Spok Holdings, Inc. · NASDAQ:SPOK
Spok — Investor Presentation (February 2023)
39 slides from Spok's investor presentation, Feb 28, 2023
Slide 1: Investor presentation February 2023
Investor presentation February 2023
Slide 2: Safe harbor statement
Safe harbor statement Statements contained in this presentation which are not historical fact, such as statements regarding Spok’s future operating and financial performance, and future dividend payments are forward-looking statements for purposes of the safe harbor provisions under the Private Secu
Slide 3: Table of Contents
Table of Contents Investment Highlights Business Strategy Spok Care Connect® Wireless Financials Wrap-Up 1 2 4 5 6 3
Slide 4: Investment Highlights
~ spok :!: Investment Highlights
Slide 5: Key Investment Strategy
Key Investment Strategy Significant Annual Free Cash Flow Generation and Strong Balance Sheet ~$25 million of annual Adjusted EBITDA, ~$36 million cash, no debt, ~$52 million of Deferred Tax Assets Software Operations Bookings Momentum, Large Identified Pipeline 2022 Software Operations Bookings up
Slide 6: Continuing History of Service and Commitment
6 Continuing History of Service and Commitment Leader in healthcare communications - A clinical communications & collaboration solution provider. Significant experience integrating to critical hospital contact centers, EHRs and many other core healthcare information systems. We continue to invest in
Slide 7: History of FCF generation and return of capital
7 History of FCF generation and return of capital • Since the 2004 merger, Spok has generated almost $1 billion in cumulative free cash flow. • Both our Wireless and Software businesses drive significant FCF and allow for the continued investment in our software business. 7
Slide 8: Spok Leadership Team
Spok Leadership Team Sharon Woods Keisling Corporate Secretary and Treasurer Renee Hall Chief Compliance Officer VP of Human Resources Tim Tindle Chief Information Officer Vince Kelly Chief Executive Officer Mike Wallace President and Chief Operating Officer Mick Ling Vice President of Maintenance R
Slide 9: Business Strategy
::: Business Strategy
Slide 10: Strategic business plan update
10 Strategic business plan update 01 02 03 Strategic business plan prioritizing maximization of free cash flow and returning capital to shareholders officially implemented on Feb. 17, 2022 Significant business improvement in virtually all areas, including sales, product development, and overall exec
Slide 11: Overall Strategy
Overall Strategy Critical Communications Purpose Built Over Time Evolution of Spok • Acquiring new customers by further penetrating the hospitals domestically with significant opportunity outside the U.S. • Continuing to expand relationships within the existing customer base with additional R&D spen
Slide 12: Software Strategy
Software Strategy • With Spok Care Connect, the contact center is the base, with products like Messenger and Spok Mobile® sold as accessories to one of three Contact Centers, which are all on-premise solutions Wireless Integration Spok Care Connect… …Product Direction • With the pivot from Spok Go,
Slide 13: Wireless Strategy
Wireless Strategy Spok continues to maximize Wireless cash flow by pursuing a strategy of simultaneously minimizing churn and revenue erosion while maximizing margins through network cost reduction efforts Network Rationalization Plan The Company has ongoing efforts to manage network capacity and to
Slide 14: Spok Care Connect
::: Sook Care Connect®
Slide 15: Focus on Healthcare
61% H e a l t h c a r e Other Large Enterprise Government 2012 15 Focus on Healthcare 85% H e a l t h c a r e Government Large Enterprise Other 2022 Percentage of revenue
Slide 16: US health systems/hospitals by lines of business
16 US health systems/ hospitals by lines of business* 847 Wireless Only 50% 486 Software Only 29% 345 Both 21% 1,600+ total Spok customers Total Population 7,103 24% Market Penetration 5% 30% 1-199 Beds 287 customers 50% 200-599 Beds 388 customers 600+ Beds 156 customers 5,481 1,308 314 Software-onl
Slide 17: Spok Care Connect Competitive Positioning
Spok Care Connect Competitive Positioning KEY VALUE PROPOSITIONS ✓ Strategic partner that solves enterprise challenges from one platform allowing the right message to get to the right person on the right device ✓ Source of truth, especially in complex IDNs, for the directory and on-call schedules ✓
Slide 18: Spok Earns Top Client Satisfaction Scores for Sixth Consecutive Year
18 Spok Earns Top Client Satisfaction Scores for Sixth Consecutive Year Overall rank Vendor Total No. 1 criteria ranks 1 Spok 11 2 Tiger Connect 2 3 Epic Secure Chat 3 4 Vocera 2 5 AT&T 1 6 Qlik 1 © 2023 Black Book Research LLC | Published: February 2023
Slide 19: Spok Care Connect
Spok Care Connect® Spok Operator Console Spok Mobile® Messenger e.Notify CTI Speech 19
