vocera investordeck march 2017
TRANSCRIPT
This presentation contains forward-looking statements reflecting our current expectations that involve risks and uncertainties which are subject to safe harbors under the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act.
These forward-looking statements may include, but are not limited to, statements concerning our plans, objectives, expectations and intentions, future financial position, future revenues, projected costs, expectations regarding demand and acceptance for ourtechnologies, growth opportunities and trends in the market in which we operate, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates," “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in our Quarterly Reports on Form 10-Q and in our other filings with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements.
2
Forward-Looking Statements
3
• Large market shifting towards Vocera
• Market leader with compelling ROI
• Large wins validate sales strategy
• Software acquisition extends platform
• Accelerating toward target financial model
*Earnings before interest, taxes, depreciation and amortization, and further excludes stock -based compensation and change in fair value of warrant and option liabilities.
**Represents the high end of the company’s guidance range
Significant Value Creating Opportunity
(1) Joint Commission, an independent healthcare accreditation organization(2) Agarwal et. al. Univ. of Maryland, 2010
92% of physicians use unsecured SMS text for patient care, leading to data breeches and HIPAA violations resulting in over $1.5M in fines per year
Efficient communication is a primary component in driving patient engagement and satisfaction
Nurses often only spend 20% of their time delivering direct care at the patient bedside
69% of accidental deaths and serious injuries in hospitals are caused by communications breakdowns1
Cybercriminals are increasingly going after targets in the medical and healthcare verticals
$12 billion wasted annually
In U.S. hospitals as a result of communication inefficiencies2
4
Healthcare Communication Challenges
Market Forces Vocera Forces
5
Political Forces
Sales & Marketing
Product
Technology Forces
Device of Choice
CC&C
Unified Platform
ROI Selling
Cross Selling
System-level Deals
Meaningful Use Hangover
ACA Repeal
Medicare/Medicaid
Hospital Budgets
Scalability
Integration
Unified Platform
Strong Backlog/DefRevenue
Approaching Target model
2017 Context
Vocera Before Vocera Now
Communications
Badge-Centric
Point Product
Department Sale
Clinical Workflow
Software-Centric
Complete Solution
Enterprise Sale
Strategic Evolution
7
10 minutes per nurse per shift
Bed turnover rates up 50%
OR revenues up $780,000
350 more annual OR capacity hours
4,000 annual ED hours recaptured
Operational Efficiency
Response times down from 2 minutes to9 seconds
35% overall Sat Rating improvement
25% improvement in HCAHPS scores
Fall related injuries down 60%; estimated $1.27 mm savings
Patient Safety and Satisfaction
Compelling Return on Investment
Key Differentiators:• Enterprise-class platform
(vs cobbling together vendors)
• Clinical Integration
• Device of Choice (Apple and Zebra)
• Vocera Badge resonates with nursing
• Superb References
• World-Class Support and Professional Services
(1) Joint Commission, an independent healthcare accreditation organization(2) Agarwal et. al. Univ. of Maryland, 2010 8
MEDCOM
Recent Platform Wins Validate Strategy
Quality ExperiencePatient-CenteredCostEnhance how care is
provided to help patients to achieve
better outcomes
Increase Operational Efficiencies
Improve patient experience by allowing
caregivers to be Patient Centered
Improve the caregiver experience by improving
workflow and empowering care teams
The Quadruple Aim
9
Our Mission
By enabling the care team to get the data, context, presence, and insights needed to…
Achieve the Quadruple Aim
Focus on the Patient Enhance workflows Make information and help easier to find
10
How Do We Do That?
