Great Elm Group, Inc. · NASDAQ:GEG
Great Elm — Great Elm Capital Group — Merger or Acquisition (September 2018)
30 slides from Great Elm's merger presentation, Sep 11, 2018
Slide 1: The Acquisition of Valley Healthcare Group and Northwest Medical
Great Elm Capital Group, Inc. The Acquisition of Valley Healthcare Group and Northwest Medical September 11, 2018 © 2018 Great Elm Capital Group, Inc.
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements Statements in this presentation that are “forward-looking” statements, including statements regarding estimated cost synergies, our future growth strategy for the combined business and post-closing initiatives, involve risks and uncertainties that may individual
Slide 3: Table of Contents
Table of Contents Slide(s): 4-5 Executive Summary 6 - 11 Introduction 12 - 14 Key Investment Considerations 15 - 17 The Transaction 18 - 19 Post Closing Initiatives 20 - 21 Summary 22 - 25 Great Elm Capital Group, Inc.: Organizational Overview 26 Q&A 27 - 30 Appendix © 2018 Great Elm Capital Group,
Slide 4: Executive Summary
Executive Summary © 2018 Great Elm Capital Group, Inc. 4
Slide 5: Executive Summary
Executive Summary Great Elm has partnered with the management team of Valley Healthcare Group (“VHG”) to acquire and combine VHG and Northwest Medical (“NWM”) VHG and NWM, which together serve approximately 70,000 patients annually across five states in the United States, are leading regional pr
Slide 6: Introduction
Introduction © 2018 Great Elm Capital Group, Inc. 6
Slide 7: Introduction: Business Overview
Introduction: Business Overview VHG and NWM are leading distributors of sleep and respiratory DME and services, including CPAP/BiPAP, ventilators and oxygen equipment. VHG and NWM use licensed respiratory therapists to assist in the education and delivery of equipment, resulting in industry-leadin
Slide 8: Introduction: Valley Healthcare Group
Introduction: Valley Healthcare Group Initially Valley Respiratory Services, VHG was founded by Ron and Pam Evans in Mesa, AZ to provide respiratory therapy and services VHG has grown organically and through acquisitions, now providing specialized DME equipment, sleep studies and respiratory the
Slide 9: Introduction: Northwest Medical
Introduction: Northwest Medical Northwest Medical was founded in 1983 and, like VHG, provides specialized DME (CPAP, ventilators, oxygen), disposable supplies and respiratory therapy services NWM has grown its presence in Washington, Oregon and Alaska through a series of strategic expansions and
Slide 10: Introduction: Pro Forma Consolidated Financial Summary
Introduction: Pro Forma Consolidated Financial Summary Pro Forma (“PF”) Consolidated Financial Summary ($ millions) The newly-combined company presents a compelling platform for $16.0 $47.1 $50.0 $43.6 growth, both through organic $45.0 expansion into adjacent markets and $14.0 $12.9 opportunistic
Slide 11: Introduction: Pro Forma Product and Payor Profile
Introduction: Pro Forma Product and Payor Profile The newly combined company represents a regionally-diverse (with 28 locations across five states) and payor-diverse quality DME and services provider that is focused on providing sleep and respiratory equipment and therapy with industry-leading com
Slide 12: Key Investment Considerations
Key Investment Considerations © 2018 Great Elm Capital Group, Inc. 12
Slide 13: Key Investment Considerations
Key Investment Considerations Platform for Growth Great Elm is forming a sleep and respiratory-focused provider of home durable medical equipment and services that is well-positioned both for organic and inorganic growth Organic Growth Opportunities: Grow market, take market share in existing
Slide 14: Key Investment Considerations (continued)
Key Investment Considerations (continued) Management: Strong and Aligned Led by Co-Founder Ron Evans, VHG has experienced very impressive revenue growth since inception Prior to the NWM transaction described herein, Ron and his team have completed seven successful acquisitions over the past fi
