF $77.4 WACC 20.0% 129.4 138.4 150.3 PV of Terminal Value 61.0 25.0% 99.0 103.2 108.4 Enterprise Value of Segment $138.4 PRELIMINARY – DRAFT AND CONFIDENTIAL (1) [****] |
| Preliminary Provider Segment Analysis 5. |
| 29 Preliminary Assumptions Provider Segment Management Assumptions General – 2024-2026 projection model provided by management – 2027-2028 assumptions provided by management • 10% revenue growth • COGS margins of 53% • 2024-2026 CAGR applied to costs associated with Product and Technology, General Administration and Sales and Marketing applied across business segments – Valuation date as of 06/30/24 Revenue – Projections provided by Savanna management through 2028 Allocations – 2024-2026 allocations provided by management – 2027-2028 total allocations projected using historical growth rates described below, and distributed across individual business segments based on historical distribution • Product and Technology: 8.5% • General Administration: 11.2% • Sales and Marketing: 5.6% Taxes – Corporate tax rate of 25% – Does not include impact of NOLs, which are accounted for only on a sum-of-the-parts basis Terminal Value – 13.0x terminal value EBITDA multiple based on comparable publicly traded companies set – Sensitized from 11.0x to 15.0x WACC – 10.0% based on comparable publicly traded companies set; see appendix for details – Sensitized from 8.0% to 12.0% PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 30 Preliminary Provider Segment Valuation Analysis Provider Segment Basis Implied Enterprise Value of Savanna’s Provider Segment Note: $ in mm, except per share data. All individual business segments valuations are shown tax-effected but without the impact of NOLs as those are captured at a WholeCo level. Source(s): Management projections and Capital IQ, as of 04/30/24. Provider Provider Trading Comps Transaction Comps Discounted Cash Flow 2023 2024 LTM Metric WACC // Terminal EBITDA Multiple '23 EBITDA Multiple '23 EBITDA Multiple LTM EBITDA Multiple 8% - 12% // 11.0x - 15.0x 11.0x - 16.0x 11.0x - 14.0x 15.0x - 20.0x '23 AEBITDA: $18.2 '24 AEBITDA: $29.1 LTM AEBITDA: $18.2 Enterprise Value Range $535 - $782 $200 - $292 $321 - $408 $273 - $365 $535 $200 $321 $273 $782 $292 $408 $365 $- $200 $400 $600 $800 $1,000 Enterprise Value PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 31 Preliminary Provider Segment Standalone Valuation Savanna Management Projections – Forecasted P&L Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 04/30/24. 2023A 2024E 2025E 2026E 2027E 2028E Total Revenue $119.3 $122.7 $137.8 $152.2 $167.4 $184.2 % Growth 2.8% 12.3% 10.5% 10.0% 10.0% Cost of Goods Sold (66.7) (64.4) (65.0) (71.7) (78.9) (86.8) Total Gross Margin $52.6 $58.3 $72.8 $80.5 $88.5 $97.4 % Margin 44.1% 47.5% 52.8% 52.9% 52.9% 52.9% Product and Technology ($2.3) ($2.0) ($2.1) ($2.3) ($2.3) ($2.2) General Administration (10.6) (8.8) (9.5) (10.3) (10.9) (11.6) Sales and Marketing (8.2) (8.3) (8.7) (9.3) (9.8) (10.4) Direct Overhead Costs ($21.1) ($19.1) ($20.3) ($21.8) ($23.0) ($24.3) Contribution Margin, Before Allo. $31.5 $39.2 $52.5 $58.7 $65.5 $73.1 % Margin 26.4% 32.0% 38.1% 38.5% 39.1% 39.7% Less: Allocated Overhead (13.3) (10.1) (10.8) (11.9) (13.0) (14.5) Adjusted EBITDA $18.2 $29.1 $41.7 $46.8 $52.5 $58.6 PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 32 Preliminary Provider Segment Standalone Valuation Discounted Cash Flow (DCF) Valuation Note: $ in mm, except per share data. Cash flows discounted back to 06/30/24 and a weighted average cost of capital of 10%. Source(s): Management projections and Capital IQ, as of 04/30/24. 2023A 2024E 2025E 2026E 2027E 2028E Adjusted EBITDA $18.2 $29.1 $41.7 $46.8 $52.5 $58.6 Less: Tax Expense (7.3) (10.4) (11.7) (13.1) (14.6) /HVV©LQ1HW:RUNLQJ&DSLWDO (1.1) (1.0) (1.0) (0.4) (0.4) Less: Capital Expenditures (1.0) (1.0) (1.0) (1.1) (1.1) Projected Free Cash Flow $19.8 $29.2 $33.1 $37.9 $42.4 WACC: 10.0% PV of UFCF $19.3 $26.6 $27.3 $28.5 $29.0 Terminal Value EBITDA Multiple 13.0x Terminal Value $761.5 Terminal EBITDA Multiple Implied Perpetual Growth Rate 4.2% 11.0x 13.0x 15.0x 8.0% $609.6 $695.7 $781.7 NPV of UFCF $130.7 WACC 10.0% 570.6 650.6 730.6 PV of Terminal Value 520.1 12.0% 535.0 609.4 683.9 Enterprise Value of Segment $650.8 PRELIMINARY – DRAFT AND CONFIDENTIAL |
| Preliminary Life Sciences Segment Analysis 6. |
| 34 Preliminary Assumptions Life Sciences Segment Management Assumptions General – 2024-2026 projection model provided by management – 2027-2028 assumptions provided by management • 10% revenue growth • COGS margins of 51% • 2024-2026 CAGR applied to costs associated with Product and Technology, General Administration and Sales and Marketing applied across business segments – Valuation date as of 06/30/24 Revenue – Projections provided by Savanna management through 2028 Allocations – 2024-2026 allocations provided by management – 2027-2028 total allocations projected using historical growth rates described below, and distributed across individual business segments based on historical distribution • Product and Technology: 8.5% • General Administration: 11.2% • Sales and Marketing: 5.6% Taxes – Corporate tax rate of 25% – Does not include impact of NOLs, which are accounted for only on a sum-of-the-parts basis Terminal Value – 12.0x terminal value EBITDA multiple based on management guidance – Sensitized from 10.0x to 14.0x WACC – 15.0% based on comparable publicly traded companies; see appendix for details – Sensitized from 13.0% to 17.0% PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 35 Preliminary Life Sciences Segment Valuation Analysis Life Sciences Segment Basis Implied Enterprise Value of Savanna’s Life Sciences Segment Note: $ in mm, except per share data. All individual business segments valuations are shown tax-effected but without the impact of NOLs as those are captured at a WholeCo level. Source(s): Management projections and Capital IQ, as of 04/30/24. Life Sciences Life Sciences Trading Comps Transaction Comps Discounted Cash Flow 2023 2024 LTM Metric WACC // Terminal EBITDA Multiple '23 EBITDA Multiple '23 EBITDA Multiple LTM EBITDA Multiple 13% - 17% // 10.0x - 14.0x 14.0x - 18.0x 13.0x - 18.0x 10.0x - 14.0x '23 AEBITDA: $19.8 '24 AEBITDA: $21.2 LTM AEBITDA: $19.8 Enterprise Value Range $256 - $376 $277 - $356 $276 - $382 $198 - $277 $256 $277 $276 $198 $376 $356 $382 $277 $- $100 $200 $300 $400 $500 $600 Enterprise Value PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 36 Preliminary Life Sciences Segment Standalone Valuation Savanna Management Projections – Forecasted P&L Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 04/30/24. 2023A 2024E 2025E 2026E 2027E 2028E Total Revenue $82.0 $85.9 $91.5 $97.9 $107.7 $118.5 % Growth 4.8% 6.5% 7.0% 10.0% 10.0% Cost of Goods Sold (39.7) (41.7) (44.4) (47.5) (52.3) (57.5) Total Gross Margin $42.3 $44.3 $47.1 $50.4 $55.4 $60.9 % Margin 51.6% 51.5% 51.5% 51.4% 51.4% 51.4% Product and Technology ($0.2) ($0.6) ($0.6) ($0.6) ($0.4) ($0.3) General Administration (4.0) (4.9) (5.0) (5.1) (5.1) (5.0) Sales and Marketing (14.1) (13.7) (14.1) (14.3) (14.6) (14.9) Direct Overhead Costs ($18.3) ($19.3) ($19.7) ($20.1) ($20.1) ($20.1) Contribution Margin, Before Allo. $24.0 $25.0 $27.4 $30.3 $35.3 $40.8 % Margin 29.3% 29.1% 29.9% 31.0% 32.8% 34.5% Less: Allocated Overhead (4.2) (3.8) (4.1) (4.5) (5.0) (5.6) Adjusted EBITDA $19.8 $21.2 $23.3 $25.8 $30.3 $35.3 PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 37 Preliminary Life Sciences Segment Standalone Valuation Discounted Cash Flow (DCF) Valuation Note: $ in mm, except per share data. Cash flows discounted back to 06/30/24 and a weighted average cost of capital of 15%. Source(s): Management projections and Capital IQ, as of 04/30/24. 2023A 2024E 2025E 2026E 2027E 2028E Adjusted EBITDA $19.8 $21.2 $23.3 $25.8 $30.3 $35.3 Less: Tax Expense (5.3) (5.8) (6.4) (7.6) (8.8) /HVV©LQ1HW:RUNLQJ&DSLWDO 1.3 (1.2) (1.1) (1.2) (1.4) Less: Capital Expenditures (0.7) (0.7) (0.7) (0.7) (0.7) Projected Free Cash Flow $16.5 $15.5 $17.5 $20.8 $24.4 WACC: 15.0% PV of UFCF – $15.9 $13.5 $13.2 $13.7 $13.9 Terminal Value EBITDA Multiple 12.0x Terminal Value $423.1 Terminal EBITDA Multiple Implied Perpetual Growth Rate 8.7% 10.0x 12.0x 14.0x 13.0% $289.1 $332.4 $375.6 NPV of UFCF $70.3 WACC 15.0% 271.9 312.2 352.6 PV of Terminal Value 241.9 17.0% 256.1 293.7 331.4 Enterprise Value of Segment $312.2 PRELIMINARY – DRAFT AND CONFIDENTIAL |
| Preliminary Corporate and Tax Analysis 7. |
