Investment Research Presentation

Month Day, 20XX

1

Syneos Health, Inc.NasdaqGS: SYNH

Sector: HealthcareSenior Analyst: Jose GrullonJunior Analysts: Garbis Chekerdjian, Ignacio

Fimbres

Spring 2018

2

Valuation Summary

Recommendation BUY

Recommendation Summary

Company (Ticker) SYNH

Current Trading Price (04-12-2018) $ 37.60

Recommendation BUY

Target Price $ 57.46

Upside Potential 52.80%

3

Agenda

REIT’sINDUSTRY DEFINITION & BREAKDOWN

COMPANY OVERVIEW

INDUSTRY TREND ANALYSIS

COMPANY TREND ANALYSIS

RISK ANALYSIS

FINANCIAL VALUATIONS

SUMMARY & RECOMMENDATION

4

Contract Research Organizations (CROs)– Definition: firms that provide outsourced drug development services, regulatory & scientific support, and

physical & human capital to help provide fully outsourced research solutions.

Industry Definition: CRO Market

Sources – Capital IQ

End Markets

Pharma & biotech industries, as well as educational & government research institutions.

Charles River Laboratories International, Inc.NYSE: CRLMkt. Cap: $5.09 billion

ICON, plc.NasdaqGS: ICLRMkt. Cap: $6.48 billion

PRA Health Sciences, Inc.NasdaqGS: PRAHMkt. Cap: $5.55 billion

Syneos Health, Inc.NasdaqGS: SYNHMkt. Cap: $3.95 billion

IQVIA Holdings, Inc.NYSE: IQVMkt. Cap: $20.35 billion

5

Industry Breakdown: CRO Market

11.6%

10.6%

13.6%

21.2%

9.9%

2.2%

0.7%

9.3%

8.0%

8.0%4.9%

CRO Product Segmentation

Preclinical

Phase I

Phase II

Phase III

Phase IV

Bioanalytics

HEOR

Pharmacovigilance

Sources – Capital IQ, Frost & Sullivan

$10

$20

$30

$40

$50

$60

$70

2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E

CRO Market Revenue Forecast (billions)

Increased Drug Development Spending & Pricing Pressures will drive demand for outsourced R&D and

clinical trial services

User-Friendly & Advanced Bioinformatics Tools will drive demand for CRO services as more biometric

platforms and customized data systems are needed

Strong M&A Activity will continue to drive value as industry consolidates to provide more services to drug

manufacturing companies

Pharma-Emerging Economies will grow at a 7.5% CAGR, driving demand for clinical trial activity in Asia

Strong Demand for Early Stage & Late Stage Clinical Trials will drive market penetration from 30.5% to

46.5% by 2021

Drivers

6

Industry Breakdown: Revenue Generation Model

Sources – IBISWorld, PRAH Form 10-K, Amgen

Input Biotech / Pharma CRO

Clinical Trial Testing

Raw Materials

Organic/Inorganic Chemical

Manufacturing

Laboratory Essentials

Medical Testing Equipment

Preclinical Trial Testing

Phase I

Phase II

Phase III

Manufacturing

Master Cell Line Production

Gene & Protein Duplication

Protein Synthesis

Biologic Preparation

Patient

Phase IV

Increased outsourcing for clinical trial services, along

with increased R&D expenditures, will drive

future value in the industry

7

Company Overview: Syneos Health, Inc.

Sources – Frost & Sullivan, Company Data

Founded in 1985 as INC Research, Inc.

Merged with InVentiv Health, Inc. in August 1, 2017

Rebranded as Syneos Health, Inc. in January 4, 2018

Top 3rd CRO, #1 CCO

Operates through its Clinical Solutions and Commercial Solutions segments to deliver end-to-end services to its customers

Syneos Health is the only fully integrated biopharmaceutical solutions organization.