Slide 20: Our value proposition
Our value proposition 20 Care team communication Provides clinician-to-clinician messaging and delivers real-time information from clinical systems to everyone on the care team Efficient clinical workflows Clinical alerting and alarm management with flexible routing and escalation of alerts to the r
Slide 21: How Spok Care Connect sets us apart
21 How Spok Care Connect sets us apart Enterprise platform for health systems, hospitals, & IDNs Extensive interoperability that supports existing workflows Powerful central directory Device-agnostic platform supports the right device for the right role Can be accessed and updated in real time by al
Slide 22: Spok Care Connect Operations Bookings
Spok Care Connect Operations Bookings Historical Bookings performance highlights potential Company places focus on Spok Go Selling and Marketing efforts Strategic Pivot reorients focus on Core Product offerings and future growth $33.2 $35.1 $45.1 $38.6 $33.6 $38.9 $39.5 $36.5 $27.3 $21.2 $24.7 0 5 1
Slide 23: Highly Profitable Reoccurring Maintenance Revenue
Highly Profitable Reoccurring Maintenance Revenue Post acquisition of Amcom, expansion of reoccurring maintenance attributable to growth in license sales and focus on Spok Care Connect Company places focus on Spok Go Selling and Marketing efforts While revenue is flat in the near term, expectation i
Slide 24: Wireless
::: Wireless
Slide 25: Nationwide Wireless Paging Network
25 Nationwide Wireless Paging Network • Largest carrier in the U.S. • Over 100 million messages / month • Carrier-grade network with 99.92% availability • Secure nationwide network • Dominates the healthcare paging market and is part of a full critical communication platform with leading-edge softwa
Slide 26: Paging Remains Relevant
Paging Remains Relevant Paging’s value remains high for critical messaging • Paging has facilitated hospital workflows and critical response • Pagers receive messages when cellular and Wi-Fi cannot • Paging’s survivable architecture provides advantages, especially in crisis and disaster scenarios •
Slide 27: Why healthcare organizations value pagers
27 Why healthcare organizations value pagers Not everyone needs a smartphone to do their job Complements secure text messaging in workflows HIPAA compliance with encrypted paging Tried and true – and cost effective Works in disaster situations
Slide 28: Spok GenA Pager
::: Spook GenA™ Pager
Slide 29: GenA Importance and Strategy
GenA Importance and Strategy • Increase features, functions and benefits to improve retention Continue to Improve UIS Trends Increase ARPU Leverage Current Investments (Wireless / Software) • Increased feature, function and benefits to drive higher Monthly Recurring Revenue • Increase encrypted page
Slide 30: Financials
::: Financials
Slide 31: 2022 Financial Results
31 2022 Financial Results For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2022 2021 2022 2021 Total Revenue $33.3 $34.5 $134.5 $142.2 Wireless $19.0 $19.2 $75.6 $78.8 Software $14.3 $15.3 $58.9 $63.4 Adjusted EBITDA (1) $5.6 $(3.8) $15.0 $(4.9) • Year-to-date capital
Slide 32: Fourth Quarter 2022 Highlights
Fourth Quarter 2022 Highlights 32 • Strategic business plan continued to progress in the fourth quarter as the Company generated $24.2 million of GAAP net income, and $5.6 million of adjusted EBITDA • 2022 adjusted EBITDA of $24.5 million • 2022 software operations bookings increased 16.6% from prio
Slide 33: 2022 Pro Forma Adjusted EBITDA
2022 Pro Forma Adjusted EBITDA 33 Adjusted EBITDA $ 14.96 Terminated Employees $ 7.47 Non-Payroll Spok Go® and Other $ 2.05 Pro Forma Adjusted EBITDA $ 24.48 (Dollars in millions)
Slide 34: 2023 Financial Outlook
2023 Financial Outlook (1) 34 From To Total Revenue: $ 129.0 $ 136.5 Wireless Revenue $ 71.5 $ 74.5 Software Revenue $ 57.5 $ 62.0 Adjusted EBITDA (2) $ 24.0 $ 26.0 (Dollars in millions) (1) Company Guidance as of February 22, 2023 and included in the related fourth quarter 2022 earnings press relea
Slide 35: Balance Sheet
35 Balance Sheet • Exceptionally clean and simple balance sheet • No debt • Common stock only • $35 million+ of cash and cash equivalents • Significant deferred tax assets to shield income from taxes for many years
Slide 36: Non-GAAP Reconciliations
~ spok ::: Non-GAAP Reconciliations
Slide 37: Reconciliation of Adjusted EBITDA
37 Reconciliation of Adjusted EBITDA For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2022 2021 2022 2021 Net income (loss) $24.2 ($16.7) $21.9 ($22.2) Add back: Benefit from income taxes ($21.0) ($4.0) ($20.9) ($5.2) Other income ($0.1) ($0.1) ($0.2) ($0.1) Interest
Slide 38: Contact Investor Relations
Contact Investor Relations 38 Al Galgano + 1 (952) 224-6096 al.galgano@spok.com
Slide 39: Slide 39
Spok Holdings — Investor Presentation (February 2023) on 6ix