Veradigm Inc. · OTC:MDRX
Veradigm — Allscripts Healthcare Solutions — Investor Presentation (October 2006)
35 slides from Veradigm's investor presentation, Oct 18, 2006
Slide 1: Allscripts: Inform. Connect. Transform.
A ALLSCRIPTS’ Inform. Connect. Transform.
Slide 2: Safe Harbor
Today’s presentations may contain forward-looking statements about Allscripts Healthcare Solutions that involve risks and uncertainties. These statements are developed by combining currently available information with Allscripts’ beliefs and assumptions. Forward-looking statements do not guarantee f
Slide 3: Financial Overview
3 Financial Overview Bill Davis Chief Financial Officer
Slide 4: Top Questions: How Did Allscripts Do in Q3?
Top 10 Questions 1. How Did Allscripts Do in the Third Quarter?
Slide 5: Q3 Performance
Q3 Performance We will be announcing Q3 results on Thursday, October 26 th after the close of the market Grant Thornton currently completing their review Audit of revenue
Slide 6: Top Questions: How Does Allscripts Size the EHR Market?
Top 10 Questions 2. How Does Allscripts Size the EHR Market?
Slide 7: Ambulatory EHR market is ~$5+ billion opportunity
Ambulatory EHR market is ~$5+ billion opportunity ~ 550,000 U.S. Physicians X 76% EHR market opportunity X ~$12,500 initial investment per physician = ~$5 billion opportunity Practice management solutions provide complementary product offering with significant incremental market opportunity ~10% to
Slide 8: Health Affairs Study
Health Affairs Study 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% < 5 MDs 6-10 MDs 11-20 MDs 21+ MDs Implementation in process Fully implemented
Slide 9: Health Affairs Study
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% < 5 MDs 6-10 MDs 11-20 MDs 21+ MDs Health Affairs Study If you combine “fully implemented” and “implementation in process” you have a total % that have bought an EHR 2,800+ survey responses w/ 700+ telephone surveys Results are consistent with other research in
Slide 10: Top Questions: Impact of Renegotiated IDX/GE Agreement
Top 10 Questions 3. What Impact Does the Renegotiated Agreement with IDX/GE Have on Allscripts’ Business?
Slide 11: IDX/GE Impact
IDX/GE Impact Increased sales into IDX base since GE announcement in Q3 2005 EHR leads buying decisions, not PM Reference sites are critical One of every five IDX clients is an Allscripts client One reference site = two year proposition Royalty to IDX from 20% to 10% to 0% Cooperation on interface e
Slide 12: Top Questions: Impact of Stark Law Changes
Top 10 Questions 4. What Impact Will Stark Law Changes Have on Allscripts and the Market as a Whole?
Slide 13: Stark/Anti-Kickback Overview
Stark/Anti-Kickback Overview You can’t do this… Anti-Kickback – I can’t give you something (a kickback) for referring patients to me or my facility On second thought… eRx – A hospital (sponsor) can now fund 100% of eRx (software, hardware, implementation, training, etc.) EHR – A hospital (sponsor) c
Slide 14: Stark/Anti-Kickback Overview: More reasons to move now
Stark/Anti-Kickback Overview More reasons to move now! When they begin to move they… Look at ambulatory systems Look at what works Look at what physicians want…and they want Allscripts
Slide 15: Stark/Anti-Kickback: Unique Opportunity for Allscripts
All Patients/ Consumers in the Region 160 MD Groups 80 MD Groups Stark/Anti-Kickback: Unique Opportunity for Allscripts 40 MD Groups Only Allscripts Can Deliver Either Stand-Alone or Integrated… Personal Health Record Community Portal/Exchange Electronic Health Record e-Prescribing
Slide 16: Top Questions: Seasonality in Bookings and Revenue
Top 10 Questions 5. Is There Seasonality in Your Bookings? What About Revenue?
Slide 17: Seasonality
Seasonality Short answer is yes… Clinical Software Business 35% of our bookings historically have occurred in Q4. Remaining 65% tends to be evenly distributed over first three quarters TouchWorks revenue largely insulated from seasonality due to revenue recognition policy. HealthMatics less insulate
Slide 18: Top Questions: Different Revenue Recognition Policies
Top 10 Questions 6. Speaking of Revenue, Why Does Allscripts Have Different Revenue Recognition Policies for HealthMatics (A4 Ambulatory) and TouchWorks?