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

2012 2013 2014 2015 2016 2017

Syneos Health Service Revenue (thousands)

Oncology

Central Nervous System

Cardiovascular

Infectious Diseases

12%

3%

4%

5%

4%

5%

6%

7%17%

37%

Market Share Analysis

Syneos Health

WuXi AppTec

Charles River Laboratories

ICON

PPD

PRA Health Sciences

Parexel International

Covance

QuintilesIMS

Others

8

Company Overview: Business & Financial Profile

0

100

200

300

400

500

600

700

800

900

Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17

Syneos Health Quarterly Adjusted Revenue (thousands)

Clinical Solutions Commercial Solutions

YoY Growth of 2.6% due strong bookings partially offset by higher cancellations

Commercial Solutions Segment declined 16.4% due to lower FDA approvals in 2016, higher cancellations, and lower YoY new business awards

Better segment integration & cross-selling opportunities will drive future growth

Increasing drug approvals and lower DFA regulation will drive biopharmaceutical funding

31%

23%16%

4%

3%

11%

12%

Ending Backlog by Therapeutic Area

Oncology

CNS

General Medicine

CV & Met

Respiratory

FSP

Other

28%

13%

59%

Customer Concentration

Top 5 6-10 Remainder

Portfolio and customer diversity,

a healthy drug pipeline, and

integrated solutions, give Syneos

Health competitive advantage

over its peers

Sources – Company Data

9

Company Overview: Revenue Generation Model

Consulting

Communications

Selling Solutions

Medical Adherence

CROProduct Development

CCOCommercialization

Cu

sto

mer

Phase I

Full Service Phases II-IV

FSP

Real World Evidence

Data Analysis

Better integration between both segments will enable more cross-selling opportunities to customers, and will decrease operating costs in

the long run

Sources – Company Data

10

Industry Trend: Backlog Conversion Rates have Slowed Down

CRO Industry Backlog Conversion Rates

CRO Industry Revenue by Therapeutic Area

Oncology

Infectious Diseases

CNS Disorders

CVD

Metabolic Disorders

Respiratory & Allergy

Others

29%

14%

15%

13%

11%

13%5%

KEY TAKEAWAYIncreasing complexity of clinical

trials has reduced backlog conversion rates across the

industry, yet Syneos Health is able to maintain above-average

performance

Syneos Health Remains Healthy

• Therapeutic diversity encourages stable

revenue stream and backlog conversion in the

future

• Startup time 20% faster than average

• Backlog conversion rate of 14.5% vs. industry

average of 11.2%

Increased Complexity of Clinical Trials

• Rising popularity of rare diseases

• Slow growth in R&D spending

• Patient recruitment challenges

Sources – Company Data, Credit Suisse, Frost & Sullivan

11

Company Trend: Expected Realized Synergies Drive Growth

Management estimates annual cost synergies to be $125 M by 2020

Merger Summary

Deal Value: $4.6 billion

Current Realized Synergies: $13.2 million

Expected 2018 Realized Synergies: $65 - $70 million

Share Allocation: 53% INC Research / 47% InVentiv Health

Expand Integrated Solutions Platform to enable cross-selling opportunities

Improve commercial expertise and integrate these services across the

firm to customers of all sizes

Continued investments in big data

KEY TAKEAWAY

Rapid realization of synergies will drive costs down and fully

integrate service platform to deliver more value to the firm’s

customers via cross-selling opportunities

Sources – Company Data, Reuters

12

Risk Analysis

REIT’s

• Total debt of $2.98 billion

• Debt / Equity ratio of 98.7% vs. peer average of 94.8%

• Debt / EBITDA ratio of 5.13x vs. peer average of 2.92x

Ability to Meet Debt Obligations

• Larger currency fluctuation risks and transaction risks in the future

• Greater operating costs as a result of different regulations across the globe

Globalization of Clinical Trials

• Recent biopharmaceutical M&A activity may impair Syneos Health’s ability to gain new customers and new business awards

• May result in slower revenue growth and lower backlog conversion ratesProject Cancellations

Growing market penetration and peer competition, along with rising debt obligations, may threaten Syneos Health’s ability to remain competitive

Sources – Company Data, Frost & Sullivan, MarketLine, Credit Suisse, FactSet

13

Financial Valuations: Comparable Companies Analysis

Comparable Company Analysis

LTM data (04-12-2018)

Company Ticker EV Market Cap Revenue EBITDA Net Income P / E EV / EBITDA EV / Revenue

Syneos, Health, Inc. SYNH $ 6,608.6 $ 3,946.8 $ 3,102.0 18.7% 7.70% 16.5x 11.4x 2.1x

