Inovalon — Q4 2020 Earnings Presentation
28 slides from Inovalon's earnings presentation, Feb 3, 2021
Slide 1: Q4 & Full Year 2020 Earnings Supplement
Q4 & Full Year 2020 Earnings Supplement February 3, 2021
Slide 2: Cautionary Note Regarding Forward-Looking Statement
2 Cautionary Note Regarding Forward-Looking Statement Certain statements contained in this presentation constitute forward-looking statements within the meaning of, and are intended to be covered by the safe harbor provisions of, Section 27A of the Securities Act of 1933, as amended, and Section 21E
Slide 3: Contents
3 2 This presentation serves as a supplement to the Inovalon announcement on February 3, 2021 pertaining to fourth quarter (Q4) and full year 2020 results and 2021 guidance. Contents INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 Appendix 1: Reconciliations 2020 Q4 & FY Financial Results1 2021
Slide 4: A Leading Vertical Provider of Cloud-Based Platforms Empowering Data-Driven Healthcare
4INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 Origins: 1998 NASDAQ: INOV Employees: 1,800 Revenue: Adj. EBITDA: Market Cap: $4 Billion Headquarters: Bowie, MD A Leading Vertical Provider of Cloud-Based Platforms Empowering Data-Driven Healthcare Top 25 U.S. Health Plans 25 of 25 22 of 25 Top
Slide 5: Q4 2020 Financial Highlights
5INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 $68.1M Significant Adjusted EBITDA, or a 35.9% Adjusted EBITDA Margin Profitability of Q4 2020 Financial Highlights $123.9M Cash & Cash Equivalents Increased Representing 18% Sequential Revenue Growth $189.7M Revenue of Record Q4 2020 New Sales A
Slide 6: Accelerating Sales Performance
6 The Company continued to see strong demand through the fourth quarter with a record new sales Annual Contract Value1 (ACV) achieving $93.5 million, with platform new sales, excluding services, ACV totaling $68.2 million, reflecting a year-over- year increase of 27% and 30%, respectively. Accelerat
Slide 7: Sales Converting to Solid Subscription Revenue
7 The Company realized increasing platform demand in Q4 2020 with platform new sales Annual Contract Value1 (ACV) achieving a record $68.2 million, a YoY increase of 30%. As previously-announced platform sales are implemented, the significant layering of subscription-based platform revenue begins to
Slide 8: Expanding Profitability & Operating Leverage
8 The Company continues to deliver strongly profitable organic growth and with gross margins greater than 70% and Adjusted EBITDA margins greater than 30%. Further, the Company’s business model contains high operating leverage as seen in the trailing twelve-month operating leverage, which reached 81
Slide 9: Factors Accelerating Growth & Visibility
9 Factors Accelerating Growth & Visibility INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 Strong Long-Term Underlying Membership Growth Dynamics: Commercial ACA, Medicaid, and Medicare Advantage all growing at between 5% and 10%+ YoY supporting strong foundational subscription-based growth Val
Slide 10: Massive Data Assets
10 Inovalon leverages massive datasets to deliver differentiated capabilities to its clients. These datasets are expanding rapidly. As of the end of Q4 2020, the MORE2 Registry® dataset contained more than 332 million unique patient counts and more than 61 billion medical event counts, increases of
Slide 11: Industry-Leading Longitudinally Linked Real World Datasets
11 Industry-Leading Longitudinally Linked Real World Datasets Empowering Key Areas of Advanced Analytics, Decision Support, and Value Realization INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 18M+ Oncology Patient Disease Cohort Examples Real World Clinical Datasets Consisting of • More than
Slide 12: Diversified Market Demand & Penetration
12 Diversified Market Demand & Penetration INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 Demand for Inovalon’s cloud-based platforms and data-driven capabilities is driving expansion across all business units: payer, pharmacy/life sciences, and provider landscapes. The breadth of end-market a
Slide 13: Contents
13 2 This presentation serves as a supplement to the Inovalon announcement on February 3, 2021 pertaining to fourth quarter (Q4) and full year 2020 results and 2021 guidance. Contents INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 Appendix 1: Reconciliations 2020 Q4 & FY Financial Results1 202
Slide 14: Strong 2021 Outlook And Beyond
14INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 Strong 2021 Outlook And Beyond The combination of previously-announced sales reaching implementation completion stages, strong ongoing sales, increasing client retention and contract renewals, increasing contract terms, value-driven pricing stre
