MModal Inc. - FORM 8-K - EX-99.1 - INVESTOR MEETING PRESENTATION

Attached files

file	filename
8-K - FORM 8-K - MModal Inc.	d318800d8k.htm

Investor Meetings

March 2012

Exhibit 99.1

Information provided and statements contained in this presentation that are not purely historical, such as

statements regarding our 2012 performance goals, our business strategy and proposed investments, 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 and forward-looking non-GAAP financial measures

to the most directly comparable GAAP financial measures.

safe harbor language and

reconciliation of non-GAAP measures

investment highlights

•

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

Market Leader

Focused Direction

Favorable Trends

Technology

Innovator

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:

•

collaborative intelligence

Medical dictation & transcription

Narrative to meaningful clinical

documentation transformation

•

Speech and Language

Understanding technology

new additions

Brand

Strategic

Partnerships

Leadership

Team

about M*Modal

our solutions

our clients

•

MTSOs

•

Radiology systems

•

EHR Vendors

•

HCIT Firms

our company

•

140+ patents and

licenses in speech

recognition and

understanding

•

Cloud Based Speech

Recognition

•

Language

Understanding

•

Coding Technology

•

EHR Integration

•

Clinical

Documentation

•

Partners:

•

850 physicians

practices

•

3,000 hospitals,

clinics, and

practices

•

200,000 physicians

•

Traded on NASDAQ

(MODL)

•

14,000+ employees

worldwide

differentiation: technology + market footprint

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

drivers for growth: healthcare reform

Meaningful

Use

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

Accountable

Care

ICD-10

Shift

from

Encounter

Value

Based

Healthcare

longer term trends

2011

2012

2013

2014

2015

2016+

Evidence based

feedback at POC with

patient context

Big Data for population

health management

Blending of Big Data +

structured data for clinical &

billing workflow

“Mobile”

becomes healthcare

interface standard

Rise of 2

gen Speech & NLU

for clinical documentation

Meaningful Use investments

ICD-10 preparation

era of Big Data

Big Data key to enabling healthcare reform

Today's challenge is primarily a data

challenge…..

•

Often derived from Claims data

•

Timeliness issues

•

May not reflect actual clinical

care process

•

Most clinical data in free text

reports

Need for structured discrete data ….

•

Run algorithms / data mine

•

Reporting

•

Cost vs. quality

80%+ of

clinical data

“trapped”

unstructured

text

Speech Recognition

Language Understanding

Discrete Data

Documentation Feedback

Medical Evidence

Insight

EHR Integration

Coding / Billing

Quality Reporting

Research

Disease Registry

ACO

conversational documentation

M*Modal differentiation

Speech Recognition

“What you say”

True Language Understanding

“What you mean”

Clinically Relevant

Cloud Based Adaptive AI

Anywhere from any device

differentiation: clinical specialty focus

Specialty

# Physicians

% of All

Physicians

Internal Medicine

98,327

15%

Family Practice

82,347

12%

Pediatrics

51,113

Psychiatry

39,015

OBGYN

35,137

Anesthesiology

34,630

Surgery General

30,675

Radiology

27,169

Emergency Medicine

26,236

Cardiology

21,013

Orthopaedic Surgery

20,075

Pathology

16,648

Oncology

15,589

Ophthalmology

15,335

Neurology

12,368

Gastroenterology

9,755

Dermatology

9,309

Urology

8,664

Pulmonology

8,616

Otorhinolaryngology

8,371

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

M*Modal is the partner of choice

strategic innovation & distribution

ambulatory

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

mobility solutions

M*Modal advanced speech understanding technology

strategic innovation & distribution

radiology & imaging

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 & NLU 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

* Representative Sample

strategic relationships

Financial Overview

strong quarterly results: operating metrics

(1)

As defined in Appendix. Includes approximately 270 million and 150 million total billed equivalent line counts associated with the acquisition of MultiModal Technologies, Inc., for the

fourth quarter and third quarter of 2011, respectively.

(2)

Excluding acquisitions, transcription volumes processed

offshore

were

49%

December 2011.

(3)

Excluding acquisitions, transcription volumes edited

post

speech

recognition

were

78%

December 2011.