PRA Health Sciences, Inc. PRAH $ 6,349.8 $ 5,191.3 $ 1,948.5 18.6% 11.23% 23.7x 17.5x 3.3x

Medpace Holdings, Inc. MEDP $ 1,484.6 $ 1,262.9 $ 386.5 28.0% 15.65% 20.9x 13.7x 3.8x

Charles River Laboratories International, Inc. CRL $ 5,879.7 $ 4,905.5 $ 1,793.6 21.6% 6.89% 39.7x 15.2x 3.3x

High 39.7x 17.5x 3.8x

Mean 28.1x 15.5x 3.5x

Median 23.7x 15.2x 3.3x

Low 20.9x 13.7x 3.3x

EV / EBITDA

LTM EBITDA $580.07

Implied Price Target $58.51

Upside (Downside) % 56%

EV / Revenue

LTM Revenue $3,102.0

Implied Price Target $70.51

Upside (Downside) % 90%

P / E

LTM EPS $ 2.28

Implied Price Target $ 53.99

Upside (Downside) % 44%

14

Financial Valuations: Discounted Cash Flow Model

REIT’s

Forecasted

2018 2019 2020 2021 2022

EBIT $ 558.72 $ 604.17 $ 661.29 $ 696.97 $ 748.66

- Taxes (178.79) (193.33) (211.61) (223.03) (239.57)

$ 379.93 $ 410.84 $ 449.68 $ 473.94 $ 509.09

+ D&A 85.20 89.93 94.60 98.23 101.56

- CAPEX (107.06) (101.15) (105.71) (106.84) (109.47)

- Δ in NWC (42.81) (45.47) (58.63) (35.46) (55.34)

Unlevered FCF $ 315.25 $ 354.14 $ 379.94 $ 429.87 $ 445.84

Net Present Value $ 1,521.57

Perpetuity Growth Method

Growth Rate 2.50%

Undiscounted TEV $ 8,492.07

Discounted TEV $ 5,811.42

DCF Value $ 7,333.00

Equity Value $ 4,671.24

Share Price $ 44.50

Implied Exit Multiple 9.99x

Exit Multiple Method

EBITDA Multiple 13.9x

Undiscounted TEV $ 11,818.12

Discounted TEV $ 8,087.55

DCF Value $ 9,609.12

Equity Value $ 6,947.37

Share Price $ 66.18

Implied Growth Rate 3.96%

Key Assumptions

Cost of Debt 3.53%

Cost of Equity 11.17%

WACC 7.88%

Terminal Growth Rate 2.50%

Exit Multiple 13.9x

Tax Rate 32.00%

15

Summary & Recommendation

Recommendation Summary

Company (Ticker) SYNH

Current Trading Price (04-12-2018) $ 37.60

Recommendation BUY

Target Price $ 57.46

Upside Potential 52.80%

Valuation Summary

Method Price Weight

Discounted Cash Flow

Perpetuity Growth Method $ 44.50 30%

Exit Multiple Method $ 66.18 30%

Comparable Company Analysis

P/E $ 53.99 10%

P/EBITDA $ 58.51 20%

EV/Sales $ 71.52 10%

Target Price $ 57.46

BUY

Rising demands for outsourced drug development services, along with rapid

realization of merger synergies and platform integration, will increase Syneos Health’s market share in the CRO industry, placing the firm above its peers as a profitable long-term investment.

16

Appendix

17

Historical Forecasted

2016 2017 2018 2019 2020 2021 2022

Revenue 3,241.3 3,102.0 3,478.0 3,671.0 3,862.0 4,010.0 4,146.0

% growth -4.3% 12.1% 5.5% 5.2% 3.8% 3.4%

COGS (excl. D&A) (2,194.3) (2,101.0) (2,347.2) (2,475.1) (2,601.0) (2,698.7) (2,788.7)

% of Revenue 67.70% 67.73% 67.49% 67.42% 67.35% 67.30% 67.26%

Gross Profit 1,047.0 1,001.1 1,130.8 1,195.9 1,261.0 1,311.3 1,357.3

% Margin 32.3% 32.3% 32.5% 32.6% 32.7% 32.7% 32.7%

SG&A (446.8) (419.5) (486.9) (501.8) (505.1) (516.1) (507.1)

