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Highly Confidential
--------------------------------------------------
Presentation to the Special
Committee of the Board of
Directors
NOVEMBER 21, 2001
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These materials are not intended to constitute
an opinion or appraisal. These materials, which
are based in part on information provided by the
Company, are intended solely to accompany
discussion with the Special Committee of the Board
of Directors.
---------------------------------------------------
TABLE OF CONTENTS
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I. Transaction Chronology
II. Transaction Overview
III. Overview of NextHealth
A. Historical and Projected Financial Results
B. Historical Stock Price Performance
IV. Valuation Summary
A. Methodology
B. Implied Valuation Matrix
C. Premium Analysis
Appendix
A. Precedent Transaction Analysis: Resorts
B. Precedent Transaction Analysis: Specialized Healthcare
C. Public Company Analysis
D. Net Operating Loss Utilization and Valuation
E. Land Development Rights Valuation
F. Diluted Share Calculation
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I. Transaction Chronology
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TRANSACTION CHRONOLOGY
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. August 8, 2000: NextHealth, Inc. ("NextHealth" or the "Company")
received a letter from AP NH, LLC ("Apollo")
requesting that NextHealth purchase Apollo's
investments in the Company for a cash price of $5.39
a share or $30.7 million (the "Apollo Proposal").
. October 16, 2000: NextHealth engaged Prudential Securities
Incorporated ("Prudential Securities" or "PSI") to
serve as its financial advisor to evaluate the
Apollo Proposal and other strategic alternatives.
. Late December 2000: The Special Committee of NextHealth's Board of
Directors (the "Special Committee") decided not to
pursue the Apollo Proposal.
. January 16, 2001: NextHealth announced that it appointed a Special
Committee to consider strategic options, including a
possible sale of the Company, to maximize shareholder
value. The Company also announced that it had
retained Prudential Securities as financial advisor
to the Special Committee.
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TRANSACTION CHRONOLOGY
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. January 18, 2001: NextHealth received an offer from Anam LLC ("Parent"
or "Bidder I"), organized by Xxxx X'Xxxxxxx, Xx.,
NextHealth's chief executive officer and Xxxxxx X.
Xxxx, a director of the Company, to buy all
outstanding shares and interest for $5.10 per share
in cash, subject to financing and other
contingencies.
. January 19, 2001 Prudential Securities responded to the 1/18/01 offer.
PSI told Bidder I that the price was not sufficient
and that the Company was not willing to accept a
financing contingency or a non-solicitation
provision.
. January 24, 2001: Bidder I revised its offer to $5.45 share and the
Company issued a press release announcing the revised
offer.
. Mid-Jan. to mid-Feb: Prudential Securities and the Special Committee
received inquiries from seven (7) parties.
. January 25, 2001: Prudential Securities mailed confidentiality
agreements to the interested parties. Subsequently,
after the execution of the confidentiality
agreements, Prudential Securities mailed
informational materials (the "Materials") and
procedure letters to such interested parties. Five
(5) entities executed confidentiality agreements and
received the Materials.
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TRANSACTION CHRONOLOGY
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. February 14, 2001: Prudential Securities received one preliminary
indication of interest from Bidder II at $5.75 to
$6.00 per share.
. February 23, 2001: Prudential Securities received one preliminary
indication of interest from Bidder III, who expressed
interest in acquiring the assets of Sierra Tucson for
$50 million free and clear of any liabilities.
. Late Feb. to Bidder II and Bidder III conducted due diligence at a
Mid March: data room in New York as well as at the Company. All
information that was provided to Bidder I was also
made available to Bidders II and III.
. March 14, 2001: The Company received 4 offers:
. Bidder I submitted a proposal to purchase all
outstanding shares and interest in the Company for
$5.75 per share.
. Bidder II/Bidder III jointly submitted a proposal to
purchase all outstanding shares and interest in the
Company for $5.75 per share subject to certain
conditions and potential price adjustments related to
Miraval's EBITDA and the Company's projected cash
balance.
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6
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TRANSACTION CHRONOLOGY
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. March 14, 2001: . Bidder II, submitted an offer to purchase the assets
(Continued) of Miraval for $47.0 million.
. Bidder III submitted a proposal to purchase the
assets of Sierra Tucson for $35.5 million.
. March 15, 2001: The Special Committee met and decided to continue
negotiations with respect to the two proposals to acquire
the stock of the Company.
. March 19, 2001: The Company received two revised offers:
. Bidder I submitted a revised offer for $6.00 per
share.
. Bidder II/Bidder III submitted a revised offer with a
floor of $4.96 per share without increasing its bid
of $5.75 per share.
. March 20, 2001: The Special Committee met and decided to further
investigate Bidder I's proposal, including the financing
of Bidder I's proposal and the potential for Bidder I to
make a cash deposit.
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TRANSACTION CHRONOLOGY
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. March 22, 2001: Prudential Securities told Deutsche Bank, financial
advisor to Bidder II, that Bidder II/Bidder III was not
the high bidder, and encouraged Bidder II/Bidder III to
raise their offer and eliminate the purchase price
adjustments.
. March 30, 2001: Bidder I revised its bid to $5.75 per share due to lower
projections on the Miraval business segment. Based upon
these lower EBITDA projections, Bidder II/III price
adjustment would have resulted in an offer price of
approximately $5.37 per share.
. April 12, 2001: After extensive negotiations (including the realization
that the Company had 300,000 additional warrants
outstanding), Bidder I and the Special Committee agreed to
a $5.65 per share purchase price.
. April 13, 2001: PSI rendered an opinion as to the fairness, from a
financial point of view, of the $5.65 per share price to
be received by the Company's stockholders, to the Special
Committee and the Board of Directors, based on conditions
as of that date.
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. April 16, 2001: The Company announced that it had entered into an
Agreement and Plan of Merger with Anam LLC and NHI
Acquisition Corp. (the "Merger Agreement").
. May 18, 2001: The Company filed a schedule 14A with the SEC.
. June 15, 2001: The Company received the SEC comment letter.
. August 28, 2001: The Company filed a revised schedule 14A with the SEC.
. September 20, 2001: The Company revised second round of comments from the
SEC.
. September 21, 2001: Anam notified the Company that it viewed events of
September 11, 2001 as a force majeure which might lead
to a material adverse change under the Merger
Agreement, and it was reviewing its options under the
Merger Agreement.
. October 19, 2001: The Company filed the second amendment to schedule 14A.
. November 1, 2001: The Special Committee and Anam commenced negotiations
of a new per share purchase price and revised
agreement.
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. November 5, 2001: The Company received third round of comments from the
SEC.
. November 6, 2001: The Special Committee and Anam agreed in principal to a
$5.10 per share purchase price and a 30-day waiver of
the non-solicitation provision of the Merger Agreement.
. November 16, 2001: At Anam's request, Apollo agreed to give Anam an option
to issue to Apollo a pre-payable, non-recourse, two-
year note in the principal amount of $1.4 million in
exchange for 341,464 warrants held by Apollo each of
which represents the right to purchase one share of
common stock of the Company at an exercise price of
$1.00 per warrant.
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To date, the Special Committee has not requested Prudential Securities to
solicit and Prudential Securities has not solicited any parties in connection
with a potential sale of the Company; however, Prudential Securities responded
to inquiries from interested third parties. Moreover, it is anticipated that
Prudential Securities will actively solicit third party proposals after the
execution of the Amended Agreement.
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10
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II. Transaction Overview
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TRANSACTION OVERVIEW
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Synopsis: It is proposed that Anam LLC, a limited liability
company ("Anam" or "Parent"), NHI Acquisition Corp., a
Delaware Corporation ("Merger Sub"), and the Company
("Target") will amend their Merger Agreement, dated
April 16, 2001 (the "Amended Agreement"). Parent and
Merger Sub are sometimes herein referred to as
("Buyer").
Merger Consideration: Pursuant to the Amended Agreement, each issued and
outstanding share of the Company's common stock, par
value $.01 per share ("Common Stock"), other than those
shares of Common Stock that, at the Effective Time, are
owned by Buyer or by any subsidiary of Buyer (the
"Excluded Shares") and all issued and outstanding
shares of the Company's preferred stock, par value $.01
(the "Preferred Shares"), shall be converted into and
exchanged for the right to receive an amount of cash
equal to $5.10 per share (the "Merger").
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This Transaction Overview does not purport to be be all-inclusive and certain
capitalized terms not defined herein have the meanings ascribed to them in the
Merger Agreement and/or the Amended Agreement. See Merger Agreement or Amended
Agreement for the complete details.
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TRANSACTION OVERVIEW
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Apollo Note: A pre-payable, non-recourse, interest only, two-year
note in the aggregate principal amount of $1.4 million
issued to Apollo, at the option of Anam, in exchange
for 341,464 warrants held by Apollo, each of which
represents the right to acquire one share of common
stock of the Company at an exercise price of $1.00 per
warrant (the "Note"). The Note will bear interest at
12% and will be secured by a valid second mortgage on
Miraval.
Xxxxxxx Money Deposit: Upon execution of the Amended Agreement, the Special
Committee will hold a $3.0 million letter of credit.
Termination Fee: The Merger Agreement provides for NextHealth to pay
Buyer a termination fee of $1.65 million, plus
reimbursement of up to $750,000 of all reasonable and
documented, out-of-pocket expenses incurred by Buyer if
the Merger Agreement is terminated under certain
circumstances detailed in the Merger Agreement.
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This Transaction Overview does not purport to be be all-inclusive and certain
capitalized terms not defined herein have the meanings ascribed to them in the
Merger Agreement and/or the Amended Agreement. See Merger Agreement or Amended
Agreement for the complete details.
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TRANSACTION OVERVIEW
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Termination Date: March 18, 2002
30 Day Solicitation For a period of 30 days from the date of the Amended
Period: Agreement, the Special Committee, with the assistance
of Prudential Securities, will solicit, initiate and
encourage the submission of additional proposals to
acquire the Company or its principal properties.
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This Transaction Overview does not purport to be be all-inclusive and certain
capitalized terms not defined herein have the meanings ascribed to them in the
Merger Agreement and/or the Amendment. See Merger Agreement or Amended Agreement
for the complete details.
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TRANSACTION OVERVIEW
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($ in thousands, except share amounts and per share data)
Merger
Agreement Offer Revised
April 13, 2001 Offer
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Offer Price per Share $ 5.65 $ 5.10
Diluted Shares Outstanding/(1)/ 14,650,973 14,617,378
------------- ------------
Implied Equity Purchase Price $ 82,778 $ 74,549
Net Debt/(2)/ 503 (5,256)
------------- ------------
Implied Aggregate Purchase Price $ 83,281 $ 69,293
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Results Results
of Implied of Implied
Operations Multiple Operations Multiple
------------ ---------- ------------- ----------
2000 Actual Net Revenues/(3)/ $40,751 2.0x $40,751 1.7x
2000 Actual EBITDA/(3),(4)/ $10,922 7.6x $10,922 6.3x
2001 Projected Net Revenues/(5)/ $45,232 1.8x $42,026 1.6x
2001 Projected EBITDA/(5),(6)/ $14,392 5.8x $11,277 6.1x
2001 Projected Net Revenues/(7)/ $50,354 1.7x $46,867 1.5x
2002 Projected EBITDA/(7)/ $17,278 4.8x $13,583 5.1x
================================================================================
__________________________________
(1) Includes all common and preferred stock, all outstanding options and
warrants. Calculated pursuant to the treasury stock method and
includes all shares owned by the Buyer. See Appendix F - "Diluted
Share Calculation".
(2) Net Debt for the Merger Agreement Offer was as of December 31, 2000.
Net Debt for the Revised Offer is as of October 31, 2001. Net Debt
includes Minority Interest.
(3) For the twelve months ended December 31, 2000. Results restated to
eliminate non-recurring and one-time charges related to the Merger
and to reclassify interest income.
(4) 2000 EBITDA excludes $521,000 for non-recurring accounting & legal
costs associated with the Merger.
(5) Source: NextHealth management. Revised 2001 Revenue and EBITDA
projections comprised of actual results through October 31, 2001 and
October 10, 2001 management projections for the remainder of the
year. Results restated to eliminate non-recurring and one-time
charges related to the Merger and to reclassify interest income.
(6) 2001 EBITDA excludes $758,000 in non-recurring accounting, legal
charges and board & SEC costs ($558,000) and management stay bonuses
($200,000) associated with the Merger.
