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Q HEALTH SERVICES, INC.
1 | P a g e 340 Royal Poinciana Way Suite 340
Palm Beach, FL 33480
www.QHealthGroup.com
FOREWORD
In December 2014, Q Health Services, Inc. released its initial business plan after a year of in-depth sector
research that scrutinized the history, current landscape, and emerging trends in the behavioral healthcare
and substance abuse treatment sector.
Q HEALTH 2014/2015 SECTOR FINDINGS
The $239 billion behavioral healthcare market is growing at a compound rate of 7%, has
been doing so for 20 years, and is projected for similar growth for the next 20 years.i
Business savvy operators can achieve gross operating profits between 18% to 30%.ii
Bain & Company’s Global Healthcare Private Equity Report 2014iii declared the behavioral
healthcare sector is generating “a great deal of interest” because of robust organic growth,
strong stock performance, and increasing activity in mergers and acquisitions. Acadia
Healthcare’s (backed by Waud Capital) October 2014 announcement of its $1.18 billion purchase
of CRC Health Group, Inc. underscored Bain’s projections.iv
The sector is over-represented by existing, small “mom-and-pop” operators who lack
business acumen and specialized, evidence-based treatment offerings.v
IN DECEMBER 2014, Q HEALTH PREDICTED CHANGE FOR 2015 AND BEYOND
Increasing scrutiny by insurance companies and regulators will drive rapid consolidation.
In 2014, the combined annual revenues of the four largest U.S.
behavioral health providers (including Acadia and CRC) were
$2 billion or about 1% of the $239 billion national market.vi By
comparison, the $300 billion global pharmaceutical market’s 10
largest companies control over $100 billion revenues, about
35% of the market.vii Further consolidation is imminent.
Payors and stakeholders increasingly demand providers to demonstrate positive
outcomes driven by evidenced-based practices. Small providers lack clinical expertise and
specialized treatment offerings.
Third party payors are abandoning the status quo of over-paying for lackluster services
with poor outcomes. A new paradigm is emerging based on contracted, in-network
reimbursements with accredited providers that deliver positive outcomes through evidence-based
practices.
Q HEALTH SERVICES, INC.
2 | P a g e 340 Royal Poinciana Way Suite 340
Palm Beach, FL 33480
www.QHealthGroup.com
Q HEALTH GOES OPERATIONAL
After a year of research and a $1.5 million investment, Q HEALTH moved from concept to full
operations in four months in June 2015. After acquiring two healthcare providers, one of which was
already in-network, and building its own state-of-the-art facility, Q HEALTH
became a fully operating, multisite, licensed healthcare provider with a census
that is doubling every 90 days. By April 2016 and after serving more than 600
guests, Q HEALTH achieved Joint Commission Accreditation with the Gold
Seal of National Quality Approval for all its facilities, becoming one of the top
1% of providers in Florida.
Q HEALTH’S SIX COMPETITIVE ADVANTAGES
1. Q Health launched from a position of
strength with a Senior Leadership Team
with proven business acumen and clinical
expertise. “Business Intelligence and
Expert Care” is more than a tagline; it is
who we are and what we do.
http://qhealthgroup.com/about-us/senior-
leadership-team/
2. Q Health’s commitment to state-of the-
art technology supports lean business
practices that drive revenue, reduce
overhead, and provide real-time
management controls.
3. Q Health’s business acumen makes us
attractive to insurance companies who
want best-in-practice partners who speak
the language of business. We’re fluent.
4. Q Health’s attractive facilities and dedicated staff provide guests an engaging environment
that de-stigmatizes behavioral healthcare, supports guest retention, and fosters engagement and
personal growth.
2016 INVESTMENT DELIVERABLESviii
Continued Focus on Cost Management
Integrated Care Delivery Models that
Focus on Outcomes
Emerging Payment Models
Shifting Care to Lower-Cost Sites &
Models
Higher Consumer Power, Engagement &
Expectations
Focus on Wellness & Prevention
Q HEALTH:
Business Intelligence. Expert Care.
Q HEALTH SERVICES, INC.
3 | P a g e 340 Royal Poinciana Way Suite 340
Palm Beach, FL 33480
www.QHealthGroup.com
5. The Q Health Wellness Model is evidenced-based, culturally relevant with broad appeal across
generations and diagnoses, reducing single-sector dependence. Providing measurable
outcomes, the Q Health Wellness Model distinguishes us from the competition while also serving as a
magnet that attracts top clinicians.
6. The Q Health Wellness Model is compelling to insurance companies and government
regulators and expedites in-network provider approvals, licensing and accreditation. Q Health is
positioned as the go-to provider of choice.
Q HEALTH ACCOMPLISHMENTS
Q HEALTH has successfully completed our proof-of-concept analyses, normalized and stabilized
operations, and has evidence of successful guest outcomes coupled with positive guest feedback data.
