athenahealth — Investor Day (December 2011)
125 slides from athenahealth's investor day presentation, Dec 15, 2011
Slide 1: 4th Annual Investor Summit
4th Annual Investor Summit December 15, 2011 a. 6 a 4 7 > ‘Jathenahealth OTA
Slide 2: Welcome to Our 4th Annual Investor Summit
2 Jennifer Heizer Director, Investor Relations (Outgoing) Dana Quattrochi Director, Investor Relations (Incoming) Welcome to Our 4th Annual Investor Summit!
Slide 3: Agenda
Agenda Opening remarks: Jonathan Bush, President, Chairman & Chief Executive Officer Culture discussion: Leslie Brunner, SVP, People & Process "Jedi" discussion: Jeremy Delinsky, SVP, Chief Technology Officer "Beautiful" discussion: Mary Kate Foley, VP, User Experience "Coordinate" discussion: Rob C
Slide 4: Safe Harbor Statement
Safe Harbor Statement 4 This presentation contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements reflecting athenahealth, Inc. (the "Company") management's expectations for future financ
Slide 5: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures In the Company's earnings releases, conference calls, slide presentations, or webcasts, the Company may use or discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure
Slide 6: Video
‘Gthenahealth Video
Slide 7: Jonathan Bush, Chairman, President & CEO
Jonathan Bush Chairman, President & CEO
Slide 8: U.S. Health Care Leads the World in Cost But Ranks 37th in Quality
U.S. Health Care Leads the World in Cost But Ranks 37th in Quality1 At 18% of GDP, the U.S. spends 3x more than the average country on health expenditures2 8 1 World Health Organization. World Health Report 2000, Health Systems: Improving Performance. http://www.who.int/whr/2000/media_centre/press_r
Slide 9: The U.S. Health Care Consumer is Blind as to Cost and Quality of Care
The U.S. Health Care Consumer is Blind as to Cost and Quality of Care... 9
Slide 10: And So is the U.S. Health Care Supply Chain
....And So is the U.S. Health Care Supply Chain 10
Slide 11: Top Down Initiatives to Improve Cost and Quality Haven't Worked
To Date, Top Down Initiatives to Improve Cost and Quality Haven't Worked... Our government has launched a number of well-intentioned economic and technology-focused initiatives 11 ACOs P4P ANSI 5010 ICD-10 MU EHR Government Alphabet Soup PQRI
Slide 12: Health Care Lacks the Connective Tissue Needed to Support Reform
....Because Health Care Lacks the "Connective Tissue" Needed to Support Reform Our health care system remains highly inefficient ~50% of all orders are never matched to results* 12 = Putting the cart before the horse ACOs P4P ANSI 5010 ICD-10 MU EHR Government Alphabet Soup PQRI *athenahealth data,
Slide 13: Our Approach Removes the Barriers to Reform by Building Connective Tissue
Our Approach Removes the Barriers to Reform by Building Connective Tissue Replace isolated technology with use of the Internet Accelerate reform with an open market that incentivizes exchange and fuels innovation 13 * *Office of Inspector General (OIG) Advisory Opinion No. 11-18. Posted: December 7,
Slide 14: athenahealth is a Company with Tremendous Purpose
athenahealth is a Company with Tremendous Purpose A health information backbone that helps health care work as it should Our Vision To be medical care givers' most trusted service Our Mission Being best in the world at getting medical care givers paid for doing the right thing Our "Hedgehog" Teacher
Slide 15: Our Services Enable Clients to Profit by Doing the Right Thing
Our Services Enable Clients to Profit by Doing the Right Thing 15 athenaCollector(r) Practice Management & Billing Service athenaClinicals(r) Electronic Health Record Service athenaCommunicator(r) Patient Portal & Communications Service Anodyne Intelligence PlatformSM Business Intelligence, Reportin
Slide 16: Our Services Enable Clients to Profit by Doing the Right Thing
Our Services Enable Clients to Profit by Doing the Right Thing 16 35% average improvement in client DAR 12% average improvement in collections Reduced administrative work 3.8% average increase in patient throughput 1,329 clinical documents processed on average per physician per month (PPM) Improved
Slide 17: We, Along with the Health Care Industry, Have a Long Way to Go
