athenahealth — Investor Day (December 2016)
156 slides from athenahealth's investor day presentation, Dec 15, 2016
Slide 1: 9th Annual Investor Summit
9 Annual th Investor Summit December 15, 2016 1
Slide 2: Welcome to our 9th Annual Investor Summit
Welcome to our 9th Annual Investor Summit Dana Quattrochi Investor Relations 2
Slide 3: Agenda
Agenda 1 Opening & Closing Remarks Jonathan Bush, Chairman & Chief Executive Officer 2 Business Model and Financial Guidance Karl Stubelis, Chief Financial Officer 3 The Service Profit Chain: Creating a New Operating Framework for Healthcare Leonard Schlesinger, Baker Foundation Professor, Harvard B
Slide 4: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements reflecting athenahealth, Inc. (“athenahealth” or “we”) management’s expectations for: futur
Slide 5: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures In our earnings releases, conference calls, slide presentations, or webcasts, we may use or discuss non-GAAP financial measures as defined by Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and
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Slide 7: Opening Remarks
Opening Remarks Jonathan Bush Chairman & CEO 7
Slide 8: The network is the computer
“the network is the computer” 8
Slide 9: Year-end 2015
Year-end 2015 75K 74M 38M 124M 4.3M Patients visited Providers on Patient Patient records Patient visits more than one the network records used* athena provider We traded patient records: via 30K 54K providers received patient records connections from athenaNet * Represents the number of unique pati
Slide 10: Year-to-date 2016
Year-to-date 20161 85K 83M 47M 132M 4.9M Patients visited Providers on Patient Patient records Patient more than one the network records used2 visits athena provider 13% 12% 24% 6% 14% We traded patient records: via 55K 122K providers received patient records Connections from athenaNet 126% 83% 1ath
Slide 11: Population Health 2.0
rithy Calendar Patients Claims Financials Reports Quality Support George MILLER 51yoM | 01-01-1963 #P129510223 | 405-5 Care Plan Goals & Tasks = Assessments (2 unread) Lose weight to reduce cardiac strain Review due 5-30-2015 2-15-2015 Weekly ) PATIENT TAS High Priority 6-1-2015 Record your weight (
Slide 12: Epocrates 2.0
Today's Schedule Jpset Stomach + Harold Jones Richard Dean Anderson Patient Harold Jones View All 53% risk current treatment plan for Dashboard ® Paul Darcy > Rnauin meuormin AUN viapetes Amoxicillin Oralair Grastek Practice Performance Your practice Practices like yours EPOC RATES 2.0
Slide 13: Hospital Expansion
HOSPITAL EXPANSION 92 hospitals contracted 35 live on athenaOne 9 development partners 13
Slide 14: New Connections
Cerner Epic NextGen eClinicalWorks athenahealth Meditech NEW CONNECTIONS Record sharing with Record sharing with 140,096 1,429 Cerner clients 152 Epic clients Network Endpoints 14
Slide 15: Government Programs
Get Meaningful Use Avoid PQRS Penalties Get Shared Savings NATIONAL NATIONAL NATIONWIDE AVERAGE AVERAGE OF ALL ACOS 33% 60% 29% GOVERNMENT PROGRAMS ATHENAHEALTH ATHENAHEALTH ATHENAHEALTH CLIENTS CLIENTS ACO CLIENTS 15 98.2% 93.6% 73%
Slide 16: Government mandates are evaporating and becoming less significant
Government mandates are evaporating and becoming less significant. “2016 will be an enormous and pivotal year for progress and it’s starting off with a bang” –Andy Slavitt, Acting CMS Administrator January 2016 16
Slide 17: Government mandates are evaporating and becoming less significant
Government mandates are evaporating and becoming less significant. 17
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Slide 19: In the absence of government mandates, we will focus on deepening our services
1 In the absence of government mandates, we will focus on deepening our services. 2 We will help our clients grow their market share. 3 We will continue to create network-effect. 19
Slide 20: We take a lot of work off their plates
We take a lot of work off their plates… but we’ll need to take more in 2017. 2016 2017 Client work athena work Client work athena work 0.8 FTE savings 1.8 FTE Improve BPO quality savings • • Reduce duplicate faxes • Real-time medication benefit checking • 0.2 Front Office FTE • Auto-label documents
Slide 21: The full continuum of care
We will reuse more data-assets across more points of care. Our strategy: The full continuum of care Lab Emergency Imaging Primary Specialists Convenient Hospital Pharmacy Facility-Based Home-Based Care Care Surgery Post Acute Post Acute 21
Slide 22: We also need to grow our clients' market share
