EX-99.(C)(III) 4 d306045dex99ciii.htm EX-99.(C)(III) EX-99.(c)(iii)

Exhibit (c)(iii)

 

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Confidential - Preliminary Draft Exhibit (c)(iii) Confidential - Preliminary Draft Confidential Treatment Requested. Certain portions of this exhibit have been redacted and separately filed with the Securities and Exchange Commission pursuant to a request for confidential treatment. Project Everest Special Committee Discussion Materials August 29, 2023 Evercore


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Confidential – Preliminary Draft Project Everest Process Update and Next Steps Completed outreach to 8 parties 8 NDAs signedManagement meetings scheduled with all 8 parties and completed with 6 Presentation materials reviewed by the Special Committee and EvercoreMaterials excluded financial forecasts Received inbound from on 8/26 Process Update Financial Forecast Provide feedback and approve updated model (and Financial Supplement packet) Review informal bidder feedback and decide next steps Evercore to present an overview of certain potential strategic alternatives and preliminary valuation perspectives Next Steps: Special Committee Status of Management Meetings First draft provided by management reviewed by Evercore Forecast walkthrough and Q&A session with CFO on 8/21 Revised draft received on 8/27 and discussed with CFO on 8/28 Outstanding model / forecast information: Longer-term financial model bridging to “steady state” growth and margins Tax basis analysis (currently being conducted by Deloitte) Segment breakdown of certain line items (e.g. Intangible Amortization) Next Steps: Potential Bidders Distribute model (and Financial Supplement packet) Model diligence calls with engaged bidders Informal feedback calls to gauge interest 2
Process Update and Next Steps â– Completed outreach to 8 parties Status of Management Meetings â– 8 NDAs signed â– Management meetings scheduled with all 8 parties and Process completed with 6 Update â–º Presentation materials reviewed by the Special [***] Committee and Evercore â–º Materials excluded financial forecasts â–Received inbound from [***] ) on 8/26 â– First draft provided by management reviewed by Evercore Forecast walkthrough and Q&A session with CFO on 8/21 Revised draft received on 8/27 and discussed with CFO on 8/28 Financial Financial forecast Outstanding model / forecast information: Forecast Longer-term financial model bridging to “steady state” growth and margins Tax basis analysis (currently being conducted by Deloitte) Segment breakdown of certain line items (e.g. Intangible Amortization) â–Provide feedback and approve updated model (and Financial Supplement packet) Next Steps: â–Review informal bidder feedback and decide next Next Steps: ^ Distribute model (and Financial Supplement packet) Special steps Potential â– Model diligence calls with engaged bidders Committee â– Evercore to present an overview of certain Bidders â– informal feedback calls to gauge interest potential strategic alternatives and preliminary valuation perspectives


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Everest Management Financial Forecast - Evercore’s Observations Forecasts assume Everest remains a standalone public company and a single business with two segments Key growth levers described in the management presentation appear to have been incorporated Forecast is provided at a business and segment level, with key financial line items (e.g., GP, S&M, R&D, G&A, D&A) by business ► Management provided voiceover basis for allocation of corporate overhead: 55% to enterprise, 45% to SMB ■ Financial forecast projected through 2027, where the company is not yet at a “steady state” Everest grows at 20%+ in 2027; Management to provide longer-term forecast to Evercore for valuation purposes WholeCo EBITDA margins are at 31 % in 2027—in line with management’s long-term targets of 30%+ ■ The SMB segment grows at a 25% CAGR between 2023 and 2027; EBITDA margins improve from 33% to 41% over same period1 Growth driven by new customers from larger group practices, further penetration of RCM, and growth into “Tier 1” and outpatient specialties Forecast incorporates price increases in 2024 and 2026 and operating leverage from favorable net take rates from Stripe partnership as volumes grow Luminello, which expands Everest’s capabilities deeper into the psychiatric segment, expected to reach ~4.5k customers and contribute ~$10mm of revenue (1.1% of WholeCo total) by year-end 2027 ■ The Enterprise segment grows at a 23% CAGR between 2023 and 2027; EBITDA margins improve from 4% to 18% over same period1 Growth from further penetration of the insurance and consumer finance verticals and new logo wins displacing legacy on-prem solutions Deceleration in revenue growth in 2H’23 on account of the HealthPay24 divestiture and down-sell of a large client, followed by re-acceleration in 2024 Margins benefit from residuals management (buyout of less active partners and targeting lower payouts) Potential Upside & Cost Saves Potential Risks to Forecast ~$9mm (growing to ~$12mm in 2027) of public company costs in a ■ TAM saturation in core markets, especially in Behavioral Health, take-private which could impact SMB growth ~$5mm of avoidable corporate costs in a separation of Enterprise ■ Payments take rate compression (vs. the expansion modeled) driven and SMB by competition ► Offset by modest incremental separation costs from upskilling ■ Increased churn from price increases in 2024 and 2026


