Risk Stratification Strategy for - jefferies.com Rasa Healthcare Inc.pdf · 2019 (NASDAQ: TRHC)...

Investor PresentationJune 2019

2019 (NASDAQ: TRHC)Proprietary and Confidential -- © 2019 Tabula Rasa HealthCare, Inc.

Medication Risk Identification & Mitigation 2

Legal Disc losure

Forward-looking statements

This presentation contains “forward-looking” statements that are based on our management’s beliefs and assumptions and on information currently available to management. These forward-looking statements include, without limitation, statements regarding the industry, business strategy, plans, goals and expectations concerning market position, product expansion, future operations, margins, profitability, future efficiencies, capital expenditures, liquidity and capital resources and other financial and operating information of Tabula Rasa HealthCare, Inc. (“Company”). When used in this discussion, the words “may,” “believes,” “intends,” “seeks,” “anticipates,” “plans,” “estimates,” “expects,” “should,” “assumes,” “continues,” “could,” “will,” “future” and the negative of these or similar terms and phrases are intended to identify forward-looking statements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this presentation. The Company’s actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.

This presentation also contains estimates and other statistical data made by independent parties and by the Company relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates.

This presentation includes certain non-GAAP financial measures as defined by SEC rules. As required by Regulation G, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in the Appendix.



Investment Highl ights

• Creator and Developer of a new market category of Adverse Drug Event (ADE) Identification and Prevention using unique and proprietary multi-drug Medication Risk Mitigation (MRM) matrix

• Prevalence of ADEs represents a large, untapped, and growing market for TRHC’s core services

• TRHC’s scalable solution reduces the risk for ADEs, is documented to improve outcomes, and lowers cost for at-risk providers

• Multiple growth opportunities: Health Plans (PACE, MTM, Part D),Community Pharmacists, Hospital Pharmacists

• Subscription-based, high recurring revenue with expanding margins

1Watanabe JH, McInnis T, Hirsch, JD, Annals of Pharmacother 26March2018 https://www.ncbi.nlm.nih.gov/pubmed/29577766

https://www.ncbi.nlm.nih.gov/pubmed/29577766



$17.2

$29.3

FY17 FY18

Tabula Rasa HealthCare at a Glance

Revenue ($M) Adjusted EBITDA ($M)

$133.5

$204.3

FY17 FY18

Tabula Rasa HealthCare has developed a proprietary, cloud-based software platform that reduces adverse drug events and lowers healthcare costs in at-risk populations

+ Founded in late 2009

+ First health plan contract 1/1/2011

+ HQ in Moorestown, NJ

+ ~1,300 employees

+ Serving ~225 healthcare organizations and 15,000+ pharmacies

+ 8 clinical intelligence call centers

+ 98% recurring revenue retention

+ Strong IP Patents & Significant Science

+ Multi-billion dollar U.S. TAM



Impact of ADEs Annual ly in the U.S .A D E s a re c o l l i n e a r w i t h t h e n u m b e r o f m e d s

Physician office visits

3.5 millionHospitalizations

125,000

Affected hospital stays

2 million20% of Re-admissions

1.7 to 4.6Increased days per affected

hospital stay

1.7 to 4.6

Emergency department visits

1 millionDeaths

100,000Deaths

150,000

RIP

Approximately 20 million people

39% of seniors in U.S. on 5+ meds

https://www.cdc.gov/nchs/data/hus/hus15.pdf#079

3

6

13

2022

18-34 35-49 50-64 65-79 80+

Average Number of Prescriptions Filled

Annually by Age

1994, 14% Seniors on > 5 Rx meds2014, 42% Seniors on > 5 Rx med

2018, 20% Seniors experienced ADELown Institute, Medication Overload, April 2018



8

TRHC ’s Propr ietary Mult i -Drug Ana lys is Sof twareG o e s b e y o n d s i m p l e n u m b e r o f m e d s , t o a d d r o o t c a u s e s c i e n c e

TRHC’s novel software assesses the combined risk of a patient’s medications in aggregate and guides pharmacists and

prescribers toward individualized medication decision support

One-to-One Drug Risk Analysis Simultaneous Multi-Drug Risk Analysis

This antiquated and obsolete one-to-one drug interaction software is the current

industry standard and lacks the ability to assess the aggregate ADE risk of a patient

unique medication regimen



Risk Strat if icat ion Sample Analysis

TRHC stratifies populations using the same science principles, providing a view into the risk and

opportunities across patient cohorts.