(3)

875

863

1,020

1,156

Q1 11

Q2 11

Q3 11

Q4 11

Total Billed Equivalent

Line Counts

(in millions)

41%

42%

45%

46%

Q1 11

Q2 11

Q3 11

Q4 11

Offshore Transcription

Volumes

(2)

72%

74%

76%

75%

Q1 11

Q2 11

Q3 11

Q4 11

Transcription Volumes

Edited Post Speech

Recognition

strong quarterly results: financial metrics

25%

28%

42%

40%

43%

(1)

(1) As defined in Appendix.

(1)

47%

29%

41%

24%

$28.0

$26.7

$27.6

$29.8

$34.1

Q4 10

Q1 11

Q2 11

Q3 11

Q4 11

Adjusted EBITDA

$110.5

$111.2

$108.4

$116.1

Q4 10

Q1 11

Q2 11

Q3 11

Q4 11

Net Revenue (in millions) & Gross

Margin Percentage

$0.28

$0.30

$0.31

$0.34

$0.38

Q4 10

Q1 11

Q2 11

Q3 11

Q4 11

Adjusted Net Income Per Fully

Diluted Share

$13.9

$13.2

$16.3

$16.8

$19.0

Q4 10

Q1 11

Q2 11

Q3 11

Q4 11

Free Cash Flow (in millions)

$108.0

2011 financial metrics

Financial Metrics

2011 Results

Net Revenues:

$444 million

Adjusted EBITDA

(1)

$118 million

Adjusted Net Income per fully

diluted share

(1)

$1.34

Free Cash Flow

(1)

$65 million

(1)

As defined in Appendix.

2012 performance goals

(1)

Financial Metrics

Range of Estimates

Net Revenues:

First half ending Jun. 30, 2012

Full year ending Dec. 31, 2012

$230 million to $240 million

$490 million to $505 million

Adjusted EBITDA

$123 million to $130 million

Adjusted Net Income per fully

diluted share

$1.24 to $1.35

(1)

Issued on March 8, 2012.

(2)

As defined in Appendix.

(2)

•

Restructuring and integration charges of $19 million to $23 million

•

Weighted average shares outstanding of 56.5 million for the full

year

•

Effective cash income tax rate of 6% to 8%

•

Capital expenditures of $26 million to $30 million

growth outlook context for 2012

•

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

Net Revenues

Adjusted EBITDA

•

Timing of sales force investments and

commercialization weighted in 1H 2012

•

Benefits from these investments begin to be realized

in 2H 2012

Free Cash Flow

•

Continue to generate significant positive FCF

•

Sufficient to fund our growth strategies

•

Timing of investments to create quarter-to-quarter

variability

(1)

Includes short-term credit facilities, capital lease obligations and equipment loans.

(2)

Based on Trailing Twelve Month Adjusted EBITDA.

As of December 31, 2011

Scheduled Amortization and Maturity

(Dollars in millions)

Cash & Cash Equiv.

$30

Debt

(1)

$297

Net Debt

$267

Total Net Leverage

(2)

2.2 x

strong balance sheet

•

Principal amortization obligation begins in Q2 2012

•

Eight acquisitions funded with cash in 2011

•

$20 million available on revolver as of March 8

•

Strong balance sheet to execute on growth strategies

$15

$20

$145

$85

2012

2013

2014

2015

2016

investment highlights

•

1 of 2 key players offering FESR and NLU technology

•

Healthcare focused

•

Large diversified base of provider clients & MTSOs

Market Leader

Focused Direction

•

Proven HCIT additions to leadership team

•

Brand investments

•

Leverage of scalable global services capability

Favorable Trends

•

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

Technology

Innovator

•

Modern architecture

•

Highly differentiated NLU approach

•

Validation from new strategic partnerships

Appendix

Three Months Ended

Dec. 31, 2011

Dec. 31, 2010

Net income attributable to MModal Inc.

$ 27,797

$ 2,083

Net income attributable to non-controlling interest

4,006

Discontinued operations

142

(218)

Income tax benefit

(26,202)

(2,159)

Interest expense, net

8,222

7,299

Other expense

2,845

100

Realized loss on settlement of foreign currencies

(991)

Loss on extinguishment of debt

13,525

Depreciation and amortization

11,310

8,872

Acquisition and restructuring charges

9,423

2,271

Cost of legal proceedings, settlements and accommodations

210

820

Share-based compensation and other non-cash awards

1,303

279

Gain on sale of investment

(8,870)

Equity in income of affiliated company

(77)

Adjusted EBITDA

$ 34,059

$ 28,021

Adjusted EBITDA as a percentage of net revenues

29.3%

25.4%

Non-GAAP Reconciliation

(Dollars in thousands)

Reconciliation of Net Income to Adjusted EBITDA (Unaudited)

Year Ended

Dec. 31, 2011

Net income attributable to MModal Inc.

