#1196 5100101 001010011001010 inovalon 5056 10100101000 1801010011001 1001100101000 BTOOTTOON TOOTOTOO 10011001010010 1010010100110010 010010010 17 Fourth Quarter & Full Year 2017 February 20, 2018 Earnings Presentation Supplement#2Note Regarding Forward-Looking Statements inovalon This presentation contains forward-looking statements. All statements other than statements of historical facts contained in this presentation, including, but not limited to, statements regarding future results of the operations and financial position of Inovalon Holdings, Inc. ("Inovalon"), and its financial targets, business strategy, and plans and objectives for future operations, are forward-looking statements. The words "believe," "may," "see", "will," "target," "estimate," "continue," "anticipate," "assume," "intend," "expect," "project," "look forward" and variations of these words or similar expressions are intended to identify forward-looking statements. Inovalon has based these forward-looking statements on its estimates of its financial results and its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs as of the date of this presentation. These forward-looking statements are subject to a number of significant business, economic, regulatory and competitive risks, uncertainties and contingencies, many of which are beyond the control of Inovalon and its management, and are based upon assumptions with respect to future events or decisions, which are subject to change. Moreover, because Inovalon operates in a very competitive and rapidly changing environment, new risks emerge from time to time. It is not possible for Inovalon's management to predict all risks, nor can Inovalon assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this presentation may not occur and actual results, including, but not limited to, the timing of and investment in technological advancements and developments, as well as Inovalon's ability to enter into new agreements with existing or new platforms, products and solutions in the timeframes expected, or at all, could differ materially and adversely from those anticipated or implied in the forward-looking statements. For a discussion of the risks and uncertainties that may cause Inovalon's actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements, you should read Inovalon's most recent Annual Report on Form 10-K, including the sections entitled "Risk Factors" and "Special Note Regarding Forward Looking Statements," as well as the other documents that Inovalon may file from time to time in the future with the Securities and Exchange Commission. You should not rely upon forward-looking statements as predictions of future events. Although Inovalon believes that the expectations reflected in the forward-looking statements are reasonable, Inovalon cannot guarantee and provides no assurance that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. In addition, certain information included in this presentation is presented strictly for illustrative or educational purposes, and such information should not be viewed as a representation regarding management's expectations or actual results. Management's expectations and actual results could differ materially from information presented solely for illustrative or educational purposes. Except as required by law, Inovalon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this presentation, to conform these statements to actual results or to changes in Inovalon's expectations, and nothing in this presentation should be regarded as a representation by any person that any financial targets, business strategy or plans and objectives for future operations suggested by any forward-looking statements will be achieved or realized. In addition, this presentation may include certain non-GAAP financial measures. These non-GAAP measures are in addition to, not a substitute for or necessarily superior to, measures of financial performance prepared in accordance with U.S. GAAP. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, is available herein and within our public filings with the Securities and Exchange Commission, available on the Company's investor website at http://investors.inovalon.com. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 2 Ⓒ2018 by Inovalon. All rights reserved.#3Contents inovalon This deck is provided as a supplement to the Q4 and FY 2017 Earnings Results release announced by Inovalon on February 20, 2018. The following outlines the content of this supplemental presentation: • Q4 and FY 2017 - Revenue Growth and Margin Expansion Empowering Healthcare's Transformation · • Transition to Subscription-Based Cloud-Based Platform Offerings • 2018 Revenue and Adjusted EBITDA Margin Guidance Bridges . 2018 Financial Guidance Summary • MORE² Registry® Dataset Expansion Expanding Compute and Analytics Expanding Connectivity • The Inovalon ONE TM Platform Appendix INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 372 Ⓒ2018 by Inovalon. All rights reserved.#4Q4 2017 - Revenue Growth and Margin Expansion Growth Revenue Continued Investment $96.1 Q4 2016 Q4 2017 Operating 59.8% Leverage Gross Margin Q4 2016 $114.6 $7.4 Q4 2016 67.6% Sales & Marketing $9.7 Q4 2017 Q4 2017 Adjusted EBITDA $25.5 $14.3 Q4 2016 Adj. EBITDA Margin 22.3% 14.9% Q4 2016 $21.1 Q4 2017 Investment in Innovation $26.4 Q4 2016 Note: All $ amounts are in Millions except as otherwise noted. 