We also need to grow our clients’ market share. Total Collections Growth Same-Store1 Collections Growth 16% 15% 16% 14% 13% 14% 12% 12% 10% 9% 10% 9% 8% 8% 7% 6% 6% 4% 4% 3% 2% 2% 0% 0% Group Large Group Enterprise Group Large Group Enterprise 1 Average collections growth of departments live at begi
Slide 23: So we will go to the Cloud and find new patients
So we will go to the Cloud and find new patients. 23
Slide 24: And, finally, we will continue to create network-effect
And, finally, we will continue to create network-effect. Patient Overlap by Quarter 25.00% 90,000,000 Patient Records Overlap 80,000,000 20.00% 70,000,000 60,000,000 15.00% 50,000,000 40,000,000 10.00% 30,000,000 5.00% 20,000,000 10,000,000 0.00% 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2
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Slide 28: $400M-$450M
$400M-$450M 28
Slide 29: Business Model and Financial Guidance
Business Model and Financial Guidance Karl Stubelis Chief Financial Officer 29
Slide 30: The largest network in healthcare
The largest network in healthcare
Slide 31: Network: Providers, Connections, Patients, Claims
NETWORK Providers Connections Patients Claims 85K 5B+ 83.4M $22B total providers electronic transactions per year patient records collections posted per year 22K 296K 1 in 10 166M primary care providers total interfaces Americans seen by athenahealth claims submitted per year providers each year 323
Slide 32: Vision and Mission
To build the information backbone that helps VISION healthcare work as it should. To be healthcare providers’ most trusted service, MISSION helping them do well by doing the right thing.
Slide 33: Critical corporate goals during fiscal year 2017
We continue to focus our work on critical corporate goals during fiscal year 2017 athenaNation • Implement athena core values • Complete DRI implementation at least at Sr. Manager and above • Complete our Agile transformation athenaNet • Weekly useful message to each user of our network (athenaNet S
Slide 34: Balanced corporate scorecard
We continue to measure our performance using a balanced corporate scorecard • Voluntary Turnover Stability • New Hires Leaving in 12 Months (10% weight) • Employee Engagement Performance • Service Performance Index (40% weight) Satisfaction • Client Net Promoter Score (15% weight) • Inbound Contacts
Slide 35: Consistent track record of growth and profitability
We have a consistent track record of growth and profitability as we build out the healthcare internet Our strategies target massive, untapped 1 addressable market opportunities Our success is aligned with our clients’ long- 2 term success Our focused investments fuel future growth, 3 profitability,
Slide 36: Consistent track record of growth and profitability
We have a consistent track record of growth and profitability as we build out the healthcare internet Our strategies target massive, untapped 1 addressable market opportunities Our success is aligned with our clients’ long- 2 term success Our focused investments fuel future growth, 3 profitability,
Slide 37: We seek to serve the entire continuum of care
We seek to serve the entire continuum of care U.S. Health Care Spend $B $1,000 ~$970B $800 Total Spend $600 ~$600B ~$2 Trillion $400 ~$230B $200 ~$160B ~$20B $0 Convenient Ambulatory Acute Care Facility-Based Home-Based Care Post Acute Post Acute Post-Acute Care: Facility-based settings, including S
Slide 38: Total addressable market is massive and growing
We believe our total addressable market is massive and growing Roadmap to Support Full Continuum of Care Ambulatory Market $30-35 Billion1 Acute Care Services $30-50 Billion1 athenaOne $70-$100 BILLION Facility-Based & Home- Based Post Acute $10-15 Billion2 1 Calculated by multiplying athenahealth’s
Slide 39: Addressable market with Network Services
We believe our total addressable market is massive and growing And even larger when you layer on our Network Services, like Population Health athenaOne $70-$100 BILLION Population Health $30-40 BILLION1 1 HIT Consultant, “Population Health Management Market to Reach $40.6 Billion by 2018”, 4/22/2014
Slide 40: Consistent track record of growth and profitability
We have a consistent track record of growth and profitability as we build out the healthcare internet Our strategies target massive, untapped 1 addressable market opportunities Our success is aligned with our clients’ long- 2 term success Our focused investments fuel future growth, 3 profitability,
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Slide 42: Performing against everything the government has thrown at us
