Corporate Overview

We are a blank check company that was formed on June 10, 2005 to serve as a vehicle for the acquisition of one or more domestic or international operating businesses in the healthcare industry. On March 22, 2006, we successfully completed our initial public offering raising $57.5 million in gross proceeds (before expenses, underwriting discounts and commissions and similar expenses of approximately $4.9 million) resulting in net proceeds to us of $53.2 million of which $52.96 million has been placed in escrow with Northern Trust Corporation pending our completion of an acquisition. A portion of the $52.96 million held in escrow consists of underwriter fees, legal fees, financial printer fees and administrative fees that have been deferred until the consummation of a business combination by us. These fees will be payable only if we complete a business combination.

Up to the point of completion of our initial public offering, our efforts have been limited to organizational activities, and we have not acquired any such assets or business operations. However, now that our initial public offering is completed, we intend to pursue potential acquisition opportunities in the healthcare space as more fully described in our Prospectus dated March 17, 2006. As set forth in our prospectus, we must complete a business combination within 18 months after the consummation of our initial public offering (or within 24 months from the consummation of the initial public offering if a letter of intent or definitive agreement has been executed within the 18 month period following the consummation of the initial public offering. If we do not complete a business combination within this period of time, we will dissolve and promptly distribute only to our public stockholders the amount of our trust fund account plus any remaining net assets.

We are incorporated in the State of Delaware.

Overview

The healthcare industry constitutes one of the largest segments of the United States economy. According to Center for Medicare and Medicaid Services, or CMS, total healthcare expenditures increased from $245.8 billion in 1980 to a projected $1.9 trillion in 2005. Expressed as a percentage of Gross Domestic Product, or GDP, CMS has reported that national healthcare spending has increased from 8.8% in 1980 to a projected 15.7% in 2005. In 2003, healthcare expenditures totaled $1.678 trillion (or $5,670 per capita) and accounted for 15.3% of GDP. In 2003, according to CMS, approximately $1.065 trillion, or 64%, of total healthcare expenditures were spent on the following categories: $515.9 billion (31%) on hospital care; $369.7 billion (23%) on physician and clinical services; and $179.2 billion (10%) on prescription drugs. In the future, CMS projects that national healthcare expenditures will reach $3.6 trillion by 2014, which represents an average annual growth rate of 7.1% over the next ten years. CMS also projects that healthcare spending will reach 18.7% of GDP by 2014. The substantial growth in domestic healthcare spending has had, and management expects it to continue to have, an impact on every major sector of the healthcare industry. Accordingly, we believe there are many attractive businesses to acquire in the healthcare industry.

Domestically, funding for healthcare comes from public and private sources. Medicaid and Medicare programs were created in the mid-1960s. Medicare focuses on coverage of the elderly (over 65 years old) and the disabled of any age. Medicaid provides coverage for the poor and indigent population and is jointly funded by the Federal and State governments. In 2002, according to CMS, roughly 34% of healthcare payments came from Medicaid and Medicare, while private health insurance supported roughly 35% of total costs. As healthcare costs rise, the private sector is responding by shifting more of the cost of healthcare to employees by paying a smaller percentage of healthcare premiums. The employee, usually in the form of a payroll deduction, must pay the amount of the premium not funded by the employer. However, according to the U.S. Census Bureau, approximately 45 million Americans were uninsured in 2003.

Our management believes that, as a result of continued growth in the healthcare industry, there will be acquisition targets within the healthcare sector. We believe that the growth and opportunity in the healthcare industry has been driven and will continue to be driven by several key trends, including:

Expanding and Aging Population
The size of the elderly population, the segment with the largest per capita usage of healthcare services, is increasing more rapidly than the rest of the population. According to the Federal Interagency Forum on Aging-Related Statistics, citing the U.S. Census Bureau, in 1970, approximately 9.9% of the U.S. population was aged 65 and older; by 2000, this number had risen to 12.4% of the population; and by the year 2030, the over-65 segment is expected to account for 19.7% of the population. By 2010, the number of people in the United States between the ages of 40 and 60 is expected to grow to more than 64 million.
Internationalization
In addition to the growing U.S. elderly population, we believe the number of people in Europe and Japan who are age 65 years or older is expected to increase at a rate at least as fast as in the U.S. In our management's business judgment, healthcare companies will continue to experience international growth opportunities as a result of growing worldwide demand for healthcare products and services, heightened awareness of the importance and potential of international markets, which often offer a less-expensive and faster regulatory path for their products, and the increasing availability of a low-cost pool of scientific talent to perform product development and clinical research.
Evolving Medical Treatments
Advances in technology have favorably impacted the development of new medical devices and treatments/therapies. The products are generally more effective and easier-to-use. Some of these breakthroughs have reduced hospital stays, costs and recovery periods. The continued advancement of technological breakthroughs should continue to boost services administered by healthcare providers.
Increased Consumer Awareness
In recent years, the publicity associated with new technological advances and new medical therapies has increased the number of patients visiting healthcare professionals to seek treatment for new and innovative therapies. Simultaneously, consumers have become more vocal due to rising costs and reduced access to physicians. Lastly, the rise in cosmetic procedures has emerged as one of the fastest growing healthcare segments. Since many cosmetic procedures require out-of-pocket expenditures, this rise may reflect a growing willingness by consumers to pay for certain procedures out of their discretionary funds. We believe that more active and aware consumers will continue to stimulate a wide variety of healthcare segments.
Fragmentation
Our management believes the fragmentation of the healthcare industry encourages entrepreneurial activity and provides opportunities for industry consolidation. Aggregating smaller companies offers the potential to bring them economies of scale, distribution capabilities, corporate efficiency and increased capital resources. We believe that fragmentation in the healthcare industry will continue to provide us with acquisition targets.

Although we may consider a target business in any segment of the healthcare industry, we intend to concentrate our search for an acquisition candidate in the following segments:

We believe the foregoing segments offer us with the most opportunities to identify suitable target businesses. Each of these categories has experienced favorable growth and development in the past, and management believes they will continue to experience growth and development in the foreseeable future. In addition, many of the directors and members of the management team have significant operating experiences and extensive networks within these industry segments, and we believe that focusing our acquisition efforts in these particular segments will allow us to leverage these experiences and networks and enhance our ability to complete an acquisition of a target business.

Government Regulation

The healthcare industry is highly regulated and any business we acquire would likely be subject to numerous rules and regulations. The federal and state governments extensively regulate the healthcare industry and are often significant sources of revenue for healthcare companies. In particular, our business could rely heavily on the Medicare and Medicaid government payment programs, each of which is financed, at least in part, with federal money. If we participate in these government payment programs, we would be subject to additional oversight and regulatory scrutiny. In addition to federal oversight, state jurisdiction is based upon the state's authority to license certain categories of healthcare professionals and providers and the state's interest in regulating the quality of healthcare in the state, regardless of the source of payment.

The significant areas of federal and state regulatory laws that could affect our ability to conduct our business following a business combination could include, among others, those regarding:

False and other improper claims for payment.
The government may fine a provider if it knowingly submits, or participates in submitting, any claim for payment to the federal government that is false or fraudulent, or that contains false or misleading information.
The Stark Self-Referral Law and other laws prohibiting self-referral and financial inducements.
Laws that limit the circumstances under which physicians who have a financial relationship with a company may refer patients to such company for the provision of certain services.
Anti-kickback laws.
Federal and state anti-kickback laws make it a felony to knowingly and willfully offer, pay, solicit or receive any form of remuneration in exchange for referrals or recommendations regarding services or products.
Health Insurance Portability and Accountability Act.
Laws designed to combat fraud against any healthcare benefit program for theft or embezzlement involving healthcare, as well as providing various privacy rights to patients and customers.
Corporate practice of medicine.
Many states have laws that prohibit business corporations from practicing medicine, employing physicians to practice medicine, exercising control over medical decisions by physicians, or engaging in certain arrangements, such as fee-splitting, with physicians.
Antitrust laws.
Wide range of laws that prohibit anticompetitive conduct among separate legal entities in the healthcare industry.

A violation of any of these laws or regulations could result in civil and criminal penalties, the requirement to refund monies paid by government and/or private payors, exclusion from participation in Medicare and Medicaid programs and/or the loss of licensure. Following a business combination, our management intends to exercise care in structuring our arrangements and our practices to comply with applicable federal and state laws and regulations. However, we can not assure you that our management will be successful in complying with all applicable laws and regulations. If we have been found to have violated any rules or regulations that could adversely affect our business and operations, the violations may delay or impair our ability to complete a business combination. Additionally, the laws in the healthcare industry are subject to change, interpretation and amendment, which could adversely affect our ability to conduct our business following a business combination.

Competitive Advantages

We believe that we are well positioned to identify and execute a business combination. The future role of our key personnel following a business combination, however, cannot presently be fully ascertained. Specifically, the members of our current management are not obligated to remain with us subsequent to a business combination, and we cannot assure you that the resignation or retention of our current management will be included as a term or condition in any agreement relating to a business combination. In addition, despite the competitive advantages we believe we enjoy, we remain subject to significant competition with respect to identifying and executing a business combination.