(7) Source: NextHealth management. Revised 2002 Net Revenues and EBITDA
projections as of November 12, 2001.
Results restated to eliminate non-recurring and one-time charges
related to the Merger and to reclassify interest income.
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TRANSACTION OVERVIEW
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Offer Price: $ 5.100
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Closing Offer
Stock Price/(1)/ Premium
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LTM Average Price (November 19, 2001): $ 4.596 11.0%
Current Price (November 19, 2001): $ 4.340 17.5%
Year to Date Average Price (November 19, 2001): $ 4.777 6.8%
Last 3 Years Average Price (November 19, 2001) $ 2.878 77.2%
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_______________________________________
(1) Source: Factset
16
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TRANSACTION OVERVIEW
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($ in thousands, except stock price and per share data)
Merger Agreement/(1)/ Revised Offer % Change
-------------------- ---------------- ----------
Offer Price per Share $ 5.65 $ 5.10 -9.7%
Aggregate Transaction Value $83,281 $69,293 -16.8%
Miraval Projected 2001 EBITDA/(2)/ $ 4,736 $ 2,527 -46.6%
Miraval Projected 2002 EBITDA/(2)/ $ 6,227 $ 4,230 -32.1%
Sierra Tucson Projected 2001 EBITDA/(2)(3)/ $10,749 $ 9,919 -7.7%
Sierra Tucson Projected 2002 EBITDA/(2)(3)/ $12,117 $10,387 -14.3%
Consolidated Projected 2001 EBITDA/(2)(4)/ $14,392 $11,277 -21.6%
Consolidated Projected 2002 EBITDA/(2)(4)/ $17,278 $13,583 -21.4%
=====================================================================================================================
(1) As of April 13, 2001.
(2) Results exclude certain non-recurring expenses in connection with the
Merger and the reclassification of interest income.
(3) Sierra Tucson Projections include STEM.
(4) Consolidated results include Miraval, Sierra Tucson, STEM and Corporate
business segments.
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III. Overview of NextHealth
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A. Historical and Projected
Financial Results
-------------------------------------
HISTORICAL AND PROJECTED FINANCIAL RESULTS
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Fiscal Year Ended December 31
--------------------------------------------------------------------------------------------
1998 1999 2000 E2001/(1)/ E2001/(2)/ E2002/(1)/ E2002/(3)/
Previous Reforecast Previous Reforecast
--------------------------------------------------------------------------------------------
Net Revenues/(4)/ $ 26,209 $ 30,270 $ 40,751 $ 45,232 $ 42,026 $ 50,354 $ 46,867
EBITDA/(4)/ 3,154 5,088 10,922 14,392 11,277 17,278 13,583
Closing Stock Price/(5)/
------------------------------
52 Week High $ 2.50 $ 2.25 $ 4.75 $ 5.22 $ 5.45 NM NM
52 Week Low $ 0.75 $ 0.75 $ 1.28 $ 3.38 $ 2.38 NM NM
52 Week Average $ 1.37 $ 1.20 $ 3.11 $ 4.64 $ 4.60 NM NM
Annual Growth Rates
------------------------------
Net Revenues 26.9% 15.5% 34.6% 11.0% 3.1% 11.3% 11.5%
EBITDA NM 61.3% 114.7% 31.8% 3.2% 20.1% 20.5%
--------------------------------------------------------------------------------------------
==========================================================================================================================
Shaded columns represent NextHealth Management projections as of the April
13, 2001 Prudential Securities Opinion. Results are restated to reclassify
interest income.
(1) Sierra Tucson, STEM and Corporate projections as of March
26, 2001. Miraval projections are as of March 29, 2001.
(2) Miraval, Sierra Tucson, STEM and Corporate projections for 2001 are
comprised of actual results through October 31, 2001 and October 10, 2001
management projections for the remainder of the year.
(3) Miraval, Sierra Tucson, STEM and Corporate projections for 2002 are from
NextHealth's management as of November 12, 2001.
(4) Historical and projected results restated to eliminate non-recurring and
one-time charges related to the Merger and to reclassify interest income.
(5) Source: Stock prices from Bloomberg database. Prices are from January 1 to
December 31, except for 2001, where prices are for the twelve months ended
November 19, 2001.
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HISTORICAL AND PROJECTED FINANCIAL RESULTS
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-----------------------------------------------------------------------------
Fiscal Year Ended December 31
---------------------------------------------------
($ in thousands, except per room and per guest data) 1999/(1)/ 2000/(1)/ E2001/(2)/ E2002/(3)/
---------------------------------------------------
Miraval Revenue Assumptions
---------------------------------------------
Rooms Available 38,690 38,796 38,690 38,690
Rooms Occupied 20,338 25,340 22,873 24,383
% Occupancy 52.6% 65.3% 59.1% 63.0%
Average Room Rate $ 274.65 $ 327.56 $ 333.68 $ 352.41
AIR Rate Per Guest $ 297.00 $ 343.66 $ 353.00 $ 389.65
Average Revenues Per Guest $ 451.41 $ 507.82 $ 530.00 $ 580.00
Guest Nights 29,828 37,961 34,007 36,690
Guests Per Room 1.47 1.50 1.49 1.50
Projected Miraval Revenues $ 13,465 $ 19,133 $ 17,901 $ 21,208
Projected Miraval EBITDA $ 179 $ 3,146 $ 2,527 $ 4,230
Sierra Tucson Revenue Assumptions/(4)/
---------------------------------------------
ADC 56.5 63.8 68.1 70.1
Average Daily Net Rate Per Guest $ 806 $ 932 $ 972 $ 998
Projected Sierra Tucson Revenues $ 16,550 $ 21,337 $ 23,857 $ 25,359
Projected STEM Revenues $ 214 $ 256 $ 244 $ 277
---------------------------------------------
Projected Total ST Revenues $ 16,764 $ 21,593 $ 24,100 $ 25,636
Projected Sierra Tucson EBITDA $ 5,917 $ 8,978 $ 9,845 $ 10,312
Projected STEM EBITDA $ 51 $ 72 $ 74 $ 75
---------------------------------------------
Projected Total ST EBITDA $ 5,968 $ 9,050 $ 9,919 $ 10,387
Projected Corporate EBITDA/(5)/ $ (1,058) $ (1,273) $ (1,169) $ (1,034)
Projected Consolidated EBITDA $ 5,088 $ 10,922 $ 11,277 $ 13,583
---------------------------------------------------
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=============================================================================
(1) Results are restated to reclassify interest income.
(2) Miraval, Sierra Tucson, STEM and Corporate projections for 2001 are
comprised of actual results through October 31, 2001 and October 10, 2001
management projections for the remainder of the year.
(3) Miraval, Sierra Tucson, STEM and Corporate projections for 2002 are from
NextHealth's management as of November 12, 2001.
(4) Sierra Tucson projections exclude Sierra Tucson Education Material ("STEM").
(5) 2000 and 2001E Corporate EBITDAs exclude $521,000 and $758,000,
respectively, for non-recurring accounting, legal, board and SEC costs and
management stay bonuses ($200,000 only in 2001) associated with the Merger.
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HISTORICAL AND PROJECTED FINANCIAL RESULTS
================================================================================
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----------------------------------
E2001/(1)/ E2002/(1)/
------------ ------------
($ in thousands)
Miraval Projections
-------------------------------------
Revised Miraval Revenues $ 17,901 $ 21,208
Previous Miraval Revenues 21,123 23,842
----------- -----------
Change $ (3,222) $ (2,633)
% Change -15.3% -11.0%
Revised Miraval EBITDA $ 2,527 $ 4,230
Prevous Miraval EBITDA 4,736 6,227
----------- -----------
Change $ (2,209) $ (1,997)
% Change -46.6% -32.1%
Sierra Tucson Projections
-------------------------------------
Revised ST Revenues $ 23,857 $ 25,359
Revised STEM Revenues 244 277
----------- -----------
Revised Total ST Revenues $ 24,100 $ 25,636
Previous Total ST Revenues 24,085 26,487
----------- -----------
Change $ 16 $ (851)
% Change 0.1% -3.2%
Revised Sierra Tucson EBITDA $ 9,845 $ 10,312
Revised STEM EBITDA 74 75
----------- -----------
Revised Total ST EBITDA $ 9,919 $ 10,387
Previous Total ST EBITDA 10,749 12,117
----------- -----------
Change $ (830) $ (1,730)
% Change -7.7% -14.3%
Corporate
-------------------------------------
Revised Corporate EBITDA $ (1,169) $ (1,034)
Previous Corporate EBITDA (1,093) (1,066)
----------- -----------
Change $ (76) $ 32
% Change 7.0% -3.0%
Consolidated
-------------------------------------
Revised Consolidated EBITDA $ 11,277 $ 13,583
Previous Consolidated EBITDA 14,392 17,278
----------- -----------
Change $ (3,115) $ (3,694)
% Change -21.6% -21.4%
----------------------------------
==================================================================================================
(1) Previous Sierra Tucson projections are from NextHealth's management as
of March 26, 2001 and include STEM. Previous Miraval projections are
from NextHealth's management as of March 29, 2001.
Revised projections for both Sierra Tucson (including STEM) and
Miraval are from NextHealth's management as of October 10, 2001. 2002
Projections are as of November 12, 2001.
Historical and projected results restated to eliminate non-recurring
and one-time charges related to the Merger and to reclassify interest
income.
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HISTORICAL AND PROJECTED FINANCIAL RESULTS
================================================================================
--------------------------------------------------------------------------------
($ in thousands)
As of December 31,/(1)/ As of October 31,/(2)/
-------------------------------------- ----------------------
1998 1999 2000 2001
---- ---- ---- ----
Assets
Cash and Marketable Securities $ 843 $ 3,803 12,737 6,249
Accounts receivable, net 955 1,174 1,467 1,002
Prepaid expenses 313 438 701 1,117
Other Current Assets 554 573 708 664
--------- -------- -------- ---------
Total Current Assets $ 2,665 $ 5,988 $ 15,613 $ 9,032
Property and Equipment, net 34,347 33,327 32,871 32,064
Long Term Receivables 135 64 64 39
Intangible Assets (less amortization) 648 431 214 69
Other assets 20 21 22 22
--------- -------- -------- ---------
Total Assets $ 37,815 $ 39,831 $ 48,784 $ 41,226
Liabilities and Equity
Accounts Payable 561 888 1,192 1,104
Accrued expenses and other liabilities 3,610 3,835 5,808 3,732
--------- -------- -------- ---------
Total Current Liabilities $ 4,171 $ 4,723 $ 7,000 $ 4,835
--------- -------- -------- ---------
Long-term Debt and financing obligation 12,815 12,724 12,587 194
--------- -------- -------- ---------
Total Liabilities 16,986 17,447 19,587 5,029
Minority Interest -- 389 547 696
Preferred stock -- -- -- --
Common stock 86 86 86 86
Retained earnings 47,997 48,012 48,146 48,178
Accumulated deficit (27,254) (26,103) (19,582) (12,763)
--------- -------- -------- ---------
Shareholders' Equity 20,829 21,995 28,650 35,501
--------- -------- -------- ---------
Total Liabilities and Shareholders' Equity $ 37,815 $ 39,831 $ 48,784 $ 41,226
========= ======== ======== =========
=========================================================================================================================
(1) Source: NextHealth's 10K for fiscal year ended December 31, 2000, 1999
and 1998.
(2) Source: NextHealth Management. Accrued expenses and other liabilities
includes $103,749 of Current portion of long-term debt.
23
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-----------------------------
B. Historical Stock Price
Performance
-----------------------------
STOCK PRICE PERFORMANCE
=============================================================================
-----------------------------------------------------------------------------
NextHealth Inc. (NEXT) High: 5.74
Nov 19, 1996 - Nov 19, 2001 Low: 0.69
U.S. Dollar Last: 4.34
------------------------------------------------------------------- 6
------------------------------------------------------------------- 5
Offer Price: $5.10
------------------------------------------------------------------- 4
------------------------------------------------------------------- 3
------------------------------------------------------------------- 2
------------------------------------------------------------------- 1
------------------------------------------------------------------- 0
Volume in Thousands (max/avg)
------------------------------------------------------------------- 1084
------------------------------------------------------------------- 18
Source: FactSet 97 98 99 00 01
================================================================================
25
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STOCK PRICE PERFORMANCE
================================================================================
NextHealth - Since Apollo's Investment
----------------------------------------------------------
Percent of Total Volume Traded at Specified Prices
November 15, 1996 to November 19, 2001
[GRAPHIC]
Daily Closing Price Percent Traded
------------------- --------------
$0.70-$1.76 47.55%
$1.76-$2.81 15.14%
$2.81-$3.87 17.69%
$3.87-$5.10 14.65%
$5.10-$5.63 4.98%
Daily Closing Price
Graph shows 23,907,400 cumulative shares, 277% of the
8,642,914 shares outstanding as reported on 9/30/01.