| 39 Preliminary Assumptions Corporate Segment Management Assumptions General – 2024-2026 projection model provided by management – 2027-2028 assumptions provided by management • 2024-2026 CAGR applied to costs associated with Product and Technology, General Administration and Sales and Marketing applied across business segments – Valuation date as of 06/30/24 Allocations – 2024-2026 allocations provided by management – 2027-2028 total allocations projected using historical growth rates described below • Product and Technology: 8.5% • General Administration: 11.2% • Sales and Marketing: 5.6% Terminal Value – 13.0x terminal value EBITDA multiple – Sensitized from 11.0x to 15.0x WACC – 13.0% based on an average of segment comparable publicly traded companies; see appendix for details – Sensitized from 11.0% to 15.0% PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 40 Preliminary Corporate Segment Valuation Analysis Savanna Management Projections – Forecasted P&L & Discounted Cash Flow (DCF) Analysis Note: $ in mm, except per share data. Cash flows discounted back to 06/30/24 and a weighted average cost of capital of 13%. Source(s): Management projections and Capital IQ, as of 04/30/24. 2023A 2024E 2025E 2026E 2027E 2028E Product and Technology ($39.6) ($37.6) ($39.4) ($44.3) ($48.1) ($52.2) General Administration (39.0) (40.2) (44.7) (49.6) (55.1) (61.3) Sales and Marketing (8.0) (5.3) (5.6) (5.9) (6.2) (6.5) Overhead Costs, Pre-Allocations ($86.6) ($83.0) ($89.7) ($99.8) ($109.4) ($120.0) Plus: Allocated Overhead 61.1 47.4 50.7 55.8 60.8 66.4 Adjusted EBITDA ($25.5) ($35.6) ($39.0) ($44.0) ($48.6) ($53.6) Less: Tax Expense – – – – – /HVV©LQ1HW:RUNLQJ&DSLWDO ––––– Less: Capital Expenditures (18.2) (17.9) (18.3) (18.5) (18.7) Projected Free Cash Flow ($53.8) ($57.0) ($62.3) ($67.1) ($72.3) WACC: 13.0% PV of UFCF – ($52.2) ($50.4) ($48.8) ($46.5) ($44.4) Terminal Value EBITDA Multiple 13.0x Terminal Value ($696.7) Terminal EBITDA Multiple Implied Perpetual Growth Rate 2.4% 11.0x 13.0x 15.0x 11.0% ($639.3) ($709.9) ($780.5) NPV of UFCF ($242.2) WACC 13.0% (603.8) (669.5) (735.3) PV of Terminal Value (427.3) 15.0% (571.1) (632.4) (693.7) Enterprise Value of Segment ($669.5) PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 41 Estimated Corporate Wind Down / Breakage Costs Preliminary Analysis 2024E Personnel $41.9 Non-Personnel 41.1 Total Overhead, Pre-Allocations $83.0 Personnel ($27.8) Non-Personnel (19.6) Allocated Overhead ($47.4) 6-Month Severance/ Total Wind Down Breakage Costs Other Breakage Personnel $14.1 $7.0 $35.0 $- $42.0 Non-Personnel 21.5 10.7 2.1 5.0 17.9 Unallocated Corporate Costs $35.6 $17.8 $37.1 $5.0 $59.9 (1) Assumes full cash payment for severance package associated with a change of control. (2) Assumes 10% non-personnel breakage costs. (3) Assumes $5mm in other wind down costs such as legal fees, administrative, etc. Note: $ in millions, except per share data. Source(s): Management projections as of April 2024. (1) (2) (3) PRELIMINARY – DRAFT AND CONFIDENTIAL Based on 2024E overhead costs, the total cost of a company winddown / breakage is estimated at $59.9mm |
| 42 Preliminary Assumptions NOLs Management Assumptions General – 2024-2026 projection model provided by management – 2027-2028 assumptions provided by management – Valuation date as of 06/30/24 Taxes – Corporate tax rate of 25% – NOL balance of $757mm as of YE ’23 provided by management, subject to 80% Section 382 limitation WACC – 13.0% based on an average of segment comparable publicly traded companies; see appendix for details – Sensitized from 11.0% to 15.0% PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 43 Preliminary NOLs Valuation Analysis Savanna Management Projections – Forecasted P&L & Discounted Cash Flow (DCF) Analysis Note: $ in mm, except per share data. Cash flows discounted back to 06/30/24 and a weighted average cost of capital of 13%. Source(s): Management projections and Capital IQ, as of 04/30/24. 2023A 2024E 2025E 2026E 2027E 2028E WholeCo Adj. EBITDA $6.5 $22.3 $61.7 $92.0 $107.2 $123.6 Less: D&A (61.2) (67.5) (54.0) (44.5) (42.5) (42.5) WholeCo Adj. EBIT ($54.7) ($45.3) $7.7 $47.5 $64.7 $81.1 NOL Beginning Balance 757.2 811.8 857.1 850.9 812.9 761.2 NOL Carried Forward 54.7 45.3 – – – – NOL Carried (Used) – – (6.1) (38.0) (51.8) (64.9) Ending Balance $811.8 $857.1 $850.9 $812.9 $761.2 $696.3 Tax Benefit of NOL Utilized – 1.5 9.5 12.9 16.2 FCF From NOLs – $1.5 $9.5 $12.9 $16.2 WACC: 13.0% PV of UFCF – – $1.4 $7.4 $9.0 $9.9 WACC Ending NOL Balance $696.3 11.0% 13.0% 15.0% Tax Rate 25.0% $143.9 $134.5 $125.8 Tax Benefit of NOL Balance $174.1 PV of Tax Benefit of NOL Balance 106.8 NPV of UFCF 27.7 Total Value of NOLs $134.5 PRELIMINARY – DRAFT AND CONFIDENTIAL |
| Appendix |
| Preliminary WACC Analysis |
| 46 Preliminary WACC Analysis Enterprise Segment (1) 2-year weekly historical beta. (2) Current 20-year US Treasury Spot yield used as a proxy for normalized long-term risk-free rate. (3) Expected Equity Risk Premium (ERP) per Kroll report as of 02/08/24. (4) Per Kroll CRSP report as of Dec '23. Size premium represents companies with market caps between $213mm and $555mm. Note: $ in millions. Source(s): Capital IQ, Company websites and filings, as of 04/30/24. Equity T otal T otal Debt / D/E Beta Debt Company Price Value Debt Cap. Cap. Ratio T ax Levered Unlevered Cost HealthEquity $78.91 $6,799 $933 $7,732 12% 0.1x 25.7% (0.05) (0.04) 5.9% Alight $9.02 $4,941 $2,918 $7,859 37% 0.6x 30.5% 1.40 0.99 4.4% Maximus 80.28 4,900 1,482 6,382 23% 0.3x 27.0% 0.80 0.66 5.7% Evolent 27.74 3,181 645 3,826 17% 0.2x 27.0% 1.02 0.89 8.1% Progyny 32.06 3,081 19 3,101 1% 0.0x 27.5% 1.43 1.42 0.0% Teladoc 12.75 2,162 1,590 3,753 42% 0.7x 27.5% 2.10 1.37 1.4% Accolade 7.63 598 242 840 29% 0.4x 21.0% 2.03 1.54 1.1% Talkspace 3.06 519 - 519 0% 0.0x 27.5% 1.55 1.55 0.0% MultiPlan 0.65 426 4,585 5,011 91% 10.8x 27.5% 0.95 0.11 7.2% All companies (n=9) Top Quartile 12.1% 0.1x 27.0% 0.95 0.66 1.1% Mean 28.1% 1.5x 26.8% 1.25 0.94 3.8% Median 23.2% 0.3x 27.5% 1.40 0.99 4.4% Bottom Quartile 37.1% 0.6x 27.5% 1.55 1.42 5.9% Cost of Capital Contribution Weight Pre-T ax After-T ax to WACC Debt Capital 23.2% 4.4% 3.3% 0.8% Equity Capital 76.8% 13.6% 13.6% 10.4% Assumed Tax Rate 26.8% Implied WACC 11.2% Cost of Equity Calculation Unlevered Beta 0.99 Levered Beta 1.21 Normalized Risk-Free Rate(2) 4.9% Equity Market Risk Premium(3) 5.5% Company Size Premium(4) 2.0% Cost of Common Equity 13.6% PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 47 Preliminary WACC Analysis (Cont’d) Provider Segment (1) 2-year weekly historical beta. (2) Current 20-year US Treasury Spot yield used as a proxy for normalized long-term risk-free rate. (3) Expected Equity Risk Premium (ERP) per Kroll report as of 02/08/24. (4) Per Kroll CRSP report as of Dec '23. Size premium represents companies with market caps between $213mm and $555mm. Note: $ in millions. Source(s): Capital IQ, Company websites and filings, as of 04/30/24. Equity T otal T otal Debt / D/E Beta Debt Company Price Value Debt Cap. Cap. Ratio T ax Levered Unlevered Cost R1 RCM $12.29 $5,171 $1,740 $6,911 25% 0.3x 25.7% 0.64 0.51 7.0% Omnicell 26.81 1,231 605 1,836 33% 0.5x 21.0% 1.03 0.74 1.0% Phreesia 20.74 1,169 12 1,181 1% 0.0x 29.7% 1.98 1.97 13.9% Craneware 26.68 933 62 995 6% 0.1x 25.0% (0.08) (0.08) 8.0% Definitive Healthcare 6.94 817 268 1,085 25% 0.3x 29.0% 2.01 1.63 5.6% HealthStream 25.77 783 19 803 2% 0.0x 27.5% 0.56 0.55 0.5% Health Catalyst 6.22 367 249 616 40% 0.7x 25.7% 2.18 1.45 2.9% All companies (n=7) Top Quartile 4.3% 0.0x 25.3% 0.60 0.53 1.9% Mean 19.0% 0.3x 26.2% 1.19 0.97 5.6% Median 24.7% 0.3x 25.7% 1.03 0.74 5.6% Bottom Quartile 29.1% 0.4x 28.3% 2.00 1.54 7.5% Cost of Capital Contribution Weight Pre-T ax After-T ax to WACC Debt Capital 24.7% 5.6% 4.1% 1.0% Equity Capital 75.3% 12.0% 12.0% 9.0% Assumed Tax Rate 26.8% Implied WACC 10.0% Cost of Equity Calculation Unlevered Beta 0.74 Levered Beta 0.92 Normalized Risk-Free Rate(2) 4.9% Equity Market Risk Premium(3) 5.5% Company Size Premium(4) 2.0% Cost of Common Equity 12.0% PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 48 Preliminary WACC Analysis (Cont’d) Life Sciences Segment (1) 2-year weekly historical beta. (2) Current 20-year US Treasury Spot yield used as a proxy for normalized long-term risk-free rate. (3) Expected Equity Risk Premium (ERP) per Kroll report as of 02/08/24. (4) Per Kroll CRSP report as of Dec '23. Size premium represents companies with market caps between $213mm and $555mm. Note: $ in millions. Source(s): Capital IQ, Company websites and filings, as of 04/30/24. Equity T otal T otal Debt / D/E Beta Debt Company Price Value Debt Cap. Cap. Ratio T ax Levered Unlevered Cost IQVIA $231.77 $42,185 $13,740 $55,925 25% 0.3x 23.5% 1.50 1.20 5.1% Veeva Systems 198.56 32,090 56 32,146 0% 0.0x 29.8% 1.34 1.33 0.0% Interactive Corp 47.56 4,094 2,493 6,588 38% 0.6x 27.5% 1.35 0.93 6.1% Phreesia 20.74 1,169 12 1,181 1% 0.0x 29.7% 1.98 1.97 13.9% Veradigm 7.99 860 219 1,079 20% 0.3x 30.5% 0.66 0.56 4.0% Definitive Healthcare 6.94 817 268 1,085 25% 0.3x 29.0% 2.01 1.63 5.6% OptimizeRx 10.20 185 37 222 17% 0.2x 29.0% 1.89 1.65 7.9% All companies (n=7) Top Quartile 8.8% 0.1x 28.3% 1.34 1.07 4.5% Mean 17.9% 0.2x 28.4% 1.53 1.33 6.1% Median 20.3% 0.3x 29.0% 1.50 1.33 5.6% Bottom Quartile 24.6% 0.3x 29.8% 1.93 1.64 7.0% Cost of Capital Contribution Weight Pre-T ax After-T ax to WACC Debt Capital 20.3% 5.6% 4.1% 0.8% Equity Capital 79.7% 15.6% 15.6% 12.4% Assumed Tax Rate 26.8% Implied WACC 13.3% Cost of Equity Calculation Unlevered Beta 1.33 Levered Beta 1.58 Normalized Risk-Free Rate(2) 4.9% Equity Market Risk Premium(3) 5.5% Company Size Premium(4) 2.0% Cost of Common Equity 15.6% PRELIMINARY – DRAFT AND CONFIDENTIAL |
| Selected Comparable Public Companies |
