MEASURABLY SUPERIOR OUTCOMES

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1 HELPING CLIENTS ACHIEVE MEASURABLY SUPERIOR OUTCOMES Investor Meeting R. Andrew Eckert Eclipsys President & CEO September 2007

2 Safe Harbor Statement SAFE HARBOR STATEMENT: FORWARD-LOOKING DISCLOSURE This presentation contains forward-looking statements based on current management expectations that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove incorrect, could cause Eclipsys results to differ materially from these expectations. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. However, actual results might differ materially from these statements due to a number of risks and uncertainties, such as slower-than-expected business development or new account implementation, or higher-than-expected costs to develop products, meet service commitments or sign new contracts. Additional risks that contribute to the uncertain nature of these statements include the factors described from time to time in Eclipsys s periodic Securities and Exchange Commission reports and filings. Eclipsys undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which they were made. USE OF NON-GAAP MEASUREMENTS In this presentation certain non-gaap measurements will be provided, which present operating results on a basis excluding or including certain items that are required to be disclosed by GAAP. This non-gaap financial information is provided as supplementary information and is not an alternative to GAAP. Management and some investors use these measures to supplement their analysis of Eclipsys financial position and results of operations. A reconciliation of the non- GAAP measures provided during this meeting to the most directly comparable GAAP measurements can be found on the Non-GAAP Reconciliation section of our Investor Relations website at 2

3 Today s Agenda Corporate Overview Andy Eckert, President & CEO Sales and Marketing Update Jay Deady, EVP Client Solutions Client Success Story: Piedmont Healthcare William M. McClatchey, MD, FACP, FACR Chief Medical Information Officer Operations Update Frank Stearns, EVP, Client Operations Development Update Joe Petro, SVP, Product Development Q & A Outcomes Center Tour/Lunch 3

4 Eclipsys Today Multiple major offices, including two in India New Outcomes Center More than 2350 employees Large & prestigious client base Eclipsys drives clinical adoption Twice as many physicians use Eclipsys computerized physician order entry (CPOE) than any other vendor Most balanced adoption across physicians and nurses in industry High-acuity patient management is core competency 4

5 Corporate Overview Improved Senior Management Team Improved Client Focus Operational Initiatives Taking Hold Improving Financial Results International Market Entry Future Success Factors 5

6 Eclipsys Executive Staff Robert J. Colletti SVP and Chief Financial Officer 1997 Brian W. Copple Chief Legal Officer, General Counsel & Corporate Secretary 2005 Nitin Deshpande President Eclipsys India 2007 John Gomez EVP Chief Technology Strategy Officer 2003 Joe Petro SVP Product Development 2007 Jan Smith SVP Human Resources 2006 Jay Deady EVP Client Solutions 2006 John McAuley SVP Outsourcing 2006 Frank Stearns EVP Client Operations

7 Upgraded Eclipsys Organization Named 24 new VPs, SVPs, EVPs since % internal promotions and 40% new hires Improved employee retention 25% 24% 20% 15% FY -05 FY % 9% 5% 0% Voluntar y Attr ition 7

8 Corporate Overview Improved Senior Management Team Improved Client Focus Operational Initiatives Taking Hold Improving Financial Results International Market Entry Future Success Factors 8

9 Eclipsys Core Values Client Focus We anticipate, understand and focus on our clients needs and make those needs our first priority. Integrity We uphold and accept only the highest standards with respect to honesty, ethics and morality. Mutual Respect We foster a culture in which individual skills, experience and talent are valued and used to our clients advantage. Commitment to Excellence We commit to operational excellence and continuous improvement in all that we do. Open Communication We promote an environment of teamwork in which the sharing of knowledge, ideas and opinions is expected of everyone. Passion We demonstrate a passion in all that we do for our clients and employees. 9

10 Recent KLAS Scores Sunrise Clinical Manager Business Indicators Implemented (new or release) in last 3 years Part of long-term plan Would you buy it again Keeps all promises A fair contract Contract is complete Timely enhancement releases Support costs as expected Recommend to a friend/peer 2007 KLAS Enterprises, LLC. All rights reserved. 10

