Connect to Health™ Allscripts Investor Presentation – July 2009 Exhibit 99.2 |
2 Forward Looking Statements This communication contains forward-looking statements within the meaning of the federal securities laws. Statements regarding future events, developments, the Company’s future performance, as well as management’s expectations, beliefs, intentions, plans, estimates or projections relating to the future are forward-looking statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties, some of which are outlined below. As a result, actual results may vary materially from those anticipated by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward- looking statements are: the volume and timing of systems sales and installations; length of sales cycles and the installation process; the possibility that products will not achieve or sustain market acceptance; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; competitive pressures including product offerings, pricing and promotional activities; our ability to establish and maintain strategic relationships; undetected errors or similar problems in our software products; compliance with existing laws, regulations and industry initiatives and future changes in laws or regulations in the healthcare industry; possible regulation of the Company’s software by the U.S. Food and Drug Administration; the possibility of product-related liabilities; our ability to attract and retain qualified personnel; our ability to identify and complete acquisitions, manage our growth and integrate acquisitions; the ability to recognize the benefits of the merger with Misys Healthcare Systems, LLC (“MHS”); the integration of MHS with the Company and the possible disruption of current plans and operations as a result thereof; the implementation and speed of acceptance of the electronic record provisions of the American Recovery and Reinvestment Act of 2009; maintaining our intellectual property rights and litigation involving intellectual property rights; risks related to third-party suppliers; our ability to obtain, use or successfully integrate third-party licensed technology; breach of our security by third parties; and the risk factors detailed from time to time in our reports filed with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K available through the Web site maintained by the Securities and Exchange Commission at www.sec.gov. The Company undertakes no obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. |
3 The Story… There is Now a Clear Market Leader… 150,000 Physicians 700 Hospitals Top-Rated in All Product Categories 1 … that is Strong and Stable Revenue ~ $700mm Electronic Health Records ~ $200mm Revenue Cycle Management (Practice Management + Claims Processing) ~ $400mm Health System Solutions ~ $100mm Recurring Revenue ~ $400mm … in a Growing Market Market Size ~ $10b Growth ~ 15-20% in EHR markets 1 2008 Year-End KLAS Report |
4 The Time is Now… |
5 Practice Automation is Critical to the Fix… › Increases the Quality of Care › Takes Costs Out › Increases Reimbursement › Improves Patient Safety › Increases Patient Satisfaction |
6 The Path is Clear… “We're investing in electronic medical records and other technologies that can drive down healthcare costs.” - President Barack Obama “Cost savings from a mandatory requirement that Medicare providers adopt and use HIT as a condition of participating in the Medicare program…savings total $34 billion over 10 years from physicians and hospitals 1 .” - CBO 1 Congressional Budget Office – 12/08 – Budget Options Vol. I – Health Care |
7 $46+ Billion New Reasons To Adopt NOW $46 billion + $2 billion = $48 billion Physician Incentives Incentive Bonuses from Medicare/Medicaid HHS Discretionary Funds Potential Areas Include: Standards Development, Grants (AHRQ, HRSA, CMS), HIE Infrastructure, Loans to the States for EHR, Regional HIT Resource Centers, Telemedicine, Efficacy Studies HHS = Health and Human Services AHRQ = Agency for Healthcare Research and Quality HRSA = Health Resources and Services Administration CMS = Centers for Medicare and Medicaid Services |
8 8 The Time is Now › Funding is Front Loaded $30,000 (close to 70% of the funding) comes in the first two years › You Need to Demonstrate Meaningful Utilization Purchase and Implementation are not enough - you must use it › Funding is Time Stamped Incentives start in 2011, decrease over time and penalties begin in 2015 |
9 EHR Stimulus Funding $44,000 (or $64,000) over 5 yrs. + PQRI Incentive $3,000 - $5,000/yr. estimate The incentive per physician . . . + ePrescribe Incentive $3,000-5,000/yr. estimate PQRI = Physician Quality Reporting Initiative Wealth of Federal Incentives Available |
10 Addressable Market TRUE NORTH Impact on EHR Adoption Practice Size Total # of Practices EHR Penetration (FY08/09) 1-3 Physicians 163,000 ~10% 4-9 Physician 27,000 ~20% 10-25 Physicians 8,000 ~25% 26+ Physicians 2,000 ~40% Total 200,000 ~12% Source: SK&A = SK&A Information Services which sells databases for sales and marketing success in healthcare industry 10 |
