Definitive Healthcare Corp. · NASDAQ:DH
Definitive Healthcare — Q2 2023 Earnings Presentation
30 slides from Definitive Healthcare's earnings presentation, Aug 14, 2023
Slide 1: Second quarter 2023 earnings presentation
DEFINITIVE HEALTHCARE Second quarter 2023 earnings presentation August 14, 2023
Slide 2: Forward-looking statements
This presentation includes forward-looking statements that reflect our current views with respect to future events of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual financial and financial performance. Such statements are provided under the “sa
Slide 3: Company overview
—— Company overview
Slide 4: Category-defining software platform for healthcare commercial intelligence and analytics
Category-defining software platform Delivered via mission-critical SaaS platform 1 for healthcare commercial intelligence 4 deeply embedded into customer workflow and analytics Large and growing $10B+ TAM in Demonstrated combination of high 2 healthcare market with significant 5 growth and high prof
Slide 5: Early innings of penetrating the large addressable opportunity
ESTIMATED GLOBAL HEALTHCARE ▪ Healthcare is over 18% of U.S. GDP in 2021 and growing Growth in U.S. ANALYTICS MARKET ($B) 1 healthcare ▪ Research suggests overall spend driven by an aging population and the emphasis on healthcare spurred by the spending COVID-19 pandemic ▪ Stakeholders are focused o
Slide 6: $10B+ TAM and customer penetration
Life $10B+ sciences HCIT Providers Diversified TAM1 Existing X X X X customer ARR Top Quartile Top Half Top Half All by segment 2.9K+ 100K+ 3.0% Customers today Potential customers Penetrated 1 TAM or “Total Addressable Market” refers to the revenue opportunity that we believe is available for our h
Slide 7: Multiple levers to drive long-term sustainable growth
Acquire new Expand with existing Innovate to strengthen Selective strategic customers customers our platform acquisitions Multiple levers to drive long-term sustainable growth 7
Slide 8: The Atlas Dataset delivers a true picture of your target market
The Atlas Dataset delivers a true picture of your target market At one midwestern IDN in 2021… Adding analysis based on organization- Mapping DH reference and Physician-level claims lens alone dramatically level claims refines the number of affiliation data with claims provides overstates the number
Slide 9: The Atlas Dataset gets your sales team to the right locations
The Atlas Dataset gets your sales team to the right locations where the buyers are A pharmaceutical firm wanted to find the doctors who could Due to centralized billing, 72% of Using claims data alone, sales reps claims flowed through one NPI -- would have gone to a billing office prescribe their dr
Slide 10: CEO with extensive experience leading healthcare SaaS companies at-scale
CEO with extensive experience leading healthcare SaaS companies at-scale Robert Musslewhite Jason Krantz Jon Maack Rick Booth Kate Shamsuddin Jensen CEO Founder & Exec. Chairman President Chief Financial Officer Chief Product Officer FOUNDER & CHAIRMAN with bold vision; named Entrepreneur of the Yea
Slide 11: Definitive Healthcare explainer and demonstration videos
Definitive Healthcare Definitive Healthcare Definitive Healthcare “explainer” video product demonstration video corporate introduction (2 MINUTES) (10 MINUTES) (30 MINUTES) 11
Slide 12: Financial highlights
—- Financial highlights
Slide 13: Our business model combines growth, profitability and visibility
HIGH AND SUSTAINABLE GROWTH EXCEPTIONAL PROFITABILITY VISIBILITY AND CONSISTENCY INTO LARGE MARKET Platform scale High gross margin SaaS business model $244M 34% 88% 98% Q2’23 Revenue 2022 Subscription Revenue 2022 Adj. Gross Margin1 Run Rate Revenue Growth (2022) Strong land and expand High profita
Slide 14: Annual and LTM revenue and enterprise customers
Annual and LTM revenue ($M) Enterprise customers (# CUSTOMERS >$100K ARR) 538 527 $238 $223 486 417 $194 $166 2021 2022 LTM Q2'22 LTM Q2'23 2021 2022 Q2'22 Q2'23 Total customers 2,800+ 3,000+ 2,900+ 2,900+ 14
Slide 15: Net dollar retention by customer cohort
All customers 105% NDR 108% NDR 102% NDR Customers 108% NDR 111% NDR 103% NDR 94% of ARR 96% of ARR 97% of ARR >$17,500 ARR 124% NDR 120% NDR 110% NDR 53% of ARR 57% of ARR 61% of ARR Enterprise Customers >$100,000 ARR 2020 2021 2022 Note: See Basis of Presentation for definitions of Net Dollar Rete