But We, Along with the Health Care Industry, Have a Long Way to Go There are still major gaps in care coordination ~50% of all orders are never matched to results* Doctors are still frustrated with EHRs Ours is nice, but it's not perfect 5-minute average documentation time, but large standard deviat
Slide 18: Our 2011 Strategy was Organized Around Four Key Themes
Our 2011 Strategy was Organized Around Four Key Themes 18
Slide 19: Our 2012 Strategy Will Enable Us to More Aggressively Pursue Growth
Our 2012 Strategy Will Enable Us to More Aggressively Pursue Growth 19
Slide 20: Our 2012 Strategy Impacts All Stakeholders
athenaNation Re-org growth team to pursue Coordinate geographic strategy athenaNet Formally launch the athenaEcosystem, a community of collaborative companies Introduce transaction- based pricing option for care coordination on athenaClinicals athenaNation DIY gear budgets Core competence around Bea
Slide 21: It Will Help Us Build the Connective Tissue We All Need
....And It Will Help Us Build the Connective Tissue We All Need So Badly 21 A health care information marketplace... Where creators of information are rewarded for making that information useful to others... ....And facilitators of health information exchange like athenahealth are key enablers of su
Slide 22: Leslie Brunner, SVP, People and Process
Leslie Brunner SVP, People and Process
Slide 23: Focused on Talent Acquisition, Employee Engagement and Growth
We are Focused on Talent Acquisition, Employee Engagement and Growth During 2011, we received 30,000 visits to our "careers" page, resulting in 10,000 applicants for 330 job openings Engagement is at an all-time high in 2011 (4.06) while voluntary turnover is the lowest on record (6.1% year-to-date)
Slide 24: We Hire Dreamers Who Can Learn Quickly and Make Them Experts
We Hire Dreamers Who Can Learn Quickly and We Make Them Experts More than 65% of our employees come from outside of health care Rigorous-2 week training on all things athenahealth and health care foundation We need them to ramp quickly and then flex like mad 90+ classes available to support our 30%
Slide 25: Expose Our People More Deeply to the Inside of Health Care
Next, We Plan to Expose Our People More Deeply to the Inside of Health Care We are donating our service offerings in non-traditional environments: Research Free clinics International health care delivery sites 25 Faith Family (free) clinic Regis College of Nursing eHealthpoint (India)
Slide 26: Growing at a Rapid Rate Means We Have to Better Coordinate
Growing at a Rapid Rate Means We Have to Better Coordinate Online community Enhance communication across geographies and teams Transparent ideation and prioritization Expand the definition of territory coordination Point Lookout in 2011 800+ athenistas were involved in development and connective tis
Slide 27: People & Process Establishes the Shell for the Community
People & Process Establishes the Shell for the Community, but Ownership Must be Decentralized Enhance management accountability for the feeling of our work place Time management Team space reflective of values Talent management Instill more flexibility to allow athenistas to bring their "whole selve
Slide 28: The Executive Team is Well Prepared for the Next Chapter
The Executive Team is Well Prepared for the Next Chapter 28 Tim Adams CFO Dr. Steve Kahane Enterprise Services Dan Orenstein General Counsel Ed Park COO Derek Hedges Business Development Leslie Brunner People & Process Rob Cosinuke CMO Client Services Technology Operations Product Strategy athenaCar
Slide 29: Jeremy Delinsky, SVP, Chief Technology Officer
Jeremy Delinsky SVP, Chief Technology Officer
Slide 30: athenaNet is the Ultimate Health Care Jedi
Pant athenaNet® is the Ultimate Health ‘\(athenahealth Care Jedi What is a Jedi? + Jedi Knights are warriors who have moved beyond fighting + They have studied so much, so hard, for so long, that they have internalized it + They can feel when things are off before they know why + They have turned fa
Slide 31: Execution-as-Efficiency vs Execution-as-Learning
31 Execution-as-Efficiency Execution-as-Learning Source: Amy C. Edmondson, Novartis Professor of Leadership and Management at Harvard Business School.