0

500

1000

1500

2000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49

Medication Risk Score Distribution (N=24,251 Medicare Members )

High risk

Very high risk

MedWise Risk Score

Nu

mb

er

of

Pati

ents



8

T R H C ’s P ro p r i e t a r y M e d W i s e R i s k S c o re I s C o r re l a t e d t o A n n u a l M e d i c a l S p e n d

11 1716 3029282524231210976 22210 8

TRHC’s MedWise Risk Score34-43

272621 151413 201918 31-33

543

20

+ =

hig

h r

isk

Lower drug risk correlates with lower medical costs

An

nu

aliz

ed

Me

dic

al S

pe

nd

(20

16

do

llars

)

• Extracted from >13 MM patients medical and pharmacy claims.• Does not include medications that were OTC, Herbal, Recreational, Samples, $4 Generics.

Every numerical change in a patient medication risk score equates to +/- $550 of medical expense

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000



8

P ro ve n Re s u l t s A c ro s s Po p u l a t i o n s

At-Risk: Landmark

Part D: EMTM Year One ResultsPACE: Northeast Client

PACE: West Coast Client

• CMS launched an Enhanced Medication Therapy Management pilot in 2017

• Goal: Reduce total medical expenses by 2% in five years

• Population Size: 240,000 Part D Members, 2017 15,000 Members Intervene in 2017

• TRHC Offering: TRHC worked with a consortium of BCBS plans to utilize TRHC’s MRM and medication interventions

2.08%

TRHC’s Year One Results

$38M in AnnualMedical Saving, or

$2,500 per Intervened Member

• In 2018, Landmark Health, TRHC’s first license customer, conducted a study of 1,000 of their at-risk members

• Study methodology: A group utilizing TRHC’s MedWise and a control group

• Results: MedWise helped Landmark realized ~$2 million of annual savings due to reductions in ER visits and hospital days

~$4,000 Reduction in annual medical expense per member

Hospital Utilization

0

2

4

6

8

10

Q4 2015 Q4 2016 Q4 2017 Q4 2018Ho

spit

aliz

atio

ns

per

10

0 m

emb

ers

per

mo

nth

Emergency Room Utilization

0

2

4

6

8

10

12

14

16

18

Q4 2016 Q4 2017 Q4 2018

ER v

isit

s p

er1

00

mem

ber

s p

er m

on

th


Medication Risk Identification & Mitigation 10Proprietary and Confidential -- © 2019 Tabula Rasa HealthCare, Inc.

Our Markets &Growth Strategy



MarketServed

PACEPayors &

PharmacistsMedicare

Part DCommunity Pharmacies

Hospitals

End User ProvidersPayors &

PharmacistsPart D MTM /

Medicaid MTMPharmacists Providers

Revenue Model

PMPM PMPM SaaS/License SaaS/License SaaS/License

MRM Matrix 2019 2020 2020

Unique Features

• Prospective prescriber-centric tool

• Secure messaging with TRHC pharmacists

• Closed, at-risk population

• Retrospective for payors: risk-stratification of a large cohort

• Concurrent for pharmacists: at the pharmacy prior to being filled

• Patient outreach regarding ADEs, safety concerns, & adherence

• Targeted Medication Reviews (TMR)

• RXCompanion software platform licensed to national pharmacies

• Patient engagement software forpharmacists

• Deployed in over 10,000 nationwide

• Precision dosing software for IVmedications

• Deployed in over 100 sites and used by more than 1,000 clinicians world-wide

Tabula Rasa Medication Risk Mit igation Product Portfol io



Payors

Pharmacists & At-Risk Providers

H o w b i g a re t h e m a r ke t s w e fo c u s u p o n ?

