The Healthscope Offer

April 2007

Strictly Private and Confidential

Table of Contents

1. Executive Summary 1

2. Valuation of Symbion 3

3. Analysis of Offer 7

4. Offer Pricing Strategy 10

5. Healthscope Contingencies 13

6. Scenario Analysis 15

7. Next Steps 17

8. Appendix

I. Industry Overview

II. Symbion

III. Valuation

IV. Synergies

V. Bid

20

22

25

30

34

1. Executive Summary

1

Executive Summary

Healthscope’s offer should be rejected as it significantly undervalues Symbion.

Valuation of Symbion Symbion valued as a standalone entity at $4.60

Analysis of Offer Minimum offer significantly undervalues Symbion

Offer contains onerous terms and conditions precedent

Symbion Response Recommend rejection of current Healthscope offer

Aim to secure a price floor of $4.60 for Symbion

Healthscope Contingencies

May revise offer and propose an amended Scheme of Arrangement

May undertake a hostile takeover

Scenario Analysis Choose appropriate strategy based on Healthscope’s response

Next Steps Implementing our recommendation

2

2. Valuation of Symbion

3

Indicative Valuation

4

Synergies

Enterprise Value 2007F EV / EBITDA

Valuation Measure Price per Share (A$) Low High Low High

Market Valuation

6 Month Trading Range 2,409 3,203 9.5 x 12.7 x

Trading Comps - EV / 2007F EBITDA 2,816 3,067 11.1 x 12.1 x

Transaction Comps - EV / LTM EBITDA 3,145 3,397 12.4 x 13.4 x

DCF Valuation

Symbion 3,016 3,377 11.9 x 13.3 x

Indicative Bid Valuation

Pre-Bid 3 Month VWAP¹ + (31.5% premium) 2,687 3,397 10.6 x 13.4 x

Broking Analyst Price Targets 3,009 3,171 11.9 x 12.5 x

$4.30

$4.09

$4.60

$4.90

$4.60

$4.25

$3.07

$3.70

$4.21

$4.01

$3.50

$4.00

Pre-bid 3 Month VWAP: $3.50

Advised SYB Price: $4.60

Discounted Cash Flow

5

Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14Cash flowsEBIT 173.7 210.3 280.1 294.5 316.8 319.8 317.9 332.4 347.5Tax on EBIT (52.1) (63.1) (84.0) (88.4) (95.0) (95.9) (95.4) (99.7) (104.3)NOPAT 121.6 147.2 196.0 206.2 221.7 223.9 222.5 232.7 243.3Dep&Amort 49.3 42.7 46.4 51.2 46.8 48.9 51.1 53.4 55.8Capex (61.4) (44.1) (48.2) (51.2) (46.8) (48.9) (51.1) (53.4) (55.8)Change in Working Capital 0.0 1.7 (2.6) 1.5 1.0 1.3 1.7 0.5 0.5FCF To Firm 109.5 147.5 191.7 207.7 222.8 225.1 224.2 233.1 243.8Terminal Value 3,610.8Total Cash Flow 109.5 147.5 191.7 207.7 222.8 225.1 224.2 233.1 3,854.5

Discount Factor from mid year n/a 1.0321 0.9385 0.8535 0.7762 0.7059 0.6419 0.5838 0.5309Discounted Cash Flow n/a 152.3 179.9 177.3 172.9 158.9 143.9 136.1 2,046.4

Output Terminal valueValuation Date 30 Apr 07 Terminal growth 3.00%PV of Annual Cash Flows 1,121.3 35.4%PV of Terminal Value 2,046.4 64.6%NPV 3,167.7Net Debt 414.0Equity Value 2,753.7Number of Shares 645.5Implied Share Price 4.27Current Share Price 3.50Premium to Share Price 21.9%

$4.27 2.50% 2.75% 3.00% 3.25% 3.50%9.45% $4.37 $4.49 $4.62 $4.77 $4.929.70% $4.21 $4.32 $4.44 $4.57 $4.719.95% $4.06 $4.16 $4.27 $4.39 $4.51

10.20% $3.91 $4.01 $4.11 $4.22 $4.3310.45% $3.78 $3.87 $3.96 $4.06 $4.17

Terminal Growth

WA

CC

Synergy Analysis

Synergies of c$74.2m are estimated to accrue from the transaction.

