#1510010 100% 10101001010010 inovalon F001010011001 1001010011001 001100101 I DETOTOO01001100101001010 ETOOTTOCT Second Quarter 2017 Earnings Presentation Supplement August 2, 2017 CONTA#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," "intend," "expect," "growth" 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 Q2 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 2 © 2017 by Inovalon. All rights reserved.#3Contents inovalon This deck is provided as a supplement to the 2017 Q2 Earnings Results release announced by Inovalon on August 2, 2017. The following outlines the content of this supplemental presentation: Q2 2017 - Continued Sequential Improvement • The Inovalon ONETM Platform and Platform Storyboard MORE2 Registry Dataset Expansion 1H/2H 2017 Revenue Growth Trending Seasonality Trends - Revenue 0 O ● · 0 D Updated 2017 Revenue Guidance Bridge Updated 2017 Adjusted EBITDA Margin Expansion Updated 2017 Financial Guidance Summary Appendix INOV Q2 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 3 © 2017 by Inovalon. All rights reserved.#4Q2 2017 - Continued Sequential Improvement inovalon Growth $112 $110 $108 $106 $104 $102 $100 70% Operating 65% Leverage 60% 55% 50% Continued 8% Investment 6% 64.7% $108.3 Gross Margin' Q1 2017 7.0% Revenue ($M) Q1 2017 Q1 2017 Q2 2017 66.4% Sales & Marketing 2 8.0% Q2 2017 +2.1% 25% 20% 15% 10% $110.6 22% 20% 18% 16% 14% 12% 10% Q2 2017 3 Adj. EBITDA Margin ³ 23.0% Q1 2017 25.1% Investment in Innovation² 16.3% Q2 2017 19.8% Q1 2017 Q2 2017 1: Gross Margin defined as Revenue less Cost of Revenue, as a percentage of Revenue. 2: Adj. EBITDA Margin, Sales & Marketing, and Investment in Innovation represent profit/expense as a percentage of revenue. INOV Q2 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 4 1 # Q2 revenue ahead of expectations. Revenue up 2.1% sequentially despite much larger CARA headwind in Q2 (-17 pts YoY) versus Q1 (-2 pts YoY). Year-to-date wins with three large-scale health plans will contribute to ramp in 2H 2017, as will growth from work in adjacent markets like Pharma. Sequential gross margin improvement of 170 bps, driven by favorable platform offering mix and pricing. Higher gross margin and G&A efficiency (improved 70 bps sequentially) resulted in Adjusted EBITDA margin expansion despite ramping investments. Introduction of the Inovalon ONE™ Platform. Continuing to invest in platform development, innovation, and sales capacity and capability expansion in order to drive growth and differentiation. © 2017 by Inovalon. All rights reserved.#5The Inovalon ONETM Platform inovalon The Inovalon ONETM Platform brings to the marketplace highly extensible, national-scale capabilities to interconnect with the healthcare ecosystem on massive scale, aggregate and analyze data in petabyte volumes, arrive at sophisticated insights in real-time, and drive impact wherever it is analytically identified best to intervene. T HATTE PORT A Spar nat Pred Cy Apple Pay Abonating Sabat Med Compa Per Kar Jutharisman Con Eestment Indon Detty Symat might Call & Fu Centr auto Cala Operational Lagal Master Data Wa INOV Q2 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 The Inovalon ONE™ Platform Architecture Dow Jonata Master Device & Montering P THE INOVALON ONE PLATFORM Coordination f P&Prer Modeling k Comparativa diagn P Matias Jura J ActCare May T S Demand h S Mr Employer PC lamarmination Anal 5 be Ta Care Setings Cha Fran - In Home Care Settings Reporting Datation & Reporting 19 Operational Her Spring S Ce foru Specialty P Master Comparative Data Warehold SUPPORT SERVICES Phonmal Support k Teppet Pa Tani Support PARTICIPATING ORGANIZATION PORTFOLIO SUPPORT M Concedy Deportat © 2017 by Inovalon. All rights reserved.#6Platform Storyboard inovalon The Inovalon ONETM Platform is an integrated, cloud-based platform of more than 80 individual proprietary toolsets able to be rapidly configured to empower the operationalization of large-scale, value- based care initiatives. Each toolset is referred to as a "Component," with each supporting critical healthcare ecosystem functionalization needs. Components are configured into integrated sets identified as "Modules," each of which shares cohesive interoperability and common data management. & CUBER a Pas Bangka BET Wp an Engin The Inovalon ONE™ Platform Storyboard B e QUE *Storyboard is provided for illustrative purposes only and does not represent a specific configuration of the Inovalon ONE™ Platform. 