Slide 32: Our Clients' Offices Bear Little Resemblance to a Production Line
Our Clients’ Offices Bear Little athena’ Resemblance to a Production Line Execution-as-Efficiency Simple, controllable employees and production systems Optimal work processes are designed and set up in advance New work processes are developed infrequently; implementing change is a huge undertaking P
Slide 33: The Practice of Medicine is About Ongoing Learning and Process Iteration
The Practice of Medicine is Much More About athena Ongoing Learning and Process Iteration Execution-as-Learning: Knowledge workers Imperfect measures of productivity and quality Answers are discovered Tentative work processes are set up as a starting point Work processes keep developing; small chang
Slide 34: athenaNet is the Only Nationwide Execution-as-Learning Platform
Oo” athenaNet is the Only Nationwide Execution- Sthenahealth as-Learning Platform in Health Care ‘CORRECTION OPPORTUNITIES. 156,242 front-end rejections 920,955 claims not Resolved on the First Pass 14,854,109 claims submitted 43,040,138 charge lines posted 103,685 pounds of paper processed & Scanne
Slide 35: A Growing Base of Learning
nt A Growing Base of Learning ‘Yathenahealti “Dendrites” Power the Network ye ea athenaNet =) ent
Slide 36: Some Rules are Published But Complex, Others Learned Through Service Work
Some Rules are Published But Complex, Others Can Only be Learned Through the Service Work We Deliver 1 36
Slide 37: Some Rules are Published But Complex, Others Learned Through Service Work
Some Rules are Published But Complex, Others Can Only be Learned Through the Service Work We Deliver 2 37
Slide 38: Some Rules are Published But Complex, Others Learned Through Service Work
Some Rules are Published But Complex, Others Can Only be Learned Through the Service Work We Deliver 2 3 38
Slide 39: Some Rules are Published But Complex, Others Learned Through Service Work
Some Rules are Published But Complex, Others Can Only be Learned Through the Service Work We Deliver 1 4 39
Slide 40: Some Rules are Published But Complex, Others Learned Through Service Work
40 Some Rules are Published But Complex, Others Can Only be Learned Through the Service Work We Deliver
Slide 41: Some Rules are Published But Complex, Others Learned Through Service Work
41 Some Rules are Published But Complex, Others Can Only be Learned Through the Service Work We Deliver
Slide 42: Some Rules are Published But Complex, Others Learned Through Service Work
42 Some Rules are Published But Complex, Others Can Only be Learned Through the Service Work We Deliver
Slide 43: Some Rules are Published But Complex, Others Learned Through Service Work
43 Some Rules are Published But Complex, Others Can Only be Learned Through the Service Work We Deliver
Slide 44: Some Rules are Published But Complex, Others Learned Through Service Work
44 Some Rules are Published But Complex, Others Can Only be Learned Through the Service Work We Deliver
Slide 45: Clinical Knowledge Management Important as Reimbursement Shifts to Pay-for-Performance
Clinical Knowledge Management is Especially Important as Reimbursement Models Shift to Pay-for-Performance A 2009 study found the cost to practices to take part in P4P programs can be as high as $15,000 per clinician per year1 45 1 Halladay JR, et. al; Cost to Primary Care Practices of Responding to
Slide 46: Meaningful Use Attestation Data
ATHN as of December 14th 46 73% 20% 100% CMS Medicare Meaningful Use Data1 CMS as of December 7th Total Eligible Professionals (EPs): 382,000 Total EPs Registered for MU: 114,925 Percentage of Total EPs: 30% Total EPs Successfully Attested: 20,864 Percentage of Total EPs: 5% Percentage of Registered
Slide 47: athenahealth Client Performance
athenahealth Client Performance: 5/27/2011: 28% 7/11/2011: athenahealth made "Race & Ethnicity" a required field 7/24/2011: 61% 8/13/2011: 89% 9/24/2011: 99%
