2013 2014 2015 2016 2017

Inpatient revenue 42,472 46,014 53,410 58,650 59,513

Outpatient revenue 28,314 30,676 35,606 39,100 39,675

Net patient service 70,786 76,690 89,016 97,750 99,188

revenue

Nonoperating rev. 1,922 1,515 1,367 1,725 1,048

Total revenues 72,708 78,205 90,383 99,475 100,236

Patient services 60,245 73,858 81,525 90,645 89,505

expenses

Interest expense 3,045 3,147 3,093 3,002 2,980

Depreciations 3,466 3,689 4,395 4,258 6,031

Total expenses 66,756 80,694 89,013 97,905 98,516

Net income 5,952 (2,489) 1,370 1,570 1,720

5. What is your estimate of Lexington General's value using the market multiple valuation technique? What are the strengths and weaknesses of this technique both in general and as applied in this situation? (Remember that there are two bases for this approachEBITDA and number of discharges.)

6. What is your final conclusion regarding the value of Lexington General to St. Joseph's? How much should St. Joseph's initially offer for Lexington General?