11 True North: Current Market Landscape / Projections • 70% of funding will be gone by 2013 • The key is driving market penetration (not just share) in the next 2-3 years • EHR adoption w/ Stimulus is estimated by CBO to be 90% by 2019 (compared to 65% without Stimulus) 0 10 20 30 40 50 60 70 80 90 100 Steeper curve in large segment 70% of funding gone by 2013, so the rush is on % 90% overall Physician adoption by 2019, per CBO 1-3 Providers 4-9 Providers 10-25 Providers 26+ Providers |
12 › < 20% Physician Penetration › < 10% in Smaller Groups The Opportunity is Significant The Electronic Health Record Revenue Cycle Management › ~10% to 20% of PM Systems Replaced/Yr. › Allscripts 3 Largest Claims Processing Clearinghouse + Significant Upside › Lower IT Penetration than Any Sector of Economy = All Results in a $10+ Billion Market Opportunity rd |
13 › 150,000 MDs and 700+ Hospitals Across the U.S. › 90,000 MDs without an EHR › ~ $1B Cross-Sell Opportunity A Great Place to Start … Our Client Base |
14 Why Allscripts Wins › Significant Footprint: 150,000 MDs, 700 Hospitals, 6,000 Post Acute Facilities, 600 Homecare Agencies › All Sizes and Settings: Ambulatory and Acute, Primary Care and Specialty, Small to Large › Diversified Portfolio: Clinical and Business Solutions › All World-Class: Top Rated Consistently › Significant Breakthroughs: Innovation Comes Standard › Real Utilization: Not Just Implementation › Strong ROI: The Solution That Pays You Back › Delivering the Next Step: Connect to Health TM |
15 Includes: • ePrescribe • Connect • Payerpath • Document Management For physicians not yet ready for an EHR Includes Connected Physician, plus: Enterprise and/or Professional EHR/ PM with connections to commercial labs and imaging centers For physicians ready to become “Operable” Includes Connected EHR, plus: Connections to other physicians, hospital ED Systems, CM systems, HIS systems, Clinical trial systems, CMS reporting, State reporting programs and RHIO’s For Physicians Ready to “Connect to Health” A Comprehensive Portfolio |
16 16 The Time is Now › Funding is Front Loaded $30,000 (close to 70% of the funding) comes in the first two years › You Need to Demonstrate Meaningful Utilization Purchase and Implementation are not enough - you must use it › Funding is Time Stamped Incentives start in 2011, decrease over time and penalties begin in 2015 |
17 A Simple Approach Get it Certified Get it Connected Get it Cool Get it Sold Get it Used |
18 18 New Innovations Overview |
19 The Allscripts Equation Market Growth/Expansion Opportunity + Market Leadership + Innovation + Financial Stability = Strongest Player in an Expanding Market |
20 Financial Overview |
21 2009 Operating Margin Growth Fiscal 2008 (1) Fiscal 2009 Bookings $317.6 $334.7 SaaS % 8% 30% Revenue (2) $669.3 $680.6 Less Prepackaged Medications (41.9) (29.7) Clinical Software Revenue $627.4 $650.9 Non GAAP Net Income (3) $61.5 $78.1 Less Prepackaged Medications (2.1) (1.4) Adjusted Non GAAP Net Income $59.3 $76.7 Non GAAP Net Income per Share $0.40 $0.52 Proforma Share Count (4) 148.2 148.2 (1) Fiscal 2008 reflects Misys Healthcare (under US GAAP) for the year ended May 31, 2008 and the trailing 12 months for Allscripts for the period ending June 30, 2008. (2) Revenue is stated on a pro forma basis after adding back $7.8m (2008 - nil) of the effect of the non-cash purchase accounting revaluation of legacy Allscripts deferred revenue balance at the point of merger. (3) Non GAAP Net Income is a non-GAAP financial measure. See reconciliation on page 21 to GAAP measure. (4) Q4 FY 09 Share count used in both periods for comparability purposes. |
22 2010 Outlook Fiscal 2009 Fiscal 2010 Bookings $334.7 N/A SaaS % 30% Revenue $650.9 $680.0 to $700.0 Non GAAP Net Income $76.7 $88.0 to $92.0 Non GAAP Net Income per Share $0.52 $0.59 to $0.61 Proforma Share Count (1) 148.2 150.0 (1) Q4 FY 2009 share count has been used for the Fiscal 2009 denominator to aid comparability. |
23 US GAAP Net Income to Non GAAP Net Income Reconciliation Fiscal 2009 Fiscal 2010 (Estimated) Earnings Before Taxes $44.4 $101.2 to $107.9 Taxes (Assumed 41% in 09 and 40% in 10) (18.4) (40.5 to 43.1) Net Income $26.0 $60.7 to $64.7 Adjustments (Tax adjusted 41% in 09 and 39% in 10) Allscripts Pre Merger Period $6.7 - Deferred Revenue Adjustment 4.6 2.9 Prepackaged Medications (1.4) - Stock-Based Compensation 4.8 10.9 Acquisition-related Amortization Expense 12.1 13.5 Transaction-related Expense 23.7 - Non GAAP Net Income $76.7 $88.0 to $92.0 |
24 Illustrative Revenue Sensitivity Analysis Four Year Cumulative Penetration Rates 110,000 MDs 20% Assumed EHR Penetration 88,000 Addressable EHR Market 20% 30% 40% 50% 60% License/Service Fees $165m $248m $330m $410m $495m Annual Maintenance $20m $30m $40m $50m $60m |
25 Significant and Realizable Synergy Opportunity Cost synergies of $20m+, pre-tax, expected in first year following transaction close Up to $25m to $30m, pre-tax, in annual cost savings within the next few years Main drivers of cost synergies include: R&D, Marketing, Sales, Administrative Functions Revenue synergies from cross-selling into respective client bases is expected to be ~$7m+ in FY 2009 Increased operating leverage expected to result in mid teens EPS growth Projected Cost Synergies $20m+ $25 - $30m First Year Run Rate |
26 Summary a complete portfolio of solutions… for practices in all sizes/areas… a footprint of 1 of 3 MDs in the U.S. Products Target Client Base |