We’ve been successful at performing against everything the government has thrown at us. Get Meaningful Use Avoid PQRS Penalties Get Shared Savings NATIONAL NATIONAL NATIONWIDE AVERAGE AVERAGE OF ALL ACOS 33% 60% 29% ATHENAHEALTH ATHENAHEALTH ATHENAHEALTH CLIENTS CLIENTS ACO CLIENTS 98.2% 93.6% 73%
Slide 43: Post Meaningful Use, we co-source with our clients
Post Meaningful Use, we co-source with our clients to reduce unnecessary work Total work Client work athenahealth work
Slide 44: Consistent track record of growth and profitability
We have a consistent track record of growth and profitability as we build out the healthcare internet Our strategies target massive, untapped 1 addressable market opportunities Our success is aligned with our clients’ long- 2 term success Our focused investments fuel future growth, 3 profitability,
Slide 45: Profitability, Growth, Cash Flow
We remain focused on profitable growth and generating cash Profitability Growth Cash Flow 45
Slide 46: Bookings definition and conversion to revenue
The sum of the expected annualized recurring FIRST, bookings values are revenue from athenahealth-branded services and estimated based on data provided by clients the contracted value from Epocrates-branded services; net of any charge backs SECOND, bookings are reported net of any charge backs • Boo
Slide 47: Growth from both new and existing clients
We generate growth from both new and existing clients $1.50 $1.25 $1.00 $0.75 $0.50 $0.25 $0.00 Beginning Recurring Attrition Existing Client Growth Ending Recurring New Client Growth Ending Recurring Revenue (Installed Revenue (Installed Revenue (Total) Base) Base) Note: Business model simplified f
Slide 48: Strong revenue visibility into next year
We continue to enjoy strong revenue visibility into next year 2017 Revenue Budget 3% 9% Existing Client Base (as of Sep 2016), less attrition* 9% To be implemented in Q4 2016 and FY 2017 79% To be sold in Q4 2016 and FY 2017 Pharma Client Base 2014 2015 2016 76% 83% 83% *Includes Epocrates subscript
Slide 49: Bookings-to-revenue by segment
While bookings-to-revenue varies by segment, we continue to compress the process over time Q1 Q2 Q3 Q4 Q1 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar SMALL Kick-off Ramp Full Revenue GROUP Kick-off Ramp Full Revenue HOSPITAL Kick-off Ramp Full Revenue ENTERPRISE Kick-off Ramp Full Re
Slide 50: Disciplined with pricing as we grow
We have been very disciplined with our pricing as we grow the business $10 $9 athenaOne Revenue per Claim $8 $7 $6 $5 $4 Small/Group: athenaOne Revenue/Claim $3 All Segments: athenaOne Revenue/Claim Enterprise: athenaOne Revenue/Claim $2 $1 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2013 2014 2
Slide 51: History of strong revenue growth
We have a history of strong revenue growth …and expect it to continue $1,600 2017 Growth $1,400 $1,310 ~20% $1,200 $1,100 $1,000 $925 $753 $800 $595 $600 $422 $324 $400 $246 $189 $136 $200 $98 $- 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (IPO) Mid Pt Mid Pt Consolidated Revenue ($Millio
Slide 52: Growth drivers change as we expand across the continuum
Our growth drivers are beginning to change as we expand across the continuum 2016 Revenue Forecast 2017 Revenue Budget ~2% ~4% athenaOne (Ambulatory) athenaOne (Hospital) Population Health All Other Pricing Framework Key Metric As of Q3 2016 athenaOne (Ambulatory) % of Collections Providers ~85,000
Slide 53: $90B-$125B Collective TAM
athenaOne (Hospital) Population Health athenaOne (Ambulatory) $90B-$125B Collective TAM athenaOne (Ambulatory) $30-$35B TAM Population Health $30-$40B TAM athenaOne (Hospital) $30-$50B TAM NOTE: Total Addressable Market (“TAM”) excludes the estimated facility-based and home-based post acute TAM of $
Slide 54: Profitability, Growth, Cash Flow
We remain focused on profitable growth and generating cash Profitability Growth Cash Flow 54
Slide 55: Our economic model is starting to mature
Our economic model is starting to mature HISTORICAL/TODAY NEAR TERM LONG-TERM GOAL Revenue Growth Revenue Growth Market Share >20% ~20% Top 3 HCIT Vendors Selling and Marketing Selling and Marketing Selling and Marketing Investments Investments Investments >Revenue Growth <Revenue Growth <<Revenue G
Slide 56: Profitability and cash flow to improve as we scale
As a result, we expect profitability and cash flow to improve as we grow and scale $200 $175 $150 $125 $Millions $100 $75 $50 $25 $0 2011 2012 2013 2014 2015 Q1 - Q3 -$25 2016 GAAP Operating Income Non-GAAP Adjusted Operating Income Cash Flow from Operating Activities 56
Slide 57: Massive data set allows us to instrument our business