$ 62,797

Net income attributable to non-controlling interest

2,138

Discontinued operations

142

Income tax benefit

(43,398)

Interest expense, net

29,301

Other expense

5,405

Realized loss on settlement of foreign currencies

(364)

Depreciation and amortization

37,826

Acquisition and restructuring charges

26,943

Benefit of legal proceedings, settlements and accommodations

(6,678)

Share-based compensation and other non-cash awards

3,984

Adjusted EBITDA

$ 118,096

Adjusted EBITDA as a percentage of net revenues

26.6%

Non-GAAP Reconciliation

(Dollars in thousands)

Reconciliation of Net Income to Adjusted EBITDA (Unaudited)

Three Months Ended

Sep. 30, 2011

June 30, 2011

Mar. 31, 2011

Net income attributable to MModal Inc.

$ 20,553

$ 5,135

$ 9,312

Net income attributable to non-controlling interest

361

271

1,506

Income tax provision (benefit)

(19,226)

886

1,144

Interest expense, net

7,081

6,961

7,037

Other (income) expense

4,033

(530)

(943)

Realized gain on settlement of foreign currencies

377

157

Depreciation and amortization

9,219

8,879

8,418

Acquisition and restructuring charges

6,251

4,391

6,878

Cost (benefit) of legal proceedings, settlements and accommodations

581

(7,513)

Share-based compensation and other non-cash awards

1,360

611

710

Adjusted EBITDA

$ 29,769

$ 27,562

$ 26,706

Adjusted EBITDA as a percentage of net revenues

27.6%

25.4%

24.0%

Non-GAAP Reconciliation

(Dollars in thousands)

Reconciliation of Net Income to Adjusted EBITDA (Unaudited)

Three Months Ended

Dec. 31, 2011

Dec. 31, 2010

Adjusted EBITDA

$ 34,059

$ 28,021

Consolidated interest expense

(8,222)

(7,299)

Non-cash interest

1,655

803

Capital expenditures

(7,045)

(4,687)

Tax benefit

26,202

2,159

Deferred tax benefit

(27,639)

(5,072)

Free Cash Flow

$ 19,010

$ 13,925

Adjusted Net Income (Unaudited)

Adjusted EBITDA

$ 34,059

$ 28,021

Less:

Amortization (excluding acquired intangibles)

4,879

3,869

Cash interest (total expenses less non-cash)

6,567

6,496

Current tax provision

1,437

2,913

Adjusted Net Income

$ 21,176

$ 14,743

Adjusted Net Income per share:

Basic

$0.39

$0.29

Diluted

$0.38

$0.28

Non-GAAP Reconciliation

(Dollars in thousands)

Free Cash Flow (Unaudited)

Three Months Ended

Sept. 30, 2011

June 30, 2011

March 31, 2011

Adjusted EBITDA

$ 29,769

$ 27,562

$ 26,706

Consolidated interest expense

(7,081)

(6,961)

(7,037)

Non-cash interest

774

831

858

Capital expenditures

(5,959)

(4,360)

(6,688)

Tax (provision) benefit

19,226

(886)

(1,144)

Deferred tax provision (benefit)

(19,933)

159

546

Free Cash Flow

$ 16,796

$ 16,345

$ 13,241

Adjusted Net Income (Unaudited)

Adjusted EBITDA

$ 29,769

$ 27,562

$ 26,706

Less:

Amortization (excluding acquired intangibles)

4,116

4,362

3,903

Cash interest (total expenses less non-cash)

6,307

6,130

6,179

Current tax provision

707

727

598

Adjusted Net Income

$ 18,639

$ 16,343

$ 16,026

Adjusted Net Income per share:

Basic

$0.35

$0.32

$0.31

Diluted

$0.34

$0.31

$0.30

(Dollars in thousands)

Free Cash Flow (Unaudited)

Non-GAAP Reconciliation

Year Ended

Dec. 31, 2011

Adjusted EBITDA

$ 118,096

Consolidated interest expense

(29,301)

Non-cash interest

4,188

Capital expenditures

(24,052)

Tax benefit

43,398

Deferred tax benefit

(46,867)

Free Cash Flow

$ 65,392

Adjusted Net Income (Unaudited)

