FINEOS Corporation Holdings Plc · ASX:FCL
FINEOS — Merger or Acquisition (August 2020)
51 slides from FINEOS's merger presentation, Aug 11, 2020
Slide 1: Acquisition of Limelight Health and Equity Raising
Not for distribution or release in the United States For personal use only FINEOS Corporation Holdings PLC ARBN 633 278 430 Acquisition of Limelight Health and Equity Raising 11 August 2020 © FINEOS CORPORATION
Slide 2: Important Notices
Important Notices For personal use only This presentation (Presentation) is dated 11 August 2020 and has been prepared by FINEOS Corporation Holdings PLC (ARBN 633 278 430) (Company or FINEOS). By accessing or attending this presentation, you acknowledge that you acknowledge and agree to the terms s
Slide 3: Important Notices
Important Notices For personal use only INVESTMENT RISK An investment in FINEOS CDIs is subject to investment and other known and unknown risks, some of which are beyond the control of FINEOS including possible loss of income and principal invested. FINEOS does not guarantee any particular rate of r
Slide 4: Important Notices
Important Notices For personal use only FINANCIAL INFORMATION All financial values contained in this presentation are in Euros (€) unless otherwise stated. Presentation of financial information relating to Limelight in this Presentation All financial years (FY) contained in this Presentation are pre
Slide 5: Important Notices
Important Notices For personal use only THIRD PARTY INFORMATION AND MARKET DATA This presentation contains information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, reliability, adequacy or c
Slide 6: Agenda
Executive summary FCL For personal use only FINEOS preliminary FY20 results (unaudited) Limelight overview Acquisition rationale and key terms Equity Raising overview Appendix A – Limelight management team Appendix B – Key risks Appendix C – Placement international offer jurisdictions © FINEOS CORPO
Slide 7: Executive summary
01 For personal use only Executive summary © FINEOS CORPORATION Not for distribution or release in the United States
Slide 8: Highly complementary acquisition
Highly complementary acquisition For personal use only FINEOS has entered into an agreement to acquire Limelight Health, Inc., a leading US software business in its field that streamlines and automates critical workflows for insurers1 Strong growth Complementary Significant cross- profile product su
Slide 9: Executive summary
Executive summary For personal use only • FINEOS continued significant momentum during FY20, seeing accelerated adoption of its core AdminSuite products across multiple key markets ‒ Strong traction in key North America market has continued with the addition of 8 new North American clients FINEOS FY
Slide 10: Executive summary (cont.)
Executive summary (cont.) For personal use only • The Acquisition will be funded by: ‒ A$85 million fully underwritten Institutional Placement (Placement) ‒ FINEOS CDIs issued to Limelight shareholders as scrip consideration1 • CDIs under the Placement will be issued at a fixed price of A$4.26 per s
Slide 11: Executive summary (cont.)
Executive summary (cont.) For personal use only • Limelight’s revenue has grown at ~40% year on year between FY18 to FY201 • Limelight is currently mid-single digit EBITDA negative2 • FINEOS is targeting meaningful revenue synergies and cost benefits to drive a positive EBITDA contribution from Lime
Slide 12: FINEOS preliminary FY20 results (unaudited)
02 For personal use only FINEOS preliminary FY20 results (unaudited) Note: FINEOS' FY20 results referred to in this Presentation are preliminary and unaudited. Refer to the Important Notices for further information © FINEOS CORPORATION Not for distribution or release in the United States
Slide 13: Summary of FINEOS preliminary FY20 results
Summary of FINEOS preliminary FY20 results (unaudited) For personal use only 9 new customer Revenue Software Revenue wins €87.8m €29.5m during FY20 vs FY19 €62.8m, up 39.8% vs FY19 €23.3m, up 27% Pro forma FINEOS Services Revenue €28.4m R&D EBITDA €58.3m Investment €15.6m vs FY19 €39.5m, up 48% vs F
Slide 14: FINEOS FY20 trading update and outlook
FINEOS FY20 trading update and outlook For personal use only FY20 Preliminary Results (unaudited)1 FY21 Outlook • Revenue of €87.8 million for FY20 (+40% on FY19), comprised of €29.5 • The impacts of COVID-19 have created an opportunity for FINEOS, highlighting the million software (+27% on FY19) an
Slide 15: Limelight overview
03 For personal use only Limelight overview © FINEOS CORPORATION Not for distribution or release in the United States
Slide 16: Overview of Limelight Health
Overview of Limelight Health For personal use only Limelight Health is a leading US software business that streamlines and automates critical workflows for insurers Overview Limelight revenue (US$m, June year end)1 ◼ Limelight Health delivers a highly configurable cloud based platform to insurance c
Slide 17: Key Limelight business strengths
Key Limelight business strengths For personal use only Differentiated, highly configurable, end-to-end new business and underwriting SaaS 4 solution suite improving quoting and underwriting turnaround times Blue-chip client base including four top US and global insurance carrier brands Attractive gr
Slide 18: Limelight platform overview
Limelight platform overview For personal use only Limelight Health provides a end-to-end proposal-rating-underwriting SaaS product that streamlines and automates critical workflows for insurers Quote Rate Underwrite Distribute Connect End-to-end quoting, Ratings engine with Underwriting dashboard, B
