Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - MModal Inc. | d296364d8k.htm |
 UBS 22
nd
Annual
Global Healthcare
Services Conference
February 2012
Exhibit 99.1 |
 safe harbor language
and reconciliation of non-GAAP measures
Information provided and statements contained in this presentation that
are not purely historical, such as statements regarding industry
trends and drivers for growth, the Company’s strategic priorities, 2012 financial and operating
performance and prior acquisition benefits, are forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements only speak as of the
date of this presentation and MModal Inc. assumes no obligation
to update the information included in this presentation.
Statements made in this presentation that are forward-looking in
nature may involve risks and uncertainties. Accordingly, readers
are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to
certain risks, uncertainties and assumptions that are difficult to
predict, including, without limitation, specific factors
discussed herein and in other disclosures and public filings made by
MModal Inc., including filings with the SEC. Although M*Modal
believes that the expectations reflected in such forward-looking statements are reasonable as of the
date made, expectations may prove to have been materially different
from the results expressed or implied by such
forward-looking statements.
In addition to the US GAAP results, M*Modal has provided
certain non-GAAP financial measures in this presentation
such as Adjusted EBITDA and Adjusted Net Income. The tables in the
appendix to this presentation include a reconciliation of the
historical non-GAAP financial measures to the most directly comparable GAAP financial measures.
The Company does not present in the presentation the comparable GAAP
financial measure and the related reconciliation for the forward
looking non-GAAP financial measures included in this presentation because management cannot predict
with sufficient reliability certain contingencies required to estimate
the comparable GAAP financial measures. |
 investment highlights
3
•
1 of 2 key players offering FESR and NLU technology
•
Healthcare focused
•
Large diversified base of provider clients & MTSOs
•
Proven HCIT additions to leadership team
•
Brand investments
•
Leverage of scalable global services capability
•
Rise of Speech + NLU in clinical documentation
•
Growth in mobility solution for healthcare
•
Healthcare reform driving new growth opportunities
•
Value of Big Data in healthcare on horizon
•
Modern architecture
•
Highly differentiated NLU approach
•
Validation from new strategic partnerships
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information
Market Leader
Focused Direction
Favorable Trends
Technology
Innovator |
 4
M*Modal
delivers
innovative
solutions
that
capture
the
complete
patient
story by
facilitating
clinical
workflows,
enabling
collaboration
and
providing
insight
for
improved
delivery
of
care.
M*Modal
is
a
leading
provider
of:
•
Medical dictation & transcription
•
Narrative to meaningful clinical
•
Speech and Language Understanding
collaborative intelligence
documentation transformation
technology
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 new
additions 5
Brand
Strategic
Partnerships
Leadership
Team
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 about M*Modal
6
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information
our solutions
•
Cloud Based Speech
Recognition
•
Language
Understanding
•
Clinical
Documentation
•
Coding Technology
•
EHR Integration
our company
•
Traded on NASDAQ
(MODL)
•
14,000+ employees
worldwide
•
140+ patents and
licenses in speech
recognition and
understanding
our clients
•
165,000 physicians
•
2,400 hospitals,
clinics, and practices
•
850 physicians
practices
•
Partners:
•
MTSOs
•
Radiology systems
•
EHR Vendors
•
HCIT Firms
|
 differentiation: technology + market footprint
7
Clinical
Documentation
1 of 3
scale players
Speech & Language
Understanding
1 of 2
healthcare players
Computer
Assisted
Coding
3 of 6 major players
use our NLU
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 drivers for growth: healthcare reform
8
Meaningful
Use
ICD-10
Accountable
Care
Physician HCIT adoption
Completeness of POC clinical documentation
Back office transition cost & complexity
Lack of clinical data integration & availability
Need for data driven medical evidence
Shift
from
Encounter
Value
Based
Healthcare
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 longer term trends
9
2011
2012
2013
2014
2015
2016+
Rise of 2
nd
gen Speech & NLU
for clinical documentation
“Mobile”
becomes healthcare
interface standard
Evidence based
feedback at POC with
patient context
Meaningful Use investments
Blending of Big Data +
structured data for clinical &
billing workflow
Big Data for population
health management
ICD-10 preparation
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 era
of Big Data 10
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 Today’s challenge is primarily a
data challenge…..
Need for structured discrete data ….
