Investor Presentation - Jefferies · Investor Presentation June 2014. ... AMD, glaucoma, ALZ are...
Transcript of Investor Presentation - Jefferies · Investor Presentation June 2014. ... AMD, glaucoma, ALZ are...
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Investor PresentationJune 2014
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Forward Looking Statement
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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.
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Why Merge Matters
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images are
growingyou need to do
more with less
regulationsare pervasive
consolidationis happening
{ ARCHIVE • ACCESS • DIAGNOSE }
{ EDUCATE • EXECUTE • ADAPT }
{ AUTOMATE • ADOPT • INTEGRATE }
{ CONNECT • CENTRALIZE • EVOLVE }
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Expanded radiology offering
2009Confirma
Acquisition
Our History of Innovation
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Expanded interoperability, radiology and cardiology offerings
2010AMICAS
Acquisition 2011OIS
Acquisition
2008Merrick
Invests InMerge
2010Stryker
Acquisition
Entered specialty orthopedics marketplace
2011LaunchedRad MUSolution
975 doctorsutilize Merge MU solutions
2012Launched
Cloud ArchiveSolution
2013LaunchediConnectNetwork
Surescripts and athenahealthsign on as partners
2010LaunchediConnect
100+ Clients
Entered eye care market
2012Launched
eClinical OS
2 million+ active patients since launch
For population health and advanced interoperability
2014Will Launch
Retinal Screening
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Our Solutions Portfolio
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Imaging & Interoperability
Cardiology Clinical Trials
RadiologyInteroperabilityCloud Archive
Eye Care Orthopedics
CardiologyHemodynamics
EDCCTMS
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Merge Cardiology Solutions are #1 in KLAS!
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Industry Leader!
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Merge Named Top 10 Overall in KLAS
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KLAS Overall Software Vendor Rankings 2013
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Merge KLAS Special Report
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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
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We Are the Leader in Interoperability
1010
iConnectEnterprise Clinical Platform
iConnectEnterprise Archive
2013 Frost & Sullivan Product Leadership Award, Medical Imaging Interoperability Solutions Market
2013 IHS VNA Global Market Leader
2013 IHS VNA Market Leader, Americas
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We’ve Made Enterprise Imaging Real
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Chicago, IL
{ iConnect Access & Enterprise Archive, Merge PACS,Merge Cardio & Hemo }
Findlay, OH
{ iConnect Access & Enterprise Archive, Merge PACS,Merge Cardio & Hemo }
San Diego, CA
{ iConnect Access, Enterprise Archive & Outpatient Radiology}
{ iConnect Access and/or Enterprise Archive, Radiology PACS, Merge Cardiology Solutions }
MI, WI, MO, TX, TN, AL, FL Ministries
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Every Image, Every EHR, Every Time
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Why iConnect Network?White Space Opportunity
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What Are the Key Drivers?
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Referral GrowthIncrease referring
physician loyalty and
expand business
Cost Savings Save time and money by
eliminating excess HL7
interfaces
Meaningful UseHelp community
physicians meet the imaging
requirement & attest
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The Imaging Marketplace
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Each year in the USA,
800M+ studies are done; 372M are outpatient
Meaningful Use now makes
interoperabilitymandatory
EHR adoption among referring
physicians is nearing 60%
12%of every visit
800Million studies
60%EHR Adoption
MU2Mandates
12% of every PCP visit in the
USA results in an imaging order
(44 Million)
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How iConnect Network Works
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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
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$20M Average annual revenue leaked,
300-bed hospital with 100 employed
physicians
Sources: The Advisory Board and referralMD
EDUCATEin-network providers about their referral patterns
QUANTIFY & TRACK patient retention with web-based solutions
IDENTIFYthe right markets & providers to build clinical networks
HOW TO IMPROVE REFERRAL LEAKAGE
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Turn Referral Leakage into Referral “Keepage”
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Source: Data from Mission Point Health Systems
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Clients Work With Many Referring Physicians
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Imaging Center / Hospital System
Allscripts
Cerner
Epic
eClinicalWorks
athena
NexGen
And They Work with Many Different EHRsHow will providers connect all disparate EHRs to imaging data & studies?
Referring Physicians
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Who Sends Referrals?
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clinicians & facilities
Sources: The Advisory Board and referralMD
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iConnect® Network
• Share imaging information between referring physicians and imaging centers on EHR networks
• Provide radiology reports as structured data directly into the physicians’ EHR
• Currently partnered with SurescriptsClinical Network Services (CNS) and athenahealth
• Will continue to add more partners to expand our reach
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Current Customers Include:
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With Universal Viewer via Web Browser
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Imaging Report
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Hospital Feedback
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“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
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Five Elements of Service
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EHR Integration: Result / Report
Delivery
E-Ordering/ Referrals
Pre-Certification: Patient Pay / Clinical
Decision Support
Consumer Engagement /
Scheduling
Data Mining & Analytics
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iConnect Retinal ScreeningAdvanced Interoperability Solution
for Population Health
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What Problems Will We Solve?
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diabetes, AMD, glaucoma, ALZ are
Increasing globally
institutions need
More Revenue with Volume
countries & socialized medicine need
Less Cost with More ServiceNo Complete Solutions
just band-aids
{ 382M DIABETICS WORLD WIDE – GROWS ~6% ANNUALLY }
{ DETECT DISEASE – TREAT EARLY – REDUCES COSTS }
{ DETECT DISEASE & INCREASE BILLABLE PROCEDURES }
{ NEED HARDWARE, SOFTWARE, CLOUD, ANALYTICS, ENGAGEMENT }
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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
• iConnect Network will deliver image reports to disparate providers’ EHRs
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Disparate Sites
The CompleteiConnect
Retinal ScreeningSolution
Every ACO and payer is focused on diabetic care management and this complements their strategy
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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
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Financial Information
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Financial Improvements in Past Year
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• 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 Q1 2014 for first time in 3 years
• 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)
Continued Innovations for Subscription
Offerings
• iConnect Network, iConnectCloud Archive (formerly Merge Honeycomb) and Merge eClinical OS
• Subscription backlog growth of 40% in 2013, 23% YoY as of Q1 2014
Aligned Costs
for Modest Topline
Growth in 2014
Improved Cash Flow by Significantly
Reducing Cash
Interest
• NOTE: See Q4 2013 and Q1 2014 earnings releases for guidance details
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Moving Beyond “Are You Financially Stable?”
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$12.5
$8.5
$7.2
$9.0
$10.2$9.2
$10.6
$15.3$14.2
$13.5
19.5%
14.8%
12.5%
16.7%
Adjusted EBITDA %
20.0%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
$0
$5
$10
$15
$20
$25
$30
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Adjusted EBITDA Cash from business ops Adjusted EBITDA %
28.0 27.9 27.5 26.1 25.5
9.4 9.7 9.5 8.5 8.2
26.6 20.0 20.7
19.3 17.4
$64.0
$57.6 $57.7
$53.9$51.1
58.5%
59.1%
56.6%
60.2%
61.9%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
Maintenance Subscription
Non Recurring Gross Margin %
Gross Margin % (net of D&A)
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Thank You
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