11 Recent KLAS Scores Sunrise Patient Financials Detail Indicators Real problem resolution Product quality rating Implementation on time Implementation within budget/cost Quality of documentation Quality of releases or updates Production errors addressed quickly Interfaces met deadlines Quality of custom work Technology easy to implement & support System response time 2007 KLAS Enterprises, LLC. All rights reserved. 11

12 Luminary Client Relationships 12

13 Corporate Overview Improved Senior Management Team Improved Client Focus Operational Initiatives Taking Hold Improving Financial Results International Market Entry Future Success Factors 13

14 Operational Initiatives Taking Hold India build-out of R&D and Client Support capacity Wholly owned, fully integrated offshore operation 225+ employees, 400+ employees by 2008 Increase R&D capacity to enhance: Sunrise Clinical Manager 5. 0 Sunrise Revenue Cycle Management Sunrise Ambulatory Care Sunrise Pharmacy Ancillary Applications Sales Process and Outcomes messaging yielding results Continue investment in Client Services and Support Scale investment to demand 14

15 Agenda Improved Senior Management Team Improved Client Focus Operational Initiatives Taking Hold Improving Financial Results International Market Entry Future Success Factors 15

16 Improving Financial Results Revenue $254.7 $309.1 $383.3 $427.6 EPS* ($1.23) ($0.70) $0.01 $0.57 Cash $151 $122 $114 $130 * excludes impact of FAS123R and restructuring costs 16

17 Corporate Overview Improved Senior Management Team Improved Client Focus Operational Initiatives Taking Hold Improving Financial Results International Market Entry Future Success Factors 17

18 International Market Entry Estimated $30B Market Opportunity Non-North American HIT is 50% of total global spend Initial Targets: Asia: $600M with 15%+ CAGR Middle East: $200M with 20% CAGR Key Success Factors Establish luminary Anchor clients Establish Impactful regional Partnerships Leverage Eclipsys India Build Management Team 18

19 Corporate Overview Improved Senior Management Team Focus on Client Satisfaction Working Operational Initiatives Taking Hold Sales Reorganization Yielding Results Improving Financial Results International Plan Future Success Factors 19

20 Future Success Factors Increase software sales Increase market share of new client wins Sunrise Clinical Manager Sunrise Revenue Cycle Management Improve up-selling performance in existing clients Improve overall company margins Eclipsys India Drive premium pricing Pay as you go Leverage recent infrastructure investments Scale incremental capacity to demand 20

21 Today s Agenda Corporate Overview Andy Eckert, President & CEO Sales and Marketing Update Jay Deady, EVP Client Solutions Client Success Story: Piedmont Healthcare William M. McClatchey, MD, FACP, FACR Chief Medical Information Officer Operations Update Frank Stearns, EVP, Client Operations Development Update Joe Petro, SVP, Product Development Q & A Outcomes Center Tour/Lunch 21

22 HELPING CLIENTS ACHIEVE MEASURABLY SUPERIOR OUTCOMES Investor Meeting Jay Deady Eclipsys Executive Vice President, Client Solutions September 18, 2007

23 Agenda Organization Focused Markets Update Sales Leading Indicators Update Solutions Update Outcomes Industry Leadership Future Goals and Success Factors 23

24 Client Solutions Organization 24

25 Organizational Update Approximately 125 field quota carriers Enterprise New Business Enterprise Client Specialty Sales Significant upgrade to Sales Support organization Demo technology deployment upgraded Demo teams aligned and upgraded Integrated into Outcomes Methodology process Creation of Solution GM roles Formally own Product Marketing & Management Manage 360 o solution team Solution-level P&L management 25

26 Agenda Organization Focused Markets Update Sales Leading Indicators Update Solutions Update Outcomes Industry Leadership Future Goals and Success Factors 26