Big Data key to enabling healthcare reform
11
80%+ of
clinical data
“trapped”
in
unstructured
text
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information
•
•
•
•
•
•
•
Often derived from Claims data
Timeliness issues
May not reflect actual clinical care
process
Most clinical data in free text
reports
Run algorithms / data mine
Reporting
Cost vs. quality |
 Speech Recognition
Language Understanding
Discrete Data
Documentation Feedback
Medical Evidence
Insight
conversational documentation
EHR Integration
Coding / Billing
Research
Disease
Registry
ACO
Quality Reporting
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 M*Modal differentiation
13
Speech Recognition
“What you say”
True Language Understanding
“What you mean”
Clinically Relevant
Cloud Based Adaptive AI
Anywhere from any device
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 differentiation: clinical specialty focus
14
Specialty
# Physicians
% of All
Physicians
Internal Medicine
98,327
15%
Family Practice
82,347
12%
Pediatrics
51,113
8%
Psychiatry
39,015
6%
OBGYN
35,137
5%
Anesthesiology
34,630
5%
Surgery General
30,675
5%
Radiology
27,169
4%
Emergency Medicine
26,236
4%
Cardiology
21,013
3%
Orthopaedic Surgery
20,075
3%
Pathology
16,648
3%
Oncology
15,589
2%
Ophthalmology
15,335
2%
Neurology
12,368
2%
Gastroenterology
9,755
1%
Dermatology
9,309
1%
Urology
8,664
1%
Pulmonology
8,616
1%
Otorhinolaryngology
8,371
1%
Other
91,009
14%
All Physicians
661,400
100%
•
M*Modal technology is
“tuned”
to clinical
specialties
•
Integrated solutions &
partnerships with HCIT
vendors
•
Large client footprint
enables technology update
potential
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 M*Modal is the partner of choice
15
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 strategic innovation & distribution
ambulatory
16
+
Footprint
180,000 physician users
1,500 hospitals
10,000 post acute care
organizations
EHR portfolio covers all
ambulatory segments
Embed FESR & NLU into
EHR portfolio
Enables Allscripts’
clients
use of natural speech in
conjunction with their EHR
Improves clinical quality,
enhances revenue cycle
(coding); increased
Physicians satisfaction
with EHR
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 mobility
solutions M*Modal advanced speech understanding technology |
 strategic innovation & distribution
radiology & imaging
18
Footprint
1,500 Hospitals
6,000 Clinics and Labs
(1/3 of all US imaging centers)
7 of 10 top Pharma
Solutions
Radiology
Cardiology
Specialty EMR
Orthopedics
Embed FESR & NLP into
entire portfolio
Enables Merge clients to
have a single integrated
solution for clinical
documentation in high
value modalities
Improves both clinical
quality and productivity of
the “ologist”
Ophthalmology
Lab
Perioperative
Clinical Trials
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 * Representative
Sample strategic relationships |
 Financial
Overview |
 strong quarterly
results: operating metrics (1) As defined in Appendix.
854
875
863
1,020
Q3 10
Q1 11
Q2 11
Q3 11
Total Billed Equivalent
Line
Counts
(1)
(in millions)
42%
41%
42%
45%
Q3 10
Q1 11
Q2 11
Q3 11
Offshore Transcription
Volumes
67%
72%
74%
76%
Q3 10
Q1 11
Q2 11
Q3 11
Transcription Volumes
Edited Post Speech
Recognition |
 strong quarterly
results: financial metrics 22%
24%
25%
28%
38%
41%
40%
43%
(1)
(1)
(1) As defined in Appendix.
(1)
22%
24%
25%
28%
38%
41%
40%
43%
$24.5
$26.7
$27.6
$29.8
Q3 10
Q1 11
Q2 11
Q3 11
Adjusted EBITDA
$0.26
$0.30
$0.31
$0.34
Q3 10
Q1 11
Q2 11
Q3 11
Adjusted Net Income Per Fully
Diluted Share
$19.2
$13.2
$16.3
$16.8
Q3 10
Q1 11
Q2 11
Q3 11
Free Cash Flow (in millions)
Net Revenue (in millions) & Gross
Margin Percentage
$113.2
$111.2
$108.4
$108.0
Q3 10
Q1 11
Q2 11
Q3 11 |
 2011 performance
goals (1)
Financial Metrics
Range of Estimates
Net Revenues
$441 million to $444 million
Total Billed Equivalent Line
Counts
3.9 to 4.0 billion
Adjusted EBITDA
$115.5 million to $118.0 million
Adjusted Net Income per fully
diluted share
$1.29 to $1.31
(1)
Issued on November 9, 2011.
(2)
As defined in Appendix.