| 50 Selected Comparable Public Companies Enterprise Segment (n=9) HealthEquity $78.91 (1.2%) (3.3%) 8.8% $6,799 $7,328 862 13.9% 15.6% 8.5x 7.4x 31.6% 36.2% 26.9x 20.3x NM 35.5x Alight 9.02 (2.5%) (8.4%) 37.1% 4,941 7,781 3,410 8.9% 4.8% 2.3x 2.2x 21.7% 22.5% 10.5x 9.7x NM 12.2x Maximus 80.28 (0.9%) (4.3%) 9.2% 4,900 6,277 4,905 5.9% 5.4% 1.3x 1.2x 11.1% 11.1% 11.5x 10.9x 30.3x 14.8x Evolent 27.74 (7.9%) (15.4%) 15.0% 3,181 3,811 1,964 45.3% 25.6% 1.9x 1.5x 9.9% 10.2% 19.5x 15.1x NM 22.0x Progyny 32.06 (1.0%) (16.0%) 3.4% 3,081 2,730 1,089 38.3% 19.3% 2.5x 2.1x 17.2% 17.5% 14.6x 12.0x 49.1x 20.4x Teladoc 12.75 (7.2%) (15.6%) (21.1%) 2,162 2,655 2,602 8.1% 2.3% 1.0x 1.0x 12.6% 13.7% 8.1x 7.3x NM NM Accolade 7.63 (18.4%) (27.2%) 17.0% 598 602 363 17.1% 13.9% 1.7x 1.5x NM NM NM NM NM NM Talkspace 3.06 (2.5%) (14.3%) 74.9% 519 395 150 25.5% 23.0% 2.6x 2.1x NM 2.2% NM NM NM NM MultiPlan 0.65 16.0% (19.9%) (61.8%) 426 4,937 962 (10.9%) 6.5% 5.1x 4.8x 64.3% 63.2% 8.0x 7.6x NM NM Upper Quartile (1.0%) (8.4%) 17.0% 2,602 25.5% 19.3% 2.6x 2.2x 26.6% 25.9% 17.1x 13.5x 44.4x 22.0x Mean (2.9%) (13.8%) 9.2% 1,812 16.9% 12.9% 3.0x 2.6x 24.1% 22.1% 14.2x 11.8x 39.7x 21.0x Median (2.5%) (15.4%) 9.2% 1,089 13.9% 13.9% 2.3x 2.1x 17.2% 15.6% 11.5x 10.9x 39.7x 20.4x Lower Quartile (7.2%) (16.0%) 3.4% 862 8.1% 5.4% 1.7x 1.5x 11.9% 10.9% 9.3x 8.6x 35.0x 14.8x Enterprise Segment Note: $ in mm, except per share data. Companies sorted by market capitalization as of 04/30/24. Revenue, EBITDA, P/E multiples and EBITDA margins denoted as 'NM' if negative, or greater than 25.0x, 50.0x and 75.0x, respectively. Enterprise Value includes non-controlling interest and preferred equity. Source(s): Capital IQ as of 04/30/24. PRELIMINARY – DRAFT AND CONFIDENTIAL Price Stock Price Perform ance Equity Ent. Revenue % Revenue Growth EV / Revenue EBIT DA Margin EV / EBIT DA P / E Com pany Nam e 04/30/24 Weekly 1-m onth 6-m onth Mkt. Cap. Value 2023A '22 / '23 '23 / '24 2023A 2024E 2023A 2024E 2023A 2024E 2023A 2024E Sharecare $0.72 (2.0%) (6.7%) (33.1%) 259 197 445 0.6% (1.8%) 0.4x 0.5x 5.6% 3.5% 8.1x 12.0x NM NM |
| 51 Selected Comparable Public Companies (Cont’d) Provider Segment (n=7) R1 RCM $12.29 4.6% (4.6%) 8.0% $5,171 $6,738 2,254 24.8% 17.3% 3.0x 2.5x 27.3% 24.9% 11.0x 10.2x NM 29.7x Omnicell 26.81 (5.7%) (8.3%) (24.1%) 1,231 1,377 1,147 (11.5%) (7.1%) 1.2x 1.3x 11.4% 9.4% 10.5x 13.8x NM 25.5x Phreesia 20.74 (10.4%) (13.3%) 67.4% 1,169 1,094 281 31.7% 26.3% 3.9x 3.1x NM NM NM NM NM NM Craneware 26.68 (3.8%) (4.0%) 39.1% 745 931 174 5.1% 6.2% 5.3x 5.0x 31.5% 31.1% 17.0x 16.2x NM 29.4x Definitive Healthcare 6.94 (4.5%) (14.0%) 16.4% 817 1,112 251 12.9% 5.9% 4.4x 4.2x 29.6% 32.4% 14.9x 12.9x NM 18.3x HealthStream 25.77 (2.4%) (3.3%) 2.9% 783 719 279 4.6% 5.4% 2.6x 2.4x 22.0% 22.5% 11.7x 10.9x 51.8x 46.3x Health Catalyst 6.22 11.1% (17.4%) (13.5%) 367 299 296 7.1% 4.3% 1.0x 1.0x 3.7% 8.0% 27.1x 12.1x NM 18.1x Upper Quartile 1.1% (4.3%) 27.7% 722 18.9% 11.7% 4.2x 3.6x 29.0% 29.5% 16.5x 13.6x 51.8x 29.7x Mean (1.6%) (9.3%) 13.8% 669 10.7% 8.3% 3.1x 2.8x 20.9% 21.4% 15.4x 12.7x 51.8x 27.9x Median (3.8%) (8.3%) 8.0% 281 7.1% 5.9% 3.0x 2.5x 24.6% 23.7% 13.3x 12.5x 51.8x 27.4x Lower Quartile (5.1%) (13.7%) (5.3%) 265 4.9% 4.8% 1.9x 1.9x 14.0% 12.6% 11.2x 11.2x 51.8x 20.1x Provider Segment Note: $ in mm, except per share data. Companies sorted by market capitalization as of 04/30/24. Revenue, EBITDA, P/E multiples and EBITDA margins denoted as 'NM' if negative, or greater than 25.0x, 50.0x and 75.0x, respectively. Enterprise Value includes non-controlling interest and preferred equity. Source(s): Capital IQ as of 04/30/24. PRELIMINARY – DRAFT AND CONFIDENTIAL Price Stock Price Perform ance Equity Ent. Revenue % Revenue Growth EV / Revenue EBIT DA Margin EV / EBIT DA P / E Com pany Nam e 04/30/24 Weekly 1-m onth 6-m onth Mkt. Cap. Value 2023A '22 / '23 '23 / '24 2023A 2024E 2023A 2024E 2023A 2024E 2023A 2024E Sharecare $0.72 (2.0%) (6.7%) (33.1%) 259 197 445 0.6% (1.8%) 0.4x 0.5x 5.6% 3.5% 8.1x 12.0x NM NM |
| 52 Note: $ in mm, except per share data. Companies sorted by market capitalization as of 04/30/24. Revenue, EBITDA, P/E multiples and EBITDA margins denoted as 'NM' if negative, or greater than 25.0x, 50.0x and 75.0x, respectively. Enterprise Value includes non-controlling interest and preferred equity. Source(s): Capital IQ as of 04/30/24. Selected Comparable Public Companies (Cont’d) Life Sciences Segment (n=7) IQVIA $231.77 (2.9%) (8.4%) 30.8% $42,185 $54,971 14,984 4.0% 3.6% 3.7x 3.5x 23.8% 24.2% 15.4x 14.6x 31.4x 20.9x Veeva Systems 198.56 (1.3%) (14.3%) 4.4% 32,090 28,118 2,155 16.4% 9.2% 13.0x 11.9x 39.3% 36.6% 33.2x 32.6x 63.3x 41.7x Interactive Corp 47.56 (3.3%) (10.8%) 11.9% 4,094 5,852 4,365 (16.6%) (9.2%) 1.3x 1.5x 7.7% 9.5% 17.4x 15.6x 15.5x NM Phreesia 20.74 (10.4%) (13.3%) 67.4% 1,169 1,094 281 31.7% 26.3% 3.9x 3.1x NM NM NM NM NM NM Veradigm 7.99 0.5% 3.8% (38.5%) 860 586 625 1.3% 3.9% 0.9x 0.9x 22.9% 21.3% 4.1x 4.2x 12.1x 11.0x Definitive Healthcare 6.94 (4.5%) (14.0%) 16.4% 817 1,112 251 12.9% 5.9% 4.4x 4.2x 29.6% 32.4% 14.9x 12.9x NM 18.3x OptimizeRx 10.20 14.1% (16.0%) 30.9% 185 208 72 14.5% 41.7% 2.9x 2.1x 5.2% 11.0% NM 18.6x NM 27.1x Upper Quartile (0.4%) (9.6%) 30.9% 3,260 15.5% 17.8% 4.2x 3.9x 28.2% 30.3% 17.4x 17.9x 39.3x 27.1x Mean (1.1%) (10.4%) 17.6% 3,248 9.2% 11.6% 4.3x 3.9x 21.4% 22.5% 17.0x 16.4x 30.5x 23.8x Median (2.9%) (13.3%) 16.4% 625 12.9% 5.9% 3.7x 3.1x 23.4% 22.7% 15.4x 15.1x 23.4x 20.9x Lower Quartile (3.9%) (14.2%) 8.1% 266 2.6% 3.8% 2.1x 1.8x 11.5% 13.6% 14.9x 13.3x 14.6x 18.3x Life Sciences Segment Price Stock Price Perform ance Equity Ent. Revenue % Revenue Growth EV / Revenue EBIT DA Margin EV / EBIT DA P / E Com pany Nam e 04/30/24 Weekly 1-m onth 6-m onth Mkt. Cap. Value 2023A '22 / '23 '23 / '24 2023A 2024E 2023A 2024E 2023A 2024E 2023A 2024E Sharecare $0.72 (2.0%) (6.7%) (33.1%) 259 197 445 0.6% (1.8%) 0.4x 0.5x 5.6% 3.5% 8.1x 12.0x NM NM PRELIMINARY – DRAFT AND CONFIDENTIAL |
| Selected Precedent Transactions |
| 54 Enterprise Segment Date Ann. Target Acquiror TEV ($mm) LTM Revenue LTM EBITDA 11/09/23 HealthComp Virgin Pulse $3,000 $- $- 06/13/23 ClaimLogiq Apixio - - - 05/09/23 Benefits Science Technologies MultiPlan 156 9.8x - 11/17/22 NIA Evolent Health 650 1.2x 6.0x 11/09/22 Kepro CNSI - - - 11/01/22 Benefitfocus Voya Financial 626 2.7x 16.7x 10/25/22 ClaimLogiq New Mountain Capital - - - 10/03/22 bswift Francisco Partners 735 3.2x 14.7x 06/29/22 IPG Evolent Health 375 2.1x 12.0x 06/21/22 Convey Health Solutions TPG 1,100 3.1x 18.9x 06/16/22 LifeWorks TELUS 2,896 2.8x 21.5x 04/22/22 ClaimsXten TPG 2,200 - - 01/05/22 Castlight Health Vera Whole Health 313 2.4x 13.1x 12/02/21 CNSI Carlyle - - - 09/13/21 Summit TurningPoint - - - 08/19/21 Inovalon 1RUGLF&DSLWDO,QVLJKW3DUWQHUV£ 7,315 10.2x 30.7x 04/23/21 PlushCare Accolade 450 12.9x - 01/06/21 Change Healthcare Optum 13,314 4.3x 16.2x 12/21/20 HMS Gainwell 3,378 5.3x 27.5x 11/20/20 Quantum Health Warburg Pincus 1,210 8.8x 24.2x 10/27/20 Health Advocate Teleperformance 690 4.9x 13.8x 08/05/20 Livongo Teladoc 18,500 71.7x - 03/09/20 Health Edge Technologies Blackstone 730 - - 06/19/18 Cotiviti Veritas Capital 4,896 6.6x 17.9x 05/11/17 Kepro Apax Partners - - - All Transactions (n=25) Upper Quartile $3,378 9.8x 22.9x Mean 3,291 9.9x 17.6x Median 1,100 4.9x 16.5x Lower Quartile 626 2.7x 13.3x TEV as a multiple of: Note: $ in mm. Source(s): Capital IQ and company press releases and filings as of 04/30/24. Selected Precedent Transactions PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 55 Provider Segment Date Ann. Target Acquiror TEV ($mm) LTM Revenue LTM EBITDA 03/18/24 Cloudbreak Health GTCR $180 $- $- 02/14/24 Cotiviti Veritas / KKR - - - 09/06/23 NextGen Healthcare Thoma Bravo 1,764 2.6x 15.8x 08/14/23 Populi Definitive Healthcare 54 11.0x - 08/08/23 Roper Technologies Syntellis Performance Solutions 1,400 - - 07/19/23 Nextech TPG 1,400 8.0x 24.6x 05/16/23 MDPortals Reveeler - - - 06/29/22 Acton Corporation HealthMark - - - 06/21/22 Convey Health Solutions TPG 1,100 3.1x 18.9x 05/10/22 Dynamic Healthcare Systems Reveeler - - - 03/02/22 Allscripts (Hospital Business Unit) N. Harris Computer 700 - - 12/20/21 Cerner Oracle 30,161 5.3x 20.6x 06/09/21 CIOX Health Datavant 7,000 - - 01/06/21 Change Healthcare Optum 13,314 4.3x 16.2x 05/04/20 eRx Network Change Healthcare 213 3.2x - 03/09/20 Health Edge Technologies Blackstone 730 - - 10/30/19 MRO Parthenon Capital - - - 09/05/19 Convey Health Solutions TPG - - - 10/01/14 MRO Imperial Capital Partners - - - All Transactions (n=19) Upper Quartile $5,691 8.0x 22.6x Mean 4,835 5.4x 19.2x Median 1,250 4.3x 18.9x Lower Quartile 335 3.1x 16.0x TEV as a multiple of: Selected Precedent Transactions (Cont’d) Note: $ in mm. Source(s): Capital IQ and company press releases and filings as of 04/30/24. PRELIMINARY – DRAFT AND CONFIDENTIAL |
| 56 Life Sciences Segment Date Ann. Target Acquiror TEV ($mm) LTM Revenue LTM EBITDA 02/29/24 Healthwise WebMD $- $- $- 02/27/24 ScienceIO Veradigm 184 - - 02/23/24 GlocalMind Apollo Intelligence - - - 02/06/24 Avant Healthcare Real Chemistry - - - 01/17/24 American HealthTech (CPSI) PointClickCare 25 - - 08/14/23 Populi Definitive Healthcare 53 10.8x - 06/08/23 Limeade WebMD Health Services 75 1.4x - 03/06/23 Weekend Health WeightWatchers 106 4.2x - 03/01/23 TI Health (Swoop) Real Chemistry - - - 07/12/22 RVO Health Optum, Red Ventures - - - 12/01/21 Meredith Holding Dotdash (IAC) 2,686 - - 12/16/20 Kantar Health Cerner 375 2.5x 16.5x 10/27/20 Outcome Health PatientPoint 600 5.0x 12.9x 02/11/20 Care.com IAC 525 2.5x 37.2x 06/12/19 Real Chemistry (fka W2O) New Mountain Capital - - - 07/24/17 WebMD KKR 2,695 3.8x 14.0x 10/21/16 Everyday Health Ziff Davis 465 1.8x 15.0x 05/23/16 Ancestory.com Silver Lake Partners 2,600 3.9x 9.9x 10/22/12 Ancestory.com Permira 1,600 3.5x 9.6x All Transactions (n=19) Upper Quartile $2,100 4.4x 15.4x Mean 922 3.9x 13.0x Median 465 3.6x 13.4x Lower Quartile 91 2.3x 9.8x TEV as a multiple of: Selected Precedent Transactions (Cont’d) Note: $ in mm. Source(s): Capital IQ and company press releases and filings as of 04/30/24. PRELIMINARY – DRAFT AND CONFIDENTIAL |