27 Eclipsys Solution Penetration Major Solutions Enterprise Clinicals Enterprise Financials Decision Support Leverageable Relationships 31% of all U.S. IDNs 25% of all U.S. facilities >200 beds 31% IDN Penetration Rate 25% > 200 beds 27

28 Market Expansion Opportunities U.S. Enterprise Clinical Market U.S. Revenue-Cycle Market Whitespace SCM Add-ons Services International Expansion Clinicals Revenue Cycle SCM Clients Outsourcing International -No CIS or HIS modules only -350 entities -550 facilities -All > 200 beds -80% over 5 yrs -Doesn t include competitive replacements -12% SCM base penetration -25% of all entities > 200 beds will replace 80% over 5 yrs -30 applications -24 owned -6 partner -20 natively integrated -5 pre-packaged integration -average client purchase = 5 applications -Professional Services -Remote Hosting -Remotely delivered services for self-hosted clients - Canada 7% -World 1% -Focus on Asia- Pac, Middle East -Eclipsys India to provide primary support over time New Business New Business Current Client Specialty Current Client Specialty New Business Current Client Specialty 20-25% Revenues 28

29 Agenda Organization Focused Markets Update Sales Leading Indicators Update Solutions Update Outcomes Industry Leadership Future Goals and Success Factors 29

30 Pipeline by Relationship Segment Pipeline up >50% overall from last year Non-U.S. up>300% overall from last year 30

31 Current Product Funnel 31

32 Market Indicators at Mid-Year RFPs Outcomes Assessments Demos Reference Calls Site Visits Pricing Requests 32

33 Agenda Organization Focused Markets Update Sales Leading Indicators Update Solutions Update Outcomes Industry Leadership Future Goals and Success Factors 33

34 New Applications in Previous Two Major Releases Sunrise Pharmacy Sunrise Ambulatory Care Sunrise Emergency Care Sunrise Enterprise Tracking Board Content Tool & Order Sets Acuity & Nurse Staff Management Sunrise Patient Portal 34

35 New at EUN in October with Sunrise 5.0 Enhanced ambulatory content Knowledge-Based Charting 2.0 with integrated acuity Medication Reconciliation Sunrise Access Management Sunrise Analytics 2.0 Additional content offerings 35

36 Converging Quality Reporting with Clinical Efficiency: Getting perfect scores and providing best care Manual Reporting (retrospective) Automated Reporting (retrospective) Synchronous Care Predictive Care Retrospective Patient is gone Concurrent Patient is still here Prospective Analyzes previous & net-new Old-school paper chart reviews: 1. Inefficient and labor-intensive 2. Too late to help cases discharged 3. Too late for decision-makers Real-time status and remediation: 1. View process successes and failures 2. Alert-driven treatment alteration 3. Maximize reportable quality Leveraging the power of computerization: 1. Virtually handless and nearly cost-free 2. Near-immediate reporting as needed 2. Quicker, but still not interventional Interactivity for care optimization: 1. Prompts for needs and alternatives 2. Best practice from the get-go 3. Maximize reportable quality 36

37 Agenda Organization Focused Markets Update Sales Leading Indicators Update Solutions Update Outcomes Industry Leadership Future Goals and Success Factors 37

38 Understanding and Quantifying Value Five outcomes categories Adoption To To increase increase physician physician and and staff staff adoption adoption Clinical Quality To To maximize maximize clinical clinical benefits, benefits, reduce reduce medical medical errors, errors, medication medication errors, errors, adverse adverse drug drug events events Constituent Satisfaction To To increase increase patient, patient, physician, physician, staff staff satisfaction satisfaction Patients Efficiency To To reduce reduce Lab, Lab, Radiology, Radiology, and and ancillary ancillary support support service service TAT TAT 38 Cost-Effectiveness To To reduce reduce cost cost and and practice practice variation variation

39 Outcomes Assessment Team Client Satisfaction Identify & Disseminate Best Practice Eclipsys Outcome Methodology client presentations Documented Outcomes Outcomes Database Outcome Toolkits Measurement & Outcome Leadership Drive Market Share Engaged 90% of qualified accounts Assessments, outcomes methodology Outcome Analysis Outcome assessment Utilized by Professional Services 39