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Everest Management Financial Forecast - Key Preliminary Takeaways from Benchmarking There were no material “hockey stick” changes in the model KPI drivers or meaningful unexplained degradation vs trends Deviations from trends were explained by in-flight initiatives (e.g., residual buyout, one-time pricing study, price increases, shared services leverage, etc.) 2023E revenue (by segment & WholeCo), gross profit, and EBITDA are generally in line with consensus and management’s guide 2024E and 2025E revenue (by segment & WholeCo) are generally in line with consensus - noting that relatively few analysts currently forecast 2025E Management forecasts EBITDA outperformance vs. consensus in ‘24E and ‘25E from operating leverage, driven by G&A improvements from build-out of shared services and Enterprise pricing/packaging study Management expects to guide’24E financials during the full-year earnings release in February 2024 Everest segments and WholeCo projected to grow roughly in-line with or above selected peers ‘23E - ‘24E growth deceleration: Everest Enterprise (~120bps) vs peers (~250bps) and Everest SMB (~320bps) vs peers (~370bps) While Enterprise margins are projected to be below peers (with expansion expected), SMB currently delivers margins in-line with peers2 ‘23E - ‘24E EBITDA margin expansion: Everest Enterprise (~300bps) vs peers (~530bps) and Everest SMB (~240bps) vs peers (90bps) Source: Company filings, Management estimates 1. Enterprise peers include ACI Worldwide, Avidxchange, Flywire, Paymentus, and Payoneer. SMB peers include Bill, Definitive Healthcare, Doximity, Evercommerce, Paycor, Paylocity, Phreesia, and Weave. All of the


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END Illustrative Revenue Bridge Enterprise SMB WholeCo ($in millions) ‘23E - ‘25E CAGR: 23.1% 26.9% 25.4% ‘25E -’27E CAGR: 22.7% 22.8% 22.8% $178 $886 $120 ^^^| 3^33 $588 $81 ^ ^^^^^ 2023E Enterprise SMB 2025E Enterprise SMB 2027E


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END Illustrative EBITDA Bridge ($ in minions) ^$9^m ^^^^ $276


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Financial Overview – Everest WholeCo Historical & Management Forecast Source: Company filings, Management estimates Note: 2021A-2023E figures pro forma for sale of HealthPay ($ in millions) $208 $293 $374 $469 $588 $726 $886 41.6% 41.4% 27.6% 25.4% 25.3% 23.4% 22.1% 2021A 2022A 2023E 2024E 2025E 2026E 2027E Revenue Revenue Growth ‘21A - ‘23E CAGR: 34.3% ‘23E - ‘27E CAGR: 24.0% $31 $48 $72 $106 $149 $205 $276 14.7% 16.5% 19.3% 22.5% 25.3% 28.2% 31.1% 2021A 2022A 2023E 2024E 2025E 2026E 2027E


