Inovalon — Q3 2020 Earnings Presentation
33 slides from Inovalon's earnings presentation, Oct 28, 2020
Slide 1: Q3 2020 Earnings Supplement
Q3 2020 Earnings Supplement October 28, 2020
Slide 2: Cautionary Note Regarding Forward-Looking Statement
Cautionary Note Regarding Forward-Looking Statement Certain statements contained in this presentation constitute forward-looking statements within the meaning of, and are intended to be covered by the safe harbor provisions of, Section 27A of the Securities Act of 1933, as amended, and Section 21E o
Slide 3: Contents
Contents 1 Overview 2 2020 Q3 & TTM Financial Results This presentation serves as a supplement to the Inovalon announcement on October 28, 2020 pertaining to third quarter (Q3) of 2020 3 2020 & 2021 Financial Guidance results and guidance. 4 Appendix 1: Reconciliations INOV Q3 2020 Earnings Suppleme
Slide 4: The Inovalon ONE Platform
Payers Pharmacies Pharmaceuticals Devices Diagnostics The Inovalon ONE® Platform Inovalon is a leading provider of cloud- based platforms empowering data-driven healthcare. Inovalon provides cloud-based, real-time Massive Advanced Intervention Data connectivity, analytics, intervention, and Data Ass
Slide 5: Empowering Data-Driven Healthcare In Scale
Empowering Data-Driven Healthcare In Scale The reach of Inovalon’s platform has grown to touch the vast majority of the United States, able to empower the market’s largest data-driven healthcare initiatives. 100s Health Plans, Providers, Life Sciences, Pharmacy, and Diagnostics Organizations 324M+ P
Slide 6: Executing on Strategy
Executing on Strategy Inovalon’s three strategy guideposts are lead in innovation, become the enablement layer, and land and expand efficiently. Inovalon Lead in Innovation Become the Enablement Layer Land and Expand Efficiently Bring to market the industry’s most Leverage the resulting capabilities
Slide 7: Cloud-Based Platform Approach
Cloud-Based Platform Approach Inovalon provides its solutions to the marketplace through the Inovalon ONE® Platform: an integrated, real-time cloud native platform which brings together the capabilities of extensive healthcare ecosystem connectivity, massive scale datasets, advanced analytics, and d
Slide 8: Massive Data Assets
Massive Data 58 MORE2 REGISTRY® DATASET GROWTH Assets 56 54 Patient Count Medical Event Count 52 Inovalon leverages massive datasets to 50 48 deliver differentiated capabilities to its clients. 46 44 These datasets are expanding rapidly. As of the 42 end of Q3 2020, the MORE2 Registry® dataset 40 38
Slide 9: Benefits of Inovalon's Massive Primary-Source Dataset
Benefits of Inovalon’s Massive Primary-Source Dataset The significant size, extensive breadth of data types, historical duration, recency timeliness, and fully linkable primary- sourced nature of Inovalon’s datasets provides a uniquely rich, longitudinally matched real-world dataset able to empower
Slide 10: Highly Differentiated Within the Market
Highly Differentiated Within the Market A leader in providing cloud-based tools to support data-driven healthcare, Inovalon empowers clients to achieve their clinical quality and financial goals by bringing highly differentiated capabilities to bear – unavailable from any other platform provider. Ma
Slide 11: Inovalon DataStream API Marketplace
Inovalon DataStream™ API Marketplace™ Inovalon DataStream™ API enables any authorized third-party traditional enterprise software platform, cloud-based platform, or mobile app software system to benefit from the power of comprehensive patient-specific data and analytics derivations on-demand, in rea
Slide 12: Contents
Contents 1 Overview 2 2020 Q3 & TTM Financial Results This presentation serves as a supplement to the Inovalon announcement on October 28, 2020 pertaining to third quarter (Q3) of 2020 3 2020 & 2021 Financial Guidance results and guidance. 4 Appendix 1: Reconciliations INOV Q3 2020 Earnings Suppleme
Slide 13: Q3 2020 Financial Highlights
Q3 2020 Subscription-Based Quarterly Platform New Platform Revenue of Sales Annual Financial Contract Value (ACV) of $142.5M Highlights Representing $42.5M An increase of The Company experienced short-term COVID- 19 pandemic impact to lower-margin Legacy and 88.3% Services business and some deal tim
Slide 14: Continued Solid Sales Performance
Continued Solid Sales Performance The Company continued to see strong demand through the third quarter with new sales Annual Contract Value1 (ACV) achieving $58.5 million, with platform new sales, excluding Services, ACV totaling $42.5 million, reflecting a year-over-year increase of 33% and 51% res
Slide 15: Continued Growth Momentum
Continued Growth Momentum The strong subscription-based revenue growth and favorable revenue mix continued to drive strong profitability. The graphics below compare the resulting Q3 2020 TTM to Q3 2019 TTM for revenue, subscription-based revenue, Adjusted EBITDA, Non-GAAP net income per share (EPS),
Slide 16: Continued Salesforce Focus
Continued Salesforce Focus During the second quarter of 2020, the Company’s sales teams focused on adjusting processes to successfully sell within the COVID- 19 pandemic environment. Having successfully demonstrated continued pipeline development and significant sales success, Inovalon resumed the e
Slide 17: Continued Headcount Efficiency Improvements