Slide 15: Strong Subscription-Based Platform Adoption
15 The following full-year Revenue guidance through 2021 was provided on October 28, 2020. Strong Subscription-Based Platform Adoption Note: CAGR calculations undertaken to the mid-point of 2021 Guidance All numbers in millions. INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 Subscription-Based
Slide 16: 2021 Expected Quarterly Revenue Cadence
16 The following illustration outlines the Company’s expected 2021 quarterly revenue cadence, which reflects 11% - 15% year-over-year organic revenue growth. 2021 Expected Quarterly Revenue Cadence INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 Note: Illustrative. Graphic drawn at midpoint of
Slide 17: Adjusted EBITDA % of Revenue
17 Adjusted EBITDA % of Revenue 2016 – 2021G CAGR22% INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 Note: CAGR calculations undertaken to the mid-point of 2021 Guidance. All numbers in millions. Graphic drawn at midpoint of guidance range. $100 $109 $152 $211 $231 $265 - $275 23% 24% 29% 33% 3
Slide 18: Cash Flow From Operations % of Revenue
18 The following full-year Cash Flow From Operations guidance through 2021 was updated on February 3, 2021. Cash Flow From Operations % of Revenue Note: CAGR calculations undertaken to the mid-point of 2021 Guidance. All numbers in millions. Graphic drawn at midpoint of guidance range. 1 Net cash pr
Slide 19: Capital Expenditure Investments
19 After a period of heavy capital expenditure undertaken to achieve the initial incremental buildout of the Inovalon ONE® Platform during 2016 through 2018, Inovalon’s capital expenditures have trended downward as a percentage of revenue. While continuing to invest consistently in the Company’s tec
Slide 20: Term Loan and Debt Leverage
20 The Company’s Term Loan contains no standing financial covenants, and the principal payment maturity schedule provides financial flexibility with 95.7% of principal not due until 2025. Additionally, the Company’s interest rate swaps fix $700M, or 77%, of the credit facility’s principal amount, pr
Slide 21: Full Year 2021 Financial Guidance
21 The Company is updating its full-year 2021 guidance to raise its net cash providing by operating activities range. Additionally, the Company is reiterating its full-year 2021 guidance as provided below on October 28, 2020, indicating 11% to 15% year-over-year organic revenue growth, and significa
Slide 22: 1Q 2021 Financial Guidance
22 Inovalon is providing Q1 2021 guidance as provided below, indicating 10% to 14% year-over-year organic revenue growth, and 16% to 31% year-over-year organic Adjusted EBITDA growth. 1Q 2021 Financial Guidance (1) The Company is assuming 151 million weighted average diluted shares and an effective
Slide 23: Contents
23 2 This presentation serves as a supplement to the Inovalon announcement on February 3, 2021 pertaining to fourth quarter (Q4) and full year 2020 results and 2021 guidance. Contents INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 Appendix 1: Reconciliations 2020 Q4 & FY Financial Results1 202
Slide 24: Reconciliation of Forward-Looking Guidance Adjusted EBITDA
24 Inovalon defines Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) as net income or loss calculated in accordance with GAAP, adjusted for the impact of depreciation and amortization, other expense, net, interest income, interest expense, provision for incom
Slide 25: Reconciliation of Forward-Looking Guidance Non-GAAP Net Income
25 Inovalon defines Non-GAAP net income as net income or loss calculated in accordance with GAAP, adjusted to exclude tax-affected stock-based compensation expense, acquisition costs, restructuring expense, amortization of acquired intangible assets, amortization of debt issuance costs and debt disc
Slide 26: Definitions
26 Definitions INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 1. Annual Recurring Revenue is defined as subscription-based revenue from existing clients plus outstanding intra-year renewals valued at an amount agreed upon in principal. 2. Annual Revenue Retention is defined as the percentage o
Slide 27: Illustrative ACV Dollar Equivalency
27 Illustrative only. Please see definitions on slide 26. ACV INOV Q4 & FY 2020 Earnings Supplement (2.3.21) 1.0.0 E xe cu te d S O W s 12 Months 24 Months 36 Months Etc. Illustrative Dollar Equivalency Inovalon’s sales have significantly expanded and accelerated, supporting strong growth going forw
Slide 28: Healthcare Empowered
© 2021 by Inovalon. All rights reserved. Healthcare Empowered®