INVESTOR PRESENTATION August 2016
Safe Harbor / Disclaimer This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future, not past, events and are subject to risks and uncertainties. The forward-looking statements, which address the Company's expected business and financial performance and financial condition, among other matters, contain words such as: “believe,” “could,” “opportunities,” “continue,” “expect,” “may,” “will,” or “would” and other words and terms of similar meaning. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about expected income; earnings; revenues; and growth. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Factors that could cause actual results to differ materially from these forward-looking statements can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and the Company’s other reports filed with the Securities and Exchange Commission. These or other uncertainties may cause the Company’s actual future results to be materially different than those expressed in any forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements. This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. This presentation also contains non-GAAP financial measures. You can find a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in the appendix to this presentation. 2
Press Ganey Overview Mission To help healthcare organizations reduce patient and caregiver suffering and improve clinical quality, safety and the overall patient experience Transformational Solutions Patient Experience Caregiver Engagement Clinical Quality Reliability & Safety 3
Disruptive Forces In Healthcare Healthcare Dynamics Market Response Shift to value-based models/Population health Growth in Spending Process to outcome measures Narrow networks Increased patient engagement Expanding Regulation Focus on performance and outcomes Expanded CAHPS programs Patient-centricity Care Redesign Caregiver Engagement / Care coordination Operational integration and advanced analytics Demand for reliable measures Rise of Consumerism Honor consumer through transparency Brand awareness / Patient Loyalty/ Market Share 4
Industry Leader With Partners Across The Continuum Of Care 60%+ Acute Hospitals 80%+ Major Teaching Hospitals 70%+ MD Groups w/ >50 Physicians 80%+ Acute Hospitals w/ 100+ Beds 5 Note: All information as of 12/31/15
Strategic Competitive Advantage Thought Leadership & Innovation 400+ Technology Client-Facing & Digital Associates Platform Advisory & Analytics Consulting & Insights 6
OUR SOLUTIONS
Operational, Clinical & Financial Performance Improvement C-Level Solutions that Drive Performance Improvement Patient Actionable data targeting improvement opportunities Experience Drive patient loyalty, improve outcomes, optimize reimbursement Demonstrated ROI Caregiver Engagement insights tiered for effective action planning Engagement Retain caregivers, increase productivity, improve performance Measure, report and act on clinical and quality performance Clinical & Quality Outcomes Achieve nursing excellence and quality standards, improve outcomes Assess operational, quality and safety performance Reliability & Safety Consulting Transform culture, reduce safety events, achieve high reliability 8
Differentiated Products Built On Leading Digital Platform 9
Patient Experience Solution Foundational To Clinical And Financial Performance Patient Experience is a Powerful Tool for Performance Improvement Average Length of Stay by Patient Experience Lower Cost of Care, Higher Operating Margin Reliability Tercile (1) for Top Performers on HCAHPS (2) 20% 6.0 % of Spending on Readmission Hospital Net Margin 5.0 16% 4.5 15.0% Average Length of Stay (Days) 3.9 12.1% 4.0 3.7 ~6% less spending 12% due to readmissions 3.0 8% 8.7% 5.9% 2.0 4% 1.0 0% 0.0 Bottom Decile Top Decile Low Middle High Reliability Score Rank by Tercile HCAHPS Overall Rating 1. Reliability and length of stay data derived from our 2013 HCAHPS all-facilities database, N=2,289,639. 2. Based on Medicare Spending by Claim, 2014 Hospital Compare and Billian’s 2014 data, N=3,080. 10
