Operation Data Pointlazard

INDUSTRY NOTE
January 9, 2012
HEALTHCARE SERVICES
Update
TOM GALLUCCI
212-632-1515
thomas.gallucci@lazardcap.com
Weekly Valuation/Financial Ratio Comparisons
In the pages that follow are detailed valuation comparison sheets for major
healthcare services subsectors, including: 1) Pharmacy Benefit Managers and
Drug Retail, 2) Pharmaceutical Distributors, 3) Clinical Labs, 4) Hospital
Management Companies & Related Providers, 5) Alternate Site Providers, 6)
Medical-Surgical Distributors, 7) HCIT Vendors & Pharma Data Providers, 8)
Post-Acute Care and Assisted Living Facilities, 9) Contract Research
Organizations, 10) Managed Care Organizations, and 11) Healthcare REITs.
We compare publicly traded companies on a price-to-earnings, P/E to

Growth and enterprise value-to-EBITDA basis, as well as on free cash flow
yield. For comparative purposes we have also included indexes such as the
S&P 500, the Large Cap Pharma Index (DRG), the AMEX Managed Care
Index (HMO), the Biotech Index (BTK), the S&P Healthcare Provider and
Services Index, and the S&P Healthcare Equipment Index.
For companies under coverage, we provide graphs detailing historical

trading multiples including: EV/EBITDA, Forward P/E, P/E/G, and Forward
P/E relative to the S&P 500 Forward P/E.
We also provide key operational and financial metrics, including cash flow
and leverage statistics, for sectors/companies under coverage
ANDREA ALFONSO
212-632-1516
andrea.alfonso@lazardcap.com
COLLEEN LANG
212-632-1517
colleen.lang@lazardcap.com
Expected earnings growth rates are listed, as well as year-to-date, 3-month

and 1-week price performance statistics.
Effective May 10, 2005, Lazard Frres & Co. LLC (LF&Co.) transferred its capital markets business (which includes
equity research, syndicate, sales and trading) to a new privately-held company, Lazard Capital Markets LLC, which is
neither owned nor controlled by LF&Co. LF&Co., which is part of publicly-traded Lazard Ltd, has retained, among
other things, its investment banking business (including its mergers and acquisitions and financial restructuring
practices). Please see pages 28-29 for important disclosures and analyst certification.
52 WEEK
TICKER
ABC
CAH
CYH
CVS
HCA
HMA
HLS
LH
LPNT
MCK
DGX
THC
UHS
VHS
WAG
RATING
PRICE
BUY
BUY
NEUTRAL
BUY
BUY
NEUTRAL
BUY
NEUTRAL
NEUTRAL
BUY
NEUTRAL
NEUTRAL
BUY
BUY
NEUTRAL
$38.59
$41.56
$18.31
$41.46
$22.34
$7.49
$17.42
$87.41
$36.90
$78.67
$58.01
$4.99
$39.20
$9.91
$33.08
PRICE
TARGET
$49
$50
NM
$47
$32
NM
$30
NM
NM
$96
NM
NM
$63
$15
NM
EPS
HIGH
LOW
2010
$43.09
$46.83
$42.10
$41.80
$35.24
$11.62
$28.16
$100.83
$43.27
$86.88
$60.83
$7.63
$56.41
$18.05
$45.18
$34.63
$37.99
$15.29
$32.06
$17.66
$6.32
$14.25
$75.99
$29.16
$69.35
$46.02
$3.59
$31.91
$8.66
$30.74
$2.17
$2.24
$3.06
$2.68
$2.93
$0.65
$1.59
$5.57
$2.84
$4.60
$4.05
$0.29
$2.54
$0.50
$2.16
HEALTHCARE SERVICES
2011E
P/E
2012E
2011E
$2.59 A
$2.82
14.9
$2.80 A
$3.19
14.8
$3.41
$3.65
5.4
$2.80
$3.22
14.8
$2.66
$3.65
8.4
$0.83
$0.94
9.1
$1.24
$1.63
14.1
$6.32
$7.05
13.8
$3.21
$3.57
11.5
$5.36 A
$6.35
14.7
$4.24
$4.67
13.7
$0.48
$0.54
10.5
$3.95
$4.43
9.9
$0.71 A
$0.78
14.1
$2.64 A
$2.75
12.5
Source: Lazard Capital Markets estimates
2012E
13.7
13.0
5.0
12.9
6.1
7.9
10.7
12.4
10.3
12.4
12.4
9.2
8.8
12.7
12.0
Exhibit 1. Lazard Capital Markets Healthcare Services Coverage Universe

( in millions, ex cept EPS)
Company
Price
Ticker
Rating
52-Wk Range
1/9/2012
Low
High
Calendar EPS
Market
P/E
LT
P/E to Growth
TEV/EBITDA
Value
2011E
2012E
2013E
2011E
2012E
2013E
Gr Rate
2011E
2012E 2013E
Stock Performance
2012
Div.
2011E
2012E
2013E
FCF Yld
Yield
2010
2011
YTD
Pharmaceutical Channel/Services
Pharmacy Benefit Managers and Drug Retail
CVS Caremark (GAAP) (a)
Adjusted Cash EPS
CVS
Buy
$41.72
$31 - $42
$55,902
$2.58
$2.80
$2.99
$3.22
$3.39
$3.62
16.1x
14.9x
13.9x
13.0x
12.3x
11.5x
13%
124%
115%
107%
100%
95%
89%
9.2x
8.7x
8.1x
5.5%
1.6%
8%
17%
2%
Walgreens (calendarized) (a)

Adjusted for FIFO (Cal)
WAG
Neutral
$32.81
$30 - $47
$29,880
$2.59
$2.78
$2.78
$2.88
$3.40
$3.45
12.7x
11.8x
11.8x
11.4x
9.7x
9.5x
16%
82%
76%
76%
73%
62%
61%
8.6x
8.3x
8.5x
8.3x
7.7x
7.5x
7.2%
2.1%
6%
-15%
-1%
Drug Distribution
AmerisourceBergen (calendarized)
ABC
Buy
$37.99
$34 - $43
$10,310
$2.66
$2.89
$3.26
14.3x
13.1x
11.7x
13%
110%
101%
90%
7.3x
6.8x
6.4x
7.8%
1.3%
31%
9%
2%
Cardinal Health (calendarized)

Adjusted Cash EPS
CAH
Buy
$41.11
$38 - $47
$14,364
$2.76
$2.91
$3.23
$3.35
$3.59
$3.67
14.9x
14.1x
12.7x
12.3x
11.5x
11.2x
12%
124%
118%
106%
102%
95%
93%
7.4x
6.6x
6.0x
6.9%
2.1%
19%
6%
1%
McKesson (calendarized)
Adjusted Cash EPS
MCK
Buy
$79.05
$67 - $87
$19,763
$5.56
$6.03
$6.42
$6.86
$7.04
$7.46
14.2x
13.1x
12.3x
11.5x
11.2x
10.6x
13%
109%
101%
95%
89%
86%
82%
7.1x
6.4x
6.1x
8.0%
1.0%
13%
11%
1%
Healthcare Facilities/Providers/Other
Clinical Laboratories
Laboratory Corp.
Adjusted Cash EPS
LH
Neutral
$85.95
$75 - $101
$8,836
$5.81
$6.32
$6.47
$7.05
$7.05
$7.70
14.8x
13.6x
13.3x
12.2x
12.2x
11.2x
13%
114%
105%
102%
94%
94%
86%
8.3x
7.7x
7.2x
9.5%
NA
17%
-2%
0%
Quest Diagnostics
Adjusted Cash EPS
DGX
Neutral
$57.24
$45 - $61
$9,342
$4.24
$4.50
$4.67
$4.97
$5.35
$5.68
13.5x
12.7x
12.3x
11.5x
10.7x
10.1x
12%
112%
106%
102%
96%
89%
84%
7.6x
7.2x
6.7x
10.1%
1.2%
-11%
8%
-1%
-3%
Hospital Management *
Community Health Sy stems
CYH
Neutral
$16.97
$15 - $43
$1,525
$3.28
$3.65
$3.90
5.2x
4.6x
4.4x
12%
43%
39%
36%
5.9x
5.7x
5.6x
4.4%
NA
5%
-53%
HCA
HCA
Buy
$20.94
$17 - $35
$9,586
$2.66
$3.65
$4.05
7.9x
5.7x
5.2x
12%
66%
48%
43%
6.8x
6.2x
5.9x
4.9%
NA
NA
-27%
-5%
Health Management Associates
HMA
Neutral
$7.12
$6 - $12
$1,816
$0.83
$0.94
$1.04
8.6x
7.6x
6.9x
12%
72%
63%
57%
6.6x
6.0x
5.7x
5.0%
NA
31%
-23%
-3%
LifePoint Hospitals
LPNT
Neutral
$35.91
$29 - $43
$1,878
$3.21
$3.57
$3.70
11.2x
10.1x
9.7x
10%
112%
101%
97%
6.0x
5.6x
5.5x
6.0%
NA
13%
1%
-3%
Tenet Healthcare
THC
Neutral
$4.79
$3 - $8
$2,599
$0.48
$0.54
$0.63
10.0x
8.8x
7.5x
10%
100%
88%
75%
5.1x
4.8x
4.5x
4.8%
NA
24%
-23%
-7%
Univ ersal Health Serv ices
UHS
Buy
$36.73
$31 - $56
$3,646
$3.95
$4.43
$4.93
9.3x
8.3x
7.5x
14%
66%
59%
53%
6.6x
6.3x
5.9x
6.6%
0.5%
42%
-11%
-5%
Vanguard Health Sy stems
VHS
Buy
$9.25
$9 - $19
$735
$0.80
$0.80
$1.09
11.6x
11.6x
8.5x
15%
77%
77%
57%
6.0x
5.5x
5.1x
NM
NA
NA
-43%
-9%
HLS
Buy
$17.15
$14 - $29
$1,869
$1.24
$1.63
$1.82
13.8x
10.5x
9.4x
13%
71%
5.7x
5.4x
5.1x
13.2%
NA
10%
-15%
-3%
14.1x
12.3x
10.9x
13%
8.1x
7.7x
7.1x
6.9%
1.6%
12%
4%
0%
Post-Acute Care
HealthSouth
HC Services Wght'd Average (Sum)
$172,051
105%
108%
80%
94%
83%
121%
103%
Market Indices
$96.73
$105.27
$124.49
13.2x
12.1x
10.3x
10%
13%
0%
2%
$30.61
$30.86
$33.59
10.9x
10.8x
9.9x
-1%
9%
0%
38%
-16%
7%
436.54
$37.36
$41.33
$44.92
10.5x
9.5x
8.7x
3%
6%
3%
317.72
$24.37
$26.92
$29.99
12.2x
11.0x
9.9x
10%
13%
5%
S & P 500 FC est.
SPX
1,277.81
1,074.77
1,370.58
Large Cap Pharma
DRG
332.84
284.70
340.27
Biotech Index
BTK
1,162.91
1,001.33
1,514.60
S&P HC Equipment
SP569
392.37
340.16
S&P HC Prov iders & Serv ices
SP585
297.27
245.59
132%
(a) - For CVS and WAG, we use the EV + Capitalized Lease/EBITDAR

* For the hospital group, we look at FCF on an EV basis. For the rest of the groups it is on a market cap basis.
Source: FactSet, LCM Research
HEALTHCARE SERVICES
Exhibit 2. Lazard Capital Markets Healthcare Services Cash Flows

(in millions except price)
Company
Ticker
FYE
FCF (OCF-Capex-Dividends)
Price
FD
Mkt
LQ Net
Total Ent.
LT
1/9/2012
Shares
Cap
Debt
Value
Gr Rate
C2011E
C2012E C2013E
FCF Per Share

C2011E C2012E C2013E
Price / FCF
FCF Yield - Market Cap
FCF Yield - EV
C2011E C2012E C2013E C2011E C2012E C2013E C2011E C2012E C2013E
Div.
Yield

CVS Caremark
CVS
Dec
$41.72
1340
$55,902
$8,626
$64,528
13%
$2,853
$3,100
$4,305
$2.13
$2.31
$3.21
19.6x
18.0x
13.0x
5.1%
5.5%
7.7%
4.4%
4.8%
6.7%
1.6%
Walgreens
WAG
Aug
$32.81
911
$29,880
$853
$30,733
16%
$1,840
$2,024
$2,328
$2.04
$2.37
$2.72
16.1x
13.9x
12.1x
6.2%
7.2%
8.3%
6.0%
6.6%
7.6%
2.7%
Laboratory Corp
LH
Dec
$85.95
103
$8,836
$1,884
$10,720
13%
$751
$835
$834
$7.31
$8.13
$8.11
11.8x
10.6x
10.6x
8.5%
9.5%
9.4%
7.0%
7.8%
7.8%
NA
Quest Diagnostics
DGX
Dec
$57.24
163
$9,342
$2,541
$11,882
12%
$632
$941
$1,073
$3.87
$5.77
$6.58
14.8x
9.9x
8.7x
6.8%
10.1%
11.5%
5.3%
7.9%
9.0%
1.2%
AmerisourceBergen
ABC
Sep
$37.99
271
$10,310
($461)
$9,849
13%
$853
$781
$859
$3.10
$2.95
$3.31
12.3x
12.9x
11.5x
8.2%
7.8%
8.7%
8.7%
7.9%
8.7%
1.3%
Cardinal Health
CAH
Jun
$41.11
349
$14,364
$514
$14,878
12%
$874
$999
$1,136
$2.48
$2.84
$3.22
16.6x
14.5x
12.8x
6.0%
6.9%
7.8%
5.9%
6.7%
7.6%
2.1%
McKesson Corp
MCK
Mar
$79.05
250
$19,763
$392
$20,155
13%
$1,461
$1,551
$1,797
$5.74
$6.30
$7.48
13.8x
12.5x
10.6x
7.3%
8.0%
9.5%
7.2%
7.7%
8.9%
1.0%
CYH
Dec
$16.97
90
$1,525
$9,008
$10,533
12%
$456
$461
$473
$5.08
$5.13
$5.26
3.3x
3.3x
3.2x
29.9% 30.3%
31.0%
4.3%
4.4%
4.5%
NA
HCA
HCA
Dec
$20.94
458
$9,586
$28,619
$38,205
12%
$1,408
$1,868
$2,098
$3.08
$4.08
$4.58
6.8x
5.1x
4.6x
14.7% 19.5%
21.9%
3.7%
4.9%
5.5%
NA
HMA
Dec
$7.12
255
$1,816
$3,489
$5,305
12%
$227
$263
$278
$0.89
$1.03
$1.09
8.0x
6.9x
6.5x
12.5% 14.5%
15.3%
4.3%
5.0%
5.2%
NA
LifePoint Hospitals
LPNT
Dec
$35.91
52
$1,878
$1,328
$3,206
10%
$230
$192
$212
$4.41
$3.67
$4.05
8.2x
9.8x
8.9x
12.3% 10.2%
11.3%
7.2%
6.0%
6.6%
NA
Tenet Healthcare
THC
Dec
$4.79
543
$2,599
$3,489
$6,088
10%
$143
$293
$374
$0.26
$0.54
$0.69
18.2x
8.9x
7.0x
5.5%
11.3%
14.4%
2.3%
4.8%
6.1%
NA
UHS
Dec
$36.73
99
$3,646
$3,909
$7,555
14%
$500
$501
$554
$5.04
$5.05
$5.59
7.3x
7.3x
6.6x
13.7% 13.8%
15.2%
6.6%
6.6%
7.3%
0.5%
VHS
Jun
$9.25
80
$735
$2,245
$2,980
15%
($89)
($113)
$9
($1.12) ($1.42)
$0.11
-8.3x
-6.5x
81.3x
1.2%
NM
NM
0.3%
NA
HLS
Dec
$17.15
109
$1,869
$740
$2,609
13%
$191
$244
$279
$1.75
$2.61
9.8x
7.6x
6.6x
10.2% 13.2%
15.2%
7.3%
9.3%
10.7%
NA
13.8x
12.4x
10.6x
9.2%
12.2%
5.6%
6.2%
7.4%
1.7%
Drug Distribution**
Hospital Management
NM
NM
Post-Acute Care
HealthSouth
HC Serv ices Wght'd Av erage (Sum)
$172,051
13%
$2.26
10.4%
Source: LCM Research

**Note that Healthcare Distribution cash flow estimates are calendarized for comparative purposes
HEALTHCARE SERVICES
Exhibit 3. Lazard Capital Markets Healthcare Services Short Interest Data

(in millions except price)
Company
Ticker Rating
Shares
Price
Mkt
Out
1/9/2012
Cap
1,340
$41.72
$55,902
11/30/2010 12/31/2010 1/31/2011
2/28/2011
3/31/2011
4/29/2011
5/31/2011
6/30/2011
7/31/2011
8/31/2011
9/30/2011 10/31/2011 11/30/2011 12/31/2011
SI as %
Avg Daily
Days To
of Float
Volume
Cover
Pharmacy Benefit Managers

