EX-99.1 2 d63152dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Certain Information to be Provided to Prospective Debt Financing Sources

Set forth below is certain information included in a presentation to certain third parties in connection with debt financing by Emdeon Inc. (“Emdeon”) for the previously announced acquisition of Altegra Health, Inc. (“Altegra”) through a senior secured incremental term loan facility and senior unsecured bridge loans (the “Debt Commitment Financing”).

Sources and Uses

The following table reflects the estimated sources and uses of the funds from the Debt Commitment Financing and may vary at the closing of the Debt Commitment Financing. The below also assumes the sizes of the incremental term loan, the new senior unsecured notes and the new sponsor equity.

 

($ in millions)       

Sources of Funds

    Amount  

Cash from Balance Sheet

    $ 65   

Revolver

      60   

Incremental Term Loan B

      395   

New Senior Unsecured Notes

      250   

New Sponsor Equity

      160   
  

 

 

  

Total Sources

    $ 930   
  

 

 

  

Uses of Funds

    Amount  

Purchase Price

    $ 910   

Estimated Fees & Expenses

      20   
  

 

 

  

Total Uses

    $ 930   
  

 

 

  

Pro Forma Capitalization

The following table reflects the pro forma capitalization of Emdeon as a result of the Debt Commitment Financing.

 

($ in millions)              

Pro Forma Capitalization

    Current      Pro Forma  

Cash and Equivalents

    $ 160       $ 95   

Revolver

      —           60   

Existing Term Loan B

      1,418         1,418   

Incremental Term Loan B

      —           395   

Capital Leases

      24         24   
  

 

 

     

 

 

  

Senior Secured Debt

    $ 1,442       $ 1,897   
  

 

 

     

 

 

  

Existing 11.000% Senior Unsecured Notes

      375         375   

Existing 11.250% Senior Unsecured Notes

      375         375   

New Senior Unsecured Notes

      —           250   
  

 

 

     

 

 

  

Total Debt

    $ 2,192       $ 2,897   
  

 

 

     

 

 

  

Sponsor Equity

      1,215         1,375   
  

 

 

     

 

 

  

Total Capitalization

    $ 3,407       $ 4,272   
  

 

 

     

 

 

  

Pro Forma Financials

    LTM
6/30/15		      PF LTM
6/30/15		  

Emdeon PF Adj. EBITDA

    $ 390       $ 390   

Altegra Health PF Adj. EBITDA

      —           59   

Estimated PF Cost Synergies

      —           15   
  

 

 

     

 

 

  

Combined PF Adj. EBITDA

    $ 390       $ 463   

Pro Forma Credit Statistics

      

Senior Secured Debt / PF Adj. EBITDA(1)

      3.70x         3.97x   

Total Debt / PF Adj. EBITDA

      5.63x         6.25x   

Total Net Debt / PF Adj. EBITDA(2)

      5.31x         6.05x   

 

  (1) The revolver debt is not included in the senior secured leverage calculation per Emdeon’s exiting credit agreement and indentures.
  (2) Cash netting capped at $125 million per Emdeon’s existing credit agreement.

 

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Reconciliation of Non-GAAP Financial Measures

Emdeon

Reconciliations of Emdeon’s Net Income (Loss) determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) to Adjusted EBITDA and Pro Forma Adjusted EBITDA have been provided in the chart below. An explanation of these non-GAAP measures is also included under the heading “Explanation of Non-GAAP Financial Measures” below. To properly evaluate Emdeon’s business, Emdeon encourages investors not to rely on any single financial measure to evaluate Emdeon’s business and to review the GAAP reconciliations. These non-GAAP measures, as Emdeon defines them, may not be similar to non-GAAP measures used by other companies.