Complementary Solutions Accelerate Performance Improvement Employee Engagement Improves Patient Experience National Percentile Rank Based on Employee Engagement Scores (1) 100 84 82 77 80 76 75 Average National Percentile Rank 71 70 63 60 50 47 42 37 40 31 23 20 0 Nurse Responsiveness Physician Pain Medication Discharge Rating Top Quintile of Employee Engagement Bottom Quintile of Employee Engagement 1. Based on Engagement data from 36 projects, year 2014. HCAHPS data from 2014 PG Database. Created by Healthcare Metrics Team. 11
Census Based Surveying Enables Innovation: Transparency Study Dr. Campbell Dr. Campbell Dr. Campbell Dr. Leiser Dr. Leiser Dr. Leiser Press Ganey Data Press Ganey Data Press Ganey Data Press Ganey Data Press Ganey Data Press Ganey Data 1164 Reviews 1164 Reviews 1164 Reviews 74 Reviews 74 Reviews 74 Reviews 4.6 Stars vs Vitals 2.5 4.6 Stars vs Vitals 2.5 4.6 Stars vs Vitals 2.5 4.9 Stars vs. Vitals 2.5 4.9 Stars vs. Vitals 2.5 4.9 Stars vs. Vitals 2.5 • Census Based Surveying increases patient data by 80% • UT Transparency has resulted in 50%+ of docs in 90th percentile in 2014 12
Industry Leading Sales And Client Management Teams 400+ Client Facing Associates 44 Transformational Consultants 73 Sales Professionals 135 Advisory Professionals Geographically-based model for majority of client base 162 Account Management Supporting Clients 13
Innovation And Thought Leadership Offer Deeper Value To Clients Investing in Thought Leadership 250 28 300+ 1,000+ 245+ Executive Council Participants in Speaking Industry articles in key Attendees across members of Press CNO Quarterly Best trade publications engagements regional symposiums Ganey nonprofit Practices Roundtable 2,800 3,000+ 26,000 265,000+ Monthly user logins Clients at national Custom analytic reports Participants in the generated annually online community for improvement conference solutions 14
GROWTH STRATEGY / TOTAL ADDRESSABLE MARKET
Total Addressable Market $4.2 Billion Total Addressable Market Prospects $294 Million $2.7 Billion Existing Clients $1.5 Billion $865 Million $319 Million (2015 PGND Revenue) Existing Solutions New Solutions Patient Caregiver Quality, Safety, Patient Engagement, Experience Engagement Consulting, Other Care Coordination, Other Consulting 16
Expanding CAHPS Requirements Will Accelerate Improvement Efforts 2016 2017 2018 Inpatient Dialysis ACOs Mandatory Hospice Home Health Medical Practices Mandatory Anticipated Voluntary (with new MIPS) Hospital Outpatient Surgery Voluntary Proposed Mandatory Departments Ambulatory Surgery Centers Voluntary Proposed Mandatory Pediatric Inpatient Hospitals Voluntary Emergency Departments Planning Anticipated Voluntary Anticipated Mandatory Inpatient Rehab Facilities Planning Anticipated Voluntary Anticipated Mandatory Long Term Care Hospitals Planning Anticipated Voluntary Anticipated Mandatory Inpatient Psychiatric Facilities Planning Anticipated Voluntary 17 2% 2% 2%
Strategic Acquisition Track Record Safety/ Consulting Clinical/ Quality Caregiver Engagement Patient Experience 2014 2009 2013 2015 2016 18
FINANCIAL REVIEW
Financial Overview Retention: 97% client retention / 94% revenue retention 3-year average Q2 2014 – Revenue Q2 2016 Predictability Visibility: Average contract life for top 100 patient experience clients is 2.9 years Organic Existing Solutions: $ 1.5B White space Growth New Solutions: $2.7B Opportunity Operating Cost of Revenue: Greater percentage of insights from electronic platform Leverage Technology Improvements: Redesign of platforms for collecting and sharing data Sales Force: Broader product offering Adjusted EBITDA less Capital Expenditures: 79% of Adjusted EBITDA from Cash Flow 2012 to 2015, 83% YTD 2Q16 Balance Sheet: deleveraged and lower interest rates Long Term Growth Targets Revenue: 7-9% organic / 2-3% acquisition Adjusted EBITDA: 13-15% 20
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