6 INOV 02 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 ending KKKL KKKL 14929 k inovalon TIME VIE © 2017 by Inovalon. All rights reserved.#7Expanded Proprietary Datasets Through extensive healthcare industry connectivity, integration technologies and expanding client base, Inovalon maintains one of the industry's largest proprietary datasets, pertaining to more than 230 million unique patients and nearly 30 billion medical events, empowering highly differentiated capabilities and value creation for our clients. Patient Count (millions) 210 200 190 180 170 150 140 130 120 110 100 90 80 70 60 50 20 10 MORE² REGISTRYⓇ GROWTH 10 Patient Count Medical Event Count 2000 2001 2002 2003 2004 2005 2006 2007 inovalon 2009 Year 2010 2011 2012 2013 2014 2015 "As of June 30, 2017, the Company was processing large unique patient count and medical event count dataset transmissions. For this reason, June 30, 2017 unique patient count and medical event count amounts vary from historical calculation methodologies, and represent estimates pending final MORE² Registry dataset incorporation and processing. 7 INOV Q2 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 30 29 28 27 26 2016 Q12017 02 2017E" 24 23 22 21 20 19 18 17 16 15 Medical Event Count (billions) © 2017 by Inovalon. All rights reserved.#81H/2H 2017 Revenue Growth Trending inovalon The headwinds previously discussed by the Company have run their course as expected, resulting in a first-half 2017 revenue decline of 3% on a reported basis. In the second half of 2017, the Company continues to expect a return to double-digit growth, with growth expected to be approximately 17% at the guidance mid-point on a reported basis. 01 16 One-off ACA-Related Impacts 5.3% 02 16 INOV Q2 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 (0.5%) Delayed Sales & Marketing Ramp 0316 Inovalon Revenue Growth Rate Trending Guidance Range 2016 2017 Graphic intended to display principal forces (i.e., not intended to be all inclusive) Full Impact of 2016 Headwinds and Bottoming Out of Growth Declines CARA Product Transition Impact 0416 (20.3%) I 8 5% 01 17 2017 Guidance Range Low -2017 Guidance Range High 02 17 1H17 Midpoint YtY Growth (3%) 1H17 Midpoint V Organic Growth (9%) 05 171 "21% Q4 17E Projected 2H17 Midpoint YtY Growth "17% 2H17 Midpoint VIY Organic Growth -10% © 2017 by Inovalon. All rights reserved.#9Seasonality Trends - Revenue inovalon With the introduction of multiple new platform offerings and the expansion into several market adjacencies (e.g. provider, pharma, and devices), Inovalon continues to work towards a dampening of seasonality. Seasonality also reflects the impact of previously-discussed headwinds in the first half of 2017, and the absence of these headwinds in the second half of 2017. 24.0% -23.6% to -24.2% 21.4% Q1 29.0% 2015 26.9% -24.1% to -24.7% Q2 -2016 -25.1% to -25.9% 9 24.6% 24.1% -2017E Q3 27.6% -26.0% to -26.4% ¹22.5% Q4 Percentages represent the portions of actual or projected revenue in each quarter, based on the full-year 2017 guidance range provided on August 2, 2017, 2017 expected seasonality is provided for illustrative purposes only to depict a shift from Q1 to Q4, consistent with historical trends-actual results may vary. INOV 02 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 © 2017 by Inovalon. All rights reserved.#10Updated 2017 Revenue Guidance Bridge inovalon The combination of previously-discussed factors in 2017 yields full year revenue guidance of $447.1M to $459.3M, or expected revenue growth between 5% and 7% on a reported basis. $427.6 2016 Actual Revenue Full Year 2016 vs. 2017 Guidance Revenue Growth Range 5% to 7% -(6 pts) Chum -(7 pts) CARA Transition Wrap-up -7 pts Account Growth The above table is for illustrative purposes only. INOV Q2 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 5 pts - 6 pts New Client 6 pts - 7 pts Creehan & Acquisitions $459.3 $447.1 2017 Revenue Guidance 10 • Client revenue churn of approximately 6 pts in 2017 is consistent with historical norms. • The impact of transitioning the CARA offering to a more flexible and modular platform substantially resolved at the end of Q2 2017. • Revenue growth from up-sell, cross- sell and new clients (signed in 2016 and seen continuing in 2017), spurred by the introduction of new platform offerings and added sales capacity. © 2017 by Inovalon. All rights reserved.