CVS Caremark
CVS
Buy
Seq. % Change
Walgreens
Seq. % Change
1.6%
9,996
4.5
20,368
1%
2.2%
7,631
2.7
11,001
15,196
12,050
11,298
14,030
15,450
13,461
14,926
15,612
44,815
34,543
29,153
25,859
21,608
-7%
38%
-21%
-6%
24%
10%
-13%
11%
5%
187%
-23%
-16%
-11%
-16%
20,488
0%
18,578
-9%
20,188
9%
WAG Neutral
911
$32.81
$29,880
24,630
-1%
15,857
-36%
13,372
-16%
13,919
4%
14,042
1%
20,350
45%
24,335
20%
26,319
8%
17,336
-34%
20,407
18%
ABC
271
$37.99
$10,310
6,303
7,263
3,673
3,746
5,425
4,482
4,414
4,279
4,113
8,035
6,455
8,238
7,360
6,965
2.6%
2,170
3.7
$14,364
-38%
6,163
15%
5,438
-49%
7,043
2%
3,725
45%
3,018
-17%
3,053
-2%
3,966
-3%
3,760
-4%
4,011
95%
5,303
-20%
4,959
28%
3,220
-11%
3,338
-5%
2,754
0.8%
1,310
4.0
$19,763
43%
2,208
-12%
2,946
30%
2,592
-47%
2,650
-19%
3,737
1%
2,719
30%
2,618
-5%
2,942
7%
2,713
32%
4,251
-6%
3,192
-35%
3,145
4%
2,184
-17%
1,858
0.7%
2,310
1.8
-12%
33%
-12%
2%
41%
-27%
-4%
12%
-8%
57%
-25%
-1%
-31%
-15%
$8,836
7,825
6,073
4,981
4,132
5,458
5,746
4,930
3,485
3,564
5,537
6,311
6,065
5,881
5,740
5.8%
745
7.4
$9,342
0%
3,366
-22%
3,643
-18%
2,459
-17%
2,330
32%
2,111
5%
2,833
-14%
3,174
-29%
6,595
2%
7,425
55%
6,090
14%
8,931
-4%
8,054
-3%
6,712
-2%
6,407
3.8%
1,250
4.9
43%
8%
-33%
-5%
-9%
34%
12%
108%
13%
-18%
47%
-10%
-17%
-5%
5,641
2,829
3,724
3,763
4,277
12,139
8,473
6,761
5,243
4,312
4,841
4,523
7,197
8,181
9.1%
2,403
1.8
51%
-50%
32%
1%
14%
184%
-30%
-20%
-22%
-18%
12%
-7%
59%
14%
NA
NA
NA
NA
3,361
859
1,827
4,030
3,460
2,431
2,761
2,155
2,917
3,619
1.1%
3,613
1.1
-74%
12,703
113%
16,276
121%
15,477
-14%
12,310
-30%
11,025
14%
9,650
-22%
9,052
35%
8,740
24%
8,224
Drug Distribution
AmerisourceBergen
Seq. % Change
Cardinal Health
Seq. % Change
McKesson
Seq. % Change
CAH
MCK
Buy
Buy
Buy
349
250
$41.11
$79.05
Laboratory Corp
Seq. % Change
Quest Diagnostics
Seq. % Change
LH
DGX
Neutral
Neutral
103
163
$85.95
$57.24
Hospital Management
Community Health
Seq. % Change
CYH Neutral
HCA
HCA
Seq. % Change
Seq. % Change
Lifepoint Hospital
Seq. % Change
Tenet Healthcare
Seq. % Change
Seq. % Change
Vanguard
Seq. % Change
HealthSouth
Seq. % Change
Buy
HMA Neutral
LPNT Neutral
THC
UHS
VHS
HLS
Neutral
Buy
Buy
Buy
90
458
255
52
543
99
80
109
$16.97
$20.94
$7.12
$35.91
$4.79
$36.73
$9.25
$17.15
$1,525
$9,586
$1,816
12,199
8,809
11,268
9,766
NA
12,325
3.4%
3,781
2.9
$1,878
-12%
3,660
-28%
3,135
28%
3,365
-13%
3,878
26%
3,989
3%
4,114
28%
4,179
-5%
4,320
-20%
4,416
-10%
4,852
-12%
5,271
-6%
4,583
-3%
4,772
-6%
4,680
9.4%
512
9.5
$2,599
41%
19,641
-14%
13,147
7%
11,775
15%
12,389
3%
14,500
3%
16,085
2%
19,007
3%
25,638
2%
28,719
10%
34,292
9%
36,859
-13%
36,619
4%
29,718
-2%
29,965
6.2%
10,581
3.2
$3,646
-6%
2,032
-33%
1,747
-10%
2,363
5%
1,143
17%
1,629
11%
1,945
18%
2,420
35%
2,535
12%
2,791
19%
1,295
7%
1,616
-1%
2,108
-19%
1,814
1%
1,779
1.8%
1,206
1.1
$735
34%
NA
-14%
NA
35%
NA
-52%
NA
42%
NA
19%
NA
24%
NA
5%
57
10%
549
-54%
807
25%
660
30%
1,372
-14%
1,340
-2%
1,329
4.7%
446
1.8
NA
865%
47%
-18%
108%
-2%
-1%
8,178
-3%
7,351
-10%
7,978
9%
8,441
6%
7,570
-10%
7,544
0%
7,142
-5%
7.6%
1,095
7.3
$1,869
10,818
-3%
10,855
0%
7,872
-27%
6,581
-16%
7,752
18%
7,848
1%
8,466
8%
HEALTHCARE SERVICES
Exhibit 4. Lazard Capital Markets Estimates vs. Consensus Quarterly Data

December-11 Quarter
Company
Ticker
Lazard
Consensus
Rating
Revenue
Revenue
Lazard
Consensus
Lazard
Consensus
EBITDA
EBITDA
EPS
EPS
0%
$2,355.4
$2,372.2
-1%
$0.89
$0.89
0%
$1,177.0
Actual
$0.63
Actual

CVS Caremark
CVS
Buy
$28,005.0
$28,050.8
Walgreens (a),(b)
WAG
Neutral
$18,157.0
Actual
Laboratory Corp.
LH
Neutral
$1,380.2
$1,377.3
0%
$313.6
$313.3
0%
$1.55
$1.52
2%
Quest Diagnostics
DGX
Neutral
$1,850.1
$1,859.2
0%
$391.6
$400.7
-2%
$1.05
$1.06
-1%
Drug Distribution (a)

AmerisourceBergen
ABC
Buy
$20,003.5
$19,993.1
0%
$320.3
$315.7
1%
$0.62
$0.62
0%
Cardinal Health
CAH
Buy
$27,182.3
$26,886.7
1%
$519.0
$505.4
3%
$0.76
$0.76
0%
McKesson Corporation
MCK
Buy
$29,884.6
$30,131.2
-1%
$660.5
$651.8
1%
$1.35
$1.38
-2%
CYH
Neutral
$3,511.2
$3,547.1
-1%
$474.5
$460.9
3%
$0.88
$0.83
6%
HCA
HCA
Buy
$7,614.7
$8,412.1
-9%
$1,563.1
$1,520.4
3%
$0.73
$0.75
-3%
HMA
Neutral
$1,603.3
$1,586.9
1%
$224.4
$213.1
5%
$0.23
$0.18
25%
LifePoint Hospitals
LPNT
Neutral
$903.7
$899.8
0%
$132.9
$129.4
3%
$0.78
$0.76
2%
Tenet Healthcare
THC
Neutral
$2,420.2
$2,426.3
0%
$344.0
$319.4
8%
$0.17
$0.14
NM
UHS
Buy
$1,860.1
$1,881.7
-1%
$277.3
$282.3
-2%
$0.89
$0.91
-2%
VHS
Buy
$1,528.8
$1,550.2
-1%
$125.2
$133.9
-7%
$0.11
$0.20
NM
HLS
Buy
$517.1
$512.9
1%
$114.2
$111.9
2%
$0.33
$0.32
6%
Post-Acute Care
HealthSouth
Source: Lazard Estimates, FactSet

(a) For ABC, CAH, MCK, WAG, and VHS, we use fiscal year sales, EBITDA, and EPS, not calendar values for the current year and next year. For calendar '11, we use fiscal 11. For calendar '12, we use fiscal 12.
(b) For WAG, we have used reported FQ1'12A results for the quarter ended November.
HEALTHCARE SERVICES
Exhibit 5. Lazard Capital Markets Estimates vs. Consensus Annual Data

Calendar 2011 (c)
Ticker
Rating
Lazard
Consensus
Revenue
Revenue
Lazard
Consensus
EBITDA
EBITDA
0%
$7,899.4
$7,948.0
-1%
$5,017.0
Actual
Calendar 2012 (c)

Lazard
Consensus
EPS
EPS
$2.80
$2.80
$2.64
Actual
Lazard
Consensus
Lazard
Revenue
Revenue
Consensus
EBITDA
EBITDA
0%
$119,138.7
$69,638.1
$119,074.1
0%
$8,540.8
$8,683.8
-2%
$72,711.9
-4%
$4,962.8
$5,024.0
-1%
Lazard
Consensus
EPS
EPS
$3.22
$3.24
-1%
$2.78
$2.71
3%

CVS Caremark
CVS
Buy
Walgreens (a)
WAG
Neutral
$106,788.0 $107,205.6
$72,184.0
Actual
Laboratory Corp.
LH
Neutral
$5,556.4
$5,552.8
0%
$1,291.7
$1,306.2
-1%
$6.32
$6.30
0%
$5,766.9
$5,770.9
0%
$1,395.8
$1,391.2
0%
$7.05
$6.93
2%
Quest Diagnostics
DGX
Neutral
$7,481.3
$7,490.3
0%
$1,570.2
$1,579.4
-1%
$4.24
$4.27
-1%
$7,697.6
$7,665.4
0%
$1,652.4
$1,666.8
-1%
$4.67
$4.67
0%
Drug Distribution (a)

AmerisourceBergen
ABC
Buy
$80,217.6
Actual
$1,327.0
Actual
$2.59
Actual
$80,772.6
$80,677.6
0%
$1,418.4
$1,407.2
1%
$2.82
$2.81
0%
Cardinal Health
CAH
Buy
$102,685.8
Actual
$1,889.9
Actual
$2.80
Actual
$107,472.6
$107,340.3
0%
$2,157.9
$2,116.5
2%
$3.19
$3.18
0%
McKesson Corporation
MCK
Buy
$112,084.0
Actual
$2,628.0
Actual
$5.36
Actual
$119,807.3
$120,281.1
0%
$2,971.7
$2,996.6
-1%
$6.35
$6.33
0%
CYH
Neutral
$13,913.3
$13,817.6
1%
$1,853.4
$1,822.6
2%
$3.28
$3.34
-2%
$14,468.2
$14,640.0
-1%
$1,919.5
$1,902.8
1%
$3.65
$3.59
2%
HCA
HCA
Buy
$29,618.7
$32,450.8
-9%
$5,985.1
$5,939.1
1%
$2.66
$2.68
-1%
$32,141.0
$35,144.5
-9%
$6,544.3
$6,359.6
3%
$3.65
$3.44
6%
15%
HMA
Neutral
$5,825.7
$5,819.8
0%
$831.3
$822.4
1%
$0.83
$0.79
5%
$6,532.4
$6,551.2
0%
$917.0
$907.7
1%
$0.94
$0.82
LifePoint Hospitals
LPNT
Neutral
$3,547.1
$3,543.6
0%
$539.2
$535.9
1%
$3.21
$3.19
1%
$3,779.8
$3,771.2
0%
$573.8
$562.7
2%
$3.57
$3.53
1%
Tenet Healthcare
THC
Neutral
$9,642.2
$9,642.5
0%
$1,195.0
$1,168.6
2%
$0.48
$0.48
0%
$9,915.0
$9,981.8
-1%
$1,290.0
$1,238.8
4%
$0.54
$0.48
NM
UHS
Buy
$7,521.6
$7,554.4
0%
$1,185.2
$1,184.9
0%
$3.95
$3.97
0%
$7,850.5
$7,898.2
-1%
$1,253.9
$1,257.3
0%
$4.43
$4.44
0%
VHS
Buy
$4,593.6
Actual
$417.6
Actual
$0.71
Actual
$6,178.1
$6,177.9
0%
$536.6
$541.3
-1%
$0.78
$0.81
-4%
HLS
Buy
$2,025.9
$2,041.3
$457.5
$455.9
$1.24
$1.21
$2,114.1
$2,119.9
0%
$484.8
$477.9
1%
$1.63
$1.44
14%
Post-Acute Care
HealthSouth
-1%
0%
3%
(a) - For ABC, CAH & MCK, we use fiscal year sales, EBITDA, and EPS, not calendar values for the current year and next year. For calendar '11, we use fiscal 11. For calendar 12, we use fiscal 12.
Source: LCM Estimates, FactSet
HEALTHCARE SERVICES
Exhibit 6. Pharmacy Benefit Managers, Drug Retailers, Institutional Pharmacy and Other Niche Specialty Providers
( in millions, except EP S)
Company
Ticker
Rating
EPS
Price
Shares
Market
Net
Total Ent.
1/9/2012
Out
Value
Debt
Value
2011E
2012E
P/E
2013E
2011E
2012E
P/E to Growth
LT
EBITDA
2013E Gr Rate 2011E 2012E 2013E
2011E
2012E
TEV / EBITDA
2013E
EV + Cap Lease/EBITDAR
2011E 2012E 2013E
2011E
2012E
9.2x
8.7x
2013E
12 FCF
Div.
Yield
Yield
5.5%
1.6%
Stock Performance
2010
2011
YTD
3 Mo.
1 Wk.
-37%
4%
-4%
-22%
-4%
8%
17%
2%
21%
2%
PBMs
BioScrip
BIOS
NR
$5.22
55
$289
$306
$595
$0.11
$0.56
NA
47.5x
9.3x
NA
23%
211%
41%
NA
$82
NA
7.2x
NA
CVS Caremark
Adjusted Cash EPS
CVS
Buy
$41.72
1340
$55,902
$8,626
$64,528
$2.58
$2.80
$2.99
$3.22
$3.39
$3.62
16.1x
14.9x
13.9x
13.0x
12.3x
11.5x
13%
124%
115%
107%
100%
95%
89%
$7,899
$8,541
$9,257
8.2x
7.6x
7.0x
Cataly st Health
CHSI
NR
$54.05
49
$2,671
($10)
$2,662
$2.35
$2.71
$3.31
23.0x
19.9x
16.3x
21%
111%
96%
79%
$204
$248
$294
13.1x
10.7x
9.0x
27%
12%
4%
-2%
4%
SXC Health
SXCI
NR
$58.75
63
$3,705
($335)
$3,370
$1.63
$2.24
$2.65
36.2x
26.3x
22.2x
25%
145%
105%
89%
$168
$232
$275
15.9x
14.5x
12.3x
59%
32%
4%
2%
4%
16.5x
14.1x
12.4x
14%
116%
100%
88%
8.8x
8.1x
7.4x
12%
19%
3%
20%
3%
16.1x
14.9x
13.9x
13.0x
12.3x
11.5x
13%
124%
115%
107%
100%
95%
89%
8.2x
7.6x
7.0x
1.6%
8%
17%
2%
21%
2%
$62,568
PBM Weighted Average (Sum)
$71,155
8.1x
5.5%
Drug Retailers
CVS Caremark
Adjusted Cash EPS
CVS
Buy
$41.72
1340
$55,902
$8,626
$64,528
$2.58
$2.80
$2.99
$3.22
$3.39
$3.62
$7,899
$8,541
$9,257
Rite Aid (Cal EPS)
RAD
NR
$1.34
887
$1,188
$6,129
$7,317
($0.43) ($0.33)
($0.23)
NM
NM
NM
NA
NM
NM
NM
$874
$900
$937
3.0x
8.1x
7.8x
Walgreen (Cal EPS)

Adjusted for FIFO (Cal)
Fiscal Year
WAG
Neutral
$32.81
911
$29,880
$853
$30,733
$2.59
$2.78
$2.64
$3.40
$3.45
$3.30
12.7x
11.8x
12.4x
11.8x
11.4x
11.9x
9.7x
9.5x
9.9x
16%
82%
76%
80%
76%
73%
77%
62%
61%
64%
$4,879
$5,087
$5,017
$4,955
$5,142
$4,963
$5,713
$5,913
$5,597
6.3x
6.0x
6.1x
6.2x
6.0x
6.2x
5.4x
5.2x
5.5x
14.1x
12.6x
10.9x
103%
91%
79%
7.5x
7.1x
6.4x
$86,970
Drug Retail Weighted Average (Sum)
$2.78
$2.88
$2.75
$102,578
9.2x
8.7x
8.1x
5.5%
NM
NM
-42%
43%
6%
36%
6%
8.6x
8.3x
8.5x
8.3x
7.7x
7.5x
7.2%
2.1%
6%
-15%
-1%
-3%
-1%
7%
6%
1%
13%
1%
6.1%
Bellwether Retailers (a)

Costco
COST
NR
$81.13
441
$35,747
($3,460)
$32,287
$3.48
$4.03
$4.65
23.3x
20.1x
17.5x
13%
174%
150%
131%
$3,416
$3,804
$4,264
8.5x
7.6x
22%
15%
-3%
0%
-3%
Target
TGT
NR
$48.95
678
$33,203
$14,363
$47,566
$4.24
$4.30
$4.87
11.5x
11.4x
10.1x
12%
98%
97%
86%
$7,429
$7,361
$7,672
6.4x
6.5x
6.2x
24%
-15%
-4%
-8%
-4%
Wal-Mart
WMT
NR
$59.00
3458
$204,022
$42,469
$246,491
$4.46
$4.87
$5.39
13.2x
12.1x
11.0x
10%
139%
127%
115%
$34,587 $36,209 $38,293
7.1x
6.8x
6.4x
1%
11%
-1%
8%
-1%
Institutional Pharmacies
Omnicare
OCR
NR
$34.31
115
$3,933
$1,614
$5,547
$2.12
$2.39
$2.66
16.2x
14.4x
12.9x
11%
146%
129%
116%
$617
$656
$694
9.0x
8.5x
8.0x
5%
36%
0%
30%
0%
PharMerica
PMC
NR
$14.55
30
$430
$235
$664
$1.04
$1.11
$1.19
13.9x
13.1x
12.3x
17%
82%
77%
72%
$89
$95
$99
7.5x
7.0x
6.7x
-28%
33%
-4%
3%
-4%
HWAY
NR
$7.25
34
$248
$246
$494
$0.90
$0.77
$0.70
8.0x
9.5x
10.3x
5%
163%
192%
209%
$116
$109
$107
4.3x
4.5x
4.6x
-39%
-39%
6%
-30%
6%
Niche Specialty Provider