40 Eclipsys Outcomes Evolution Rest of Industry Hospital power statistics Outcome measurement methodology Standardize & automate Eclipsys TODAY Identify & disseminate best practices Eclipsys Outcomes Evolution 17% in LOS 76% allergy doc 85% CPOE in 1 year 57% med order TAT 43% ED LWBS Collaborative approach to identify linkages between metric improvement and Eclipsys solutions Evidence-based & industry-aligned outcome toolkits Integrate outcome toolkits with implementation. Aggregate outcomes across the Eclipsys community through an Outcomes Database. Great outcomes achieved by customers! Not repeatable Majority of industry Developed a methodology that has led to documented outcomes! Needed a standard approach with measurements Outcome toolkits in various phases of rollout! Cross-organization commitment Transforms from a postinstall project to the basis for install planning Measurement is not single facility but by % of client base adoption 40

41 Knowledge-Based Charting Better Compliance Proven at LIVE Sites Core Measures Performance Summary for Pneumonia 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Percent of Pneumonia Patients Assessed and Given Influenza Pneumonia (PN) Core Measures: Collective Performance versus U.S. and Regional CMS Averages Percent of Pneumonia Patients Assessed and Given Percent of Pneumonia Patients Given Initial Antibiotic(s) within Percent of Pneumonia Patients Given Oxygenation Assessment Percent of Pneumonia Patients Given Smoking Cessation Percent of Pneumonia Patients Given the Most Appropriate Initial Percent of Pneumonia Patients Whose Initial Emergency Room KBC clients consistently beat U.S. and regional CMS averages Eclipsys 19-KBC-Facility Cumulative Pct Performance Level 2 CMS U.S. Average Cumulative CMS Regional Average The KBC Client Cohort collectively beat U.S. averages for: Heart Attack (AMI) 6 of 7 Core Measures Heart Failure (HF) 4 of 4 Core Measures Pneumonia (PN) 7 of 7 Core Measures Surgical (SCIP) 2 of 2 Core Measures The KBC Client Cohort collectively beat computed mean regional averages for: Heart Attack (AMI) 6 of 7 Core Measures Heart Failure (HF) 4 of 4 Core Measures Pneumonia (PN) 6 of 7 Core Measures Surgical (SCIP) 2 of 2 Core Measures 41

42 Agenda Organization Focused Markets Update Sales Leading Indicators Update Solutions Update Outcomes Industry Leadership Future Goals and Success Factors 42

43 Future Goals and Success Factors Continue to execute on licensed software and net-new clinical client wins Continue deal and pipeline momentum of revenue cycle Accelerate white space add-on sales opportunities within the base 43

44 Today s Agenda Corporate Overview Andy Eckert, President & CEO Sales and Marketing Update Jay Deady, EVP Client Solutions Client Success Story: Piedmont Healthcare William M. McClatchey, MD, FACP, FACR Chief Medical Information Officer Operations Update Frank Stearns, EVP, Client Operations Development Update Joe Petro, SVP, Product Development Q & A Outcomes Center Tour/Lunch 44

45 HELPING CLIENTS ACHIEVE MEASURABLY SUPERIOR OUTCOMES Investor Meeting Frank Stearns Executive Vice President, Client Operations September 2007

46 Agenda Integrated Organization Services and Activations Update Improving Margins Technology Solutions Services Update Product Support Services Update Future Goals and Success Factors 46

47 Client Operations Organization Frank Stearns Executive VP Technology Solution Services Professional Services Support Services Services Sales 47

48 Agenda Integrated Organization Services and Activations Update Improving Margins Technology Solutions Services Update Product Support Services Update Future Goals and Success Factors 48

49 Services Updates Hired Charles Wagner, SVP, Professional Services Former IBM/Healthlink executive Increased capacity and improving margins in 2007 Added 80+ new Client Operations staff in the Past 12 months Successful Client Operations Summit 49

