Investor Presentation. June 2014

Transcription

1 Investor Presentation June 2014

2 Forward Looking Statement The matters discussed in this presentation may include forward-looking statements, which could involve a number of risks and uncertainties. When used in this presentation, the words will, believes, intends, anticipates, expects and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from those expressed in, or implied by, such forward looking statements. Except as expressly required by the federal securities laws, the Company undertakes no obligation to update such factors or to publicly announce the results of any of the forward-looking statements. See the Company s most recent earnings press release for explanation of non-gaap financial measures used in this presentation as well as reconciliation from GAAP to non-gaap metrics. Some of the products and/or product features discussed in this presentation may be works in progress and not yet generally available for sale. 2

3 Why Merge Matters images are growing { ARCHIVE ACCESS DIAGNOSE } you need to do more with less { AUTOMATE ADOPT INTEGRATE } regulations are pervasive { EDUCATE EXECUTE ADAPT } consolidation is happening { CONNECT CENTRALIZE EVOLVE } 3

4 Our History of Innovation 2010 AMICAS Acquisition Expanded interoperability, radiology and cardiology offerings 2011 OIS Acquisition Entered eye care market 2014 Will Launch Retinal Screening For population health and advanced interoperability 2008 Merrick Invests In Merge 2010 Launched iconnect 100+ Clients 2012 Launched eclinical OS 2 million+ active patients since launch 2009 Confirma Acquisition Expanded radiology offering 2011 Launched Rad MU Solution 975 doctors utilize Merge MU solutions 2013 Launched iconnect Network Surescripts and athenahealth sign on as partners 2010 Stryker Acquisition Entered specialty orthopedics marketplace 2012 Launched Cloud Archive Solution 4

5 Our Solutions Portfolio Imaging & Interoperability Radiology Interoperability Cloud Archive Eye Care Orthopedics Cardiology Cardiology Hemodynamics Clinical Trials EDC CTMS 5

6 Merge Cardiology Solutions are #1 in KLAS! Industry Leader! 6

7 Merge Named Top 10 Overall in KLAS KLAS Overall Software Vendor Rankings

8 8 Merge KLAS Special Report

9 Merge KLAS Report Overall Performance 1. Customers Buying In Enterprise imaging strategy Image enabling the EMR Focus and transparency 2. Footprint Expanding Clients plan to expand imaging suite Clients plan to stay at rate above market average Clients looking into adding interoperability and cardiology 3. Cerner Integration Ready to Pay Off 9

10 We Are the Leader in Interoperability iconnect Enterprise Clinical Platform iconnect Enterprise Archive 2013 Frost & Sullivan Product Leadership Award, Medical Imaging Interoperability Solutions Market 2013 IHS VNA Global Market Leader 2013 IHS VNA Market Leader, Americas 10 10

11 We ve Made Enterprise Imaging Real Chicago, IL { iconnect Access & Enterprise Archive, Merge PACS, Merge Cardio & Hemo } MI, WI, MO, TX, TN, AL, FL Ministries { iconnect Access and/or Enterprise Archive, Radiology PACS, Merge Cardiology Solutions } Findlay, OH { iconnect Access & Enterprise Archive, Merge PACS, Merge Cardio & Hemo } San Diego, CA { iconnect Access, Enterprise Archive & Outpatient Radiology} 11

12 Every Image, Every EHR, Every Time 12

13 Why iconnect Network? White Space Opportunity 13

14 What Are the Key Drivers? Cost Savings Save time and money by eliminating excess HL7 interfaces Meaningful Use Help community physicians meet the imaging requirement & attest Referral Growth Increase referring physician loyalty and expand business 14

15 The Imaging Marketplace 12% of every visit 800 Million studies 60% EHR Adoption MU2 Mandates 12% of every PCP visit in the USA results in an imaging order (44 Million) Each year in the USA, 800M+ studies are done; 372M are outpatient EHR adoption among referring physicians is nearing 60% Meaningful Use now makes interoperability mandatory 15

16 How iconnect Network Works 16

17 Merge Can Help with Referral Leakage! Average employed physician group refers more than 20% of potential revenue out-of-network While most organizations are (rightly focused) on building stronger physician relationships to curb leakage, they fail to realize that breakdowns in referral coordination drive 40% of leakage $20M Average annual revenue leaked, 300-bed hospital with 100 employed physicians HOW TO IMPROVE REFERRAL LEAKAGE EDUCATE in-network providers about their referral patterns QUANTIFY & TRACK patient retention with web-based solutions IDENTIFY the right markets & providers to build clinical networks Sources: The Advisory Board and referralmd 17