Healthw ay s (Cal EPS)
Market Indices
S & P 500 FC est.
SPX
$1,277.81
$96.73 $105.27 $124.49
13.2x
12.1x
10.3x
10%
132%
121%
103%
13%
0%
2%
7%
2%
Large Cap Pharma
DRG
$332.84
$30.61
$30.86
$33.59
10.9x
10.8x
9.9x
-1%
9%
0%
7%
0%
Biotech Index
BTK
$1,162.91
38%
-16%
7%
3%
7%
S&P HC Equipment
SP569
$392.37
$37.36
$41.33
$44.92
10.5x
9.5x
8.7x
3%
6%
3%
8%
3%
SP585
$297.27
$24.37
$26.92
$29.99
12.2x
11.0x
9.9x
10%
13%
5%
13%
5%
S&P 500 Retailing
SP421
$31.07
$35.65
$41.73
17.2x
15.0x
12.8x
24%
3%
2%
1%
2%
$533.34
HEALTHCARE SERVICES
Exhibit 7. PBM Financial & Operating Metrics

2011
Company
Revenues (E)
$106,788.0
CVS
CVS adj. for corp expense
Consolidated Gross Margin

2012E
2009A
2010A
2011E
2012E
2009A
2010A
2011E
2012E
2009A
2010A
2011E
2012E
20.6%
20.9%
19.2%
18.0%
$5.06
$4.63
$3.50
$3.34
7.9%
8.0%
7.4%
7.2%
$4.17
$3.92
$2.90
$2.81
$19.59
$17.40
$12.39
$15.15
$13.81
$9.69
$9.10
2010A
2011E
2012E
$1,045.9 $2,275.5 $2,853.4 $3,100.3
Free Cash Flow per Share

2009A
$2.10
Net Debt / Total Capital

Company
2009A
CVS
23.3%
2010A
19.9%
2011E
21.4%
2010A
$2.37
2011E
$3.05
Days Sales In Inventory

2012E
$3.45
20.4%
Retail Claims Processed
2010A
2011E
2012E
1.4x
1.3x
1.4x
1.2x
Mail Pharmacy Rx's Filled
Days In Receivables
2011E
2012E
2009A
2010A
2011E
2012E
45.2
50.6
43.6
42.0
20.4
19.3
20.7
19.8
17.1
19.4
18.6
18.5
48.4
50.5
45.6
43.3
2012E
2009A
2012E
2009A
Q110
Q210
Q310
Q410
2009A
14.9x
2010A
14.3x
2011E
13.6x
Return On Sales
15.0x
Equiv. Rx's Filled (retail+(mail*3))

2012E
2009A
2010A
2011E
2012E
CVS
592.5
520.7
705.9
817.4
66.0
64.1
70.8
86.5
198.2
179.0
241.5
289.0
CVS
Q306
Q406
2006
44.1%
45.1%
42.7%
Retail
55.7%
55.7%
57.6%
58.6%
56.9%
Cash Conversion Cycle (Days)
2010A
2011E
Q206
2012E
1.55x
2009A
2010A
41.3%
2011E
1.59x
2012E
2009A
Q106
2010A
1.40x
2011E
2012E
40.4%
Days In Payables
1.09x
2010A
2011E
Mail
$4,035.9 $4,759.5 $5,533.0 $5,962.4
2009A
2009A
2010A
(a)
Cash Realization Ratio

2012E
2012E
2009A
CaremarkRx
2011E
2011E
Interest Coverage
2009A
2010A
2010A
Net Debt / EBITDA

2012E
Operating Cash Flow

2009A
2009A
Company (in millions)
Generic Penetration Rates
PBM EBITDA Per Equiv. Rx
2011E
2009A
CVS
Consolidated EBITDA Margin
2010A
Free Cash Flow (OCF-CapEx-Divs) (b)

Company
PBM GM Per Equiv. Rx
2009A
Q208
10.5%
2010A
9.3%
2011E
9.2%
Return On Equity (Dupont)
10.2%
2010A
2011E
2012E
10.5%
9.3%
9.2%
10.2%
Q209
Q309
Q409
2009
Mail % of Adjusted Rx's

2009A
2010A
2011E
2012E
23.6%
26.1%
22.4%
22.8%
Q308
Q408
2008
Q109
Q107
Q207
Q307
Q407
2007
Q108
2010
Q111
Q211
Q311
Mail
45.4%
47.6%
49.0%
49.7%
48.0%
52.8%
54.5%
55.2%
55.2%
54.4%
55.5%
56.3%
56.6%
57.4%
56.5%
58.8%
61.0%
62.4%
62.9%
61.3%
63.8%
64.6%
65.0%
Retail
59.8%
61.2%
61.6%
63.5%
61.5%
65.2%
65.5%
66.1%
67.7%
66.2%
68.8%
67.8%
69.5%
70.0%
69.0%
71.6%
72.2%
73.1%
73.9%
72.7%
74.8%
75.0%
75.3%
(a) - For historical comparison purposes, we have included actual figures for Caremark as a stand-alone PBM.
(b) - Note that when CVS refers to FCF metrics, it excludes the impact of acquisitions/dividends.
Furthermore, for Gross Margin-per-equivalent Rx's and EBITDA-per-equivalent Rx's, we use gross margin and EBITDA for the PBM business.
Source: Company reports, Lazard Capital Markets estimates
HEALTHCARE SERVICES
Exhibit 8. Pharmaceutical Distribution

EPS
P/E
Lt
P/E to Growth
EBITDA
TEV / EBITDA
Stock Performance
Price
Shares
Market
Net
Total Ent.
12 FCF
Div.
Ticker
Rating
1/9/12
Out
Value
Debt
Value
2011E
2012E
2013E
2011E
2012E
2013E Gr Rate 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E
Yield
Yield
2010
2011
YTD
3 Mo.
1 Wk.
AmerisourceBergen
Calendar Cash EPS
Fiscal Year (Sep)
ABC
Buy
$37.99
271
$10,310
($461)
$9,849
$2.66
$2.69
$2.59
$2.89
$2.92
$2.82
$3.26
$3.28
$3.15
14.3x
14.1x
14.7x
13.1x
13.0x
13.5x
11.7x
11.6x
12.1x
13%
7.8%
1.3%
31%
9%
2%
3%
2%
Cardinal Health
Calendar Cash EPS
Fiscal Year - Cash (Jun)
CAH
Buy
$41.11
349
$14,364
$514
$14,878
$2.76
$2.91
$2.80
$3.23
$3.35
$3.19
$3.59
$3.67
$3.54
14.9x
14.1x
14.7x
12.7x
12.3x
12.9x
11.5x
11.2x
11.6x
6.9%
2.1%
19%
6%
1%
0%
1%
McKesson Corp
Calendar Cash EPS
Fiscal Year - Cash (Mar)
MCK
Buy
$79.05
250
$19,763
$392
$20,155
$5.56
$6.03
$5.36
$6.42
$6.86
$6.35
$7.04
$7.46
$7.02
14.2x
13.1x
14.8x
12.3x
11.5x
12.5x
8.0%
1.0%
13%
11%
1%
8%
1%
14.5x
(in millions, except EP S)
Company
Pharmaceutical Distributors
$44,436
Weighted Av erage (Sum)

International Pharmaceutical Distributors (in local currency)
Profarma
PFRM3-BR
NR
BRL 10.57
$44,881
110% 101%
109% 100%
113% 104%
90% $1,357 $1,441 $1,544

89%
93% $1,327 $1,418 $1,522
12%
124% 106%
118% 102%
122% 108%
95% $2,024 $2,266 $2,463

93%
97% $1,890 $2,158 $2,379
11.2x
10.6x
11.3x
13%
109%
101%
114%
86% $2,833 $3,145 $3,321

82%
87% $2,628 $2,972 $3,189
12.6x
11.4x
13%
90%
33
350
$106
455
1.34
1.60
1.73
7.9x
6.6x
6.1x
9%
95%
89%
96%
114% 100%
84%
71%
7.3x
6.8x
6.4x
7.4x
6.9x
6.5x
7.4x
6.6x
6.0x
7.9x
6.9x
6.3x
7.1x
6.4x
6.1x
7.7x
6.8x
6.3x
7.2x
6.6x
6.1x
7.6%
1.4%
19%
9%
2%
4%
2%
-31%
-2%
6%
-2%
3%
65%
89
105
110
5.1x
4.3x
4.1x
-6%
Medical-Surgical and Dental Distributors

Henry Schein
HSIC
NR
$66.13
93
$6,141
$291
$6,432
$3.94
$4.30
$4.77
16.8x
15.4x
13.9x
11%
158% 145% 130%
$689
$729
$772
9.3x
8.8x
8.3x
17%
5%
3%
3%
Ow ens and Minor
OMI
NR
$27.94
63
$1,759
$59
$1,817
$1.90
$2.08
$2.28
14.7x
13.5x
12.3x
10%
154% 141% 129%
$246
$265
$286
7.4x
6.9x
6.4x
3%
-6%
1%
-5%
1%
Patterson (Cal EPS)
PDCO
NR
$29.58
113
$3,348
$136
$3,484
$1.91
$2.06
$2.26
15.5x
14.3x
13.1x
10%
163% 151% 138%
$406
$417
$442
8.6x
8.4x
7.9x
9%
-4%
0%
1%
0%
PSS World (Cal EPS)
PSSI
NR
$24.21
54
$1,306
$167
$1,473
$1.41
$1.63
$1.93
14%
125% 108%
$173
$192
$212
Weighted Av erage (Sum)
$12,554
$13,207
17.2x
14.9x
12.6x
16.2x
14.8x
13.3x
91%
155% 142% 128%
8.5x
7.7x
6.9x
8.8x
8.3x
7.8x
0%
7%
0%
20%
0%
11%
1%
1%
3%
1%
Market Indices
S & P 500 FC est.
SPX
1,277.81
$96.73
$105.27
$124.49
13.2x
12.1x
10.3x
10%
13%
0%
2%
7%
2%
Large Cap Pharma
DRG
332.84
$30.61
$30.86
$33.59
10.9x
10.8x
9.9x
-1%
9%
0%
7%
0%
Biotech Index
BTK
1,162.91
38%
-16%
7%
3%
7%
S&P HC Equipment
SP569
392.37
$37.36
$41.33
$44.92
10.5x
9.5x
8.7x
3%
6%
3%
8%
3%
SP585
297.27
$24.37
$26.92
$29.99
12.2x
11.0x
9.9x
10%
13%
5%
13%
5%
132% 121% 103%
HEALTHCARE SERVICES
10
Exhibit 9. Pharmaceutical Distribution Financial & Operating Metrics

C2011E
Revenues
Consolidated Gross Margin
Consolidated EBIT Margin
Company
C2010A
C2011E
C2012E
C2010A
C2011E
C2012E
AmeriSourceBergen
$80,217.6
2.98%
3.18%
3.32%
1.38%
1.50%
1.64%
Cardinal Health
$106,809.2
3.93%
4.12%
4.29%
1.50%
1.65%
McKesson
$118,933.6
5.32%
5.43%
5.76%
2.02%
2.07%
Working Capital (% of Sales)
Operating Cash Flow

F2011A
F2012E
Free Cash Flow (OCF-Capex-Div)
F2011A
F2012E
$1,108.6 $1,167.9 $1,039.8
1.78x
1.63x
1.38x
$833.4
$882.4
$764.5
$2.90
$3.18
$2.87
1.83%
$2,134.1 $1,394.4 $1,463.5
3.32x
1.45x
1.38x
$1,619.4
$828.8
$918.5
$4.48
$2.35
$2.61
2.28%
$2,316.0 $2,338.0 $2,017.4
1.84x
1.66x
1.27x
$1,807.0
$1,779.0
$1,354.6
$6.62
$6.76
$5.40
Days Sales In Inventory
F2010A
F2011A
F2012E
Free Cash Flow Per Share
F2010A
Inventory Turnover
F2010A
Days In Payables
Days In Receivables
F2010A
F2011A
F2012E
Cash Conversion Cycle (Days)
Company
F2010A
F2011A
F2012E
F2010A
F2011A
F2012E
F2010A
F2011A
F2012E
F2010A
F2011A
F2012E
F2010A
F2011A
F2012E
F2010A
F2011A
F2012E
AmeriSourceBergen
1.1%
0.5%
0.4%
14.9x
14.6x
14.7x
24.6
25.1
24.9
17.9
17.5
17.8
42.6
43.2
42.4
-0.1
-0.7
0.2
Cardinal Health
3.4%
3.4%
3.4%
14.4x
14.4x
13.9x
25.4
25.4
26.2
19.2
21.9
20.9
36.6
42.0
40.1
8.0
5.3
7.0
McKesson
4.1%
3.2%
3.4%
10.9x
11.5x
12.2x
33.5
31.7
30.0
27.1
29.9
29.1
47.0
48.5
47.4
13.6
13.2
11.7
Company
Current Book
Value/Share

F2010A
F2011A
F2012E
Net Debt / EBITDA
Interest Coverage
Return On Sales
F2010A
F2011A
F2012E
F2010A
F2011A
F2012E
F2010A
F2011A
F2012E
Return On Committed Capital
F2010A
F2010A
F2011A
F2012E
F2011A
F2012E
AmeriSourceBergen
$11.48
-11.9%
-19.1%
-22.8%
-0.3x
-0.3x
-0.4x
15.4x
18.4x
16.5x
0.80%
0.89%
0.93%
14.5%
18.7%
18.5%
21.1%
25.0%
24.3%
Cardinal Health
$16.49
-13.5%
8.9%
-0.3%
-0.4x
0.3x
0.0x
14.4x
21.1x
23.9x
0.65%
0.93%
0.88%
11.1%
11.3%
12.3%
11.6%
17.8%
18.3%
McKesson
$27.23
-23.5%
5.1%
-1.8%
-0.6x
0.1x
0.0x
13.6x
13.1x
12.3x
1.16%
1.26%
1.33%
11.8%
11.0%
12.0%
16.7%
19.5%
20.6%
HEALTHCARE SERVICES
11
Calendar EV/EBITDA
Distributors vs. S&P 500 Forward P/E
HC Distribution - Calendar EV/EBITDA
Forward P/E: HC Distributors vs. S&P 500

Next 12 Months
14.0x
1.60x
Historical Average: 1.04x
12.0x
1.40x
Historical Average of ~8x

10.0x
1.20x
8.0x
1.00x
6.0x
0.80x
4.0x
0.60x
2.0x
0.40x
ABC
MCK
Dist Average
Jul-11
Oct-11
Apr-11
Jan-11
Jul-10
Oct-10
Apr-10
Jan-10
Jul-09
Oct-09
Apr-09
Jan-09
Jul-08
CAH
Oct-08
Apr-08
Jan-08
Jul-07
Oct-07
Apr-07
Jan-07
Jul-06
Oct-06
Apr-06
Jan-06
0.0x
0.20x
Historical Dist Average
Jul-11
Oct-11
Apr-11
Jan-11
Jul-10
Oct-10
Apr-10
Jan-10
Jul-09
Jul-11
Absolute Forward P/E
Apr-11
Dist vs. SPX
Oct-09
Jan-09
Apr-09
Jul-08
Oct-08
Apr-08
Jan-08
Jul-07
Oct-07
Apr-07
Jan-07
Jul-06
Oct-06
Apr-06
Jan-06
0.00x
Historical Average
Forward P/E/G
HC Distribution - Absolute Forward P/E - Next 12 Months

2.0x
25.0x
1.8x
20.0x
1.6x
Historical group average of 1.1x
1.4x
15.0x
1.2x
10.0x
1.0x
0.8x
5.0x
0.6x
0.0x
ABC
CAH
MCK
Dist Average
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
0.4x
0.2x
Historical Average
ABC
MCK
Oct-10
Jan-11
Jul-10
Apr-10
Oct-09
Distributor Average
Jan-10
Jul-09
Apr-09
Jan-09
Jul-08
CAH
Oct-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
0.0x
Source of charts: LCM, FactSet
Historical Average
Distributors vs. DRG Components

Forward P/E: HC Distributors vs. Pharma
Next 12 Months
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
DIST vs. Pharma
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Jul-08
Oct-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
0.00
Historical Average
HEALTHCARE SERVICES
12
Exhibit 10. Clinical & Anatomic Pathology Labs

Rating
Price
1/9/2012
Shares
Out
Market
Value
( in millions, except EPS)
Company
Ticker
Net
Debt
Total Ent.
Value
EPS
2011E
2012E
P/E
2013E
2011E
2012E
2013E
11.6x
9.7x
P/E to Growth
LT
Gr Rate 2011E 2012E 2013E
EBITDA
2011E
2012E
TEV / EBITDA
2013E
2011E
2012E
2013E
12 FCF
Yield
Div.
Yield
Stock Performance
2010
2011
YTD 3 Mo. 1 Wk.
Clinical & Anatomic Pathology Labs