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Financial Overview - Everest WholeCo Historical & Management Forecast ($ in millions) Revenue ‘21A -’23E CAGR: 34.3% ‘23E - ‘27E CAGR: 24.0% $886 , $726 CY23 Guide: ^^^^H !,$376.5 - $379.0 $588 41.4% $469 $374 41.6% $293 “— $208 i 1 1 ^ 1 1 1 1 1 2021A 2022A 2023E 2024E 2025E 2026E 2027E ^™ Revenue Revenue Growth ‘21A -’23E CAGR: 53.7% ‘23E - ‘27E CAGR: 39.8% $276 CY23 Guide: $205 $69.5 - $70.5 i ^^^^H ^^^^1 $149 $106 $31 $ ■14.7% | 16.5% 2021A 2022A 2023E 2024E 2025E 2026E 2027E ^ EBITDA EBITDA Margin Source: Company filings, Management estimates Note: 2021A-2023E figures pro forma for sale of HealthPay EBITDA


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Financial Overview - Everest Enterprise Historical & Management Forecast ($ in millions) Revenue ‘21A -’23E CAGR: 26.3% ‘23E - ‘27E CAGR: 22.9% $359 $294 $239 $192 $157 $128 $99 21.9% ^^^H 24.3% ^^^H 23.2% ^^^H 22.1% 29.7% 17.4% ^^^1 II 23.1% ^^^1 ^^^1 ^^^1 ^^^1 i 1 ^ 1 ^ 1 ^ 1 ^ 1 ^ 1 2021A 2022A 2023E 2024E 2025E 2026E 2027E ^™ Revenue Revenue Growth EBITDA1 ‘21A -’23E CAGR: 1.9%2 ‘23E - ‘27E CAGR: 76.7%2 $95 I j $69 30 $49 26 i jmmi $14 $18 $23 7.2% 23 6.5% _2.5% j ~4.2% 20 WTM I I j”5 ^— ^ 15 i i _y—__ ggg^u— M1’irf%M ^^^| ^^^^j 2021A 2022A 2023E 2024E 2025E 2026E 2027E EBITDA (Post-Allocation) Allocation of Corporate Overhead EBITDA Margin (Post-Allocation) InvoiceCloud % of Enterprise Revenue Evercore 8 Project Everest Source: Company filings, Management estimates Note: 2021A-2023E figures pro forma for sale of HealthPay 55% of allocatable corporate overhead (total overhead less $5mm duplicative costs) allocated to segment per management CAGRs calculated post-allocation of corporate overhead 71.8% 74.9% 78.1% 80.9% 82.2% 83.4% 84.2%


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Comparison of Management Forecast to Consensus Revenue in the model generally in-line with consensus but there is a paucity of Street estimates for 2025 CY23 Guide: $376.5 - $379.0 WholeCo Revenue Broker Min. Broker 1st Quartile Broker Median Broker Max. Management Broker 3rd Quartile Enterprise Revenue SMB Revenue ($ in millions) CY23E CY24E CY25E CY23E CY24E CY25E2 CY23E CY24E CY25E X Source: Management estimates, FactSet (8/18/23) Note: 2023 Management figures are pro forma to remove impact of HealthPay from full year


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Comparison of Management Forecast to Consensus ($ in millions) Revenue in the model generally in-line with consensus but there is a paucity of Street estimates for 2025 WholeCo Revenue Enterprise Revenue SMB Revenue $600-1 $250-1 $350-1 $350 . $588 $350 * $585 a $239 X $233 $550 $225 $300 $500 - . $469 $200 - $277 “ $468 $195 $270 $450 - . $192 $250 $175 $400 X $378 ‘~CY23G”u7de~ $164 $217 A $374 l$37.6_5_-$37_9_0 $157 • $215 ($381 mm (incl. HealthPay) $164mm(incl. HealthPay)] $350 J $150 J $200 J CY23E CY24E CY25E CY23E CY24E CY25E2 CY23E CY24E CY25E # Broker Min. 1 Qua^ie X Broker Median 1 0^31^!^ ^ Broker Max. A Management