Slide 48: athenahealth Client Performance
athenahealth Client Performance: 5/30/2011: 8% 8/13/2011: 24% 9/10/2011: 77% 10/8/2011: 88% 12/3/2011: 92%
Slide 49: But, We Have Much More Work To Do
But, We Have Much More Work To Do... Taking on more client work: Credentialing, insurance package selection, etc. 'Administrivia': ANSI 5010, ICD-10, ongoing benefit plan changes, etc. Government incentives & penalties: Meaningful Use, PQRI, etc. Payment Reform: Patient-Centered Medical Home (PCMH),
Slide 50: As We Build the Connective Tissue for Care Coordination
....As We Build the Connective Tissue for Care Coordination 50
Slide 51: Jedi Panel
Jedi Panel 51 Moderator Jeremy Delinsky - SVP, Chief Technology Officer Panelists Joe Hendrickson VP, athenaNet Intelligence Doran Robinson VP, Health Care Transactions Ryan Wise VP, Product Strategy
Slide 52: Presentation Break
{/athenahealth Presentation Break
Slide 53: Mary Kate Foley, Beautiful Discussion
Mary Kate Foley Beautiful Discussion VP, User Experience
Slide 54: Beautiful Is a Simple, Elegant Expression of Purpose
To Us, Beautiful Is a Simple, Elegant Expression of Purpose Simple: Eliminate as much work as we can Design workflows that remain easy to learn and efficient to use Elegant: How the system looks should express how the system works Invite and compel Focus on the essential Purposeful: Everything shoul
Slide 55: EHRs Lag Other Industries in Usability
EHRs Lag Other Industries in Usability 55 Health care is inherently complex Translates into complex systems Make It Simple Eliminate work Redefine remaining work and zero in on best practices Expertise in user- centered design is low Customization often mistaken as means to improve usability Many EH
Slide 56: We Focus on Beautiful in Two Complementary Ways
We Focus on Beautiful in Two Complementary Ways 56 Using the environment beautifully as it is Making the environment more beautiful
Slide 57: We Learn From Our Network and Our Network Learns from Us
We Learn From Our Network...and Our Network Learns from Us 57 Improve what we have Prioritize improvements to athenaNet features, workflows Promote and train on existing features, practices Use what we have, well
Slide 58: We Work with Clients to Optimize the Operational Side of Clinical Care
We Work with Our Clients to Optimize the Operational Side of Clinical Care 58
Slide 59: Assessing Documentation Time by Specialty
We Can Assess Documentation Time by Specialty and ID Leaders and Laggards 59 Documentation Time by Specialty June 2011 Minutes
Slide 60: Developing a Point of View Founded on First-Hand Knowledge
As a Result of Our Learning, We Develop a Point of View Founded on first-hand knowledge: ran our own practice Studied patient flow at medical practices using LEAN methodology CLINICAL STAGES Our lean mapping study drove the creation of the 5-stage clinical workflow
Slide 61: Basic EHR Best Practices
Overall, We've Identified These Basic EHR Best Practices Don't let work pile up from day to day Physicians should document patient exams in real-time Have the right people do the right work Clinical staff should perform intake, not physicians Staff should handle all of the documents they can Physici
Slide 62: Doctors Who Created Order Sets Spent Less Time Diagnosing and Ordering
Doctors Who Created Order Sets Spent Less Time Diagnosing and Ordering Less Time Diagnosing and Ordering Less Time Diagnosing and Ordering 62 Median Elapsed Seconds in Assessment/Plan # User-specific order sets athenaCare is identifying accelerators and working to increase their use
Slide 63: Case Study: Improved Quality of Diagnosis Search Results by 25%
Case Study: We Improved Quality of Diagnosis Search Results by 25% Tested potential solutions against 80,000+ actual athenaNet searches Released as a consumer app would: 'try before you buy' Most productive change: refined algorithm based on what other physicians in same specialty select after simil