Bio-Reference Labs
BRLI
NR
$16.63
28
$468
$17
$485
$1.20
$1.43
$1.72
13.9x
Enzo Biochem Inc.
ENZ
NR
$2.23
39
$86
($24)
$62
($0.29)
($0.14)
$0.04
NM
GHDX
NR
$25.60
31
$789
($77)
$712
$0.26
$0.42
$0.73
97.3x
61.7x
LH
Neutral
$87.41
103
$8,986
$1,884
$10,870
$5.81
$6.32
$6.47
$7.05
$7.05
$7.70
15.0x
13.8x
13.5x
12.4x
Medtox Scientific
MTOX
NR
$15.01
$136
$1
Myriad Genetics
MYGN
NR
$21.19
87
$1,844
Genomic Health
Laboratory Corp.
Adjusted Cash EPS
19%
75%
63%
52%
$90
NA
5.4x
NA
13%
-27%
2%
-12%
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
-2%
-58%
0%
-20%
0%
34.9x
NA
NA
NA
NA
$14
$19
$27
51.7x
37.9x
26.0x
9%
19%
1%
11%
1%
12.4x
11.4x
13%
116%
106%
104%
95%
95%
87%
$1,497
8.4x
7.8x
7.3x
17%
-2%
2%
10%
2%
$1,292 $1,396
9.3%
NA
2%
$137
$0.50
$0.76
NA
30.0x
19.9x
NA
20%
150%
99%
NA
$13
$17
NA
10.5x
8.1x
NA
69%
7%
7%
13%
7%
$1,844
$1.17
$1.33
$1.48
18.1x
15.9x
14.3x
13%
144%
127%
114%
$172
$190
$202
NA
9.7x
9.1x
-12%
-8%
1%
4%
1%
Neogenomics
NGNM
NR
$1.43
43
$62
$5
$67
($0.03)
$0.03
$0.09
-47.7x
NA
16.8x
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
-13%
8%
2%
24%
2%
Psychemedics
PMD
NR
$9.42
$49
($6)
$44
$0.70
NA
NA
13.5x
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
12%
11%
4%
10%
4%
Quest Diagnostics
Adjusted Cash EPS
DGX
Neutral
$58.01
163
$9,467
$2,541
$12,008
$4.24
$4.50
$4.67
$4.97
$5.35
$5.68
13.7x
12.9x
12.4x
11.7x
10.8x
10.2x
12%
114%
107%
104%
97%
90%
85%
$1,773
7.6x
7.3x
6.8x
-11%
8%
0%
21%
0%
SKHCF
NR
AUD 11.66
390
4,547
4,547
0.79
NA
NA
-13%
-4%
2%
3%
0%
$26,434
$30,776
0%
1%
1%
12%
1%
Sonic Healthcare (a)

Weighted Average (Sum)(a)
14.8x
NA
NA
9%
163%
NA
NA
17.1x
13.2x
11.7x
14%
125%
105%
93%
$1,570 $1,652
NA
660
NA
NA
6.9x
NA
7.8x
7.7x
7.2x
9.9%
9.6%
1.2%
International Labs (a)

Diagnosticos da America
DASA3-BR
NR
BRL 15.25
311
4,737
455
5,193
$0.63
$0.98
$1.14
24.2x
15.5x
13.4x
37%
66%
42%
36%
538
$628
$705
9.7x
8.3x
7.4x
58%
-31%
-2%
0%
-2%
Fleury S/A
FLRY3-BR
NR
BRL 21.60
34
740
NA
NA
$0.98
$1.39
$1.71
22.0x
15.6x
12.6x
NA
NA
NA
NA
NA
$391
$468
NA
NA
NA
45%
-20%
1%
1%
1%
NA
Other Related Providers

BioClinica, Inc.
BIOC
NR
$4.44
16
$73
($10)
$63
$0.17
$0.31
$0.40
26.1x
14.3x
11.1x
NA
NA
NA
NA
NA
NA
NA
Cepheid (b)
CPHD
Neutral
$34.65
67
$2,336
($73)
$2,263
$0.08
$0.41
$0.71
NM
85.6x
49.1x
20%
NM
NM
245%
$23
$49
$96
NA
NA
5%
-5%
4%
-1%
4%
46.5x
23.5x
82%
51%
1%
-12%
1%
EXACT Sciences(b)
EXAS
Buy
$8.34
52
$437
($94)
$343
($0.53)
($0.63)
($0.53)
NM
NM
-15.6x
NA
NA
NA
NA
-$28
-$31
-$23
NM
NM
NM
76%
36%
3%
6%
3%
Gen-Probe Inc(b)
GPRO
Neutral
$60.06
47
$2,828
$10
$2,838
$2.31
$2.68
$3.03
26.0x
22.4x
19.8x
13%
196%
169%
149%
$198
$219
$243
14.3x
13.0x
11.7x
36%
1%
2%
2%
2%
($0.55)
NM
NM
NM
NA
NM
NM
NM
NA
NA
NA
NA
NA
NA
-32%
-66%
-1%
42%
-1%
NM
NM
NM
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
97%
-38%
-5%
-10%
-5%
13.2x
12.1x
10.3x
10%
132%
121%
103%
13%
0%
2%
7%
2%
12.2x
11.0x
9.9x
10%
13%
5%
13%
5%
Nanosphere Inc.
NSPH
NR
$1.45
43
$63
($40)
$23
($0.97)
($0.82)
Response Genetics, Inc.
RGDX
NR
$1.45
20
$28
($4)
$24
($0.14)
($0.16)
SPX
1,277.81
$96.73
SP585
297.271
$24.37
Market Indices
S & P 500 FC est.
S&P HC Providers & Services
$105.27 $124.49
$26.92
$29.99

(a) - Share price and estimates are in local currency. Sonic Healthcare is excluded from sum calculations ie. market value, enterprise value; however, it is included for all average calculations ie. P/E, stock
performance.
(b) - EXAS and CPHD are covered by LCM analyst Steve Unger. However, we use consensus estimates in this valuation sheet.
HEALTHCARE SERVICES
13
Exhibit 11. Clinical Labs Financial and Operating Metrics

Company
2011E
Revenues
LabCorp
$5,556.4
42.0%
41.9%
41.1%
41.1%
24.5%
24.3%
23.2%
24.2%
$862.4
$883.6
$890.6
$968.0
1.6x
1.5x
1.6x
1.5x
Quest Diagnostics
$7,481.3
42.0%
41.5%
41.6%
41.8%
21.5%
21.4%
21.0%
21.5%
$997.4
$1,118.0
$893.8
$1,261.9
1.4x
1.5x
1.3x
1.7x
2009A
Gross Margin
2010A
2011E
Free Cash Flow (OCF-Capex)

2009A
2010A
2011E
Company
2012E
2009A
EBITDA Margin
2010A
2011E
2012E

2009A
2010A
2011E
2012E
2012E
2009A
Operating Cash Flow

2010A
2011E
2012E
Days Sales Outstanding

2009A
2010A
2011E
2012E

2009A
2010A 2011E

2009A
2010A 2011E
2012E
2012E
LabCorp
$747.7
$757.5
$751.3
$835.3
$6.88
$7.21
$7.34
$8.29
49.3
45.9
45.3
42.0
36.1%
48.0%
31.1%
13.7%
Quest Diagnostics
$755.8
$841.3
$631.7
$941.2
$4.02
$4.74
$3.95
$6.06
43.3
42.9
45.1
46.0
37.2%
36.0%
52.5%
44.4%
Company
LQ Book
Value / Share
LabCorp
$22.01
1.1x
1.6x
1.1x
0.5x
18.7x
19.7x
15.3x
14.2x
28.8%
26.2%
22.9%
20.9%
11.4%
11.7%
10.7%
0.0%
Quest Diagnostics
$21.65
1.6x
1.6x
2.5x
2.1x
9.3x
9.1x
7.7x
8.4x
20.1%
18.9%
12.5%
18.8%
10.3%
10.3%
6.5%
9.9%
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
2009A
Net Debt/EBITDA
2010A
2011E
2012E
2009A
Accessions (M)
2010A
Interest Coverage
2010A
2011E
2012E
Return on Equity (DuPont)

2009A
2010A
2011E
Price Per Accession
Company
2009A
2011E
2012E
LabCorp
120
120
124
126
Quest Diagnostics
147
146
145
146
Q105
Q205
Q305
Q405
2009A
2010A
2011E
2012E
Return on Sales
2009A
2010A 2011E
2012E
EBIT Per Accession

2012E
2009A
2010A
2011E
2012E
$ 39.28 $ 41.82 $ 44.90 $821.07
$7.98
$8.43
$9.16
$9.19
$ 50.56 $ 50.50 $ 51.54 $ 52.90
$10.85
$10.82
$10.82
$11.36
Est. Adjusted & Pro Forma Rev Growth Mix

(YOY % Change)
LabCorp
Organic Volume
Organic Price
Total Organic Rev Growth*
Quest Diagnostics
Est. Organic Volume
Est. Organic Price
Total Organic Rev Growth*
Q106
Q206
Q306
Q406
Q107(a)
Q207
Q307
Q407
Q108
Q311
0.1%
1.1%
2.1%
2.0%
2.8%
4.4%
3.5%
4.1%
5.0%
5.3%
4.2%
4.0%
3.7%
2.8%
3.1%
3.0%
3.7%
2.8%
1.3%
0.7%
0.4%
0.3%
1.7%
2.7%
3.1%
2.2%
1.2%
3.7%
3.9%
1.7%
2.3%
1.5%
1.5%
3.1%
3.7%
1.4%
1.3%
1.2%
1.0%
1.9%
2.3%
2.3%
3.2%
1.8%
1.8%
3.8%
3.4%
2.9%
3.0%
3.2%
3.4%
1.5%
2.0%
2.1%
3.8%
5.0%
3.4%
4.3%
4.3%
5.9%
6.7%
7.8%
6.4%
6.6%
5.4%
5.0%
5.6%
5.1%
5.4%
6.2%
5.5%
4.6%
5.1%
4.1%
3.3%
3.3%
4.9%
6.1%
4.6%
4.2%
3.3%
2.8%
5.3%
4.0%
3.3%
2.0%
2.0%
0.2%
1.5%
-0.8%
-1.1%
-0.6%
1.6%
2.2%
1.8%
1.9%
1.7%
1.5%
2.4%
1.1%
0.5%
-1.6%
-1.3%
-0.3%
0.1%
2.0%
-1.1%
-1.5%
2.3%
1.3%
3.0%
2.8%
4.3%
4.3%
5.4%
5.9%
3.0%
3.1%
2.8%
3.4%
2.0%
1.9%
1.7%
1.4%
2.4%
3.1%
3.4%
2.2%
2.3%
-0.3%
-1.4%
-1.5%
-1.7%
-0.7%
-0.5%
5.1%
6.6%
7.0%
6.1%
6.3%
6.3%
5.6%
7.4%
2.2%
2.0%
2.2%
5.0%
4.2%
3.7%
3.6%
3.1%
3.9%
5.5%
4.5%
2.7%
0.7%
-1.6%
-1.7%
-1.4%
0.3%
-1.8%
-2.0%
* Estimated organic revenue growth seeks to adjust for acquisitions and major contract changes, as well as normalize for difficult weather and other unusual items in certain periods. Please call our office for
further details on adjustments made.
HEALTHCARE SERVICES
14
Exhibit 12. Clinical Lab Trading Multiples

Calendar EV/EBITDA
Labs vs. S&P 500 Forward P/E

Forward P/E: Labs vs. S&P 500
Next 12 Months
E/V to EBITDA: DGX vs. LH (6-Year Trend)

1.40
1.30
1.20
1.10
1.00
Historical EV/EBITDA: 8.5x

6/23/2011
10/23/2011
2/23/2011
6/23/2010
10/23/2010
2/23/2010
Average
Labs vs. SPX
LH
LH
DGX
DGX
Sep-11
Jan-11
May-11
Sep-10
Jan-10
May-10
Sep-09
Average
Average
HEALTHCARE SERVICES
15
12/23/2011
6/23/2011
12/23/2010
6/23/2010
12/23/2009
6/23/2009
12/23/2008
6/23/2008
12/23/2007
6/23/2007
6/23/2011
12/23/2010
6/23/2010
12/23/2009
6/23/2009
12/23/2008
6/23/2008
12/23/2007
6/23/2007
12/23/2006
6/23/2006
5.0x
Historical PEG Ratio: 116%
12/23/2006
Historical Average: 15x
6/23/2006
10.0x
12/23/2005
15.0x
6/23/2005
160%
140%
120%
100%
80%
60%
40%
20%
0%
20.0x
12/23/2005
Jan-09
P/E to Growth
25.0x
6/23/2005
Historical Labs vs. SPX
Forward P/E/G
P/E: DGX vs. LH (6-Year Trend)
0.0x
May-09
Sep-08
Jan-08
May-08
Sep-07
May-07
Jan-07
0.60
Sep-06
6/23/2009
10/23/2009
0.70
Jan-06
DGX
Historical relative valuation: 1.06x

0.80
May-06
LH
2/23/2009
6/23/2008
10/23/2008
2/23/2008
6/23/2007
10/23/2007
2/23/2007
6/23/2006
10/23/2006
2/23/2006
6/23/2005
0.90
10/23/2005
13.0x
12.0x
11.0x
10.0x
9.0x
8.0x
7.0x
6.0x
5.0x
4.0x
Exhibit 13. Hospital and Hospital-Related Providers

Earnings Per Share
Ticker
Rating
Price
1/9/2012
Shares
Out
Market
Value
Net
Debt
Total Ent.
Value
2011E
2012E
2013E
Community Health Systems
CYH
Neutral
$18.31
90
$1,645
$9,008
$10,653
$3.28
$3.65
$3.90
HCA
HCA
Buy
Health Management Assoc.
HMA
LifePoint Hospitals
LPNT
Tenet Healthcare
Universal Health Services
Company
Price-to-Earnings
P/E to Growth
LT
2011E 2012E 2013E Gr Rate 2011E 2012E 2013E
EBITDA
2011E
TEV/EBITDA
2012E 2013E
2011E 2012E 2013E
Stock Performance
12 EV
FCF Yield
2010
2011
YTD
3 Mo.
1 Wk.
Acute Care Facilities

5.6x
$22.34
458
$10,227
$28,619
$38,846
$2.66
$3.65
$4.05
Neutral
$7.49
255
$1,911
$3,489
$5,400
$0.83
$0.94
$1.04
9.1x
Neutral
$36.90
52
$1,930
$1,328
$3,258
$3.21
$3.57
$3.70
11.5x
THC
Neutral
$4.99
543
$2,708
$3,489
$6,197
$0.48
$0.54
$0.63
10.5x
9.2x
UHS
Buy
$39.20
99
$3,891
$3,909
$7,800
$3.95
$4.43
$4.93
9.9x
Vanguard Health Systems

VHS
Adjusted for DMC Commitment
Buy
$9.91
80
$788
$2,245
$2,545
$3,033
$3,333
$0.80
$0.80
$1.09
12.4x
9.1x
7.6x
NA
Weighted Average (Sum)
$23,099
$75,187
8.4x
5.0x
6.1x
4.7x
12%
5.5x
12%
7.9x
7.2x
10.3x
10.0x
46%
42%
39%
$1,778 $1,840 $1,886
6.0x
5.8x
5.6x
4.3%
5%
-53%
5%
3%
5%
$5,597 $6,142 $6,445
6.9x
6.3x
6.0x
4.8%
NA
-27%
1%
17%
1%
70%
51%
46%
12%
75%
66%
60%
$806
$891
$934
6.7x
6.1x
5.8x
4.9%
31%
-23%
2%
-2%
2%
10%
115% 103% 100%
$535
$569
$582
6.1x
5.7x
5.6x
5.9%
13%
1%
-1%
1%
-1%
7.9x
10%
105%
-3%
11%
-3%
8.8x
8.0x
14%
71%
12.4x
9.1x
15%
83%
6.8x
12%
77%
64%
57%
NA
NA
NM
NM
NM
NM
NA
NA
79%
$1,184 $1,279 $1,357
5.2x
4.8x
4.6x
4.7%
24%
-23%
63%
57%
$1,136 $1,203 $1,284
6.9x
6.5x
6.1x
6.4%
42%
-11%
1%
13%
1%
83%
61%
6.1x
6.7x
5.6x
6.1x
5.2x
5.7x
NM
NA
-43%
-3%
7%
-3%
6.5x
6.0x
5.8x
5.1%
27%
-23%
1%
11%
1%
NA
NA
NA
NA
NM
NM
51%
NM
14%
92%
$501
$544
$587
Behavioral Health
Acadia Healthcare Company
ACHC
NR
$11.36
10
$109
($1)
$107
MDTH
NR
$7.18
20
$145
$41
$186
Air Methods
AIRM
NR
$83.21
13
$1,068
$36
$1,105
ExamWorks Group
EXAM
NR
$9.28
30
$282
($19)
IntegraMed
INMD
NR
$8.00
12
$95
($35)
IPC The Hospitalist Company
IPCM
NR
$45.65
17
$769
($19)
NA
NA
NA
NA
NA
NA
NA
NA
NM
NM
NM
NM
NA
NA
NA
NA
NA
NA
76%
-48%
-2%
-49%
-2%
$3.82
NA
NA
21.8x
NA
NA
20%
109%
NA
NM
$121
$163
NA
9.1x
6.8x
NA
67%
50%
-1%
23%
-1%
$263
($0.21)
($0.13)
$0.09
NM
NM
15%
NM
NM
NM
$60
$86
$102
4.4x
3.1x
2.6x
NA
NA
-2%
6%
-2%
$59
$0.46
$0.61
NA
17.3x
13.2x
NA
25%
69%
53%
NM
$19
$23
NA
3.1x
2.6x
NA
9%
-9%
2%
3%
2%
$750
$1.77
$2.19
$2.53
25.8x
20.9x
18.0x
22%
117%
95%
82%
$51
$64
$75
14.6x
11.7x
10.1x
17%
17%
0%
26%
0%
8.1x
NA
12%
7%
-3%
9%
-3%
Specialty Hospitals
MedCath
NA
Outsourced Services
MedNax
NM
MD
NR
$69.84
49
$3,418
$103
$3,521
$4.47
$5.03
$5.48
15.6x
13.9x
12.7x
MedQuist Holdings1
MEDH
Neutral
$9.95
53
$522
$227
$749
$1.31
$1.22
$1.11
7.6x
8.2x
9.0x
14%
Omnicell Inc.
OMCL
NR
$16.86
34
$577
($184)
$393
$0.58
$0.71
$0.70
29.2x
23.8x
24.1x
16%
Team Health
TMH
NR
$22.69
67
$1,515
$373
$1,889
$1.24
$1.43
$1.58
18.3x
15.9x
14.4x
14%
110%
97%
89%
$383
$436
NA
9.2x
NM
NM
NM
$116
$125
$139
6.5x
6.0x
5.4x
NA
NA
3%
32%
3%
183% 149% 151%
$34
$40
$46
11.5x
9.8x
8.5x
24%
14%
2%
14%
2%
128% 111% 101%
$179
$203
$222
10.5x
9.3x
8.5x
11%
42%
3%
25%
3%
7.3x
5.9x
-8%
21%
-3%
-8%
-3%
17%
-1%
1%
0%
1%
TRCR
Buy
$23.03
11
$256
($27)
$229
$1.35
$1.55
$1.86
17.1x
14.9x
12.4x
15%
114%
99%
83%
$28
$31
$39
8.2x
US Physical Therapy
USPH
NR
$19.95
12
$240
($3)
$236
$1.34
$1.52
$1.73
14.9x
13.1x
11.6x
16%
96%
84%
74%
$38
$41
$45
6.2x
5.8x
5.3x
SPX
1277.81
$96.73 $105.27
$124.49
10.3x
10%
132% 121% 103%
13%
0%
2%
7%
2%
SP585
297.27
$24.37
$29.99
10%
13%
5%
13%
5%
Transcend Services
Market Indices
S & P 500 FC est.
$26.92
13.2x
12.2x
12.1x
11.0x
9.9x

