2014 Quality Systems, Inc. All rights reserved.

Transcription

1 2014 Quality Systems, Inc. All rights reserved.

2 Safe Harbor Provisions SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS: This presentation may contain forward-looking statements within the meaning of the federal securities laws. Statements regarding future events, developments, the Company's future performance, as well as management's expectations, beliefs, intentions, plans, estimates or projections relating to the future (including, without limitation, statements concerning revenue and net income), are forward-looking statements within the meaning of these laws and involve a number of risks and uncertainties. Management believes that these forward looking statements are reasonable and are based on reasonable assumptions and forecasts, however, undue reliance should not be placed on such statements that speak only as of the date hereof. Moreover, these forward-looking statements are subject to a number of risks and uncertainties, some of which are outlined below. As a result, actual results may vary materially from those anticipated by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: the volume and timing of systems sales and installations; length of sales cycles and the installation process; the possibility that products will not achieve or sustain market acceptance; seasonal patterns of sales and customer buying behavior; impact of incentive payments under The American Recovery and Reinvestment Act on sales and the ability of the Company to meet continued certification requirements; the development by competitors of new or superior technologies; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; undetected errors or bugs in software; product liability; changing economic, political or regulatory influences in the health-care industry; changes in product-pricing policies; availability of third-party products and components; competitive pressures including product offerings, pricing and promotional activities; the Company's ability or inability to attract and retain qualified personnel; possible regulation of the Company's products by the U.S. Food and Drug Administration and other changes to the regulatory framework applicable to our business; uncertainties concerning threatened, pending and new litigation against the Company including related professional services fees; uncertainties concerning the amount and timing of professional fees incurred by the Company generally; changes of accounting estimates and assumptions used to prepare the prior periods' financial statements; general economic conditions; and the risk factors detailed from time to time in the Company s periodic reports and registration statements filed with the Securities and Exchange Commission.

3 Steve Plochocki President and Chief Executive Officer Introduction & Industry Dynamics

4 Agenda 9:00am 10:00am 10:45am Steve Plochocki President and CEO Dan Morefield COO Gary Voydanoff EVP, Sales & Marketing Sheldon Razin Founder and Chairman of the Board Client Panel Discussion Moderator: Mike Lovett EVP, Ambulatory Division Jamie Myers, CIO CareMore Larry Tatum, MD, CEO Texas Health Care Hal Teitelbaum, MD, CEO Crystal Run Healthcare Laura Young, Executive Director Behavioral Health Information Network of Arizona Q & A Session 12:00pm Lunch With executive team and clients

5 Leadership Team Paul Holt EVP and CFO Steve Puckett EVP and CTO Dave Ott SVP and CIO Donn Neufeld EVP EDI and Dental Jocelyn Leavitt EVP, General Counsel & Secretary Monte Sandler EVP RCM Services Jonathon Isaacs SVP Hospital Solutions Mark Davis EVP Corporate Development & Strategy Kelli Castellano SVP Marketing & Communications Dr. Sarah Corley Chief Medical Officer

6 Industry Dynamics

7 Building the Company A willingness to reinvest and reinvent to better compete

8 Fiscal 2015 Outlook Topline growth RCM Mirth Collaborative Care Solutions EHR replacement market Margins Investing in higher growth initiatives and R&D Expanding service offerings Increasing deployment of cloud and mobility solutions

9 Dan Morefield Chief Operating Officer Financial Highlights & Operational Overview

10 Fiscal 2014 Financial Highlights Revenue RCM Growth Mirth Growth Recurring Revenue Growth Free Cash Flows Mirth Acquisition

11 Five-year Revenue

12 Free Cash Flows Cash from operations, less capitalized software and fixed asset investments

13 Growth Area FY14 RCM Services $68.1M revenue $20.2M gross profit 30% gross margin $55M in new contracts 29% bookings growth Average length of contract 3 years Longer term contracts up to 7 years RCM BOOKINGS ARE UP 29% 29% YOY YOY

14 Growth Area FY14 Acquired September 2013 Accelerating growth 42 new clients added FY14 Q4 Growing SaaS revenue streams Global client base 300+ clients in the U.S. and 21 foreign countries Open source solution ~10K server installations

15 Growth Area FY14 Interoperability expertise enabling connected healthcare Mirth accelerating the NextGen Healthcare interoperability strategy Mirth s care management solution and central data repository strengthen NextGen Population Health to deliver a comprehensive, vendor neutral solution for collaborative care