Adjusted EBITDA

$ 118,096

Less:

Amortization (excluding acquired intangibles)

17,260

Cash interest (total expenses less non-cash)

25,183

Current tax provision

3,469

Adjusted Net Income

$ 72,184

Adjusted Net Income per share:

Basic

$1.37

Diluted

$1.34

(Dollars in thousands)

Free Cash Flow (Unaudited)

Non-GAAP Reconciliation

Three Months Ended

Dec. 31, 2011

Dec. 31, 2010

MModal Inc. Shares

Basic outstanding

54,418

35,158

Effect of dilutive options

1,034

1,212

Diluted shares

55,452

36,370

Proforma

impact

fully

dilutive

(1)

Basic

172

15,775

Diluted

394

16,005

Proforma Shares

Basic

54,590

50,933

Diluted

55,846

52,375

(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 MModal MQ Inc. (f/k/a MedQuist Inc.)

Non-GAAP Reconciliation

Three Months Ended

Sept. 30, 2011

June 30, 2011

March 31, 2011

MModal Inc. Shares

Basic outstanding

51,195

49,168

40,933

Effect of dilutive options

1,283

1,391

1,047

Diluted shares

52,478

50,559

41,980

Proforma impact of fully dilutive

(1)

Basic

1,814

1,929

10,683

Diluted

2,023

2,176

10,913

Proforma Shares

Basic

53,009

51,097

51,616

Diluted

54,501

52,735

52,893

Non-GAAP Reconciliation

(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 MModal MQ Inc. (f/k/a MedQuist Inc.)

Performance Goals -

Twelve Months Ended

December 31, 2012

Low

High

Net income attributable to MModal Inc.

$ 18,000

$ 20,400

Income tax provision

7,000

5,800

Interest expense, net

29,000

28,500

Other income

(4,500)

(5,000)

Realized gain on settlement of foreign currencies

1,700

Depreciation and amortization

47,000

49,500

Acquisition and restructuring charges

19,000

23,000

Share-based compensation and other non-cash awards

5,800

6,100

Adjusted EBITDA

$ 123,000

$ 130,000

Non-GAAP Reconciliation

(Dollars in thousands)

Reconciliation of Net Income to Adjusted EBITDA (Unaudited)

Performance Goals -

Twelve Months Ended

December 31, 2012

Low

High

Adjusted EBITDA

$ 123,000

$ 130,000

Less:

Amortization (excluding acquired intangibles)

21,000

23,500

Cash interest (total expenses less non-cash)

25,600

25,100

Current tax provision

6,100

4,900

Adjusted Net Income

$ 70,300

$ 76,500

Adjusted Net Income per share:

Basic

$1.28

$1.39

Diluted

$1.24

$1.35

MModal Inc. Shares

(1)

Basic outstanding

55,100

Effect of dilutive options

1,400

Diluted shares

56,500

(Dollars in thousands)

Adjusted Net Income (Unaudited)

Non-GAAP Reconciliation

(1)

MModal Inc. weighted average shares outstanding

Non-GAAP Financial Measures

In addition to the United States generally accepted accounting principles, or GAAP, results provided throughout this document, M*Modal has provided certain non-

GAAP financial measures to help evaluate the results of our performance. The Company believes that these non-GAAP financial measures, when presented in

conjunction with comparable GAAP financial measures, are useful to both management and investors in analyzing the Company's ongoing business and operating

performance. The Company believes that providing the non-GAAP information to investors, in addition to the GAAP presentation, allows investors to view the

Company's financial results in the way that management views financial results. The tables attached to this press release include a reconciliation of these historical

non-GAAP financial measures to the most directly comparable GAAP financial measures.

We also present Adjusted EBITDA and Adjusted Net Income on a forward-looking basis as part of our performance goals for fiscal 2012 and a reconciliation of

these non-GAAP financial measures to the most directly comparable GAAP financial measures. These measures are subject to change because management

cannot predict, with sufficient reliability, potential changes in tax valuation allowances, 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 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 MModal MQ Inc. (f/k/a

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

Non-GAAP Financial Definitions

Total billed

equivalent

line

counts

defined

the

Company

the

number

lines

and

line

equivalents

billed

for

the

period,

defined

customer's

contract,

and

includes

volume

transcribed

edited

the

Company's

transcription

platforms,

well

technology

volume

(speech

recognition).

Non-GAAP Financial Definitions

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.

Attached files

MModal Inc. Reports

Also read