INVESTOR PRESENTATION November 2012
today s agenda 2 Latest Announcements Merge to Connect to Surescripts Clinical Network Merge Named to EMC Select Program Merge Unveils New Mobile & Internet Platform for Consumers Recent Significant Wins Overview of Market Trends Solutions Update Enterprise Imaging and Interoperability Merge Honeycomb Meaningful Use Booth Tour
Merge to connect to Surescripts Network Press Release 4 Monday! The Surescripts network supports the most comprehensive ecosystem of health care organizations nationwide. Surescripts operates the nation's largest health information network. Merge will connect its extensive imaging network with the Surescripts Network for Clinical Interoperability. This connectivity will allow hospitals and imaging centers to provide electronic delivery of imaging reports to care provider organizations through EHRs on the Surescripts Network. Merge is their first specialty content provider!
EHR integration today A key business driver. National estimates show EHR adoption above 60% in the physician community. Imaging (and other specialties) are key referring physician revenue streams for hospitals and imaging centers. The order to result process is the work product for imaging centers Costly EHR professional services fees: ($5,000 - $50,000 PER interface, PER customer) Ongoing maintenance fees (to EHR vendor) as much as $20/md/month Deployment and maintenance of VPNs and/or HL7 interfaces for each specific physician practice Hard to scale Each interface is custom / unique to the EHR and PACS viewer Required for EACH EHR and EACH PACS combination HL7 Interface Sends Report RIS/PACS Imaging Center Portal or DICOM Viewer is Avaialble to see image EMR Report includes link to see image On PACS archive
meaningful use stage 2 accelerates need Core Requirement: Computerized order entry (30%) of radiology orders by the ordering physician New Option: More than 10% of all tests whose result is one or more images ordered by the EP during the reporting period are available through Certified EHR Technology To enable referring physicians to access 10% of their images on demand means that 100% of images need to be available in their EMR (we don t know which 10% they ll want to view) MU2 is an unfunded mandate for imaging centers to make images available to referring physicians so that the images can be accessed from the referring physicians EMR but referring physicians will expect imaging centers and hospitals to support MU2 and will choose imaging centers that make it easy for them to achieve MU2 Imaging providers and EMR vendors will compete for referring physicians on the basis of how easy it is for referring physicians to use their imaging services and EMR systems to ms to attest for MU2
a simpler approach Surescripts & Merge Surescripts recently acquired Kryptiq Offers EHR integration with over 300 vendors (for e-rx) Clinical Interoperability Network supports a full referring physician workflow (for orders and results) Recently announced relationship with Epic, NextGen (and 20 other top EHR companies) Leading independent provider of enterprise imaging solutions for hospitals and imaging centers Deploying a national orders/results hub to be used by all clients to interact t with the Surescripts network 1500 hospital customers >1,000 imaging center locations in the US
Merge named to EMC Select Program Press Release 8 Tomorrow! EMC Select is a program which helps customers easily acquire components that comprise an information i infrastructure. Merge s entire iconnect Enterprise Clinical Platform will be offered by 350 EMC sales reps across the country Announcing via press release tomorrow
Merge unveils latest innovation 9 A new mobile and Internet platform for consumers to select a radiologist, schedule an appointment t and receive results electronically. Our goal is to close the loop between a referral and a patient receiving results while at the same time enabling our customers to grow their businesses to deliver the best patient t care.
