Spok Holdings, Inc. · NASDAQ:SPOK
Spok — Investor Presentation (May 2019)
51 slides from Spok's investor presentation, May 16, 2019
Slide 1: Making care collaboration easier. Investor Presentation
Making care collaboration easier. Investor Presentation | 05.15.19
Slide 2: Overview of Spok
Overview of Spok Vince Kelly President and CEO 2
Slide 3: Agenda
Agenda • Overview of Spok – Vince Kelly, President & CEO • Financial Highlights – Mike Wallace, CFO • Product Development – John LaLonde, CTO • Sales – Don Soucy, EVP Global Sales • Customer View – Tim Tindle, CIO • Q&A - Team • Wrap-Up • Note: Product demo locally for in person attendees 3
Slide 4: Safe harbor statement
Safe harbor statement This presentation may include forward-looking statements that are subject to risks and uncertainties relating to Spok’s future financial and business performance. Such statements may include estimates of revenue, expenses, and income, as well as other predictive statements or p
Slide 5: Create beautiful software that delights our customers
Create beautiful software that delights our customers 5
Slide 6: Our history
Our history 2004 2008 2011 2014 2018 USA Mobility formed Amcom acquires USA Mobility USA Mobility and Spok introduces its from merger of Arch Telident 911 and acquires Amcom Amcom Software come cloud-native Wireless, Inc. and Commtech Wireless Software together under single platform Metrocall Holdin
Slide 7: A global leader in healthcare communication
A global leader in healthcare communication Profitable and debt free Resources to invest Strong wireless base Focus on software growth Strategic investments and dividends Highly leverageable customer base 50+ 2004 600+ #1 Years in business Public company Employees For secure communicatio
Slide 8: Our value proposition
Our value proposition Delivering clinical information to care teams when and where it matters most to improve patient outcomes. Enterprise call processing Efficient clinical workflows Care team communication Quickly help staff and patients, and directly Clinical alerting and alarm management with Pr
Slide 9: The best hospitals rely on Spok
The best hospitals rely on Spok All 30 hospitals on the U.S. News and World Report 2018- 19 Honor Roll are Spok customers 1,900+ Hospitals
Slide 10: Market focus
Market focus 81% Government Large Healthcare Enterprise Other Government Large Enterprise Other 2012 61% Healthcare 2018 10
Slide 11: Software market share
Software market share Size of market: Console Alerting Mobile $2.5 – $5.0 Billion 600+ Beds Market Size: 45% 30% 16% 124 Hospitals 200-599 Beds Market Size: 29% 14% 7% 1183 Hospitals 0-199 Beds Estimated based on US healthcare Market Size: 14% 2% 1% market data from Definitive 4952 Hospitals Healthc
Slide 12: What sets Spok apart?
Trusted by more than What sets Spok apart? 1,900 hospitals Including 100 % of Single integrated platform for all communications U.S. News & World Report Best Hospitals – Purpose-built, from the ground up, not pieced- something no other clinical together through partnerships or acquisitions communica
Slide 13: Spok Care Connect and competing products
CC&C Strategic Options Vocera SmartBadge 1 Lightning Bolt 2 devices physician scheduling Extension alarm CareWire management patient engagement mVisum alarm analytics Telmediq secure Spok Care Connect Wallace Wireless communications Patient-centric care team collaboration • Efficient clinical workfl
Slide 14: Competitive feature landscape
Competitive feature landscape Contact center Scheduling Clinical alerting solutions system Alarm integration On call Care coordination Nurse call Clinical Web monitoring directory Critical test results Physician Paging communication Secure Patient texting communication 14
Slide 15: Competitor landscape
Competitor landscape Scheduling 15
Slide 16: Return on investment: Patient safety
Return on investment: Patient safety 20% 70% 68% Reduction in Reduction in Reduction in sepsis mortality code blue critical code rate for patients response rate launch time with MEWS 7-11 16
Slide 17: Return on investment: Cost savings and staff efficiency
Return on investment: Cost savings and staff efficiency 67% 83% $1.5M Reduction in time Decrease in time Saved over 5 spent updating to notify staff of a years through on-call schedules disaster event increased staff efficiency $ 17