Slide 16: Historical framework: profitability and growth drivers
Historical framework Confidence in drivers Culture of measurement Profitability drivers ▪ High gross margins Attractive PROFITABILITY profitability ▪ Economies of scale with G&A after absorbing public company costs ▪ Investing in sales capacity and product development Growth drivers Attractive ▪ Ear
Slide 17: Q2 results
—- Q©2 results
Slide 18: Second Quarter 2023 results versus guidance range
$ MILLIONS, except per share info Second Quarter 2023 Guidance Range Comments ▪ Revenue - 0% or at midpoint Revenue $61.0 $60.5 - 61.5 % growth 12% 11% - 13% ▪ Adj. Operating profit – 7% or $1.0 million beat Adjusted Operating Profit $16.0 $14.5 - 15.5 vs. midpoint % of revenue 26% 24% - 25% Adjuste
Slide 19: Key shareholder statistics as of 6/30/2023
Minority Comments Key shareholder statistics as of 6/30/2023 Public Shares Interest Combined ▪ 2.7M class B shares were exchanged into class (Class A Shares) (Class B Shares) A public shares in the quarter Vested shares ▪ 0.2M class A shares issued from RSU vesting Sponsor ownership (as-if convert
Slide 20: Cash and debt
AS OF $ MILLIONS, except net leverage ratio JUNE 30, 2023 JUNE 30, 2022 YoY Growth Comments Cash & Short-term investments (1) $350.9 $346.4 $4.5 1% ▪ Cash & Debt – Strong balance sheet positions Total debt outstanding (2) $263.0 $269.8 -$6.9 -3% us to move quickly to seize opportunities Net leverage
Slide 21: Guidance
— Guidance
Slide 22: Third quarter and full year 2023 guidance
(as of August 14, 2023) $ MILLIONS, except per share info Third Quarter 2023 Full Year 2023 Revenue $63.0 - 64.5 $249.0 - 255.0 % growth 10% - 12% 12% - 15% Adjusted Operating Profit $16.0 - 17.0 $61.5 - 65.5 % of revenue 25% - 26% 25% - 26% Adjusted EBITDA $17.5 - 18.5 $67.0 - 71.0 % of revenue 28%
Slide 23: Non-GAAP reconciliations & basis of presentation
— Non-GAAP reconciliations & basis of presentation
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures We define Unlevered Free Cash Flow as net cash provided from operating activities less purchases of property, equipment and other assets, plus cash interest expense, and cash payments related to transaction, integration, and restructuring related expenses, earnouts, and o
Slide 25: Adjusted gross profit reconciliation
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, $ THOUSANDS 2023 2022 $ % 2023 2022 $ % Reported Gross Profit $49,789 $42,770 $7,019 16% $97,084 $81,566 $15,518 19% Amortization of intangible assets acquired through 2,314 5,302 (2,988) (56%) 4,604 10,404 (5,800) (56%) business combinations Equ
Slide 26: Non-GAAP operating expense reconciliation
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, $ THOUSANDS 2023 2022 $ % 2023 2022 $ % GAAP Sales & Marketing $24,702 $23,585 $1,117 5% $48,125 $44,878 $3,247 7% Equity-based compensation (2,920) (5,055) $2,135 (42%) (5,569) (8,802) $3,233 (37%) Other non-recurring items (93) (26) ($67) >100%
Slide 27: Adjusted operating profit reconciliation
THREE MONTHS ENDED JUNE 30, % of Revenue SIX MONTHS ENDED JUNE 30, % of Revenue $ THOUSANDS 2023 2022 $ % 2023 2022 2023 2022 $ % 2023 2022 Net income (loss) ($11,605) ($10,142) ($1,463) 14% (19%) (19%) ($27,577) ($23,181) ($4,396) 19% (23%) (22%) Interest expense, net 221 2,580 (2,359) (91%) 0% 5%
Slide 28: Adjusted EBITDA reconciliation
THREE MONTHS ENDED JUNE 30, % of Revenue SIX MONTHS ENDED JUNE 30, % of Revenue $ THOUSANDS 2023 2022 $ % 2023 2022 2023 2022 $ % 2023 2022 Net income (loss) ($11,605) ($10,142) ($1,463) 14% (19%) (19%) ($27,577) ($23,181) ($4,396) 19% (23%) (22%) Interest expense, net 221 2,580 (2,359) (91%) 0% 5%
Slide 29: Unlevered free cash flow reconciliation
THREE MONTHS ENDED JUNE 30, % of Revenue SIX MONTHS ENDED JUNE 30, % of Revenue $ THOUSANDS 2023 2022 $ % 2023 2022 2023 2022 $ % 2023 2022 Cash Flow from Operations $12,037 $15,481 ($3,444) (22%) 20% 28% $26,994 $29,114 ($2,120) (7%) 22% 28% Cash interest 3,616 2,579 $1,037 40% 6% 5% 7,091 4,350 $2
Slide 30: Basis of presentation: TAM and definitions
TAM: TAM or “Total Addressable Market” refers to the revenue opportunity that we believe is available for our healthcare commercial intelligence platform, a subset of the Global Healthcare Analytics Market. We calculate our TAM by estimating the number of potential customers (including current custo
Definitive Healthcare — Q2 2023 Earnings Presentation on 6ix