INVESTOR PRESENTATION August 2016 Safe Harbor / Disclaimer This - - PowerPoint PPT Presentation

August 2016

INVESTOR PRESENTATION

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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

• f 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.

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

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   

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Disruptive Forces In Healthcare

 Shift to value-based models/Population health  Process to outcome measures  Narrow networks Growth in Spending  Patient-centricity  Caregiver Engagement / Care coordination  Operational integration and advanced analytics  Demand for reliable measures  Honor consumer through transparency  Brand awareness / Patient Loyalty/ Market Share  Increased patient engagement  Focus on performance and outcomes  Expanded CAHPS programs Care Redesign

Market Response Healthcare Dynamics

Expanding Regulation Rise of Consumerism

Industry Leader With Partners Across The Continuum Of Care

80%+ 60%+ 80%+ 70%+

Note: All information as of 12/31/15

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Acute Hospitals Major Teaching Hospitals MD Groups w/ >50 Physicians Acute Hospitals w/ 100+ Beds

Strategic Competitive Advantage

Thought Leadership & Innovation 400+ Client-Facing Associates Technology & Digital Platform Analytics & Insights Advisory & Consulting

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OUR SOLUTIONS

 Actionable data targeting improvement opportunities  Drive patient loyalty, improve outcomes, optimize reimbursement

Operational, Clinical & Financial Performance Improvement

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 Engagement insights tiered for effective action planning  Retain caregivers, increase productivity, improve performance  Measure, report and act on clinical and quality performance  Achieve nursing excellence and quality standards, improve outcomes  Assess operational, quality and safety performance  Transform culture, reduce safety events, achieve high reliability

C-Level Solutions that Drive Performance Improvement

Patient Experience

Demonstrated ROI

Caregiver Engagement Clinical & Quality Outcomes Reliability & Safety Consulting

Differentiated Products Built On Leading Digital Platform

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4.5 3.9 3.7 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Low Middle High

Average Length of Stay (Days) Reliability Score Rank by Tercile

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.

15.0% 8.7% 5.9% 12.1% 0% 4% 8% 12% 16% 20% Bottom Decile Top Decile

~6% less spending due to readmissions

Patient Experience Solution Foundational To Clinical And Financial Performance

Average Length of Stay by Patient Experience Reliability Tercile (1) Lower Cost of Care, Higher Operating Margin for Top Performers on HCAHPS (2)

Patient Experience is a Powerful Tool for Performance Improvement

Hospital Net Margin 10 % of Spending on Readmission

HCAHPS Overall Rating

71 70 77 82 75 76 84 31 23 42 37 50 63 47 20 40 60 80 100

Nurse Responsiveness Physician Pain Medication Discharge Rating

Average National Percentile Rank Top Quintile of Employee Engagement Bottom Quintile of Employee Engagement National Percentile Rank Based on Employee Engagement Scores (1)

Employee Engagement Improves Patient Experience

1. Based on Engagement data from 36 projects, year 2014. HCAHPS data from 2014 PG Database.

Complementary Solutions Accelerate Performance Improvement

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Created by Healthcare Metrics Team.

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Census Based Surveying Enables Innovation: Transparency Study

• Census Based Surveying increases patient data by 80%
• UT Transparency has resulted in 50%+ of docs in 90th percentile in 2014
• Dr. Campbell

Press Ganey Data 1164 Reviews 4.6 Stars vs Vitals 2.5

• Dr. Campbell

Press Ganey Data 1164 Reviews 4.6 Stars vs Vitals 2.5

• Dr. Campbell

Press Ganey Data 1164 Reviews 4.6 Stars vs Vitals 2.5

• Dr. Leiser

Press Ganey Data 74 Reviews 4.9 Stars vs. Vitals 2.5

• Dr. Leiser

Press Ganey Data 74 Reviews 4.9 Stars vs. Vitals 2.5

• Dr. Leiser

Press Ganey Data 74 Reviews 4.9 Stars vs. Vitals 2.5

Industry Leading Sales And Client Management Teams

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400+

Client Facing Associates Transformational Consultants Sales Professionals Advisory Professionals Account Management Supporting Clients

44 73 135 162

Geographically-based model for majority of client base

Innovation And Thought Leadership Offer Deeper Value To Clients

Executive Council members of Press Ganey nonprofit Speaking engagements Clients at national conference Attendees across regional symposiums Monthly user logins for improvement solutions

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Investing in Thought Leadership

28 245+ 2,800 1,000+ 265,000+

Industry articles in key trade publications Participants in the

• nline community

Custom analytic reports generated annually

300+ 26,000 3,000+

Participants in CNO Quarterly Best Practices Roundtable

250

GROWTH STRATEGY / TOTAL ADDRESSABLE MARKET

Total Addressable Market

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Quality, Safety, Consulting, Other Existing Clients Prospects Patient Experience Caregiver Engagement $319 Million (2015 PGND Revenue) Patient Engagement, Care Coordination, Other Consulting $865 Million $294 Million $2.7 Billion New Solutions Existing Solutions $4.2 Billion Total Addressable Market $1.5 Billion