6

Estimated cost synergies

Area Estimated Quantity pa ($m) Details

Pathology cost synergies 68.9 Laboratory consolidation Procurement of consumables Rationalisation of pathology support functions

Corporate cost synergies 5.3 Rationalisation of firm-wide corporate functions Costs saved from de-listing Symbion Costs saved from using a common IT platform

74.2Total

Implementation costsTimeline for pathology synergies

Costs(1) ($m) Details

51.6 Implementation costs relating to

pathology lab synergies

(1) One-off implementation cost staggered over three years

3. Analysis of Offer

7

Offer Price and TermsIn addition to undervaluing Symbion, Healthscope’s offer has attached to it undesirable terms and conditions precedent.

8

Implied Offer Price Terms and Conditions Precedent

Comments

Management Structure

Seek to retain 1-2 Symbion Board members in MergeCo

Exclusivity Period & Break

Fee

Symbion directors should be allowed to consider better third-party proposals that maximise shareholder value

Break fee acceptable

Regulatory Approval

ACCC anti-competition concerns for pathology business in Victoria

IAC Debt Commitment

Undesirable to have IAC debt commitment as a hurdle requirement

CGT Roll-over Relief

CGT roll-over relief available for the scrip component of the offer

Healthscope VWAP

<$5.30(1) $5.30 - $5.60

$5.60 - $6.06

$6.06 - $6.51

>$6.51

Exchange Ratio

-0.4642 – 0.4393

0.43930.4393 – 0.4086

0.4089

Pro-forma SYB Ownership

-55.9% –54.5%

54.5%54.5% – 52.7%

52.7%

Implied Value

- $4.30$4.30 – $4.50

$4.50 $4.50

(1) As a Healthscope VWAP of $5.30 is a condition precedent, anything lower would not result in the offer going ahead

Offer Characteristics

There are several concerns for Symbion shareholders with the Healthscope offer.

9

Attraction Concerns

Contribution Ratio

Symbion receives a proportionally higher ownership stake in MergeCo given its EBITDA contribution

Business Scale and Mix

Symbion shareholders who elect to receive a scrip component have exposure across 4 different market segments

Form of Consideration

Individual shareholders have flexibility to maximise cash consideration or scrip consideration

Offer Price Offer price significantly undervalues

Symbion

Uncertainty of Consideration

Price floor of $4.30 due to double collar

But exact value of consideration is uncertain

Volatility of MergeCo’s

Price

Potential for volatility in MergeCo’s price post-transaction

An oversupply of MergeCo shares will exert downward pressure on price

Integration and Synergy Risks

Long-term success of MergeCo predicated on the full realisation of synergies

No guarantee that Healthscope will be able to integrate Symbion successfully

4. Offer Pricing Strategy

10

Fair Value of Symbion

Minimum price acceptable to Symbion is $4.60.

11

Maximise Shareholder

Value

Board owes duty to shareholders to only accept offers that maximise shareholder value

Scheme proposal implies payment of full value for Symbion to ensure a friendly transaction

Era of Consolidation Coming to an

End

Potentially the last available acquisition in the healthcare industry due to sector consolidation

A higher price will be sought to take advantage of the opportunity

Future Prospects

Symbion has significant market share in each of its business divisions

Spare debt capacity to fund future growth

Strong industry growth prospects (eg due to ageing population)

Valuation Offer Price Considerations

Synergies

Enterprise Value

Valuation Measure Price per Share (A$)

Market Valuation

6 Month Trading Range

Trading Comps - EV / 2007F EBITDA

Transaction Comps - EV / LTM EBITDA

DCF Valuation

Symbion

Indicative Bid Valuation

Pre-bid 3 Month VWAP¹ + (31.5% premium)

Analyst Price Targets

$4.30

$4.09

$4.60

$4.90

$4.60

$4.25

$3.07

$3.70

$4.21

$4.01

$3.50

$4.00

Pre-bid 3 Month VWAP - $3.50

Advised SYB Price - $4.60

Healthscope Offer Determinants

It is unlikely that Healthscope will be prepared to pay more than $4.60.

