Nuance Communications - J.P. MORGAN 39TH ANNUAL HEALTHCARE CONFERENCE 2021 - Investors
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Nuance Communications J.P. MORGAN 39TH ANNUAL HEALTHCARE CONFERENCE 2021
Forward-looking Statements And Non-GAAP Financial Measures Statements in this presentation regarding future performance and our management’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” "intends" or “estimates” or similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including but not limited to: the ability to effect the separation and spin-off of our Auto business; our ability to close the sale of our Imaging business, our ability to successfully wind-down certain products or business lines, fluctuations in demand for our existing and future products; fluctuations in the mix of products and services sold in specific periods; further unanticipated costs resulting from the FY17 malware incident including potential costs associated with litigation or governmental investigations that may result from the incident; our ability to control and successfully manage our expenses and cash position; our ability to develop and execute in a timely manner our productivity and cost initiatives; the effects of competition, including pricing pressure, and changing business models in the markets and industries we serve; changes to economic conditions in the United States and internationally; uncertainties associated with the transition of our chief executive officer, and the addition of a number of new directors; the imposition of tariffs or other trade measures particularly between the United States and China; potential future impairment charges related to our newly reorganized business reporting units; fluctuating currency rates; possible quality issues in our products and technologies; our ability to successfully integrate operations and employees of acquired businesses; the conversion rate of bookings into revenue; the ability to realize anticipated synergies from acquired businesses; and the other factors described in our most recent Form 10-K, Form 10-Q and other filings with the Securities and Exchange Commission. We disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this document. This presentation also includes certain financial measures that are not calculated in accordance with U.S. generally accepted accounting principles, or GAAP. These non-GAAP financial measures are in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. We have provided a reconciliation of non-GAAP measures to the most directly comparable GAAP measures, which is available in the earnings press release and the prepared remarks furnished as exhibits to the Company’s Form 8-K submitted to the SEC on November 19, 2018. This presentation should be read in conjunction with the earnings release, prepared remarks and Form 10-K. © 2021 Nuance Communications, Inc. All rights reserved. 2
Nuance: Leader in Conversational AI and Ambient Solutions
▪ FINANCIAL SERVICES
H EA LTH C ARE L A RGE ▪ TELECOMMUNICATIONS
E N TE RPRI SES ▪ RETAIL
▪ GOVERNMENT
We help unburden clinicians,
radiologists, and care teams with
efficient new ways to capture
clinical documentation for over
62%
OF TOTAL REVENUE
We deliver superior customer
experiences for 1,500 financial
services, telecommunications,
retail and government
36%
OF TOTAL REVENUE
10,000 healthcare organizations organizations through secure
omni-channel conversations
$915M
FY’20 REVENUE
$530M
FY’20 REVENUE
$1,479 FY’20 REVENUE
($MM) 7,100 GLOBAL
EMPLOYEES 1,600+ R&D
EMPLOYEES 2,350 ISSUED
PATENTS
© 2021 Nuance Communications, Inc. All rights reserved. 3
Nuance has a Proven
Conversational AI Platform
LARGE
FOOTPRINT 90% 80% 85%
of U.S. hospitals of radiology reports in the U.S. Of Fortune 100
created with Nuance solutions trust Nuance
COMPELLING
FINANCIAL
PROFILE
$1,347M 540 bps 25.5%
FY’21 Revenue FY’21 Gross Margin FY’21 Operating Margin
(Midpoint) Expansion (Midpoint)
T H I R D PA R T Y
RECOGNITION 2020 Leader Tech Cares Award 6
Forrester ranked Nuance for For service to local & global Employer of Choice awards
Conversational AI for chatbots communities during COVID-19 received in 2020
© 2021 Nuance Communications, Inc. All rights reserved. 4Nuance addresses some of
Healthcare’s Toughest Challenges…
CLINICIAN FINANCIAL PROPER ADMINISTRATIVE COMPLIANCE
BURNOUT PRESSURE PAYMENTS OVERLOAD RISKS
40-60% -15.8% 64% 43% 90%
Physicians are Margins by 2021 for of Medicare FFS of workday of Medicare
burned out hospitals operating improper payments spent on clinical payments tied to
business as usual attributable to documentation quality or value
insufficient
documentation
© 2021 Nuance Communications, Inc. All rights reserved. 5…By Driving Measurable Results Across Platforms
Financial Improved Quality Improved Improved Physician
Integrity and Compliance Patient Experience and Care Team Experience
70% 36% Up to 3 days 2 hours
Reduction in unbilled Increased capture of extreme Reduced length of stay due to early Freed per clinician per shift, due
surgical cases severity of illness radiology interventions to administrative tasks automated