Our massive data set allows us to instrument our business at unparalleled levels Denominator Toggle: Cases vs. Providers Unit Cost by issue reason by month Product Toggle Case volumes by reason Client Toggle 57
Slide 58: Profitability to improve significantly in fiscal year 2017
We expect our profitability to improve significantly in fiscal year 2017 $200 $175 $150 $125 $Millions $100 $75 $50 $25 $0 2011 2012 2013 2014 2015 2016 Mid Pt 2017 Mid Pt GAAP Operating Income Non-GAAP Adjusted Operating Income 58 NOTE: 2016 and 2017 based upon mid-point of the fiscal year 2016 and
Slide 59: 2017 priorities
2017 priorities 1 Grow bookings to $400 - $450 million 2 Scale operations and improve automation rates across each of our services 3 Improve cost of bookings relative to fiscal year 2016 4 Maintain investment in research and development to expand our core services, network services, & platform 5 59
Slide 60: Changes to financial guidance measures for fiscal 2017
We are making changes to our financial guidance measures for fiscal year 2017 • Starting in 2017, we will no longer guide to the financial metric we previously referred to as Non-GAAP Adjusted Gross Margin. 2 • We will continue to provide a bridge to this number in the Non- GAAP tables in our earnin
Slide 61: Fiscal year 2017 growth and profitability expectations
We are introducing our fiscal year 2017 growth and profitability expectations Fiscal Year 2017 Expectations Financial Measures GAAP Revenue $1,290 million – $1,330 million GAAP Operating Income $61 million – $81 million Non-GAAP Adjusted Operating Income1 $170 million – $190 million Financial Metric
Slide 62: The Service Profit Chain: Creating a New Framework for Healthcare
The Service Profit Chain: Creating a New Framework for Healthcare Leonard Schlesinger, Baker Foundation Professor Harvard Business School 62
Slide 63: High-Performing Physician Network model
Introducing the High-Performing Physician Network model LEADERSHIP OPERATIONAL EFFECTIVENESS PATIENT JOURNEY RESULTS Intentional Physician/Staff Intentional Patient Clinical Financial Design Capability Design Capability Results Results TECH NETWORK
Slide 64: Quantifying the benefits of performance improvement
Quantifying the benefits of performance improvement Incremental Annual Revenue per Physician Associated with Quintile Improvement Primary Care $397K revenue baseline per MD $93,037 $85,473 $179k +45% Pediatrics $426K revenue baseline per MD $119,549 $110,774 $230k +54% OB/GYN $526K revenue baseline
Slide 65: Massive diseconomies of scale
Massive diseconomies of scale Productivity Patient Collections wRVU per provider day Patient pay yield (excluding uninsured) 16% 16% Enterprise disadvantage Enterprise disadvantage Patient Loyalty Patient Access 18-month new patient retention rate Time to 3rd available appointment (specialty-adjuste
Slide 66: Large enterprises growing faster but only through acquisition
Large enterprises growing faster— but only through acquisition Year-Over Year Collections Growth Total Collections Growth Same-Store1 Collections Growth 16% 15% 16% 14% 13% 14% 12% 12% 10% 9% 10% 9% 8% 8% 7% 6% 6% 4% 4% 3% 2% 2% 0% 0% Group Large Group Enterprise Group Large Group Enterprise 1 Avera
Slide 67: The case for learning organizations
The case for learning organizations Variation of financial performance among practices Legend within Enterprise 75th % Median 25th % Practice Financial Performance Score Overall Median Enterprise A Enterprise B Enterprise C Enterprise D Enterprise E Enterprise F Organization 67
Slide 68: Value of improving patient collection stragglers
The value of improving patient collection stragglers Variation of patient pay yield rate among practices Legend within Enterprise 75th % Median 25th % Practice Patient Pay Yield Bringing low- performing departments up to the 75th percentile for Enterprise B would increase patient collections by 31%
Slide 69: High-Performing Physician Network 1.0 model
The High-Performing Physician Network 1.0 model LEADERSHIP OPERATIONAL EFFECTIVENESS PATIENT JOURNEY RESULTS Intentional Physician/Staff Intentional Patient Clinical Financial Design Capability Design Capability Results Results TECH NETWORK
Slide 70: The Network: Going Deep and Expanding Across the Continuum
The Network: Going Deep and Expanding Across the Continuum Kyle Armbrester Chief Product Officer 70
Slide 71: Year in review
year in review 71
Slide 72: With Streamlined, we made a good change
With Streamlined, we made a good change… Providers are more efficient at 11% documenting during encounters “None of my providers would go back to Classic.” Providers see a drop in –Dr Root, Ascension 23% documentation after the visit 72