(2)
(2)
(2) |
 (1)
Based on Q3 2011 Adjusted EBITDA annualized.
As of September 30, 2011
Scheduled Amortization and Maturity
(Dollars in millions)
Cash
$37
Debt
$296
Net Debt
$259
Total Net Leverage
2.2
x
(1)
strong balance sheet
•
Principal amortization obligation begins in Q2 2012
•
Five acquisitions funded with cash through Q3 2011
•
Full availability on $25 million revolver as of November 10, 2011
•
Strong balance sheet to execute on growth strategies
$0
21
$22
$21
145
$87
2011
2012
2013
2014
2015
2016
$
$ |
 preliminary
growth
outlook
for
2012
(1)
25
•
Low-
to
mid-teens
percentage
growth
(2)
•
Growth in core business from new sales, integration of
acquisitions and MTSO roll up strategy
•
Full year benefit from acquisitions and commercialization
of technology
•
2H 2012 to reflect ramp up of new sales force
investments
•
Mid-
to
high-single-digit
percentage
growth
(2)
•
Timing of sales force investments and commercialization
weighted in 1H 2012
•
Benefits from these investments begin to be realized in
2H 2012
•
Continue to generate significant positive FCF
•
Sufficient to fund our growth strategies
•
Timing of investments to create quarter-to-quarter
variability
(1)
Issued on November 9, 2011.
(2) From mid-point of 2011 performance goals.
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 investment highlights
26
•
1 of 2 key players offering FESR and NLU technology
•
Healthcare focused
•
Large diversified base of provider clients & MTSOs
•
Proven HCIT additions to leadership team
•
Brand investments
•
Leverage of scalable global services capability
•
Rise of Speech + NLU in clinical documentation
•
Growth in mobility solution for healthcare
•
Healthcare reform driving new growth opportunities
•
Value of Big Data in healthcare on horizon
•
Modern architecture
•
Highly differentiated NLU approach
•
Validation from new strategic partnerships
Collaborative
Intelligence
for
Health
–
©
2012
MModal
IP
LLC,
All
rights
reserved.
–
Confidential
Information |
 Appendix
|
 Three Months
Ended Sept. 30, 2011
Sept. 30, 2010
Net income attributable to MModal Inc.
$20,553
$ 5,871
Net income attributable to non-controlling interest
361
2,737
Discontinued operations
-
(155)
Income tax provision (benefit)
(19,226)
229
Interest expense, net
7,081
4,663
Other (income) expense
4,033
(482)
Realized gain on settlement of foreign currencies
93
-
Depreciation and amortization
9,219
9,125
Acquisition and restructuring charges
6,251
1,797
Cost of legal proceedings, settlements and
accommodations
44
633
Share-based compensation and other non-cash awards
1,360
164
Equity in income of affiliated company
-
(70)
Adjusted EBITDA
$29,769
$24,512
Adjusted EBITDA as a percentage of net revenues
27.6%
21.7%
Non-GAAP Reconciliation
(Dollars in thousands)
Reconciliation of Net Income to Adjusted EBITDA (Unaudited) |
 Nine Months Ended
Sept. 30, 2011
Net income attributable to MModal Inc.
$ 35,000
Net income attributable to non-controlling interest
2,138
Discontinued operations
-
Income tax provision (benefit)
(17,196)
Interest expense, net
21,079
Other (income) expense
2,560
Realized gain on settlement of foreign currencies
627
Depreciation and amortization
26,516
Acquisition and restructuring charges
17,520
Cost of legal proceedings, settlements and
accommodations
(6,888)
Share-based compensation and other non-cash awards
2,681
Equity in income of affiliated company
-
Adjusted EBITDA
$84,037
Adjusted EBITDA as a percentage of net revenues
25.6%
Non-GAAP Reconciliation
(Dollars in thousands)
Reconciliation of Net Income to Adjusted EBITDA (Unaudited)
|
 Three Months
Ended June 30, 2011
March 31, 2011
Net income attributable to MModal Inc.
