Merge Healthcare Investor Presentation

Merge Healthcare Investor Presentation January 2015

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Copyright 2014 Merge Healthcare

Forward Looking Statement 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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Who Are We?

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Innovative Imaging and Interoperability Merge Healthcare

Radiology Interoperability Cloud Archive Eye Care Orthopedics Laboratory

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Cardiovascular Imaging Hemodynamics

Merge DNA

Electronic Data Capture Clinical Trials Management System

Foundation Offerings Radiology

•  Comprehensive radiology suite for hospital and ambulatory markets •  PACS, RIS, financials, document management and analytics • 

Cardiology

Best in KLAS Cardiovascular PACS and Hemodynamics Monitoring •  Deep integration with Cerner & Epic

Orthopedics

Eye Care

5

• 

>500

15%

Hospital clients

Amb mkt share

mkt share

>500

32%

sites

mkt share

Comprehensive technology offering to power entire orthopedics practices: PACS, EMR, Billing/Scheduling, and Digital Radiology equipment

360

30%

clients

mkt share

Eye Care PACS and image capture systems for ophthalmology practices.

660

32%

clients

mkt share

Vendor neutral archive (VNA) is world market share leader •  Zero-download DICOM image & XDS viewer •  Image sharing built into enterprise viewer (unique) • 

30%

Hospital clients

• 

Interoperability

>600

Saas Offerings eClinicalOS™

iConnect® Network

iConnect® Retinal Screening

iConnect® Cloud Archive

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Clinical Trials Electronic Data Capture & Trials Management Systems

7K+

9of10

sites

Top pharma

•  Interoperability service that addresses referral management for hospitals / imaging centers. •  Image enable physician EHRs

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2

• 

End-to-End Retinal Screening Service for Diabetic Retinopathy •  Aligns with payment reform and need for diabetic care management

Clients

OEM Resellers

• 

•  • 

Image archiving Infrastructure supports other SaaS services

NEW >5M Studies under contract

Merge Client Base 1,500

6,000

Integrated Delivery Networks

1/3 of all U.S. imaging centers

hospitals

Local Community Hospitals

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clinics

30% + of all ortho groups 1,000 + ophthalmology sites

250

partners

75% of all worldwide modality vendors

9

of

10

top pharma

Top pharmaceutical companies & CRO’s have used Merge to run clinical trials

Merge Cardiology: #1 in KLAS

Industry Leader

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Merge Named Top 10 Overall in KLAS KLAS Overall So-ware Vendor Rankings 2013

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Leader for Meaningful Use in Radiology

HHS Report: Merge RIS Most Widely-Used Certified EHR Technology by Radiologists

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Leader in Interoperability

iConnect

iConnect

Enterprise Clinical Platform

Enterprise Archive

2013 Frost & Sullivan Product Leadership Award, Medical Imaging Interoperability Solutions Market

2013 IHS VNA Global Market Leader

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11


2013 IHS VNA Market Leader, Americas

What Do We Do?

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We are Innovators 2010

Expanded interoperability, radiology and cardiology offerings

AMICAS Acquisition

2014

2011

Entered eye care market

OIS Acquisition

1990 Co Founder of DICOM

2009

Confirma Acquisition

2010

Launched iConnect Brand

Launched Rad MU Solution

2010

Stryker Acquisition

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2012

100+ Clients

2011

Expanded radiology offering

Entered specialty orthopedics marketplace

Launched Retinal Screening

Launched eClinical OS

975 doctors utilize Merge MU solutions

2 million+ active patients since launch

2013

Launched iConnect Network

2012

Launched Cloud Archive Solution

For population health and advanced interoperability

Surescripts and athenahealth sign on as partners

Merge Innovative Imaging Solutions Merge provides solutions to over 7,500 healthcare facilities in the United States. ACUTE SOLUTIONS Hospitals/IDNs Clinical Trials eClinicalOS, Clinical Trials Management System

Eye Care Eye Station, Retinal Screening

Clinical Labs LIS, LabAccess

Orthopedics OrthoEMR, OrthoPACS, OrthoCase

Cardiology Cardio, Hemo

Radiology PACS, VNA, RIS, Financials

Interoperability iConnect VNA, Universal Viewer, Image-Sharing 14


AMBULATORY SOLUTIONS

Changing How Clinical Trials Are Managed MANAGE

&

DESIGN

&

MONITOR

BUILD

RECRUIT PLAN & BUDGET

& CAPTURE

REPORT

& DELIVER

TIME INTENSIVE & EXPENSIVE TO MANAGE

Combination of data capture methods to deliver comprehensive clinical trial results. Manual effort, requiring professional services. 15


ALL-IN-ONE PLATFORM, EASY TO USE

SaaS platform for clients to design their own clinical trials, one location for clinical trial data collection, storage, management and reporting.