| Enterprise Segment Revenue Analysis |
| 58 Top Enterprise Logos By Revenue Note: Companies sorted by 2023A Revenue. Source(s): Sapphire management projections. 2023A 2024E % Change Carelon - Horizon 17,033,581 - (100%) Carelon - Blue Cross Blue Shield Michigan 4,067,663 - (100%) Sharecare AI 18,815,994 - (100%) 1. Elevance $39,917,238 $- (100%) 2. State Health Benefit Plan 18,496,869 18,170,279 (2%) 3. Carefirst Wellness 12,868,786 9,516,686 (26%) 4. Carefirst DM FEP 12,509,737 12,444,801 (1%) 5. Highmark Health Solutions 10,109,400 600,000 (94%) 6. Carefirst PCMH 7,679,525 12,467,500 62% 7. Blue Cross Blue Shield Minnesota 7,570,449 - (100%) 8. Delta Air Lines 7,390,962 6,107,341 (17%) 9. Koch Industries 6,800,669 6,546,753 (4%) 10. Blue Cross Blue Shield Of Arizona 5,979,462 4,033,282 (33%) 11. Los Angeles Police Relief Assoc 4,002,222 4,063,123 2% 12. CarePlus 3,041,661 2,662,905 (12%) 13. Healthgrades 2,991,519 2,160,000 (28%) 14. Health Net CA 2,612,554 1,746,616 (33%) 15. Lennar Corporation 1,946,204 1,019,612 (48%) 16. Blue Cross of Idaho 1,680,374 1,629,579 (3%) 17. Assoc For Los Angeles Deputy Insurance Trust 1,456,528 1,315,056 (10%) 18. Los Angeles Fireman's Relief Assoc 1,382,765 1,393,512 1% 19. Blue Cross Blue Shield Of Nebraska 1,300,752 1,129,436 (13%) 20. Wellstar 1,192,466 182,565 (85%) 21. RELX Inc 1,021,095 650,659 (36%) 22. Learning Care Group 914,423 1,016,866 11% 23. Centene Peach State Health Plan 636,000 9,518,000 1397% 24. State of Tennessee - 5,665,975 NM All Other Clients 86,472,309 78,312,511 (9%) 239,973,969 182,353,056 (24%) Customer Total Revenue Logo Visibility Into 2024 PRELIMINARY – DRAFT AND CONFIDENTIAL [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] |
| 59 Historical Enterprise Revenue Bridge FY2020 – FY2021 Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 04/30/24. $190 $12 $17 $38 ($14) ($15) $10 $2 $5 $244 – $50 $100 $150 $200 $250 $300 $54mm increase in revenue (29%), driven by $25mm of organic growth with COVID and other new logos and $29mm of inorganic growth via acquisition of Carelinx and doc.AI (Elevance) PRELIMINARY – DRAFT AND CONFIDENTIAL [****] [****] |
| 60 Historical Enterprise Revenue Bridge FY2021 – FY2022 Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 04/30/24. $244 ($37) $42 $17 ($5) ($3) $1 $259 FY 2021 Health Security (COVID Vaccine) Carelinx Ramp Carelon (advocacy) International (France & Brazil Red.) ÍŘôƱŘŜťώ(IJŘĺīīıôIJťώ"ôèīĖIJô Other FY 2022 – $50 $100 $150 $200 $250 $300 $15mm of organic growth due to ramping of Carelinx which offset lost Health Security revenue and other reductions PRELIMINARY – DRAFT AND CONFIDENTIAL [****] |
| 61 Historical Enterprise Revenue Bridge FY2022 – FY2023 Note: $ in mm, except per share data. Source(s): Management projections and Capital IQ, as of 04/30/24. $259 $4 $9 ($10) ($8) ($5) ($1) ($4) $244 FY 2022 Carelon (advocacy) Other Advocacy Carelinx ÍŘôƱŘŜťώŘôŕŘĖèĖIJČ International (Brazil Term) Meta Other FY 2023 – $50 $100 $150 $200 $250 $300 ($15mm) reduction of revenue driven by Carelinx performance, Carefirst repricing and international terminations, partially offset by advocacy revenue increases PRELIMINARY – DRAFT AND CONFIDENTIAL [****] |
| Public Market Overview |
| 63 Public Market Overview (1) Consists of 355.076mm basic shares outstanding (as of 04/16/24), 18.605mm warrants at various strike prices, 80.008mm vested options outstanding at various strike prices, 19.080mm RSUs vested or expected to vest before June, 2024, 14.231 options that vest upon change in control, 23.061mm RSUs that vest upon change in control, (3.531mm) unvested options at various strike prices, 49.370mm unvested RSUs. Accounted for using the Treasury Stock Method based on Savanna’s stock price as of 04/30/24. (2) Includes $50mm Series A Convertible Preferred aggregate liquidation preference (5.000mm Units which convert to common stock on a 1:1 basis at $10.00 per share entirely held by Anthem, Inc.). (3) Includes $0.519mm of long-term debt associated with a senior secured revolving credit facility with Wells Fargo. Note: $ in millions, except per share data. CIC = Change in Control. Source(s): Capital IQ, Company website, press releases and filings as of 04/30/24. Current Valuation Trading Statistics Pre-CIC Post-CIC Price Per Share (04/30/24) $0.72 $0.72 52 Week High: 1.80 1.80 52 Week Low: 0.48 0.48 Diluted Shares Outstanding (mm)(1) 369.440 392.502 Fully Diluted Market Cap: $264 $281 Plus: Preferred Liquidation Preference(2) - 50 Plus: Debt (12/31/23)(3) 1 1 Less: Cash & Equivalents (12/31/23) (128) (128) Enterprise Value: $137 $203 $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Stock Price Performance $0.72 2023A 2024E 2025E 2026E Revenue $401 $418 $512 $619 EV / Revenue 0.5x 0.5x 0.4x 0.3x Adj. EBITDA 7 22 62 92 EV / EBITDA 31.1x 9.1x 3.3x 2.2x 07/01/21: closed business combination with Falcon Capital Acquisition Corp. 11/10/21: announced third quarter 2021 financial results and operational highlights 11/09/23: appointed Brent Layton as next CEO; founder Jeff Arnold to serve as executive chairman 02/12/21: Savanna and Falcon Capital Acquisition Corp. reached agreement to combine; company expected to have an initial enterprise value of $3.9bn 08/11/21: entered home health market with acquisition of CareLinx 08/10/22: initiated a strategic review of its non-enterprise businesses 03/12/24: Savanna announced that is has been evaluating a range of options including a potential sale of the Company 10/12/23: received an unsolicited preliminary non-binding proposal from Claritas Capital to acquire the Company 05/31/23: concluded strategic review and announced share repurchase program PRELIMINARY – DRAFT AND CONFIDENTIAL |
| Analysis at Various Offer Prices For WholeCo |
| 65 Analysis at Various Offer Prices For WholeCo Current Illustrative Offer Prices Share Price ($) $0.72 $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 $2.50 $2.75 $3.00 Prem./(Disc.) to Current Share Price ($0.72) -% 40% 75% 110% 144% 179% 214% 249% 284% 319% Basic Shares Outstanding 355.08 355.08 355.08 355.08 355.08 355.08 355.08 355.08 355.08 355.08 Series A Convertible Preferred Stock - - - - - - - - - - Warrants - - - - - - - - - - Vested Options at Various Strike Prices 0.39 0.50 5.49 11.25 19.99 26.54 31.64 35.72 39.05 41.87 RSUs Vesting between January and June 2024 9.25 9.25 9.25 9.25 9.25 9.25 9.25 9.25 9.25 9.25 Vested Portion of RSUs - 2024 Grants Already Granted 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 2.28 Vested Portion of RSUs - 2024 Grant Yet to be Granted 2.45 2.45 2.45 2.45 2.45 2.45 2.45 2.45 2.45 2.45 Options Vesting per CIC Trigger at Various Strike Prices - (0.00) (0.02) 0.02 0.26 0.43 0.57 0.68 0.77 0.84 RSUs Vesting per CIC trigger(1) 23.06 23.06 23.06 23.06 23.06 23.06 23.06 23.06 23.06 23.06 Fully Diluted Shares Outstanding 392.50 392.61 397.58 403.38 412.35 419.08 424.31 428.50 431.93 434.82 Implied Equity Offer Value to Common $281 $393 $497 $605 $722 $838 $955 $1,071 $1,188 $1,304 Plus: Preferred Liquidation Preference 50 50 50 50 50 50 50 50 50 50 Plus: Debt (12/31/23) 1 1 1 1 1 1 1 1 1 1 Less: Cash & Equivalents (12/31/23) (128) (128) (128) (128) (128) (128) (128) (128) (128) (128) Implied Transaction Value $203 $315 $419 $527 $644 $760 $877 $994 $1,110 $1,227 2023A Revenue $401 $401 $401 $401 $401 $401 $401 $401 $401 $401 Implied 2023A Revenue Multiple 0.5x 0.8x 1.0x 1.3x 1.6x 1.9x 2.2x 2.5x 2.8x 3.1x (1) Calculation of fully-diluted shares outstanding assumes change in control. (2) Consists of 355.076mm basic shares outstanding (as of 04/16/24), 18.605mm warrants at various strike prices, 80.008mm vested options outstanding at various strike prices, 19.080mm RSUs vested or expected to vest before June, 2024, 14.231 options that vest upon change in control, 23.061mm RSUs that vest upon change in control, (3.531mm) unvested options at various strike prices, 49.370mm unvested RSUs. Accounted for using the Treasury Stock Method based on Savanna’s stock price as of 04/30/24. (3) Includes $50mm Series A Convertible Preferred aggregate liquidation preference (5.000mm Units which convert to common stock on a 1:1 basis at $10.00 per share entirely held by Anthem, Inc.). Note: $ in millions, except per share data. Source(s): Capital IQ and Company website, press releases and filings as of 04/30/24. (3) (1) (2) (1) PRELIMINARY – DRAFT AND CONFIDENTIAL |
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| At your side. On your side. |
Exhibit 16(d)(iv)
EXECUTION VERSION
Limited Guarantee
This Limited Guarantee, dated as of June 21, 2024 (this “Limited Guarantee”), is made by Altaris Health Partners V, L.P., a Delaware limited partnership (the “Guarantor”), in favor of Sharecare, Inc., a Delaware corporation (the “Guaranteed Party”). Capitalized terms used but not otherwise defined herein shall have the respective meanings given to them in the Merger Agreement (as defined below).