Slide 73: Lessons learned: from Agile ethos to Agile process
…and we learned some valuable lessons during the roll- out, moving us from an “Agile ethos” to an “Agile process” 1 3 4 5 NPS dropped to 20 points 1 2 3 4 5 73
Slide 74: Notable progress in the hospital market
“The University of Toledo Medical We made notable progress in the Center continues to work closely with our athena partners to further hospital market in less than two years... develop and refine a state of the art 92 cloud based EMR with a focus on improving the physician, nurse, and learner experi
Slide 75: Hospital Performance in 2016
Hospital Performance in 2016 Q1 Q2 Q3 Q4 2016 2016 2016 2016 Hospital Cash flow as a percentage of 103.3% 98.2% 106.9% 104.3% 103.4% average baseline trend DAR 51 48 41 43 16% decrease Percentage of claims paid in 40 days 72% 78% 79% 82% 14% increase CPOE Adoption Rate 20% 26.5% 20% 27% 35% increase
Slide 76: Government mandates are evaporating
Government mandates are evaporating and becoming less significant “2016 will be an enormous and pivotal year for progress and it’s starting off with a bang” –Andy Slavitt, Acting CMS Administrator January 2016 76
Slide 77: What's to come
what’s to come 77
Slide 78: In 2017, we aim to…
In 2017, we aim to… 1 continue to deepen our services with a focus on “Provider/Staff Capability” 2 continue our expansion across the continuum build enhanced connections to legacy 3 software to expand the network 78
Slide 79: Driving results and ROI for clients by adding depth
We are hyper-focused on driving results and ROI for our clients by adding depth to our services LEADERSHIP OPERATIONAL EFFECTIVENESS PATIENT JOURNEY RESULTS Intentional Physician/Staff Intentional Patient Clinical Financial Design Capability Design Capability Results Results 79 TECH NETWORK
Slide 80: Taking work off our clients' plates
We’ve taken a lot of work off of our client’s plates this year… and we’ll take on even more in 2017 KEY WORK REDUCTION EFFORTS 0.8 1.8 • Clinicals: Removing documents from inboxes through automation, better connections, and enhanced machine learning FTE FTE • Collector: Taking on all patient insuran
Slide 81: Making existing workflows more effective and efficient
While we continue to make existing workflows more effective and efficient, using human-centered design MISSION CRITICAL WORKFLOWS INITIATIVE IDENTIFY AUDIT Signature Experiences MONITOR PRIORITIZE REWORK 81
Slide 82: In 2017, we aim to…
In 2017, we aim to… 1 continue to deepen our services with a focus on “Provider/Staff Capability” 2 continue our expansion across the continuum build enhanced connections to legacy 3 software to expand the network 82
Slide 83: The full continuum of care
Our strategy: The full continuum of care Lab Emergency Imaging CORE SERVICES Primary Specialists Convenient Hospital Pharmacy Facility-Based Home-Based Care Care Surgery Post Acute Post Acute Build / Buy / Partner More Disruption Please Partners NETWORK SERVICES 83
Slide 84: Hospital Goals for 2017
Hospital Goals for 2017 Eliminate Improve Work Performance Hospital • Global formulary and • Material cash flow tables improvements over baseline Plan to reach • Remote medication verification 102% with the addition of 100 new hospitals • Expanded Authorization management services • Plan to double
Slide 85: Continuing our long history of adjacency expansion
Continuing our Long History of Adjacency Expansion Freestanding EDs Imaging Centers • <$1B market but rapidly growing • $100B+ market, $1-3B TAM • Many still on paper T-sheets • Rising consolidation due to pressure from reimbursement cuts • 323 hospitals operate 387 Pharmacy freestanding EDs (76% gr
Slide 86: In 2017, we aim to…
In 2017, we aim to… 1 continue to deepen our services with a focus on “Provider/Staff Capability” 2 continue our expansion across the continuum build enhanced connections to legacy 3 software to expand the network 86
Slide 87: Managing coverage across the continuum
We are now managing coverage across the continuum and have grown coverage dramatically during 2016 Year Start 287 Via CommonWell 2217 0 311 Via Carequality 0 500 1000 1500 2000 2500 3000 Known Clients Connected Clients NumberNumber of knownofclients knowneligible clients for eligible participation f
Slide 88: Managing coverage across the continuum
We are now managing coverage across the continuum and have grown coverage dramatically during 2016 Year Start Year End 287 1429 Via CommonWell 2217 2853 0 152 311 330 Via Carequality 0 500 1000 1500 2000 2500 3000 Known Clients Connected Clients NumberNumber of knownofclients knowneligible clients f
Slide 89: API partners and connections