% of Revenue 13.78% 13.52% 14.00% 13.67% 13.08% 12.87% 12.23%

EBITDA 600.2 581.6 643.9 694.1 755.9 795.2 850.2

% Margin 18.5% 18.7% 18.5% 18.9% 19.6% 19.8% 20.5%

Total Depreciation (78.4) (76.0) (85.2) (89.9) (94.6) (98.2) (101.6)

Total Operating Expenses (525.2) (495.5) (572.1) (591.8) (599.8) (614.3) (608.6)

Operating Income (EBIT) 521.8 505.6 558.7 604.2 661.3 697.0 748.7

% Margin 16.1% 16.3% 16.1% 16.5% 17.1% 17.4% 18.1%

Interest Expense (243.8) (144.7) (123.8) (123.8) (123.8) (123.8) (123.8)

Interest Income 0.2 1.2 0.7 0.7 0.7 0.7 0.7

Net Interest Inc. (Exp) (243.5) (143.5) (123.1) (123.1) (123.1) (123.1) (123.1)

EBT Excl. Unusual Items 278.3 362.1 435.6 481.1 538.2 573.9 625.6

% Margin 8.6% 11.7% 12.5% 13.1% 13.9% 14.3% 15.1%

Income Tax Expense (96.9) (122.9) (139.4) (153.9) (172.2) (183.6) (200.2)

Net Income to Company 181.3 239.2 296.2 327.1 366.0 390.2 425.4

Minority Int. in Earnings - - - - - - -

Net Income 181.3 239.2 296.2 327.1 366.0 390.2 425.4

% Margin 5.6% 7.7% 8.5% 8.9% 9.5% 9.7% 10.3%

EPS $ 1.72 $ 2.28 $ 2.78 $ 3.07 $ 3.44 $ 3.67 $ 4.00

Income Statement

18

Income StatementHistorical Forecasted

2016 2017 2018 2019 2020 2021 2022

Cash And Equivalents 103.1 322.0 491.0 698.9 932.7 1,216.3 1,578.4

Accounts Receivable 385.3 1,016.0 1,139.1 1,202.3 1,264.9 1,313.4 1,357.9

Total Receivables 385.3 1,016.0 1,139.1 1,202.3 1,264.9 1,313.4 1,357.9

Inventory - - - - - - -

Prepaid Exp. 34.2 84.2 94.1 99.2 104.3 108.2 111.8

Total Current Assets 522.6 1,422.2 1,724.2 2,000.5 2,301.8 2,637.9 3,048.1

Gross Property, Plant & Equipment 122.0 277.8 384.8 486.0 591.7 698.5 808.0

Accumulated Depreciation (63.6) (97.3) (182.5) (272.5) (367.1) (465.3) (566.9)

Net Property, Plant & Equipment 58.3 180.4 202.3 213.5 224.6 233.2 241.1

Goodwill 552.5 4,292.6 4,292.6 4,292.6 4,292.6 4,292.6 4,292.6

Other Intangibles 114.5 1,286.1 1,286.1 1,286.1 1,286.1 1,286.1 1,286.1

Deferred Tax Assets, Current & LT 14.7 20.2 20.2 20.2 20.2 20.2 20.2

Other Long-Term Assets 25.9 84.5 84.5 84.5 84.5 84.5 84.5

Total Assets 1,288.5 7,285.9 7,609.8 7,897.3 8,209.7 8,554.4 8,972.5

Accounts Payable 23.7 58.6 65.4 69.0 72.5 75.2 77.7

Accrued Exp. 153.6 500.3 580.7 598.5 602.5 615.5 604.7

ST Debt 11.9 25.0 27.9 29.5 30.9 32.1 33.2

Total Current Liabilities 189.1 583.9 674.1 696.9 705.9 722.8 715.7

Long Term Debt 485.8 2,945.9 2,945.9 2,945.9 2,945.9 2,945.9 2,945.9

Capital Leases & Current Portion - 36.8 36.8 36.8 36.8 36.8 36.8

Unearned Revenue, Non-Current 277.6 559.3 559.3 559.3 559.3 559.3 559.3

Def. Tax Liability, Non-Curr. 8.3 37.8 37.8 37.8 37.8 37.8 37.8

Other Non-Current Liabilities 26.2 99.6 99.6 99.6 99.6 99.6 99.6

Total Liabilities 987.0 4,263.3 4,353.5 4,376.4 4,385.3 4,402.3 4,395.1

Common Stock 0.5 1.0 1.0 1.0 1.0 1.0 1.0

Additional Paid In Capital 573.2 3,414.4 3,414.4 3,414.4 3,414.4 3,414.4 3,414.4

Retained Earnings (230.0) (370.5) (136.8) 127.9 431.3 759.1 1,184.4

Treasury Stock - - - - - - -

Comprehensive Inc. and Other (42.3) (22.4) (22.4) (22.4) (22.4) (22.4) (22.4)