1. Limited Guarantee.
(a) To induce the Guaranteed Party to enter into that certain Agreement and Plan of Merger, dated as of the date hereof (as it may be amended, supplemented or modified from time to time, the “Merger Agreement”), by and among the Guaranteed Party, Impact Acquiror Inc., a Delaware corporation (“Parent”), Impact Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”), the Guarantor, intending to be legally bound, hereby absolutely, unconditionally and irrevocably guarantees, subject to the limitations contained herein and in Section 8.2(a), 8.2(d) and 8.2(e) of the Merger Agreement, the due, punctual and complete payment of (x) any monetary damages payable by Parent, Merger Sub or any of their Affiliates to the Company following a termination of the Merger Agreement in accordance with its terms, solely to the extent (i) a court of competent jurisdiction shall have entered a final and non-appealable judgment that such monetary damages are due and payable by Parent, Merger Sub or any of their Affiliates to the Company in accordance with Section 8.2(a) of the Merger Agreement or (ii) a written agreement signed by the Guaranteed Party and the Guarantor pursuant to which the Guarantor expressly agrees to pay an amount in damages and/or costs and expenses to the Guaranteed Party, and (y) payment obligations of Parent and Merger Sub solely with respect to the amounts required to be paid by Parent or Merger Sub to the Company for reimbursement under Section 6.10 with respect to the Proxy Statement and indemnification or reimbursement under the last sentence of Section 6.17(b) of the Merger Agreement, in the case of the foregoing clauses (x) and (y), in a maximum aggregate amount equal to $45,000,000 (the “Maximum Amount”) (collectively, the “Obligation”). If Parent or Merger Sub fails to pay and discharge all or any portion of the Obligation when due and payable pursuant to the Merger Agreement, upon the Guaranteed Party’s demand, the Guarantor shall immediately pay, or cause to be paid, to the Guaranteed Party the Obligation. The Guaranteed Party may not be entitled to receive payment in respect of monetary damages from the Guarantor (for the avoidance of doubt, excluding any payment in respect of Section 6.10 and Section 6.17(b) of the Merger Agreement) under or in respect of this Limited Guarantee unless and until the Merger Agreement has been validly terminated in accordance with Section 8.1 thereof; provided that Guarantor expressly acknowledges and agrees that the Guaranteed Party’s election to pursue an injunction, specific performance or other equitable relief prior to the termination of this Agreement shall not restrict, impair or otherwise limit the Guaranteed Party from seeking in the alternative from the Chosen Court monetary damages up to the Maximum Amount. For the avoidance of doubt, in no event shall the Guarantor be obligated to pay or contribute (as applicable) any amount in respect of both the Obligation and the Commitment (as defined in the Equity Commitment Letter).
(b) The parties hereto agree that this Limited Guarantee may not be enforced without giving effect to the limitations set forth in Section 1 (including, without limitation, the Maximum Amount and limitations set forth in Section 8.2(a), 8.2(d) and 8.2(e) of the Merger Agreement). The Guaranteed Party agrees, on behalf of itself and its controlled Affiliates that none of them shall assert any claim of any kind, directly or indirectly, in any Proceeding, that the Guarantor is liable hereunder for the Obligation in an aggregate amount in excess of the Maximum Amount. All payments hereunder shall be made in lawful money of the United States, in immediately available funds.
2. Nature of Guarantee. The obligations of the Guarantor are irrevocable. The Guaranteed Party shall not be obligated to file any claim relating to the Obligation in the event that Parent or Merger Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Guaranteed Party to so file shall not affect the Guarantor’s obligations hereunder. This Limited Guarantee is an unconditional guarantee of payment in accordance with Section 1 hereof and not of collection, and a separate proceeding or proceedings may be brought and prosecuted against the Guarantor to enforce this Limited Guarantee, irrespective of whether any proceeding is brought against Parent, Merger Sub or the Guarantor or whether Parent, Merger Sub or the Guarantor are joined in any such proceeding or proceedings. In the event that any payment to the Guaranteed Party in respect of the Obligation is rescinded or must otherwise be returned to the Guarantor for any reason whatsoever, the Guarantor shall remain liable hereunder with respect to the Obligation (subject to the terms and conditions hereof) as if such payment had not been made. Subject to the other provisions of this Limited Guarantee, the Guaranteed Party hereby agrees that the Guarantor may assert, as a defense to, or release or discharge of, such payment by the Guarantor under this Limited Guarantee, against an affirmative claim by the Guaranteed Party, or any of its Affiliates , or any other Person claiming by, through or on behalf of any of them, any claim, release, rights, remedies, set-offs and defenses that Parent or Merger Sub could assert with respect to the Obligation pursuant to the terms of the Merger Agreement (other than any such rights, remedies, set-offs and defenses arising out of, due to, or as a result of, the insolvency, bankruptcy, reorganization or other similar proceeding affecting Parent or Merger Sub).
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3. Changes in Obligations; Certain Waivers.
(a) The Guarantor agrees that the Guaranteed Party may at any time and from time to time, without notice to or further consent of the Guarantor, enter into any agreement with Parent or Merger Sub for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, or for any modification of the Merger Agreement or the Equity Commitment Letter or of any agreement between the Guaranteed Party and Parent or Merger Sub or any Person interested in the transactions contemplated by the Merger Agreement without in any way impairing or affecting the Guarantor’s obligations under this Limited Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder are absolute, unconditional and irrevocable, subject to the limitations contained in this Limited Guarantee, and shall not be released or discharged, in whole or in part, or otherwise affected by (i) the failure of the Guaranteed Party to assert any claim or demand or to enforce any right or remedy against Parent, Merger Sub, the Guarantor or any other Person with respect to the Obligation; (ii) any change in the time, place or manner of payment of the Obligation or any rescission, waiver, compromise, consolidation or other amendment or modification of any of the terms or provisions of the Merger Agreement, the Equity Commitment Letter or any Rollover Agreements made in accordance with the terms thereof; (iii) any insolvency, bankruptcy, reorganization or other similar proceeding affecting Parent or Merger Sub or any other Person interested in the transactions contemplated by the Merger Agreement or any of their respective assets or any other Person now or hereafter liable with respect to the Obligation; (iv) the adequacy or potential adequacy of any other means the Guaranteed Party may have of obtaining payment of the Obligation; (v) any change in the corporate or legal existence, structure or direct or indirect ownership of Parent, Merger Sub or the Guarantor or any other Person interested in the transactions contemplated by the Merger Agreement; (vi) the addition, substitution or release of any Person now or hereafter liable with respect to the Obligation or otherwise interested in the transactions contemplated by the Merger Agreement; or (vii) the value, genuineness, validity, regularity, illegality or enforceability of the Merger Agreement or any other agreement evidencing, securing or otherwise executed in connection with the Obligation. To the fullest extent permitted by Law, the Guarantor hereby expressly waives any and all rights or defenses arising by reason of any Law which would otherwise require any election of remedies by the Guaranteed Party. The Guarantor hereby expressly waives promptness, diligence, notice of the acceptance of this Limited Guarantee and of the Obligation, presentment, demand for payment, notice of non-performance and default, including notice of the Obligation incurred and all notices of any kind (except for notices to be provided pursuant to this Limited Guarantee or to Parent or Merger Sub and their counsel in accordance with the Merger Agreement), all defenses which may be available by virtue of any valuation, stay, moratorium law or other similar Law now or hereafter in effect, any right to require the marshalling of assets of Parent or Merger Sub or any other Person interested in the transactions contemplated by this Limited Guarantee or the Merger Agreement and all suretyship defenses generally, other than defenses to the payment of the Obligations that are available to Parent, Merger Sub or the Guarantor under the Merger Agreement. The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the transactions contemplated by the Merger Agreement and that the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such benefits. Notwithstanding anything to the contrary contained in this Limited Guarantee, the Guaranteed Party hereby agrees that to the extent that Parent and Merger Sub are relieved of any portion of the Obligation under the Merger Agreement by the actual satisfaction or waiver thereof on the terms and subject to the conditions set forth in the Merger Agreement, the Guarantor shall be following such actual satisfaction or waiver similarly relieved of such Obligation to such extent under this Limited Guarantee. Notwithstanding anything to the contrary contained herein, any payment actually made by or on behalf of Parent or Merger Sub to the Guaranteed Party with respect to the Obligation shall reduce the total Obligation of the Guarantor under this Limited Guarantee dollar for dollar.
(b) The Guaranteed Party hereby covenants and agrees that it shall not institute or assert, and shall cause its controlled Affiliates not to institute or assert, any proceeding or bring any claim of any kind whatsoever in any Proceeding, whether at law or in equity, and whether sounding in contract, tort, statute or otherwise (including, without limitation, any Claim (as defined in Section 9)) arising under or in connection with this Limited Guarantee, the Equity Commitment Letter or the Merger Agreement or the transactions contemplated hereby or thereby against the Guarantor or any of its Non-Parties, except for claims (i) by the Guaranteed Party against the Guarantor under and pursuant to this Limited Guarantee (as limited by its terms, including, without limitation, the provisions of Section 1), (ii) by the Guaranteed Party as a third-party beneficiary of the Equity Commitment Letter pursuant to and upon the terms and conditions set forth therein and in Section 9.5(b) and 9.5(c) of the Merger Agreement, (iii) by the Guaranteed Party against Parent or Merger Sub under and pursuant to the Merger Agreement, (v) by the Guaranteed Party pursuant to the terms and subject to the conditions of the Confidentiality Agreement or (v) by the Guaranteed Party as a third-party beneficiary of any Rollover Agreement pursuant to and upon the terms and conditions set forth therein (the claims referred to in the foregoing clauses (i)-(v) of this Section 3(b), collectively, the “Permitted Claims”).