12

EPS Accretion /

Dilution

Difficult for Healthscope to sell a dilutive offer to its shareholders

Scrip of merged entity more attractive than that of Symbion on an EPS basis

Synergies

Value of deal is synergy-driven

Offer of $4.60 provides buffer for EPS dilution from synergy risk

Merger of Equals

Opportunity for Symbion shareholders to participate in synergies of the transaction

Resulting ownership of MergeCo in favour of Symbion shareholders(2)

Offer price considerations(1)

(1) Analysis assumes cash portion of bid is fully funded by debt (i.e. 40% debt, 60% scrip)(2) Symbion shareholders to own ~52% of MergeCo

Offer price $4.70Offer price $4.60

MergeCo versus Healthscope EPS accretion / dilution

MergeCo EPS comparison (offer of $4.60)

Earnings Per Share (cents) 2008F 2009F 2010FSymbion 26.4 28.6 31.8Healthscope 33.5 35.2 39.8MergeCo (Excl C&P) 31.3 36.0 44.8

-6.6%

2.2%

12.5%

(10.0%)

(5.0%)

0.0%

5.0%

10.0%

15.0%

2008F 2009F 2010F

-8.4%

-0.2%

10.6%

(10.0%)

(5.0%)

0.0%

5.0%

10.0%

15.0%

2008F 2009F 2010F

5. Healthscope Contingencies

13

Decision Tree Analysis

Rejection of the offer increases the chance for a favourable result for Symbion.

14

Recommendation Healthscope Response Likely Outcome

Reject Offer

Offer undervalues Symbion based on DCF and transaction comparables

Duty to maximise shareholder value

Revised Scheme

Proposal of scheme at $4.60 and implementing more favourable terms

75% threshold easier to achieve that 90% required for alternative hostile takeover bid

Hostile Takeover

At the same price and on same terms as scheme proposal

80% minimum for CGT rollover relief to be available for scrip portion

90% minimum acceptance condition

Transaction Successful

Board recommendation of revised scheme

Thorough due diligence undertaken

75% acceptance at scheme vote achieved

Unsuccessful Bid

Rejection of offer by Symbion board

Retail shareholders will follow recommendation of the board

Greater risk due to less reliable due diligence

90% minimum acceptance not reached

6. Scenario Analysis

15

Scenario Analysis

There are a number of scenario-based strategies that can be employed after rejecting the initial offer.

16

Description Strategy

Hostile Takeover Bid

Healthscope pursues an off market hostile takeover bid rather than proposing a revised scheme

Recommend Symbion shareholders reject the offer listing key reasons

May implement a takeover defence strategy such as a share buyback

Walk Away Healthscope abandons all plans of a merger

Acceptance of scheme proposal did not maximise shareholder value

Use available debt capacity to fund future growth

Interloper in a Revised Scheme

Healthscope offers a revised proposal and an interloper takes a blocking stake to prevent the merger

Revised proposal will require 75% acceptance of shareholders by votes and 50% by number

Maximum blocking stake is 19.9%

Pitch approval of the scheme to all shareholders

Superior Proposal by a Third Party

A superior proposal is put forward by a third party post-rejection of the scheme offer

Recommend if offer pays at least full value for Symbion pending analysis of offer consideration

7. Next Steps

17

Next Steps

18

Reject offer and provide reasons to Symbion shareholders

Analyse any revised offers from Healthscope

Accept new offer or proceed with defence strategies

8. Appendix

19

Appendix I – Industry Overview

20

Key players

Salient features

Major customer bases are referring doctors and hospitals

Medicare rebates accounted for c93% of total industry revenue

Existing Medicare Agreement caps funding growth at 5%pa but estimated to increase

Top 3 private operators control c67% of market share

Significant growth potential due to aging population

Funding structure similar to pathology

Primary source of referrals

Private GPs comprise c70% of market with large, integrated healthcare providers comprising 30%

Projected 5-year CAGR of 2.7%

Government incentives to promote the consolidation of independent practices

Key Segments

Pathology, diagnostic imaging and medical centres are key growth segments in Australian healthcare.

