Agility  SHS  SCR  Sequel  Management Discussion & Analysis  Annual Report  2013  In December 2012, the Corporation announced the purchase of preferred LLC units in Agility Health, LLC for an aggregate acquisition  cost of $12.5 million USD. The Corporation acquired additional preferred LLC units in the last quarter of 2013 for an aggregate  acquisition cost of $7.6 million USD. Agility’s year end is December 31 st , annual growth and decline in Agility’s distributions to Alaris is  capped at 6% and is based on the change in same clinic sales. Agility Health is a private health care company specializing in providing physical and occupational therapy and speech pathology  services to health care providers and employers through 27 hospital clinics, 47 long term care facilities and 46 outpatient clinics across  the United States.  Based on unaudited statements provided by management for the year ending December 31, 2013, revenue and EBITDA were both  modestly ahead of the prior year and same clinic sales were up approximately 1.5%. Distributions are currently scheduled at $3.41  million in Canadian dollars for 2014. The Corporation has purchased monthly forward contracts locking in the foreign exchange rate  for all of 2014 and 70% of 2015, which will result in an increase in CAD distributions.  The fair value of the Agility units will fluctuate each quarter with foreign exchange rates but the underlying valuation of the Agility units  remains unchanged. The earnings coverage ratio for Agility is expected to be in the 1.0x to 1.5x range.  In March 2013, the Corporation announced the purchase of partnership units in SHS Services Management, LP for an aggregate  acquisition cost of $15.5 million. During this period SHS entered into a strategic alliance with Sears Canada Inc. (“Sears”) whereby  SHS would operate the Sears installed home improvements business as a licensee to Sears. Due to a sharp decline in sales, cost  overruns and challenges in transitioning the business from Sears to SHS, SHS entered a receivership process in December 2013.  The Corporation does not expect to recover a material amount out of the receivership process, except for the $2 million secured loan,  and as a result has reduced the fair value of its preferred units in SHS to nil at December 31, 2013.  The receiver is currently in the process of liquidating SHS's assets. The value of the liquidated assets and any priority claims, as well  as the timing of completion of the receivership process, has yet to be determined, and, therefore, Alaris cannot estimate the amounts  it will recover, if any, from the receivership process or other remedies available to it. As such Alaris is not using any estimates of  recovery in its future guidance.  In May 2013, the Corporation announced the purchase of partnership units in SCR Mining and Tunneling, LP for an aggregate  acquisition cost of $40 million. Due to the multiyear business cycles of SCR’s operations, the Corporation established that the first  reset would not be until January 1, 2016 and will be based on the two year average revenue results for 2014 and 2015 compared to  the two year average for 2013 and 2014. Annual growth or decline in SCR’s distributions to Alaris is capped at 6% and are based on  net revenue. SCR provides mining, surface and underground construction, electrical and mechanical services to the Canadian mining industry. Based on unaudited financial statements provided by management for the trailing twelve months ended December 31, 2013, SCR’s  revenue and EBITDA are behind the prior year as was expected. SCR’s year end is December 31 st and the distributions to the  Corporation will not change until the completion of SCR’s 2015 fiscal year. Of note, SCR has no debt and annual distributions are  currently scheduled at $6.4 million until December 31, 2015.  The SCR units have only been owned for seven months and the business has performed as expected thus the fair value of the SCR  units remains unchanged at $40.5 million. The earnings coverage ratio for SCR is greater than 2.0x.  In July 2013, the Corporation announced the purchase of preferred LLC units in Sequel Youth and Family Services, LLC for an  aggregate acquisition cost of $66 million USD. Annual growth or decline in Sequel’s distributions to Alaris is capped at 5% and is based  on same program sales. Sequel is a privately owned company founded in 1999 which develops and operates programs for people with behavioral, emotional,  or physical challenges. 19 