Slide 19: Revenue Recognition
Revenue Recognition HealthMatics Services we provide are deemed not “essential” to the software Average installation ~ 1 to 3 months We recognize software fees upon installation of the software, and service fees as services are provided TouchWorks Services we provide are deemed to be “essential” to
Slide 20: Revenue Recognition Examples: TouchWorks and HealthMatics
TouchWorks Example (2,000 Implementation hours) Q2 ’06 500 hours are worked 500 / 2,000 or 25% x $1.0 million = $250,000 Revenue Recognition $1,000,000 $300,000 Service $700,000 Software HealthMatics Example Q2 ’06 Software installed and 50% of hours completed $170,000 + (30,000 x 50%) = $185,000 $2
Slide 21: Diversified Backlog Provides Stability and Strong Visibility
$87.9 $27.0 $13.3 $39.7 Diversified Backlog Provides Stability and Strong Visibility As of 6/30/06 ($ in Millions) As of 6/30/06 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $167.9 Million $87.9 $27.0 $13.3 $39.7 Clinical Software Maintenance Support Information Services Clinical Software Subscriptio
Slide 22: Top Questions: Are Medication and Acute Businesses Strategic?
Top 10 Questions 7. Are the Medication and Acute (ED and Canopy) Businesses Strategic to Allscripts?
Slide 23: Medication Business
Medication Business Continue to view as low growth business With that said… Consistently delivers $44 to $45 million of profitable revenue ~ 10% operating margins Affords us an opportunity to invest back into growth businesses Motivated to “grow out of it” as quickly as possible Renewed interest in
Slide 24: Acute Businesses: Our Solutions Ensure Continuity of Care
E H R Hospital Emergency Department (ED) Care Management E H R Acute Businesses Our Solutions Ensure Continuity of Care Hospital Emergency Department (ED) Care Management INFORMATION INFORMATION
Slide 25: Top Questions: Guidance for 2007
Top 10 Questions 8. When Is Allscripts Going to Provide Guidance for 2007?
Slide 26: Growth Segments
$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 $260 $280 $300 $320 2006(E) 2007(E) $100.8 $120.6 $220.0 $300.0 Pre-packaged Medications Information Services Clinical Software and Related Services * Growth segments include Clinical Software and Related Services and Information Services Gr
Slide 27: Solid Bookings Growth
$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 2006(E) 2007(E) Solid Bookings Growth Information Services Clinical Software and Related Services $65.9 $89.5 $170.0 $240.0 ($ in Millions)
Slide 28: Accelerated Growth Continues in 2007
Accelerated Growth Continues in 2007 2006 (E) 2007 (E) Revenues: Software & Related Services $65.2 $165.0 $240.0 Prepackaged Medications 45.6 43.0 44.0 Information Services 9.8 12.0 16.0 Total Revenues $120.6 $220.0 $300.0 Gross Profit 54.9 115.0 159.0 Gross Profit % 45.5% 52.3% 53.0% Income from Op
Slide 29: Impact of Convertible Debt
Impact of Convertible Debt (for illustrative purposes only) ($ in Millions, except per share) Non-Converted Converted Non-Converted Converted GAAP Net Income $11.3 $11.3 $25.0 $25.0 Adjustments: Add Back Interest Expense 3.5 3.5 Tax Effect of Interest Add-back @ 38% (1.3) (1.3) Adjusted GAAP Net Inc
Slide 30: Top Questions: Non-GAAP Earnings Metric in 2007?
Top 10 Questions 9. Is Allscripts Going to Use a “Non-GAAP” Earnings Metric in 2007?
Slide 31: 2007 Earnings Metrics: Cash Earnings
2007 Earnings Metrics Cash Earnings ($ in Millions, except per share) 2006 (E) 2007 (E) GAAP Net Income $9.7 $11.0 $25.0 Depreciation and Amortization 6.5 16.5 17.5 Income Taxes 0.0 7.0 16.0 Stock-Based Compensation 0.6 2.5 6.4 A4 One-Time Deal-Related Cost 0.0 1.0 0.0 Cash Earnings 16.8 38.1 64.9 W
Slide 32: 2007 Earnings Metrics: Adjusted Earnings
2007 Earnings Metrics Adjusted Earnings ($ in Millions, except per share) 2006 (E) 2007 (E) GAAP Net Income $9.7 $11.0 $25.0 Income Tax Provision @ 38% ($3.7) $0.0 $0.0 Acquisition-Related Amortization, net of taxes @ 38% $0.4 $6.4 $6.4 Stock-Based Compensation, net of taxes @ 38% $0.3 $1.6 $4.0 Adj
Slide 33: Top Questions: Ongoing Operating Model for Each Business
Top 10 Questions 10. What Is the Ongoing Operating Model for Each of Allscripts’ Businesses?
Slide 34: Business Operating Models
Business Operating Models Medication Services Annual revenue growth expected flat to low single digits Gross margin of 18% to 20% of revenue OI margin of 8% to 10% of revenue (1) Clinical Solutions Annual revenue growth of approximately 35%+ Gross margin of 58% to 62% of revenue OI margin of 20% to
Slide 35: Allscripts: Inform. Connect. Transform.
A ALLSCRIPTS’ Inform. Connect. Transform.
Allscripts Healthcare Solutions — Investor Presentation (October 2006) on 6ix