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! Everest, Flywire, Payoneer, Definitive, Doximity presented on a net revenue basis; other companies presented on a gross revenue basis j Median: 13.9% Median: 28.9% 43.7% Adj. 32.5% 32.6% __ EBITDA -m 30.1% 27.8%


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! Everest, Flywire, Payoneer, Definitive, Doximity presented on a net revenue basis; other companies presented on a gross revenue basis j Median: 13.9% Median: 28.9% 43.7% Adj. 32.5% 32.6% __ EBITDA -m 30.1% 27.8%


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! Everest, Flywire, Payoneer, Definitive, Doximity presented on a net revenue basis; other companies presented on a gross revenue basis j Median: 13.9% Median: 28.9% 43.7% Adj. 32.5% 32.6% __ EBITDA -m 30.1% 27.8%


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Everest - Operational Benchmarking (Cont’d) ‘ 1 ! Everest, Flywire, Payoneer, Definitive, Doximity presented on a net revenue basis; other companies presented on a gross revenue basis [ Median: 8.1% Median: 13.9% 29.6% SBC % 20.5% of ~12% in , k 18.5% Revenue 2027E1 ( \ ~9% in 2024 Z 106% ~7%° 125% 142% 12.0% 13.7% 2027E 10.0% 10.4% . 0 [ 2D^7E2 j ~L~ ^n/ 8.1% 7.3% 5.4% 5.2% Source: Company filings, FactSet (8/18/23) Note: Everest based on Management projections except where indicated as Consensus Note: SBC for Everest Enterprise and SMB segments pro-rated from WholeCo SBC by annual average employee headcount; confirming reasonableness of allocation assumption with Everest Enterprise based on 33% of ‘23E WholeCo SBC (per management), grown in line with Enterprise headcount, with 55% corporate SBC allocation SMB based on 24% of ‘23E WholeCo SBC (per management), grown in line with SMB headcount, with 45% corporate SBC allocation


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Confidential - Preliminary Draft Operating Metrics Overview - Everest SMB Transactions / 0 39 0 45 0.46 0.48 0.48 0.49 0.49 ‘21A -’23E: 8.8% Appt. ‘23E -’27E: 1.2% 1 1 ^ 1 ^ 1 ^ 1 ^ 1 ^ 1 $111 $112 $114 $114 $115 $116 $118 Average ‘21A -’23E: 1.5% Transaction Size ‘23E -’27E: 0.8% 1.08% 1 03% 1.15% 1.18% 1.20% 1.20% 1.20% ‘21A -’23E: 3.0% Take Rate ^^^h ‘23E -’27E: 1.1% I 1 1 ^ 1 ^ 1 ^ 1 ^ 1 ^ 1 2021A 2022A 2023E 2024E 2025E 2026E 2027E CAGR New Net 20 4% 24.2% Accounts ° 15.8% 14.0% 13.4% 12.6% 12.2% (% of beginning) Subscription $ $1 867 $2,067 $2,267 ‘21A -’23E: 2.0%


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Confidential - Preliminary Draft Operating Metrics Overview - Everest SMB Transactions / 0 39 0 45 0.46 0.48 0.48 0.49 0.49 ‘21A -’23E: 8.8% Appt. ‘23E -’27E: 1.2% 1 1 ^ 1 ^ 1 ^ 1 ^ 1 ^ 1 $111 $112 $114 $114 $115 $116 $118 Average ‘21A -’23E: 1.5% Transaction Size ‘23E -’27E: 0.8% 1.08% 1 03% 1.15% 1.18% 1.20% 1.20% 1.20% ‘21A -’23E: 3.0% Take Rate ^^^h ‘23E -’27E: 1.1% I 1 1 ^ 1 ^ 1 ^ 1 ^ 1 ^ 1 2021A 2022A 2023E 2024E 2025E 2026E 2027E CAGR New Net 20 4% 24.2% Accounts ° 15.8% 14.0% 13.4% 12.6% 12.2% (% of beginning) Subscription $ $1 867 $2,067 $2,267 ‘21A -’23E: 2.0%