We calculate EV/EBITDA adjusted for non-controlling interests for the hospital group
THC EV/EBITDA adjusted for the NPV of the company's NOL
HEALTHCARE SERVICES
16
Exhibit 14. Hospital Financial and Operating Metrics

Company
2011E
Revenues (E)
Consolidated EBITDA
2009A
2010A
2011E
Consolidated EBITDA Margin

2012E
$13,913
$1,513
$1,671
$1,763
$1,860
2009A
13.8%
2010A
13.9%
2011E
13.5%
2012E
Operating Cash Flow

2009A
2010A
2011E
Cash Realization Ratio (OCF / NI)

2012E
13.3%
$350
$688
$1,057
$1,076
Free Cash Flow (OCF-Capex)
2009A
2010A
2011E
2012E
2009A
3.5x
3.4x
3.7x
3.0x
$500
2010A
2011E
2012E
$521
$456
$461
2009A
$1.31
2010A
$1.75
2011E
$3.87
2012E
$5.45
HCA
$32,482
$5,472
$5,868
$5,985
$6,544
18.2%
19.1%
18.4%
18.6%
$2,747
$3,085
$3,219
$3,631
2.0x
2.0x
2.6x
1.7x
$1,369
$1,993
$1,408
$1,868
$3.17
$4.56
$2.84
$4.04
$5,826
$679
$733
$831
$917
14.7%
14.4%
14.3%
14.0%
$449
$440
$529
$584
2.7x
2.6x
2.3x
2.2x
$249
$193
$227
$263
$1.01
$0.77
$0.89
$1.03
LifePoint Hospitals
$3,547
$469
$500
$539
$574
15.8%
15.3%
15.2%
15.2%
$350
$374
$457
$444
2.6x
2.4x
2.7x
2.4x
$183
$205
$230
$192
$3.41
$3.84
$4.51
$3.86
Tenet Healthcare
$9,642
$956
$1,048
$1,195
$1,292
10.6%
11.4%
12.4%
13.0%
$425
$472
$622
$809
2.2x
0.4x
2.5x
2.8x
($31)
$9
$143
$293
($0.06)
$0.02
$0.29
$0.63
$7,522
$696
$749
$1,185
$1,254
13.4%
13.5%
15.8%
16.0%
$533
$501
$791
$843
1.8x
1.8x
1.8x
1.7x
$154
$254
$500
$501
$1.56
$2.59
$5.06
$5.08
Vanguard Health Systems - FY 6/30
$4,896
$298
$322
$418
$554
9.3%
9.5%
8.5%
8.9%
$312
$316
$283
$369
10.1x
14.0x
8.1x
4.2x
$181
$159
$73
$24
$4.01
$3.57
$1.52
$0.30
Company
HCA
Book
Value/Share
Debt / EBITDA
Interest Coverage
Return On Sales
2009A
2010A
2011E
2012E
2009A
2010A
2011E
2012E
2009A
2010A
2011E
2012E
$23.86
83%
81%
79%
77%
5.6x
5.3x
5.0x
4.9x
2.6x
2.7x
2.9x
2.9x
2009A
2.5%
2010A
2.8%
2011E
2.8%
Return On Invested Capital

2012E
2009A
2010A
2011E
2.8%
7.6%
7.8%
8.1%

2012E
8.3%
2009A
15.8%
2010A
16.1%
2011E
15.7%
2012E
14.3%
NM
-297%
-246%
-292%
-346%
4.7x
4.8x
4.6x
4.1x
2.8x
2.8x
2.9x
3.5x
4.7%
5.4%
5.3%
5.9%
13.7%
15.9%
16.0%
16.6%
NM
NM
NM
NM
$2.02
87%
83%
80%
71%
4.5x
4.1x
4.0x
3.6x
3.2x
3.6x
4.1x
4.2x
3.2%
3.6%
4.1%
4.1%
9.5%
9.9%
9.9%
11.0%
41.8%
35.6%
30.4%
25.6%
LifePoint Hospitals
$35.61
38%
39%
40%
38%
3.0x
3.1x
2.9x
2.8x
4.5x
4.6x
5.1x
5.4x
4.8%
4.7%
4.7%
4.8%
5.8%
5.8%
5.9%
6.1%
8.4%
8.3%
8.7%
9.1%
Tenet Healthcare
$2.75
94%
76%
77%
73%
4.9x
3.9x
3.4x
3.1x
2.1x
2.5x
3.2x
3.3x
0.8%
1.9%
2.8%
3.0%
5.8%
7.7%
7.8%
7.9%
23.6%
12.4%
20.3%
18.4%
$17.10
42%
68%
64%
59%
2.3x
5.8x
3.7x
3.5x
15.2x
9.7x
5.8x
6.5x
5.6%
5.3%
5.8%
6.2%
9.3%
5.1%
8.5%
9.2%
16.6%
14.9%
19.0%
17.6%
NM
68%
86%
89%
85%
5.2x
5.4x
6.7x
5.0x
2.7x
2.8x
2.4x
3.3x
1.0%
0.7%
0.7%
1.4%
7.0%
5.7%
8.4%
9.7%
5.4%
5.4%
14.1%
30.9%
Q103
Q203
Q303
Q403
2003
Q104
Q204
Q304
Q404
2004
Q105
Q205
Q305
Q405
2005
Q106
Q206
Q306
Q406
2006
Q107
Q207
Q307
Q407
Vanguard Health Systems - FY 6/30
Same-Store Revenue Growth
2007
Q108
Q208
Q308
Q408
2008
Q109
Q209
Q309
Q409
2009
Q110
Q210
Q310
Q410
2010
Q111
Q211
Q311
8.2%
8.3%
8.1%
9.3%
8.5%
8.2%
7.0%
6.1%
5.3%
6.6%
8.4%
9.3%
8.6%
9.2%
9.0%
6.8%
7.7%
7.8%
5.9%
7.0%
6.1%
4.5%
5.7%
5.6%
5.5%
5.7%
4.9%
8.2%
6.6%
6.3%
4.3%
6.7%
5.2%
7.3%
5.9%
3.7%
3.2%
3.8%
4.9%
3.9%
5.1%
5.8%
3.8%
HCA
8.2%
7.1%
6.9%
7.4%
7.6%
8.7%
6.8%
5.9%
6.5%
7.3%
6.5%
4.3%
4.6%
4.8%
4.7%
5.0%
6.0%
5.5%
7.7%
6.4%
6.7%
8.5%
7.0%
6.9%
7.5%
8.0%
5.0%
7.6%
6.6%
6.8%
4.6%
7.4%
7.6%
4.5%
6.0%
1.5%
3.8%
1.5%
1.5%
2.1%
5.9%
2.4%
3.7%
7.4%
7.0%
7.8%
7.9%
7.5%
7.0%
4.8%
3.7%
3.5%
4.8%
3.8%
5.1%
5.9%
4.7%
3.8%
6.5%
4.1%
4.5%
6.1%
5.3%
6.8%
7.1%
6.5%
4.6%
6.3%
3.1%
3.9%
3.4%
3.3%
4.2%
3.1%
4.5%
5.8%
7.9%
5.3%
4.4%
4.0%
5.1%
2.1%
3.9%
4.8%
4.2%
4.7%
LifePoint Hospitals
2.5%
5.2%
5.7%
3.3%
4.2%
13.2%
8.4%
8.4%
8.2%
9.5%
7.2%
7.2%
5.0%
4.4%
6.0%
3.9%
5.4%
8.5%
6.6%
6.1%
5.9%
7.8%
4.7%
4.7%
5.8%
5.9%
4.1%
5.3%
4.9%
5.0%
7.4%
5.5%
5.8%
5.8%
6.1%
5.3%
6.3%
7.8%
6.7%
6.5%
5.8%
5.2%
1.5%
Tenet Healthcare
10.0%
4.7%
2.7%
-10.2%
-3.9%
-2.9%
-3.3%
-4.7%
-3.0%
-2.9%
2.4%
-4.5%
-0.3%
0.6%
-0.2%
0.2%
2.5%
-1.5%
2.6%
1.0%
3.1%
0.9%
7.0%
6.0%
4.3%
6.7%
5.9%
5.2%
4.9%
5.1%
4.5%
4.5%
5.2%
3.5%
4.4%
3.2%
3.2%
-0.5%
1.8%
1.9%
7.1%
3.1%
3.6%
Triad Hospitals
11.6%
9.3%
9.8%
11.8%
10.6%
11.2%
9.7%
7.7%
4.8%
8.3%
7.9%
6.1%
3.7%
7.0%
6.5%
8.1%
9.6%
9.6%
9.2%
4.9%
4.8%
NA
NA
4.9%
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
8.4%
9.4%
7.2%
5.3%
8.0%
3.8%
2.2%
3.0%
2.6%
3.1%
8.7%
6.6%
4.9%
8.6%
7.2%
3.1%
7.6%
7.2%
7.0%
6.4%
11.1%
5.8%
7.6%
7.6%
8.0%
6.9%
7.6%
2.5%
2.2%
5.1%
0.9%
2.9%
5.3%
5.6%
3.7%
3.1%
2.2%
1.9%
2.3%
2.4%
6.6%
6.1%
3.1%
Vanguard Health (Calendarized)

SS Adj. Admission Growth
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
13.0%
9.5%
7.6%
4.2%
8.6%
4.1%
6.6%
3.5%
8.6%
6.4%
8.9%
4.8%
6.8%
7.1%
6.9%
5.8%
9.9%
7.5%
6.8%
7.4%
11.0%
5.6%
3.0%
3.1%
5.7%
-3.4%
3.1%
5.9%
4.0%
2.4%
6.9%
3.7%
1.6%
Q103
Q203
Q303
Q403
2003
Q104
Q204
Q304
Q404
2004
Q105
Q205
Q305
Q405
2005
Q106
Q206
Q306
Q406
2006
Q107
Q207
Q307
Q407
2007
Q108
Q208
Q308
Q408
2008
Q109
Q209
Q309
Q409
2009
Q110
Q210
Q310
Q410
2010
Q111
Q211
Q311
-1.1%
-1.0%
-2.1%
-1.0%
2.4%
-0.4%
2.1%
3.6%
1.0%
-1.3%
1.3%
2.8%
1.3%
2.6%
0.5%
1.8%
-0.9%
0.5%
0.7%
3.2%
0.9%
1.2%
-0.4%
-0.6%
0.8%
0.3%
3.8%
2.3%
2.5%
2.2%
1.8%
-2.4%
1.7%
1.9%
1.6%
0.7%
0.1%
-0.9%
-1.3%
-0.1%
-0.6%
0.0%
-0.7%
HCA
-0.9%
-0.4%
-0.2%
1.5%
0.0%
2.5%
1.0%
1.3%
0.1%
1.3%
2.1%
1.2%
1.1%
0.7%
1.4%
-0.1%
0.1%
-0.9%
0.2%
-0.2%
-1.3%
-1.5%
-0.5%
0.3%
-0.6%
1.1%
2.0%
1.9%
1.8%
1.7%
1.9%
4.4%
4.8%
2.6%
3.4%
1.1%
1.6%
0.7%
2.3%
1.4%
3.3%
1.9%
3.8%
2.4%
1.5%
2.9%
3.9%
2.7%
4.1%
2.7%
0.04%
-0.6%
2.6%
3.3%
3.4%
3.2%
0.1%
2.0%
-0.1%
-0.1%
-0.1%
2.5%
-0.2%
0.6%
2.0%
1.9%
1.6%
1.5%
1.2%
-0.1%
-1.0%
1.1%
0.4%
0.1%
2.7%
7.0%
3.9%
3.4%
3.1%
3.7%
-0.3%
0.1%
1.7%
-0.3%
-2.9%
0.8%
LifePoint Hospitals
-1.7%
0.0%
1.4%
4.6%
1.0%
5.5%
0.1%
1.9%
-4.9%
0.6%
1.9%
1.1%
-2.4%
-2.4%
-0.4%
-3.3%
-1.7%
1.1%
4.3%
0.1%
1.8%
1.5%
1.9%
-3.0%
0.6%
0.1%
-1.1%
-1.0%
-0.6%
-0.5%
-1.5%
-0.1%
1.6%
1.7%
0.4%
0.9%
1.6%
-1.1%
-1.2%
0.1%
0.1%
-1.1%
-0.9%
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
-1.9%
-2.6%
0.1%
-1.7%
-0.7%
-0.9%
0.5%
1.4%
0.1%
1.6%
2.8%
3.5%
1.6%
2.0%
1.7%
2.6%
2.7%
0.7%
1.9%
-1.1%
-0.6%
-1.8%
0.4%
-0.8%
2.3%
1.0%
2.3%
Triad Hospitals
-0.5%
2.3%
3.9%
8.2%
NA
7.1%
NA
2.3%
-0.1%
3.2%
2.1%
0.5%
NA
-0.3%
0.2%
-0.1%
1.5%
4.0%
2.5%
1.8%
1.9%
NA
NA
1.9%
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
2.7%
0.0%
0.0%
-1.4%
0.0%
0.5%
0.1%
-0.4%
0.9%
0.3%
2.3%
2.6%
2.9%
3.7%
2.9%
1.3%
1.8%
1.2%
2.1%
1.6%
5.5%
4.0%
4.5%
2.6%
4.2%
1.5%
0.6%
-1.1%
-1.0%
0.7%
0.0%
3.1%
2.6%
3.1%
2.2%
1.8%
1.9%
1.6%
-0.1%
1.3%
0.6%
-0.9%
-0.3%
Vanguard Health (Calendarized)
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
7.3%
4.3%
3.2%
-2.8%
3.0%
-4.7%
-2.5%
-1.9%
2.6%
-1.5%
3.5%
1.6%
1.2%
1.5%
2.2%
2.7%
2.5%
2.9%
1.0%
2.1%
1.6%
2.1%
2.7%
2.9%
2.3%
0.6%
3.3%
2.2%
2.8%
2.2%
4.0%
0.7%
2.2%
Tenet Healthcare
SS Rev per Adj. Admisssion
Q103
Q203
Q303
Q403
2003
Q104
Q204
Q304
Q404
2004
Q105
Q205
Q305
Q405
2005
Q106
Q206
Q306
Q406
2006
Q107
Q207
Q307
Q407
2007
Q108
Q208
Q308
Q408
2008
Q109
Q209
Q309
Q409
2009
Q110
Q210
Q310
Q410
2010
Q111
Q211
Q311
9.2%
10.7%
9.2%
6.8%
9.0%
5.9%
3.4%
5.0%
6.7%
5.3%
5.5%
7.9%
5.9%
8.6%
NA
7.8%
7.2%
7.1%
2.6%
6.1%
4.9%
4.9%
6.3%
4.9%
5.3%
1.9%
2.4%
5.2%
3.4%
4.1%
6.9%
4.8%
3.2%
5.7%
5.2%
3.6%
4.2%
5.2%
5.0%
4.5%
5.1%
6.6%
5.0%
4.9%
5.4%
4.7%
3.9%
4.7%
3.2%
3.5%
3.6%
4.2%
3.6%
0.5%
1.7%
2.6%
4.6%
6.4%
6.7%
4.2%
4.6%
3.5%
4.8%
6.2%
5.0%
4.6%
3.0%
4.7%
1.8%
5.4%
4.4%
2.1%
4.2%
3.0%
1.1%
-1.1%
3.9%
1.7%
1.3%
0.2%
5.5%
2.0%
2.3%
5.1%
7.3%
3.8%
LifePoint Hospitals
4.3%
5.3%
4.2%
-1.2%
3.2%
7.3%
8.2%
6.4%
13.7%
8.8%
5.3%
6.1%
7.7%
6.9%
6.4%
7.5%
7.3%
7.3%
2.2%
6.1%
3.9%
6.2%
2.7%
8.0%
5.2%
5.7%
5.2%
5.9%
5.8%
5.5%
6.1%
5.6%
4.1%
4.0%
5.0%
4.4%
4.6%
9.0%
8.1%
6.5%
5.7%
6.3%
2.4%
Tenet Healthcare
7.3%
2.8%
1.2%
-11.6%
-6.0%
-1.3%
1.3%
0.2%
1-2%
1.0%
5.0%
-2.5%
2.8%
6.7%
2.1%
5.8%
8.0%
2.0%
2.7%
4.6%
3.3%
3.1%
6.8%
4.0%
4.3%
5.5%
2.9%
1.4%
3.6%
3.1%
1.7%
1.5%
2.3%
2.9%
2.1%
4.3%
3.8%
1.3%
2.3%
2.9%
4.8%
2.0%
1.3%
Triad Hospitals
12.1%
8.8%
7.0%
4.3%
8.1%
4.5%
6.5%
5.7%
6.2%
5.4%
7.6%
6.1%
5.8%
7.6%
6.5%
8.7%
8.1%
6.0%
NA
6.8%
2.8%
NA
NA
NA
2.8%
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
5.6%
9.4%
7.2%
6.8%
7.3%
3.3%
2.1%
3.4%
1.7%
2.8%
6.2%
3.9%
2.0%
4.8%
4.2%
1.3%
6.2%
6.0%
4.8%
4.7%
5.3%
1.7%
3.0%
4.8%
3.7%
5.3%
7.0%
3.7%
3.3%
4.4%
0.9%
-0.2%
2.6%
2.5%
1.5%
1.3%
0.3%
0.3%
2.4%
1.1%
5.9%
7.1%
3.5%
HEALTHCARE SERVICES
17
Exhibit 15. Hospital Trading Multiples