11
Communicate Engage
ExperienceImprove response
times, patient care, safety and satisfaction
Over 120 clinical integrations
Secure Text, Voice, Image
Clinical Communication and Collaboration
12
Hospital Staff Physicians Post Acute Home
Badge MC40-HC iPhone Android Tablets Desktop
Voice Secure Texting Clinical Integration and Workflow
Patient Engagement
Vocera Software PlatformCommunication and Clinical Workflows
Master Directory with Care Team Sync
Staff Assignment and On-Call Scheduling
Analytics and Reporting
Certified Security
Clinical System Integrations
Enterprise-Grade Communication Platform
16
Scalable, Secure and Integrated = we consistently win >70% of competitive sales
Stat
us
Qu
o
• Pagers
• Overhead Paging
• Shouting or Walking
Wir
ele
ss
De
vice
s • Spectralink
• Cisco
• Ascom
Smar
tph
on
e
Ap
ps
• Voalte
• Tiger Text
• Texting Solutions
• Mobile Apps
Complete end-to-end solution
Role-based intelligence
Device of Choice
Ease-of-use
Hands-free
Clinical integration
Enterprise class
Trusted provider
Purpose-built device
World class service and support
Competitive Landscape
6,986 Hospitals in the U.S.(1)
U.S. Hospitals1100+
(1)
Large Global Market Opportunity
(1 ) Based on Definitive US Healthcare Database(2) Definitive Healthcare database
International Healthcare Facilities
230+
Global Non-Healthcare Facilities
270+
Fed Hospitals Vocera Total
VA 68 153
DoD 32 64
Total 100 217
~$6 Billion Global Market Opportunity
17
11085200
Vocera Hospitals US Hospitals
18% U.S. Penetration Rate(2)
(6308 Total US Hospitals)
• Large System Deals
• Further penetrate existing health system customers
• Continue pace of new customer acquisition
Building momentum across new products
• EHR Integration
• Collaboration Suite
• Clinical Integration
• Even Driven Alerts
• Care Experience
Extend Reach to New Users
• Physicians
• Long Term Care
• Surgery Centers
Attractive International Markets
• Canada
• United Kingdom
• Saudi Arabia
• UAE
• Qatar
• Australia
• Singapore
• New Zealand
Core Customer Growth
Software
New Users
International Expansion
18
Our Opportunity: Multiple Avenues for Growth
19
• 60% revenues are recurring
• High visibility
• Low customer concentration
% of 2016 Revenue Revenue Streams
• Perpetual licenses • Subscriptions
Software*15%+ recurring
16%
• Software maintenance• Technical support
Maintenance*All recurring
34%
• Professional services• Deployment & training
Services*15%+ recurring11%
39% Devices *50% recurring
• Badges• Batteries, chargers, accessories
Diversified Revenue Streams
(1) Earnings before interest, taxes, depreciation and amortization, and further
excludes stock -based compensation and change in fair value of warrant and option liabilities.
Revenue Q4 2016 Highlights
Adjusted EBITDA
$28.4 $36.0
$104.1 $127.7
Q415 Q416 2015 2016
($ in
Mill
ion
s)
$0.2 $1.3
-$2.8
$4.3
Q415 Q416 2015 2016
($ in
Mill
ion
s)
Q4/2016 Results exceeded expectations • Q4: 27% Revenue Growth, 2016: +23%
• Q4: 46% Software Growth, 2016: +36%
• 27% Backlog and Deferred Revenue Growth
Solid Customer Base and Value Proposition• 95%+ s/w maintenance renewal rate
• Strong competitive win rate
Expanding Profitability and Cash Flow• A-EBITDA $4.3 million in 2016
• $11.4 million operating cash flow in 2016
20
+27% +23%
Q4’16 Financial Highlights
21
2017 Revenue Visibility
$4.2
Total Revenue
Book ship/Bookings
FY16 Plan
Actual %
*VCRA $73.9M, EXT $5.8M
VCRA
EXT
Total
Rev from Def.Rev/BL
Supplies Visible Revenue Book-ship 2017 Revenue
$161M
65-70%
22
Actual
2014 2015 2016
R&D % of Revenue 17% 15% 13%
S&M % of Revenue 47% 41% 37%
G&A % of Revenue 13% 12% 11%
~$200M
Target Model
12%
29%
8%
Sales
Notes
• All numbers are non-GAAP• Mean peer group enterprise value comps are 3-4x Revenue and 12-15x A-EBITDA
Drivers
Operating Leverage Drives Significant Value
24
Broadcast to OR Turnover
Call on-call Orthopedic Surgeon
Secure text to on-call Cardiologist
Urgent call to ED Charge Nurse
The Call Sheet Transformed
EHR
Evans Army Community Hospital (EACH)92 Bed Military Treatment Facility (MTF)–A Part of Colorado Springs Military Health System, Colorado Springs, Colorado
Challenge: Improve staff-to-staff and staff-to-patient communication in physically challenging locations
Patient and Staff Satisfaction
• Due to distance of facilities, locations, and physical layout of each department, there is a communication barrier between staff members as well as between staff and patients
• For the last three years, The Joint Commission has identified communication as one of the top 3 root causes of sentinel events
• 20% improvement in inpatient satisfaction over 10 months: expected returns of over $150,000/quarter
• 88% reduction in patient falls within 10 months. Hospital-wide implementation yearly potential cost avoidance of over $94,000
• Key security certifications enabled MEDCOM to establish Vocera as enterprise standard
Situation Approach Impact• In June 2012, the Vocera Badge, a
wearable, voice-controlled device enabling hands-free communication, was implemented in the ED. By the end of 2015, it was rolled out to multiple departments.