Slide 64: How Many Tasks Providers Have Open
We're Also Inspecting How Many Tasks Providers Have Open 64 Unsigned Clinical Encounters 28 % Clinical Results 31 % Orders 11 % Clinical Documents 19 % Snapshot of open inbox tasks for providers on 12/7/2011 Then we'll help them empty the buckets 28 %
Slide 65: Our iPhone Application Will Help Physicians Reduce Inbox Tasks
Our iPhone Application Will Help Physicians Reduce Inbox Tasks 65 Support physicians with work outside of the office Elegant iPhone interactions Simplicity through user- centered techniques Currently in alpha test
Slide 66: We Will Use the iPad To Drive More Control into Documentation Cycle Time
We Will Use the iPad To Drive More Control into Documentation Cycle Time 66 Compelling, elegant screens Rules at every stage Create no more than 10 workflows
Slide 67: Beautiful Panel
67 Beautiful Panel Moderator Mary Kate Foley - VP, User Experience Panelists Dr. James Cardon Managing Partner, Cardiology P.C. Ed Park EVP, Chief Operating Officer Evan Grossman VP, athenaClinicals Product Strategy
Slide 68: Rob Cosinuke, Coordinate Discussion
Rob Cosinuke Coordinate Discussion SVP, Chief Marketing Officer
Slide 69: Coordinate Means Working Together to Succeed at a Common Goal
Coordinate Means Working Together to Succeed at a Common Goal Realigning our growth teams to focus on winning in regional "care networks" Doing the hard work of care coordination within these networks Creating a sustainable business model to encourage successful care coordination 69
Slide 70: Three Key Growth Initiatives from Last Year
At Last Year's Investor Summit, I Outlined Three Key Growth Initiatives 70 1 2 3
Slide 71: We Expanded Teams and Programs to Drive Awareness and Leads
We Expanded Teams and Programs for Both Audiences To Drive Awareness and Leads athena Yaong! Google Forbes ~ medpage WWE GRIME Medscape 21a mons HE Enterprise C-Suite Programs Linked [J Healt Healthcare ITNews _ Sa Events bs athena HIMSS Amica Messaging
Slide 72: Targeted, Regional Flywheel Campaigns
We Invested More Heavily in Targeted, Regional Flywheel Campaigns... 72 72 Mail Invitations Phone Invitations Sales Team Coordination Channel Partners
Slide 73: Armed Sales With More Responses, Leads and Meetings
....And We Armed Sales With More Responses, Leads and Meetings 73
Slide 74: Increased National Physician Awareness
These Efforts Also Helped Drive Increased National Physician Awareness 74 National Market Awareness of athenahealth Base: All Respondents National (1060) Q8: Which of these companies are you aware of? Q11: To the best of your knowledge, what products or services does athenahealth provide?
Slide 75: Flywheels Drove Greater Regional Awareness and Lead Generation
While Focused Regional "Flywheels" Drove Greater Regional Awareness and Lead Generation 75 Base: All Respondents National (1060) Flywheel (351) Q8: Which of these companies are you aware of? Q11: To the best of your knowledge, what products or services does athenahealth provide? Flywheel markets inc
Slide 76: Expanding Our Flywheels by 4x in 2012
Given These Strong Results, We are Expanding Our Flywheels by 4x in 2012... 76
Slide 77: Drawing Inspiration from a Well-Known, Disruptive Innovator
....And We Will Draw Inspiration from a Well-Known, Disruptive Innovator... 77
Slide 78: From the Early 1500s
....From the Early 1500s ....From the Early 1500s 78
Slide 79: He Was Not in HCIT But Guided Leaders in Consolidating Power
He Was Not in HCIT...But Guided Leaders in Consolidating Power 79
Slide 80: Machiavelli Would Conquer Sienna by Identifying Key Influencers
Machiavelli Would Conquer the Territory of Sienna by Identifying Key Influencers 80 80
