Definitive Healthcare Corp. · NASDAQ:DH
Definitive Healthcare — Q3 2021 Earnings Presentation
37 slides from Definitive Healthcare's earnings presentation, Nov 8, 2021
Slide 1: Third quarter 2021 earnings presentation
Third quarter 2021 earnings presentation November 8, 2021
Slide 2: Disclaimer
Disclaimer This presentation is being provided by Definitive Healthcare (together with its subsidiaries, the “Company,” “we,” “our,” “us,” “Definitive Healthcare,” “Definitive,” or “DHC”) solely for informational purposes. This presentation and the accompanying oral commentary contain “forward-looki
Slide 3: Company overview
—— Company overview
Slide 4: Investment highlights
Investment highlights 1 Category-defining software platform for healthcare commercial intelligence 4 Delivered via mission-critical SaaS platform deeply embedded into customer workflow and analytics Large and growing $10B+ TAM in Demonstrated combination of high 2 healthcare market with significant
Slide 5: Our platform and revenue model
Our platform and revenue model SaaS-based …across entire …drives customers' intelligence continuum of commercial success… platform… healthcare Sales Life sciences Marketing Clinical research Healthcare IT & product development Strategy Providers Physician network management Other diversified Talent
Slide 6: Definitive Healthcare at-a-glance
Definitive Healthcare at-a-glance SCALE GROWTH $172M 43% Q3’21 Revenue Run Rate1 Q3’21 Revenue Growth1 BUSINESS MODEL PROFITABILITY 99% Category-defining software 38% Subscription Revenue (2020 and YTD Q3’21) platform Q3’21 LTM uFCF Margin1 for healthcare commercial intelligence TAM 2 CUSTOMERS $10B
Slide 7: The healthcare market is large and complex
The healthcare market is large and complex Healthcare companies without Definitive Healthcare Healthcare companies with Definitive Healthcare Medical devices Key opinion Consultants leaders Hospitals Patients Software Ambulatory vendors Physicians GPOs Payers Telemedicine Gov’t & regulators 7
Slide 8: Companies need to answer a range of critical questions
Companies need to answer a range of critical questions SALES & NETWORK PRODUCT MARKETING DEVELOPMENT Only ~1/3 of a sales rep’s ~50% of drug launches ~60% of physician groups day is spent selling1 underperform expectations2 owned by health systems3 • Who are the decision-makers? • How large is the m
Slide 9: Definitive Healthcare makes healthcare intelligence highly actionable
Definitive Healthcare makes healthcare intelligence highly actionable ALTERNATIVE APPROACHES DEFINITIVE HEALTHCARE Google searches; disparate data sources Integrated platform organizing entire ecosystem Unstructured, complex, and inaccurate raw data Standardization through data linkages Outdated inf
Slide 10: Integrated, growing platform provides 360° view of healthcare market
Integrated, growing platform provides 360° view of healthcare market Complete provider universe Affiliations & Physicians (Definitive ID = Industry relationships Hospitals Physician groups standard) Physician referral Daily opportunities GPOs Connected care patterns (RFPs, new patient starts) Payers
Slide 11: Multi-tenant SaaS platform deeply embedded into customer workflow
Multi-tenant SaaS platform deeply embedded into customer workflow ONE PLATFORM, MANY ACCESS CHANNELS DEEP INTEGRATIONS, FREQUENT USAGE Active users High usage / ROI ~34,000 ~1.5M Users actively utilize Reports run on SaaS the platform platform / month Multi-tenant SaaS CRM integration API integratio
Slide 12: Illustrative HCIT use case: platform enables actionable insights
Illustrative HCIT use case: platform enables actionable insights with just a few clicks MAP DECISION-MAKING QUANTIFY ROI FOR ENTITIES PRODUCT TO CRYSTALIZE (Affiliations data) MESSAGING (Readmission data) Analyze data by Physician Group and Health System to determine Analyze readmission rates for kn
Slide 13: Definitive Healthcare’s unique AI-driven intelligence engine