$1 billion 82% Up to 40% 98%
Of appropriate reimbursement Increase in follow-up tracking Reduction in duplicate imaging Of Physicians recommend DMO
captured with CDI solutions and unnecessary repeat scans
Dragon Medical Power Scribe CDI Solutions
Clinician R a d i o l o g i st N o n - C l i n i ca l
© 2021 Nuance Communications, Inc. All rights reserved. 6Large and Expanding Market Opportunity
Accelerating Expanding Presence in
Transition to Cloud International, Ambulatory
and Community Markets
Building on Market Disrupting
Core Product Platforms AI Technology
© 2020 Nuance Communications, Inc. All rights reserved. 7Capturing Significant Untapped Potential 01 02 03 04
C L O U D C O N V E R S I O N Attractive Unit Economics I N T E R N AT I O N A L E X PA N S I O N
2 – 2.5x
revenue uplift per year
2 – 2.5x
revenue uplift per year
1 – 1.5 x
revenue uplift per year
~1.3M physicians overseas
more than doubles market
opportunity in 14 countries
On-Premise On-Premise On-Premise A M B U L AT O R Y & C O M M U N I T Y (2)
Maintenance Maintenance Term
conversion conversion license
Dragon Medical PowerScribe One
Low market share enables
One (“DMO”) & CDE One(1) significant runway
1. CDE One is cloud offering for CDI
2. Includes hospitals withBuilding on Core Product Platforms 01 02 03 04
Creates TAM Expansion
~$600M ~$1.4B ~$2.8B
DMO U.S. DMO U.S. + DMO U.S. +
International International +
CAPD
~$138M ~$249M ~$622M
PowerScribe PowerScribe PowerScribe
On-premise Cloud Cloud + Add-Ons
Nuance Share
Greenfield
© 2021 Nuance Communications, Inc. All rights reserved. 9W W W. N U A N C E . C O M / D A X I N V E S T O R D E M O © 2021 Nuance Communications, Inc. All rights reserved. 10
Disruptive innovation: Nuance DAX 01 02 03 04
High-quality clinical documentation that writes itself
Secure ambient capture of AI note creation, with quality review Completed high quality clinical
encounter (audio and data) driving machine learning documentation in the EHR
AI LEARNING LOOP
14 specialties Platform agnostic with $4 – $8B
telehealth compatibility market opportunity
© 2021 Nuance Communications, Inc. All rights reserved. 11DAX Generates Meaningful ROI 01 02 03 04
Physicians feeling burnout
9
Of physicians believe
and fatigue
76% Nuance DAX improves
the quality of the
patient experience
minutes
Average wait time
72% 17%
+24%
“Just the thought of DAX going away Patients seen
BEFORE DAX AFTER DAX makes me want to quit.” per day by one
cardiologist
EAR, NOSE AND THROAT SPECIALIST
“DAX has made me much more efficient. “Our faculty would tell you this has
I went from seeing 15 to 17 patients in a day
minutes
6
been the best thing that improved
to consistently seeing over 20 patients.
Saved per patient quality of life. It brought back the
I no longer have a 3-month backup, which is
helpful for patients and for me.” encounter joy of seeing patients again for me.”
ORTHOPEDICS
CARDIOLOGIST
© 2021 Nuance Communications, Inc. All rights reserved. 12Strong Healthcare ARR Growth
~$850 - $1,060
Through ‘23 and Beyond 2023 DAX ARR
2021 DAX ARR of of $100M to
($ IN MILLIONS) $10M to $20M $250M
Total $510 - $540
CAGR(1)
Core
$386 30% - 40%
DAX
$299
32% -
$214 40%
$131
$63
2016 2017 2018 2019 2020 2021 2023
Guidance Outlook
1. 3-year CAGR from FY 2020
© 2021 Nuance Communications, Inc. All rights reserved. 13Significant Healthcare Cloud Revenue Growth driven by
ARR Growth 31% Growth
YoY(1)
$460
($ IN MILLIONS)
$51
$352 $50
R E S U LT I N G I N $257
H I G H LY V I S I B L E , $359
RECURRING
REVENUE STREAMS
FY'19 FY'20 FY'21 Guidance (Midpoint)
Dragon Medical + DAX Cloud Radiology Cloud Non-Clinical Cloud
1. In FY’19 and FY’20 DAX revenue contributions were immaterial
© 2021 Nuance Communications, Inc. All rights reserved. 14Forging New Frontiers in Disruptive 01 02 03 04
Innovations by leveraging
Conversational AI platform
AI MARKETPLACE PAT I E N T An AI-powered
intelligent patient
ENGAGEMENT engagement platform
POWERSHARE SOLUTIONS powering the modern
Digital Front Door
Connects suppliers of
AI algorithms to
AI DEVELOPERS SUBSCRIBERS
subscribers via single Increased patient capacity and retention
cloud platform
Improved patient outcomes
POWERSCRIBE Higher levels of patient satisfaction
© 2021 Nuance Communications, Inc. All rights reserved. 15Nuance’s Sustainable Differentiation Established Technological Deeply Domain Specific Broad Footprint with Superiority in Embedded Healthcare Distribution Long-Tenured Conversational Workflows Expertise Channels Customer Base AI and NLU © 2021 Nuance Communications, Inc. All rights reserved. 16
Compelling Investment Thesis
Secular Tailwinds Driven by Increasing Continued Growth Supported
Pressure Facing Healthcare Industry by Multiple Vectors
Strong Competitive Positioning with Trusted Partner with Established
Opportunity to Capture Additional Share Footprint Across Healthcare Ecosystem
Large and Expanding Addressable Market Trusted Employer:
Opportunity #1 in Top 100 Places to Work
© 2021 Nuance Communications, Inc. All rights reserved. 17Thank you. J.P. MORGAN 39TH ANNUAL HEALTHCARE CONFERENCE 2021
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