#11Updated 2017 Adjusted EBITDA Margin Expansion inovalon Inovalon's investments in innovation are driving increased platform efficiencies, while also enabling the introduction of new platform offerings with higher margins. These forces are enabling an expected 100 to 200 basis point expansion in annual Adjusted EBITDA margin in 2017 before the impact of the acquisition of CCS. 100 to 200 Basis Point Year-to-Year Improvement 23.4% FY2016 Ad EBITDA Margin % (200- 400 bps) Investment Initiatives 200- 100 bps 400- 200 bps Represents -450 bps of Gross Margin Expansion YIY Platform Mix & Price Changes Platform Efficiencies The above table is for illustrative purposes only. INOV Q2 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 FY 2017E AA ERITIDA Margin% Excl. 2017 YTD Acquisition (90 bps) CCS Acquisition 24.5% 23.5% FY 2017 E Adj. EBITDA 11 Margin% Incl. 2017 YTD Acquisition Continued commitment to investments in innovation, sales capacity expansion and efficiency initiatives. Increasing mix of higher margin platform products offset typical unit price changes. Technology-enabled efficiency initiatives spanning connectivity, automation and integration drive strong operating leverage yielding Gross Margin expansion of 450 bps YtY. Over the 2H 2017 integration period, the acquisition of CCS is seen to be a -90 bp headwind to Adjusted EBITDA margin. © 2017 by Inovalon. All rights reserved.#12Updated 2017 Financial Guidance Summary inovalon™ Inovalon is adjusting its full-year 2017 guidance to reflect strong year-to-date performance, updated visibility into second half 2017 expectations, and the acquisition of CCS (including non-recurring integration expenses). Financial Metric Revenue Net Income Adjusted EBITDA Non-GAAP Net Income Diluted net income per share Non-GAAP diluted net income per share Updated Guidance Range Provided August 2, 2017 INOV 02 2017 Eamings Presentation Supplement (8.2.17) v1.0.0 $447.1 million to $459.3 million $18.0 million to $22.5 million $105.2 million to $112.5 million $42.2 million to $46.6 million FONTE $0.13 to $0.16 $0.29 to $0.32 Previous Guidance Range Provided May 3, 2017 *The Company is now assuming 143.5 million shares for the full year 2017, down from 145.0 million shares assumed in guidance previously. 12 $440.5 million to $455.0 million $19.5 million to $24.0 million $105.2 million to $112.5 million $42.2 million to $46.6 million $0.13 to $0.16 $0.29 to $0.32 © 2017 by Inovalon. All rights reserved.#13E inovalon ปลาคม 30 healthcare empowered 7 MED Appendix#14Reconciliation 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, 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: (In millions) Reconciliation of Forward-Looking Guidance Net Income to Adjusted EBITDA: Net income Depreciation and amortization Loss (gain) on disposal of equipment Interest expense Interest income Provision for income taxes (1) EBITDA Stock-based compensation Acquisition costs: Transaction costs Contingent consideration Other non-comparable items (2) Adjusted EBITDA Adjusted EBITDA margin $ Guidance Range Twelve Months Ending December 31, 2017 High Low 18 51 5 (6) 12 80 15 25 3 105 23.5% $ 23 52 5 (6) 14 88 15 25 3 113 24.5% A 40% tax 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 02 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 14 © 2017 by Inovalon. All rights reserved.#15Reconciliation 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 m Stock-based compensation Acquisition costs: Transaction costs 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 $ $ $ Guidance Range Twelve Months Ending December 31, 2017 High Low 18 15 2553 (16) 42 0.13 0.29 143,500 $ $ 23 15 2 5 15 3 (16) 0.16 0.32 143,500 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 40% tax rate is assumed in order to approximate the Company's effective corporate tax rate. 15 INOV Q2 2017 Earnings Presentation Supplement (8.2.17) v1.0.0 © 2017 by Inovalon. All rights reserved.#16inovalon healthcare empowered