Inovalon — Q1 2021 Earnings Presentation
28 slides from Inovalon's earnings presentation, Apr 28, 2021
Slide 1: Q1 2021 Earnings Supplement
Q1 2021 Earnings Supplement April 28, 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 April 28, 2021 pertaining to first quarter (Q1) 2021 results and 2021 guidance. Contents INOV Q1 2021 Earnings Supplement (4.28.21) 1.0.0 Appendix 1: Reconciliations 2021 Q1 Financial Results1 2021 Financial Guidance 3
Slide 4: A Leading Vertical Provider of Cloud-Based Platforms Empowering Data-Driven Healthcare
4INOV Q1 2021 Earnings Supplement (4.28.21) 1.0.0 Origins: 1998 NASDAQ: INOV Employees: 1,900 Revenue: Adj. EBITDA: Market Cap: $5 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 25 of 25 Top-25
Slide 5: Q1 2021 Financial Highlights
5INOV Q1 2021 Earnings Supplement (4.28.21) 1.0.0 $58.6M Significant Adjusted EBITDA, or a 33.1% Adjusted EBITDA Margin Profitability of Q1 2021 Financial Highlights $128.6M Cash & Cash Equivalents Increased Representing Revenue Growth of 15% Year-over-year $177.2M Revenue of Platform New Sales ACV
Slide 6: Accelerating Sales Performance
6 Demand for Inovalon’s product offerings in the first quarter 2021 was strong. Q1 2021 total new sales Annual Contract Value1 (ACV) was $82.1 million, an increase of 81% year-over-year. Platform new sales, excluding services, ACV totaled $63.8 million, an increase of 120% year-over-year. Accelerati
Slide 7: Sales Converting to Solid Subscription Revenue
7 The significant layering of subscription-based platform revenue continued to fuel revenue growth in Q1 2021. Platform new sales Annual Contract Value1 (ACV) increased 120% year-over-year to $63.8 million. Q1 2021 subscription-based revenue was $158.0 million, an increase of 15% year-over-year, and
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 a high degree of operating leverage as seen in the trailing twelve-month operating leverage, of 7
Slide 9: Continued Salesforce Expansion
9 Given Inovalon’s large market opportunity and increasing market demand for the Inovalon ONE Platform®, Inovalon continues to invest in its sales and marketing engine to drive further organic revenue growth. As of the end of Q1 2021, Inovalon had 299 sales and marketing employees. Continued Salesfo
Slide 10: Factors Accelerating Growth & Visibility
10 Factors Accelerating Growth & Visibility INOV Q1 2021 Earnings Supplement (4.28.21) 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 Value-
Slide 11: Massive Data Assets
11 Inovalon leverages massive datasets to deliver differentiated capabilities to its clients. These datasets are expanding rapidly. As of the end of Q1 2021, the MORE2 Registry® dataset contained more than 336 million unique patient counts and more than 62 billion medical event counts, increases of
Slide 12: Industry-Leading Longitudinally Linked Real World Datasets
12 Industry-Leading Longitudinally Linked Real World Datasets Empowering Key Areas of Advanced Analytics, Decision Support, and Value Realization INOV Q1 2021 Earnings Supplement (4.28.21) 1.0.0 20M+ Oncology Patient Disease Cohort Examples Real World Clinical Datasets Consisting of • More than 336
Slide 13: Contents
13 2 This presentation serves as a supplement to the Inovalon announcement on April 28, 2021 pertaining to first quarter (Q1) 2021 results and 2021 guidance. Contents INOV Q1 2021 Earnings Supplement (4.28.21) 1.0.0 Appendix 1: Reconciliations 2021 Q1 Financial Results1 2021 Financial Guidance 3
Slide 14: Strong 2021 Outlook And Beyond
14INOV Q1 2021 Earnings Supplement (4.28.21) 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 term length, value- driven pricing s
Slide 15: Strong Subscription-Based Platform Adoption
15 The following full-year Revenue guidance through 2021 was increased on April 28, 2021. Strong Subscription-Based Platform Adoption INOV Q1 2021 Earnings Supplement (4.28.21) 1.0.0 Note: CAGR calculations undertaken to the mid-point of 2021 Guidance All numbers in millions. Subscription-Based Plat
Slide 16: 2021 Expected Quarterly Revenue Cadence
16 Q1 2021 Q2 2021G Q3 2021G Q4 2021G The following illustration outlines the Company’s expected 2021 quarterly revenue cadence, which reflects 12% - 16% year-over-year organic revenue growth. 2021 Expected Quarterly Revenue Cadence INOV Q1 2021 Earnings Supplement (4.28.21) 1.0.0 Note: Illustrative
Slide 17: Adjusted EBITDA % of Revenue
17 Adjusted EBITDA % of Revenue 2016 – 2021G CAGR22% INOV Q1 2021 Earnings Supplement (4.28.21) 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% 35% 3
Slide 18: Cash Flow From Operations % of Revenue
18 The following full-year Cash Flow From Operations guidance through 2021 was provided 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 p
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: Covenant-Lite Debt Leverage
20 The Company’s Term Loan contains no standing financial covenants, and the principal payment maturity schedule provides financial flexibility with 95.9% 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 revenue range, indicating 12% to 16% year-over-year organic revenue growth. Additionally, the Company is reiterating its full-year 2021 profitability guidance as provided on February 3, 2021, and updating its capital expenditures gu
Slide 22: Q2 2021 Financial Guidance
22 Inovalon is providing Q2 2021 guidance as provided below, indicating 11% to 15% year-over-year organic revenue growth. Q2 2021 Financial Guidance (1) The Company is assuming 151 million weighted average diluted shares and an effective tax rate of approximately 28% for the full year 2021. INOV Q1
Slide 23: Contents
23 2 This presentation serves as a supplement to the Inovalon announcement on April 28, 2021 pertaining to first quarter (Q1) 2021 results and 2021 guidance. Contents INOV Q1 2021 Earnings Supplement (4.28.21) 1.0.0 Appendix 1: Reconciliations 2021 Q1 Financial Results1 2021 Financial Guidance 3
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 Q1 2021 Earnings Supplement (4.28.21) 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 of re
Slide 27: Illustrative ACV and Contract Value
27 Illustrative only. Please see definitions on slide 26. ACV INOV Q1 2021 Earnings Supplement (4.28.21) 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 forward.
Slide 28: Healthcare Empowered
© 2021 by Inovalon. All rights reserved. Healthcare Empowered®