CURRENT TAM $8.5 BillionTOTAL TAM (Including Emerging Markets) $16.0 Billion

PACE $1.0 BillionMedicare Heath Plans $1.5 BillionMedicaid Managed Care $2.5 BillionCommercial Health Plans $2.5 Billion

U.S. Pharmacists $1.0 Billion

Hospitals $0.5 BillionInternational Pharmacists $7.0 Billion

Medicare and Medicaid estimated at $3 PMPM – Commercial estimated at $1 PMPM

Pharmacists estimated at $250/mo – Hospitals estimated at $2.5k/mo



I n 2 0 1 1 w e s t a r t e d w i t h PA C E . I n 2 0 1 6 - 2 0 1 9 , w e a d d e d o t h e r c o m p a n i e s t h a t w e r e PA C E - f o c u s e d , f o l l o w e d b y C o m m u n i t y & H o s p i t a l P h a r m a c i s t s - f o c u s e d c o m p a n i e s .

= PACE focused = Pharmacist focused



Leading Provider of MTM Services

leveraging 6 Call Centers to manage

Over 8 Million Patients Served by Over 400

Health Plans Leading Provider of Precision Dosing of

Parenteral Medications in

Hospitals, Home IV Therapy

Leading Science in Medication Safety

With Proven ECHO Outcomes

TRHC * PrescribeWellness * SinfoniaRx * DoseMeRx

Drive Medication Safety, Adherence and Outcomes

Leading Network of 10,000+ Community Pharmacies Single

Technology Platform

Ta b u l a R a s a H e a l t h C a re : L e a d i n g P ro v i d e r i n M e d i c a t i o n S a fe t y



PACE Enrollment Poised to Accelerate

Historical PACE Enrollment PACE 2.0

Annual Growth from 2015-2019: 8-10% Anticipated Future Growth Rate: >15%

+ ~45,000 Patients enrolled as of year end 2018

+ 240+ PACE Centers in 31 States

+ PACE 2.0 launched by the National PACE Association (NPA) in Spring of 2018

+ Goal of growing PACE membership 5x to 200,000 by 2028

June 2019 CMS updated and modernized PACE rules to include:

+ Reducing administrative burden for PACE organizations

+ Allowing PACE members to keep their primary physician

+ Clarifying and simplifying enrollment policies

+ Setting requirements for quality improvement

Positive PACE Regulatory Changes

Tabula Rasa currently serves ~13,000 PACE members with MRM capabilities

-

10,000

20,000

30,000

40,000

50,000

Dec

-09

Au

g-10

Ap

r-1

1

Dec

-11

Au

g-12

Ap

r-1

3

Dec

-13

Au

g-14

Ap

r-1

5

Dec

-15

Au

g-16

Ap

r-1

7

Dec

-17

Au

g-18

Ap

r-1

9

Pace Enrollment 201120k enrolled

201845k enrolled

2018100k target enrollment

2025200k target enrollment



Part D Medication Therapy Management (MTM)

Historical Part D Enrollment Sinfonia MTM Offering

CAGR: 5.8%

+ 43.4 million seniors are enrolled in a Part D plan

+ Beginning in January 2019, Medicare shifted MTM from an administrative (ALR) expense to a medical (MLR)expense which should drive adoption

+ Sinfonia is the premier provider of MTM to Part D providers

+ Member outreach regarding safety concerns, adherence, and cost savings opportunities

+ Targeted Medication Reviews (TMR)

