Finance
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su_mhc6305_w3_a4_2.xlsMerger Analysis
| Merger Analysis Case Study | © 2007 South University | |||||
| Franklin Teaching Hospital | ||||||
| Enter appropriate input values in the cells colored red. | ||||||
| INPUT DATA: | KEY OUTPUT: | |||||
| (millions of $) | (millions of $) | |||||
| Cash flow data: | Pro forma net cash flows: | |||||
| Growth in gross revenues (2007-2011): | 2007 | $162.242 | ||||
| Inpatient | 0.0% | 2008 | $162.242 | |||
| Outpatient | 0.0% | 2009 | $162.242 | |||
| Allowances and discount % | 0.0% | 2010 | $162.242 | |||
| Other op rev growth rate | 0.0% | 2011 | $0.000 | |||
| Patient services exp as a | ||||||
| % of net patient rev | 0.0% | 2007 EBITDA | $162.242 | |||
| Percent of net op CF | Average 5-yr EBITDA | $0.000 | ||||
| retained for growth | 0.0% | |||||
| Annual inputs: | ||||||
| *Interest on | **Cost Savings | Acquisition value: | ||||
| Year | Required Loans | at Franklin | ||||
| 2007 | $0.000 | $0.000 | DCF method | $0.000 | ||
| 2008 | $0.000 | $0.000 | Market multiple method: | |||
| 2009 | $0.000 | $0.000 | Applied to 2000 EBITDA | $0.000 | ||
| 2010 | $0.000 | $0.000 | Applied to avg EBITDA | $0.000 | ||
| 2011 | $0.000 | $0.000 | Applied to discharges | $0.000 | ||
| Long-term (2008 and beyond) | ||||||
| constant growth rate | 0.0% | |||||
| *Interest on required loans represents the | ||||||
| Market data: | estimated interest payments on any borrowings | |||||
| Discount rate (cost of equity) | 0.0% | required to fund the acquisition. | ||||
| EBITDA multiple | 0.0 | |||||
| Market value to discharges ratio | $0 | **Cost savings at Franklin represents any | ||||
| synergistic benefits that will accrue at | ||||||
| Operating data: | the acquirer as opposed to at the target. | |||||
| Expected number of discharges | 0 | |||||
| HISTORICAL DATA: | ||||||
| Palmetto General Hospital | ||||||
| Income Statements: | ||||||
| (Millions of Dollars) | ||||||
| 2002 | 2003 | 2004 | 2005 | 2006 | ||
| Inpatient revenue | $81.624 | $88.249 | $99.010 | $105.332 | $110.384 | |
| Outpatient revenue | 22.861 | 27.067 | 34.628 | 43.616 | 50.810 | |
| Gross patient revenue | $104.485 | $115.316 | $133.638 | $148.948 | $161.194 | |
| Allowances and discounts | 33.699 | 38.626 | 44.622 | 51.198 | 62.006 | |
| Net patient revenue | $70.786 | $76.690 | $89.016 | $97.750 | $99.188 | |
| Other operating revenue | 1.922 | 1.515 | 1.367 | 1.725 | 1.048 | |
| Total operating revenue | $72.708 | $78.205 | $90.383 | $99.475 | $100.236 | |
| Patient services expenses | $60.245 | $73.858 | $81.525 | $90.645 | $89.505 | |
| Interest expense | 3.045 | 3.147 | 3.093 | 3.002 | 2.980 | |
| Depreciation | 3.466 | 3.689 | 4.395 | 4.258 | 6.031 | |
| Total operating expense | $66.756 | $80.694 | $89.013 | $97.905 | $98.516 | |
| Net income | $5.952 | ($2.489) | $1.370 | $1.570 | $1.720 | |
| MODEL-GENERATED DATA: | ||||||
| Palmetto General Hospital | ||||||
| Pro Forma Income Statements: | ||||||
| (Millions of Dollars) | ||||||
| 2007 | 2008 | 2009 | 2010 | 2011 | ||
| Inpatient revenue | $110.384 | $110.384 | $110.384 | $110.384 | $110.384 | |
| Outpatient revenue | 50.810 | 50.810 | 50.810 | 50.810 | 50.810 | |
| Gross patient revenue | $161.194 | $161.194 | $161.194 | $161.194 | $161.194 | |
| Allowances and discounts | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Net patient revenue | $161.194 | $161.194 | $161.194 | $161.194 | $161.194 | |
| Other operating revenue | 1.048 | 1.048 | 1.048 | 1.048 | 1.048 | |
| Total operating revenue | $162.242 | $162.242 | $162.242 | $162.242 | $162.242 | |
| Patient services expenses | $0.000 | $0.000 | $0.000 | $0.000 | $0.000 | |
| Interest expense | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Total operating expense | $0.000 | $0.000 | $0.000 | $0.000 | $0.000 | |
| Net operating cash flow | $162.242 | $162.242 | $162.242 | $162.242 | $162.242 | |
| Cost savings at University | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Growth retentions | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Terminal value | 0.000 | |||||
| Net cash flow to equityholders | $162.242 | $162.242 | $162.242 | $162.242 | $0.000 | |
| EBITDA | $162.242 | $162.242 | $162.242 | $162.242 | $0.000 | |
| Valuation Results: | ||||||
| Average 5-year EBITDA | $0.000 | |||||
| Value according to DCF method | $0.000 | |||||
| Value according to market multiple method: | ||||||
| Applied to 2004 EBITDA | $0.000 | |||||
| Applied to average 2004-2008 EBITDA | $0.000 |
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