$5,135
$9,312
Net income attributable to non-controlling interest
271
1,506
Income tax provision (benefit)
886
1,144
Interest expense, net
6,961
7,037
Other (income) expense
(530)
(943)
Realized gain on settlement of foreign currencies
377
157
Depreciation and amortization
8,879
8,418
Acquisition and restructuring charges
4,391
6,878
Cost (benefit) of legal proceedings, settlements and
accommodations
581
(7,513)
Share-based compensation and other non-cash awards
611
710
Adjusted EBITDA
$27,562
$26,706
Adjusted EBITDA as a percentage of net revenues
25.4%
24.0%
Non-GAAP Reconciliation
(Dollars in thousands)
Reconciliation of Net Income to Adjusted EBITDA (Unaudited) |
 Three Months
Ended Sept. 30, 2011
Sept. 30, 2010
Adjusted EBITDA
$29,769
$24,512
Consolidated interest expense
(7,081)
(4,663)
Non-cash interest
774
1,482
Capital expenditures
(5,959)
(2,907)
Tax (provision) benefit
19,226
(229)
Deferred tax provision (benefit)
(19,933)
964
Free Cash Flow
$16,796
$19,159
Adjusted Net Income (Unaudited)
Adjusted EBITDA
$29,769
$24,512
Less:
Amortization (excluding acquired intangibles)
4,116
4,894
Cash interest (total expenses less non-cash)
6,307
3,181
Current tax provision (benefit)
707
(735)
Adjusted Net Income
$18,639
$17,172
Adjusted Net Income per share:
Basic
$0.35
$0.34
Diluted
$0.34
$0.26
Non-GAAP Reconciliation
(Dollars in thousands)
Free Cash Flow (Unaudited) |
 Three Months
Ended June 30, 2011
March 31, 2011
Adjusted EBITDA
$27,562
$26,706
Consolidated interest expense
(6,961)
(7,037)
Non-cash interest
831
858
Capital expenditures
(4,360)
(6,688)
Tax provision (benefit)
(886)
(1,144)
Deferred tax provision (benefit)
159
546
Free Cash Flow
$16,345
$13,241
Adjusted Net Income (Unaudited)
Adjusted EBITDA
$27,562
$26,706
Less:
Amortization (excluding acquired intangibles)
4,362
3,903
Cash interest (total expenses less non-cash)
6,130
6,179
Current tax provision
727
598
Adjusted Net Income
$16,343
$16,026
Adjusted Net Income per share:
Basic
$0.32
$0.31
Diluted
$0.31
$0.30
(Dollars in thousands)
Free Cash Flow (Unaudited)
Non-GAAP Reconciliation |
 Nine Months
Ended Sept. 30, 2011
Adjusted EBITDA
$84,037
Less:
Amortization (excluding acquired intangibles)
12,381
Cash interest (total expenses less non-cash)
18,616
Current tax provision
2,032
Adjusted Net Income
$51,008
Adjusted Net Income per share:
Basic
$0.99
Diluted
$0.96
(Dollars in thousands)
Adjusted Net Income (Unaudited)
Non-GAAP Reconciliation |
 Three Months
Ended Sept. 30, 2011
Sept. 30, 2010
MModal Inc. Shares
Basic outstanding
51,195
35,158
Effect of dilutive options
1,283
13,963
Diluted shares
52,478
49,121
Proforma impact of fully dilutive shares
(1)
Basic
1,814
15,775
Diluted
2,023
16,005
Proforma Shares
Basic
53,009
50,933
Diluted
54,501
65,126
(1)
Fully dilutive shares includes common stock equivalents which consists of stock options, restricted
stock issuable to certain key employees, shares issued to former principal stockholders,
shares issued to former principal stockholders and shares issued in our initial public offering, our private exchange offer, our public exchange
offer and our short-form merger with MedQuist Inc.
Non-GAAP Reconciliation |
 Three Months
Ended June 30, 2011
March 31, 2011
MModal Inc. Shares
Basic outstanding
49,168
40,933
Effect of dilutive options
1,391
1,047
Diluted shares
50,559
41,980
Proforma impact of fully dilutive shares
(1)
Basic
1,929
10,683
Diluted
2,176
10,913
Proforma Shares
Basic
51,097
51,616
Diluted
52,735
52,893
(1)
Fully dilutive shares includes common stock equivalents which consists of stock options, restricted
stock issuable to certain key employees, shares issued to former principal stockholders, shares
issued to former principal stockholders and shares issued in our initial public offering, our private exchange offer, our public exchange
offer and our short-form merger with MedQuist Inc.
Non-GAAP Reconciliation |
 Non-GAAP Financial Definitions
Non-GAAP Financial Measures
We have provided the Company's Adjusted EBITDA and Adjusted Net Income,
each a non-GAAP financial measure, on a forward-looking basis
in this document. We are unable to present a quantitative
reconciliation of these forward-looking non-GAAP financial measures to the most
directly comparable forward-looking GAAP financial measure because
management cannot predict, with sufficient reliability, contingencies
relating to potential changes in tax valuation allowances, potential
changes to customer accommodation accruals, potential restructuring impacts,
contingencies related to past and future acquisitions, and changes in
fair values of our derivative instruments, all of which are difficult to estimate
primarily due to dependencies on future events.