Slide 18: Financial highlights
Financial highlights Mike Wallace Chief Financial Officer 18
Slide 19: 2019 first quarter scorecard
2019 first quarter scorecard Grow software bookings Retain wireless Execute on Operate a profitable, and revenue subscribers and Project Catapult collaborative and revenues focused company 19
Slide 20: Software bookings and revenue growth
Software bookings and revenue growth $90 $81 $79 $78 $80 $74 $74 $80 $70 $61 $63 $75 $71 $70 $70 $60 $68 $48 $60 $50 $51 $40 Millions $30 $34 $20 $10 $0 2011* 2012 2013 2014** 2015 2016 2017 2018 2019E*** Software Bookings Software Revenue * The software business was acquired on March 3, 2011 ** 201
Slide 21: Wireless revenue trends continue to improve
Wireless revenue trends continue to improve $250 3,000 $200 Number of units (000) Wireless revenue 2,500 $200 $168 $150 2,000 $150 $132 $119 $110 1,500 $102 $94 Millions $100 $85 1,000 $50 500 1,668 1,515 1,376 1,256 1,173 1,111 1,049 992 $0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019E* Revenue a
Slide 22: Investment in innovation
Investment in innovation 2015 2016 2017 2018 Q1-FY19 Cost of Revenue 17.9% 17.1% 16.6% 19.1% 18.2% Research and development 5.4% 7.5% 10.9% 14.4% 14.8% R&D Spend ~3x increase as a Sales and Marketing 14.5% 13.8% 13.3% 14.5% 14.6% percentage of revenue since General and administrative 23.7% 23.9% 27.
Slide 23: Balance sheet strength
Balance sheet strength (Dollars in millions as of March 31, 2019) Cash, Cash Equivalents and Short-Term Investments $ 81.8 Accounts Receivable 36.7 • Cash and Short-Term Other Current Assets 10.1 Investments totaling $81.8 Other Assets 212.0 Total Assets $ 340.6 million. • Continue to operate as a d
Slide 24: Capital allocation
Capital allocation Internal investment Acquisitions Share Repurchases/Dividend Product innovation and technology expansion Subject matter/industry expertise Opportunistic capital deployment for shareholder value Automation and efficiency initiatives Technology / Customer / Geographic expansion Share
Slide 25: Transformation
Transformation 01 Technology Platform Transformation As we move from a set of predominantly legacy products, our cloud-based platform will allow us to target the strong demand for workflow solutions in the marketplace 02 Business Model Transformation With the transition to a cloud-based platform, we
Slide 26: New logo example
New logo example Mid-Atlantic Hospital Annual Patient Volume: Solution-Enterprise Catalog Mid-size 250,000 (No Discounting) Current Revenue Model New Revenue Model License Maintenance Prof. Services Total Subscription Fees Year 1 $ 700,000 $ 126,000 $ 190,500 $1,016,500 $ 416,600 Year 2 $- $ 129,780
Slide 27: Existing customer example
Existing customer example East Coast Hospital Annual Patient Volume: Solution-Enterprise Catalog Mid-size 300,000 Current Revenue Model New Revenue Model Maintenance Prof. Services Total Subscription Fees Year 1 $ 87,897 $ 60,000 $ 147,897 $150,304 Year 2 $ 92,292 $ ---------- $ 92,292 $150,304 Year
Slide 28: Maintaining 2019 financial guidance
Maintaining 2019 financial guidance From To Revenues Wireless $81 $89 Software $75 $85 $156 $174 Operating expenses (a) $155 $165 Capital expenses $3 $7 (a) Operating expenses exclude depreciation, amortization and accretion 28
Slide 29: Product development
Product development John LaLonde Chief Technology Officer 29
Slide 30: Our Future - Built for the cloud
Our Future - Built for the cloud The first-of-its-kind cloud-native enterprise communication platform was built as a powerful system of action with deep EHR interoperability. The real-time cloud-based solution will give hospitals the most in security, agility, and breadth and depth of services. 30
Slide 31: Strategic partnership
Strategic partnership ®spok aWws wee)
Slide 32: Care team collaboration
Care team collaboration Spok Care Connect includes a fully integrated healthcare contact center, clinical alerting and alarm management solution, and a multi-device solution for care team communications. The first phase of the new platform has already been implemented by two customers, Peninsula Reg
Slide 33: What we hear