50 Client Operations: An Experienced Team * Average Client Operations employee has 22 years professional service * 86% of the Client Operations Team has more than 20 years professional service Years of Service: Less than 5 years 5 9 years years More than 20 years Client Operations 3% 11% 22% 64% Less than 5 years 5-9 years years More than 20 years 50

51 Services Updates Strategies helping to accelerate activations Fine-tuned Outcomes Methodology Better project resourcing and management Improved documentation and training Increased support for on-site resources Replication of Outcomes Methodology from successful activations Calgary Health Region NYU Medical Center West Penn Allegheny Health System St. Barnabas Hospital Sheppard Pratt Health System 51

52 Activation Stats 80% on-time, on-budget Sunrise Clinical Manager 4.5 upgrades 59 clients live Major Revenue Cycle Management activations 12 activations January-August were upgrades to version 11.6 in first 6 months of 2007 More than 200 total activations in last 12 months 52

53 Other Activation Stats Since October 2006 Investor Meeting Sunrise Pharmacy Knowledge-Based Medication Administration Sunrise Ambulatory Care 53

54 Agenda Integrated Organization Services and Activations Update Improving Margins Technology Solutions Services Update Product Support Services Update Future Goals and Success Factors 54

55 Improving Margins By mid-2008, reduce timeline, complexity and cost of implementation by 30% New resource-allocation strategy Deploy content strategy Institute prescriptive deployment Client Operations in India 55

56 Agenda Integrated Organization Services and Activations Update Improving Margins Technology Solutions Services Update Product Support Services Update Future Goals and Success Factors 56

57 Update: Technology Solution Services 25% of Sunrise Clinical Manager clients remote hosted Included in upwards of 40% of new sales deals Running most solutions Current key initiatives Remote monitoring Leveraging resources in India 57

58 Agenda Integrated Organization Services and Activations Update Improving Margins Technology Solutions Services Update Product Support Services Update Future Goals and Success Factors 58

59 Update: Product Support Services Client satisfaction Driving down open support cases Margin enhancement Providing value-added services Leveraging systems to be more efficient Augmenting staff in India Backlog Nov 2006 Sept

60 Agenda Integrated Organization Services and Activations Update Improving Margins Technology Solutions Services Update Product Support Services Update Future Goals and Success Factors 60

61 Future Goals and Success Factors Continue to improve client satisfaction Obtain even more-predictable outcomes with our implementations Improve operating margins 61

62 Today s Agenda Corporate Overview Andy Eckert, President & CEO Sales and Marketing Update Jay Deady, EVP Client Solutions Client Success Story: Piedmont Healthcare William M. McClatchey, MD, FACP, FACR Chief Medical Information Officer Operations Update Frank Stearns, EVP, Client Operations Development Update Joe Petro, SVP, Product Development Q & A Outcomes Center Tour/Lunch 62

63 HELPING CLIENTS ACHIEVE MEASURABLY SUPERIOR OUTCOMES Investor Meeting Joe Petro Senior Vice President, Product Development September 18, 2007

64 Agenda Background and Early Observations Changes to Date Methodology and Development Strategy Future Direction 64

65 Background TrueAdvantage SVP, Technology Development and Operations Drove company s product and partnership strategies, significantly expanding his development teams and leading development of a patent-pending, content-production platform Aspect Development (acquired by i2) VP, Global Content solutions Grew team from 60 to more than 1,000 employees worldwide, with majority located in India and balance in Europe, U.S. and Asia-Pacific Member of Aspect Development s senior leadership team; revenue grew 140 percent in five years. 65

66 Organization Chart 500 Trained Professionals Joe Petro Senior VP Global Operations Program Management Office Clinical Development Revenue Cycle Management Platform Development 66

67 Early Observations Substantial development talent Solid core product foundation Well-written and stable Large clients up and running and satisfied High rates of client satisfaction Client-engagement process is highly synergistic and responsive Perfectly aligned with support and services Poised for cross-product integrated product expansion Creating leverage in India 67