+ RXCompanion software platform

+ Star improvement programs

Sinfonia by the numbers

Tabula Rasa’s SinfoníaRx a leading MTM provider for Part D

2223.4

24.8 25.9 26.928.7

30.9

34.736.8

38.640.4

41.943.4

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Par

t D

Mem

ber

s (m

illio

ns)

+ ~8 million eligible Part D members

+ ~450 Part D plans managed

+ Marquee customer base:



E M T M P i l o t

+ Five-year pilot program launched by CMMI

+ Opportunity for stand-alone Medicare Part D programs to right-size MTM investments, optimize medication use and improve care coordination

+ Five separate regions to compete with innovated approaches

+ Goal to reduce overall Medicare expenses by 2% by the fifth year

Year One: 2017 Potential opportunityYear Two: 2018

+ TRHC provided medication intervention

+ Intervened on

>15,000 patients

+ TRHC & community pharmacist interventions

+ Intervened on

> 24,000 patients

Enhanced Medication Therapy Management (EMTM)Medicare Fee-for-Service

patients for TRHC

+ Northern Plains Alliance + ~200,000 Medicare Part D Patients

Exceeded the Goal in Year One: Part A and B spending decreased by 2.08%, net savings realized $38M ($2,500 per intervened member)

• Expand to other regions

• ~45 million Total Medicare Part D lives

• 2020 Pharmacogenomic Testing

Year Three: 2019

+ Provide members with MedWise app

+ Goal to intervened on

>35,000 patients



Community Pharmacies

PrescribeWellness Offering PrescribeWellness by the Numbers

+ 10,000+ community pharmacy customers

+ 40 million patients in the network

+ 277 million patients within 5 miles of a PW pharmacy

+ 10 million Medicare-eligible patients

+ 90+ Pharmacy management and EMR integrations

Network of 10,000 community pharmacy customers expands Tabula Rasa’s reach to the patient and Sinfonia’s market opportunity

PrescribeWellness’ SaaS-based data and analytics software works with community pharmacists to engage and better service their patients

The solution reviews immunization databases, offers medication synchronization, Medicare Advantage plan review, biometric screening

Expanded Daily

PatientEngagement



Long-Term Growth Strategy

Expand PACE Leadership

Cross-Sell

Drive TRHC’s MRM Further into Healthcare

Accelerate Licensing

Opportunities

+ Add new PACE providers

+ Grow organically within existing customer base

+ Currently service 85% of PACE providers, but only 15% utilize TRHC’s entire solution suite

+ Up-sell MRM to MTM customers

+ Launch an MRM solution that easily integrates into EMRs

+ Connect with PrescribeWellness’ >10,000 community pharmacies

+ Leverage DoseMe’s hospital customer base

Strategic Acquisitions

+ Enhance medication safety offering

+ Enter new markets at scale



Financial Overview



Financial Highl ights

Strong Visibility into Future Top Line Growth

+ Very high customer and revenue retention rates

+ Consistent underlying same-store growth within customer base

+ Additive acquisitions present compelling cross-selling opportunities

Margin Expansion

+ Product revenue increasingly becoming a smaller portion of total revenue

+ Services businesses carry higher margins

Rapidly Growing Total Addressable Market

+ Third-party validated ROI in multiple markets and various applications

+ Evolving payment models pushing more healthcare organization into at-risk setting

PACE - Product, 48%

PACE - Service, 14%

Medicare, 22%

Pharmacies, 12%

Medicaid, ~1%

Commercial, ~1%Skilled Nuring Facilities,

2%

Hospitals, <1%

2019 Revenue Breakdown



Track Record of Consistent Growth

22

Annual Revenue ($M) Annual Adjusted EBITDA ($M)

Per-Member Per-Month and Subscription-Based Revenue Models

98% Revenue Retention

Exclusive and Multi-year Contracts

Service revenue growth of approximately >100% in 2018

$70

$95

$133

$204

$285

2015 2016 2017 2018 2019E

$8.6

$14.3

$17.2

$29.3

$38.5

2015 2016 2017 2018 2019E



Strong Financial Performance

Adjusted EBITDA ($M)