• The solution was integrated with alarm and alert systems and nurse call systems:• Patient-to-staff, and staff-to patient• Pain button
Improve Quality of Patient Care and Safety, and Patient and Staff Satisfaction
Percentage of customers who have users in the following categories%
• Pharmacy
• Clinical Engineers/Informatics
• Dietary/Nutrition
• Command Center
• Warehouse/Materials
• Phlebotomists
• Admitting
• ED
• Interpreters
• Path Lab
• Case Management
• Management/Admin
• Biomed
• Pastors
• Activity Department
• Quality/Risk Management
Others
Spring 2015 survey of Vocera customers conducted by
18%
38%
59%
61%
68%
72%
78%
81%
81%
99%
Other
Security
IT or Telecomn
Physicians
Rehabilitation
Transport Techs
Housekeeping
Respiratory Therapists
Imaging Personnel
Nursing Staff
26
Expanding User Base
U.S. Hospitals and Health Systems
27
1,100 U.S. Hospitals 200 International Hospitals 250+ non-healthcare
Washington, Cleveland, Tampa, Phoenix, Ann Arbor
U.S. VA and DoD
Evans Army HospitalFort Carson
Irwin Army HospitalFort Riley
Landstuhl Army Medical CenterGermany
International Non-Healthcare
Large, Passionate Customer Base
Vocera Care Team Sync
28
Care Team Sync informs and updates the Master Directory, facilitating accurate care team assignments
Dr. Smith , Primary Care Physician
Dr. Evans, Cardiologist
Dr. Jenkins, Hospitalist
Stacy Jones, Nurse
Adam North, Assistant
Dr. Smith , Primary Care Physician
Dr. Evans, Cardiologist
Dr. Jenkins, Hospitalist
Stacy Jones, Nurse
Adam North, Assistant
Bi-Directional Sync with the EHR
29
Nurse Call
Fall Prevention & Bed Alarms
Patient Flow, RTLS, Bed Management
Interactive Patient Engagement
Smartphones and Tablets
Electronic Health Records (EHR)
Physiologic Monitoring and Medical Devices
Partner Ecosystem
• Intelligent software platform
• Hands-free, lightweight
• Purpose built device
• Speech recognition interface
• Multi-platform support
• DoD Unified Capabilities (UC) Approved Products List (APL)
• FIPS 140-2, JITC, DoD ATO
• FDA 510k platform for alarm management and secure texting
• Over 95% renewal rates
• 1,200 hospitals; 200 other healthcare facilities
• Over 500,000 users
• 275+ sales & services people
• Roughly 75 quota carrying reps
• 150+ Engineers
• 34+ clinicians on staff
• Patient experience collaborative
• 15 years of development
• 29 U.S. patents issued – 8 pending
• Multi-variable clinical rules engine
• Wi-Fi & VoIP expertise
• Proprietary noise cancellation
• Integrated with 120+ clinical systems
• Enterprise class solution
First Mover Unique Solution Proprietary IP Strong Brand
Vocera Differentiation
31
Tangible benefits identified within the first six months after deploying Vocera
12%
8%
20%
30%
38%
41%
45%
71%
73%
Other
Increased Cost Savings
Increased Patient Satisfatction
Increased Patient Throughput
Increased Patient Safety
Reduced Noise Level
Increased Care Team Satisfaction
Improved Response Times
Increased Workflow Efficiencies
Spring 2015 survey of Vocera customers conducted by
What Customers Say about Vocera
EHR
Clinical Systems
Location
Scheduling
Messaging
Voice
Vocera Core Platform
Engage(Workflow)
Acquisition Enhancements
Our Enhanced Platform
Engage Deployment Scenarios
Critical Lab Notification Sends instant
notifications of a critical lab value to the
responsible clinician.