Definitive Healthcare’s unique AI-driven intelligence engine SOURCE INDUSTRIALIZE LINKAGES BUILT OVER 10 YEARS (UN)STRUCTURED DATA HEALTHCARE INTELLIGENCE Hospitals Physician Imaging Clinics groups centers First party research Ambulatory Integrated Physicians Payors surgery centers Delivery networks
Slide 14: Our platform’s self-reinforcing competitive moat
Our platform’s self-reinforcing competitive moat Hub of proprietary intelligence that we …Creates unique opportunity for believe does not exist elsewhere… rapid innovation on our platform NEW INTELLIGENCE Hospitals Physician Imaging Clinics groups centers Medical claims Clinical trials Rx claims Amb
Slide 15: Competitive positioning creates barriers to entry
Competitive positioning creates barriers to entry H e a l t hc ar e c o m m e r c i a l i n t e l l ig e n c e Raw cl ai ms Ni che Hori zontal data provi ders & Ecosystem heal thcare go- to- market consul tants pl ayers speci alists pl atforms Healthcare expertise Data linkages Healthcare affiliatio
Slide 16: Why Definitive Healthcare wins
Why Definitive Healthcare wins Vertical Customer need What customer couldn’t find elsewhere What Definitive Healthcare delivered Unlocked new opportunities with both physician- • Successfully launch two Ability to identify physicians with specific and facility-specific detail drugs underdiagnosed pa
Slide 17: Diversified customer base across entire healthcare ecosystem
Diversified customer base across entire healthcare ecosystem Life sciences DIVERSIFIED CUSTOMER BASE 2,700+ Customers Healthcare IT <2.0% Revenue by a single customer1 Healthcare providers ENTERPRISE CUSTOMERS 377 Customers > $100K ARR Diversified Large and diverse customer base with significant dem
Slide 18: Highly effective land and expand go-to-market engine
Highly effective land and expand go-to-market engine LAND EXPAND Multi-Channel Lead Generation Experienced Account Managers, “Farmers” Outbound: Highly scalable outbound inside sales team booking Vertically focused Account Managers focus on driving retention, thousands of demos per year upsells
Slide 19: Rapidly growing market driven by strong healthcare tailwinds
Rapidly growing market driven by strong healthcare tailwinds ESTIMATED GLOBAL HEALTHCARE • Healthcare is over 18% of U.S. GDP in 2021 and growing Growth in U.S. ANALYTICS MARKET ($B) 1 healthcare • Research suggests overall spend driven by an aging population and the emphasis on healthcare spurred b
Slide 20: Large and underpenetrated market opportunity
Large and underpenetrated market opportunity $10B Life sciences HCIT Providers Diversified + TAM1 Existing X X X X Customer ARR Top Quartile Top Half Top Half All by Segment 2.7K+ 100K+ 2.7% Customers today Potential customers Penetrated 1 TAM or “Total Addressable Market” refers to the revenue oppo
Slide 21: Multiple drivers of future growth
Multiple drivers of future growth Acquire new Expand with existing Innovate to strengthen our Selective strategic customers customers platform acquisitions Multiple levers to drive long-term sustainable growth 21
Slide 22: Experienced and innovative management team
Experienced and innovative management team Jason Krantz Robert Musslewhite Rick Booth Kate Shamsuddin Jensen Joe Mirisola FOUNDER & CEO Founder & CEO President Chief Financial Officer Chief Product Officer Chief Revenue Officer with bold vision; named Entrepreneur of the Year, New England in 2020 LE
Slide 23: Selected videos about Definitive Healthcare
Selected videos about Definitive Healthcare Definitive Healthcare Definitive Healthcare Definitive Healthcare “Explainer” video product demonstration video IPO roadshow video (2 MINUTES) (10 MINUTES) (30 MINUTES) 23
Slide 24: Financial highlights
Financial highlights 24
Slide 25: Financial highlights
Financial highlights HIGH AND SUSTAINABLE GROWTH EXCEPTIONAL PROFITABILITY VISIBILITY AND CONSISTENCY INTO LARGE MARKET Platform scale High gross margin SaaS business model $172M 43% 88% 99% Q3’21 Revenue Q3’21 Subscription Revenue Q3’21 LTM Adj. Gross Margin1 Run Rate Revenue Growth (2020 and YTD 2