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(c) Except as expressly set forth herein, the Guarantor hereby unconditionally and irrevocably waives, and agrees not to exercise, any rights that it may now have or hereafter acquire against Parent or Merger Sub that arise from the existence, payment, performance or enforcement of the Guarantor’s Obligation under or in respect of this Limited Guarantee, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Guaranteed Party against Parent or Merger Sub, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from Parent or Merger Sub, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until the Obligation shall have been paid to the Guaranteed Party in full in cash. If any amount shall be paid to the Guarantor in violation of the immediately preceding sentence at any time and from time to time pursuant to this Limited Guarantee at any time prior to the payment in full of the Obligation, such amount shall be received and held in trust for the benefit of the Guaranteed Party, shall be segregated from other property and funds of the Guarantor and shall forthwith be paid or delivered to the Guaranteed Party in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Obligation, whether matured or unmatured, or to be held as collateral for the Obligation thereafter existing.
4. Effect on Certain Rights. No failure on the part of the Guaranteed Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Guaranteed Party of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power hereunder except as explicitly set forth herein (including, without limitation, Section 9 hereof). Subject to the terms, conditions and limitations hereof and of the Merger Agreement and the Equity Commitment Letter, (i) each and every right, remedy and power hereby granted to the Guaranteed Party or allowed to it by applicable Law shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party at any time or from time to time and (ii) the Guaranteed Party shall not have any obligation to proceed at any time or in any manner against or exhaust any or all of the Guaranteed Party’s rights against Parent or Merger Sub or any other Person liable for any portion of the Obligation prior to proceeding against any Guarantor hereunder.
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5. Representations and Warranties. The Guarantor hereby represents and warrants to the Guaranteed Party that:
(a) the Guarantor is a limited partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and the Guarantor has all requisite organizational power and authority to execute, deliver and perform this Limited Guarantee;
(b) the execution, delivery and performance of this Limited Guarantee have been duly and validly authorized by all necessary action and do not contravene any provision of the Guarantor’s partnership agreement or similar organizational documents or any applicable Law or contractual restriction binding on such Guarantor or its assets that would prevent Guarantor from performing its obligations under this Limited Guarantee;
(c) all consents, approvals, authorizations, permits of, filings with and notifications to, any Governmental Entity necessary for the due execution, delivery and performance of this Limited Guarantee by the Guarantor have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any Governmental Entity is required in connection with the execution, delivery or performance of this Limited Guarantee by such Guarantor;
(d) this Limited Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject, as to enforcement, to the Bankruptcy and Equity Exception; and
(e) the Guarantor has the financial capacity to pay and perform its obligations under this Limited Guarantee, and all funds necessary for such Guarantor to fulfill its obligations under this Limited Guarantee shall be available to the Guarantor for so long as this Limited Guarantee shall remain in effect in accordance with Section 8 hereof.
6. Assignment. This Limited Guarantee may not be assigned, transferred or delegated (including, without limitation, by operation of Law) by the Guaranteed Party without the prior written consent of the Guarantor, or by the Guarantor without the prior written consent of the Guaranteed Party; provided that the Guarantor may assign all or any portion of its obligations with respect to the Obligation under this Limited Guarantee to any equity co-investor and/or any of its Affiliates and affiliated funds, if applicable without the prior written consent of the Guaranteed Party; provided, however, that (a) all representations, warranties and covenants herein shall be deemed to be those of the assigning Guarantor and such assignee, (b) no such assignment shall relieve the Guarantor of any portion of its obligations hereunder, (c) such assignment would not reasonably be expected result in any material delay in satisfying, or increase the risk of not satisfying, the conditions to the Closing set forth in the Merger Agreement or otherwise impede the consummation of the transactions contemplated by the Merger Agreement in any way, (d) the assignee is capable of performing its obligations under this Agreement, including having the financial capacity necessary to fund the Obligation (or portion thereof that is being assigned) and (e) no such assignment shall be permitted (i) in violation of applicable Law or (ii) that would (x) require any additional regulatory consent to be obtained by the Guarantor, Parent or Merger Sub or the Company (the “Transaction Parties”); or (y) cause any statement made or information provided to a regulatory authority prior to such assignment to become materially untrue or misleading (other than any statement made or information provided related solely to the identity of the Guarantor). Any attempted assignment in violation of this Section 6 shall be null and void and of no force or effect.
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7. Notices. All notices and other communications under this Limited Guarantee shall be given by the means specified in the Merger Agreement, mutatis mutandis (and shall be deemed given as specified therein), as follows:
If to the Guaranteed Party, to:
Sharecare, Inc.
255 East Paces Ferry Road NE, Suite 700
Atlanta, Georgia 30305
Attention: Carrie Ratliff, Chief Legal Officer
Email: legal@sharecare.com
with a copy to (which shall not constitute notice):
Wachtell, Lipton, Rosen &
Katz
51 West 52nd Street
New York, NY 10019
Attention: Mark Gordon; Meng Lu
Email: MGordon@wlrk.com; MLu@wlrk.com
If to the Guarantor, to:
Altaris Health Partners V, L.P.
c/o Altaris, LLC
10 E. 53rd Street, 31st Floor
New York, NY 10022
Attention: Nicholas Fulco
Email: nicholas.fulco@altariscap.com
with a copy to (which shall not constitute notice):
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
Attention: David B. Feirstein, P.C.; William N. Lay
Email: david.feirstein@kirkland.com; william.lay@kirkland.com
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8. Continuing Guarantee; Termination. Unless terminated pursuant to this Section 8, this Limited Guarantee shall remain in full force and effect and shall be binding on the Guarantor, its successors and permitted assigns until all of the Obligation has been indefeasibly paid in full(subject to the limitation in Section 1). Notwithstanding the foregoing or anything to the contrary expressed in or implied by this Limited Guarantee or otherwise, this Limited Guarantee shall terminate automatically and immediately (other than this Section 8, Sections 9 through 17 and Section 18, all of which shall survive the termination of this Limited Guarantee) and the Guarantor shall have no further liability or obligation under or with respect to this Limited Guarantee as of the earliest to occur of (a) the consummation of the Closing and the payment of all amounts required to be paid by Parent under the Merger Agreement at or prior to the Closing, (b) ninety (90) days following the date the Merger Agreement is validly terminated in accordance with its terms (the date of such ninety (90) day anniversary, the “Final Date”), unless the Guaranteed Party commences any Proceeding for payment against the Guarantor in a Chosen Court prior to the Final Date, in which case this Limited Guarantee shall terminate immediately and with no further liability or obligations of the Guarantor upon the final resolution of such Proceeding and the indefeasible payment to the Guaranteed Party of all amounts (if any) finally determined (and not subject to any appeal) by the Chosen Court or agreed in writing by the parties hereto to be owing thereunder by or on behalf of the Guarantor, (c) the payment and performance in full of all of the Obligation, and (d) at the Guarantor’s election, at any time when the Guaranteed Party or any of its controlled Affiliates asserts a claim in any Proceeding (i) that the provisions of Section 1 with respect to the Maximum Amount or the provisions of this Section 8 or Section 9 are illegal, invalid or unenforceable in whole or in part, (ii) that the Guarantor is liable hereunder in excess of the Obligation or that the Guarantor or any of its Non-Parties are collectively liable hereunder in excess of the Maximum Amount or (iii) against the Guarantor or any of its Non-Parties asserting a theory of liability against the Guarantor or any of its Non-Parties with respect to this Limited Guarantee, the Equity Commitment Letter or the Merger Agreement, in each case, except for Permitted Claims. In the event of a termination by the Guarantor pursuant to the above clause (d), then (x) the obligations of the Guarantor under this Limited Guarantee shall terminate ab initio and be null and void, (y) if the Guarantor shall have previously made any payments under this Limited Guarantee, it shall be entitled to recover and retain any and all such payments and (z) none of the Guarantor, Parent, Merger Sub or any of their respective Non-Parties shall have any liability to the Guaranteed Party, its equityholders or any of their respective Representatives under this Limited Guarantee or the Merger Agreement (or any of the transactions contemplated hereby or thereby).
9. No Recourse. Without limiting the payment and other obligations of the Guarantor hereunder, the Guaranteed Party acknowledges, on behalf of itself and each of its Affiliates, that Parent does not have any assets other than its rights under (x) the Merger Agreement, (y) this Limited Guarantee and (z) the Equity Commitment Letter unless and until Closing occurs, and that no funds are expected to be contributed to Parent unless and until the Closing occurs and that, except for its rights under (I) Section 6 of the Equity Commitment Letter (and subject to all of the terms, conditions and limitations therein) and (II) under Section 9.5(b) of the Merger Agreement (and subject to Section 9.5(c) of the Merger Agreement), the Guaranteed Party shall not have any right to cause any assets to be contributed to Parent by the Guarantor, any Affiliate thereof or any other Person, except as is required to comply with Parent’s or Merger Sub’s reimbursement obligations pursuant to Section 6.10 or Section 6.17(b) of the Merger Agreement prior to the Closing. The Guaranteed Party acknowledges, covenants and agrees, on behalf of itself and each of its Affiliates, that all claims, obligations, liabilities, causes of action, actions or other Proceedings (in each case, whether at law or in equity, and whether sounding in contract, tort, statute or otherwise) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to this Limited Guarantee, or the negotiation, execution, performance, or breach (whether willful, intentional, unintentional or otherwise) of this Limited Guarantee, including, without limitation, any representation or warranty made or alleged to be made in, in connection with, or as an inducement to, this Limited Guarantee (each of such above-described legal, equitable or other theories or sources of liability, a “Claim”) may be made or asserted only against (and are expressly limited to) the Guarantor as expressly identified in the preamble to and signature page(s) of this Limited Guarantee (as limited by its terms, including, without limitation, the provisions of Section 1) or its permitted assigns; provided, however, that in the event the Guarantor (i) consolidates with or merges with any other Person and is not the continuing or surviving entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its assets to any Person, then, and in each such case, the Guaranteed Party may seek recourse, whether by the enforcement of any judgement or assessment, by any legal or equitable proceeding or by virtue of any statute, regulation or other applicable Law against such continuing or surviving entity or such Person, as the case may be, but only to the extent of the liability of the Guarantor hereunder (and subject to the limitations and conditions herein). Except as set forth in the previous sentence, other than the Guarantor, no Person (including, without limitation, any of the Non-Parties of the Guarantor) shall have any liability or obligation whatsoever for, in respect of, based upon or arising out of or relating to any Claims. Notwithstanding anything to the contrary, nothing in this Section 9 or otherwise shall limit in any way the rights of the Guaranteed Party to assert or obtain damages or any other remedy in respect of, arising under, or relating in any manner to a Permitted Claim.
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10. Governing Law; Jurisdiction; Waiver of Jury Trial. This Limited Guarantee, and any action (whether at Law, in contract or in tort) that may directly or indirectly be based upon, relate to or arise out of this Limited Guarantee or any transaction contemplated hereby, or the negotiation, execution or performance hereof, shall be governed by, and construed and enforced in accordance with, the Laws of the State of Delaware, without regard to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. In addition, each of the parties hereto (a) expressly submits to the personal jurisdiction and venue of the courts of the State of Delaware and the federal courts of the United States of America located in the State of Delaware (the “Chosen Courts”), in the event any dispute between the parties hereto (whether in contract, tort or otherwise) arises out of this Limited Guarantee or the transactions contemplated hereby, (b) expressly waives any claim of lack of personal jurisdiction or improper venue and any claims that such courts are an inconvenient forum with respect to such a claim, and (c) agrees that it shall not bring any claim, action or proceeding against any other party hereto relating to this Limited Guarantee or the transactions contemplated hereby in any court other than the Chosen Courts. Each of the parties hereto hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail or by overnight courier service, postage prepaid, to its address set forth in Section 7, such service to become effective ten (10) days after such mailing. EACH PARTY HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LIMITED GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS LIMITED GUARANTEE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.