Slide 19: Customer base and pipeline driving growth
Customer base and pipeline driving growth For personal use only Limelight holds a blue chip customer base and a strong pipeline underpinning growth …with a strong pipeline of opportunities driven by an Blue chip customer base… experienced sales team 4 3.6 years 10 Strong Top US and global Average cu
Slide 20: Acquisition rationale and key terms
04 For personal use only Acquisition rationale and key terms © FINEOS CORPORATION Not for distribution or release in the United States
Slide 21: Strategic rationale
Strategic rationale For personal use only Limelight’s product, customers, technology and key personnel are highly complementary to FINEOS’ growth strategy • Significant standalone revenue and growth trajectory expected to support FINEOS’ US growth agenda, with 38% revenue growth in FY20 Strong growt
Slide 22: Augmenting FINEOS' existing capabilities
Augmenting FINEOS’ existing capabilities For personal use only The combined FINEOS/Limelight Health product line is expected to provide a highly competitive product relative to best of breed competitor software • Limelight expands FINEOS’ leading core software capabilities into front office market u
Slide 23: Further alignment with key global markets
Further alignment with key global markets For personal use only The acquisition of Limelight is expected to expand FINEOS’ revenue base while also substantially increasing US employee headcount PF FY20 Revenue PF FY20 Headcount by Geography FINEOS standalone FINEOS standalone 6.0% 19.0% 35.0% 59.0%
Slide 24: Pro forma revenue impact
Pro forma revenue impact For personal use only The acquisition of Limelight is expected to help drive strong growth in both software and services revenue Pro Forma Combined FY20 revenue composition Period ending 30 June 2020 Unaudited Pro Unaudited Unaudited Forma Combined Standalone EURm FINEOS (FY
Slide 25: Key Acquisition terms
Key Acquisition terms For personal use only On 11 August 2020 FINEOS entered into a binding, conditional Merger Agreement to acquire 100% of shares and options in Limelight • Limelight Health security holder approval (50.1%) Key conditions • 2 year escrow (lock-up) deeds and acceptable employment ag
Slide 26: Equity Raising overview
05 For personal use only Equity Raising overview © FINEOS CORPORATION Not for distribution or release in the United States
Slide 27: Acquisition funding
Acquisition funding For personal use only Acquisition will be funded by a combination of cash and FINEOS CDIs1 Estimated Sources €m A$m % Description Fully underwritten institutional placement A$104.3 million Equity 51.9 85.0 76.5% total acquisition price to raise approximately A$85 million CDIs to
Slide 28: Equity Raising overview
Equity Raising overview For personal use only • FINEOS is funding the purchase price for Limelight and transaction costs through: ‒ A$85 million fully underwritten Institutional Placement (Placement) launched today Acquisition funding ‒ FINEOS CDIs issued to Limelight shareholders as scrip considera
Slide 29: Equity Raising overview (cont.)
Equity Raising overview (cont.) For personal use only • Michael Kelly, FINEOS’ founder, CEO and Director, has informed that while he will not be participating in the Equity Raising, he is supportive of the acquisition of Limelight and excited by the powerful combination of the two highly complementa
Slide 30: Security Purchase Plan overview
Security Purchase Plan overview For personal use only • FINEOS will also offer Eligible CDI Holders the opportunity to participate in a non-underwritten SPP to raise up to A$5 million • Eligible CDI Holders on the register at 7pm (AEST) on Monday, 10 August 2020 in Australia and Ireland will be invi
Slide 31: Equity Raising timetable
Equity Raising timetable For personal use only Event Date Record date for SPP 7:00pm (AEST) Monday, 10 August 2020 Trading halt. Announcement of the Placement and SPP Tuesday, 11 August 2020 Placement bookbuild Tuesday, 11 August 2020 Announcement of the outcome of the Placement Wednesday, 12 August
Slide 32: APPENDIX A – Limelight management team
06 APPENDIX A – Limelight management team For personal use only © FINEOS CORPORATION Not for distribution or release in the United States
Slide 33: Highly experienced management team
Highly experienced management team For personal use only The acquisition of Limelight brings a leading management team with deep insurance industry and technical expertise to complement FINEOS’ US growth strategy • Jason co-founded Limelight in 2014 • Alan has over 15 years experience Jason Alan bui
Slide 34: APPENDIX B – Key risks
07 APPENDIX B – Key risks For personal use only © FINEOS CORPORATION Not for distribution or release in the United States
Slide 35: Key risks
Key risks For personal use only This section describes some of the potential key risks associated with FINEOS' business and an investment in FINEOS The risks associated with FINEOS' business and the general risks set out in the prospectus dated 26 July 2019 (Prospectus) still apply as updated by the
Slide 36: Key risks: Acquisition risks
Key risks: Acquisition risks For personal use only There is a risk that the Acquisition may not complete on the current terms and expected timing, or at all due to, among other factors a failure to satisfy any of the conditions precedent to the Merger Agreement (some of which are not within FINEOS'
Slide 37: Key risks: Acquisition risks (cont.)