21

Pathology Diagnostic Imaging Medical Centres

Sonic38%

Symbion35%

Healthscope10%

St John of God5%

Primary 5%

Other7%

DCA 35%

Sonic16%

Symbion16%

Other33%

IPN2%

Symbion2% Primary

3%

Other93%

Appendix II – Symbion

22

Share Register Overview

Holder Number of Shares % Ownership Investment Strategy

62,587,624 9.7 Appears to be a long term investor

59,360,508 9.2 Appears to be a long term investor

54,352,948 8.5 Trader rather than buy and hold investor

51,694,537 8.0 Trader rather than buy and hold investor

32,594,8635.1 Appears to be a long term investor

Substantial shareholders

30%

70%

Estimated OwnershipRetail Investors Institutional Investors

23

Share Price Chart

24

(1) Healthcare Index is a market capitalisation-weighted index comprising of Sonic, Healthscope, Primary, Blackmores and Sigma

80

90

100

110

120

130

May-06 Aug-06 Nov-06 Feb-07 May-07

SYB v Healthcare Index(1)

Healthcare Index Symbion

Appendix III – Valuation

25

Valuation Assumptions

Legislative

Medicare rebates capped at 5% growth affecting pathology and medical imaging

Rebates set to expire in FY09, but assumed to remain in place

Operating

Revenue Pathology – 12.5%

growth FY07 Diagnostic imaging –

5% growth FY07 Consumer – 12%

growth FY07 Pharmacy – 12.5%

growth FY07

Longer-term growth for radiology tied to Medicare rebate scheme

Longer-term growth for consumer and pharmacy tied to CPI

EBITDA Margin Assumed to be

slightly higher than FY07 numbers due to cost savings and high operating leverage

Capex and D&A Maintenance capex

assumed forecasted as a percentage of revenue

D&A forecast as a % of capex merging into 100% of capex in perpetuity

Financing 7.5% cost of debt (no margin)

26

WACC Calculation

DCF assumptionsRisk-free Rate 6.50%Market Risk Premium 6.00%Equity Beta 0.85Cost of Equity 11.6%

Cost of Debt 7.50%Margin -Tax Rate 30%Pre-tax Cost of Debt 7.50%Post-tax Cost of Debt 5.25%

Target Gearing (D/E) 35.0%E/V 74.1%D/V 25.9%

Post-tax WACC 9.95%

Trading Comparables

Valuation

List of Comparables Graph

27

Trading Comparables EV / 2007F EBITDA

Healthscope 10.4x

Symbion 11.1x

Sonic Healthcare 11.5x

Primary 11.7x

API 12.7x

Sigma 13.2x

Median 11.6x

Earnings Median multiple applied to 2007 Enterprise Value

2007F Low High Low High

253 11.1x 12.1x 2808 3061

Plus Associates 0 0

Less Net Debt & Minorities (418) (418)

Implied Equity Value 2390 2643

Shares Outstanding 645.5 645.5

Implied Value Per Share $3.70 $4.09

3-Mth VWAP (Pre-Bid) $3.50 $3.50

Premium / (Discount) Over Current 5.5% 14.5%

10.4x 11.1x 11.5x 11.7x12.7x 13.2x

Median 11.6x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

Healthscope Symbion Sonic Healthcare

Primary API Sigma

Mul

tiple

Transaction Comparables

Sum of the Parts List of Transactions

28

Valuation of Consumer and Pharmacy

Earnings Median multiple Value

30-Jun-06 LTM Low High Low High

Divisional EBITDA

Pathology 110 13.4x 14.4x 1474 1584

Diagnostic Imaging 54 9.5x 10.5x 513 567

Consumer 47 13.0x 14.0x 611 658

Pharmacy 36 15.0x 16.0x 540 576

247

Enterprise Value 3138 3385

Plus Associates 0 0

Less Net Debt & Minorities (418) (418)