================================================================================
NextHealth - Last 3 Years
----------------------------------------------------------
Percent of Total Volume Traded at Specified Prices
November 19, 1998 to November 19, 2001
[GRAPHIC]
Daily Closing Price Percent Traded
------------------- --------------
$0.74-$1.74 40.78%
$1.74-$2.75 8.9%
$2.75-$3.93 22.22%
$3.93-$5.10 20.56%
$5.10-$5.60 7.54%
-----------------------------------------------
Daily Closing Price
Graph shows 16,195,600 cumulative shares, 187% of the
8,642,914 shares outstanding as reported on 9/30/01.
===============================================================================
NextHealth - LTM
----------------------------------------------------------
Percent of Total Volume Traded at Specified Prices
November 19, 2000 to November 19, 2001
[GRAPHIC]
Daily Closing Price Percent Traded
------------------- --------------
$2.81-$3.37 5.00%
$3.37-$3.93 12.9%
$3.93-$4.49 10.9%
$4.49-$5.10 39.8%
$5.10-$5.60 31.4%
Daily Closing Price
Graph shows 3,785,200 cumulative shares, 44% of the
8,642,914 shares outstanding as reported on 9/30/01.
================================================================================
NextHealth - Since Announcement
----------------------------------------------------------
Percent of Total Volume Traded at Specified Prices
April 16, 2001 to November 19, 2001
[GRAPHIC]
Daily Closing Price Percent Traded
------------------- --------------
$3.58-$3.94 7.21%
$3.94-$4.30 14.51%
$4.30-$4.66 6.61%
$4.66-$5.10 29.48%
$5.10-$5.60 42.18%
Daily Closing Price
Graph shows 1,919,900 cumulative shares, 22% of the
8,642,914 shares outstanding as reported on 9/30/01.
================================================================================
Source:FactSet
26
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STOCK PRICE PERFORMANCE
================================================================================
LAST 3 YEARS INDUSTRY STOCK PRICE PERFORMANCE
Comparative Price Performance
--------------------------------------------------------------------------------
Indexed Prices
Nov 19, 1998 - Nov 19, 2001
____NextHealth Inc.
____Index:Resort
____Index:Healthcare
____AMEX Xxxxxx Xxxxxxx XXXX Ind Rms
____New Standard & Poors 500 Index
GRAPHIC
================================================================================
Healthcare Index is composed of: KIDS, RYOU and RSCR.
Resort Index is composed of: MTN, SIH and SNSTA
Source: FactSet.
27
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STOCK PRICE PERFORMANCE
================================================================================
LTM STOCK PRICE PERFORMANCE
Industry Performance
-------------------------------------------------------------------------
Indexed Prices
Nov 17, 2000 - Nov 19, 2001
____NextHealth Inc.
____Index:Resort
____Index:Healthcare
____AMEX Xxxxxx Xxxxxxx XXXX Ind Rms
____New Standard & Poors 500 Index
GRAPHIC
Healthcare Index is composed of: KIDS, RYOU and RSCR.
Resort Index is composed of: MTN, SIH and SNSTA
Source: FactSet.
28
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================================================================================
-----------------------------------
IV. Valuation Summary
-----------------------------------
================================================================================
-----------------------------------
A. Methodology
-----------------------------------
VALUATION SUMMARY
================================================================================
------------------------------------------------------------------------
Methodology
-------------
. Discussed the Company's historical results, future growth
opportunities and other matters which we considered relevant to our
analysis with NextHealth's management.
. Analyzed the Company's latest twelve months ("LTM") financial and
operational performance compared to certain publicly traded
specialized healthcare and resort companies.
. Analyzed the Company's financial and operational performance
compared to the targets in selected sales of healthcare and resort
assets.
. Prudential Securities compared the multiple of total purchase
price to the Company's LTM and projected 2001 EBITDA with the LTM
EBITDA multiples paid in selected acquisitions of healthcare and
resort assets. In addition, Prudential Securities compared the
Company's projected 2002 EBITDA, which includes projected growth
at Miraval of over 65% compared to 2001 levels, with the LTM
EBITDA multiples paid in selected acquisitions as an additional
comparative measure. The comparison of forward projections to
trailing EBITDA inherently generates a higher implied valuation
due to projected EBITDA growth.
. Analyzed the stock price premium paid in the Merger compared with
the premia paid in selected acquisitions of publicly traded real
estate and healthcare companies.
. Prudential Securities requested the Company's five year forecast in
order to perform a discounted cash flow analysis: However, due to
the attacks on September 11, 2001, Management believes that its
five year projections as of March 2000 are no longer valid and that
it does not have the ability to forecast its projected results
beyond 2002. Accordingly, Prudential Securities did not perform a
discounted cash flow analysis.
================================================================================
31
==
VALUATION SUMMARY
================================================================================
----------------------------------
B. Implied Valuation
Matrix
----------------------------------
VALUATION SUMMARY
================================================================================
--------------------------------------------------------------------------------
NOTE
---------
None of the companies or assets utilized for comparative purposes in
the following publicly-traded companies and precedent transactions
analyses is, of course, identical to NextHealth. Accordingly, a
complete valuation analysis cannot be limited to a quantitative review
of the selected companies or targets and involves complex
considerations and judgments concerning differences in financial and
operating characteristics of such companies or assets, as well as
other factors that could affect their relative value and that of
NextHealth.
Moreover, none of the companies or assets analyzed herein were
comprised of both business segments (healthcare and resorts).
33
==
VALUATION SUMMARY
=============================================================================
Implied Value Ranges Based on Publicly Traded Companies
and Precedent Transactions Analysis
[GRAPHIC]
Implied Value Range
Low Median High
--- ------ ----
Public Companies Analysis - LTM EBITDA $4.38 $5.08 $6.50
Precedent Transactions Analysis - LTM EBITDA $4.22 $5.61 $8.22
Precedent Transactions Analysis - 2001E EBITDA $4.08 $5.44 $8.06
Precedent Transactions Analysis - 2002E EBITDA $5.02 $6.71 $9.72
34
==
VALUATION SUMMARY
================================================================================
Public Company Summary Valuation Matrix
(In thousands, except per share)
--------------------
Offer Price $ 5.100
====================
----------------------------------------------------------------------------------------------------------------------------------
LTM
LTM Corporate Adjusted LTM MULTIPLE RANGE ENTERPRISE VALUE ("EV")
----------------------------- ---------------------------------
EBITDA/(1)/ EBITDA EBITDA/(1)/ Low Mean Median High Low Mean Median High
---------- ------ ------ --- ---- ------ ---- --- ---- ------ ----
/(1)(2)/
------- ------ ------ ------------------------------- ----------------------------------
MIRAVAL $3.039 $(292) $2.747 6.566x 7.245x 7.266x 7.903x $18.040 $19.905 $19.962 $21.713
SIERRA TUCSON/(3)/ $9.628 $(925) $8.703 4.250x 5.613x 5.201x 7.387x $36.993 $48.851 $45.267 $64.292
====== ====== ====== =============================== ==================================
Low Mean Median High
--- ---- ------ ----
----------------------------------
COMBINED ENTERPRISE VALUE $55.032 $68.756 $65.230 $86.005
==================================
Net Debt
--------
------
CONSOLIDATED NET DEBT/(4)/ $5.256
------
Rights
------
------
VALUE OF LAND DEVELOPMENTAL RIGHTS/(5)/ $ 820
======
NOL Value
---------
------
PRESENT VALUE OF NOLS $2.965
======
Low Mean Median High
--- ---- ------ ----
------- ------- ------- -------
IMPLIED EQUITY VALUE $64.073 $77.796 $74.271 $95.046
======= ======= ======= =======
Diluted Shares
--------------
------
DILUTED SHARES OUTSTANDING/(6)/ 14.617
======
Low Mean Median High
--- ---- ------ ----
----- ----- ----- -----
IMPLIED VALUE PER SHARE $4.38 $5.32 $5.08 $6.50
===== ===== ===== =====
NOTES
-----
(1) For the twelve months ended October 31, 2001.
(2) Corporate EBITDA prorated based on Miraval and Sierra Tucson EBITDA. LTM
Corporate EBITDA excludes non-recurring accounting and legal charges and
board and SEC costs associated with the Merger of $857,000.
(3) Sierra Tucson LTM EBITDA includes STEM EBITDA of $86.0K.
(4) As of October 31, 2001. Net debt includes current portion of long-term debt,
financing obligations and minority interest, net of cash. Source: NextHealth
Management.
(5) See Appendix E - "Land Rights Valuation Calculation."
(6) Diluted shares outstanding calculated using the Treasury Stock Method. See
Appendix F - "Diluted Share Calculation."
35
==
VALUATION SUMMARY
================================================================================
Precedent Transaction Summary Valuation Matrix
(In thousands, except per share)
------------------------------
Offer Price $ 5.100
==============================
----------------------------------------------------------------------------------------------------------------------------------
LTM
LTM Corporate Adjusted LTM MULTIPLE RANGE ENTERPRISE VALUE ("EV")
------------------------------ --------------------------------
EBITDA /(1)/ EBITDA /(1)(2)/ EBITDA /(1)/ Low Mean Median High Low Mean Median High
------ ------ ------ --- ---- ------ ---- --- ---- ------ ----
------ ------ ------ ------------------------------ --------------------------------
MIRAVAL $3,039 $ (292) $2,747 6.818x 8.972x 9.091x 11.045x $18,733 $24,650 $24,977 $ 30,345
SIERRA TUCSON /(3)/ $9,628 $ (925) $8,703 3.889x 6.073x 5.518x 9.285x $33,846 $52,859 $48,024 $ 80,813
------ ------ ------ ------------------------------ --------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Low Mean Median High
--- ---- ------ ----
--------------------------------
COMBINED ENTERPRISE VALUE $52,579 $77,508 $73,001 $111,158
================================
Net Debt
--------
--------
CONSOLIDATED NET DEBT /(4)/ $ 5,256
========
Rights
-------
-------
VALUE OF LAND DEVELOPMENTAL RIGHTS /(5)/ $ 820
=======
NOL Value
---------
---------
VALUE OF NOLS $ 2,965
=========
Low Mean Median High
--- ---- ------ ----
--------------------------------
IMPLIED EQUITY VALUE $61,620 $86,549 $82,042 $120,199
================================
Diluted Shares
--------------
--------------
DILUTED SHARES OUTSTANDING /(6)/ 14,617
==============
Low Mean Median High
--- ---- ------ ----
--------------------------------
IMPLIED VALUE PER SHARE $ 4.22 $ 5.92 $ 5.61 $ 8.22
================================
NOTES
-----
(1) For the twelve months ended October 31, 2001.
(2) Corporate EBITDA prorated based on Miraval and Sierra Tucson EBITDA. LTM
Corporate EBITDA excludes non-recurring accounting and legal charges and
board and SEC costs associated with the Merger of $857,000.
(3) Sierra Tucson LTM EBITDA includes STEM EBITDA of $86.0K.
(4) As of October 31, 2001. Net debt includes current portion of long-term
debt, financing obligations and minority interest, net of cash. Source:
NextHealth Management.
(5) See Appendix E - "Land Rights Valuation Calculation."
(6) Diluted shares outstanding calculated using the Treasury Stock Method. See
Appendix F - "Diluted Share Calculation."