Full Report Notifications
Sends full Radiology, Cardiology, Pathology,
and other reports.
Clinical Order Notification
Instantly alerts a nurse when a clinical order has
been placed that may require action.
Nurse Call Alert
Combines alerts from nurse call systems with
HIS/EHR or other clinical data and sends
notifications to the appropriate clinician.
One App: Alarms, Alerts, Messaging
Single view for all patient events and conversations
Engage Mobile – Design Elements
Swipe Left for Event Response Team
Alarm Prompts Event Responses
Swipe Right for Alert/Alarm Details
Swipe Right for Alert/Alarm Details
SOLUTION IMPACT
vCustomer Examples
v
PROBLEM• Studies show that RNs are
interrupted about 12 times per hour, or once every 5 minutes
• Critical alarms are often missed, resulting in patient harm.
Engage cuts through the clutter and sends only actionable notifications requiring timely response, on the caregivers mobile device of choice
• Improvements in patient safety• Reduced needless interruptions • Nurses can spend more time at
the bedside and stay focused on patient needs
Veterans Administration: 55% reduction of artifact alarms (false positive alarms).Wake Forest: “Prioritization of alarms has been attributed to 19 patient “saves”, where we prevented a failure to rescue situation.”
*Kowalcyk, Liz. Patient alarms often unheard, unheeded. February13,2011. http://www.boston.com/lifestyle/health/articles/2011/02/13/patient_alarms_often_unheard_ unheeded/
Engage Use Case: Interruption Fatigue
v
v
PROBLEM• NICU staff receive alerts that lack
context.• Nurse must take additional steps
to locate the relevant contextual information, causing delays in patient response
• Engage sends contextual event notifications to caregiver
• Relevant data can include:• Location • Caller ID• Level of urgency• Gestation age• Status of amniotic fluid
• Early interventions and informed, timely decisions
• Quicker response to patient needs and improved outcomes
• Improved neonatal resuscitation compliance
Customer Example
University of Maryland: The neonatologist and NICU staff receive contextual alarm notifications to their Zebra MC40-HCs mobile smartphones. The caregiver uses the relevant data to make faster decisions that improve outcomes and compliance.
SOLUTION IMPACT
Engage Use Case: Neonatal Resuscitation
v
v
PROBLEM• There are between 700,000 and
1,000,000 patient falls in hospitals each year
• Implication: Falls pose a serious hazard to patient safety as well significant legal and regulatory problems for the hospital
• Engage technology sends bed exit alarms directly to nurse’s mobile device instantly
• Nurse call requests can be sent at varying levels of priority based on a patient’s fall risk score
Reductions in patient falls and the related injuries and costs.40% reduction in fall rate
Customer Examples
Nursing leaders using Engage presented a case study at NICHE (Nurses Improving Care for Healthsystem Elders) showing an ROI of $1.06M. Research found a decrease in patient falls from 3.27 per 1,000 to 1.97 per 1,000.
SOLUTION IMPACT
Engage Use Case: Patient Falls
Maintenance Maintenance
Supplies
Expansions
Supplies
Maintenance
38
Supplies
Expansions
New Customers
Sold into existing deployments
Additional deployments within existing customers
Maintenance
Quarterly Bookings Patterns Lead to High Visibility
39
Note: Company estimates based upon illustrative purchase of 200 enterprise user licenses, 200 badges, 400 batteries and associated accessories, based on 2015 data. All devices and software licenses assume 100% shared usage, 3 users/device or license. Smartphone only assumes that consumers procure their own smartphones outside Vocera. Mixed model assumes 20% MC40 smartphone and 80% badge mix. Smartphone and Mixed models include sale of Engage software to half of available beds as labeled.
Revenue- Initial Deployment $359 $295 $414 $546
Gross Margin- Initial Deployment $21259%
$19365%
$24259%
$34163%
Software
Maintenance
Services
Devices
Revenue Streams ($ in thousands)
Initial Customer Deployment Scenarios