Implied Equity Value 2720 2967

Shares Outstanding 645.5 645.5

Implied Value Per Share $4.21 $4.60

3-Mth VWAP (Pre-Bid) $3.50 $3.50

Premium Over Current 20.4% 31.3%

Pathology & Medical Centres

Target Company Date Acquiror EV (US$m) EV / LTM EBITDA

Clinical Pathology Labs Aug-05 Sonic Healthcare 375 9.5x

QML Jun-02 Mayne Group 268 9.9x

LabOne Aug-05 Quest Diagnostics 934 13.8x

Dynacare May-02 Lab Corp of America 672 14.0x

IPN Jun-04 Sonic Healthcare 105* 15.3x

Ameripath Inc Apr-07 Quest DIagnostics 2398* 17.2x

Median 13.9x

Imaging

Target Company Date Acquiror EV (A$m) EV / LTM EBITDA

MIA Jun-04 DCA 934 9.6x

DCA Group Sep-06 CVC Asia Pacific 2414 10.0x

Qld Diagnostic Imaging Feb-02 Mayne Group 87 10.1x

Median 10.0x

Pharmacy

Target Company Date Acquiror EV (A$m) EV / LTM EBITDA

Chronimed Aug-04 Mayne Group 115 9.4x

CCS Medical Oct-05 Sonic 630 10.5x

Mayne Pharmaceuticals Sep-06 Hospira Inc 2523 14.9x

Accredo Feb-05 Medco Health Solutions 2499 16.1x

Priority healthcare Jul-05 Quest 1341 16.7x

Arrow Pharmaceuticals Aug-05 Sigma Pharmaceuticals 680 17.7x

Median 15.5x

Consumer

Target Company Date Acquiror EV (US$m) EV / LTM EBITDA

Rexall Sundown (Royal Numico) Jun-03 NBTY 250 6.4x

Roche Consumer Health Jul-04 Bayer 2962 12.5x

Rexall Sundown May-00 Royal Numico 1649 14.4x

Pfizer Consumer Healthcare Jun-06 Johnson & Johnson 22668* 20.8x

Median 13.5x

*Figures in AUD

Earnings Median multiple Value

30-Jun-06 LTM Low High Low High

Divisional EBITDA

Consumer 47 13.0x 14.0x 611 658

Pharmacy 36 15.0x 16.0x 540 576

83

Enterprise Value 1151 1234

9.5x 9.9x

13.8x 14.0x15.3x

17.2x

Median 13.8x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

CLP QML LabOne Dynacare IPN Ameripath Inc

Mul

tiple

9.6x 10.0x 10.1x

Median 10.0x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

MIA DCA Group Qld Diagnostic Imaging

Mul

tiple

6.4x

12.5x14.4x

20.8x

Median 13.5x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

Rexall Sundown

(Royal Numico)

Roche Consumer

Health

Rexall Sundown

Pf izer Consumer Healthcare

Mul

tiple

9.4x 10.5x

14.9x 16.1x 16.7x 17.7x

Median 15.5x

0.0x

4.0x

8.0x

12.0x

16.0x

20.0x

Mul

tiple

Transaction Comparables (Cont.)

Pathology and Medical Centres Diagnostic Imaging

Pharmacy Consumer

29

Appendix IV – Synergies

30

Synergy Analysis

Divisional Synergies

31

Synergy Realisation

Divisional Synergies (A$m) 2006A 2007F 2008F 2009F 2010F 2011F 2012F 2013F 2014F Implied Operating Expenses

Synergistic Division Pathology & Medical Centres 507 572 586 634 686 725 771 809 850Radiology 246 258 273 287 301 316 332 349 366Consumer 153 169 183 197 207 220 233 240 247Pharmacy 2265 2543 2740 2945 3093 3185 3281 3379 3481

Synergistic Division Corporate Costs 8 8 8 8 8 8 8 8 8Consolidated 3179 3551 3790 4071 4294 4454 4625 4785 4952

Symbion & Healthscope Pathology & Medical Centres 1460 1579 1702 1791 1869 1941 2015Corporate 5 5 5 5 5 5 5

3 year average 68.9

Synergy Realisation (A$m) 2008F 2009F 2010F 2011F 2012F 2013F 2014FTiming of Pathology Realisation 6.9 34.4 68.9 68.9 68.9 68.9 68.9Corporate Synergies 5.3 5.3 5.3 5.3 5.3 5.3 5.3Implementation Costs -10.3 -20.7 -20.7Total 1.9 19.1 53.5 74.2 74.2 74.2 74.2% realisation 10% 50% 100% 100% 100% 100% 100%

Synergy Analysis (Cont.)