36
==
VALUATION SUMMARY
================================================================================
Precedent Transaction Summary Valuation Matrix
(In thousands, except per share)
------------------------------
Offer Price $ 5.100
==============================
----------------------------------------------------------------------------------------------------------------------------------
2001E
2001E Corporate Adjusted 2001E MULTIPLE RANGE ENTERPRISE VALUE ("EV")
--------------------------- --------------------------------
EBITDA /(1)/ EBITDA /(1)(2)/ EBITDA /(1)/ Low Mean Median High Low Mean Median High
------ ------ ------ --- ---- ------ ---- --- ---- ------ ----
------ ------ ------ ------------------------------ --------------------------------
MIRAVAL $2,527 $ (237) $2,290 6.818x 8.972x 9.091x 11.045x $15,614 $20,545 $20,818 $ 25,293
SIERRA TUCSON /(3)/ $9,919 $ (932) $8,987 3.889x 6.073x 5.518x 9.285x $34,950 $54,583 $49,590 $ 83,449
------ ------ ------ ------------------------------ --------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Low Mean Median High
--- ---- ------ ----
--------------------------------
COMBINED ENTERPRISE VALUE $50,564 $75,128 $70,409 $108,742
================================
Net Debt
--------
--------
CONSOLIDATED NET DEBT /(4)/ $ 5,256
========
Rights
-------
-------
VALUE OF LAND DEVELOPMENTAL RIGHTS /(5)/ $ 820
=======
NOL Value
---------
---------
VALUE OF NOLS $ 2,965
=========
Low Mean Median High
--- ---- ------ ----
--------------------------------
IMPLIED EQUITY VALUE $59,604 $84,169 $79,450 $117,782
================================
Diluted Shares
--------------
--------------
DILUTED SHARES OUTSTANDING /(6)/ 14,617
==============
Low Mean Median High
--- ---- ------ ----
--------------------------------
IMPLIED VALUE PER SHARE $ 4.08 $ 5.76 $ 5.44 $ 8.06
================================
NOTES
-----
(1) For the twelve months ended December 31, 2001.
(2) Corporate EBITDA prorated based on Miraval and Sierra Tucson EBITDA. 2001E
Corporate EBITDA excludes non-recurring accounting and legal charges and
board and SEC costs of $558,000 and stay bonuses of $200,000
(3) Sierra Tucson 2001E EBITDA includes STEM EBITDA of $73.6K.
(4) As of October 31, 2001. Net debt includes current portion of long-term
debt, financing obligations and minority interest, net of cash. Source:
NextHealth Management.
(5) See Appendix E - "Land Rights Valuation Calculation."
(6) Diluted shares outstanding calculated using the Treasury Stock Method. See
Appendix F - "Diluted Share Calculation."
37
==
VALUATION SUMMARY
====================================================================================================================================
Precedent Transaction Summary Valuation Matrix
(In thousands, except per share)
--------------------------------
Offer Price $ 5.1000
================================
------------------------------------------------------------------------------------------------------------------------------------
2002E
2002E Corporate Adjusted 2002E MULTIPLE RANGE ENTERPRISE VALUE ("EV")
---------------------------- ----------------------------------
EBITDA/(1)/ EBITDA /(1)(2)/ EBITDA /(1)/ Low Mean Median High Low Mean Median High
------- ------ ------ ---- ---- ------ ---- ---- ---- ------ ----
------- ------ ------ ----------------------------- ----------------------------------
MIRAVAL $ 4,230 $ (299) $ 3,931 6.818x 8.972x 9.091x 11.045x $ 26,801 $ 35,266 $ 35,734 $43,415
SIERRA TUCSON/(3)/ $10,387 $ (735) $ 9,653 3.889x 6.073x 5.518x 9.285x $ 37,538 $ 58,625 $ 53,262 $89,628
------- ------- -------- ----------------------------- -----------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Low Mean Median High
--- ---- ------ ----
-----------------------------------
COMBINED ENTERPRISE VALUE $64,339 $93,890 $88,997 $133,042
===================================
Net Debt
--------
--------
CONSOLIDATED NET DEBT/(4)/ $ 5,256
========
Rights
------
---------
VALUE OF LAND DEVELOPMENTAL RIGHTS/(5)/ $ 820
=========
NOL Value
---------
---------
VALUE OF NOLS $ 2,965
=========
Low Mean Median High
---- ---- ------ ----
-----------------------------------
IMPLIED EQUITY VALUE $73,379 $102,931 $ 98,038 $ 142,083
===================================
Diluted Shares
--------------
--------------
DILUTED SHARES OUTSTANDING/(6)/ 14,617
===========
Low Mean Median High
---- ---- ------ ----
------------------------------------
IMPLIED VALUE PER SHARE $ 5.02 $ 7.04 $ 6.71 $ 9.72
====================================
NOTES
-----
(1) For the twelve months ended Deember 31, 2002.
(2) Corporate EBITDA prorated based on Miraval and Sierra Tucson EBITDA.
(3) Sierra Tucson 2002E EBITDA includes STEM EBITDA of $74.9K.
(4) As of October 31, 2001. Net debt includes current portion of long-term
debt, financing obligations and minority interest, net of cash. Source:
NextHealth Management.
(5) See Appendix E - "Land Rights Valuation Calculation."
(6) Diluted shares outstanding calculated using the Treasury Stock Method. See
Appendix F - "Diluted Share Calculation."
38
==
VALUATION SUMMARY
================================================================================
------------------------------------
C. Premium Analysis
------------------------------------
VALUATION SUMMARY
================================================================================
--------------------------------------------------------------------------------
Premium Analysis-Prior to Announcement of Strategic Alternatives
------------------------------------- ----------------------------
Closing Price Prior to Announcement Offer Premium / (Discount)
------------------------------------- ----------------------------
Date Date Acquiror Name Offer 1 Day 1 Week 4 Weeks 1 Day 1 Week 4 Weeks
Announced Effective Target Name Price Earlier Earlier Earlier Earlier Earlier Earlier
---------- ----------- -------------------------------- ------- -------- --------- --------- -------- --------- --------
-----------------------------------------------------------------------------------------------------------------------------------
1/16/2001/(1)/ NA Investor Group $ 5.10 $ 3.38 $ 3.50 $ 3.00 51.1% 45.7% 70.0%
NextHealth
-----------------------------------------------------------------------------------------------------------------------------------
08/09/01 NA Ameris Acquisition, Inc. $ 6.00 $ 4.49 $ 4.55 $ 4.40 39.9% 31.9% 36.4%
Children's Comprehensive
Services, Inc.
11/30/00 10/29/01 Investor Group $ 10.00 $ 8.00 $ 7.75 $ 7.75 25.0% 29.0% 29.0%
G&L Realty Corporation
11/02/00 05/15/01 Developers Diversified Realty $ 13.74 $12.50 $11.44 $13.00 9.9% 20.1% 5.7%
American Industrial Properties
10/05/00 Withdrawn Xxxxxx Hotel Group Inc. $ 4.50 $ 2.06 $ 2.19 $ 2.78 118.2% 105.7% 61.8%
Interstate Hotels Corp.
09/21/00 01/05/01 Investor Group $ 7.38 $ 5.56 $ 5.88 $ 5.94 32.7% 25.6% 24.3%
Sunburst Hospitality Corp
09/19/00 11/30/00 Pritzker Group $ 5.00 $ 4.38 $ 4.38 $ 4.31 14.3% 14.3% 15.9%
US Franchise Systems Inc
07/27/00 12/22/00 Investor Group $ 2.25 $ 1.06 $ 0.88 $ 0.94 111.8% 157.1% 140.0%
BFX Hospitality Group Inc
02/28/00 04/30/00 Bass PLC $ 9.50 $ 5.75 $ 4.88 $ 4.56 65.2% 94.9% 108.2%
Bristol Hotels & Resorts Inc
12/28/99 02/02/00 National Nephrology Associates $ 10.00 $ 8.25 $ 6.63 $ 6.31 21.2% 50.9% 58.4%
Renex Corp
07/28/98 Withdrawn Investor Group $ 5.00 $ 3.81 $ 4.00 $ 4.75 31.1% 25.0% 5.3%
Physicians Resource Group Inc
12/02/98 06/08/99 Irvine Co $ 34.00 $27.38 $27.13 $26.56 24.2% 25.3% 28.0%
Irvine Apartment Communities
03/13/98 07/31/98 Investor Group $ 19.00 $16.50 $17.13 $14.13 15.2% 10.9% 34.5%
MedCath Inc
Summary Statistics
---------------------------------------------
High 118.2% 157.1% 140.0%
Median 28.1% 27.3% 31.8%
Mean 42.4% 49.2% 45.6%
Low 9.9% 10.9% 5.3%
---------------------------------------------
================================================================================
(1) Date NextHealth Inc. announced intentions to explore strategic alternatives.
Source: Securities Data Company, Inc. Date: 11/12/01
For all public targets with Primary SIC Codes 6531, 7011, 7991, 8062, 8063,
8069, 8093.
Includes transactions between 1/1/98 and 11/12/01 that were under $1 billion
where cash was the currency. Excludes repurchases and self tenders.
40
==
VALUATION SUMMARY
================================================================================
--------------------------------------------------------------------------------
Premium Analysis - Prior to Announcement of Definitive Agreement
----------------------------------- --------------------------
Closing Price Prior to Announcement Offer Premium / (Discount)
----------------------------------- --------------------------
Date Date Acquiror Name Offer 1 Day 1 Week 4 Weeks 1 Day 1 Week 4 Weeks
Announced Effective Target Name Price Earlier Earlier Earlier Earlier Earlier Earlier
--------- --------- ---------------------------- ----- -------------------------- ---------------------------
----------------------------------------------------------------------------------------------------------------------------------
N/A/(1)/ NA Investor Group $ 5.10 $ 4.34 $ 4.30 $ 4.12 17.5% 18.6% 23.8%
NextHealth
----------------------------------------------------------------------------------------------------------------------------------
08/09/01 NA Ameris Acquisition, Inc. $ 6.00 $ 4.29 $ 4.55 $ 4.40 39.9% 31.9% 36.4%
Children's Comprehensive
Services, Inc.
11/30/00 10/29/01 Investor Group $10.00 $ 8.00 $ 7.75 $ 7.75 25.0% 29.0% 29.0%
G&L Realty Corporation
11/02/00 05/15/01 Developers Diversified Realty $13.74 $12.50 $11.44 $13.00 9.9% 20.1% 5.7%
American Industrial Properties
10/05/00 Withdrawn Xxxxxx Hotel Group Inc. $ 4.50 $ 2.06 $ 2.19 $ 2.78 118.2% 105.7% 61.8%
Interstate Hotels Corp.
09/21/00 01/05/01 Investor Group $ 7.38 $ 5.56 $ 5.88 $ 5.94 32.7% 25.6% 24.3%
Sunburst Hospitality Corp
09/19/00 11/30/00 Pritzker Group $ 5.00 $ 4.38 $ 4.38 $ 4.31 14.3% 14.3% 15.9%
US Franchise Systems Inc
07/27/00 12/22/00 Investor Group $ 2.25 $ 1.06 $ 0.88 $ 0.94 111.8% 157.1% 140.0%
BFX Hospitality Group Inc
02/28/00 04/30/00 Bass PLC $ 9.50 $ 5.75 $ 4.88 $ 4.56 65.2% 94.9% 108.2%
Bristol Hotels & Resorts Inc
12/28/99 02/02/00 National Nephrology Associates $10.00 $ 8.25 $ 6.63 $ 6.31 21.2% 50.9% 58.4%
Renex Corp
07/28/98 Withdrawn Investor Group $ 5.00 $ 3.81 $ 4.00 $ 4.75 31.1% 25.0% 5.3%
Physicians Resource Group Inc
12/02/98 06/08/99 Irvine Co $34.00 $27.38 $27.13 $26.56 24.2% 25.3% 28.0%
Irvine Apartment Communities
03/13/98 07/31/98 Investor Group $19.00 $16.50 $17.13 $14.13 15.2% 10.9% 34.5%
MedCath Inc
Summary Statistics
---------------------------------------
High 118.2% 157.1% 140.0%
Median 28.1% 27.3% 31.8%
Mean 42.4% 49.2% 45.6%
Low 9.9% 10.9% 5.3%
---------------------------------------
================================================================================
(1) For purposes of this analysis, announcement was to be November 20, 2001.
Source: Securities Data Company, Inc. Date: 11/12/01
For all public targets with Primary SIC Codes 6531, 7011, 7991, 8062, 8063,
8069, and 80093.
Includes transactions between 1/1/98 and 11/12/01 that were under $1 billion
where cash was the currency . Excludes repurchases and self tenders.