Calendar EV/EBITDA
Hospitals vs. S&P 500 Forward P/E

Forward P/E: Hospitals vs. S&P 500
Next 12 Months
12.0x
1.40x
11.0x
10.0x
1.20x
Historical Average: 0.90x
9.0x
8.0x
1.00x
7.0x
6.0x
0.80x
5.0x
4.0x
0.60x
Hospitals vs. SPX
Jul-11
Oct-11
Apr-11
Jan-11
Jul-10
Oct-10
Apr-10
Jan-10
Jul-09
Oct-09
Apr-09
Jan-09
Jul-08
Oct-08
Apr-08
Jan-08
Jul-07
Oct-07
Apr-07
Jan-07
0.20x
Historical Hosp Average
Jul-06
Jul-11
Oct-11
Apr-11
Jan-11
Jul-10
Hosp Average
Oct-10
Apr-10
Jan-10
Jul-09
UHS
Oct-06
T HC
Oct-09
Apr-09
Jan-09
Jul-08
Oct-08
Apr-08
LPNT
Apr-06
HMA
Jan-08
Jul-07
Oct-07
Apr-07
HCA
0.40x
Jan-06
CYH
Jan-07
Jul-06
Apr-06
Jan-06
2.0x
Oct-06
3.0x
Historical Average
Forward P/E/G
200%
23.0x
180%
Historic Average of 108%
20.0x
160%
Historic Average of 13.0x

17.0x
140%
14.0x
120%
100%
11.0x
80%
8.0x
60%
5.0x
40%
CYH
HCA
HMA
LPNT
TRI
UHS
Historic Average
HEALTHCARE SERVICES
18
9/30/2011
5/31/2011
1/31/2011
9/30/2010
5/31/2010
1/31/2010
9/30/2009
5/31/2009
1/31/2009
9/30/2008
5/31/2008
1/31/2008
9/30/2007
5/31/2007
9/30/2011
5/31/2011
1/31/2011
9/30/2010
5/31/2010
Historic Average
1/31/2007
UHS
1/31/2010
9/30/2009
1/31/2009
5/31/2009
TRI
9/30/2006
LPNT
5/31/2006
HMA
9/30/2008
5/31/2008
1/31/2008
HCA
20%
1/31/2006
CYH
9/30/2007
5/31/2007
1/31/2007
9/30/2006
5/31/2006
1/31/2006
2.0x
Exhibit 16. Post-Acute Care and Assisted Living

Rating
Price
Shares
Market
Net
Total Ent.
1/9/2012
Out
Value
Debt
Value
Earnings Per Share
Ticker
Rehab, IRFs and LTCHs

Hanger Orthopedic
HGR
NR
$18.22
34
$626
$472
$1,098
$1.59
$1.76
$1.97
11.4x
HealthSouth
HLS
Buy
$17.42
109
$1,899
$740
$2,638
$1.24
$1.63
$1.82
14.1x
Select Medical
SEM
NR
$8.75
152
$1,327
$1,445
$2,772
$0.78
$0.89
$0.99
Average (Sum)
$3,852
2011E
2012E
2013E
Price-to-Earnings
Company
$6,509
2011E
2012E
Gr Rate
10.4x
9.2x
10.7x
9.6x
10%
11.3x
9.9x
8.8x
12.7x
10.3x
9.3x
P/E to Growth
LT
2013E
EBITDA
2011E
2012E
TEV/EBITDA
2011E
2012E
2013E
2013E
2011E
2012E
13%
86%
78%
69%
$150
$161
$175
7.3x
6.8x
13%
107%
81%
72%
$457
$485
$513
5.8x
5.4x
113%
99%
88%
$379
$405
$431
105%
86%
77%
Stock Performance
12 FCF
2013E
Yield
2010
2011
YTD
3 Mo.
1 Wk.
6.3x
NA
53%
-12%
5.1x
13%
10%
-15%
-3%
-9%
-3%
-1%
15%
-1%
7.3x
6.8x
6.4x
10%
-31%
16%
3%
10%
3%
6.4x
6.0x
5.7x
12%
21%
-14%
-2%
9%
0%
SNFs
Kindred Healthcare
KND
NR
$11.19
51
$575
$3,866
$4,441
$1.93
$1.74
$2.04
5.8x
6.4x
5.5x
11%
54%
60%
51%
$791
$915
$942
5.6x
4.9x
4.7x
18%
0%
-36%
-5%
17%
-5%
Skilled Healthcare
SKH
NR
$5.33
37
$198
$516
$714
$1.11
$0.78
$0.90
4.8x
6.8x
5.9x
9%
52%
74%
64%
$133
$117
$117
5.4x
6.1x
6.1x
27%
21%
-39%
-2%
29%
-2%
The Ensign Group
ENSG
NR
$24.74
22
$534
$70
$604
$2.27
$2.14
$2.29
10.9x
11.6x
10.8x
13%
82%
87%
81%
$113
$117
$129
5.3x
5.1x
4.7x
-7%
62%
-1%
1%
11%
1%
7.7x
8.6x
7.7x
65%
73%
65%
5.5x
5.2x
4.9x
9%
28%
-22%
-2%
16%
-2%
7.6x
9.6x
NA
76%
96%
NM
NA
3.0x
3.6x
NA
10%
-3%
-57%
3%
-7%
3%
Average (Sum)
$1,307
$5,759
Home Health
Almost Family
AFAM
NR
$17.12
Amedisys
AMED
NR
$10.85
29
$312
$62
$374
$1.94
$0.99
$0.88
5.6x
11.0x
12.4x
11%
53%
103%
116%
$139
$96
$92
2.7x
3.9x
4.1x
10%
-31%
-67%
-1%
-18%
-1%
Gentiva Health Services
GTIV
NR
$7.34
30
$223
$947
$1,170
$1.64
$0.88
$0.67
4.5x
8.3x
11.0x
15%
30%
56%
73%
$195
$155
$138
6.0x
7.6x
8.5x
18%
-2%
-75%
9%
91%
9%
LHC Group
LHCG
NR
$13.72
18
$251
($0)
$250
$1.69
$1.46
$1.33
8.1x
9.4x
10.3x
13%
63%
72%
79%
$53
$63
$58
4.7x
4.0x
4.4x
10%
-11%
-57%
7%
-19%
7%
6.3x
9.7x
11.3x
54%
83%
92%
4.1x
4.7x
5.4x
12%
-14%
-65%
4%
9%
4%
Average (Sum)
Hospice
Chemed Corporation
$160
($45)
$945
$115
$2.27
$1.79
NA
$1,909
10%
$38
$32
CHE
NR
$51.98
21
$1,094
$120
$1,215
$4.71
$5.18
NA
11.0x
10.0x
NA
13%
88%
80%
NM
$196
$210
NA
6.2x
5.8x
NA
9%
32%
-19%
2%
-2%
2%
Other Long Term Care Providers

Advocat
AVCA
NR
$5.66
$33
$16
$48
$0.67
$0.55
NA
8.4x
10.3x
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
-32%
6%
2%
-7%
2%
National Healthcare Corp
14
$584
($226)
$358
$2.96
$2.54
NA
14.3x
16.6x
NA
12%
119%
139%
NM
$91
$82
NA
3.9x
4.4x
NA
NA
28%
-9%
1%
25%
1%
NHC
NR
$42.24
Assisted Living
Assisted Living Concepts
ALC
NR
$14.94
20
$299
$109
$409
$0.93
$1.05
NA
16.1x
14.2x
NA
11%
146%
129%
NM
$65
$67
NA
6.2x
6.1x
NA
6%
23%
-8%
0%
9%
0%
Brookdale Senior Living
BKD
NR
$15.71
121
$1,900
$2,335
$4,235
($0.44)
$0.13
NA
NM
NM
NA
NA
NM
NM
NM
$388
$422
NA
10.9x
10.0x
NA
8%
18%
-19%
-10%
17%
-10%
Capital Senior Living Corp.
CSU
NR
$7.66
28
$212
$133
$345
$0.21
$0.36
NA
36.5x
21.3x
NA
NA
NM
NM
NM
$35
$47
NA
9.7x
7.3x
NA
8%
33%
19%
-4%
10%
-4%
Emeritus
ESC
NR
$16.80
44
$745
$1,823
$2,568
($1.66)
($1.34)
NA
NM
NM
NA
15%
NM
NM
NM
$206
$242
NA
12.5x
10.6x
NA
11%
5%
-11%
-4%
4%
-4%
Five Star Quality Care
FVE
NR
$3.00
48
$143
$4
$147
$0.45
$0.31
NA
6.7x
9.8x
NA
NA
NM
NM
NM
$45
$50
NA
3.3x
2.9x
NA
NA
104%
-58%
0%
2%
0%
20.6x
15.5x
NA
146%
129%
NM
10.4x
9.3x
NA
9%
20%
-15%
-7%
12%
-7%
Average (Sum)
Market Indices
S & P 500 FC est.
$3,000
$7,294
SPX
$1,277.81
$96.73
$105.27
$124.49
13.2x
12.1x
10.3x
10%
132%
121%
103%
13%
0%
2%
7%
2%
SP585
$297.27
$24.37
$26.92
$29.99
12.2x
11.0x
9.9x
10%
13%
5%
13%
5%
HEALTHCARE SERVICES
19
Exhibit 17. Alternate Site

Earnings Per Share
Ticker
Rating
Price
1/9/2012
Shares
Out
Market
Value
Net
Debt
Total Ent.
Value
2011E
2012E
2013E
AMSG
NR
$25.98
31
$810
$249
$1,059
$1.68
$1.96
AIQ
NR
$1.13
53
$60
$556
$616
($0.19)
DaVita, Inc.
DVA
NR
$77.82
95
$7,406
$3,426
$10,832
$5.06
Fresenius Medical Care
FMS
NR
$69.62
300
$20,864
$3,802
$24,666
Lincare
LNCR
NR
$24.78
89
$2,194
$290
Rotech Healthcare
ROHI
NR
$1.25
26
$32
$448
AHS
NR
$3.98
40
$161
$217
Company
Price-to-Earnings
P/E to Growth
EBITDA
TEV/EBITDA
2011E
LT
2012E 2013E Gr Rate
2011E
2012E
2013E
2011E
2012E
2013E
NA
15.5x
13.3x
NA
10%
155%
133%
NM
$114
$171
($0.25)
NA
NM
NM
NA
12%
NM
NM
NM
$143
$142
$6.21
$7.02
15.4x
12.5x
11.1x
13%
120%
98%
86%
Stock Performance
2011E 2012E 2013E
2010
2011
YTD
3 Mo.
1 Wk.
NA
9.3x
6.2x
NA
-5%
24%
0%
12%
0%
NA
4.3x
4.4x
NA
-26%
-70%
-10%
-10%
-10%
$1,402 $1,576 $1,688
7.7x
6.9x
6.4x
18%
9%
3%
22%
3%
$2,631 $3,008
NA
9.4x
8.2x
NA
9%
18%
2%
1%
2%
Surgery Centers
Amsurg Corp.
Imaging/Radiology Related Companies

Alliance Imaging
Kidney Dialysis Providers
$3.56
$4.13
$4.50
19.6x
16.8x
15.5x
12%
165%
142%
131%
$2,484
$1.93
$2.26
$2.39
12.9x
11.0x
$480
($0.15)
$0.13
NA
NM
9.6x
10.4x
16%
82%
70%
66%
$454
$502
$516
5.5x
4.9x
4.8x
8%
-4%
-4%
13%
-4%
NA
15%
NM
64%
NM
$116
$126
NA
4.1x
3.8x
NA
411%
-34%
0%
-27%
0%
$378
$0.18
$0.39
$0.55
21.9x
10.1x
7.3x
14%
156%
72%
52%
$58
$71
$80
6.5x
5.3x
4.7x
-32%
-28%
-10%
-4%
-10%
7.4x
6.5x
-15%
-34%
-7%
20%
-7%
Respiratory/Oxygen Providers
Staffing Companies
AMN Healthcare Services
Cross Country
CCRN
NR
$5.17
31
$162
$41
$202
$0.16
$0.26
$0.35
33.1x
20.2x
14.9x
12%
276%
168%
124%
$22
$27
$31
9.2x
LCAV
NR
$4.54
19
$86
($44)
$42
($0.47)
NA
NA
NM
NA
NA
NA
NA
NA
NA
-$3
NA
NA
NA
NA
NA
12%
-50%
57%
82%
57%
18.1x
15.3x
14.0x
12%
149%
126%
115%
8.7x
7.6x
6.0x
10%
14%
2%
7%
2%
Vision Care Companies

LCA - Vision
Market Indices
S & P 500 FC est.
$8,683
$13,129
SPX
1,277.81
$96.73
$105.27
$124.49
13.2x
12.1x
10.3x
10%
132%
121%
103%
13%
0%
2%
7%
2%
SP585
297.27
$24.37
$26.92
$29.99
12.2x
11.0x
9.9x
10%
13%
5%
13%
5%
HEALTHCARE SERVICES
20
Exhibit 18. Healthcare IT Vendors/Pharma Data Providers

P/E
LT
2011E 2012E 2013E Gr Rate
P/E to Growth
Shares
Out
Market
Value
Net
Debt
Total Ent.
Value
NR
$63.47
174
$11,062
($478)
$10,583
$1.84
$2.25
$2.74
34.5x
28.3x
23.2x
20%
NR
$54.35
11
$601
($16)
$585
$2.34
$2.69
$3.24
23.2x
20.2x
16.8x
18%
$53.20
36
$1,930
($107)
$1,823
$0.86
$0.98
$1.32
61.7x
54.2x
40.4x
32%
195%
Ticker
Hospital Vendors
Cerner
CERN
Computer Programs and Systems Inc.
CPSI
Other HCIT Vendors

Athena
ATHN
NR
Rating
MedAssets Inc
MDAS
NR
Merge Technologies
MRGE
Quality Systems Inc.
QSII
WBMD
WebMD
Earnings Per Share
Price
1/9/2012
Company
$9.46
57
$543
$923
NR
$4.73
88
$415
NR
$36.72
59
$2,167
NR
$37.90
57
$2,159
($401)
2012E
2013E
2011E
EBITDA
TEV / EBITDA
2012E
2013E
174%
143%
117%
$689
$815
$971
130%
113%
94%
$43
$50
$60
172%
128%
$69
$84
$109
26.4x
51%
45%
39%
$188
$201
$221
2011E
Stock Performance
2012E
2013E
2010
2011
YTD
15.4x
13.0x
10.9x
15%
29%
13.5x
11.8x
9.7x
2%
9%
21.7x
16.7x
-9%
6.6x
-5%
7.8x
7.3x
3 Mo.
1 Wk.
4%
-8%
4%
6%
-22%
6%
20%
8%
-14%
8%
-54%
2%
-6%
2%
$0.98
$1.10
$1.25
9.7x
8.6x
7.6x
$205
$620
$0.19
$0.27
$0.41
25.2x
17.5x
11.5x
20%
126%
88%
58%
$59
$67
$78
10.6x
9.3x
7.9x
11%
30%
-2%
-27%
-2%
($122)
$2,045
$1.33
$1.66
$1.96
27.5x
22.1x
18.8x
20%
136%
109%
93%
$137
$170
$199
14.9x
12.0x
10.3x
11%
6%
-1%
-21%
-1%
$1,759
$1.22
$0.94
$1.09
31.0x
40.5x
34.7x
12%
258%
337%
289%
$224
$186
$204
7.8x
9.5x
8.6x
33%
-26%
1%
25%
1%
34.8x
30.5x
24.9x
20%
176%
159%
131%
15.2x
13.1x
10.9x
13%
16%
3%
-7%
3%
132%
121%
103%
$18,881
19%
2011E 2012E 2013E
$1,466
$18,877
2011E
Market Indices
S & P 500 FC est.
SPX
1277.81
$96.73 $105.27 $124.49
13.2x
12.1x
10.3x
10%
SP585
297.271
$24.37
$29.99
12.2x
11.0x
9.9x
2011E
2012E
LT
Gr Rate
2011E
$26.92
13%
0%
2%
7%
2%
10%
13%
5%
13%
5%
2013E
2011E
Exhibit 19. Contract Research Organizations (CROs) (a)

Company
Ticker Rating
Price
1/9/2012
Shares
Out
Market
Value
Net Total Ent.