Slide 81: We Will Coordinate Around Key Physician Influencers
4 In the Same Way, We Will Coordinate § athenahealth Around Key Physician Influencers Those Generating the Most Patient Referrals Examples of Coordination Strategies A large multi-specialty is influenced by a few leading athenahealth primary care referring physicians Large owned physician group beco
Slide 82: A Light Service at the Epicenter of Care Coordination Networks
But Imagine if We had a "Light" Service That Sat at the Epicenter of These Care Coordination Networks? 82 athenaCoordinator Launched August 31, 2011
Slide 83: Ramp Docs onto the Network Via Strong Benefits
We'd Ramp Docs onto the Network Via Strong Benefits to Ordering Providers and Receivers 83 -
Slide 84: The OIG is On-Board: New Pricing Strategy
Furthermore, the OIG is On-Board! We will reduce the base fee for athenaClinicals We will make up the difference via fees per "closed loop" order paid by in-network receivers Revenue neutral to athenahealth Lower effective cost for the athenaClinicals client 84 * Among other reasons cited in the OIG
Slide 85: An Exercise in Coordinate: The Columbus, OH Market
An Exercise in Coordinate: The Columbus, OH Market 85
Slide 86: Using Intelligence to Determine a Coordinated Attack Strategy
Using our Intelligence to Determine a Coordinated Attack Strategy 86 Owned Practices 21+ Owned Practices 1 - 20 Hospitals Athena Customers Admitting Practices 1 - 20 Admitting Practices 21+ Other Practices 21+ Other Practices 1 - 20
Slide 87: Start by Finding the Anchor Hospitals
Start by Finding the Anchor Hospitals 87 Owned Practices 21+ Owned Practices 1 - 20 Hospitals Athena Customers Admitting Practices 1 - 20 Admitting Practices 21+ Other Practices 21+ Other Practices 1 - 20
Slide 88: Prospecting Uncovers One Interested Hospital
Prospecting Uncovers One Interested Hospital in Our "Sweet Spot" 88 Owned Practices 21+ Owned Practices 1 - 20 Hospitals Athena Customers Admitting Practices 1 - 20 Admitting Practices 21+ Other Practices 21+ Other Practices 1 - 20
Slide 89: Identifying Their Owned Practices Defines Their Core Care Network
And Identifying Their "Owned" Practices Defines Their Core Care Network 89 Owned Practices 21+ Owned Practices 1 - 20 Hospitals Athena Customers Admitting Practices 1 - 20 Admitting Practices 21+ Other Practices 21+ Other Practices 1 - 20
Slide 90: Understanding Referral Patterns Identifies Influencers
Understanding Referral Patterns in Our Client Base Identifies Influencers 90 Owned Practices 21+ Owned Practices 1 - 20 Hospitals Athena Customers Admitting Practices 1 - 20 Admitting Practices 21+ Other Practices 21+ Other Practices 1 - 20
Slide 91: Layering on Affiliated Practices Further Defines Target Groups
Layering on "Affiliated" Practices Further Defines Target Groups With Market Clout 91 Owned Practices 21+ Owned Practices 1 - 20 Hospitals Athena Customers Admitting Practices 1 - 20 Admitting Practices 21+ Other Practices 21+ Other Practices 1 - 20
Slide 92: A Critical Mass of Small, Independent Practices Can Also Gain Us Access
A Critical Mass of Small, Independent Practices Can Also Gain Us Access 92 Owned Practices 21+ Owned Practices 1 - 20 Hospitals Athena Customers Admitting Practices 1 - 20 Admitting Practices 21+ Other Practices 21+ Other Practices 1 - 20
Slide 93: Regional Sales Leaders Will Have Resources to Reach a Network Tipping Point
Regional Sales Leaders Will Have Resources at Their Disposal to Help Reach a Network "Tipping Point" Faster Each RVP will have: Director of Market Strategy Directors focused exclusively on hospitals and athenaCoordinator Budget to make strategic concessions to most influential practices Ability to "
Slide 94: Coordinate Panel
94 Moderator Rob Cosinuke - SVP, Chief Marketing Officer Panelists Bill Conway SVP ,Sales Evan Grossman VP, athenaClinicals Product Strategy Jamie Mallinger VP, Marketing & Growth Operations David Harvey VP, Product Strategy