1: Gross Margin defined as Revenue less Cost of Revenue, as a percentage of Revenue. 2: Adj. EBITDA Margin represents Adjusted EBITDA as a percentage of Revenue. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 Q4 2017 Q4 2017 4 # · # @ inovalon Ramping of the Inovalon ONE™ Platform engagements with four national health plans, in addition to other new business signings Delivered 19% year-over-year growth as reported, and 14% year-over-year growth on an organic basis, consistent with guidance Product mix improvement and technology- enabled efficiencies continued to drive gross margin expansion on a year-over-year (+780 bps) and sequential (+80 bps) basis Adjusted EBITDA margin expanded 740 bps year-over-year while maintaining increased investments in innovation and sales & marketing Continued investment in platform innovation to drive growth and differentiation Expanded MORE2 Registry patient count, EHR connectivity provider count, and trailing 12-month Patient Analytics Months (PAM) by 59%, 23%, and 60% year-over-year, respectively Ⓒ2018 by Inovalon. All rights reserved.#5FY 2017 - Revenue Growth and Margin Expansion Growth Operating Leverage Continued Investment Revenue $427.6 FY 2016 62.8% Gross Margin FY 2016 $449.4 $27.1 FY 2017 FY 2016 66.4% Sales & Marketing $34.1 FY 2017 FY 2017 Adjusted EBITDA $109.0 $99.9 FY 2016 Adj. EBITDA Margin 24.3% 23.4% FY 2016 $62.4 FY 2017 Investment in Innovation $85.8 FY 2016 Note: All $ amounts are in Millions except as otherwise noted. 1: Gross Margin defined as Revenue less Cost of Revenue, as a percentage of Revenue. 2: Adj. EBITDA Margin represents Adjusted EBITDA as a percentage of Revenue. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 FY 2017 FY 2017 5 i W M inovalon Revenue and Adjusted EBITDA in-line with prior guidance, up 5% and 9% year-over- year, respectively Strong market adoption of the Inovalon ONE ™M Platform Signed multi-year engagements with multiple national health plans, state and regional players Expanded gross margin by 360 bps, driven by favorable product mix and pricing, and technology-enabled efficiency initiatives Expanded Adjusted EBITDA margin by 90 bps, consistent with guidance, while increasing investments in innovation and sales & marketing Total annualized revenue from new business signings increased by 45% and average revenue per opportunity increased by 54% versus 2016 Significant investments in platform innovation - including modularity, connectivity, compute power and cloud infrastructure, and enhanced data visualization Ⓒ2018 by Inovalon. All rights reserved.#6Empowering Healthcare's Transformation inovalon By the end of 2017, there were over 94 million patients on the Inovalon ONETM Platform, an increase of more than 450% from 2016. The vast majority of clients represented by the more than 94 million patients utilize only a small fraction of the Platform's capabilities providing a significant opportunity for expanding value for clients and financial performance for Inovalon. Number of Patients on Inovalon's Cloud-Native Platform 0 2014 (1) Figures are as of December 31" for each respective year. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 452% Year-over-Year Growth (4Q 2017 vs. 4Q 2016)¹ 8,269,695 2015 6 17,129,398 2016 94,482,322 2017 Ⓒ2018 by Inovalon. All rights reserved.#7Transition from Legacy to Platform-Based Revenue inovalon Inovalon has been undergoing an intentional transition in its offering portfolio from legacy enterprise solutions to subscription-based cloud-based platform offerings with add-on advisory services. Growth in revenue from the Company's subscription-based cloud-based platform offerings was approximately 30% in 2017 in comparison to 2016, with continued expansion seen for 2018. Subscription-Based Platform Offerings: Cloud-based platform offerings tied to subscription-based contract structures. Legacy Solutions: Solutions historically provided by the Company that are not cloud-based platform offerings tied to subscription- based contract structures. Services: Advisory, implementation, and support services under time and materials, fixed price, or retainer- based contracts. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 $437.3 53% 43% 4% 2015 Services Revenue Offering Mix 7 $427.6 54% 34% 12% 2016 Legacy Solutions $449.4 66% 19% 15% 2017 $482M - $462M -69% -16% -15% 2018G Subscription-Based Platform Offerings Ⓒ2018 by Inovalon. All rights reserved.#82018 Revenue Guidance Bridge inovalon Inovalon continues to transition its business to an increasingly subscription-based cloud-based platform model. The Company's advancing capabilities and technologies continue to be positively recognized in the marketplace. At the same time, external market forces related to the ACA are a short-term opposing force in 2018. This combination of factors in 2018 yields full-year revenue guidance of $462M to $482M, or expected revenue growth of 5% at the midpoint. $449.4 2017 Actual Revenue Full Year 2017 vs. 2018 Guidance Revenue Growth of 5% at Midpoint -(5 pts) Net Client Chumn -(8 pts) Client ACA Withdrawals The above table is for illustrative purposes only. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 -16 pts New Client Sales -2 pts CCS Acquisition (in 2017) 8 $471.9 2018 Revenue Guidance Net Client Churn expected to be ~5 points in 2018 Client decisions to withdraw from ACA markets, unrelated to the efficacy of Inovalon services, is a short-term headwind of ~8 points in 2018, most pronounced in 1H 2018 . Continued transition and expansion of Inovalon ONE™ Platform adoption is seen driving new platform client sales of ~16 points of growth in 2018 Ⓒ2018 by Inovalon. All rights reserved.#92018 Adjusted EBITDA Margin Bridge inovalon Inovalon continues to expect operating leverage, driven by further improvement in mix and pricing, along with technology-enabled efficiency initiatives. The Company sees these driving 50 basis points of Adjusted EBITDA margin expansion in 2018. 24.3% FY 2017 Adj. EBITDA Margin % ~50 Basis Point Year-to-Year Improvement -20 bps Investment Initiatives / Overhead Efficiencies -10 bps Represents -30 bps of Gross Margin Expansion YtY Platform Mix & Price Changes -20 bps The above table is for illustrative purposes only. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 Platform Efficiencies 9 24.8% FY 2018G Adj. EBITDA Margin % The full gross margin benefit of an increasing mix of higher margin Platform offerings, coupled with continued technology efficiencies, is seen to be partially offset by one-time client ACA withdrawals Efficiencies achieved in overhead are expected to fully offset continued investments in strategic areas for the Company Ⓒ2018 by Inovalon. All rights reserved.#102018 Financial Guidance Summary Inovalon is providing 2018 guidance as follows. Financial Metric Revenue $462 million to $482 million $12 million to $16 million $113 million to $121 million $44 million to $49 million Diluted net income per share $0.09 to $0.11 Non-GAAP diluted net income per share $0.31 to $0.35 Net Income Adjusted EBITDA Non-GAAP net income 2018 Guidance INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 The Company is assuming 140 million shares for the full year 2018. Additionally, the Company's guidance assumes an effective tax rate of approximately 30% for the full year 2018. 10 inovalon Ⓒ2018 by Inovalon. All rights reserved.#11MORE2 Registry® Dataset Expansion One of the industry's largest independent healthcare datasets, with more than 240M patients and 37B medical events Primary-sourced, longitudinally-matched, with data from all major U.S. healthcare programs Contains EHR, claims, scripts, labs, provider, demographic data & more Qualified Entity (QE) containing CMS' Fee for Service Medicare Data Empowers and informs our industry-leading analytics, creating differentiation and client value Patient Count (millions) 210 100 BB28828898895 170 160 150 140 130 110 100 90 60 40 30 10 MORE² REGISTRYⓇ GROWTH 2000 Patient Count 2001 Medical Event Count 2003 2004 2005 2000 1 2007 2009 2010 2011 2012 2013 2014 Year Please see the Company's filings with the Securities and Exchange Commission (SEC), including the Form 8-K filed on February 20, 2018, for further information on this and other key metrics. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 11 2015 inovalon 2016 2017 13.8 37 35 33 32 30 20 28 26 25 10 19 7 D Medical Event Count (billions) Ⓒ2018 by Inovalon. All rights reserved.#12Expanding Compute and Analytics inovalon Inovalon has significantly expanded its cloud computing environments in support of the growing demand for the Inovalon ONETM Platform. Reflecting this demand, Inovalon is seeing significant growth in its trailing 12-month Patient Analytics Months (PAM)¹ metric. Analytical Process Count (000s) 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 60% Year-over-Year Expansion (4Q 2017 vs. 4Q 2016) ² 2Q13 3Q13 1Q14 4Q13 2Q14 12 3Q14 1Q15 4Q14 2Q15 3Q15 4Q15 1Q16 3Q16 2Q16 4Q16 1Q17 (1) Patient Analytics Months, or PAM, is defined as the sum of the analytical processes performed on each respective patient within patient populations covered by clients under contract. (2) Figures are as of December 31 for each respective period. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 2Q17 3Q17 4Q17 Ⓒ2018 by Inovalon. All rights reserved.#13Expanding Connectivity inovalon Inovalon's interoperability technology enables real-time, bi-directional data aggregation and point-of-care intervention through Electronic Health Record (EHR) systems, driving positive impact and efficiency for clients, clinicians, patients, and the Company. Hospital 010110101011101010101011011011011011010101101 101010111010101010110110110110110101011010101 010101110101010101101101101101101010110101011 Claims. Lab, Pharmacy Data Sources 1 EHR Partner 1 ACO Environment Data Integration & Analytics Inovalon/EHR System Interoperability Long Term Facility EHR Partner 2 1 HOSPITAL Hospital System H EHR Partner 3 (1) 2014 and 2017 figures are as of December 31 for each respective year. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 Provider Office Provider Count 120,000 100,000 80,000 60,000 40,000 20,000 13 0 4Q13 1 1Q14 1 2Q14 203% CAGR (2014-2017)¹ 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Ⓒ2018 by Inovalon. All rights reserved.