What we hear Quality measures, changes in reimbursement, staff shortages and cybersecurity threats are making patient care delivery more challenging than ever to operating efficiently with staff satisfaction and greater productivity. Reduce IT burden and simplify software installs Provide greater sc
Slide 34: Roadmap
Roadmap 2018 2019 2020 2021 Foundation Productivity IDN Scale AI Analytics 1 2 3 4 • AWS Platform • Workflow Automation • Cloud Contact Center • Clinical Capacity • HIPAA Eligible • On-Call Scheduling • Cooperative Networks • Workflow Outcomes • Secure Messaging • Spok Console Integration • VOIP-Vid
Slide 35: Product release strategy
Product release strategy Then: One release every 18 months Now: Three releases per year 2019 – R1 2019 – R2 2019 – R3 2020 – R1 HIMSS Summer Sales Connect HIMSS 35
Slide 36: 2019 platform focus areas
2019 platform focus areas Cloud Mobile Clinical Interoperability architecture experience workflows and security 36
Slide 37: Sales
Sales Don Soucy EVP – Global Sales 37
Slide 38: Top sales growth initiatives
Top sales growth initiatives Ready all customers for Care Connect Cloud Become a truly elite clinical sales team Expand reach with global channel partners Strategic Accounts Dominate wireless and create leverage 38
Slide 39: Canberra Hospital
Canberra Hospital The Canberra Hospital is the largest public hospital in their region and provides care to more than 500,000 people through a range of services that include acute inpatient and day services, outpatient services, women’s and children’s services, pediatrics and pathology. Products: Co
Slide 40: Sectra/New South Wales
Sectra/New South Wales NSW Health had clearly articulated the need for a PACS/RIS and a shared platform with the ability to collaborate around medical images and information across its multiple Local Health Districts in NSW. The hospitals taking part manage a joint volume of around 3 million imaging
Slide 41: NYU Langone Health
NYU Langone Health NYU Langone Health operates seven hospitals and is opening two more in Florida in 2019. Spok is currently installed at three sites: Tish Hospital, NYU Langone Orthopedic Hospital, and Winthrop. The current project consists of a CCS 1.9 (SmartSuite) upgrade at Tisch and will add fo
Slide 42: University of Utah
University of Utah The University of Utah Hospital is a research and teaching hospital on the campus of the University of Utah in Salt Lake City, Utah. It serves as a major regional referral center for Utah and its surrounding states. It is praised for their specialties of: cardiology, geriatrics, g
Slide 43: Customer view
Customer view Tim Tindle Chief Information Officer 43
Slide 44: Tim Tindle, Chief Information Officer
Tim Tindle Chief Information Officer My background Why Spok? What’s ahead: A healthcare CIO’s perspective o Dominant themes o Communication, communication, communication o Technology, strategy, and partnerships 44
Slide 45: Dominant themes
Dominant themes Optimization focus (Triple Aim) o Improving the patient experience of care (including quality and satisfaction o Improving the health of populations o Reducing the per capita cost of health care Tele-health / alternate care delivery models Patient engagement Predictive analytics (sep
Slide 46: Communication, communication, communication
Communication, communication, communication Care Coordination Real- time hospital Social determinants Expanded EHR / healthcare of health interoperability 46
Slide 47: Technology strategy and partnerships
Technology strategy and partnerships App Stores / extending capabilities / opportunities Enterprise solutions partners vs to innovate departmental solutions o Enterprise Health Information System solution (EHRs: Epic, Cerner, Meditech, etc.) o Enterprise Resource Planning (ERP) solution (Oracle/Peop
Slide 48: Q & A
Q & A 48
Slide 49: Thank you
Thank you Making care collaboration easier. 49
Slide 50: Product demonstration
Product demonstration Sarb Singh- Kaur VP Development 50
Slide 51: Reconciliation from net income (loss) to EBITDA
Reconciliation from net income (loss) to EBITDA as a percentage of total revenue(a) Reconciliation of net income (loss) to EBITDA 2015 2016 2017 2018 Q1-FY19 Net income (loss) $80,246 $13,979 $(15,306) $(1,479) $742 (Less) plus: income tax (benefit) expense (53,948) 8,992 26,865 (706) 586 (Less) plu