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Wilhoite turned first to the market approach, examining the
value of publicly traded companies that operated home health care
agencies. For each of these, he ascertained a “revenue pricing
multiple”; i.e., a percentage that when multiplied by the annual
revenues of a home health care agency would reflect the MVIC of
that agency. The MVIC of the comparable companies reflected a
median revenue multiple of .61. Because Sta-Home tax-exempt
entities were nonprofit companies, however, their returns on
invested capital were considerably lower. Wilhoite selected a
multiple of .3, noting that this multiple represented a discount
of 50 percent from the median guideline company multiple. He
then multiplied .3 times the Sta-Home tax-exempt entities’ 1995
revenues of $45,209,000 to arrive at an MVIC for the Sta-Home
tax-exempt entities of $13,563,000.
Wilhoite next turned his attention to the guideline merged
and acquired company method. He examined figures available from
publications such as the “Home Health Care M&A Report” published
by Irving Levin Associates, Inc. He pointed out that two of the
comparable merged or acquired companies were very close in
revenues to the Sta-Home tax-exempt entities; of those two, the
MVIC of Patient-Care, Inc., represented a revenue multiple of
.40, and the MVIC of Magellan Health Services, Inc., reflected a
revenue multiple of 1.08. With respect to a comparable company
that operated at a loss, namely, Nurse-Care, Inc., Wilhoite noted
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