Transcript Slide 1

Robert J. Colletti
Senior Vice President and Chief Financial Officer
John A. Adams
Executive Vice President and Chief Administrative Officer
Safe Harbor Statement
The attached materials and management’s prepared remarks include forward-looking
statements, and management may make additional forward-looking statements in
response to questions. These materials may include, but are not limited to, statements
concerning our anticipated performance, including revenue, margin, cash flow, balance
sheet and profit expectations; development and implementation of our software; duration,
size, scope and revenue expectations associated with client contracts; benefits provided
by Eclipsys software, outsourcing and consulting services; business mix; sales and
growth in our client base; market opportunities; industry conditions; and our accounting,
including its effects and potential changes in accounting.
Actual results might differ materially from the results projected due to a number of risks
and uncertainties. Software development may take longer and cost more than expected,
and incorporation of anticipated features and functionality may be delayed, due to various
factors including programming and integration challenges and resource constraints. We
may change our product strategy in response to client requirements, market factors,
resource availability, and other factors. Implementation of some of our software is
complex and time consuming. Results depend upon a variety of factors and can vary by
client. Each client’s circumstances may include unforeseen issues that make it more
difficult or costly than anticipated to implement or derive benefit from software,
outsourcing or consulting services. The success and timeliness of our services often
depends at least in part upon client involvement, which can be difficult to control. We are
required to meet specified performance standards, and contracts can be terminated or
their scope reduced under certain circumstances. Competition is vigorous, and
competitors may develop more compelling offerings or offer more aggressive pricing.
New business is not assured and existing clients may migrate to competing offerings.
Financial performance targets might not be achieved due to various risks, including
slower-than-expected business development or new account implementation, or higherthan-expected costs to develop products, meet service commitments or sign new
contracts. Our cash consumption may exceed expected levels if profitability does not
meet expectations or strategic opportunities require cash investments.
More information about Eclipsys’ risks is available in Eclipsys’ recent Form 10-Q and other
filings made by Eclipsys from time to time with the Securities and Exchange Commission.
Special attention is directed to the portions of those documents entitled “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”
Who we are….
• Founded in 1995
• Became a publicly traded company in
1998
• NASDAQ: ECLP
•
•
•
•
1500+ facilities using our solutions
2000+ employees
Headquarters: Boca Raton, FL
2004 revenues: $300 million+
Health Care IT Market
• HCIT is forecasted to grow at a
compounded annual rate of 7% from $36.5B
in 2003 to $47.0B in 20071
• EHR solutions reported to be ordered by
30% as of end of 2003, by acute-care
hospitals, with 80% penetration rate
expected by 20162
Sources: (1) “North American Healthcare IT Spending Forecasts to
2007”, ID Number: M-22-6133, April 24, 2004, Gartner Research, Michael
Davis, Joanne Galimi. (2) “The Diffusion and Value of Healthcare
Information Technology”, Rand Corporation, Anthony Bower.
Catalysts for HCIT Adoption
•
Government: One goal is for Americans to have personal EMR w/in 10 yrs1
•
Non-Governmental: Leapfrog Group focusing on patient safety and quality care
•
Consumerism: 70% of Americans turn to the Internet for healthcare decisions2
•
Workforce: Shortage of healthcare profssionals3
•
Capital constraints: Financing future growth is looming issue4
•
Information systems5
•
18% of provider respondents indicate that they have a fully operational EMR
•
53% of respondents state IT purchases to reduce med errors is top priority
Sources: (1) President’s Information Technology Advisory Committee, Health Care Delivery and Information
Technology (HIT) Subcommittee: Draft Recommendations, April 13, 2004 (2) Survey: Consumers Want More
Healthcare Info, Consumeraffairs.com, March 28, 2005. (3) “Competing for Talent” The Advisory Board, 2004.
(4) “Financing the Future”, The Advisory Board, 2003. (5) 16th Annual HIMSS Leadership Survey, HIMSS,
February 14, 2005
Eclipsys: Leadership in NHIN Initiatives
• President Bush: NHIN (National Health
Information Network) infrastructure by 2015
• Established ONCHIT (Office of the National Coordinator for
Health Information Technology), David Brailer, MD as head
(4/04)
• Published strategic plan to achieve NHIT (6/04)
• Strategic Plan
• Achieve Interoperable Health Records
• Interconnect Clinicians
• Personalize Care
• Improve Population Health
Eclipsys: Leadership in NHIN Initiatives
• Eclipsys Providing Leadership
• Eclipsys XA ObjectsPlus offering promoting interoperability
between disparate systems
• Web-based Remote Access Services (RAS) interconnecting
physicians
• eLink and Standards-based interfaces
• Founding member of HIMSS EHRVA which is committed to a
leadership role in standards development, EHR certification,
interoperability, advancing performance and quality
measures
• NHIN prototypes design and testing with EHRVA (Electronic
Health Record Vendor Association)
• Founding member of Integrating the Healthcare Enterprise
(IHE) initiative
• Driving HIMSS 2006 interoperability showcase w/ Sunrise XA
connected to HCO, VA and Dept of Defense HIS
Eclipsys is The Outcomes Company
• We provide software, content and services that
help our customers transform healthcare and
improve their clinical, financial and satisfaction
outcomes.