Total Common Equity 301.5 3,022.6 3,256.3 3,520.9 3,824.4 4,152.1 4,577.5

Minority Interest - - - - - - -

Total Equity 301.5 3,022.6 3,256.3 3,520.9 3,824.4 4,152.1 4,577.5

Total Liabilities and Equity 1,288.5 7,285.9 7,609.8 7,897.3 8,209.7 8,554.4 8,972.5

19

Statement of Cash FlowsHistorical Forecasted

2016 2017 2018 2019 2020 2021 2022

Net Income 181.3 239.2 296.2 327.1 366.0 390.2 425.4

Add: Depreciation & Amortization 78.4 76.0 85.2 89.9 94.6 98.2 101.6

Less: Change in Net Working Capital - (285.9) (42.8) (45.5) (58.6) (35.5) (55.3)

Less: Capital Expenditures - - (107.1) (101.2) (105.7) (106.8) (109.5)

Operating Cash Flow 259.7 29.3 231.5 270.4 296.2 346.2 362.1

Initial Cash Balance - 38.6 322.0 491.0 698.9 932.7 1,216.3

Cash Available for Investors 259.7 67.8 553.5 761.4 995.2 1,278.8 1,578.4

Debt Additions (Repayments) (0.9) 1,780.5 - - - - -

Equity Additions (Share Repurchase) (64.5) - (62.5) (62.5) (62.5) (62.5) -

Historical Cash Adjustment (155.8) (1,526.3) - - - - -

Ending Cash Balance 38.6 322.0 491.0 698.9 932.7 1,216.3 1,578.4

20

DCF - Perpetuity Growth Sensitivity

WACC

– 6% 7% 7% 8% 8% 9% 9% 10%

Term

inal G

row

th

Rate

3.5% $ 101.12 $ 82.35 $ 68.47 $ 57.80 $ 49.36 $ 42.52 $36.88 $32.14

3.0% $ 84.10 $ 69.95 $ 59.07 $ 50.47 $ 43.50 $ 37.75 $32.92 $28.83

2.5% $ 71.46 $ 60.38 $ 51.61 $ 44.50 $ 38.64 $ 33.72 $29.54 $25.96

2.0% $ 61.71 $ 52.77 $ 45.53 $ 39.55 $ 34.54 $ 30.28 $26.62 $23.45

1.5% $ 53.96 $ 46.57 $ 40.48 $ 35.37 $ 31.03 $ 27.30 $24.07 $21.25

1.0% $ 47.65 $ 41.43 $ 36.22 $ 31.80 $ 28.00 $ 24.71 $21.83 $19.29

DCF - EV/EBITDA Exit Multiple Sensitivity

WACC

– 6% 7% 7% 8% 8% 9% 9% 10%

Term

inal E

BIT

DA

Mu

ltip

le

15.9 x $ 83.66 $ 81.47 $ 79.34 $ 77.27 $ 75.26 $ 73.30 $71.39 $69.54

14.9 x $ 77.72 $ 75.66 $ 73.67 $ 71.73 $ 69.84 $ 68.00 $66.22 $64.48

13.9 x $ 71.77 $ 69.86 $ 68.00 $ 66.18 $ 64.42 $ 62.71 $61.04 $59.42

12.9 x $ 65.83 $ 64.05 $ 62.32 $ 60.64 $ 59.01 $ 57.42 $55.87 $54.37

11.9 x $ 59.88 $ 58.24 $ 56.65 $ 55.10 $ 53.59 $ 52.13 $50.70 $49.31

10.9 x $ 53.94 $ 52.44 $ 50.98 $ 49.56 $ 48.18 $ 46.83 $45.53 $44.25

Sensitivity Analysis