INVESTOR PRESENTATION. August 2012

Transcription

1 INVESTOR PRESENTATION August 2012

2 forward looking statement 2 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.

3 agenda 3 financial OVERVIEW about MERGE growth STRATEGIES Q2 Highlights/Results Financial Strengths Historical Performance Overview Client s Solutions New Business Models Enterprise-Wide Imaging Cross Sell / Up Sell Data & Analytics

4 FINANCIAL OVERVIEW

5 Q2 highlights 5 COMPANY highlights CLIENT highlights SOLUTION highlights Q2 2012: Year over year growth of 11%* Subscription backlog increase of $9M from 12/31/11 Reported results by operating group Year over year growth expected in 2012 while converting to a subscription pricing model iconnect contracts: Franciscan Alliance, Children s Hospital & Research Center in Oakland, Our Lady of Lourdes and St. Vincent Hospital 12 contracts for the Merge Meaningful Use (MU) platform Over 70 Merge clients have already successfully attested for MU Accelerated adoption of subscription model Launched Honeycomb Imaging Archiving Released new version of Merge OrthoPACS, MergePACS, and iconnect Access *Pro Forma

6 pro forma year over year comparison 6 ($ in millions except for per share data) Q Q % change Net sales $63.4 $ % Adjusted net income $1.7 $5.0-66% Adjusted EBITDA $13.6 $ % Cash from business operations $10.2 $6.6 55% Subscription & non-recurring backlog* $62.4 N/A N/A *Comparable information for 2011 is not available due to change in reporting metrics.

7 Q operating group results 7 ($ in millions ) Healthcare Healthcare DNA Net sales $54.9 $8.5 % of sales from subscription 7% 66% Adjusted EBITDA $14.5 $0.0 Subscription backlog at period end $11.9 $22.2 Non-recurring backlog at period end $28.3 $0.0

8 financial strengths 8 Top Line Revenue Expect continued growth on an annualized basis vs Subscription model contract signings to accelerate in second half of 2012 Predictable 59% of business from subscription and maintenance Vast majority of Merge DNA expected to come from predictable sources in second half of 2012 Backlog Visibility $62.4M of subscription ($34.1M) and non-recurring backlog ($28.3M) at 06/30/12 Growth in subscription backlog of $9M since 12/31/11

9 year over year growth 9 Pro forma revenue (in millions) Pro forma adjusted EBITDA (in millions) $350 $75 $300 $250 $200 $190 $237 $251 $60 $45 $43 $60 $56 $150 $30 $100 $50 $15 $0 2010A 2011A LTM* $0 2010A 2011A LTM* *Latest Twelve Months Pro-forma Actuals as of 6/30/2012

10 pro forma P&L trends 10 > Gross Margin Expansion (as % of Revenue) > Sales & Marketing Investment (as % of Revenue) 64% 62% 60% 58% 56% 54% 52% 50% 62.2% 60.0% 55.1% LTM* 20% 15% 10% 5% 0% 13.2% 16.4% 17.5% LTM* > R & D Synergies (as % of Revenue) > G & A Savings (as % of Revenue) 15% 14% 13% 12% 11% 10% 13.5% 11.6% 11.9% LTM* *Latest Twelve Months Pro-forma Actuals as of 6/30/ % 14% 13% 12% 11% 10% 14.7% 13.8% 13.5% LTM*

11 ABOUT MERGE

12 our company 12 Leading provider of clinical systems and innovations that seek to transform healthcare Company history of 20+ years Traded on NASDAQ Exchange (MRGE) Over 900 employees worldwide

13 our history of innovation 13 Over 90 patents in imaging and healthcare information technology Co-founder of DICOM #1 provider of DICOM solutions globally Radiology Firsts First Outpatient RIS First automated Radiology Billing Software First MRI-CAD product First breast MRI-CAD application First prostate and liver MRI applications Cardiology Firsts First Cardiology PACS First Hemo system designed to be used on a touch screen Interoperability Firsts First Web Based Imaging Viewer technology First Vendor Neutral Archive First Zero Download Image Viewer

14 our clients 14 1,500 Hospitals 6,000 Clinics & Labs 250 Partners 7 of 10 Top Pharma Companies 20,000 Health Stations Including the Top 20 Hospitals on America s Best Hospital Honor Roll Solutions across all hospital types 1/3 of all US Imaging Centers 2,000 Ophthalmology sites annual market size 75% of all worldwide modality vendors use Merge in their systems Distribution and cloud partners Top pharmaceutical companies use Merge to run clinical trials Released new multi-tenant EDC platform in June 2012 The largest network of health stations in the nation 70 million Americans used a health station last year