41
==
================================================================================
----------------------------------
Appendix
----------------------------------
================================================================================
----------------------------------
A. Precedent Transactions
Analysis:
Resorts
----------------------------------
RESORT PRECEDENT TRANSACTIONS
================================================================================
------------------------------------------------------------------------------------------------------------------------------------
(dollars in millions)
Target Date Announced Total Purchase EBITDA
Acquiror (Location) Completed Price TPP/EBITDA
(Symbol) Description Consideration (TPP) Cap Rate TPP/Room
-------------------------------------------------------------------------------------------------------------------------------
Vail Resorts, Inc. The Xxxx-Xxxxxxx, Rancho Mirage 10/17/01 $ 45.0 /(1)/ $ 6.6 /(2)/ $187,500
(MTN) (Palm Springs, CA) 11/15/01 6.8x
Hotel, Resort 240 rooms cash 14.7%
-------------------------------------------------------------------------------------------------------------------------------
Vail Resorts, Inc. RockResorts International LLC 10/17/01 $ 7.5 /(1)/ NA NA
(MTN) (Scottsdale, AZ) 11/15/01 NA
5 luxury resort hotels, 706 rooms cash NA
--------------------------------------------------------------------------------------------------------------------------------
Investor Group Hotel Hana-Maui 8/15/01 /(3)/ NA NA NA
(Hana, HI) 8/15/01 NA
Small luxury hotel, 97 rooms NA NA
--------------------------------------------------------------------------------------------------------------------------------
Vail Resorts, Inc. Vail Marriott Mountain Resort 7/24/01 $ 41.5 /(4)/ $ 5.3 /(5)/ $118,911
(MTN) (Vail, CO) pending 7.9x
Hotel, resort 349 rooms cash 12.7%
--------------------------------------------------------------------------------------------------------------------------------
Peabody Hotel Group Xxxxxxx Xxxxxxx Hotel 7/19/01 /(6)/ NA NA NA
(Orlando, FL) 7/19/01 NA
Luxury hotel, 891 rooms NA NA
--------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Leisure Ltd. C. Spa 7/19/01 $ 5.5 /(7)/ NA NA
(STNR) (CA) 7/19/01 NA
6 day spas cash NA
--------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Leisure Ltd. Mandara Spa LLC, Mandara Asia Ltd 7/3/01 $ 74.0 /(8)/ $ 6.7 /(9)/ NA
(STNR) (U.S. and Asia) 7/3/01 11.0x
Over 50 resort and ship spas cash and stock 9.1%
--------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Leisure Ltd. Greenhouse Spa Inc. 4/30/01 $ 27.8 /(10)/ NA NA
(STNR) (NY, CA, CT, MI) 7/12/01 NA
11 luxury day spas cash and stock NA
--------------------------------------------------------------------------------------------------------------------------------
KSLRecreation Corp. Arizona Biltmore 12/22/00 $343.3 /(11)/ $36.0 /(11)/ $470,274
(Phoenix, AZ) 12/22/00 9.5x
Hotel, Resort 730 rooms cash 10.5%
------------------------------------------------------------------------------------------------------------------------------------
44
==
RESORT PRECEDENT TRANSACTIONS
================================================================================
(dollars in millions)
Target Date Announced Total Purchase EBITDA
Acquiror (Location) Completed Price TPP/EBITDA
(Symbol) Description Consideration (TPP) Cap Rate TPP/Room
------------------------------------------------------------------------------------------------------------------------------
Marriott International Xxxx-Xxxxxxx Kapalua 12/02/00 $143.0 NA $260,949
(Maui, HI) 12/02/00 NA
Hotel, 548 rooms cash NA
-------------------------------------------------------------------------------------------------------------------------------
Raffles Holdings Ltd. L'Ermitage Xxxxxxx Hills
(Prch'd f/LAHOTEL Corp.) 10/06/00 $ 68.0 /(12)/ NA $548,387
(Beverly Hills, CA) 10/06/00 NA
Hotel, 124 rooms cash NA
------------------------------------------------------------------------------------------------------------------------------
Marriott International Frenchman's Reef Marriott Resort 03/16/00 $ 73.0 /(13)/ $10.0 /(13)/ $144,841
(MAR) (St. Xxxxxx, U.S.V.I.) 03/16/00 7.3x
Resort, 504 rooms cash 13.7%
-------------------------------------------------------------------------------------------------------------------------------
Strategic Hotel Capital Marriott Lincolnshire Resort 10/04/99 $ 40.8 /(14)/ $ 4.5 /(14)/ $104,615
Incorporated (Outside Chicago, IL) 10/04/99 9.1x
Resort, 390 rooms securitization 11.0%
-------------------------------------------------------------------------------------------------------------------------------
Strategic Hotel Capital Ritz Carlton, Laguna Niguel 10/04/99 $212.6 /(14)/ $21.8 /(14)/ $540,967
Incorporated (Laguna Niguel, CA) 10/04/99 9.8x
Resort, 393 rooms securitization 10.3%
-------------------------------------------------------------------------------------------------------------------------------
Wyndham International, Inc. The Buttes 09/20/99 $ 63.6 /(15)/ $ 6.4 /(16)/ $179,320
(Tempe, AZ) 09/20/99 10.0x
Resort, 353 rooms sale/securitization 10.0%
-------------------------------------------------------------------------------------------------------------------------------
LaSalle Hotel Properties Viking Hotel 06/04/99 $ 28.0 /(17)/ $ 2.8 /(17)/ $153,846
(LHO) (Newport, Rhode Island) 06/04/99 10.0x
Resort, 182 rooms cash 10.0%
-------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Pointe Hilton Resort at Squaw Peak 04/21/99 $ 94.0 /(18)/ $11.6 /(18)/ $166,963
(HLT) (Phoenix, AZ) 04/21/99 8.1x
Resort, 563 rooms cash 12.4%
-------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Pointe Hilton Tapatio Cliffs Resort 08/18/98 $116.0 /(19)/ NA $198,291
(HLT) (Phoenix, AZ) 08/18/98 NA
Resort, 585 rooms cash, debt/(20)/ NA
-------------------------------------------------------------------------------------------------------------------------------
================================================================================
45
==
RESORT PRECEDENT TRANSACTIONS
================================================================================
--------------------------------------------------------------------------------
(dollars in millions)
Target Date Announced Total Purchase EBITDA
Acquiror (Location) Completed Price TPP/EBITDA
(Symbol) Description Consideration (TPP) Cap Rate TPP/Room
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
LaSalle Hotel Properties San Diego Princess Resort 06/01/98 $ 73.0 /(21)/ $ 8.4 /(22)/ $158,009
(LHO) (San Diego, CA) 06/01/98 8.7x
Resort, 462 rooms in 129 villas cash 11.5%
------------------------------------------------------------------------------------------------------------------------------------
Patriot American Hospitality WHG Resorts & Casino 01/16/98 $280.0/(23)/ $ 26.5 /(23)/ $163,743
(PAH) (Puerto Rico) 01/16/98 10.6x
570-room Condado Plaza Hotel, 389-room El stock swap 9.5%
San Xxxx Hotel, 751-room El Conquistador
Resort
------------------------------------------------------------------------------------------------------------------------------------
Host Marriott Coronado Island Le Meridien Resort 12/17/97 $ 54.4 /(24)/ $ 6.9 /(24)/ $ 23,000
(HMT) (San Diego, CA) 12/17/97 7.9x
Resort, 300 rooms cash 12.7%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------- -------------------------------------------
Key: EBITDA TPP/
TPP (Total Purchase Price) = Stock + Debt - Cash Multiple Room
EBITDA (earnings before interest, taxes, depreciation and amortization) = Total ----------- ------------
Revenues - Operating Expenses High: 11.0x $ 548,387
Cap Rate = EBITDA/ TPP Low: 6.8x $ 23,000
Mean: 9.0x $ 227,974
Median: 9.1x $ 166,963
------------------------------------------------------------------------------- -------------------------------------------
================================================================================
46
==
RESORT PRECEDENT TRANSACTIONS
================================================================================
--------------------------------------------------------------------------------
Notes:
______________
(1) Vail Resorts News Release dated October 17, 2001. $45 million PP is $20
million at close, $25 million in 2 years.
(2) PR Newswire press release dated October 17, 2001. EBITDA is for calendar
year 2000.
(3) Associated Press dated August 15, 2001.
(4) Xxxxxx Brothers Research Report dated July 25, 2001. Purchase price of
$49.5 MM is adjusted for $2MM in cash reserves, $2MM in prepaid capex,
and NPV of acquired development land at $4MM, for an adjusted price of
$41.5 MM.
(5) Xxxxxx Brothers Research Report dated July 25, 2001. EBITDA for CY 2000,
after franchise fees.
(6) Business Wire press release dated July 19, 2001.
(7) San Diego Business Journal article dated July 30, 2001.
(8) Source: 8K dated July 18, 2001. Purchased 60% stake; purchase price of
$44.4MM is grossed up to $74MM.
(9) Xxxx Xxxx Southeast Research Group Report dated June 28. EBITDA for
2001E.
(10) Source: 8K dated July 27, 2001. Purchase price excludes consideration of
up to $3MM in options if certain EBITDA levels are obtained.
(11) Source: 8K/A dated December 22, 2000. EBITDA as of October 30, 2000.
(12) PR Newswire press release dated October 6, 2000.
(13) PR Newswire press release dated March 16, 2000 and Deutsche Bank
research report dated April 13, 2000.
(14) Xxxxx'x Pre-Sale Report dated October 8, 1999.
(15) PR Newswire press release dated September 19, 1999.
(16) Xxxxx'x Pre-Sale Report dated September 24, 1999.
(17) PSI Research Report dated June 24, 1999.
(18) Xxxxx'x Pre-Sale Report dated October 17, 1999.
(19) PR Newswire press release dated August 18, 1998.
(20) Hilton (acq. of Tapatio) paid $26.3m cash & $80.9m debt for 75%
ownership; partner Xxxxxxx Builders, paid $8.8m for 25%
(21) PR Newswire press release dated June 1, 1998.
(22) Trailing 12 month EBITDA
(23) PR Newswire press release dated January 16, 1998 and Xxxxx'x Pre-Sale
Report dated August 10, 2000.
(24) PR Newswire press release dated December 17, 1997.