Slide 15: The Transaction
The Transaction © 2018 Great Elm Capital Group, Inc. 15
Slide 16: The Transaction: Overview
The Transaction: Overview Great Elm has purchased an 80.1% equity interest in an entity formed to acquire and combine VHG and NWM The transaction purchase price of $63.6 million, excluding financing, closing and professional fees and expenses and contingent consideration, was funded using $19.7
Slide 17: The Transaction: Sources & Uses
The Transaction: Sources & Uses SOURCES & USES1 ($ in 000's) Sources Revolving Credit Facility (Funded) $6,330.0 Senior Secured Notes 25,000.0 Qualified Preferred Stock 5,266.3 Rollover Equity (VHG) 3,665.4 Rollover Equity (Corbel) 3,665.4 Cash from GEC Balance Sheet 19,673.0 Total Sources $63,600.0
Slide 18: Post Closing Initiatives
Post Closing Initiatives © 2018 Great Elm Capital Group, Inc. 18
Slide 19: Post Closing Initiatives
Post Closing Initiatives Integration (2018 and 2019) Unique, patient- Implement best Pursue Organic Growth Opportunities (2019) centric asset practices across organizations to Expand existing with regional improve patient Pursue Tuck-In Acquisitions (2019-2020) footprint focus on sleep complianc
Slide 20: Summary
Summary © 2018 Great Elm Capital Group, Inc. 20
Slide 21: Summary
Summary Tailwind of growth from industry trends in a large market Platform for Highly fragmented industry of nearly 6,000 respiratory-focused DME Growth companies that we view as ripe for consolidation Strong & Strong management team with a history of integrating successful Aligned acquisition
Slide 22: Great Elm Capital Group, Inc.: Organizational Overview
Great Elm Capital Group, Inc.: Organizational Overview © 2018 Great Elm Capital Group, Inc. 22
Slide 23: Organizational Overview
Organizational Overview *All debt of subsidiaries is non-recourse to GEC Investment Management Real Estate Operating Companies Great Elm Capital Management, Inc. (“GECM”) Great Elm FM Acquisition, Inc. Great Elm DME Holdings, Inc. SEC Registered Investment Advisor Great Elm FM Acquisition, Inc.
Slide 24: Organizational Overview: Drivers of Shareholder Value
Organizational Overview: Drivers of Shareholder Value Grow GECC through additional debt issuances and equity raises, as well Investment as by acquiring other BDCs via M&A Management Increase assets under management (“AUM”) via new fund launches, SMAs and co-investments Seek opportunities, such
Slide 25: Organizational Overview: Alignment of Interest
Organizational Overview: Alignment of Interest Employee Share Employees of GEC/GECM collectively own over 1.8 million shares in Ownership GEC, representing approximately 7.0% of the shares outstanding1 Director Share The directors of GEC collectively own approximately 10.4% of GEC’s Ownership ou
Slide 26: Q&A
Q&A © 2018 Great Elm Capital Group, Inc. 26
Slide 27: Appendix
Appendix © 2018 Great Elm Capital Group, Inc. 27
Slide 28: Appendix: Non-GAAP Reconciliation
Appendix: Non-GAAP Reconciliation EBITDA, Adjusted EBITDA and Pro Forma ($ in thousands) Adjusted EBITDA ($ in thousands) EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA For Calendar Year 2017 For the Trailing Twelve Months Ended June 30, 2018 VHG & NWM (a) GEC (a) VHG & NWM Total Net (loss) i
Slide 29: Appendix: Experienced Management Team
Appendix: Experienced Management Team Ronald A. Evans (Founder/CEO of VHG) • Ron is involved in all areas of VHG including operations, sales, logistics, customer service, inventory management and strategic planning • More than three decades of direct experience in respiratory care • Twelve years as
Slide 30: Appendix: Contact Information
Appendix: Contact Information Investor Relations Meaghan K. Mahoney Senior Vice President 800 South Street, Suite 230 Waltham, MA 02453 Phone: +1 (617) 375-3006 investorrelations@greatelmcap.com © 2018 Great Elm Capital Group, Inc. 30
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