Emdeon Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited and amounts in millions)

 

    Three months ended 3/31,     Three months ended 6/30,     Year To Date 6/30,     LTM 6/30,  
    2014     2015     2014     2015     2014     2015     2015  

Net income (loss)

   $ (3.0 )    $ (5.7 )    $ (59.5 )    $ 7.9      $ (62.5 )    $ 2.2      $ (11.2 ) 

Interest expense, net

     36.6        38.0        36.5        38.1        73.1        76.1        149.9   

Income tax provision (benefit)

     (21.3 )      (6.0 )      (27.0 )      (15.9 )      (48.2 )      (22.0 )      (15.6 ) 

Depreciation and amortization

     46.5        48.1        46.6        49.5        93.1        97.6        193.8   

EBITDA

   $ 58.8      $ 74.3      $ (3.3 )    $ 79.6      $ 55.5      $ 154.0      $ 316.8   

EBITDA Adjustments:

              

Equity compensation

   $ 1.9      $ 2.2      $ 1.8      $ 2.0      $ 3.7      $ 4.2      $ 7.8   

Acquisition accounting adjustments

     0.3        0.4        0.2        0.5        0.5        0.9        1.4   

Acquisition-related costs

     1.4        0.8        2.1        2.4        3.5        3.2        6.7   

Transaction-related costs and advisory fees

     1.5        1.5        1.6        1.7        3.1        3.2        6.5   

Strategic initiatives, duplicative and transition costs

     5.0        1.0        4.7        2.3        9.8        3.2        6.3   

Severance costs

     2.7        2.1        1.1        2.0        3.8        4.1        8.3   

Accretion

     (0.1 )      5.0        4.8        3.8        4.8        8.8        18.5   

Impairment of long-lived assets

     3.1        0.8        76.5        0.1        79.6        1.0        4.6   

Contingent Consideration

     2.0        (2.0 )      (0.3 )      1.9        1.7        (0.2 )      (0.5 ) 

Other non-routine, net

     1.7        1.4        1.1        1.6        2.8        3.0        4.7   

Total

     19.5        13.2        93.6        18.3        113.2        31.5        64.3   

Adjusted EBITDA

   $ 78.3      $ 87.6      $ 90.3      $ 97.9      $ 168.6      $ 185.5      $ 381.2   

PF impact of acquisitions and related cost savings initiatives (1)

                 8.3   

Pro Forma Adjusted EBITDA

               $ 389.5   

Altegra Health Acquisition (2)

                 59.0   

Cost savings related to Altegra Health acquisition (2)

                 14.7   

Pro Forma Adjusted EBITDA for Altegra Health acquisition

               $ 463.2   

 

(1) Represents pro forma adjustments for LTM period to reflect acquisitions of Capario, Change Healthcare and AdminiSource Communications as if consummated as of beginning of the period and pro forma adjustments in accordance with Emdeon’s Credit Agreement for the impact of cost savings initiatives. Pro forma adjustments permitted by Emdeon’s Credit Agreement may include adjustments that are not permitted in pro forma financial statements presented in accordance with generally accepted accounting principles or Regulation S-X.
(2) Includes net pro forma acquired EBITDA for contemplated acquisition of Altegra Health, including related pro forma adjustments for excluding shared services costs, projected cost synergies and other pro forma adjustments in accordance with Emdeon’s Credit Agreement. Pro forma adjustments permitted by Emdeon’s Credit Agreement may include adjustments that are not permitted in pro forma financial statements presented in accordance with generally accepted accounting principles or Regulation S-X.

 

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Altegra

Reconciliations of Altegra’s Net Income (Loss) determined in accordance with GAAP to Adjusted EBITDA and Pro Forma Adjusted EBITDA have been provided in the chart below. An explanation of these non-GAAP measures is also included under the heading “Explanation of Non-GAAP Financial Measures” below. To properly evaluate Altegra’s business, Altegra encourages investors not to rely on any single financial measure to evaluate Altegra’s business and to review the GAAP reconciliations. These non-GAAP measures, as Altegra defines them, may not be similar to non-GAAP measures used by other companies.

Altegra Health

Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited and amounts in millions)

 

     Year Ended
December 31,		      Three Months Ended 3/31,     Three Months Ended 6/30,      LTM 6/30,  
     2012     2013     2014      2014     2015     2014      2015      2015  

Net income (loss)

    $ (1.3 )    $ 2.0      $ 5.1       $ (0.6 )    $ 1.6      $ 1.3       $ 3.0       $ 9.1   

Interest expense, net

      7.5        4.6        6.7         1.4        1.6        1.5         1.6         7.0   

Income tax provision (benefit)

      0.9        1.4        3.4         (0.4 )      1.1        0.9         1.9         6.0   