NEXTGEN Epic e HEALTHCARE minute LT, (77 ad j . eClinicalWorks & 8 Surescri pts AMAS Se Dignity Health ICAO “e Cvs M=RGE sunquestm CAREMABK Healthcare #MEDHOST™ Eo Allscripts” MEDITECH commonwell A ye rithia? Trinity Health aprina aoe) Wxcdy |p 2=Greenway Children,s —— = Cerner YaLE-New Hen SmDio >
Slide 90: Closing thoughts
Harnessing our enhanced data accessibility into meaningful, action-oriented, network-enabled experiences CLOSING THOUGHTS????? 90
Slide 91: The Network is the Growth Engine for the Future
The Network is the Growth Engine for the Future Jonathan Porter Network Services 91
Slide 92: Network Services
NETWORK SERVICES Epocrates athenaWell A trusted brand and widely- A mobile app for patients, used mobile app connecting allowing them to be active providers to athenaNet members in their care team Clinical collaboration Patient Identity Services Scheduling Messaging Marketplace Population Health A p
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Slide 94: Supply and demand virtuous cycle
UberX Black Car VIRTUOUS SUPPLY DEMAND CYCLE Early Adopters Mainstream Consumers 94
Slide 95: Number of Active U.S. Driver-Partners
Active Uber Drivers by Service uberX Only 150,000 Number of Active U.S. Driver-Partners 100,000 Tipping Point 50,000 UberBLACK 0 JUL 2012 JAN 2013 JUL 2013 JAN 2014 JUL 2014 JAN 2015 95 Note: Sample consists of all U.S. UberBLACK and uberX driver-partnens making at least four trips in any month (284
Slide 96: Patients shared across clients are reaching critical mass
Patients shared across clients are reaching critical mass Patient Overlap by Quarter 25.00% 90,000,000 Patient Records Overlap 80,000,000 20.00% 70,000,000 60,000,000 15.00% 50,000,000 40,000,000 10.00% 30,000,000 5.00% 20,000,000 10,000,000 0.00% 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Slide 97: Patients shared across clients are reaching critical mass
Patients shared across clients are reaching critical mass Patient Overlap by Quarter 25.00% 90,000,000 Patient Records Overlap Core 80,000,000 20.00% Services 70,000,000 60,000,000 15.00% 50,000,000 40,000,000 10.00% 30,000,000 5.00% 20,000,000 10,000,000 0.00% 0 2001 2002 2003 2004 2005 2006 2007 2
Slide 98: Size of the Network
Network Services 83.4M 85.5K 322.8K 526.5K patient records on providers on core loosely connected potential providers the network services providers (Population health) (athenaOne) (Epocrates) SIZE OF THE NETWORK Tipping Point Core Services TIME 98
Slide 99: Over the next 2 years, we aim to accomplish goals
Over the next 2 years, we aim to accomplish 3 goals: 1 Everyone gains value from being on the network 2 Virally grow the network Create reasons for network (free) users to become core 3 (paid) users 99
Slide 100: Everyone gains value from being on the network
1 Everyone gains value from being on the network 100
Slide 101: Common Collaboration Platform
Common Collaboration Platform Doctors save time with access to more patient records DOCTORS PATIENTS NETWORK Patients save time when more doctors have access to their records 101
Slide 102: Common Calendar
Common Calendar Doctors benefit from more patients scheduling into the calendar DOCTORS PATIENTS NETWORK Patients benefit from more doctors with open calendars 102
Slide 103: More Disruption Please
More Disruption Please Doctors benefit from a more diverse and specialized set of apps DOCTORS APPS NETWORK App providers benefit from more doctors on the network 103
Slide 104: Virally grow the network
2 Virally grow the network Patient Patient Patient Care Coordinator Patient Miriam, Care Manager Family Patient for Diabetes and CHF Doctor PCP Care Manager for Transitions Hospitalist Pharmacist Patient Patient Patient Ophtholmologist Behavioral Specialist Patient Endocrinologist 104 Patient
Slide 105: Create reasons for network users to become core users
3 Create reasons for network (free) users to become core (paid) users 105
Slide 106: The Network is the Platform
The Network is the Platform Prakash Khot Chief Technology Officer 106
Slide 107: Facebook is pretty much the GPS for this revolution
“Facebook is pretty much the GPS for this revolution. Without the street there’s no revolution, but add Facebook to the street and you get real potential.” Foetus Chief Technology Officer Tazrik: Tunisian street resistance network 107
Slide 108: Trump Twitter profile
TRUMP MAKE AMERICA GREAT AGAIN! Donald J. Trump © The official Twitter profile for Donaki Trump donakdjtrump.com Tweets Tweets & replies Photos & videos - Pes = Donald J. Trump “re p I'm on Bill @oreillyfactor tonight at 8 PM. It will be another lively interview about how to #MakeAmericaGreatAgain!