Revenue ($M) Clients

Gross profit ($M)

Margin 29.8% 32.6% 31.6% 27.9% 14.4% 9.3% 9.8% 12.9%

$61.0

$43.9

$204.3

$133.4

Product Revenue Service Revenue

Margin

$95.2 112.76

$38.2

$91.5

FY17 FY18

$17.2

$29.3

FY17 FY18

170

224

FY17 FY18

$39.8

$66.6

FY17 FY18

$27.2 $31.0

$16.8

$30.0

1Q'18 1Q'19

$4.3

$5.7

1Q'18 1Q'19

$12.3

$19.3

1Q'18 1Q'19



GM: Low 20’s

Medicat ion R isk Management Offer ing Summary

PACE Payors and At-Risk Providers

Technology

Clinical Services

Medication Fulfillment

Technology Technology

Clinical Services

PMPM + FFS PMPM or PUMPM SaaS

Gross Margin: Low 20s Gross Margin: ~40% Gross Margin: ~80%



F inanc ia l Out look

$68m - $73m

($10.9)m – ($10.1)m

$8.5m - $9.5m

Revenue

Net Income (Loss)

Adjusted EBITDA

2Q19 Guidance 2019 Guidance

$280m - $290m

$(39.3)m - $(35.1)m

$36.0m - $41.0m



Appendix



Prof ic ient Management Team

Calvin H. Knowlton, PhD

Chief Executive Officer

Orsula V. Knowlton PharmD, MBA

Chief Marketing & New Business Development Officer

Janice R. Casserly, JD

SVP, Human Resources

Brian W. Adams

Chief Financial Officer

Kevin J. Dill, JD

Chief Compliance Officer & General Counsel

Joseph J. Filippoli, MBA

Chief Information Officer

Brian J. Litten, JD

Chief Strategy Officer

Robert L. Alesiani, PharmD

Chief Pharmacotherapy Officer

Michael Greenhalgh, RPh

Chief Operations Officer

Chief Client Officer

Kevin P. Boesen, PharmD

Chief Sales Officer

Richard O. Schamp, MD

Chief Medical Officer

Philip W. Heath, MS

Chief Administrative Officer

Thomas N. Wilson

Chief Technology Innovations Officer

Chief Accounting Officer

Andrea C. Speers

Michael J. Ristagno, PharmD, MBA



Unique Market Pos i t ion, H igh Barr iers to Entry and Deep Compet i t ive Moat

Analytics platform demonstrating optimized outcomes

Extensive Clinical & Management Expertise

First Mover Advantage

Market Leadership

Direct Sales to Payers with Ongoing Client Liaison Support

High Customer Retention

Long-Term Contracts

Highly Scalable Platform

Aligned Incentives with Value-Based Care

TRHC Intellectual Property

High Barriers to EntrySolid Competitive Advantage

Medication Risk Mitigation Patents

Medication Management System and Method#8,392,220

Medication Management System and MethodMedication Risk Mitigation Matrix System and MethodLong QT-JT: Index & Score Method

Issued Pending

Proprietary Multidrug Medication Risk Matrix

Data analytics demonstrating up to 50%

reductions in hospitalizations, ER Visits

and readmissions

Applicable in a Variety of Markets (Pace, Part-D Opioids,

ACO)

Proprietary Medication Risk

Score

Adaptable Solution Delivery

(License, PMPM,

Product)



TRHC Inte l lectua l Property

Medication Risk Mitigation Patents

• Medication Management System and Method

• 3/5/2013

• # 8,392,220 • Medication Management System and Method (filed 12/22/14)

• Medication Risk Mitigation Matrix System and Method (filed 1/28/16)

• Long QT-JT: Index & Score Method (filed 5/19/16)• Population Based Medication Risk Stratification and