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11. Entire Agreement. This Limited Guarantee (including the Schedule hereto and the documents and instruments referred to herein), together with the Equity Commitment Letter, the Confidentiality Agreement and the Merger Agreement, constitute the entire agreement among the parties hereto and supersedes any prior understandings, agreements or representations by or among the parties hereto, written or oral, with respect to the subject matter hereof, and the parties hereto specifically disclaim reliance on any such prior understandings, agreements or representations to the extent not embodied in this Limited Guarantee or any of the foregoing.
12. Amendments. This Limited Guarantee may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.
13. Extension; Waiver. To the extent legally allowed, the Guaranteed Party may (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties of the Guarantor contained herein or in any document delivered pursuant hereto and (c) waive compliance by the Guarantor with any of the agreements or conditions contained herein. To the extent legally allowed, the Guarantor may (i) extend the time for performance of any of the obligations or other acts of the Guaranteed Party, (ii) waive any inaccuracies in the representations and warranties of the Guaranteed Party contained herein or in any document delivered pursuant hereto and (iii) waive compliance by the Guaranteed Party with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any extension or waiver of the terms hereof shall be valid only if set forth in a written instrument signed on behalf of such party. Such extension or waiver shall not apply to any time for performance, inaccuracy in any representation or warranty, or noncompliance with any agreement or condition, as the case may be, other than that which is specified in the extension or waiver. The delay or failure of any party hereto to assert any of its rights under this Limited Guarantee or otherwise shall not constitute a waiver of such rights.
14. Severability. Any term or provision (or part thereof) of this Limited Guarantee that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions (or parts thereof) hereof or the validity or enforceability of the offending term or provision (or part thereof) in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision (or part thereof) hereof is invalid or unenforceable, the parties hereto shall replace such invalid or unenforceable term or provision (or part thereof) with a valid and enforceable term or provision (or part thereof) that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term (or part thereof). Notwithstanding the foregoing, this Limited Guarantee may not be enforced without giving full force and effect to the limitations set forth in Section 1, Section 8 and Section 9.
15. Counterparts and Signature. This Limited Guarantee may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which, when taken together, one and the same agreement or document. A signed copy of this Limited Guarantee, with the same effect as if the signatures thereto and hereto were upon the same instrument, shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered (by telecopy, electronic delivery or otherwise) to the other parties. Signatures to this Limited Guarantee transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature. The parties irrevocably and unreservedly agree that this Limited Guarantee may be executed by way of electronic signatures and the parties agree that this letter, or any part thereof, shall not be challenged or denied any legal effect, validity and/or enforceability solely on the ground that it is in the form of an electronic record.
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16. No Third Party Beneficiaries. The parties hereto hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit in accordance with and subject to the terms of this Limited Guarantee. This Limited Guarantee is not intended to, and shall not, confer upon any Person other than the parties hereto and their respective successors and permitted assigns any rights or remedies hereunder; provided, however, that the Non-Parties of the Guarantor are intended third-party beneficiaries of Section 9, and any and all such Non-Parties may enforce such rights directly.
17. Confidentiality. This Limited Guarantee shall be treated as strictly confidential and is being provided to the Guaranteed Party solely in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement. This Limited Guarantee may not be used, circulated, quoted or otherwise referred to in any document (other than the Merger Agreement and the Equity Commitment Letter) or otherwise distributed to any Person, except with the prior written consent of the Guarantor and the Guaranteed Party. Notwithstanding the foregoing, (a) this Section 17 shall not prevent the use of this Limited Guarantee in connection with any Proceeding to enforce the terms of this Limited Guarantee, (b) this Limited Guarantee may be provided to those of the Guarantor’s and the Guaranteed Party’s employees, agents, advisors and other representatives who have been directed to treat this Limited Guarantee as confidential on terms substantially identical to the terms contained in this Section 17, and (c) this Limited Guarantee may be disclosed by a party to the extent compelled by a Governmental Entity or required by Law or legal process or pursuant to the applicable rules of any national securities exchange or to the extent required in connection with any required securities or governmental filings relating to the transactions contemplated by the Merger Agreement.
18. Certain Terms. As used herein, “Non-Parties” means, with respect to any Person, (i) any former, current, or future general or limited partners, equityholders, stockholders, directors, officers, employees, managers, members, Affiliates, assignees, agents and other representatives of (all above-described Persons in this subclause (i), collectively, “Affiliated Persons”) such Person, and (ii) any Affiliated Persons of such Affiliated Persons, in each case together with the respective successors, assigns, heirs, executors or administrators of the Persons in subclauses (i) and (ii); provided that none of the Guarantor, Parent, Merger Sub or any Investor (as defined in the Equity Commitment Letter), or any of their respective permitted assigns or Affiliated Persons, shall be a Non-Party of the Guarantor.
[Remainder of Page Intentionally Left Blank – Signature Pages Follow]
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IN WITNESS WHEREOF, the parties have duly executed and delivered this Limited Guarantee as of the date first above written.
| GUARANTOR: | |
| ALTARIS HEALTH PARTNERS V, L.P. | |
| By: AHP V GP, L.P., its general partner | |
| By: Altaris Partners, LLC, its general partner |
| By: | /s/ George E. Aitken-Davies | |
| Name: | George E. Aitken-Davies | |
| Title: | Manager |
| GUARANTEED PARTY: | |
| SHARECARE, INC. |
| By: | /s/ Justin Ferrero | |
| Name: | Justin Ferrero | |
| Title: | President and Chief Financial Officer |
Exhibit 16(f)
§ 262. Appraisal rights
(a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger, consolidation, conversion, transfer, domestication or continuance, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger, consolidation, conversion, transfer, domestication or continuance nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word “stockholder” means a holder of record of stock in a corporation; the words “stock” and “share” mean and include what is ordinarily meant by those words; the words “depository receipt” mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository; the words “beneficial owner” mean a person who is the beneficial owner of shares of stock held either in voting trust or by a nominee on behalf of such person; and the word “person” means any individual, corporation, partnership, unincorporated association or other entity.
(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent, converting, transferring, domesticating or continuing corporation in a merger, consolidation, conversion, transfer, domestication or continuance to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263, § 264, § 266 or § 390 of this title (other than, in each case and solely with respect to a converted or domesticated corporation, a merger, consolidation, conversion, transfer, domestication or continuance authorized pursuant to and in accordance with the provisions of § 265 or § 388 of this title):
(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders, or at the record date fixed to determine the stockholders entitled to consent pursuant to § 228 of this title, to act upon the agreement of merger or consolidation or the resolution providing for the conversion, transfer, domestication or continuance (or, in the case of a merger pursuant to § 251(h) of this title, as of immediately prior to the execution of the agreement of merger), were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.
(2) Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent, converting, transferring, domesticating or continuing corporation if the holders thereof are required by the terms of an agreement of merger or consolidation, or by the terms of a resolution providing for conversion, transfer, domestication or continuance, pursuant to § 251, § 252, § 254, § 255, § 256, § 257, § 258, § 263, § 264, § 266 or § 390 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or of the converted entity or the entity resulting from a transfer, domestication or continuance if such entity is a corporation as a result of the conversion, transfer, domestication or continuance, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger, consolidation, conversion, transfer, domestication or continuance will be either listed on a national securities exchange or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a., b. and c. of this section.
(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this title is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
(4) [Repealed.]
(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation, the sale of all or substantially all of the assets of the corporation or a conversion effected pursuant to § 266 of this title or a transfer, domestication or continuance effected pursuant to § 390 of this title. If the certificate of incorporation contains such a provision, the provisions of this section, including those set forth in subsections (d), (e), and (g) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger, consolidation, conversion, transfer, domestication or continuance for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent corporations or the converting, transferring, domesticating or continuing corporation, and shall include in such notice either a copy of this section (and, if 1 of the constituent corporations or the converting corporation is a nonstock corporation, a copy of § 114 of this title) or information directing the stockholders to a publicly available electronic resource at which this section (and, § 114 of this title, if applicable) may be accessed without subscription or cost. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger, consolidation, conversion, transfer, domestication or continuance, a written demand for appraisal of such stockholder’s shares; provided that a demand may be delivered to the corporation by electronic transmission if directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger, consolidation, conversion, transfer, domestication or continuance shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger, consolidation, conversion, transfer, domestication or continuance, the surviving, resulting or converted entity shall notify each stockholder of each constituent or converting, transferring, domesticating or continuing corporation who has complied with this subsection and has not voted in favor of or consented to the merger, consolidation, conversion, transfer, domestication or continuance, and any beneficial owner who has demanded appraisal under paragraph (d)(3) of this section, of the date that the merger, consolidation or conversion has become effective; or
(2) If the merger, consolidation, conversion, transfer, domestication or continuance was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a constituent, converting, transferring, domesticating or continuing corporation before the effective date of the merger, consolidation, conversion, transfer, domestication or continuance, or the surviving, resulting or converted entity within 10 days after such effective date, shall notify each stockholder of any class or series of stock of such constituent, converting, transferring, domesticating or continuing corporation who is entitled to appraisal rights of the approval of the merger, consolidation, conversion, transfer, domestication or continuance and that appraisal rights are available for any or all shares of such class or series of stock of such constituent, converting, transferring, domesticating or continuing corporation, and shall include in such notice either a copy of this section (and, if 1 of the constituent corporations or the converting, transferring, domesticating or continuing corporation is a nonstock corporation, a copy of § 114 of this title) or information directing the stockholders to a publicly available electronic resource at which this section (and § 114 of this title, if applicable) may be accessed without subscription or cost. Such notice may, and, if given on or after the effective date of the merger, consolidation, conversion, transfer, domestication or continuance, shall, also notify such stockholders of the effective date of the merger, consolidation, conversion, transfer, domestication or continuance. Any stockholder entitled to appraisal rights may, within 20 days after the date of giving such notice or, in the case of a merger approved pursuant to § 251(h) of this title, within the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days after the date of giving such notice, demand in writing from the surviving, resulting or converted entity the appraisal of such holder’s shares; provided that a demand may be delivered to such entity by electronic transmission if directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs such entity of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger, consolidation, conversion, transfer, domestication or continuance, either (i) each such constituent corporation or the converting, transferring, domesticating or continuing corporation shall send a second notice before the effective date of the merger, consolidation, conversion, transfer, domestication or continuance notifying each of the holders of any class or series of stock of such constituent, converting, transferring, domesticating or continuing corporation that are entitled to appraisal rights of the effective date of the merger, consolidation, conversion, transfer, domestication or continuance or (ii) the surviving, resulting or converted entity shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant to § 251(h) of this title, later than the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection and any beneficial owner who has demanded appraisal under paragraph (d)(3) of this section. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation or entity that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation or the converting, transferring, domesticating or continuing corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger, consolidation, conversion, transfer, domestication or continuance, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.