================================================================================
47
==
================================================================================
-----------------------------
B. Precedent Transactions
Analysis:
Specialized Healthcare
-----------------------------
SPECIALIZED HEALTHCARE PRECEDENT TRANSACTIONS
================================================================================
--------------------------------------------------------------------------------
($ in millions, except per bed data)
Date Total EBITDA
Target Announced Purchase TPP/ TPP
Acquiror (Property Type, Location) Completed Price EBITDA Per
(Symbol) # of beds Consideration (TPP) Cap Rate Bed
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Dynacq International Inc. Charis Hospital 10/17/01 $ 3.4 /(1)/ NA NA
(DYII) (Psychiatric Hospital, Baton Rouge, LA) Pending NA
Cash NA
---------------------------------------------------------------------------------------------------------------------------------
Ameris Acquisition, Inc. Children's Comprehensive 08/09/01 $ 64.2 /(2)/ $ 13.1 /(3)/ NA
Services, Inc. Pending 4.9x
(Youth education and treatment) Cash 20.4%
---------------------------------------------------------------------------------------------------------------------------------
Welsh Xxxxxx Xxxxxxxx Behavioral Healthcare Corp. 05/02/01 $ 65.6 /(5)/ NA XX
Xxxxx IX (Psychiatric Hospital Chain) /(4)/ 05/02/01 NA
Cash NA
---------------------------------------------------------------------------------------------------------------------------------
Undisclosed Acquiror Charter-by-Sea N/A $ 6.8 /(6)/ $ 0.9 /(6)/ NA
(Hospital, GA) N/A 7.2x
309 /(6)/ 13.8%
---------------------------------------------------------------------------------------------------------------------------------
RehabCare Group Inc. DiversiCare Rehab Services Inc. 09/20/00 NA NA NA
(14 Outpatient Therapy Locations, KY, TN) 09/20/00 NA
NA NA
---------------------------------------------------------------------------------------------------------------------------------
Ramsay Youth Services Inc Charter Behavioral Health-Bran 08/04/00 $ 7.7 /(7)/ NA $34,222
(RYOU) (Service, FL) 08/04/00 NA
225 /(7)/ Cash NA
---------------------------------------------------------------------------------------------------------------------------------
Cita Biomedical Inc. Addiction Medical Group Inc. 06/20/00 /(8)/ NA NA NA
(DTOX) (3 Opiate Detoxification Centers, CA) Pending NA
NA NA
---------------------------------------------------------------------------------------------------------------------------------
Universal Health Service Inc 11 Charter Hospitals (Crescent) 05/31/00 $105.0 /(10)/ $ 27.0 /(10)/ $75,000
(UHT) (Hospital,GA PA NJ DE KY SC TN MS UT TX) 05/31/00 3.9x
1400 /(9)/ 25.7%
---------------------------------------------------------------------------------------------------------------------------------
Benchmark Medical Inc. Northstar Health Services Inc. 03/04/00 $ 36.0 /(11)/ $ 4.7 /(12)/ NA
(Outpatient Rehabilitation Clinics, PA
OH.) 09/22/00 7.6x
(NHSI) Cash 13.2%
---------------------------------------------------------------------------------------------------------------------------------
================================================================================
49
==
SPECIALIZED HEALTHCARE PRECEDENT TRANSACTIONS
================================================================================
--------------------------------------------------------------------------------
($ in millions, except per bed data)
Date Total EBITDA
Target Announced Purchase TPP / TPP
Acquiror (Property Type, Location) Completed Price EBITDA Per
(Symbol) # of beds Consideration (TPP) Cap Rate Bed
---------------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities Charter Behavioral Healthcare 02/16/00 $152.6 /(13)/ $ 20.3 /(13)/ NA
(CRE) (Behavioral healthcare services, U.S.) Withdrawn 7.5x
37 core facilities/(14)/ 13.30%
---------------------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx Inc New Life Treatment Centers Inc 11/08/99 $ 15.0 /(15)/ NA NA
(TNM) (Hospital) 11/08/99 NA
NA
--------------------------------------------------------------------------------------------------------------------------------
BI Inc Behavioral Careoptions Inc 10/05/99 /(16)/ NA NA NA
(BIAC) (Drug Treatment) 10/05/99 NA
NA
----------------------------------------------------------------------------------------------------------------------------------
Select Medical Corp. NovaCare Inc. 10/04/99 $200.0 /(17)/ $ 36.2 /(17)/ NA
(Outpatient Physical Rehabilitation. 11/19/99 5.5x
TK:NAHC)
Cash 18.1%
---------------------------------------------------------------------------------------------------------------------------------
Texas Pacific Group, Inc Magellan Health Services Inc 07/19/99 $ 75.4 /(18)/ NA NA
(Hospital, MD) 12/16/99 NA
Cash NA
---------------------------------------------------------------------------------------------------------------------------------
Universal Health Services Inc Hospital Group-Psychiatric Bus 03/15/99 $ 30.0 /(19)/ $ 7.2 /(19)/ $10,714
(UHS) (Hospital, PA) 04/18/99 4.2x
280/(19)/ 24.0%
---------------------------------------------------------------------------------------------------------------------------------
Focus Healthcare LLC Meadowwood Behavioral Health 11/18/98 $ 5.0 NA NA
(Hospital, DE) 11/18/98 NA
Cash NA
---------------------------------------------------------------------------------------------------------------------------------
Medical Industries of America Santera Rehabilitation Inc. 09/16/98 $ 7.7 /(20)/ $ 1.7 /(21)/ NA
(Cyber Care Inc. : CYBR) (Hospitals/ Ass. living, VA, WV, GA,
KY, OH) Withdrawn 4.6x
Cash / Stock 22.0%
---------------------------------------------------------------------------------------------------------------------------------
Alexian Brother Health System Xxxxxxx Estates, Woodland Hosp 08/20/98 $254.0 /(23)/ NA NA
(Hospital, IL) 02/01/99 NA
344/(22)/ NA
----------------------------------------------------------------------------------------------------------------------------------
================================================================================
50
==
SPECIALIZED HEALTHCARE PRECEDENT TRANSACTIONS
================================================================================
--------------------------------------------------------------------------------
($ in millions, except per bed data)
Date Total EBITDA
Target Announced Purchase TPP/ TPP
Acquiror (Property Type, Location) Completed Price EBITDA Per
(Symbol) # of beds Consideration (TPP) Cap Rate Bed
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
West Virginia University Chestnut Ridge Hospital 07/06/98 $ 14.8 /(24)/ NA $ 211,429
(Hospital, WV) 10/02/98 NA
70 Cash NA
---------------------------------------------------------------------------------------------------------------------------------
Undisclosed Acquiror Greenbriar Psychiatric Hosp 06/05/98 $ 1.6 /(25)/ NA NA
(Hospital, LA) 06/05/98 NA
NA
---------------------------------------------------------------------------------------------------------------------------------
Horizon Health Corp FPM Behavioral Health Inc 05/01/98 $ 20.0 /(26)/ NA NA
(HORC) (HC Service, MN) 06/02/98 NA
Cash NA
---------------------------------------------------------------------------------------------------------------------------------
National Mentor, Inc. Rehabilitation Achievement 04/17/98 /(27)/ NA NA NA
(Magellan Health Svs.: MGL) (Outpatient clinic, IL) 04/17/98 NA
NA NA NA
---------------------------------------------------------------------------------------------------------------------------------
MD Network, L.P. Sun Healthcare 02/26/98 NA $159.5 /(28)/ NA
(Outpatient rehab. facilities, FL) 02/26/98 NA
NA NA NA
---------------------------------------------------------------------------------------------------------------------------------
Horizon Mental Health Mgmt Acorn Behavioral Healthcare 10/20/97 $ 12.7 /(29)/ $ 0.7 /(29)/ NA
(HORC) (Clinic, PA) 11/03/97 18.4x *
Cash NA
---------------------------------------------------------------------------------------------------------------------------------
Atlantic Shores Healthcare Undisclosed Psychiatric Hosp 07/21/97 $ 6.0 /(30)/ NA NA
(WHC) Wackenhut subsidiary 07/21/97 NA
NA
---------------------------------------------------------------------------------------------------------------------------------
Vencor Inc Transitional Hospitals Corp 05/07/97 $639.0 /(32)/ $16.4 /(32)/ NA
(VCRI) (Hospital, NV 16 hospitals in 13 08/26/97 39.0x *
states)
1340/(31)/ Cash 2.6%
---------------------------------------------------------------------------------------------------------------------------------
Wackenhut Corrections Corp Coral Ridge Psychiatric Hosp 04/24/97 $ 6.0 /(33)/ NA NA
(WHC) (Hospital, FL) 05/06/97 NA
86/(33)/ NA
------------------------------------------------------------------------------------------------------------------------------------
================================================================================
51
==
SPECIALIZED HEALTHCARE PRECEDENT TRANSACTIONS
================================================================================
--------------------------------------------------------------------------------
($ in millions, except per bed data)
Date Total EBITDA
Target Announced Purchase TPP/ TPP
Acquiror (Property Type, Location) Completed Price EBITDA Per
(Symbol) # of beds Consideration (TPP) Cap Rate Bed
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Children's Comprehensive Vendell Healthcare Inc 02/27/97 $ 25.6 /(34)/ ($2.8) /(35)/ NA
(KIDS) (Hospital, AK, KY, MI, MT, UT, FL, TX) 06/02/97 NA
564 /(34)/ Stock/Cash NA
-----------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities Magellan Health Svcs-Hosp 01/29/97 $ 387.2 /(36)/ $41.7 /(36/) NA
(CRE) (Hospital, U.S., UK and Switz.) 06/17/97 9.3x
Cash 10.77%
-----------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------- -------------------------------------------
Key: EBITDA TPP/
Multiple Bed
-------- ---
TPP (Total Purchase Price) = Stock + Debt - Cash High: 9.3x $ 75,000
EBITDA (earnings before interest, taxes, depreciation and amortization) = Total Median: 5.5x $ 34,222
Revenues - Operating Expenses Mean: 6.1x $ 39,979
Cap Rate = EBITDA/ TPP Low: 3.9x $ 10,714
* Excluded from ranges for High, Median, Mean and Low calculations because they
are outliers.
------------------------------------------------------------------------------- -------------------------------------------
================================================================================
52
==
SPECIALIZED HEALTHCARE PRECEDENT TRANSACTIONS
================================================================================
--------------------------------------------------------------------------------
Notes:
_______________
(1) PR Newswire press release dated October 17, 2001.
(2) Business wire press release dated August 9, 2001, adjusted for debt and
cash using 10K dated September 28, 2001.
(3) Information from KIDS 10-K dated September 28, 2001.
(4) News article from Mental Health Weekly, May 14, 2001.
(5) Business wire press release dated May 2, 2001. Purchased 61% stake;
purchase price of $40MM is grossed up to $65.6MM.
(6) Information from RYOU 8-K dated August 18, 2000.
(7) Information from RYOU 8-K dated August 18, 2000.
(8) PR Newswire press release dated June 20, 2000.
(9) PR Newswire press release dated August 4, 2000.
(10) PR Newswire press release dated May 30, 2000.
(11) Press Releases dated 3/4/00 and 9/25/00.
(12) LTM EBITDA for year end 12/31/99 from 10K dated 3/27/00.
(13) PR Newswire press release dated Febraury 16, 2000. Charter (tenant of
Crescent) arranged this deal in bankruptcy hoping to restructure
operations. Subsequently, bankruptcy prevailed and they asked Crescent to
auction the facilites. Had they stayed in business, Crescent would have
demanded a rental payment of $20.3m (or a 13.3% return on appraised
value), with an annual increase of 5% over the 10-year lease term, which
represents an approximate 16.7% return on appraised value.
(14) PR Newswire press release dated May 19, 2000.
(15) Information from TNM 10-Q dated February 15, 2000.
(16) PR Newswire press release dated October 5, 1999.
(17) Purchase price source Press Release dated 10/04/99. LTM EBITDA based on
EBITDA for 9 months ended 3/31/99, annualized. Source: Proxy dated
8/31/99, pg. 13.
(18) Information from MGL 8-K dated July 21, 1999.
(19) Purchase Price source PR Newswire press release dated April 15, 1999
(includes $3 million of future contingency payments) and LTM EBITDAR and
units from Xxxxxx Xxxxx Associates Inc. Transaction Report.
(20) Press release dated September 16, 1998.
(21) Represents fiscal year 1997 earnings due to lack of available data.
Source: press release dated September 16, 1998.
(22) PR Newswire press release dated August 19, 1998.
(23) PR Newswire press release dated February 2, 1998.
(24) Xxxxxx Xxxxx Associates Inc. Transaction Report.
(25) Investext
(26) Information from HORC 8-K dated June 17, 1998.
(27) Press release dated April 17, 1998. Terms not disclosed.
(28) Press release dated February 26, 1998.
(29) Information from HORC 8-K dated November 5, 1997.
(30) PR Newswire press release dated August 19, 1998.
(31) Xxxxxx.xxx company overview as of November 1996.
(32) Hostile offer. PR Newswire press release dated May 7, 1997.
(33) Information from news article dated July 18, 1997 posted on
xxxx://xxx.xxxxxxxxxxx.xxx.
(34) PR Newswire press release dated June 2, 1997.
(35) Information from KIDS 8-K/A dated August 18, 1997.
(36) Information from CEI 8-K/A dated July 2, 1997.