Slide 95: Presentation Break
{/athenahealth Presentation Break
Slide 96: Tom Scully, Lunch Keynote
Tom Scully Lunch Keynote Senior Counsel, Alston & Bird
Slide 97: Steve Kahane, President, Enterprise Services Group
Steve Kahane, M.D., M.S. President, Enterprise Services Group
Slide 98: Client Panel
98 Client Panel Moderator Steve Kahane, M.D., M.S. President, Enterprise Services Group Panelists Ken Davis, M.D. President & CEO, Harbin Clinic Charlie Martin, Jr. Chairman & CEO, Vanguard Health Systems John Sawyer, M.D., M.P.H Medical Director, Hudson Headwaters Health Network
Slide 99: Tim Adams, SVP, Chief Financial Officer
Tim Adams SVP, Chief Financial Officer
Slide 100: A High Growth Company Focused on Maximizing Long-term Shareholder Value
We are a High Growth Company Focused on Maximizing Long-term Shareholder Value We have a huge market opportunity We operate in a rapidly changing and dynamic market We have highly differentiated cloud-based services The lifetime value of a new client generates significant shareholder value Our finan
Slide 101: Top Line Expansion Fuels Investments in Growth and Innovation
Top Line Expansion Fuels Investments in Growth and Innovation 101 42% GM CAGR 35% 4-Year CAGR in Revenue *2011 estimate based upon midpoint of guidance provided in Q3 2011 earnings release See non-GAAP reconciliations within earnings releases
Slide 102: Attach Rates of athenaClinicals and athenaCommunicator on New Deals
102 As of Q3 2011: 74% of all new athenaCollector deals included athenaClinicals 40% of all new athenaCollector deals included athenaClinicals and athenaCommunicator
Slide 103: The Present Value of a Client Far Exceeds the Cost to Acquire Them
The Present Value of a Client Far Exceeds the Cost to Acquire Them 103 Base avg. athenaCollector revenue of $20K per physician Discount rate of 11% (WACC) Excludes terminal value Key Assumptions: New physician to the network 12-year period 62.5% Non-GAAP Adj. GM Annual revenue attrition of 5% athena
Slide 104: We Remain Confident in Our Fiscal Year 2011 Expectations
We Remain Confident in Our Fiscal Year 2011 Expectations 104 1 See non-GAAP reconciliation tables in following slides Note: These estimates reflect the Company's current operating plan as of December 15, 2011, and are subject to change as future events and opportunities arise. FISCAL YEAR 2011 EXPEC
Slide 105: We Still Want to Grow Revenue by at Least 30% Per Year
But We have Miles to Climb...AND We Still Want to Grow Revenue by at Least 30% Per Year
Slide 106: Continue Strategic Investments in a Disciplined Manner
We Must Continue to Make Strategic Investments in a Disciplined Manner Gross margin will be impacted by strategic investments and our faster- growing service offerings in 2012 These service offerings reduce overall margin by ~2 percent Our investment in expanded services is approximately $2 million
Slide 107: Gross Margin Performance is Impacted by Service Expansion
Our Gross Margin Performance is Impacted by Service Expansion 107 Note: Non-GAAP Gross Margins for each product exclude implementation revenue and costs athenaCollector athenaCommunicator athenaClinicals Anodyne Analytics Non-GAAP Total GM athenaCoordinator
Slide 108: Investments Aligned with Our Long-Standing Strategic Waterfall
These Investments are Aligned with Our Long-Standing Strategic Waterfall 108
Slide 109: Pursuing Aggressive 2012 Goals: Corporate Scorecard
We are Pursuing Aggressive 2012 Goals: Unveiling our Corporate Scorecard 109 1 See non-GAAP reconciliation tables in following slides Category Metric Weight Goal STABILITY Voluntary Turnover 10% 10% STABILITY Corporate Compliance 5% 95% STABILITY Employee Engagement - 4.1 STABILITY STABILITY RESULTS
Slide 110: Introducing Fiscal Year 2012 Expectations