Debt
Value
Calendar EPS
2011E
2012E
P/E
2013E
2013E
P/E to Growth
EBITDA
2012E 2013E
2011E
2012E
TEV / EBITDA
2012E
Stock Performance
2013E
2010
2011
YTD
3 Mo.
1 Wk.
Charles River Laboratories
CRL
Neutral
$27.82
51
$1,406
$512
$1,917
$2.41
$2.64
$2.91
11.5x
10.5x
9.6x
11%
106%
97%
88%
$262
$268
$274
7.3x
7.2x
7.0x
5%
-23%
2%
-4%
2%
Covance
CVD
Buy
$47.83
61
$2,914
($245)
$2,669
$2.70
$3.07
$3.50
17.7x
15.6x
13.7x
15%
116%
102%
89%
$319
$355
$389
8.4x
7.5x
6.9x
-6%
-11%
5%
2%
5%
eResearch Technology
ERES
NR
$4.96
49
$245
($10)
$235
$0.37
$0.46
$0.51
13.4x
10.7x
9.7x
22%
62%
50%
45%
$60
NA
3.9x
NA
22%
-36%
6%
8%
6%
ICON plc
ICLR Neutral
$17.50
61
$1,069
($257)
$812
$0.54
$1.00
$1.49
32.5x
17.6x
11.8x
12%
268%
145%
97%
$77
$112
$148
7.3x
5.5x
1%
-22%
2%
16%
2%
MDS Pharma (Cal EPS)
MDZ
NR
$8.53
67
$572
($31)
$541
$0.67
$0.70
NA
12.7x
12.2x
NA
13%
98%
94%
NA
$75
$76
NA
7.1x
NA
49%
-27%
2%
-4%
2%
Parexel Intl. (Cal EPS)
PRXL
Buy
$21.11
60
$1,268
$157
$1,425
$1.03
$1.32
$1.69
20.5x
16.0x
12.5x
16%
124%
97%
76%
$163
$194
$234
8.7x
7.3x
6.1x
51%
-2%
2%
1%
2%
18.6x
14.6x
12.2x
14%
134%
104%
86%
7.9x
7.2x
6.5x
12%
-15%
3%
2%
3%
13.2x
12.1x
10.3x
10%
132%
121%
103%
13%
0%
2%
7%
2%
38%
-16%
7%
3%
7%
$7,473
$7,599
10.6x
Market Indices
S & P 500 FC est.
SPX
Biotech Index
BTK
Large Cap Pharma
DRG
SP585
1,277.81
$96.73
$105.27
1,162.91
$124.49
332.84
$30.61
$30.86
$33.59
10.9x
10.8x
9.9x
-1%
9%
0%
7%
0%
297.27
$24.37
$26.92
$29.99
12.2x
11.0x
9.9x
10%
13%
5%
13%
5%
- -
Source: LCM Research, FactSet estimates

(a) - Companies with ratings are covered by another analyst at LCM (Steve Unger). Estimates presented, however, are FirstCall estimates.
HEALTHCARE SERVICES
21
Exhibit 20. Managed Care Organizations

Company
Ticker
Rating
Price
1/9/2012
Shares
Out
Market
Value
Net
Debt
Total Ent.
Value
EPS
2011E
2012E
P/E
2013E
2011E
2012E
2013E
LT
Gr Rate
P/E to Growth
2011E
2012E
FCF/Share
2013E
2011E 2012E
FCF Yield
2013E
2011E 2012E
Book Value/Share
2013E
2011E
2012E
Price-to-Book
2013E
2011E
2012E
Stock Performance
2013E
2010
2011
YTD
3 Mo.
1 Wk.
4%
Commercial HMOs
Diversified National Plans
Aetna
AET
NR
$44.07
377
$16,606
$2,469
$19,075
$5.14
$5.08
$5.59
8.6x
8.7x
7.9x
12%
71%
72%
66%
$5.33
$5.98
Cigna
CI
NR
$43.61
272
$11,865
$1,311
$13,176
$5.28
$5.62
$6.33
8.3x
7.8x
6.9x
10%
80%
76%
67%
$5.53
$4.35
UNH
NR
$52.78
1083
$57,161
($1,760)
$55,401
$4.58
$4.77
$5.43
11.5x
11.1x
9.7x
12%
96%
92%
81%
$4.66
$5.34
WLP
NR
$70.73
360
$25,491
$7,488
$32,979
$7.09
$7.75
$8.67
10.0x
9.1x
8.2x
9%
108%
99%
89%
$8.37
Coventry Health Care
CVH
NR
$29.39
146
$4,299
($168)
$4,132
$2.92
$3.28
$3.55
10.1x
9.0x
8.3x
8%
122%
109%
101%
Health Net
HNT
NR
$32.78
89
$2,913
$168
$3,081
$3.10
$3.35
$3.70
10.6x
9.8x
8.9x
11%
96%
89%
80%
10.4x
9.9x
8.8x
11%
94%
90%
80%
United Health Group
$6.50
12.1%
13.6%
$23.47
$33.75
$35.09
1.9x
1.3x
1.3x
-4%
38%
4%
20%
12.7%
10.0%
$33.29
$39.71
$42.42
1.3x
1.1x
1.0x
4%
15%
4%
0%
4%
$6.16
8.8%
10.1%
11.7%
$26.39
$30.32
$32.82
2.0x
1.7x
1.6x
18%
40%
4%
13%
4%
$9.25
$8.79
11.8%
13.1%
12.4%
$65.97
$75.00
$76.93
1.1x
0.9x
0.9x
-2%
17%
7%
6%
7%
$4.27
$4.02
$4.15
14.5%
13.7%
14.1%
$31.66
$35.11
$39.36
0.9x
0.8x
0.7x
9%
15%
-3%
1%
-3%
$3.95
$3.58
$3.41
12.1%
10.9%
10.4%
$16.62
$19.50
$21.02
2.0x
1.7x
1.6x
17%
11%
8%
33%
8%
10.6%
11.4%
9.1%
1.7x
1.4x
1.3x
9%
31%
5%
11%
5%
Blues Plans
WellPoint
Regional HMOs
Commercial HMO Weighted Average
$118,335
$127,842
Government HMOs
Amerigroup
AGP
NR
$65.07
50
$3,270
($384)
$2,886
$3.77
$4.00
$4.82
17.3x
16.3x
13.5x
11%
151%
142%
118%
$4.72
$7.70
$5.91
7.3%
11.8%
9.1%
$25.02
$27.92
$33.42
2.6x
2.3x
1.9x
63%
35%
10%
51%
10%
Centene
CNC
NR
$42.36
53
$2,229
($100)
$2,129
$2.19
$2.71
$3.16
19.3x
15.7x
13.4x
14%
143%
116%
99%
$1.95
$4.13
$3.43
4.6%
9.7%
8.1%
$17.95
$19.56
$23.58
2.4x
2.2x
1.8x
20%
56%
7%
50%
7%
HS
NR
$54.65
68
$3,726
$435
$4,162
$4.22
$4.39
$4.79
12.9x
12.5x
11.4x
13%
99%
95%
87%
$8.29
$5.25
$4.64
15.2%
9.6%
8.5%
$26.35
$30.02
$34.33
2.1x
1.8x
1.6x
51%
106%
0%
44%
0%
Humana
HUM
NR
$92.25
167
$15,367
($2,059)
$13,308
$8.44
$7.98
$8.90
10.9x
11.6x
10.4x
8%
132%
139%
125%
$10.70
$9.65 $10.79
11.6%
10.5%
11.7%
$47.70
$54.86
$59.42
1.9x
1.7x
1.6x
25%
60%
5%
28%
5%
Molina Healthcare
MOH
NR
$25.43
46
$1,177
($319)
$858
$1.55
$1.75
$1.98
16.4x
14.5x
12.8x
18%
93%
82%
73%
$2.62
$2.85
$2.34
10.3%
11.2%
9.2%
$17.27
$18.98
$20.57
1.5x
1.3x
1.2x
22%
20%
14%
59%
14%
Universal American
UAM
NR
$12.36
81
$998
($219)
$779
($0.19)
$0.57
$0.76
-63.7x
21.8x
16.2x
NA
NA
NA
NA
-$3.34
$2.18
NA
NM
17.6%
NA
$12.53
$12.73
$14.79
1.0x
1.0x
0.8x
75%
-38%
-3%
20%
-3%
Healthspring
Government MCO Weighted Average
$26,768
$24,121
10.1x
13.1x
11.5x
10%
128%
128%
114%
10.9%
10.5%
10.5%
2.0x
1.8x
1.6x
34%
58%
5%
36%
5%
Managed Care Weighted Average
$119,611
$118,984
10.3x
10.5x
9.3x
11%
101%
97%
86%
10.7%
11.2%
9.3%
1.7x
1.5x
1.4x
14%
36%
5%
16%
5%
Market Indices
S & P 500 FC est.
SPX
1,278
$96.73 $105.27 $124.49
13.2x
12.1x
10.3x
10%
132%
121%
103%
13%
0%
2%
7%
2%
SP585
297
$24.37
$26.92
$29.99
12.2x
11.0x
9.9x
10%
13%
5%
13%
5%
AMEX MS Healthcare Payors
HMO
2,419
15%
35%
6%
26%
6%
Source: FactSet estimates, LCM Research
HEALTHCARE SERVICES
22
Exhibit 21. Healthcare REITs

FFO/Share
Company
Ticker
Rating
Price
1/9/2012
Shares
Out
Market
Value
2011E
2012E
2013E
BioMed Realty Trust
BMR
NR
$18.14
133
$2,410
$1.18
$1.26
$1.33
Price-to-FFO
LT
2011E 2012E 2013E Gr Rate
15.3x
14.5x
13.7x
5%
Stock Performance
Annual
Dividend
Current
Dividend Yield
Spread to
10 Year
2010
2011
YTD
3 Mo.
1 Wk.
$0.80
4.4%
245 bps
18%
-3%
0%
8%
0%
-27%
1%
16%
1%
Cogdell Spencer
CSA
NR
$4.31
51
$220
$0.30
$0.39
$0.43
14.4x
11.0x
10.0x
NA
$0.40
9.3%
732 bps
2%
HCP, Inc.
HCP
NR
$40.34
409
$16,485
$2.57
$2.80
$2.93
15.7x
14.4x
13.8x
NA
$1.92
4.8%
280 bps
20%
13%
-3%
11%
-3%
14%
-1%
15%
-1%
HCN
NR
$54.23
178
$9,645
$3.37
$3.77
$4.03
16.1x
14.4x
13.5x
NA
$2.86
5.3%
331 bps
7%
Healthcare Realty Trust
HR
NR
$18.83
77
$1,453
$1.12
$1.30
$1.38
16.8x
14.5x
13.7x
NA
$1.20
6.4%
441 bps
-1%
-12%
1%
9%
1%
LTC Properties
LTC
NR
$31.27
30
$943
$2.14
$2.29
$2.40
14.6x
13.7x
13.0x
NA
$1.74
5.6%
360 bps
5%
10%
1%
21%
1%
Medical Properties Trust
MPW
NR
$9.92
111
$1,098
$0.73
$0.90
$0.97
13.5x
11.1x
10.3x
NA
$0.80
8.1%
610 bps
8%
-9%
1%
9%
1%
Omega Healthcare Investors
OHI
NR
$19.53
103
$2,016
$1.78
$1.94
$2.02
11.0x
10.1x
9.7x
NA
$1.60
8.2%
623 bps
15%
-14%
1%
21%
1%
2%
0%
4%
0%
Healthcare REIT
Senior Housing Properties Trust
SNH
NR
$22.52
153
$3,454
Universal Health Realty Trust
UHT
NR
$38.78
13
$491
Ventas
VTR
NR
$53.70
291
$15,616
$1.74
$3.29
$1.86
$3.66
$1.91
$3.82
$58,012
12.9x
12.1x
11.8x
NA
$1.52
6.7%
479 bps
0%
NA
NA
NA
NA
$2.44
6.3%
433 bps
14%
7%
-1%
13%
-1%
16.3x
14.7x
14.1x
NA
$2.30
4.3%
232 bps
20%
5%
-3%
8%
-3%
15.6x
14.1x
13.5x
295 bps
15%
7%
-2%
10%
-2%
Market Indices
S & P 500 FC est.
SPX
$1,277.81
13%
0%
2%
7%
2%
SP585
$297.27
10%
13%
5%
13%
5%
HEALTHCARE SERVICES
23
Exhibit 22. WAG Consolidated Income Statement

F2008A
F2009A
F2010A
F2011A
$72,184.0
51,692.0
20,492.0
F1Q12A
Nov-11
$18,157.0
13,053.0
5,104.0
F2Q12E
Feb-12
$18,056.5
13,055.7
5,000.7
F3Q12E
May-12
$17,205.0
12,152.0
5,053.0
F4Q12E
Aug-12
$16,562.5
11,673.3
4,889.3
$59,034.2
42,417.8
16,616.4
$63,335.0
45,722.0
17,613.0
$67,420.0
48,444.0
18,976.0
13,254.6
3,361.8
14,366.0
3,247.0
15,518.0
3,458.0
16,561.0
3,931.0
4,204.0
900.0
4,110.0
890.8
3,970.7
1,082.3
One-time Items
Interest Expense, Net
GAAP Pretax Income
(78.8)
10.8
3,429.8
0.0
83.0
3,164.0
0.0
85.0
3,373.0
(434.0)
71.0
4,294.0
0.0
17.0
883.0
0.0
16.5
874.3
Income Taxes - Continuing Ops

Net Income from Cont. Ops
1,273.2
2,156.6
1,158.0
2,006.0
1,282.0
2,091.0
1,580.0
2,714.0
329.0
554.0
Dividends Declared
GAAP Net Income to Common
Adjusted Proforma Net Income
0.4
2,156.2
2,106.6
0.5
2,005.5
2,005.5
0.6
2,090.4
2,133.4
0.8
2,713.3
2,438.5
$2.17
$2.12
$2.06
994.7
$2.02
$2.02
$2.11
991.3
$2.13
$2.16
$2.33
982.6
840.0
4,201.8
9.8%
4,177.2
975.0
4,222.0
0.5%
4,392.0
97.6
119.8
($0.06)
($0.08)
Net Sales
COGS
Gross Profit
SG&A
EBITDA
Proforma EBIT
Interest Expense
Income Tax Rate
Net Income from Continuing Ops
Growth Rate Analysis (YOY )
($ millions, except per-share data)

Net Sales
COGS
Gross Profit
SG&A
Pro-forma EBIT
GAAP EPS
Pro Forma EPS
Calendar EPS
Diluted Shares Outstanding
D&A
EBITDA
YOY Growth
Calendarized EBITDA
Change in LIFO Reserve
Calendarized LIFO Reserve
EPS Impact
Calendarized LIFO EPS Impact
F2012E
F2Q13E
Feb-13
$18,040.4
12,953.0
5,087.4
F3Q13E
May-13
$19,098.4
13,481.6
5,616.8
F4Q13E
Aug-13
$18,823.9
13,240.7
5,583.2
F2013E
F2014E
$69,981.1
49,934.1
20,047.0
F1Q13A
Nov-12
$17,100.2
12,268.5
4,831.7
$73,062.9
51,943.8
21,119.1
$77,508.5
54,962.4
22,546.1
3,914.4
974.9
16,199.0
3,848.0
3,945.6
886.0
4,214.5
872.9
4,268.2
1,348.6
4,229.7
1,353.4
16,658.1
4,460.9
17,789.0
4,757.1
0.0
16.0
1,066.3
0.0
15.5
959.4
0.0
65.0
3,783.0
0.0
15.5
870.5
0.0
15.0
857.9
0.0
14.5
1,334.1
0.0
14.0
1,339.4
0.0
59.0
4,401.9
0.0
51.0
4,706.1
323.5
550.8
394.5
671.8
355.0
604.4
1,402.0
2,381.0
322.1
548.4
317.4
540.5
493.6
840.5
495.6
843.8
1,628.7
2,773.2
1,741.2
2,964.8
0.2
553.8
553.8
0.2
550.6
550.6
0.2
671.6
671.6
0.2
604.2
604.2
0.9
2,380.1
2,380.1
0.2
548.2
548.2
0.2
540.2
540.2
0.2
840.3
840.3
0.2
843.6
843.6
0.9
2,772.3
2,772.3
0.9
2,963.9
2,963.9
$2.94
$2.64
$2.59
923.8
$0.63
$0.63
$0.63
$0.63
$0.78
$0.78
$0.71
$0.71
$0.65
$0.65
$0.64
$0.64
$1.00
$1.00
$1.01
$1.01
885.2
870.0
857.0
848.0
$2.75
$2.75
$2.78
865.1
842.0
840.0
838.5
837.0
$3.30
$3.30
$3.40
839.4
$3.55
$3.55
$3.65
835.9
1,030.0
4,488.0
6.3%
4,691.0
1,086.0
5,017.0
11.8%
4,882.6
277.0
1,177.0
-3.0%
280.0
1,170.8
-20.0%
280.0
1,362.3
11.7%
280.0
1,254.9
12.0%
1,117.0
4,965.0
-1.0%
4,954.7
285.0
1,171.0
-0.5%
285.0
1,157.9
-1.1%
285.0
1,633.6
19.9%
285.0
1,638.4
30.6%
1,140.0
5,600.9
12.8%
5,736.4
1,180.0
5,937.1
6.0%
6,060.2
172.0
155.7
($0.11)
($0.10)
140.0
157.7
($0.09)
($0.10)
208.0
207.3
($0.14)
($0.14)
45.0
45.0
45.0
45.0
50.0
50.0
50.0
50.0
($0.03)
($0.03)
($0.03)
($0.03)
180.0
186.7
($0.13)
($0.14)
($0.04)
($0.04)
($0.04)
($0.04)
200.0
199.8
($0.15)
($0.15)
220.0
219.8
($0.17)
($0.17)
F2008A
100.0%
71.9%
28.1%
22.5%
7.1%
5.7%
0.0%
37.1%
3.7%
F2009A
100.0%
72.2%
27.8%
22.7%
6.7%
5.1%
0.1%
36.6%
3.2%
F2010A
100.0%
71.9%
28.1%
23.0%
6.7%
5.1%
0.1%
38.0%
3.1%
F2011A
100.0%
71.6%
28.4%
22.9%
7.0%
5.4%
0.1%
36.8%
3.8%
F1Q12A
100.0%
71.9%
28.1%
23.2%
6.5%
5.0%
0.1%
37.3%
3.1%
F2Q12E
100.0%
72.3%
27.7%
22.8%
6.5%
4.9%
0.1%
37.0%
3.1%
F3Q12E
100.0%
70.6%
29.4%
23.1%
7.9%
6.3%
0.1%
37.0%
3.9%
F4Q12E
100.0%
70.5%
29.5%
23.6%
7.6%
5.9%
0.1%
37.0%
3.6%
F2012E
100.0%
71.4%
28.6%
23.1%
7.1%
5.5%
0.1%
37.1%
3.4%
F1Q13A
100.0%
71.7%
28.3%
23.1%
6.8%
5.2%
0.1%
37.0%
3.2%
F2Q13E
100.0%
71.8%
28.2%
23.4%
6.4%
4.8%
0.1%
37.0%
3.0%
F3Q13E
100.0%
70.6%
29.4%
22.3%
8.6%
7.1%
0.1%
37.0%
4.4%
F4Q13E
100.0%
70.3%
29.7%
22.5%
8.7%
7.2%
0.1%
37.0%
4.5%
F2013E
100.0%
71.1%
28.9%
22.8%
7.7%
6.1%
0.1%
37.0%
3.8%
F2014E
100.0%
70.9%
29.1%
23.0%
7.7%
6.1%
0.1%
37.0%
3.8%
F2008A
F2009A
F2010A
F2011A
F1Q12A
F2Q12E
F3Q12E
F4Q12E
F2012E
F1Q13A
F2Q13E
F3Q13E
F4Q13E
F2013E
F2014E
9.8%
10.1%
9.0%
7.3%
7.8%
6.0%
9.6%
6.7%
NM
10.9%
5.6%
5.1%
-1.1%
8.4%
-3.4%
NM
-9.0%
-7.0%
-4.5%
-0.3%
6.4%
6.0%
7.7%
6.9%
8.0%
6.5%
2.4%
10.7%
4.2%
7.0%
-0.9%
7.1%
6.7%
8.0%
7.9%
6.7%
13.7%
-16.5%
23.2%
29.8%
21.9%
-6.0%
4.7%
5.3%
3.2%
6.1%
5.0%
-4.4%
-15.0%
-3.5%
-4.5%
0.8%
-5.3%
-2.4%
-0.9%
-6.1%
1.3%
-0.2%
-26.2%
-8.3%
-28.1%
-25.5%
-20.5%
-6.3%
-6.3%
-8.1%
-2.0%
3.3%
-5.5%
13.8%
-11.1%
19.6%
11.4%
19.9%
-7.1%
-7.8%
-9.5%
-3.5%
1.1%
-7.6%
17.2%
3.3%
-22.7%
-23.7%
25.5%
-6.9%
-3.1%
-3.4%
-2.2%
2.9%
-2.2%
-2.1%
-8.5%
-11.3%
-12.3%
4.4%
-6.4%
-5.8%
-6.0%
-5.3%
-1.1%
-6.1%
-1.6%
-8.8%
-2.1%
-1.0%
4.1%
-4.9%
-0.1%
-0.8%
1.7%
-2.2%
2.5%
-2.0%
-9.1%
-1.9%
-1.9%
1.6%
-3.4%
11.0%
10.9%
11.2%
4.6%
7.5%
24.6%
-9.4%
25.1%
25.1%
27.9%
-2.2%
13.7%
13.4%
14.2%
5.3%
8.1%
38.8%
-9.7%
39.6%
39.6%
41.5%
-1.3%
4.4%
4.0%
5.3%
1.6%
2.8%
15.9%
-9.2%
16.2%
16.5%
20.0%
-3.0%
6.1%
5.8%
6.8%
6.1%
6.8%
6.6%
-13.6%
6.9%
6.9%
7.3%
-0.4%
Margin Analysis (as a % of Revenues)
Net Revenues
COGS
Gross Profit
2-Year Gross Profit
SG&A
Proforma EBIT
Interest Expense
Income Tax Expense
Net Income from Continuing Ops
Pro Forma EPS
Diluted Shares Outstanding