================================================================================
53
==
================================================================================
__________________________
C. Public Company Analysis
__________________________
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES
================================================================================
--------------------------------------------------------------------------------
(in millions, except per share data)
------ -------- ----- ----------- -------------- ----------- ------- ------- -----------
52 Week (Intra
Current Day) Diluted Equity Total
LTM Share Price Stock Price Shares Market Net Enterprise
Company Name Ticker Exchange Date 11/19/01 High Low Outstanding Value Debt/(1)/ Value
-------------------------------------- ------ -------- ----- ----------- -------------- ----------- ------ --------- -----------
------------------------------------------------------------------------------------------------------------------------------------
NEXTHEALTH INC. - Current Price /(1)/ NEXT NASDAQ 10/31/01 $ 4.340 $ 5.74 $ 2.00 14.6 $ 63.4 (5.26) $ 58.2
NEXTHEALTH INC. - Offer Price /(1)/ NEXT NASDAQ 10/31/01 $ 5.100 $ 5.74 $ 2.00 14.6 $ 74.5 (5.26) $ 69.3
------------------------------------------------------------------------------------------------------------------------------------
Resorts
--------------------------------------
SONESTA INTL HOTELS /(2)/ SNSTA NASDAQ 09/30/01 $ 7.150 $10.36 $ 6.40 3.7 $ 26.4 $ 60.76 $ 87.2
SUN INTERNATIONAL HOTELS LTD /(3)/ SIH NYSE 09/30/01 $ 19.320 28.90 16.10 26.8 517.10 646.64 1,163.7
VAIL RESORTS INC /(4)/ MTN NYSE 07/31/01 $ 17.500 24.75 12.95 35.2 615.55 400.78 1,016.3
Specialized Healthcare Companies
--------------------------------------
CHILDREN'S COMPREHENSIVE SERVICES
INC. /(5)/ KIDS NASDAQ 09/30/01 $ 4.790 $ 5.29 $ 2.00 7.3 $ 34.9 $ 20.0 $ 54.8
RAMSAY YOUTH SERVICES INC /(6)/ RYOU NASDAQ 09/30/01 $ 3.410 5.21 0.38 9.1 31.16 28.59 59.75
RES CARE INC. /(7)/ RSCR NASDAQ 09/30/01 $ 9.200 9.80 3.50 24.4 224.94 213.59 438.53
================================================================================
55
==
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES
================================================================================
--------------------------------------------------------------------------------
(In millions, except per share data)
----- --------- ------ ---------- -------- ---------- -------- ------ ------- --------
Total Equity Value Multiples Equity
LTM ------------------------------ LTM LTM
EBITDA LTM 2001E 2002E Net LTM EBITDA Book Market/
Company Name Ticker MULTIPLE EPS EPS EPS Revenues EBITDA Margin Value Book
--------------------------------------- ----- --------- ------ ---------- -------- ---------- -------- ------ ------- --------
------------------------------------------------------------------------------------------------------------------------------------
NEXTHEALTH INC. - Current Price /(1)/ NEXT 5.1x 7.6x 7.5x 5.6x $ 42.8 $ 11.5 26.7% $ 35.5 1.8x
NEXTHEALTH INC. - Offer Price /(1)/ NEXT 6.1x 8.9x 8.9x 6.5x $ 42.8 $ 11.5 26.7% $ 35.5 2.1x
Resorts
---------------------------------------
SONESTA INTL HOTELS /(2)/ SNSTA 6.6x NM NA NA $103.6 $ 13.3 12.8% $ 29.0 0.9x
SUN INTERNATIONAL HOTELS LTD /(3)/ SIH 7.3 14.3 16.2 46.0 619.4 160.2 25.9% 641.8 0.8
VAIL RESORTS INC /(4)/ MTN 7.9 32.7 39.8 27.8 559.3 128.6 23.0% 519.2 1.2
Resorts
------------------------------------------------------------------------------------------
Mean 7.2x 23.5x 28.0x 36.9x $427.4 $100.7 20.6% $396.7 1.0x
Median 7.3 23.5 28.0 36.9 559.3 128.6 23.0% 519.2 0.9
High 7.9 32.7 39.8 46.0 619.4 160.2 25.9% 641.8 1.2
Low 6.6 14.3 16.2 27.8 103.6 13.3 12.8% 29.0 0.8
------------------------------------------------------------------------------------------
Specialized Healthcare Companies
---------------------------------------
CHILDREN'S COMPREHENSIVE SERVICES INC.
/(5)/ KIDS 4.3x 11.6x NA NA $133.2 $ 12.9 9.7% $ 58.0 0.6x
RAMSAY YOUTH SERVICES INC /(6)/ RYOU 5.2 6.2 NA NA 131.0 11.5 8.8% 23.1 1.3
RES CARE INC. /(7)/ RSCR 7.4 22.6 21.9 12.4 888.8 59.4 6.7% 184.7 1.2
Specialized Healthcare Companies
------------------------------------------------------------------------------------------
Mean 5.6x 13.5x 21.9x 12.4x $384.4 $ 27.9 8.4% $ 88.6 1.1x
Median 5.2 11.6 21.9 12.4 133.2 12.9 8.8% 58.0 1.2
High 7.4 22.6 21.9 12.4 888.8 59.4 9.7% 184.7 1.3
Low 4.3 6.2 21.9 12.4 131.0 11.5 6.7% 23.1 0.6
------------------------------------------------------------------------------------------
Composite Valuation
------------------------------------------------------------------------------------------
Mean 6.4x 17.5x 26.0x 28.7x $405.9 $ 64.3 14.5% $242.6 1.0x
Median 6.9 14.3 21.9 27.8 346.2 36.3 11.3% 121.3 1.0
High 7.9 32.7 39.8 46.0 888.8 160.2 25.9% 641.8 1.3
Low 4.3 6.2 16.2 12.4 103.6 11.5 6.7% 23.1 0.6
------------------------------------------------------------------------------------------
================================================================================
56
==
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES
================================================================================
--------------------------------------------------------------------------------
Resort Public Company Notes
Financial data excludes the results of discontinued operations,
extraordinary gains and one-time charges. Fully-diluted shares
outstanding calculated using the treasury stock method.
NEXTHEALTH INC.
(1) Source: Company management. LTM financial data as of October 31, 2001.
LTM EPS includes addbacks of $.857M ($.840M tax adjusted) of costs
associated with the merger.
2001 EPS includes an addback $.558M ($.55M tax adjusted) for accounting,
legal, board and SEC costs associated with the merger and $.2M ($.2M tax
adjusted) for executive stay bonuses associated with the merger.
SONESTA INTL HOTELS -CL A
(2) Source: Form 10K dated December 31, 2000 and form 10Q dated September
30, 2001.
LTM Net Income for fiscal year ended December 31, 2000 excludes $.006M
($.004M tax adjusted) of gains on sales of assets, $1.7M ($1.0M tax
adjusted) of gain from casualty and $.27M extraordinary loss on
refinancing of debt, net of tax. LTM Net Income for the period ended
September 30, 2001 excludes $.56M ($.34M tax adjusted) of gains on sales
of assets and $.8M ($.5M tax adjusted) of gain from casualty. LTM Net
Income for the period ended September 30, 2000 excludes $.014M ($.008M
tax adjusted) of gains on sales of assets, $1.175M ($.705M tax adjusted)
of gain from casualty and $.274M of extraordinary loss on refinancing
debt. LTM EPS Multiple calculated using LTM Net Income which excludes
$.006M ($.004M tax adjusted) of gains on sales of assets, $1.7M ($1.0M
tax adjusted) of gain from casualty and $.27M extraordinary loss on
refinancing of debt, net of tax. LTM Net Income for the period ended
September 30, 2001 excludes $.56M ($.34M tax adjusted) of gains on sales
of assets and $.8M ($.5M tax adjusted) of gain from casualty. LTM Net
Income for the period ended September 30, 2000 excludes $.014M ($.008M
tax adjusted) of gains on sales of assets, $1.175M ($.705M tax adjusted)
of gain from casualty and $.274M of extraordinary loss on refinancing
debt.
================================================================================
57
==
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES
================================================================================
Resort Public Company Notes
SUN INTERNATIONAL HOTELS LTD
(3) Source: Income Statement from form 6K dated November 5, 2001, Balance
Sheet and Cash Flow from form 20F dated December 31, 1999. Diluted
weighted average shares outstanding for three months ended September 30,
2001.
LTM EBIT, LTM EBITDA and LTM Net income include add-backs of non-
recurring pre-opening expenses of $7.6M ($7.2M tax adjusted), write-off
of Desert Inn costs of $11.2M ($10.6M tax adjusted), transactions costs
of $7.0M ($6.6M tax adjusted) and write down of assets to be sold of
$229.2M ($216.4M tax adjusted) and exclude a gain of $76.4M ($72.1M tax
adjusted) of Ocean Club Estates lot sales for fiscal year ended December
31, 2000. In addition LTM EBIT, LTM EBITDA and LTM Net income include
add-backs of non-recurring pre-opening expenses of $5.1M ($4.8M tax
adjusted) and restructuring costs of $1.2M ($1.1M tax adjusted) and
exclude a gain of $6.9M ($6.5M tax adjusted) of Ocean Club Estates lot
sales for the period nine months ended September 30, 2001. LTM EBIT, LTM
EBITDA and LTM Net income also include add-backs of non-recurring pre-
opening expenses of $2.1M ($2.0M tax adjusted), write-off of Desert Inn
costs of $11.2M ($10.6M tax adjusted) and transactions costs of $7.0M
($6.6M tax adjusted) and exclude a gain of $74.8M ($70.6M tax adjusted)
of Ocean Club Estates lot sales for the period nine months ended
September 30, 2000.
LTM EPS Multiple calculated using LTM Net Income which include add-backs
of non-recurring pre-opening expenses of $7.6M ($7.2M tax adjusted),
write-off of Desert Inn costs of $11.2M ($10.6M tax adjusted),
transactions costs of $7.0M ($6.6M tax adjusted) and write down of
assets to be sold of $229.2M ($216.4M tax adjusted) and exclude a gain
of $76.4M ($72.1M tax adjusted) of Ocean Club Estates lot sales for
fiscal year ended December 31, 2000. In addition LTM EBIT, LTM EBITDA
and LTM Net income include add-backs of non-recurring pre-opening
expenses of $5.1M ($4.8M tax adjusted) and restructuring costs of $1.2M
($1.1M tax adjusted) and exclude a gain of $6.9M ($6.5M tax adjusted) of
Ocean Club Estates lot sales for the period nine months ended September
30, 2001. LTM EBIT, LTM EBITDA and LTM Net income also include add-backs
of non-recurring pre-opening expenses of $2.1M ($2.0M tax adjusted),
write-off of Desert Inn costs of $11.2M ($10.6M tax adjusted) and
transactions costs of $7.0M ($6.6M tax adjusted) and exclude a gain of
$74.8M ($70.6M tax adjusted) of Ocean Club Estates lot sales for the
period nine months ended September 30, 2000.
Hurricane repair expenditures are included in capital expenditures for
the period ended December 31, 2000. CapEx was 18% of Gross Revenues in
1999. Cash and cash equivalents do not include restricted cash of $1.7M
for fiscal year ended December 31, 2000. Total debt excludes capital
creditors of $13.0M for the fiscal year ended December 31, 2000.
VAIL RESORTS INC
(4) Source: Form 10K dated July 31, 2001.
LTM Net Income excludes loss on disposal of fixed assets of $.14M ($.09M
tax adjusted) for fiscal year ended July 31, 2001. LTM EPS Multiple
calculated using LTM Net Income which includes an add-back for loss on
disposal of fixed assets of $.14M ($.08M tax adjusted) for fiscal year
ended July 31, 2001.
Cash and cash equivalents do not include restricted cash of $19.3M for
fiscal year ended July 31, 2001.
================================================================================
58
==
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES
================================================================================
Specialized Healthcare Public Company Notes
Financial data excludes the results of discontinued operations,
extraordinary gains and one-time charges. Fully-diluted shares
outstanding calculated using the treasury stock method.
CHILDREN'S COMPREHENSIVE SERVICES INC.
(5) Source: Form 10K dated December 31, 2000 and form 10Q dated September
30, 2001. LTM EPS Multiple is calculated using LTM Net Income which
includes $.2M ($.2M tax adjusted) of merger expenses for the period
ending September 30, 2001.
RAMSAY YOUTH SERVICES INC
(6) Source: Form 10K dated December 31, 2000 and form 10Q dated September
30, 2001. LTM Net Income includes an add-back of $.7M ($.6M tax
adjusted) for losses related to asset sales and closed businesses and
$.5M ($.46M tax adjusted) for the period ended December 31, 2000 and
September 30, 2000, respectively. LTM EPS Multiple is calculated using
LTM Net Income which includes an add-back of $.7M ($.6M tax adjusted)
for losses related to asset sales and $.5M ($.46M tax adjusted) for the
period ended December 31, 2000 and September 30, 2000, respectively.
RES CARE INC.
(7) Source: Form 10K dated December 31, 2000 and form 10Q dated September
30, 2001. LTM EBIT, Net Income and LTM EBITDA include $4.1M ($2.5M tax
adjusted), $1.7M ($1.0M tax adjusted) and $3.7M ($2.2M tax adjusted) of
special charges for the period ended December 31, 2000, September 30
2001 and September 30 2000, respectively.
59
==
================================================================================
---------------------------
Resort
Companies
---------------------------
APPENDIX (RESORT COMPANIES)
================================================================================
Company Descriptions
Sonesta International Hotels Corporation
Sonesta International Hotels Corporation ("Sonesta") owns or operates 25 hotels
in Bermuda, the Caribbean, Egypt, Italy, Peru and the United States. Sonesta's
luxury properties cater to upscale business and leisure travelers and are
designed to showcase the culture and history of their exotic locales. Sonesta
operations include a 10th century castle in Tuscany and three cruise ships on
the Nile. In 2001 the company entered a franchise agreement for 10 hotels in
Brazil. The founding Xxxxxxxxx family (including chairman and CEO Xxxxx and
president Xxxxxxxxx) owns about 45% of Sonesta.