Merge eClinicalOS: Our Disruptive Model

PAY AS YOU GO

ALL IN ONE

•  Only pay for what you use

•  Complete eClinical Suite

•  Budget instantly

•  Sponsors, CROs/AROs & Sites in a unified system

•  Scale up or down

•  Always growing & improving

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EASY TO USE •  Intuitive •  Consistent and accessible •  Deploy trials in as few as 10 days

Merge eClinicalOS: End to End Solutions

START UP

Build Your Study Configure Your Solution

CONDUCT

Empower Your Sites Manage Your Study

SUBMIT

Track Inventory & Supplies

Manage Image & Endpoint Adjudication

Archive Your Data

Manage Randomization

Capture Data & Source Documents

Report & Export Your Data

Plug eCOS in wherever the need

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Where Are We Now?

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3rd Consecutive Quarter of Growth

19

19

$54.2M

26%

$10.7M

Revenue

Adjusted EBITDA

45% increase in Cash


We are Trending in the Right Direction $30 Gross Margin % (net of D&A) 65.0%

$100 61.9%

$50

56.9% $57.7 $53.8

60.0%

59.3%

20.0%

$51.1

$54.1

$54.2

20.7

19.4

9.5

8.4

17.4 8.2

19.6

16.5% $20

15%

12.5%

55.0%

10%

$15.1

$14.2

$15

$13.9

50.0% 8.9

5% $11.2

19.4

$10.2 $10

8.2

0%

$8.9 $7.9

$7.2

-5%

45.0% 27.5

26.0

25.5

25.6

$5

26.3

-10%

$0

40.0% Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

$0

-15% Q3 2013

Maintenance Non Recurring

20

20.7%

$17.4

$20 $10

$25

$12.9

$40 $30

25%

61.6%

60.2%

$80

$60

25.6%

20%

$90

$70

30%


Subscription Gross Margin %

Q4 2013

Adj. EBITDA

Q1 2014

Q2 2014

Cash from Bus Ops

Q3 2014 Adj. EBITDA %

Performance vs. Guidance Year-to-Date Results Compared to Mid-Point of 2014 Annual Guidance

21

21

73%

83%

75%

Revenue

Adjusted EBITDA

Adjusted Net Income


Why Merge? Why Now?

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1) Because 93% of Merge Clients …say we are a part of their long term strategy. Here’s why:

Merge’s core imaging solutions enable hospitals and imaging centers to manage their images throughout their enterprise and through the entire cycle of care. Our new releases provide increased automation and client driven features and functionality. 23


Merge’s innovative solutions increase revenues, reduce costs, and deliver operational efficiencies driving revenue for our clients. Merge is innovating with new solutions that support our clients’ patient care and financial requirements and that resolve long standing market challenges.

Merge solutions deliver the tools to easily manage the production and access of images, a key component of managing costs under new payment models.

2) eClinicalOS is Growing Rapidly CLINICAL SITES 18500

19%

18000

PROFESSIONAL USERS 35000

27%

35%

140000

17000

25000

120000

16500 16000

Q2

15500

Q3

20000 15000

15000 14500 14000 13500 13000

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180000 160000

30000

17500

CLINICAL SUBJECTS

Copyright 2014 Merge Healthcare. Internal Use Only.

10000

Q2 Q3

100000 80000 60000 40000

5000 0

20000 0

2012 2013

3) We Have Invested in the Future SAAS Delivers Sustainable, Predictable Revenue 2014

2010

Hospital Market Entry

2011

Eye Care Market Entry

1990

2012

2010

Co Founder Of DICOM

Launched eClinical OS

Launched iConnect Brand

2011

2009

2010

Orthopedic Market Entry


2013

Launched Rad MU Solution

CAD Market Entry

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Launched Retinal Screening

Launched iConnect Network

2012

Launched Cloud Archive Solution

iConnect Network: $1.4 Billion Opportunity Referral Management is a 1.4 B Opportunity for Imaging with a 10% CAGR THE PROBLEM

18%

THE NUMBER OF PRIMARY AND SPECIALIST PROVIDERS IS EXPECTED TO GROW BY 18% OVER THE NEXT TEN YEARS.

159% REFERRALS ARE ON THE RISE - UP 159% BETWEEN 1999 AND 2009

46%

THE NUMBER OF FAXED REFERRALS THAT ARE NEVER COMPLETED

20M

HOSPITALS ARE LOSING AN AVERAGE OF $20 MILLION PER YEAR IN REFERRALS

THE SOLUTION: iConnect Network

Keep patients in-network

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Capture referrals from physician community

Improve care coordination

Collaboration between imaging providers and referring physicians

In Conclusion

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Merge is… Established vendor in over 7,500 client accounts, providing core imaging solutions Innovating in new technologies that provide long-term, predictable, and sustainable revenue Experiencing rapid, healthy growth in our clinical trials business

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Contact Merge CONTACT US:

FOLLOW US:

Merge Healthcare Headquarters 350 N. Orleans Street, 1st Floor Chicago, IL 60654

facebook.com/MergeHealthcare linkedin.com/company/MergeHealthcare merge.com/blog

1.312.565.6868 phone 1.312.565.6870 fax 1.877.446.3743 toll-free

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