68 Agenda Background and Early Observations Changes to Date Methodology and Development Strategy Future Direction 68

69 Changes to Date Increased bandwidth in cross-product development Emphasized India leverage Cross-product alignment of Product Development Team (PDT) with Solution Management Group (SMG) Commitment to disciplined Development Process and Methodology Increased autonomy Do the right thing culture 69

70 Agenda Background and Early Observations Changes to Date Methodology and Development Strategy Future Direction 70

71 Disciplined Development = On-time, Stable Releases ESF Eclipsys Solution Framework Adaptation of Microsoft Solution Framework (MSF) Milestone-Driven Process Model = Phases Combination of Industry- Standard Development Models Team Model = Role Clusters Clear Accountability, Shared Responsibility Shared Vision Expect Change Best-in-class Product Mindset 71

72 Focus in Development Sunrise 5.0 GA December 2007 Performance and quality gates Continuous improvement through closed-loop development Continued increased bandwidth through expansion of India operations 72

73 Office Locations in India Baroda 1.7M population 3 rd most populated city in state of Gujarat 30,000 students graduating per year (10,000 engineers) Primary industries manufacturing & pharmaceuticals (software/ IT early stage development) Pune 5M population 2 nd most-populated city in state of Maharashtra 7 th largest city in India Considered the Oxford of India due to concentration of colleges / universities (100+) 100,000 graduates per year (30,000 engineers) Primary industries software/it & manufacturing 573

74 India Success Factors Expectation setting and clarity of delivery Different cultures require a different style Adaptation of style do what works and evolve Many offshore projects fail because of weak processes and U.S.-centric communication style Leverage lessons learned (10 years plus) Hire people who have done it successfully Daily operational micromanagement heavy tactical management leading to delivery of strategic milestones 74

75 Agenda Background and Early Observations Changes to Date Methodology and Development Strategy Future Direction 75

76 Future Direction Maturation of the development process and organization based on ESF Leveraging state-of-the-art technologies Service Oriented Architecture 100% Microsoft.NET (Primarily C#) Microsoft SQL Server 2005 and 2008 Microsoft Windows 2008 Lower-weight client Vastly Extending Foundation Services Security and Auditing 100% more exposed objects Windows Communication Framework (WCF) Windows Workflow Foundation (WWF) 76

77 Today s Agenda Corporate Overview Andy Eckert, President & CEO Sales and Marketing Update Jay Deady, EVP Client Solutions Client Success Story: Piedmont Healthcare William M. McClatchey, MD, FACP, FACR Chief Medical Information Officer Operations Update Frank Stearns, EVP, Client Operations Development Update Joe Petro, SVP, Product Development Q & A Outcomes Center Tour/Lunch 77

78 5-Year Operating Margin (EBIT) Overview (*) Key Drivers: Overall revenue growth to approximate 13% - 15% Focus on Improved Revenue mix: Software bookings growth of ~ 20% Increase hosting revenue & margins Eliminate low-margin business Improvement in Professional Services: Revenue growth slightly higher than overall growth Target contribution margin of ~ 35% Leverage India operations across entire Company * excludes impact of FAS123R 78

79 5-Year Operating Margin (EBIT) Summary (*) Estimated overall gross margins of ~ 50% SG&A to approximate 15% -17% of revenue (20% today) Research & development estimated to range from 11% - 13% of revenues 20% operating margin * excludes impact of FAS123R 79

80 Today s Agenda Corporate Overview Andy Eckert, President & CEO Sales and Marketing Update Jay Deady, EVP Client Solutions Client Success Story: Piedmont Healthcare William M. McClatchey, MD, FACP, FACR Chief Medical Information Officer Operations Update Frank Stearns, EVP, Client Operations Development Update Joe Petro, SVP, Product Development Q & A Outcomes Center Tour/Lunch 80

81 HELPING CLIENTS ACHIEVE MEASURABLY SUPERIOR OUTCOMES Investor Meeting Q & A

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