 


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Confidential – Preliminary Draft Project Everest Project Everest – Management Presentation Takeaways (Week of 8/21 & 8/29) Starting the week of August 21st, the Everest team hosted five management presentations with potentially interested partiesvirtual): Tone was highly engaged and complimentary; asked many questions particularly regarding SimplePractice, with a focus on growth, GTM, and customer conversion and retention trends(virtual): Very engaged, interjected with questions early on in the presentation; most focused on SimplePractice competitors / market penetration strategy and growth drivers; noted they would “run the business exactly the same way” (in-person / virtual): Conversation was positive and indicated they would dive into the model and circle back; largely asked questions around growth goals and strategy, customer gross retention and potential business partners (in-person / virtual): Highly engaged both in the room and on Zoom; interested in GTM and acquisition opportunities; questions focused on SimplePractice customer base, integration strategy and macro / TAM trends (virtual): and spoke almost exclusively for the first hour; seemed much more focused on SMB; questions focused on retention / churn drivers, customer profiles / cohorts and ARPU growth (virtual): Very engaged with questions from both the Healthcare and FinTech angles; focused on product and market expansion in the SMB vertical and growth opportunities, as well as positioning / competitive differentiation in the Enterprise segment. Said Everest was a “strong product with amazing momentum” Two additional meetings are currently scheduled: (8/31) and (9/14) What are conversion / retention rates for SimplePractice? Is SimplePractice replacing another service / competitor for new customers? What does it offer that peers don’t? What is a typical customer account size / profile? How is inorganic growth factoring into GTM strategies for new verticals (e.g., managed care, outpatient services)? How easy would it be to separate the two businesses? What are shared services / support teams? Frequent Questions SimplePractice growth / go-to-market strategies SMB competitive landscape / SimplePractice advantages Capital allocation (M&A vs. R&D) to drive market penetration CAC / customer retention drivers / churn rates ESMT vertical integration potential Dis-synergies / considerations for separation of businesses Recurring Themes 18


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These materials have been prepared by Evercore Group L.L.C. (“Evercore”) for the Special Committee of the Board of Directors of Everest to whom such materials are directly addressed and delivered and may not be used or relied upon for any purpose other than as specifically contemplated. These materials are based on information provided by or on behalf of the Company and/or other potential transaction participants, from public sources or otherwise reviewed by Evercore. Evercore assumes no responsibility for independent investigation or verification of such information and has relied on such information being complete and accurate in all material respects. To the extent such information includes estimates and forecasts of future financial performance prepared by or reviewed with the Management of the Company and/or other potential transaction participants or obtained from public sources, Evercore 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). No representation or warranty, express or implied, is made as to the accuracy or completeness of such information and nothing contained herein is, or shall be relied upon as, a representation, whether as to the past, the present or the future. These materials were designed for use by specific persons familiar with the business and affairs of the Company. These materials are not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. These materials have been developed by and are proprietary to Evercore and were prepared exclusively for the benefit and internal use of the Special Committee of the Board of Directors of the Company. These materials were compiled on a confidential basis for use by the Special Committee of the Board of Directors of the Company in evaluating the potential transaction described herein and not with a view to public disclosure or filing thereof under state or federal securities laws, and may not be reproduced, disseminated, quoted or referred to, in whole or in part, without the prior written consent of Evercore. These materials do not constitute an offer or solicitation to sell or purchase any securities and are not a commitment by Evercore (or any affiliate) to provide or arrange any financing for any transaction or to purchase any security in connection therewith. Evercore assumes no obligation to update or otherwise revise these materials. These materials may not reflect information known to other professionals in other business areas of Evercore and its affiliates. Evercore and its affiliates do not provide legal, accounting or tax advice. Accordingly, any statements contained herein as to tax matters were neither written nor intended by Evercore or its affiliates to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on such taxpayer. Each person should seek legal, accounting and tax advice based on his, her or its particular circumstances from independent advisors regarding the impact of the transactions or matters described herein.