Depreciation and amortization

      14.4        16.7        24.1         5.4        6.9        5.6         6.9         26.9   

EBITDA

    $ 21.5      $ 24.6      $ 39.4       $ 5.8      $ 11.2      $ 9.2       $ 13.3       $ 48.9   

EBITDA Adjustments:

                    

Equity compensation

      2.9        3.2        4.8         1.1        1.2        1.2         1.5         5.2   

Acquisition accounting adjustments

      —          (0.9 )      0.9         0.2        —          0.2         —           0.4   

Acquisition-related costs

      1.6        1.3        3.0         1.2        0.1        0.9         0.8         1.8   

Sponsor Advisory fees

      0.5        0.5        0.5         0.1        0.1        0.1         0.1         0.5   

Severance costs

      —          0.8        0.9         0.0        0.0        0.3         0.2         0.9   

Loss (gain) related to financing transactions

      3.1        0.6        0.6         0.6        0.0        0.0         —           0.0   

Other non-routine, net

      0.3        5.3        1.5         0.8        (0.3 )      0.2         0.2         0.3   

Total

      8.4        10.8        12.2         4.0        1.1        2.9         2.8         9.2   

Adjusted EBITDA

    $ 29.9      $ 35.4      $ 51.7       $ 9.9      $ 12.3      $ 12.1       $ 16.2       $ 58.1   

PF impact of acquisitions and related cost savings initiatives(1)

                       0.9   

Pro Forma Adjusted EBITDA

                     $ 59.0   

 

(1) Represents pro forma adjustments to reflect acquisition of Outcome Health Information Solutions as if consummated as of beginning of the period presented and pro forma adjustments for the impact of cost savings initiatives. Pro forma adjustments may include adjustments that are not permitted in pro forma financial statements presented in accordance with generally accepted accounting principles or Regulation S-X.

Explanation of Non-GAAP Financial Measures

Emdeon

Emdeon’s management believes that, in order to properly understand Emdeon’s short-term and long-term financial trends, investors may wish to consider the impact of certain non-cash or non-operating items, when used as a supplement to financial performance measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. In addition to the description provided below, reconciliations of Emdeon’s GAAP to non-GAAP results are provided in the financial statement tables included above.

In this presentation, Emdeon defines Adjusted EBITDA as EBITDA (which is defined as net income (loss) before net interest expense, income tax provision (benefit) and depreciation and amortization), plus certain other non-cash or non-operating items, and defines Pro Forma Adjusted EBITDA as Adjusted EBITDA plus the pro forma effects of acquisitions and cost savings initiatives as permitted by the terms of Emdeon’s credit facilities.

 

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To properly evaluate Emdeon’s business, Emdeon encourages investors to not rely on any single financial measure to evaluate Emdeon’s business and to review the reconciliation of net income (loss) to the non-GAAP measures of Adjusted EBITDA and Pro Forma Adjusted EBITDA. Adjusted EBITDA and Pro Forma Adjusted EBITDA, as Emdeon defines them, may differ from and may not be comparable to similarly titled measures used by other companies, because Adjusted EBITDA and Pro Forma Adjusted EBITDA are not measures of financial performance under GAAP and are susceptible to varying calculations. Adjusted EBITDA and Pro Forma Adjusted EBITDA calculations also are used in Emdeon’s credit facilities and indentures, although the adjustments used to calculate Adjusted EBITDA and Pro Forma Adjusted EBITDA as used in Emdeon’s credit facilities and indentures may vary in certain respects among such agreements and from those presented below.

Emdeon’s management uses Adjusted EBITDA and Pro Forma Adjusted EBITDA to facilitate a comparison of Emdeon’s operating performance on a consistent basis from period to period that, when viewed in combination with Emdeon’s GAAP results, Emdeon’s management believes to provide a more complete understanding of factors and trends affecting Emdeon’s business than GAAP measures alone. Emdeon’s management believes these non-GAAP measures assist Emdeon’s board of directors, management, lenders and investors in comparing Emdeon’s operating performance on a consistent basis because they remove, where applicable, the impact of Emdeon’s capital structure, asset base, acquisition accounting, non-cash charges and non-operating items from Emdeon’s operating performance. Additionally, management uses Adjusted EBITDA and Pro Forma Adjusted EBITDA to evaluate the operational performance of Emdeon as a basis for strategic planning and as a performance evaluation metric in determining achievement of certain executive and management incentive compensation programs.

