Spok Holdings, Inc. · NASDAQ:SPOK
Spok — Investor Presentation (December 2022)
40 slides from Spok's investor presentation, Dec 15, 2022
Slide 1: Smarter, faster clinical communication – Investor Presentation December 2022
S m a r t e r, fa s t e r c l i n i c a l c o m m u n i c a t i o n I n v e s t o r P r e s e n t a t i o n | D e c e m b e r 2 0 2 2
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
Investment Highlights1
Slide 5: Key Investment Strategy
Key Investment Strategy Significant Annual Free Cash Flow Generation and Strong Balance Sheet ~$20 million+ annual run-rate in free cash flow, ~$35 million cash, no debt, Deferred Tax Assets Software Operations Bookings Momentum, Large Identified Pipeline YTD Software Operations Bookings up 18% YOY
Slide 6: Spok at a Glance
Spok at a Glance 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 and enhance our solutions. La
Slide 7: History of FCF generation and return of capital
History of FCF generation and return of capital • Since the 2004 merger, Spok has generated almost $1 billion in cumulative free cash flow. • Wireless continues to drive investment in our software business since the acquisition of Amcom in 2011. 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 Strategy2
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
Spok Care Connect®3
Slide 15: Focus on Healthcare
61% H e a l t h c a r e Other Large Enterprise Government 2012 Focus on Healthcare 15 85% H e a l t h c a r e Government Large Enterprise Other 2022 Percentage of revenue
Slide 16: Longstanding Customer Relationships
1 2 3 4 5 6 7 8 9 10 1 13 2 21 3 21 4 29 5 26 6 15 7 36 8 29 9 26 10 19 11 4 12 17 13 43 14 20 15 28 16 31 17 Tie 15 17 Tie 19 12 20 19 TOP 10 CHILDREN’S HOSPITALS (2022-2023) TOP 20 ADULT HOSPITALS (2022-2023) Rochester Phoenix Wireless Software Wireless Software Wireless Software Longstanding Cust
Slide 17: US health systems/hospitals by lines of business
17 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 18: 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 19: Spok #1 Secure Healthcare Provider Communications Platforms
Spok #1 Secure Healthcare Provider Communications Platforms 2022 Black Book Survey 19
Slide 20: Spok Care Connect
Spok Care Connect® Spok Operator Console Spok Mobile® Messenger e.Notify CTI Speech
Slide 21: Our value proposition
Our value proposition Improve patient outcomes by connecting clinical teams with the people and information they need when and where it matters most. 21 C a r e t e a m c o m m u n i c a t i o n Provides clinician-to-clinician messaging and delivers real-time information from clinical systems to eve
Slide 22: How Spok Care Connect sets us apart?
22 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 roleCan be accessed and updated in real time by al
Slide 23: 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 $23.5 to $2
Slide 24: 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 25: Wireless
Wireless4
Slide 26: Nationwide Wireless Paging Network
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 software
Slide 27: 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 28: Why healthcare organizations value pagers
Why healthcare organizations value pagers 28 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 29: Spok GenA Pager
Spok GenA™ Pager Fri Nov 27 2020 08:01 AM ir, John Smith @ @C a0
Slide 30: 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 31: Financials
Financials5
Slide 32: Third Quarter and YTD 2022 Financial Results
Third Quarter and YTD 2022 Financial Results 32 For the Three Months Ended September 30 For the Nine Months Ended September 30 2022 2021 2022 2021 Total Revenue $33.7 $35.9 $101.3 $107.6 Wireless $19.1 $19.6 $56.6 $59.6 Software $14.7 $16.2 $44.7 $48.0 Adjusted Operating Expenses(1) $27.9 $39.4 $95.
Slide 33: Third Quarter 2022 Highlights
Third Quarter 2022 Highlights ⚫ Strategic business plan continued to progress in the third quarter as the Company generated $2.9 million of GAAP net income, and $4.7 million of adjusted EBITDA ⚫ Year-to-date proforma adjusted EBITDA of $16.9 million ⚫ Third quarter software operations bookings incre
Slide 34: September 2022 YTD Pro Forma Adjusted EBITDA
September 2022 YTD Pro Forma Adjusted EBITDA 34 Adjusted EBITDA $ 1.1 Severance and Restructuring $ 5.7 Terminated Employees $ 7.4 Non-Payroll Spok Go® and Other $ 2.7 Total Impact: $ 15.8 Pro Forma Adjusted EBITDA $ 16.9 (Dollars in millions)
Slide 35: 2022 Financial Outlook
35 2022 Financial Outlook Updated Updated(1) At Q2’22 Total Revenue: $ 131.5 to $ 136.0 $ 130.0 to $ 136.0 Wireless Revenue $ 74.5 to $ 75.5 $ 73.5 to $ 75.5 Software Revenue $ 57.0 to $ 60.5 $ 56.5 to $ 60.5 Adj. Operating Expenses(2) $ 123.0 to $ 125.0 $ 123.3 to $ 126.1 Capital Expenditures $ 3.2
Slide 36: Balance Sheet
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 federal income taxes for many years to come 36
Slide 37: Wrap Up
Wrap Up6
Slide 38: Spok Value
Spok Value Enormous customer base and strong relationships with leading healthcare providers Largest wireless paging network in the country with 800,000+ units in service No debt, $35mm+ cash balance, significant deferred tax assets, funding 80%+ of dividend from free cash flow, substantial dividend
Slide 39: Thank you
Thank you S m a r t e r, fa s t e r c l i n i c a l c o m m u n i c at i o n 39
Slide 40: Contact Investor Relations
40 Contact Investor Relations Al Galgano + 1 (952) 224-6096 al.galgano@spok.com
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