Important footnote about our C12 and C13 estimates:
Given the uncertainty regarding the timing of a resolution, in our view it is cleaner to incorporate the impact
of lost ESRX business fully into our C12 outlook.
If no agreement is reached, we estimate that WAG will retain ~20% of ESRX-related volume and the EPS
impact would be ~$0.40 weighted earlier in the year. Combined with share buybacks, our C12 estimate
moves to $2.78.
Given that we believe a deal is still the most likely outcome with an eye towards the long-term value of WAG in
C2013, our estimates assume that WAG and ESRX reach a deal in C13.
In C13, we add back ~85% of historical volume to WAGs business. We believe there is risk that the longer
the dispute persists, some legacy WAG-ESRX patients will find new places to fill their prescriptions and may
not return to WAG, resulting in our 85% estimate rather than 100% of the historical 90M scripts. This
assumption, combined with share buybacks, results in our C13 EPS estimate of $3.40.
HEALTHCARE SERVICES
24
INVESTMENT THESES
We maintain our BUY rating on ABC. Our price target of $49 is based on shares
trading at ~15x C13E EPS over the next 12 months. Given the relative stability
of the companys underlying business, solid market position, accelerating topline, and strong balance sheet, we believe shares are compelling at current
levels. Risks to our investment thesis and price target include: sell side margin
pressures, the health of the independent pharmacy base, the sustainability of
branded price inflation and generic deflation.
Maintain BUY on CAH. Our price target of $50 is based on shares trading at
15x our C12 EPS estimate over the next twelve months. Risks to our
investment thesis and price target include: sell side margin pressures, the
sustainability of branded price inflation and generic deflation, commodity prices
and the impact of the weak economy on the companys medical supply segment.
We maintain our BUY rating on MCK. Our price target of $96 is based on
shares trading at over ~15x C12E EPS over the next 12 months. In our view
MCKs operations and underlying fundamentals are as strong as any in the
business such that shares warrant at least a similar multiple to the group average.
Additionally, implicit in the stocks current valuation is a modest multiple for
the companys HCIT earnings; as trends improve here over the course of C11 it
could foster multiple expansion. Risks to our investment thesis and price target
include: sell side margin pressures, the sustainability of branded price inflation,
generic deflation, the health/stability of Rite Aid, and the impact of the weak
economy on its HCIT and med-surg businesses.
We maintain our BUY rating on CVS shares. Our PT of $47 is based on shares
trading at ~15x 2012E EPS over the next year, in line with the 10%-15% fiveyear EPS growth target. Risks include the upcoming PBM selling season, FEP
re-pricing, generic price dynamics/profitability, retail volume and
reimbursement trends and overall execution within the PBM and around the
combined model.
We rate WAG NEUTRAL. While WAG appears fairly inexpensive on the
surface, we expect the stock could be range-bound over the near to intermediate
term until visibility on improved earnings trends materializes. The company has
a strong network of stores that make it a force in the drug channel, but WAG is
not immune to various/persistent headwinds in the retail pharmacy environment.
While internal initiatives and Duane Reade-related synergies should help over
the next year, WAG expects that generics remain a drag until late C11/2012
given reimbursement dynamics. Risks include a competitive retail landscape,
possible reimbursement and integration risks (WAG must execute on its various
internal initiatives aimed at improved sales/returns and broader healthcare
strategy as well as integrate its acquisitions).
We rate shares of CYH NEUTRAL. We anticipate that an overhang will persist
on shares given government inquiries and shareholder lawsuits, the outcomes of
which are difficult to assess at this point in time. Key risks include: CYHs
leverage, volume/payor mix trends, the unpredictability of bad debt, and
Medicaid reimbursement in light of stretched state budgets.
HEALTHCARE SERVICES
25
We rate shares of HCA a BUY. Our $32 PT is based on shares trading at 7x our
2012 EBITDA-MI estimate over the next twelve months. Risks to our BUY
rating and PT include: the macroeconomic outlook and its impact on volumes
and payor mix, Medicare and Medicaid pricing growth given federal and state
budget constraints, managed care pricing given employer/consumer pushback on
private pay premiums, the unpredictability of bad debt expense, and the
sustainability of moderate cost trends.
We maintain our NEUTRAL rating on HMA. We generally believe the
company is headed in the right direction, with strong management substantially
improving HMAs operating focus over the past 12-18 months or so. Key risks
for HMA include: the companys leverage, deteriorating payor mix trends given
rising unemployment and uninsured populations, the unpredictability of bad debt
expense, Medicaid reimbursement in light of stretched state budgets and the
sustainability of moderate cost trends.
We maintain our NEUTRAL rating on LPNT. While we anticipate that LPNT
has the opportunity to drive improved volume trends over time and note much
improved physician recruiting, in our view relative visibility on intermediate
term growth remains modest. Key risks for LPNT, and the industry in general,
include: struggles to drive volume growth, deteriorating payor mix trends given
expense, and Medicaid reimbursement in light of stretched state budgets..
We maintain our NEUTRAL rating on THC. While cost cutting has supported
growth throughout the past two years, volumes have been weak. The benefits
from cost cutting will, a some point, plateau and incremental growth will be
dependent on increasing volumes. Key risks for THC include: the companys
ability to drive volume growth over time, deteriorating payor mix trends given
expense, and Medicaid reimbursement in light of stretched state budgets.
We rate shares of UHS BUY. Our $63 price target is based on shares trading at
~14x our 2012 EPS estimate (and ~8x our 2012 EBITDA estimate) over the next
12 months, which assumes shares essentially maintain their current multiple on
forward-year earnings over the next year. We remain more constructive toward
the behavioral health business (now ~2/3 of consolidated earnings) than acute
care, and in addition UHS of course should enjoy accelerating earnings growth
in 2011-2012 given PSYS-related synergy opportunities. Risks include:
Medicaid reimbursement, integration of PSYS assets, acute care volume trends,
deteriorating acute care payor mix trends.
We rate shares of VHS BUY. Our $15 PT is based on shares trading at ~6.25x
our C2012E EV/EBITDA-MI estimate. Risks to our BUY rating and PT include
the integration of Detroit Medical Center, market concentration, macroeconomic
outlook and its impact on volumes and payor mix, Medicare and Medicaid
pricing growth given federal and state budget constraints, bad debt expense, and
the sustainability of moderate cost trends.
We maintain our NEUTRAL rating on DGX. Quest Diagnostics remains a
leader in a strong cash flow generating and defensive industry. On a company-
HEALTHCARE SERVICES
26
specific basis, successful cost-cutting efforts continue to boost bottom line

growth. However, we generally view profit margins as getting closer to
maturity and dont anticipate that margin expansion will boost long-term
earnings growth as significantly as it has in 2009. While the company/group has
visibility on intermediate-term managed care pricing trends given it is between
major contract renewals, longer-term we remain cautiously disposed toward
both managed care and government reimbursement pricing.
We maintain our NEUTRAL rating on LH. LabCorp is a leader in a defensive
industry that generates strong free cash flow and earnings visibility in the long
term is enhanced by recent acquisitions including Genzyme Genetics. However
the stocks premium versus its peers already reflects the companys higher
quality results to date and its solid long-term positioning in the base business, as
well as anticipated accretion from the deal. We rate shares NEUTRAL as we
expect LH to perform reasonably over time, but believe there is currently greater
relative value elsewhere in our coverage.
We rate shares of HLS BUY. HealthSouths solid revenue and EBITDA
growth, strong free cash flow generation and reasonable valuation make it an
attractive investment, in our view. Our $30 PT is based on shares trading at
over 8x C2012E EBITDA. Risks include changes to Medicare reimbursement,
the companys leverage, and the long-term implications of health reform law.
HEALTHCARE SERVICES
27
ANALYST CERTIFICATION
All of the recommendations and views about the securities and companies in this report accurately reflect
the personal views of the research analyst named on the cover of this report. No part of this research
analysts compensation was, is, or will be directly or indirectly related to the specific recommendations or
views expressed by the research analyst in this research report.
IMPORTANT DISCLOSURES
Lazard Frres & Co. LLC has received compensation for investment banking services
from HCA, and VHS within the past twelve (12) months.
Lazard Capital Markets LLC has acted as manager or co-manager of a securities
offering on behalf of HCA, and VHS within the past twelve (12) months.
Lazard Capital Markets LLC makes a market in ABC, CAH, MCK, CYH, HCA, HMA, LPNT,
THC, UHS, VHS, DGX, HLS, CVS, and WAG securities.
Please go to http://research.lazardcap.com/pricecharts to view price charts for companies mentioned in this

report.
BUY
61%
DISTRIBUTION OF INVESTMENT RATINGS (AS OF 01/06/12)

OVERALL DISTRIBUTION
BANKING CLIENT DISTRIBUTION*
NEUTRAL
SELL
BUY
NEUTRAL
SELL
38%
1%
14%
6%
0%
* Indicates the percentage of each category in the Overall Distribution that were banking clients of Lazard Frres in the previous 12 months.
RATING
BUY
NEUTRAL
SELL
GUIDELINE
(return targets may be modified by risk or liquidity issues)
Expected to produce a positive total return of more than 10% in the next 12 months.
Fairly valued; expected to product a total return of 10% in the next 12 months.
Expected to product a negative total return of more than 10% in the next 12 months.
HEALTHCARE SERVICES
28
DISCLAIMERS
This report has been prepared by Lazard Capital Markets LLC (LCM) in New York. It may not be
reproduced, redistributed or copied in whole or in part for any purpose. This report has been approved by, and
is being distributed in the US or to US persons, by LCM, which accepts responsibility for its contents in the US.
Transactions undertaken in the US in any security mentioned herein must be effected through LCM or another
US-registered broker-dealer, in conformity with SEC Rule 15a-6.
Neither this report nor any copy or part thereof may be distributed in any other jurisdictions where its
distribution may be restricted by law and persons into whose possession this report comes should inform
themselves about, and observe, any such restrictions. Distribution of this report in any such other jurisdictions
may constitute a violation of US securities laws, or the law of any such other jurisdictions.
This report does not constitute an offer or solicitation to buy or sell any securities referred to herein. It should
not be so construed, nor should it or any part of it form the basis of, or be relied on in connection with, any
contract or commitment whatsoever. The information in this report, or on which this report is based, has been
obtained from sources that LCM believes to be reliable and accurate. However, it has not been independently
verified and no representation or warranty, express or implied, is made as to the accuracy or completeness of
any information obtained from third parties. The information or opinions are provided as at the date of this
report and are subject to change without notice. The information and opinions provided in this report take no
account of the investors individual circumstances and should not be taken as specific advice on the merits of
any investment decision. Investors should consider this report as only a single factor in making any investment
decisions. Further information is available upon request. LCM may provide specialized research products or
services to certain customers focusing on the prospects for individual covered stocks as compared to other
covered stocks over varying time horizons or under differing market conditions. While the views expressed in
these situations may not always be directionally consistent with the long-term views expressed in the analyst's
published research, the analyst has a reasonable basis and any inconsistencies can be reasonably explained.
LCM does not accept any liability whatsoever for any direct or consequential loss howsoever arising, directly or
indirectly, from any use of this report or its contents.
By accepting this report you agree to be bound by the foregoing limitations.
Lazard Capital Markets LLC
30 Rockefeller Plaza, New York, NY 10020
Member NYSE and FINRA
Copyright 2012 Lazard Capital Markets LLC. All rights reserved.
HEALTHCARE SERVICES
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INDUSTRY NOTE

Weekly Valuation/Financial Ratio Comparisons

We compare publicly traded companies on a price-to-earnings, P/E to

For companies under coverage, we provide graphs detailing historical

Expected earnings growth rates are listed, as well as year-to-date, 3-month

Exhibit 1. Lazard Capital Markets Healthcare Services Coverage Universe

Walgreens (calendarized) (a)

Cardinal Health (calendarized)

Health Management Associates

Univ ersal Health Serv ices

Vanguard Health Sy stems

S & P 500 FC est.

Large Cap Pharma

S&P HC Prov iders & Serv ices

(a) - For CVS and WAG, we use the EV + Capitalized Lease/EBITDAR

Exhibit 2. Lazard Capital Markets Healthcare Services Cash Flows

FCF Per Share

FCF Yield - Market Cap

C2011E C2012E C2013E C2011E C2012E C2013E C2011E C2012E C2013E

Pharmacy Benefit Managers and Drug Retail

Community Health Sy stems

Health Management Associates

Univ ersal Health Serv ices

Vanguard Health Sy stems

Source: LCM Research

Exhibit 3. Lazard Capital Markets Healthcare Services Short Interest Data

11/30/2010 12/31/2010 1/31/2011

9/30/2011 10/31/2011 11/30/2011 12/31/2011

Pharmacy Benefit Managers

Source: FactSet, LCM Research

Exhibit 4. Lazard Capital Markets Estimates vs. Consensus Quarterly Data

Pharmacy Benefit Managers and Drug Retail

Drug Distribution (a)

Health Management Associates

Univ ersal Health Serv ices

Vanguard Health Sy stems

Source: Lazard Estimates, FactSet

Exhibit 5. Lazard Capital Markets Estimates vs. Consensus Annual Data

Calendar 2012 (c)

Pharmacy Benefit Managers and Drug Retail

Drug Distribution (a)

Community Health Sy stems

Health Management Associates

Univ ersal Health Serv ices

Vanguard Health Sy stems

2013E Gr Rate 2011E 2012E 2013E

2011E 2012E 2013E

PBM Weighted Average (Sum)

Rite Aid (Cal EPS)

Walgreen (Cal EPS)

Drug Retail Weighted Average (Sum)

Bellwether Retailers (a)

$34,587 $36,209 $38,293

Niche Specialty Provider

$96.73 $105.27 $124.49

Large Cap Pharma

S&P HC Prov iders & Serv ices

S&P 500 Retailing

Source: FactSet, LCM Research

Exhibit 7. PBM Financial & Operating Metrics

Consolidated Gross Margin

$1,045.9 $2,275.5 $2,853.4 $3,100.3