16 Operations Overview

17 Restructured for Operational Effectiveness Quality Systems, Inc. Shared Services

18 Operational Effectiveness Shared Services Research & Development Finance Global Operations Sales & Marketing Legal Facilities Human Resources IT Management

19 Restructured to Focus on Growth Initiatives Strategic Investment Areas Research & Development Collaborative care solutions Cloud enabled suite Ambulatory solutions QSI DentalWeb Mobility solutions Mirth / interoperability Services Development RCM services expansion Clinical services expansion Professional consulting

20 Advanced clinical charting & practice management Low upfront infrastructure costs Scalable and rapidly deployable Anytime, anywhere access to data 4 th Generation Technology Large Contract Recently Signed

21 NextGen Hospital Solutions On track for upgrading existing clients to MU2 certified product and improved client satisfaction As backlog of implementations are completed, reallocating staff to manage costs Bookings up $2M with MU2-related products and services Success and renewed focus around our Emergency Department application and Surgical Scheduling

22 Voice of Client Program Develop a clear and consistent program to maximize the client experience Standardize corporate assessment tools and mechanisms for all divisions - You can't manage what you can't measure Create openness and transparency in providing insights to internal stakeholders Our over-arching goal is to win in the market, using the insights we gain from our clients

23 Strategic Focus Fiscal 2015

24 Fiscal 2015 Strategic Focus Organic growth with acquisitions to enhance current solution stack Grow beyond EHR into collaborative care / population health mgt. solutions Continue to establish interoperability leadership position 2015 FOCUS Deliver solutions that enable healthcare organizations to successfully move to value-based reimbursement models

25 Fiscal 2015 Strategic Focus Organic growth with acquisitions to enhance current solution stack Expand our cloud enabled technology NextGen Healthcare QSI DentalWeb 2015 FOCUS Deliver actionable healthcare analytics to support clinical decision-making, inform priorities and improve outcomes Deliver our HIT solutions via flexible service models that promote client success Population Health RCM (ambulatory, hospital, dental)

26 Gary Voydanoff EVP, Sales & Marketing Strategic Advantage & Growth Opportunities

27 Our Strategic Advantage Strong, active client base 32 VAR partner relationships 300+ HOSPITAL RELATIONSHIPS 4,400+ CLIENTS 85,000+ PROVIDERS Recurring Revenue is UP Client Retention is HIGH

28 Strategic Advantage Industry Leading Clients: Patient Centered Medical Homes NextGen Healthcare ~10% Misc vendors ~0.1% each Other top vendors combined ~5% each

29 Strategic Advantage Industry Leading Clients: Accountable Care Organizations Over 600 ACOs 34% NextGen NextGen Healthcare clients lead or participate in 34% of all ACOs

30 Why It Matters: We re delivering solutions now to meet current market demand and positioning our clients for future success NextGen Practice Management NextGen Revenue Cycle Mgt. NextGen Ambulatory EHR NextGen Population Health NextGen Patient Portal NextGen Health Quality Measures Streamlined registration, scheduling NextGen Unified enterprise Practice workflows Management Full-service revenue cycle Improve client A/R by 36% NextGen RCM Services $550M+ in MU incentives Used by over 40 specialties NextGen EHR Manage gaps in care NextGen Proactive Population patient outreach Health Mgt Patient engagement 5M+ patients enrolled (growing fast) NextGen Patient Portal Clinical data repository NextGen Reporting Health for P4P Quality programs Measures NextGen HIE Used by more than 34K providers Covers 12.7 million patients NextGen HIE Interoperability Data Integration Care Management

31 Strategic Advantage Market Share NextGen Healthcare All Based on HDS known EHR data from January 2014 Source: Healthcare Data Solutions, January 2014 EHR data collection

32 Strategic Advantage Better results period. Based on HDS known EHR data from January 2014

33 Driving Industry Demand Client base and net new revenue Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value

34 Industry Demand Driver Ominous Financial Trends Facing Medical Groups TOP FOUR Rising operating costs Preparing for reimbursement models that place a greater share of financial risk on the practice Managing finances with uncertainty of reimbursement rates Collecting from self-pay, high-deductible, and health savings account patients Source: MGMA 2013 Survey Medical Practice Today: What members have to say REIMBURSEMENT COSTS Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value