We are Introducing Fiscal Year 2012 Expectations 110 1 See non-GAAP reconciliation tables in following slides Note: These estimates reflect the Company's current operating plan as of December 15, 2011, and are subject to change as future events and opportunities arise. FISCAL YEAR 2012 EXPECTATIONS
Slide 111: Fiscal 2012 Tax Rate, Stock Compensation and Seasonality
111 Our expected FY 2012 GAAP effective tax rate is 42-43% Our estimated FY 2012 FAS123R expense is approximately $24 million Our business is impacted by moderate seasonality Our collections are directly correlated to physician office activity, which may be reduced subsequent to holiday and summer v
Slide 112: Beyond 2012, Continue to Invest in Growth and Innovation
Beyond 2012, We Will Continue to Invest in Growth and Innovation While Maximizing Shareholder Value Pursue annual revenue growth goal of 30% Improve gross margin across all service offerings All services attain 70%+ Non-GAAP gross margin levels over time* Invest in growth and innovation Leverage G&A
Slide 113: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures In the Company's earnings releases, conference calls, slide presentations, or webcasts, the Company may use or discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure
Slide 114: Non-GAAP Reconciliation for Fiscal Year 2011 Expectations: Gross Margin
Non-GAAP Reconciliation for Fiscal Year 2011 Expectations 114 NON-GAAP ADJUSTED GROSS MARGIN Please note that these figures may not sum exactly due to rounding.
Slide 115: Non-GAAP Reconciliation for Fiscal Year 2011 Expectations: Adjusted EBITDA
Non-GAAP Reconciliation for Fiscal Year 2011 Expectations 115 NON-GAAP ADJUSTED EBITDA Please note that these figures may not sum exactly due to rounding.
Slide 116: Non-GAAP Reconciliation for Fiscal Year 2011 Expectations: Net Income & EPS
Non-GAAP Reconciliation for Fiscal Year 2011 Expectations 116 NON-GAAP ADJUSTED NET INCOME & NON-GAAP ADJUSTED EPS Please note that these figures may not sum exactly due to rounding.
Slide 117: Non-GAAP Reconciliation for Fiscal Year 2011 Expectations: Adjusted EPS
Non-GAAP Reconciliation for Fiscal Year 2011 Expectations 117 NON-GAAP ADJUSTED EPS Please note that these figures may not sum exactly due to rounding.
Slide 118: Non-GAAP Reconciliation for Fiscal Year 2012 Expectations: Gross Margin
Non-GAAP Reconciliation for Fiscal Year 2012 Expectations 118 NON-GAAP ADJUSTED GROSS MARGIN Please note that these figures may not sum exactly due to rounding.
Slide 119: Non-GAAP Reconciliation for Fiscal Year 2012 Expectations: Operating Income
Non-GAAP Reconciliation for Fiscal Year 2012 Expectations 119 NON-GAAP ADJUSTED OPERATING INCOME Please note that these figures may not sum exactly due to rounding.
Slide 120: Non-GAAP Reconciliation for Fiscal Year 2012 Expectations: Net Income & EPS
Non-GAAP Reconciliation for Fiscal Year 2012 Expectations 120 NON-GAAP ADJUSTED NET INCOME & NON-GAAP ADJUSTED EPS Please note that these figures may not sum exactly due to rounding.
Slide 121: Non-GAAP Reconciliation for Fiscal Year 2012 Expectations: Adjusted EPS
Non-GAAP Reconciliation for Fiscal Year 2012 Expectations 121 NON-GAAP ADJUSTED EPS Please note that these figures may not sum exactly due to rounding.
Slide 122: Scorecard Metric Definitions
Scorecard Metric Definitions 122 METRIC DEFINITION Voluntary Turnover # voluntary terminations/starting headcount. Corporate Compliance % of compliance tasks that are met within the deadline. Employee Engagement Quarterly engagement survey results for employees. DAR Collector only Days in A/R of Col
Slide 123: Management Q&A
Vathenahealth Management Q&A
Slide 124: Closing Remarks
Closing Remarks Jonathan Bush Chairman, President & CEO
Slide 125: 4th Annual Investor Summit
4th Annual Investor Summit December 15, 2011 a. 6 a 4 7 > ‘Jathenahealth OTA