Slide 26: Strong and durable revenue growth
Strong and durable revenue growth Annual revenue ($M) Enterprise customers (# CUSTOMERS >$100K ARR) $154 377 292 $118 221 $86 2019 2020 Q3'21 Total Customers 2019 2020 LTM Q3'21 2,000+ 2,500+ 2,700+ Resilient growth through COVID: Both new logo wins and customer retention 26
Slide 27: Net dollar retention
Net dollar retention ALL CUSTOMERS 106% NDR 108% NDR CUSTOMERS 92% OF ARR 94% of ARR >$17,500 ARR 118% NDR 124% NDR 46% OF ARR 53% OF ARR ENTERPRISE CUSTOMERS >$100,000 ARR 101% Overall net dollar retention 105% Overall net dollar retention 2019 2020 Note: See Basis of Presentation for definition of
Slide 28: Significant profitability
Significant profitability Adjusted EBITDA ($M) Investment driving growth Unlevered free cash flow ($M) and profitability $59 $56 $54 $50 $52 Sales and $42 marketing capacity New product development G&A infrastructure 2019 2020 LTM Q3'21 2019 2020 LTM Q3'21 % Margin % Margin 49% 45% 37% 59% 44% 38% N
Slide 29: Growth and profitability
Growth and profitability Historical framework Confidence in drivers Culture of measurement Key profitability drivers 90%+ gross margin Attractive PROFITABILITY profitability Economies of scale with G&A after absorbing public company costs Investing in sales capacity and product development Key
Slide 30: Q4 and full year 2021 guidance
Q4 and full year 2021 guidance (as of November 8, 2021) $ IN MILLIONS, except per share info Fourth Quarter 2021 Full Year 2021 Revenue $44 - 45 $164 - 165 % growth 31% - 34% 38% - 39% Adjusted Income from Operations $11.5 - 12.5 $52 - 53 % margin 26% - 28% 32% - 32% Adjusted EBITDA $12.5 - 13.5 $55
Slide 31: Appendix
Appendix 31
Slide 32: Reconciliation from GAAP gross profit to adjusted gross profit
Reconciliation from GAAP gross profit to adjusted gross profit THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, $ IN THOUSANDS 2021 2020 $ % 2021 2020 $ % Reported Gross Profit $32,599 $22,660 $9,939 44% $90,050 $62,505 $27,545 44% Amortization of Intangible Assets Resulting From Pur
Slide 33: Reconciliation from GAAP to non-GAAP operating expenses
Reconciliation from GAAP to non-GAAP operating expenses THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, $ IN THOUSANDS 2021 2020 2021 2020 GAAP Sales & Marketing $14,376 $8,292 $39,003 $23,542 Equity Compensation Costs (326) (132) (567) (380) Non-Recurring and One-Time Items (360) -
Slide 34: Reconciliation from net income to adjusted operating profit
Reconciliation from net income to adjusted operating profit THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, $ IN THOUSANDS 2021 2020 $ % 2021 2020 $ % Net (Loss) Income ($20,966) ($9,962) ($11,004) >(100%) ($46,493) ($35,295) ($11,198) 32% Interest Expense 7,186 9,022 (1,836) (20%)
Slide 35: Reconciliation from net income to adjusted EBITDA
Reconciliation from net income to adjusted EBITDA THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, $ IN THOUSANDS 2021 2020 $ % 2021 2020 $ % Net (Loss) Income ($20,966) ($9,962) ($11,004) >(100%) ($46,493) ($35,295) ($11,198) 32% Interest Expense 7,186 9,022 (1,836) (20%) 23,956 27,
Slide 36: Reconciliation from net income to adjusted net income
Reconciliation from net income to adjusted net income THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, $ IN THOUSANDS 2021 2020 $ % 2021 2020 $ % Net (Loss) Income ($20,966) ($9,962) ($11,004) >(100%) ($46,493) ($35,295) ($11,198) 32% Loss on Extinguishment of Debt 9,873 - 9,873 100%
Slide 37: Basis of presentation
Basis of presentation TAM: TAM or “Total Addressable Market” refers to the revenue opportunity that we believe is available for our healthcare commercial intelligence platform. We calculate our TAM by estimating the number of potential customers (including current customers with whom we can expand o
Definitive Healthcare — Q3 2021 Earnings Presentation on 6ix