Our Software Optimizes Patient Flow
The Connected Enterprise
Our Customers
•
•
•
•
Community
Academic
IDNs
Specialty
centers
• Ambulatory
• Regional
• Pediatric
Partnership: Turning Vision into Reality
Sarasota Memorial Health Care System, Sarasota, FL
Computerized Physician Order Entry
• 90% reduction in Medicare denials for
ED-ordered EKGs and chest X-rays
• $2 million estimated annual savings in
printing and labor costs
• Reduced average medication order
completion time
•
from 3 hours to 45 minutes
• Reduced lab turnaround times
•
•
89% for ASAP physician orders
53% for routine orders
Partnership: Turning Vision into Reality
El Camino Hospital, Mountain View, CA
Network Services, Wireless
• Installed a wireless network instead of
upgrading the existing wired network
• Reduced annual labor and materials costs
by 66%
• Avoided business interruptions
• Project completed in less than 4 months
Financial Overview
• Summary of Financial Results
• Traditional Model vs. Software Recurring Revenue
Model
• 2005 Success Factors
• Overall Financial Summary
Revenue Growth
(in millions)
42%
Growth
$309.1
$254.7
$218.1
2002
2003
2004
Improving Financial Results
Revenues
Q1
$56.8
Q2
$63.4
2003
Q3
$68.2
EPS
($0.29)
($0.24)
($0.24)
($0.46)
($1.23)
Revenues
Q1
$68.4
Q2
$73.7
2004
Q3
$79.8
Q4
$87.2
Total
$309.1
Y/Y % change
20.3%
16.2%
17.1%
31.6%
21.4%
EPS
($0.28)
($0.21)
($0.14)
($0.06)
($0.70)
Y/Y % change
3.4%
12.5%
41.7%
87.0%
43.1%
Q1
Q2
Revenues
$84.4
$95.9
Y/Y % change
23.5%
30.2%
EPS
($0.15)
($0.05)
Y/Y % change
46.0%
75.2%
2005
Q3
Q4
$66.3
Total
$254.7
Q4
YTD
Total
$180.3
($0.20)
Traditional Model vs. Software Recurring Revenue Model
Affects of each model on a typical $10 million contract
Advantages of Contracting Model
• Improves long term visibility of the business model
• Helps build foundation for sustainable profitability
• Strategic selling advantage
• Helps insulate business model in capital reimbursement
environment
• Better aligns customer payments with value received
Quarterly Revenue Composition
Growth in Recurring Revenue
12.9%
2.1%
4.7%
2.9%
7.8%
$40.8
6.6%
2.5%
$43.7
$44.8
Q3
Q4
4.7%
$47.0
$59.6
5.2%
$62.9
$51.9
$50.8
$48.4
$37.6
Q1
Q2
2003
Q1
Q2
Q3
2004
Q4
Q1
Q2
2005
Growth In Professional Services
23.6%
$21.2
19.2%
18.0%
$12.2
6.9%
-11.0%
0.0%
$14.6
7.3%
-4.3%
6.8%
$16.2
$15.1
$14.0
$13.1
$11.8
$11.8
$10.0
Q1
Q2
Q3
2003
Q4
Q1
Q2
Q3
2004
Q4
Q1
Q2
2005
2005 Success Factors
• Improve professional service margins throughout year
• Capitalize on content offering and add-on
software opportunities
• Successful implementations
• 2004
• 54 major system activations for 2004
• 18 major system activations in Q4
• 23 Sunrise Clinical Manager 3.5XA activations in 2H04
• 2005
• 33 major clinical activations in 1H05
• 40 additional major clinical activations scheduled for 2H05
• 27 Sunrise Clinical Manager 4.0XA planned for balance of the year
• Continue to leverage operating expenses
• Successful releases of Sunrise Clinical Manager 4.0 XA
(released in March ’05) and Sunrise Clinical Manager 4.5 XA
Leverage Operating Expenses
Overall Financial Summary
•
•
•
•
Improving financial results
Financial model – capitalize on
recurring revenue model
Reduction in loss per share
Improving DSO’s:
•
•
•
•
•
•
Increase in deferred revenue:
•
•
•
•
12/31/2002 - 79 days
12/31/2003 - 75 days
12/31/2004 - 67 days
03/31/2005 - 63 days
06/30/2005 – 61 days
$309.1
$254.7
$218.1
2002
2003
2004
Revenue growth
12/31/2002 - $80.1 million
12/31/2004 - $125.0 million
Leverage operating expenses
Objective is build a financial model
that generates sustained profitability
2002
2003
($0.67)
2004
($0.70)
($1.23)
Loss per share improvement
Our mission