Slide 109: E7th st
E7th st a2 Esthst
Slide 110: Delivered 2,000 flu shots in hours
Delivered Belfast? Show short video. 2,000 flu shots in 4 hours 110
Slide 111: Outsmart traffic with the largest community of drivers
OUTSMART TRAFFIC WITH THE ARGEST COMMUNITY OF DRIVERS Delivered 2,000 flu shots in
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Slide 113: Alexa, turn on Welcome Home
“Alexa. turn on Welcome Home” =~ " 4 “Alexa, turn on my Chill Time” “Alexa, turn off my Bedroom Sonos” 7 “Alexa, turn on the TV" -
Slide 114: Physicians experience delays delivering care due to inaccessible records
95 % of physicians have experienced a delay or difficulty delivering medical care because patients’ health records were not easily accessible or shared Even when physicians practice within the same organization, only 114 44% Report they can share patient Information 2015 Epocrates / athenahealth sur
Slide 115: Network scale metrics
142M patient visits per 296K 9% year total 5B+ no-show interfaces electronic rate transactions per year 83.4M patient records 9K lab and imaging $22B endpoints collections posted per year 59K pharmacy endpoints 166M claims submitted per year 115 Source: athenahealth data as of Q3 2016 or TTM (Q4 201
Slide 116: Our vision: build the information backbone
OUR VISION: Build the information backbone that makes healthcare work as it should. 116
Slide 117: athenaWell and service layers
athenaWell Inpatient Inpatient Clinicals Clinicals Inpatient Inpatient Financials Financials Epocrates Epocrates Epocrates Population Population Population Population Health Health Health Health athena athena athena athena athena Coordinator Coordinator Coordinator Coordinator Coordinator Proxsys Pr
Slide 118: 2007 to 2016 growth
20161 athenaWell Inpatient Inpatient 85K providers Clinicals Clinicals $22B collections Inpatient Financials Inpatient Financials Epocrates 166M Epocrates Epocrates claims 83.4M patients 2007 Population Population Population Population Health Health Health Health athena athena athena athena athena 1
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Slide 121: How do we proceed from here?