#14The Inovalon ONETM Platform inovalon The Inovalon ONETM Platform is an integrated, cloud-based platform of more than 80 individual proprietary toolsets, or "Components", able to be rapidly configured to empower the operationalization of large-scale, data-driven and value-based care initiatives. Toat PORT FORT HOT Employer Settings Connectivity & nation P DIRE margen dates. Hattata Pata Manbaring Ita துணC. CcLarena M Twit CO a Tochtergen a Cata BERDOM A Stable Health Settings C C The Inovalon ONETM Platform Architecture S F&F Campagn Analytical Algorithms & Engines Lo M INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 THE INOVALON ONE PLATFORM Ambulatory/C /Outputlan Care Settings Point Of Care VenuCondition B Master Platform Data Warehouse Real World Intervention/Point-Of-Care Solutions P&Fr Sekalige Autentin Care Settings Dreat Denunte A M HEL MAM Makan P Men Hemen Dend ve Da APOT Student ki Ghigan Shredar 14 A Post-Acute Care Settings 農食 Madan beklen Cre M Qually P Imp Reporting Home Care Settings Management & Administration Consoles Sepertig Data Visualization & Reporting Caption H Bewaring Regulamery Penting Du 165 Master Comparative Data Warehous Th Spaly Pharmas p SUPPORT SERVICES Paga Dent B Prom Prog Hylamput Praka PARTICIPATING ORGANIZATION PORTFOLIO SUPPORT Munting t Ⓒ2018 by Inovalon. All rights reserved.#15inovalon DOTOTOO healthcare empowered FE 77 2010 LOLA 19 EBS Appendix#16Reconciliation of Forward-Looking Guidance Adjusted EBITDA inovalon Inovalon defines Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) as net income calculated in accordance with GAAP, adjusted for the impact of depreciation and amortization, realized losses on short-term investments, loss (gain) on disposal of equipment, interest expense, interest income, provision for income taxes, stock-based compensation, acquisition costs, tax on equity exercises, and other non-comparable items. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of revenue. A reconciliation of forward-looking net income to Adjusted EBITDA guidance follows: Guidance Range Twelve Months Ending December 31, 2018 High (In millions) Reconciliation of Forward-Looking Guidance Net Income to Adjusted EBITDA: Net income 11 G Depreciation and amortization Loss (gain) on disposal of equipment Interest income Interest expense Provision for income taxes (1) EBITDA Stock-based compensation Acquisition costs: Transaction costs Integration costs Contingent consideration accretion Compensatory contingent consideration Other non-comparable items (2) Adjusted EBITDA Adjusted EBITDA Margin 60 16 Low 12 65 (6) 6 5 82 18 3 4 2 4 113 24.5% 16 65 6 7 89 18 3 GNA W 4 2 5 A 30% lax rate is assumed in order to approximate the Company's effective corporate tax rate. Other "non-comparable items include items that are not comparable across reporting periods or items that do not otherwise relate to the Company's ongoing financial results, such as certain employee related expenses attributable to advancements in automation and operational efficiencies. Non-comparable items are excluded from Adjusted EBITDA in order to more effectively assess the Company's period over period and on going operating performance. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 121 25.1% Ⓒ2018 by Inovalon. All rights reserved.#17Reconciliation of Forward-Looking Guidance Non-GAAP Net Income inovalon Inovalon defines Non-GAAP net income as net income calculated in accordance with GAAP, adjusted to exclude tax-affected stock-based compensation expense, acquisition costs, amortization of acquired intangible assets, tax on equity exercises and other non-comparable items. A reconciliation of net income to Non-GAAP net income follows: (In millions, except per share amounts) Reconciliation of Forward-Looking Guidance Net Income to Non-GAAP net income: Net income Pi Stock-based compensation Acquisition costs: Transaction costs Integration costs Contingent consideration accretion Compensatory contingent consideration Amortization of acquired intangible assets Other non-comparable items (1) Tax impact of add-back items (2) Non-GAAP net income GAAP diluted net income per share Non-GAAP diluted net income per share Weighted average shares of common stock outstanding - diluted CA 17 $ Guidance Range Twelve Months Ending December 31, 2018 High Low 12 $ 18 3 4 2 15 4 (14) 44 0.09 0.31 140 60 $ 16 18 GGNAE. 3 15 5 (14) 49 Other "non-comparable items include items that are not comparable across reporting periods or items that do not otherwise relate to the Company's ongoing financial results, such as certain employee related expenses attributable to advancements in automation and operational efficiencies. Non-comparable items are excluded from Non-GAAP net income in order to more effectively assess the Company's period over period and on going operating performance. A 30% tax rate is assumed in order to approximate the Company's effective corporate tax rate. INOV Q4 2017 Earnings Presentation Supplement (2.20.18) v1.0.0 0.11 0.35 140 Ⓒ2018 by Inovalon. All rights reserved.#18Inovalon healthcare empowered Ⓡ