From Q HEALTH’S conception, we have strategically designed scalability into every business structure,
system, and process. In addition, we have in hand a robust playbook that paves the way for further
expansion, growth, and sustained profitability. Our record demonstrates:
Comprehensive sector-wide knowledge and acumen;
Ability to identify, predict, and respond to emerging trends;
Drive lean business operations by harnessing state-of-the-art
technologies;
Experienced operators with the know-how to design, build,
and successfully operate multiple facilities;
Create and implement an evidenced-based service delivery model compelling to guests,
insurance companies, and governmental and accrediting bodies;
Build a reputation in the community as a respected, quality provider.
Q HEALTH LOOKS AHEAD: 2016 & BEYOND
Becker’s August 2015 Private Equity Investment in Healthcare Report ix states “There continues to be a
tremendous amount of interest in the following sectors, lab and toxicology companies, health IT
companies, behavioral health, and revenue cycle and back office services.” Becker notes the $29.6
billion private equity dollars invested in healthcare in 2014, “a dramatic increase” from $16 billion in 2013.x
In addition, Bain and Company’s Global Healthcare Private Equity Report 2015 projects that insurance
companies and state governments are increasingly seeking best-in-class partners to provide
Q HEALTH SERVICES, INC.
4 | P a g e 340 Royal Poinciana Way Suite 340
Palm Beach, FL 33480
www.QHealthGroup.com
service to complex patient segments, such as those with substance abuse disorders and co-occurring
mental health disorders, a Q HEALTH specialty area.
Bain stresses that opportunities are rich for those providers who can develop niche markets and
product offerings, achieve operational improvements and efficiencies, and service complex
segments with specialized product lines across
geographies.xi These components are the DNA of Q HEALTH’s
overall growth strategy.
OPPORTUNITY IS KNOCKING RIGHT NOW.
Q HEALTH entered the behavioral healthcare market precisely
because of the anticipated changes and disruptions the sector is experiencing and will continue to
experience – as we and others - have predicted. Providers still committed to operating under yesterday’s
models and assumptions have failed, are failing, or will fail. Q HEALTH thrives in market conditions that
others find overwhelming. The market is ripe for consolidation and we are positioned to take advantage
of it.
THE INVESTMENT
Upon inception, Q Health has established a three-round equity raise totaling $18 million over a four-year
time frame.
ROUND 1 was a $3.5 million equity raise and encompassed two phases. The first phase of $1.5
million was pre-operational and funded sector research, analytics, organizational start-up costs, and on-
boarding best-in-class senior team from across the country. The second phase of $2 million funded
opening Q HEALTH’s first organic facility and acquisition costs of two facilities. Round 1 is complete.
ROUND 2 is a $5 million equity raise that will open, build, and launch Q HEALTH’s next three facilities,
two of which have already been identified. Round 2 is now open and the additional three facilities are to
be open, operating, and stabilized over the next 18 months.
Sources and Uses
Each facility is budgeted at $1.5 million for start-up and operating deficit costs.
$500,000 is ear-marked for augmenting and expanding existing marketing efforts.
ROUND 3 is a $10 million equity raise that will open, build, and launch a further seven facilities.
Q HEALTH SERVICES, INC.
5 | P a g e 340 Royal Poinciana Way Suite 340
Palm Beach, FL 33480
www.QHealthGroup.com
SOURCES
i Appendix E. Acadia Healthcare Investor Presentation August 2014, pp.12-14. ii Appendix E. Acadia Healthcare Investor Presentation August 2014, p. 11. iii Appendix A. Bain & Company Global Healthcare Private Equity Report, 2014. pp. 6-7. iv Source: Bloomberg.com. Acadia Healthcare to Buy CRC Health in $1.18 Billion Deal. 10.29.14. Retrieved 12.1.14 at http://www.bloomberg.com/news/2014-10-29/acadia-healthcare-to-buy-crc-health-in-1-18-billion-deal.html v Source: Private equity investment in healthcare: 15 health investment niches – A review of key sectors for 2015. Retrieved 4.26.16 at http://www.beckershospitalreview.com/finance/private-equity-investment-in-healthcare-15-healthcare-investment-niches-a-review-of-key-sectors-for-2015.html vi Appendix E. Acadia Healthcare Investor Presentation August 2014. vii Source: WHO/Pharmaceutical 2014. Retrieved 12.5.14 at http://www.who.int/trade/glossary/story073/en/# viii Source: Bain & Company Global Healthcare Private Equity Report 2015 ix Source: Private equity investment in healthcare: 15 health investment niches – A review of key sectors for 2015. Retrieved 4.26.16 at http://www.beckershospitalreview.com/finance/private-equity-investment-in-healthcare-15-healthcare-investment-niches-a-review-of-key-sectors-for-2015.html x Ibid. xi Source: Bain & Company Global Healthcare Private Equity Report 2015.