Personalized Risk Score (filed 10/31/17)

Medication Risk Mitigation Copyrights & Trademarks

• Source Code and Manuals of EireneRx® - 2012, 2015

Copyrights Trademarks

Issued Pending

• Tabula Rasa HealthCare• CareKinesis• SinfoniaRx• Capstone Performance

Systems• Medliance• Mediture• Cognify• Peak• MedWise

• EireneRx & EireneRxCS• CareVention HealthCare• NiaRx• Medication Risk

Mitigationby CareKinesis

• Jack Russell Software Company

Proprietary Undergirding of Scientific Processes and Application



Balance Sheet Summary

Period Ended

December 31, 2018 December 31, 2017

Cash $25,029 $10,430

Accounts receivable, net 27,950 17,087

Other current assets 10,332 $7,934

Current assets $63,311 $35,451

Noncurrent assets 207,646 152,381

Total assets $270,957 $187,832

Long term debt 1,097 1,705

Line of credit 45,000 -

Other liabilities 85,851 62,239

Total liabilities $131,948 $63,944

Shareholders’ equity $139,009 $123,888

Total liabilities & shareholders’ equity $270,957 $187,832

($ in thousands)



Three Months Ended March 31,

2019 2018

Net income (loss) ($10,979) ($18,094)

Add:

Interest expense 2,693 63

Income tax expense (benefit) (4,041) 2,650

Depreciation and amortization 6,299 4,048

Change in fair value of acquisition-related contingent consideration expense (income)

1,176 13,521

Acquisition-related expense 3,691 164

Stock-based compensation expense 6,852 1,945

Adjusted EBITDA $5,691 $4,297

Reconc i l iat ion of GAAP Net Income to Adjusted EBITDA at Year End

($ in thousands)

Adjusted EBITDA consists of net income (loss) plus certain other expenses, which includes interest expense, provision (benefit) for income tax, depreciation and amortization, change in fair value of acquisition-related contingent consideration expense (income), acquisition-related expense, payroll tax expense related to stock option exercises and stock-based compensation expense. TRHC believes the exclusion of these items assists in providing a more complete understanding of the company’s underlying operations results and trends and allows for comparability with TRHC’s peer company index and industry and to be more consistent with TRHC’s expected capital structure on a going forward basis.



Reconc i l iat ion of GAAP Net Income to Adjusted EBITDA

($ in thousands)

Adjusted EBITDA consists of net income (loss) plus certain other expenses, which includes interest expense, provision (benefit) for income tax, depreciation and amortization, change in fair value of acquisition-related contingent consideration expense, severance expense related to the termination of two members of senior management, change in fair value of warrant liability, loss on extinguishment of debt, acquisition-related expense, payroll tax expense related to stock option exercises and stock-based compensation expense. TRHC believes the exclusion of these items assists in providing a more complete understanding of the company’s underlying operations results and trends and allows for comparability with TRHC’s peer company index and industry and to be more consistent with TRHC’s expected capital structure on a going forward basis.

2015 2016 2017 2018

Net income ($2,864) $5,521 $12,791 ($47,269)

Add:

Interest expense 5,915 4,488 688 906

Income tax expense (benefit) 328 541 (9,339) (3,376)

Depreciation and amortization 3,933 5,115 9,512 16,802

Change in fair value of acquisition-related contingent consideration (income) expense (2,059) (283) (6,173) 49,468

Severance expense - - - 390

Change in FV of warrant liability 2,786 (639) - -

Loss on extinguishment of debt - 6,411 - -

Acquisition-related expenses - - 921 1,901

Payroll tax expense related to stock option exercises - - 95 138

Stock-based compensation expense 565 4,250 8,752 10,361

Adjusted EBITDA $8,604 $14,362 $17,247 $29,321

Risk Stratification Strategy for - jefferies.com Rasa Healthcare Inc.pdf · 2019 (NASDAQ: TRHC)...

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