Adjusted Net Income
Adjusted Net Income, a non-GAAP financial measure, is defined by
the Company as Adjusted EBITDA less amortization expense for capitalized
intangible assets (excluding acquired intangibles), less interest
expense (net of non-cash interest), and less current tax provision. We measure
Adjusted Net Income based on Proforma Shares Outstanding (see below).
Management believes that utilization of Adjusted Net Income is an
important non-GAAP financial measure of our normalized operating
results. Proforma Shares Outstanding
For purposes of evaluating our results on per-share
metrics, many of our computations utilize proforma share computations. Our measure of
proforma shares includes our Basic and Diluted share computations
utilized for GAAP purposes, plus our estimate of the impacts of common
stock equivalents which consist of stock options, restrictive stock
issuable to certain key employees, shares issued to former principal stockholder
shares issued to former principal stockholders and shares issued in our
initial public offering, our private exchange offer, our public exchange offer
and our short-form merger with MedQuist Inc..
Free Cash Flow
Free Cash Flow, a non-GAAP financial measure, is defined by the
Company as Adjusted EBITDA less consolidated interest expense (net of non-
cash interest), less capital expenditures (including capitalized
software development costs), and less current tax provision (net of deferred tax
provision). Management believes that utilization of Free Cash
Flow is an important non-GAAP measure of the Company’s ability to convert
operating results into cash.
Total Billed Equivalent Line Counts
Total billed equivalent line counts is defined by the Company as the
number of lines and line equivalents billed for the period, as defined by a
customer’s contract, and includes volume transcribed or edited on
the Company’s transcription platforms, as well as technology volume (speech
recognition).
|
 Adjusted EBITDA
Adjusted EBITDA is a metric used by management to measure operating performance. Adjusted EBITDA is
defined as net income attributable to MModal Inc., as applicable, plus net income attributable
to noncontrolling interests, income taxes, net interest expense, depreciation and amortization,
cost (benefit) of legal proceedings, settlements, and accommodations, acquisition and restructuring charges, discontinued operations,
equity in income of affiliated company, share-based compensation and other non-cash awards,
realized gain on settlement of foreign currency hedges, excluding other (income) expense. The
realized gain on settlement of foreign currency hedges is a component of other (income) expense,
as reported in the Consolidated Statements of Operations. Share-based compensation and other
non-cash awards represents only the portion of such expense that is a component of selling,
general and administrative expense, as reported in the Consolidated Statements of Operations, as it
excludes such expense attributable to the Company’s restructuring actions.
We
present
Adjusted
EBITDA
as
a
supplemental
performance
measure
because
we
believe
it
facilitates
operating
performance
comparisons
from
period to period and company to company by backing out the following:
•
potential
differences
caused
by
variations
in
capital
structures
(affecting
interest
expense,
net),
tax
positions
(such
as
the
impact
on
periods
or
companies for changes in effective tax rates), the age and book depreciation of fixed assets
(affecting depreciation expense); •
the impact of non-cash charges; and
•
the impact of acquisition and integration related charges, restructuring charges, and certain unusual
or nonrecurring items. Because Adjusted EBITDA facilitates internal comparisons of operating
performance on a more consistent basis, we also use Adjusted EBITDA in measuring
our
performance
relative
to
that
of
our
competitors.
Adjusted
EBITDA
is
not
a
measurement
of
our
financial
performance
under
GAAP
and should not be considered as an alternative to net income, operating income or any other
performance measures derived in accordance with GAAP
or
as
an
alternative
to
cash
flow
from
operating
activities
as
measures
of
our
profitability
or
liquidity.
We
understand
that
although
Adjusted
EBITDA
is frequently used by securities analysts, lenders and others in
their evaluation of companies, Adjusted EBITDA has limitations as an
analytical tool, and you should not consider it in isolation, or
as a substitute for analysis of our results as reported under GAAP. Some of these
limitations are:
•
Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures
or contractual commitments; •
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital
needs; •
Although depreciation is a non-cash charge, the assets being depreciated will often have to be
replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such
replacements; and •
Other
companies
in
our
industry
may
calculate
Adjusted
EBITDA
differently
than
we
do,
limiting
its
usefulness
as
a
comparative
measure.
Non-GAAP Financial Definitions |