(3) Notwithstanding subsection (a) of this section (but subject to this paragraph (d)(3)), a beneficial owner may, in such person’s name, demand in writing an appraisal of such beneficial owner’s shares in accordance with either paragraph (d)(1) or (2) of this section, as applicable; provided that (i) such beneficial owner continuously owns such shares through the effective date of the merger, consolidation, conversion, transfer, domestication or continuance and otherwise satisfies the requirements applicable to a stockholder under the first sentence of subsection (a) of this section and (ii) the demand made by such beneficial owner reasonably identifies the holder of record of the shares for which the demand is made, is accompanied by documentary evidence of such beneficial owner’s beneficial ownership of stock and a statement that such documentary evidence is a true and correct copy of what it purports to be, and provides an address at which such beneficial owner consents to receive notices given by the surviving, resulting or converted entity hereunder and to be set forth on the verified list required by subsection (f) of this section.
(e) Within 120 days after the effective date of the merger, consolidation, conversion, transfer, domestication or continuance, the surviving, resulting or converted entity, or any person who has complied with subsections (a) and (d) of this section and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger, consolidation, conversion, transfer, domestication or continuance, any person entitled to appraisal rights who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such person’s demand for appraisal and to accept the terms offered upon the merger, consolidation, conversion, transfer, domestication or continuance. Within 120 days after the effective date of the merger, consolidation, conversion, transfer, domestication or continuance, any person who has complied with the requirements of subsections (a) and (d) of this section, upon request given in writing (or by electronic transmission directed to an information processing system (if any) expressly designated for that purpose in the notice of appraisal), shall be entitled to receive from the surviving, resulting or converted entity a statement setting forth the aggregate number of shares not voted in favor of the merger, consolidation, conversion, transfer, domestication or continuance (or, in the case of a merger approved pursuant to § 251(h) of this title, the aggregate number of shares (other than any excluded stock (as defined in § 251(h)(6)d. of this title)) that were the subject of, and were not tendered into, and accepted for purchase or exchange in, the offer referred to in § 251(h)(2) of this title)), and, in either case, with respect to which demands for appraisal have been received and the aggregate number of stockholders or beneficial owners holding or owning such shares (provided that, where a beneficial owner makes a demand pursuant to paragraph (d)(3) of this section, the record holder of such shares shall not be considered a separate stockholder holding such shares for purposes of such aggregate number). Such statement shall be given to the person within 10 days after such person’s request for such a statement is received by the surviving, resulting or converted entity or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section, whichever is later.
(f) Upon the filing of any such petition by any person other than the surviving, resulting or converted entity, service of a copy thereof shall be made upon such entity, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all persons who have demanded appraisal for their shares and with whom agreements as to the value of their shares have not been reached by such entity. If the petition shall be filed by the surviving, resulting or converted entity, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving, resulting or converted entity and to the persons shown on the list at the addresses therein stated. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving, resulting or converted entity.
(g) At the hearing on such petition, the Court shall determine the persons who have complied with this section and who have become entitled to appraisal rights. The Court may require the persons who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any person fails to comply with such direction, the Court may dismiss the proceedings as to such person. If immediately before the merger, consolidation, conversion, transfer, domestication or continuance the shares of the class or series of stock of the constituent, converting, transferring, domesticating or continuing corporation as to which appraisal rights are available were listed on a national securities exchange, the Court shall dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of the class or series eligible for appraisal, (2) the value of the consideration provided in the merger, consolidation, conversion, transfer, domestication or continuance for such total number of shares exceeds $1 million, or (3) the merger was approved pursuant to § 253 or § 267 of this title.
(h) After the Court determines the persons entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger, consolidation, conversion, transfer, domestication or continuance, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date of the merger, consolidation, conversion, transfer, domestication or continuance through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger, consolidation or conversion and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the surviving, resulting or converted entity may pay to each person entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Court, and (2) interest theretofore accrued, unless paid at that time. Upon application by the surviving, resulting or converted entity or by any person entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the persons entitled to an appraisal. Any person whose name appears on the list filed by the surviving, resulting or converted entity pursuant to subsection (f) of this section may participate fully in all proceedings until it is finally determined that such person is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving, resulting or converted entity to the persons entitled thereto. Payment shall be so made to each such person upon such terms and conditions as the Court may order. The Court’s decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving, resulting or converted entity be an entity of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a person whose name appears on the list filed by the surviving, resulting or converted entity pursuant to subsection (f) of this section who participated in the proceeding and incurred expenses in connection therewith, the Court may order all or a portion of such expenses, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal not dismissed pursuant to subsection (k) of this section or subject to such an award pursuant to a reservation of jurisdiction under subsection (k) of this section.
(k) Subject to the remainder of this subsection, from and after the effective date of the merger, consolidation, conversion, transfer, domestication or continuance, no person who has demanded appraisal rights with respect to some or all of such person’s shares as provided in subsection (d) of this section shall be entitled to vote such shares for any purpose or to receive payment of dividends or other distributions on such shares (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger, consolidation, conversion, transfer, domestication or continuance). If a person who has made a demand for an appraisal in accordance with this section shall deliver to the surviving, resulting or converted entity a written withdrawal of such person’s demand for an appraisal in respect of some or all of such person’s shares in accordance with subsection (e) of this section, either within 60 days after such effective date or thereafter with the written approval of the corporation, then the right of such person to an appraisal of the shares subject to the withdrawal shall cease. Notwithstanding the foregoing, an appraisal proceeding in the Court of Chancery shall not be dismissed as to any person without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just, including without limitation, a reservation of jurisdiction for any application to the Court made under subsection (j) of this section; provided, however that this provision shall not affect the right of any person who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such person’s demand for appraisal and to accept the terms offered upon the merger, consolidation, conversion, transfer, domestication or continuance within 60 days after the effective date of the merger, consolidation, conversion, transfer, domestication or continuance, as set forth in subsection (e) of this section. If a petition for an appraisal is not filed within the time provided in subsection (e) of this section, the right to appraisal with respect to all shares shall cease.
(l) The shares or other equity interests of the surviving, resulting or converted entity to which the shares of stock subject to appraisal under this section would have otherwise converted but for an appraisal demand made in accordance with this section shall have the status of authorized but not outstanding shares of stock or other equity interests of the surviving, resulting or converted entity, unless and until the person that has demanded appraisal is no longer entitled to appraisal pursuant to this section.
Exhibit 107
Calculation of Filing Fee Tables
Schedule 13E-3
(Form Type)
Sharecare, Inc.
Impact Acquiror Inc.
Impact Merger Sub Inc.
Impact Aggregator LP
Impact Upper Parent Inc.
Altaris LLC
Altaris Health Partners V, L.P.
AHP V GP, L.P.
Altaris Health Partners V-A, L.P.
Claritas Capital Fund IV, LP
Claritas Dozoretz Partners, LLC
Claritas Irby, LLC
Claritas Opportunity Fund 2013, LP
Claritas Opportunity Fund II, LP
Claritas Sharecare CN Partners, LLC
Claritas Opportunity Fund IV, L.P.
Claritas Cornerstone Fund, LP
Claritas Sharecare 2018 Notes, LLC
Claritas Sharecare Notes, LLC
Claritas Sharecare 2019 Notes, LLC
Claritas Opportunity Fund V, LP
Claritas SC Bactes Partners, LLC
Claritas SC Partners, LLC
Claritas Sharecare F3 LLC
Claritas Sharecare-CS Partners, LLC
Claritas Frist Partners, LLC
Claritas Sharp Partners, LLC
Claritas Sharecare Partners, LLC
Claritas Irby Partners II, LLC
Claritas Capital SLP - V, GP
CC Partners IV, LLC
CC SLP IV, GP
Claritas Capital, LLC
CC SLP V, GP
Claritas SCB SLP, GP
CC Partners V, LLC
Claritas Capital EGF - V Partners, LLC
Claritas Capital EGF - IV Partners, LLC
Claritas SC SLP, GP
Claritas Opportunity Fund Partners II, LLC
Claritas Capital Management Services, Inc.
John H. Chadwick
Jeffrey T. Arnold
Arnold Media Group, LLC
JT Arnold Enterprises, II LLLP
(Exact Name of Registrant and Name of Person Filing Statement)
Table 1: Transaction Valuation
|
Proposed Maximum Aggregate Value of Transaction |
Fee Rate | Amount of Filing Fee | |
| Fees to be Paid | $553,799,894.27(1) | 0.00014760 | $81,740.86(2) |
| Fees Previously Paid | — | — | |
| Total Transaction Valuation | $553,799,894.27 | ||
| Total Fees Due for Filing | $81,740.86 | ||
| Total Fees Previously Paid | — | ||
| Total Fee Offsets | $81,740.86(3) | ||
| Net Fee Due | — |
| (1) | Aggregate number of securities to which transaction applies: As of July 25, 2024, the maximum number of shares of common stock of Sharecare, Inc. (“ShareCare”) to which this transaction applies is estimated to be 407,954,469, which consists of (1) 378,476,333 shares of common stock entitled to receive the per share merger consideration of $1.43 per share (including 7,991,966 shares of common stock underlying certain outstanding restricted stock unit awards that are expected to convert into shares of common stock prior to or as of the closing of the transaction); (2) 27,900,940 shares of common stock underlying in-the-money stock options that are vested or that will vest upon the closing of the transaction in accordance with their terms, which are entitled to receive the per share merger consideration of $1.43 per share minus any applicable exercise price; and (3) 1,577,196 shares of common stock underlying outstanding restricted stock units held by non-employee directors of Sharecare, which are entitled to receive the per share merger consideration of $1.43 per share. |
| (2) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): Estimated solely for the purposes of calculating the filing fee, as of July 25, 2024, the underlying value of the transaction was calculated based on the sum of (1) the product of 378,476,333 shares of common stock and the per share merger consideration of $1.43 per share; (2) the product of 27,900,940 shares of common stock underlying in-the-money stock options that are vested or that vest upon the closing of the transaction in accordance with their terms and $0.37 (which is the difference between the per share merger consideration of $1.43 and the weighted average exercise price of such options of approximately $1.06); and (3) the product of 1,577,196 shares of common stock underlying outstanding restricted stock units held by non-employee directors of Sharecare and the per share merger consideration of $1.43 per share. Pursuant to the Merger Agreement, at the Effective Time, each outstanding Company Warrant (as defined in the Merger Agreement) of Sharecare shall, in accordance with its terms, automatically and without any required action on the part of the holder thereof, cease to represent a warrant of Sharecare in respect of shares of Sharecare common stock and shall become a warrant exercisable for the per share merger consideration of $1.43. If a holder properly exercises a Company Warrant within thirty (30) days following the public disclosure of the consummation of the Merger pursuant to a current report on Form 8-K, the exercise price of the Company Warrant, as determined by the applicable warrant agreement, with respect to such exercise shall be reduced by an amount (in dollars and in no event less than zero) equal to the difference of (a) the exercise price in effect prior to such reduction minus (b) (i) the per share merger consideration of $1.43 minus (ii) the Black-Scholes Warrant Value (as defined in the applicable warrant agreement). As of the close of business on July 25, 2024, Sharecare estimated that the exercise price of outstanding Company Warrants, as adjusted pursuant to the foregoing sentence, to be approximately $1.43 and, accordingly, the Company does not expect any Company Warrants to be exercised following the Effective Time. The Company has excluded the Company Warrants from the maximum number of shares of Sharecare common stock to which this transaction applies in the table above. In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying the sum calculated in the preceding sentence by .00014760. |
| (3) | Sharecare previously paid $81,740.86 upon the filing of its Preliminary Proxy Statement on Schedule 14A on August 5, 2024 in connection with the transaction reported hereby. |
Table 2: Fee Offset Claims and Sources
| Registrant or Filer Name |
Form or Filing Type |
File Number |
Initial Filing Date | Filing Date | Fee Offset Claimed |
Fee Paid with Fee Offset Source |
||||||||||||
| Fee Offset Claims | Schedule 14A | 001-39535 | August 5, 2024 | $81,740.86 | ||||||||||||||
| Fee Offset Sources | Sharecare, Inc. | Schedule 14A | 001-39535 | August 5, 2024 | $81,740.86(3) | |||||||||||||