Computation of MergeCo Synergies

32

Implementation Costs

Computation of MergeCo Synergies (A$m) 2007F 2008F 2009F 2010FAssume 95% of Pathology and Medical Centre Costs 0.95Pathology Division Operating Cost Estimate 543.8 556.7 602.3 651.6Number of Pathology Labs 149.0 149.0 149.0 149.0Average Cost Per Pathology Lab 3.6 3.7 4.0 4.4Synergistic Labs 112.00Closures 37.0Less Potential Synergistic Labs 20.0Total Lab Closure 17.0Cost Saving 62.0 63.5 68.7 74.33 year average 68.9

Implementation Costs (A$m) 2008F 2009F 2010FNumber of Labs Closed 17Percentage of Fixed Costs 75%Fixed Cost Estimate 417.5 451.7 488.7Fixed Costs Per Lab 2.80 3.03 3.28Store Closures 17Total Cost 47.6 51.5 55.83 year Average 51.64

Synergy Analysis (Cont.)

Sensitivities

33

Cost Savings From Rationalising Labs (A$m)27.0 32.0 37.0 42.0 47.0

2008F 41.6 -0.18 1.85 3.87 5.90 7.92Implementation Costs 46.6 -1.18 0.85 2.87 4.90 6.92

51.6 -2.18 -0.15 1.87 3.90 5.9256.6 -3.18 -1.15 0.87 2.90 4.9261.6 -4.18 -2.15 -0.13 1.90 3.92

Cost Savings From Rationalising Labs (A$m)27.0 32.0 37.0 42.0 47.0

2009F 41.6 2.84 12.96 23.09 33.22 43.34Implementation Costs 46.6 0.84 10.96 21.09 31.22 41.34

51.6 -1.16 8.96 19.09 29.22 39.3456.6 -3.16 6.96 17.09 27.22 37.3461.6 -5.16 4.96 15.09 25.22 35.34

Cost Savings From Rationalising Labs (A$m)27.0 32.0 37.0 42.0 47.0

2010F 41.6 17.01 37.27 57.52 77.77 98.03Implementation Costs 46.6 15.01 35.27 55.52 75.77 96.03

51.6 13.01 33.27 53.52 73.77 94.0356.6 11.01 31.27 51.52 71.77 92.0361.6 9.01 29.27 49.52 69.77 90.03

Appendix V – Bid

34

Deal Rationale

There is a strong strategic case for Healthscope to combine with Symbion.

35

Fully Integrated Network

Create a fully integrated healthcare network

Unified referral base to improve margins and increase patient volumes

Gain Market Share

Creation of Australia’s largest pathology provider

Market-leading positions in private hospitals, diagnostic imaging and medical centres

Participate in Synergies

Offer allows Symbion shareholders to participate in any upside from synergies

Revenue synergies potentially achievable in the longer term

The combination of the Healthscope and Symbion

businesses will yield several strategic benefits

Potential Bidders

There are a number of potential bidders that might be interested in Symbion.

36

Potential BidderMarket

Capitalisation (A$m)*

Enterprise Value (A$m)*

Strategic Rationale

4,287 5,027 Opportunity to derive synergies for its pathology and medical

imaging business groups

1,450 1,678 Has already engaged Symbion for a potential merger

Synergies available through the complementary pathology assets

n/a n/a Holds a portfolio of healthcare companies worldwide

237 263 Seeks distribution networks for its consumer and pharmacy

businesses

366 374 Seeks distribution networks for its consumer and pharmacy

businesses

*Data as at 30 April 2007

Healthscope Board

37

Kevin McCann Chairman

Age: 65

Appointed Chairman in March 1994

Former Chairman of Allens Arthur Robinson specialising in commercial law

Linda NichollsDeputy Chairman

Age: 58

Appointed in January 2000

Has experience in the financial services industry and health sectors

Richard EnglandChair of Audit & Compliance Committee

Age: 56

Appointed in October 1996

Chartered Accountant with financial accounting and management experience

Ron EvansNon-executive director

Age: 67

Joined the Board in June 2005

Has held senior financial management positions at BHP Billiton and Orica Limited

Ziggy SwitkowskiDirector

Age: 58

Joined the Board in January 2006

Director of Suncorp-Metway Limited, Tabcorp Holdings

Brings executive experience

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