MARKETPLACE OVERVIEW
healthcare IT spending increasing 11 1 2 3 U.S. HIT spending projected to grow 24% through 2014 to $62 billion Electronic Health Record (EHR) adoption is maturing The need to increase value of EHR investment is now relevant HIT Spending Growth Healthcare Spending Growth Spend ions) U.S. HCIT ($ in bill $75.0 $60.0 $45.0 $30.0 $15.0 $40.0 $61.5 2012 2014 Source: U.S. Healthcare IT Market Analysis. RNCOS, May 2011 Source: Imaging Performance Partnership, The Advisory Board, 2012
imaging & storage is growing 12 1 2 3 Growth in every category: Increase in scan volumes, average study sizes and exams stored in an archive Evolving risk models: Providers beginning to take risk & driving need for cost efficiency Patient safety concerns: For example, one CT scan radiation = 400 chest x-rays Global VNA & PACS Study Volumes US PACS Requirements Source: World Market for Medical Enterprise Data Storage, InMedica, Published April 2012 Source: Frost & Sullivan, May 2012
consolidation is changing the rules 13 1 2 3 Hospital & physician 50% of medical Payor & provider Redistribution of risk Consolidation driving interoperability: practices now & bundled Providers need owned by hospitals, payments anywhere, anytime up from 26% in data to avoid 2005 redundant tests Practices Owned by Hospitals 2005 2008 Imaging Center Chains in US 26% 50% 50% 74% Hospital Owned Private Practice Source: Physician Compensation and Production Survey, MGMA Source: Imaging Market Update, The Advisory Board, 2012
regulation creating favorable tailwinds 14 1 2 3 Meaningful Use: $20 billion allocated for adoption of HIT. Key component is info exchange Accountable Care Organizations (ACOs): Changing reimbursement trends Radiation Dosage: California law requires the dose used for CT scans be recorded in every patient s medical record Hospital EMR Adoption Doubled ACOs Gaining Traction 154 89 Total Added in ACOs July 12 Source: ONC Data Brief, No. 1, February 2012 Source: U.S. Department of Health & Human Services, July 9 2012
SOLUTIONS UPDATE
our solution ecosystem 16 RADIOLOGY HEALTH STATIONS S CARDIOLOGY CLINICAL TRIALS INTEROPERABILITY PARTNERS & INTERNATIONAL HONEYCOMB EYE CARE OTHOPAEDICS
Merge Honeycomb 17 PACS deployments increasing across multiple hospitals. Increasing regulations require hospitals and imaging centers to maintain archives. Trends are driving up the cost of local storage infrastructure. NEW offering Growth Drivers New, disruptive offering in large, untapped market 50% of hospitals will move to the cloud in the next 5 years* Subscription model enabling scalable solution Unlimited storage capabilities with per-study pricing Solutions Honeycomb Image Sharing Honeycomb Archive
Honeycomb traction 18 Launched Merge Honeycomb to Radiology marketplace at RSNA Released Merge ege Honeycomb Archive Oct 2011 Nov 2011 Feb 2012 Mar 2012 Oct 2012 Announced Merge s move to the cloud with Honeycomb Launched Merge Honeycomb to acute marketplace at HIMSS 3.6 million studies in Merge Honeycomb! 18
ambulatory radiology solutions 19 US market includes 6,000 freestanding imaging centers and 5,000 hospitals. Merge offers a wing-to-wing solution in the ambulatory radiology segment. 000 ff 120 0 20% clients mkt share Growth Drivers Current clients upgrading, adding on modules, expanding archives 80% of Merge s clients need to upgrade PACS in the next 3 years Customer footprint expansion driving new system installations Sales increase as existing client acquire hospitals and physician i groups Solutions Merge PACS Merge RIS Merge efilm Merge CADstream Merge Financials Merge Dashboards Merge Patient Portal
Meaningful Use dollars 20 110 Merge clients live on MU certified solutions 776 eligible providers have attested Clients are getting MU dollars
investment highlights 21 Favorable Conditions Customer footprint expansion driving new system installations Economic and regulatory environment are driving change Meaningful Use & interoperability accelerate demand; in their infancy New risk models driving need for efficiencies Increased emphasis on cloud based solutions Industry Leading Offerings #1 VNA in the world & #1 KLAS-rated products (cardiology, others trending) The only industry solution for enterprise-wide image sharing Wrap around EHR product portfolio for specialty physicians Largest national footprint of imaging clinics & healthcare ATMS Significant Growth Opportunities Replacement cycle and upgrades to new platforms Cross-selling and up-selling Meaningful Use Stage 2 and 3 Strategic partnerships International Recently introduced products gaining traction Subscription product offering 21
investment highlights cont. 22 Track Record of Innovation & Execution > 90 patents with > 60 applications Standardized go-to-market strategy Recent success of new products Trusted and valued partner of clients Attractive Business Model Highly visible, recurring revenue model with growing subscription component Strong historical financial performance History of rationalizing customer bases and reducing expenses Strong, Seasoned Leadership Seasoned management team with extensive industry experience Operational expertise and track record of delivering i shareholder h value Management team has experience with subscription-based business models 22
BOOTH TOUR