18 Turn Referral Leakage into Referral Keepage Source: Data from Mission Point Health Systems 18

19 Clients Work With Many Referring Physicians Cerner athena Referring Physicians Epic Allscripts eclinical Works NexGen Imaging Center / Hospital System And They Work with Many Different EHRs How will providers connect all disparate EHRs to imaging data & studies? 19

20 Who Sends Referrals? clinicians & facilities Sources: The Advisory Board and referralmd 20

21 iconnect Network Share imaging information between referring physicians and imaging centers on EHR networks Current Customers Include: Provide radiology reports as structured data directly into the physicians EHR Currently partnered with Surescripts Clinical Network Services (CNS) and athenahealth Will continue to add more partners to expand our reach 21

22 With Universal Viewer via Web Browser Imaging Report 22

23 Hospital Feedback We ve worked with Merge for several years, so it was an easy choice to implement Merge s VNA and iconnect Network for a comprehensive, enterprise-wide imaging strategy Despite having an HIE in place, we needed a single solution that handles imaging as it becomes more important to healthcare as a whole. With iconnect Network, we ll meet MU2 requirements for the exchange of images and, most importantly, enable better access to imaging for physicians in order to provide the best care for our patients. Dave Holland, CIO, Southern Illinois Healthcare 23

24 Five Elements of Service E-Ordering/ Referrals Consumer Engagement / Scheduling Pre-Certification: Patient Pay / Clinical Decision Support EHR Integration: Result / Report Delivery Data Mining & Analytics 24

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26 iconnect Retinal Screening Advanced Interoperability Solution for Population Health 26

27 What Problems Will We Solve? diabetes, AMD, glaucoma, ALZ are Increasing globally { 382M DIABETICS WORLD WIDE GROWS ~6% ANNUALLY } institutions need More Revenue with Volume { DETECT DISEASE & INCREASE BILLABLE PROCEDURES } countries & socialized medicine need Less Cost with More Service { DETECT DISEASE TREAT EARLY REDUCES COSTS } No Complete Solutions just band-aids { NEED HARDWARE, SOFTWARE, CLOUD, ANALYTICS, ENGAGEMENT } 27

28 How Will iconnect Retinal Screening Work? Primary providers will capture images and upload to iconnect Cloud Archive Client owned reading center will interpret images in Merge Eye Care PACS Image reports will route to iconnect Network The Complete iconnect Retinal Screening Solution iconnect Network will deliver image reports to disparate providers EHRs Disparate Sites Every ACO and payer is focused on diabetic care management and this complements their strategy 28

29 What s Next for iconnect Retinal Screening? Currently undergoing a pilot program launch with Ontario Telemedicine Network First phase will offer diabetic retinopathy screening once available in late Q2 Future stages of solution will include screenings for: Glaucoma Age-related macular degeneration Other serious neurological diseases 29

30 30 Financial Information

31 Financial Improvements in Past Year Continued Innovations for Subscription Offerings Aligned Costs for Modest Topline Growth in 2014 Improved Cash Flow by Significantly Reducing Cash Interest iconnect Network, iconnect Cloud Archive (formerly Merge Honeycomb) and Merge eclinical OS Subscription backlog growth of 40% in 2013, 23% YoY as of Q Excludes $14M of sales in 2013 from discontinued, low-margin products Reorganized operations in late 2013 for annual savings of $6M Generated NET INCOME in Q for first time in 3 years NOTE: See Q and Q earnings releases for guidance details Debt refinanced in April 2013 (at half the interest rate) & again in April 2014 (to significantly reduce covenants, including none for 1 year) Total of $25M paid in first year of new debt (compared to no debt principal payments in 2012 and 2011) 31

32 Moving Beyond Are You Financially Stable? $100 $90 $80 $70 $60 $50 $40 $ % 59.1% $57.6 $ % $ Gross Margin % (net of D&A) 60.2% 61.9% $ % 60.0% 55.0% 50.0% $30 $25 $20 $ % $ % 12.5% $ % $14.2 Adjusted EBITDA % 20.0% $ % 25% 20% 15% 10% 5% $30 $ % $10 $9.2 $8.5 $10.6 $7.2 $9.0 $10.2 0% -5% $ $5-10% $0 Q Q Q Q Q Maintenance Subscription 40.0% $0 Q Q Q Q Q % Non Recurring Gross Margin % Adjusted EBITDA Cash from business ops Adjusted EBITDA % 32

33 33 Thank You