35 Revenue Driver Ominous Financial Trends RCM Services 29% bookings growth FY14 Net new RCM client base is growing 6% client base penetration RCM 3X New for FY15 Credentialing and reporting services Clinical services Patient pay focus Flexible Service Delivery Models Population Health Patient Portal Consulting Services 37% bookings growth FY14 Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value

36 Industry Demand Driver Interoperability Achieving interoperability for a wide range of complex data (administration, clinical, financial, lab, radiology, pharmacy, etc.) has been one of the healthcare industry s biggest problems for years, and continues to be so even today. Parag Someshwar, Vice President of Technology, CitiusTech Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value

37 REVENUE DRIVER Interoperability NextGen -Provider Sharing NextGen Provider Sharing NextGen Healthcare Provider Network NextGen Healthcare Provider Network Integrated Referral Ordering Integrated referral ordering Secure Sharing of EHR Documents Secure sharing of EHR documents Improved Office Efficiency Improved office efficiency Nation-Wide Data Sharing Closed-loop referrals 3 rd Party EHRs & Inpatient Clinicals CCDA exchange Discrete clinical data exchange with payers Data notification The open exchange of health information creates the foundation for collaborative care

38 Revenue Driver Interoperability Vendor Neutral Solutions

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40 Industry Demand Driver Collaborative Care Population Health Market Opportunity* $40.6B by % CAGR Target Markets 608 ACOs today 3,400+ clients 500K+ physicians Clinically Integrated Networks Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value *Source: Markets and Markets, Population Health Management Market by Component Report

41 Industry Demand Driver Collaborative Care Current Solutions LACK meaningful analytics Skewed from a claims data-only perspective LACK true interoperability Ineffective connectivity tools and expertise PROBLEMATIC clinical workflow for vendor-agnostic systems Creates additional work for providers and staff Dissatisfied early adopters Highly fragmented, no defined market leader Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value

42 Revenue Driver Collaborative Care NextGen Collaborative Care Optimization (CCO) All-inclusive functionality Supports collaborative care models to drive Engaged patients Wellness and chronic disease management Improved, measureable outcomes Cost savings Vendor neutral Expand our market to non-nextgen Healthcare providers Supports broad connectivity across systems Optimizes clinical workflow Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value

43 EHR or Interoperability? Pick one? Will you invest in deploying and subsidizing for affiliates a centralized EHR capable of at least some population health management? Or, are you going to deploy a private HIE capable of clinically integrating many disparate EHRs and a comprehensive population health management platform? You probably aren t going to be able to afford both. J.D. Whitlock Director of Clinical and Business Intelligence Catholic Health Partners

44 NextGen CCO product architecture Collaborative Care Optimization Platform Business Intelligence

45 Revenue Driver Collaborative Care - NextGen CCO SaaS solution for small practices to multi-million dollar enterprise solution Completely scalable and modular Launched NextGen Population Health prior to Mirth acquisition Less than 1% client base penetration Client base revenue potential is significant Total market opportunity is $40B* *Source: Markets and Markets, Population Health Management Market by Component Report

46 Industry Demand Driver Physician Dissatisfaction 1/ % 1/3 physician practices plan to purchase, replace or upgrade ambulatory EHR systems* 25-30% of all NextGen Ambulatory EHR sales replaced other vendors Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value *HIMSS Analytics, Ambulatory Electronic Health Record and Practice Management Study

47 Revenue Driver Physician EHR Satisfaction NextGen Ambulatory EHR v5.8/8.3 Usability feedback is positive Mobility - ios release of our EHR NextGen Ambulatory EHR v5.9 Focused on user experience Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value

48 *Limited release Cloud-Enabled Ambulatory Solutions The NextGen Cloud-Enabled Suite includes: NextGen Share connectivity platform Mobility ios release of our EHR application EHR* Practice Management* NextGen CCO Tier 2 Summer 2014 Fall 2014 Winter 2015 Interactive Connected Intuitive *Limited release Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value

49 Revenue Driver EHR Market Opportunity Physician office usage of EHR January 2014 Overall U.S. Office Response Yes % No % 61.0% 39.0% By Number of Physicians at Site Yes % No % 1 physician 53.7% 46.3% 2 physicians 64.9% 35.1% 3 to 5 physicians 69.6% 30.4% 6 to 10 physicians 73.8% 26.2% 11 to 25 physicians 78.1% 21.9% 26 or more physicians 77.5% 22.5% Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value *SK&A Survey, Physician Office Usage of EHR Software, January 2014