61
==
APPENDIX (RESORT COMPANIES)
================================================================================
Sonesta International Hotels Corp. (SNSTA)
Nov 17, 2000 - Nov 19, 2001 High: 10.36
U.S. Dollar Low: 6.40
Last: 7.16
[GRAPH]
62
==
APPENDIX (RESORT COMPANIES)
================================================================================
Company Descriptions
Sun International Hotels
Sun International Hotels Limited ("SUN"), established in 1993, is an
international resort and gaming company that develops and manages premier resort
and casino properties. The Company owns nearly 70% of Paradise Island in the
Bahamas, home to its Atlantis Resort and Casino, featuring more than 2,300 rooms
and 60 acres of pools, waterfalls, and marine habitats. The firm is planning an
Atlantis online casino that will operate in the Isle of Man, a UK territory. The
firm also has an interest in the tribal-owned Mohegan Sun Casino in Connecticut,
holds stakes in beach resorts in the Indian Ocean, and manages the Royal Mirage
Hotel in Dubai. It sold Resorts Casino Hotel in Atlantic City in 2001 and
dissolved a complicated ownership structure leaving Caledonia Investments with a
22% stake and World Leisure Group (controlled by CEO Xxx Xxxxxxx) with 17%. The
firm will also phase out the Sun International name.
63
==
APPENDIX (RESORT COMPANIES)
===============================================================================
-------------------------------------------------------------------------------
Sun International Hotels Ltd. (SIH)
Nov 17, 2000-Nov 19, 2001 High: 28.90
U.S. Dollar Low: 16.10
Last: 19.32
[GRAPHIC]
================================================================================
Source: FactSet
64
==
APPENDIX (RESORT COMPANIES)
================================================================================
Company Descriptions
Vail Resorts Inc.
Vail Resorts ("VAIL") operates four ski resorts in Colorado (Beaver Creek
Resort, Breckenridge Mountain Resort, Keystone Resort, and Vail Mountain), and
four in Wyoming's Grand Teton National Park. The Company also operates Wyoming's
Xxxxxxx Hole Golf & Tennis Club and owns 51% of the Snake River Lodge & Spa
(also in Xxxxxxx Hole). Not just winter xxxxxx, the company's ski resorts offer
summer activities such as golf and fishing. Subsidiary RockResorts International
also owns 11 hotel resorts in six states. Investor Xxxxxx Xxxxx controls 34% of
Vail Resorts; cereal maker Ralcorp Holdings and investment firm Apollo Advisors
control about 22% and 21% of the company, respectively
65
==
APPENDIX (RESORT COMPANIES)
===============================================================================
-------------------------------------------------------------------------------
Vail Resorts Inc. (MTN)
Nov 17, 2000 - Nov 19, 2001 High: 24.75
U.S. Dollar Low: 12.95
Last: 17.50
[GRAPHIC]
================================================================================
Source: XxxxXxx
00
==
================================================================================
-----------------------------
Specialized Healthcare
Companies
-----------------------------
APPENDIX (SPECIALIZED HEALTHCARE COMPANIES)
================================================================================
Company Descriptions
Children's Comprehensive Services Inc.
Children's Comprehensive Services Inc. ("CCS") provides a continuum of services
to at-risk and troubled youth. The Company emphasizes education, treatment and
juvenile justice services for troubled kids through nonresidential (day
treatment and other programs) and residential (detention and inpatient)
facilities. Its services are geared toward young people who have mental,
emotional, or behavioral problems, or developmental or learning disabilities.
CCS, alone and through programs managed for not-for-profit Helicon, works with
some 3,400 juveniles in about a dozen states. Customers include social services
providers, school districts, juvenile courts, and parents. CCS is being bought
by Kids Holdings (a company formed by investors to complete the purchase).
68
==
APPENDIX (SPECIALIZED HEALTHCARE COMPANIES)
================================================================================
--------------------------------------------------------------------------------
Children's Comprehensive Services Inc. (KIDS)
Nov 17, 2000 - Nov 19, 2001 High: 5.29
U.S. Dollar Low: 2.00
Last: 4.79
[GRAPHIC]
================================================================================
Source FactSet
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APPENDIX (SPECIALIZED HEALTHCARE COMPANIES)
================================================================================
Company Descriptions
Ramsay Youth Services
Ramsay Youth Services ("Ramsay") offers youth services, primarily through
contracts with state and local government agencies trying to cut costs by
privatizing juvenile social-services programs. Xxxxxx'x rehabilitation programs
for young people with behavioral or psychiatric disorders, substance-abuse
problems, and developmental difficulties are offered through inpatient
facilities, group homes, and charter schools, as well as through outpatient and
day treatment programs. The Company has operations in nine states (primarily in
the South) and Puerto Rico. Chairman Xxxx Xxxxxx owns more than half of the
company.
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APPENDIX (SPECIALIZED HEALTHCARE COMPANIES)
================================================================================
--------------------------------------------------------------------------------
Ramsay Youth Services Inc. (RYOU)
Nov 17, 2000 - Nov 19, 2001 High: 5.21
U.S. Dollar Low: 0.38
Last: 3.41
[GRAPHIC]
================================================================================
Source: FactSet
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APPENDIX (SPECIALIZED HEALTHCARE COMPANIES)
===============================================================================
Company Descriptions
Res-Care Inc.
Res-Care Inc. ("RES") is a leading provider of residential, training,
educational and support services to populations with special needs, including
persons with developmental and other disabilities. Res-Care has facilities in
more than 30 states, as well as in the District of Columbia, Puerto Rico, and
Canada. Services include training in social, vocational, and functional skills,
as well as counseling and therapy programs. The company also serves
disadvantaged youths at vocational training centers under the federal Job Corps
program. In addition to these services, the company operates alternative
schools, boot camps, and other correctional and care programs for at-risk
youths. Res-Care is being bought out by a group including its senior management.
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APPENDIX (SPECIALIZED HEALTHCARE COMPANIES)
================================================================================
--------------------------------------------------------------------------------
Res-Care Inc. (RSCR)
Nov 17, 2000 - Nov 19, 2001 High: 9.80
U.S. Dollar Low: 3.50
Last: 9.20
[GRAPHIC]
================================================================================
Source: XxxxXxx
00
==
================================================================================
-------------------------------
D. Net Operating Loss
Utilization & Valuation
-------------------------------
APPENDIX - NOL UTILIZATION & VALUATION
================================================================================
NOL Projected Utilization
2001
----
Beginning Federal NOL Balance /(1)/ $ 20,500
Assumed Federal Tax Rate 34%
---------
Total NOL Federal Tax Credits Available $ 6,970
Combined 2001 Federal Taxes for Miraval and ST $ 2,660
---------
Ending Federal Tax Credit Balance @ 34% Tax Rate $ 4,310
Ending Federal NOL Balance $ 12,676
Beginning State NOL Balance /(1)/ $ 18,000
Assumed State Tax Rate 7%
---------
Total NOL State Tax Credits Available $ 1,260
Combined 2001 State Taxes for Miraval and ST $ 548
---------
Ending State Tax Credit Balance @ 7% Tax Rate $ 712
Ending State NOL Balance $ 10,176
(1) As of 12/31/01, per NextHealth 10K dated 3/16/01.
75
APPENDIX - NOL UTILIZATION & VALUATION
================================================================================
--------------------------------------------------------------------------------
NOL Valuation
NOL Cap and Available Federal Tax Credits
2002 2003 2004 2005
---- ---- ---- ----
Beginning Federal NOL Balance /(1)/ $ 12,676
NOL CAP
------
30 Year Treasury Yield as of 11/19/01 /(2)/ 5.20%
NextHealth Stock Offer Price 5.10
Diluted Shares Outstanding 14,617
--------
NOL Cap Per Year $ 3,876 $ 3,876 $ 3,876 $ 1,049
Assumed Federal Tax Rate 34% 34% 34% 34%
-------- -------- ------- -------
Maximum Tax Credits Available Per Year $ 1,318 $ 1,318 $ 1,318 $ 357
Ending NOL Outstanding balance $ 8,801 $ 4,925 $ 1,049 $ 0
PV of Tax Credits /(3)/: 1,014 780 600 125
Total Present Value of Tax Credits: 2,518
NOL Cap and Available State Tax Credits
2002 2003 2004
---- ---- ----
Beginning State NOL Balance /(1)/ $ 10,176
NOL CAP
-------
30 Year Treasury Yield as of 11/19/01 /(2)/ 5.20%
NextHealth Stock Offer Price 5.10
Diluted Shares Outstanding 14,617
--------
NOL Cap Per Year $ 3,876 $ 3,876 $ 2,425
Assumed State Tax Rate 7% 7% 7%
-------- -------- -------
Maximum Tax Credits Available Per Year $ 271 $ 271 $ 170
Ending NOL Outstanding balance $ 6,301 $ 2,425 $ 0
PV of Tax Credits /(3)/: 209 161 77
Total Present Value of Tax Credits: 446
--------
Total Value of NOLs $ 2,965
========
================================================================================
(1) As of 12/31/01, per NextHealth 10K dated 3/16/01.
(2) Source: FactSet
(3) Present Value of Tax Credits are discounted at 30.0%.
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================================================================================
------------------------------
E. Land Development
Rights Valuation
-------------------------------
APPENDIX - LAND DEVELOPMENT RIGHTS VALUATION
================================================================================
--------------------------------------------------------------------------------
Land Development Rights Present Value
($ thousands, except land area and per share data)
Projections /(1)/
Low Range Mid Range High Range
------------ ----------- -----------
Sale Price per Acre $ 100.00 $ 125.00 $ 150.00
Number of Acres 21.6 21.6 21.6
------------ ----------- -----------
Total Sale Contibutions $ 2,160.00 $ 2,700.00 $ 3,240.00
Less: Development Costs per Lot $ 25.00 $ 25.00 $ 25.00
Number of Lots 26 26 26
------------ ----------- -----------
Total Development Costs $ 650.00 $ 650.00 $ 650.00
============ =========== ===========
Contibutions less Devlopment Costs $ 1,510.0 $ 2,050.0 $ 2,590.0
Sewer Infrastructure Costs per sq. ft. $ 0.05 $ 0.05 $ 0.05
Total Number of Square Feet 13,200 13,200 13,200
------------ ----------- -----------
Total Sewer Infrastructure Costs $ 660.00 $ 660.00 $ 660.00
Total Value of Land Development Rights $ 850.0 $ 1,390.0 $ 1,930.0
Less: Taxes (41%) $ 348.5 $ 569.9 $ 791.3
------------ ----------- -----------
Tax adjusted Value of Land Development Rights $ 501.5 $ 820.1 $ 1,138.7
Total Cash Received from Sale of Rights $ 501.5 $ 820.1 $ 1,138.7
Low Mid High Assumed Value
--- --- ---- -------------
----------------------------------------- ----------
Range of Land Development Rights Values $ 501.5 $ 820.1 $ 1,138.7 $ 820.1
========================================= ==========
----------------------------------------- ----------
Range of Land Development Rights Values Per Share $ 0.03 $ 0.06 $ 0.08 $ 0.06
========================================= ==========
================================================================================
(1) Based upon conversations with NextHealth outside legal counsel/land use plan
consultant and local Tucson area commercial real estate broker.
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================================================================================
----------------------------
F. Diluted Share
Calculation
------------------------------
DILUTED SHARE CALCULATION
================================================================================
---------------------------------------------------------------------
Cash Price per Share $ 5.100
---------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Common /(1)/ Diluted
Repurchased Net Additional Shares Shares
Option Plan Options /(1)/ Exercise Price Cash to Company Shares Shares Outstanding Outstanding
-----------------------------------------------------------------------------------------------------------------------------------
Warrants 900,000 $ 1.00 $ 900,000 176,471 723,529
Series A Convertible
Preferred 4,606,500 - - - 4,606,500
DSO Plan 364,000 $ 2.10 $ 765,098 150,019 213,981
1990 Plan 292,850 $ 1.83 $ 535,772 105,053 187,797
1992 Plan 603,875 $ 3.05 $ 1,842,213 361,218 242,657
-----------------------------------------------------------------------------------------------------
6,767,225 $ 4,043,083 792,761 5,974,464 8,642,914 14,617,378
===========
================================================================================
(1) Source: NextHealth management as of November 8, 2001.
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