15 Merge Healthcare solutions 15 Acute Solutions Enterprise Departmental Ambulatory Solutions Specialty Partner Solutions Cross-Platform Imaging Rad Cardio Periop Rad Ortho OBGYN Eye Care HIT EMR OEM Interoperability Clinical Imaging Specialty EHR Toolkits & Device Connectivity Patient Engagement

16 Merge DNA solutions 16 Consumer & Retail 70 million Americans used health stations last year 500 million total visits last year Pilots underway to rollout digital Healthstation $2-3M hospital Clinical Trials Subscription-based pricing and delivery model Launched new transformative platform in June of DIA Solutions for data capture and reporting Data & Analytics Connections to consumers, providers, corporations and payers Expertise in interoperability, data and analytics

17 GROWTH STRATEGIES

18 total opportunity: $19B+ for $18B $16B $5B Merge DNA Health Stations* Clinical Trials data management Data and Analytics $1B $14B International marketplace Enterprise Imaging $12B $10B $8B $7.8B Acute marketplace - US Subscription Based Solutions Enterprise Imaging Departmental Solutions (Radiology, Cardiology, Anesthesia) $6B $4B $4B $2B $5.4B Ambulatory marketplace - US Subscription Based Solutions Imaging Centers EHR for Image-Intensive Specialties (Ortho, OB, Eye Care) $0 *Source the Kiosk Industry Group,

19 Merge growth strategies 19 Me erge Healthcare Embrace New Models Enterprise-Wide Imaging Cross Sell & Upsell Client Base Embrace accelerated adoption of subscription model Release Honeycomb Archive Interoperability is driving requirements for enterprisewide imaging strategy Radiology & Cardiology: two largest imaging specialties Penetrate acute base with full solution suite Cross sell into acute base with iconnect solutions Expand footprint in ambulatory base with full suite Merge DNA Innovate in New Markets New Clinical Trials platform launch at DIA in June Commenced distribution of redesigned health station

20 embrace new models 20 Strategies Embrace accelerated adoption of subscription model Release Honeycomb Archive Subscription or transaction based pricing model Developments Emergence of Cloud Archive Growth #1 VNA In World 37% Global Market Share Healthcare finally ready to adopt Recent client wins InMedia Report Solutions Merge Honeycomb, iconnect Solution Suite, Merge EHR / PM for Ortho, Eye Care * US Market share

21 Merge Honeycomb: our move to the cloud 21

22 a track record of innovation 22 Introduced cloudbased hosted solution with Amazon Launched Merge Honeycomb to Radiology marketplace at RSNA Released Merge Honeycomb Archive 2009 Oct 2011 Nov 2011 Feb 2012 March 2012 Announced Merge s move to the cloud with Honeycomb Launched Merge Honeycomb to acute marketplace at HIMSS 22

23 enterprise-wide imaging 23 Strategies Assist hospitals & health systems implement the two phases of an enterprise-wide imaging strategy Target Radiology & Cardiology: two largest imaging specialties Developments Client Traction 56 iconnect Clients In just 6 quarters Proven ROI ROI of $2M to $4M per hospital 2 Phased Approach Phase 2 Phase 1 Solutions iconnect Suite, Merge PACS, Merge Cardio

24 enterprise imaging: a two-phased approach 24 Step One Build an enterprise-wide imaging strategy from the archive up Step Two Deploy the approach across departments Begin with Radiology & Cardiology as those are the most imageintensive specialties Extend to other departments over time Annual hospital scan volume is 480,562,500 per year.

25 cross sell & up sell clients 25 Strategies Penetrate acute base with full solution suite Cross sell into acute base with iconnect solutions Expand footprint in ambulatory base with full suite Developments Acute Clients More VNA images than anyone 16%* 13B 37%* On average our hospital clients only own 1 of 6 available Merge solutions #2 vendor Merge Ambulatory Clients < 10% have our complete solution suite Solutions * Global Market share iconnect Suite, Merge PACS, Merge Cardio Merge RIS, Merge PACS, Merge Financials, Merge Documents

26 Merge DNA: growth strategies 26 Strategies Accelerate Clinical Trials traction with new products Commenced placement of redesigned health station Launch data and analytics offerings to marketplace Developments Health Stations Launch Imaging in Clinical Trials 1,500 health stations across 5 major retailers Worldwide deployment of Subscription eclinical Platform Solutions Clinical Trials suite, health stations, Data and Analytics offerings