Altegra Health

Altegra’s management believes that, in order to properly understand Altegra’s short-term and long-term financial trends, investors may wish to consider the impact of certain non-cash or non-operating items, when used as a supplement to financial performance measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP. In addition to the description provided below, reconciliations of Altegra’s GAAP to non-GAAP results are provided in the financial statement tables included above.

In this presentation, Altegra defines Adjusted EBITDA as EBITDA (which is defined as net income (loss) before net interest expense, income tax provision (benefit) and depreciation and amortization), plus certain other non-cash or non-operating items, and defines Pro Forma Adjusted EBITDA as Adjusted EBITDA plus the pro forma effects of acquisitions and cost savings initiatives.

To properly evaluate Altegra’s business, Altegra encourages investors to not rely on any single financial measure to evaluate Altegra’s business and to review the reconciliation of net income (loss) to the non-GAAP measures of Adjusted EBITDA and Pro Forma Adjusted EBITDA. Adjusted EBITDA and Pro Forma Adjusted EBITDA, as Altegra defines them, may differ from and may not be comparable to similarly titled measures used by other companies, because Adjusted EBITDA and Pro Forma Adjusted EBITDA are not measures of financial performance under GAAP and are susceptible to varying calculations.

Altegra’s management uses Adjusted EBITDA and Pro Forma Adjusted EBITDA to facilitate a comparison of Altegra’s operating performance on a consistent basis from period to period that, when viewed in combination with Altegra’s GAAP results, Altegra’s management believes to provide a more complete understanding of factors and trends affecting Altegra’s business than GAAP measures alone. Altegra‘s management believes these non-GAAP measures assist Altegra’s board of directors, management, lenders and investors in comparing Altegra’s operating performance on a consistent basis because it removes, where applicable, the impact of Altegra’s capital structure, asset base, acquisition accounting, non-cash charges and non-operating items from Altegra’s operating performance. Additionally, Altegra’s management uses Adjusted EBITDA to evaluate the operational performance of Altegra as a basis for strategic planning and as a performance evaluation metric in determining achievement of certain executive and management incentive compensation programs.

Altegra Health

Historical Financial and Operations Data

The below table includes information on Altegra’s historical financials for 2012, 2013 and 2014. This information excludes the pro forma adjustments to reflect acquisitions as if consummated at the beginning of the period (these pro forma adjustments are included in the Altegra EBITDA reconciliation table above).

 

Altegra    PF FYE December 31,     Quarter Ending 3/31,     Quarter Ending 6/30,     LTM  

($ in millions)

    2012     2013     2014     2014     2015     2014     2015     Q2 2015  

Total Revenue

    $ 116.2      $ 138.5      $ 192.6      $ 44.1      $ 54.8      $ 47.7      $ 56.2      $ 211.8   

% Growth

      —          19.1 %      39.1 %      —          24.3 %      —          17.8 %      —     

Gross Profit

    $ 74.8      $ 89.2      $ 119.1      $ 26.7      $ 34.0      $ 29.2      $ 36.8      $ 134.0   

% Growth

      —          19.3 %      33.5 %      —          27.4 %      —          26.1 %      —     

% Margin

      64.3 %      64.4 %      61.8 %      60.5 %      62.0 %      61.1 %      65.4 %      63.3 % 

Adjusted EBITDA

    $ 29.9      $ 35.4      $ 51.7      $ 9.9      $ 12.3      $ 12.1      $ 16.2      $ 58.1   

% Growth

      —          18.2 %      46.0 %      —          24.2 %      —          33.4 %      —     

% Margin

      25.8 %      25.6 %      26.8 %      22.4 %      22.4 %      25.4 %      28.8 %      27.4 % 

Change in Margin (bps)

      —          (21)  bps      127  bps      —          (3)  bps      —          338  bps      —     

Net Income / (Loss)

    $ (1.3 )    $ 2.0      $ 5.1      $ (0.6 )    $ 1.6      $ 1.3      $ 3.0      $ 9.1   

 

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