Inovalon Results Presentation Deck
Why is Adjusted EBITDA Margin Changing?
inovalon
Year-over-year profit drivers are being influenced by a number of forces in 2016. In addition to those forces impacting the
Gross Margin (as discussed on Slide 19), investments in platform capabilities, technologies and corporate infrastructure are
also having an impact. During the second quarter of 2016, the Company accelerated certain investments as can be seen in
the increased R&D expense and Investment in Innovation as a percentage of revenue from 10% in Q2 2015 to 13% in Q2
of 2016. The resulting impact is an Adjusted EBITDA margin change from 35% in 2015 to 28% to 30% in 2016. As the
platform capabilities being launched by the Company are increasingly fully automated and highly cloud efficient, the value
delivered to the client and efficiencies realized in their operation is significant. As such, the negative impact to Adjusted
EBITDA is seen to be a near-term phenomenon.
35%
FY2015
Adj. EBITDA
Margin %
Full Year 2015 vs. 2016
Adjusted EBITDA Margin Drivers
(2-3 pts)
(2-3 pts)
(4 pts)
3 pts
INOV 02 2016 Eamings Presentation Supplement (8.3.16) v1.0.0
28% - 30%
Platform Platform Investment Platform FY 2016
Mix
Initiatives
Efficiency Adj. EBITDA
Price
Margin %
20
Platform Capabilities & Technologies
Post-Acute Care (PAC) Platform
Artificial Intelligence (OCR & NLP)
Data Diagnostics ™M
SAFHIRE Platform as a Service
EHR Connectivity
Client Cloud Access (e.g., QSI-XL™, CARA)
N
Select Investment Initiatives
A
Corporate Infrastructure
Go To Market / Sales Capability Expansion
Corporate Development (Strategic Mergers &
Acquisitions)
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