Continued Headcount Efficiency Improvements The Company’s transition to higher-valued cloud-based offerings leveraging increased connectivity, software automation, SaaS- based, and subscription-based offerings continues to witness a substantial corresponding decrease in headcount while concurrently
Slide 18: Contents
Contents 1 Overview 2 2020 Q3 & TTM Financial Results This presentation serves as a supplement to the Inovalon announcement on October 28, 2020 pertaining to third quarter (Q3) of 2020 3 2020 & 2021 Financial Guidance results and guidance. 4 Appendix 1: Reconciliations INOV Q3 2020 Earnings Suppleme
Slide 19: Strong Subscription-Based Platform Adoption
Strong Subscription-Based Platform Adoption The following full-year Revenue guidance through 2021 is being provided as of October 28, 2020. $741- $768 ~9% $657- $668 $642.4 ~3% ~10% 2016 – 2021G 11% ~3% Subscription-Based CAGR 24% $527.7 6% $449.4 11% $427.6 9% 15% Subscription-Based 12% Platform Of
Slide 20: 2021 Expected Quarterly Revenue Cadence
2021 Expected Quarterly Revenue Cadence The following illustration outlines the Company’s expected 2021 quarterly revenue cadence, which reflects 12% - 16% year- over-year organic revenue growth $201 - $210 $190 - $195 $180 - $187 $170 - $176 Q1 Q2 Q3 Q4 2021 2021 2021 2021 *Cadence reflects expecte
Slide 21: Adjusted EBITDA
Adjusted EBITDA The following full-year Adjusted EBITDA guidance through 2021 is being provided as of October 28, 2020. $265 - $275 $226 - $236 2016 – 2021G 22% CAGR $211 $152 $109 $100 35% 36% 33% 29% 23% 24% 2016 2017 2018 2019 2020G 2021G % of Revenue Note: CAGR calculations undertaken to the mid
Slide 22: Cash Flow From Operations
Cash Flow From Operations The following full-year Cash Flow From Operations guidance through 2021 is being provided as of October 28, 2020. $160 - $175 2 $160 - $175 2016 – 2021G 12% CAGR $1041 $106 $98 $93 $90 25% 22% 22% 22% 17% 17% 2016 2017 2018 2019 2020G 2021G % of Revenue Note: CAGR calculati
Slide 23: Capital Expenditure Investments
Capital Expenditure Investments During the period Q3 2016 through Q1 2018, the Company elected to invest more than $40M into incremental development towards the launch of the Inovalon ONE® Platform. The period of this disproportional investment is now complete and is increasingly being harvested thr
Slide 24: Covenant-Lite Debt Leverage
Covenant-Lite Debt Leverage On April 2, 2018, the Company put in place a $980M seven-year term debt facility and $100M five-year revolving debt facility, collectively the credit facility. Proceeds were used, among other things, to pay off all of the Company’s existing debt obligations of $225M as we
Slide 25: Full Year 2020 Financial Guidance
Full Year 2020 Financial Guidance Reflecting the ongoing short-term impacts of the COVID-19 pandemic with regard to legacy, services, and timing impacts, Inovalon is providing the following update to its guidance for the remainder of 2020 as outlined within the table below. Previous 2020 Financial U
Slide 26: Q4 2020 Financial Guidance
Q4 2020 Financial Guidance Inovalon is providing Q4 2020 guidance as provided below, indicating 3% to 10% year-over-year organic revenue growth. Q4 2020 Financial Financial Metric Guidance Revenue $179 million to $190 million Net Income 1 $17 million to $25 million Non-GAAP net income1 $24 million t
Slide 27: Full Year 2021 Financial Guidance
Full Year 2021 Financial Guidance The Company is providing its full-year 2021 guidance as provided below as of October 28, 2020, indicating 12% to 16% year-over-year organic revenue growth. 2021 Financial YoY Financial Metric Guidance Change Revenue $741 million to $768 million 12% to 16% Net Income
Slide 28: Contents
Contents 1 Overview 2 2020 Q3 & TTM Financial Results This presentation serves as a supplement to the Inovalon announcement on October 28, 2020 pertaining to third quarter (Q3) of 2020 3 2020 & 2021 Financial Guidance results and guidance. 4 Appendix 1: Reconciliations INOV Q3 2020 Earnings Suppleme
Slide 29: Reconciliation of Forward-Looking Guidance Adjusted EBITDA
Reconciliation of Forward-Looking Guidance Adjusted EBITDA Inovalon defines Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) as net income or loss calculated in accordance with GAAP, adjusted for the impact of depreciation and amortization, other expense, net
Slide 30: Reconciliation of Forward-Looking Guidance Non-GAAP Net Income
Reconciliation of Forward-Looking Guidance Non-GAAP Net Income Inovalon defines Non-GAAP net income as net income or loss calculated in accordance with GAAP, adjusted to exclude tax-affected stock-based compensation expense, acquisition costs, restructuring expense, amortization of acquired intangib
Slide 31: Definitions
Definitions 1. Annual Recurring Revenue is defined as subscription-based revenue from existing clients plus outstanding intra-year renewals valued at an amount agreed upon in principal. 2. Annual Revenue Retention is defined as the percentage of revenue from engagements with existing clients in the
Slide 32: ACV, TCV and Bookings
ACV, TCV and Bookings Inovalon’s sales have significantly expanded and accelerated, supporting strong growth going forward. The Company started reporting its sales performance in 2018 by providing new sales Annual Contract Value (ACV) data, a metric reflecting the sum of the first 12 months of reven
Slide 33: Healthcare Empowered
Healthcare Empowered® © 2020 by Inovalon. All rights reserved.