Key risks: Acquisition risks (cont.) For personal use only For the purpose of this Presentation, FINEOS has prepared (and made assumptions in the preparation of), the financial information relating to Limelight on a stand-alone basis and the post-completion pro forma financial information relating t
Slide 38: Key risks: Acquisition risks (cont.)
Key risks: Acquisition risks (cont.) For personal use only The integration of Limelight carries numerous risks, including potential delays, additional unanticipated costs in implementing necessary changes, and difficulties in integrating various operations. Significant additional costs may be incurr
Slide 39: Key risks: Acquisition risks (cont.)
Key risks: Acquisition risks (cont.) For personal use only As a result of acquiring Limelight, FINEOS will be exposed to risks specific to Limelight's business. Limelight's primary source of revenue is derived from fees for providing its group employee benefits platform service and products. The bus
Slide 40: Key risks: Underwriting risk
Key risks: Underwriting risk For personal use only As noted above FINEOS and the Underwriters have entered into a Placement Agreement, under which the Underwriters will subscribe for (or procure subscribers for) all CDIs offered under the Placement that are not acquired by eligible institutional inv
Slide 41: Key risks: Underwriting risk (cont.)
Key risks: Underwriting risk (cont.) For personal use only • without the prior written consent of the Underwriters (such consent not to be unreasonably with-held or delayed), FINEOS alters its share capital (other than as contemplated by the Placement or Merger Agreement) or the Constitution; • ther
Slide 42: Key risks: Industry and business risks
Key risks: Industry and business risks For personal use only FINEOS is currently monitoring the actual and potential impact of COVID-19 on its business and the broader economy. Despite current customer service levels and behaviour, given the high degree of uncertainty surrounding the extent and dura
Slide 43: Key risks: Industry and business risks (cont.)
Key risks: Industry and business risks (cont.) For personal use only FINEOS’ current financial performance depends on the ability to retain existing clients and its growth depends on the ability of FINEOS to attract further business from existing clients and to attract new clients. Current and prosp
Slide 44: Key risks: Industry and business risks (cont.)
Key risks: Industry and business risks (cont.) For personal use only The financial information presented in the Presentation, including the FY20 financial information in respect of FINEOS and pro-forma financial information intended to illustrate (i) the historical performance of FINEOS relative to
Slide 45: Key risks: Industry and business risks (cont.)
Key risks: Industry and business risks (cont.) For personal use only A significant proportion of FINEOS’ revenue is currently derived from FINEOS’ largest two clients, which together represented approximately 37% in the six months to 31 December 2019. As FINEOS relies on its top two clients for a si
Slide 46: Key risks: Industry and business risks (cont.)
Key risks: Industry and business risks (cont.) For personal use only FINEOS' operating activities in the United States are denominated in U.S. dollars and in Australia are denominated in Australian dollars, whereas the Company reports in Euros. As a result of the use of these different currencies, t
Slide 47: APPENDIX C – International offer jurisdictions
08 APPENDIX C – International offer jurisdictions For personal use only © FINEOS CORPORATION Not for distribution or release in the United States
Slide 48: Placement international offer restrictions
Placement international offer restrictions For personal use only This document does not constitute an offer of CDIs of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the CDIs may not be offered or sold in the Equi
Slide 49: Placement international offer restrictions (cont.)
Placement international offer restrictions (cont.) For personal use only European Union This document has not been, and will not be, registered with or approved by any securities regulator in the European Union. Accordingly, this document may not be made available, nor may the CDIs be offered for sa
Slide 50: International offer restrictions (cont.)
International offer restrictions (cont.) For personal use only Singapore This document and any other materials relating to the CDIs have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other doc
Slide 51: International offer restrictions (cont.)
International offer restrictions (cont.) For personal use only United States This Presentation does not constitute an offer to sell, or a solicitation of any offer to buy, any securities in the United States. The new CDIs have not been, and will not be, registered under the U.S. Securities Act of 19
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