In pursuit of our mission to provide care across the continuum, how do we proceed from here? Lab Emergency Imaging Primary Specialists Convenient Hospital Pharmacy Facility-Based Home-Based Care Care Surgery Post Acute Post Acute 121
Slide 122: The network is the platform
“the network is the platform” 122
Slide 123: gs Sees 1IaE
gs Sees 1IaE > a ee oS re rene >” Deir
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Slide 125: Embedded Assets
Embedded Assets Provider-ceniric data models, Clinicals workflows, Communication Fab >—
Slide 126: Platform architecture
Doctor Nurse Care Mgr ¢ 9 9 & @eQ2BSS80S0CBQq athena Business Services Partner Services Collector Pop Health Epocrates | Telehealth Specialized EHRs Platform as a Service H-Objects Network tric athena Backbone n Exchange Foundation Services Polyglot Data Fabric Comm A <r, [nomen] me |v | = | Infrast
Slide 127: Continuous Accelerated Evolution
Continuous Accelerated Evolution Embedded assets Revenue Cycle Clinicals Epocrates drug Document Interoperability Order sets Management Encounter monographs Processing workflows Workflows Workflows Electronic Data Quality & Provider-centric Population Provider-centric Communication interchange Perfo
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Slide 129: Migrate to microservices architecture
1 2 3 4 5 Migrate to Adopt mobile Adopt a Complement Adoption of microservices and social, progressive private cloud open source architecture purpose-built Agile culture with public technologies to apps and process cloud build new capabilities 6 7 8 9 10 Enable Test-driven Adopt a Evolve towards Sus
Slide 130: 2016 2017 2018+
2016 2017 2018+ 130
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Slide 132: athenahealth: Revolutionizing healthcare
athenahealth Revolutionizing healthcare 132
Slide 133: Presentation Break
Presentation Break
Slide 134: Client Panel Discussion
Client Panel Discussion Stephen Kahane, M.D., M.S. Client Organization 134
Slide 135: Panelists
Client Panel Moderator Stephen Kahane, M.D., M.S., Client Organization Panelists Robert Brenner, M.D. Joseph Marchant Bryan Stiltz Bruce Swartz SVP, Chief Physician Executive Chief Executive Officer SVP, Physician Enterprise SVP, Physician Integration Valley Health System Bibb Medical Center Adventi
Slide 136: Management Q&A
Management Q&A
Slide 137: Closing Remarks
Closing Remarks Jonathan Bush Chairman & CEO 137
Slide 138: Deep and wide in equal measure
Deep and wide in equal measure 1 We’re doubling-down on work. 2 We’re expanding across the continuum. 3 We’re evolving our platform. 4 We’re pushing out network-effect. 138
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Slide 140: Who would have thought…
Who would have thought… 140
Slide 141: iPhone users and landlines
101 million iPhone users 80 million landlines 141
Slide 142: Years to build: Airbnb and Hilton
95 YEARS TO BUILD 6 YEARS TO BUILD 769,000 ROOMS, 78 COUNTRIES 2.3 million ROOMS, 191COUNTRIES Source: 142 2016 STR, airbnb.com, hilton.com
Slide 143: US sales of apparel and accessories
US sales of apparel and accessories $60 $50 BILLIONS $40 $30 $20 $10 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Amazon Macy’s TJ Maxx Walmart Nordstrom Source: 143 ATLAS | Data: Cowen and Company
Slide 144: Time to reach 50 million users
Time to reach 50 million users Telephone 75 Years TV 13 Years Internet 4 Years Facebook 3.5 Years Whatsapp 1.5 Years Source: Citi Digital Strategy Team 144
Slide 145: Epic, Cerner, NextGen connections
Cerner Epic NextGen eClinicalWorks athenahealth Meditech 145
Slide 146: Our rate of connection is growing at an accelerated pace
Our rate of connection is growing at an accelerated pace. 47M 55K Patient records 122K providers received Connections patient records used* from athenaNet 24% 126% 83% * Represents the number of unique patient records (claim or encounter) over the last 18 months 146
Slide 147: Massive potential to reduce harm and improve outcomes
There is massive potential to reduce harm and improve outcomes. Major Transfusion Reaction ACE in Pregnancy Wrong-site surgery Missed Major Drug Interaction Egregiousness Readmission Antibiotics for URI Delayed diagnosis of Acromegaly Unnecessary Testing Missed Screening Test Missed Normal Test Resu
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Slide 149: Please join us
Please join us: • Lunch with Management • Nerve Center Tour
Slide 150: Thank You
Thank You
Slide 151: Appendix
Appendix
Slide 152: Additional points of interest for fiscal year 2017
Additional points of interest for fiscal year 2017 It is best to assess our business on a year-over-year basis as there is typically an increase in expense levels during Q1 versus Q4 • FICA payroll tax reset, benefit rate changes, trade shows, etc. The number of working days varies each quarter; imp
Slide 153: Financial and other key metric definitions
Financial and other key metric definitions Annual Bookings Annual Bookings is defined as the sum of the expected annualized recurring revenue from our athenahealth-branded services and the contracted value from our Epocrates-branded services; net of actual charge backs. Providers The number of provi
Slide 154: 2017 Guidance
2017 Guidance
Slide 155: Non-GAAP reconciliation for fiscal year 2017 expectations
Non-GAAP reconciliation for fiscal year 2017 expectations GAAP Operating Income and Non-GAAP Adjusted Operating Income $Millions LOW HIGH Fiscal Year Ending December 31, 2017 Total rev enue $ 1,290 $ 1,330 GAAP operating income $ 61 $ 81 GAAP operating margin 4.7% 6.1% Add: Stock-based compensation
Slide 156: 9th Annual Investor Summit
9 Annual th Investor Summit December 15, 2016 156