50 The Journey to Value-based Reimbursement Requires Change Volume Fees for service Lack of data analytics Fragmented data Disjointed care Payer/Provider disconnect Value Data sharing / interoperability Longitudinal data integration Population health management Patient engagement Care coordination Business intelligence and analytics Risk management Optimized health outcomes Regulatory requirements Technology moves practices toward optimized outcomes

51 Industry Demand Driver Regulatory Requirements Our Meaningful Use (MU) rankings remain strong Approximately $550 million in MU incentives using certified solutions from NextGen Healthcare* Out of hundreds of certified EHR products, NextGen Healthcare has maintained the 4th place ranking in overall MU Medicare Attestations since 2012 Small vendors continue to struggle Cost to maintain regulatory requirements is very high Many looking to exit Focusing on opportunities to sell complementary products There is significant opportunity in cross-selling new solutions to our existing client base and bundling multiple solutions for new clients * Based on Feb ONC Medicare attestation data

52 Revenue Driver Client Base Opportunity Clients looking now for collaborative care solutions low penetration to date Population Health Care Coordination RCM Services Population Health Care Coordination Interoperability RCM Services Patient Portal Interoperability Patient Portal Consulting Services Consulting Services Clinical Services Emergency Department Solution Mobility Solutions Clinical Services EDIS Solution Mobile Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value

53 Product Penetration in Current Client Base Opportunity for Growth

54 Driving Revenue Fiscal 2015 Client base and net new revenue Ominous Financial Trends Interoperability Collaborative Care EHR Dissatisfaction Volume to Value RCM Services Consulting Services Clinical Services NextGen Share NextGen HIE Mirth Solutions Population Health NextGen CCO Mirth Solutions NextGen EHR 5.8/8.3 Mobility Solutions Cloud Technology Health Quality Measures Analytics Interoperability

55 Sheldon Razin Founder and Chairman of the Board

56 Client Panel Discussion Moderator: Mike Lovett, EVP and General Manager, Ambulatory Larry Tatum, MD, CEO Texas Health Care Hal Teitelbaum, MD, CEO Crystal Run Healthcare Laura Young, Executive Director Behavioral Health Info Network of AZ Jamie Myers, CIO CareMore

57 Larry Tatum, MD, CEO Texas Health Care Multispecialty Group 150+ physicians 57 locations Original organization founded in 1995 All providers on NextGen solutions as of 2011 Texas Health Care is equally owned by its physician members No outside ownership, venture capital, or hospital interest in the company Operational elements of the business are shared and standardized Physicians are free to spend more time with patients All eligible physicians hit MU goals in 2012 and earned $3M+ in incentives Patient call-backs are completed in 20 minutes versus 1-2 days

58 Hal Teitelbaum, MD, CEO Crystal Run Healthcare Multispecialty Group (40+ specialties) 300+ physicians 20+ locations 3,500 patients per day Client since 1999 Grew from 15 to 300 physicians with NextGen solutions One of the fastest growing practices in the country One of the first 27 Medicare Shared Saving Program ACOs in the U.S. First NCQA ACO in New York State Among the first to receive NCQA PCMH Level 3 Recognition Reduced the cost of care for diabetic population by 15 percent while improving quality metrics for other at-risk populations

59 Laura Young, Executive Director Behavioral Health Information Network of Arizona (BHINAZ) Behavioral Health Private HIE 1,000+ providers connected 5 connected organizations; 10 more by end of 2014 Client relationship started with Jewish Family in 1999 First statewide behavioral health information exchange in the nation Powered by NextGen Healthcare and Mirth Piloted the HIE with Jewish Family Children s Services and Quality Care Network Connects all certified electronic health record (EHR) systems used by BHINAZ member organizations Service enables medical and behavioral health professionals to have necessary information available at the point of care

60 Jamie Myers, CIO CareMore Health System, fully owned by WellPoint 400+ physicians 40+ locations Client since 2007 Serves nearly 75,000 Medicare members in Virginia, California, Arizona and Nevada Provides a unique model of care to Medicare Advantage and Medicaid members with chronic conditions Championed medical homes and aggressive coordinated care for Medicare beneficiaries at dozens of care centers in California, Arizona and Nevada Emphasizes primary and preventive care to treat its members

61 Client Q&A

62 Q&A Session QSI Executive Team and Client Panelists Moderator: Steve Plochocki President and CEO

63 2014 Quality Systems, Inc. All rights reserved.