Proposed Mandatory

2018 Medical Practices

Expanding CAHPS Requirements Will Accelerate Improvement Efforts

2% 2% 2%

Hospital Outpatient Surgery Departments

Voluntary

2016 2017 Ambulatory Surgery Centers

Voluntary Proposed Mandatory

Pediatric Inpatient Hospitals Emergency Departments

Planning Anticipated Voluntary Anticipated Mandatory

Long Term Care Hospitals

Planning Anticipated Voluntary Anticipated Mandatory

Inpatient Psychiatric Facilities

Planning Anticipated Voluntary

Inpatient Dialysis ACOs Hospice Home Health

Mandatory

Inpatient Rehab Facilities

Planning Anticipated Voluntary Anticipated Mandatory Voluntary Mandatory Anticipated Voluntary (with new MIPS) 17

Strategic Acquisition Track Record

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2009

Caregiver Engagement Safety/ Consulting Clinical/ Quality Patient Experience

2013 2014 2015 2016

FINANCIAL REVIEW

Financial Overview

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Revenue Predictability

 Retention: 97% client retention / 94% revenue retention 3-year average Q2 2014 – Q2 2016  Visibility: Average contract life for top 100 patient experience clients is 2.9 years  Existing Solutions: $1.5B White space  New Solutions: $2.7B Opportunity  Cost of Revenue: Greater percentage of insights from electronic platform  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 2012 to 2015, 83% YTD 2Q16  Balance Sheet: deleveraged and lower interest rates

Organic Growth Operating Leverage Cash Flow

Long Term Growth Targets Revenue: 7-9% organic / 2-3% acquisition Adjusted EBITDA: 13-15%

$0 $50 $100 $150 $200 $250 $300 $350

2012 2013 2014 2015 YTD 2Q15 YTD 2Q16

Revenue

Growth Track Record

($ in millions)

$0 $25 $50 $75 $100 $125

2012 2013 2014 2015 YTD 2Q15 YTD 2Q16

Adjusted EBITDA

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5.4x 4.6x 4.0x 1.3x 1.0x 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 2012 2013 2014 2015 YTD 2Q16

Total Net Debt (1) / Adjusted EBITDA Ratio

Adjusted EBITDA Less CapEx & Leverage Ratio

1. Net debt = total debt – cash.

($ in millions)

$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100

2012 2013 2014 2015 YTD 2Q16

Adjusted EBITDA Less Capital Expenditures

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APPENDIX

Adjusted EBITDA Reconciliation

1. Includes costs associated with modification of equity awards in connection with the liquidating distribution and IPO of $70,438 in May of 2015. 2. Write-off of unamortized deferred financing fees, loss on original issue discount and lender fees in connection with debt refinancings. 3. Non-cash property and equipment and intangible impairment charges related to the discontinuation of certain clinical solutions in 2013. 4. Management fees paid to Vestar. 5. Transaction costs incurred in connection with completed and potential acquisitions. 6. Expense associated with executive separation agreements and targeted employee headcount reductions. 7. Primarily consists of professional fees incurred for the preparation for compliance with Section 404 of the Sarbanes-Oxley Act and for design of the equity incentive and compensation programs, professional fees incurred in connection with the IPO and capital structure, corporate strategic planning and technology consulting projects, as well as expenses and revenue credits related to client retention due to the discontinuation of certain clinical solutions and software applications.

Fiscal Year ended December 31 YTD

($ in thousands)

2012A 2013A 2014A 2015A 2Q15 2Q16 Net income (loss) $(7,391) $99 $15,583 $(36,627) $(47,843) $16,046 Interest expense 32,157 24,644 19,832 11,163 8,354 2,366 Income tax expense (benefit) (604) 5,926 13,196 7,528 (1,360) 13,169 Depreciation & amortization 27,202 32,468 35,102 41,224 20,096 23,115 EBITDA $51,364 $63,137 $83,713 $23,288 $(20,753) $54,696 Equity-based compensation(1) 14,256 9,787 8,034 86,745 74,997 13,349 Extinguishment of debt (2) 7,185 7,922 2,894 1,750 638

• Non-cash impairment charges (3)
• 2,579
• Management fee to related party (4)

968 907 1,047 553 553

• Acquisition expenses (5)

1,327 902 462 945 203 1,191 Severance (6) 2,797 625 1,084 2,095

• 709

Loss (gain) on disposal of property & equipment

• 274

1,719 307 (31) 20 Other non-comparable items (7) 1,465 2,159 3,606 1,802 864 106 Adjusted EBITDA $79,362 $88,292 $102,559 $117,485 $56,471 $70,071

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Adjusted EBITDA Less Capital Expenditures

Fiscal Year ended December 31 YTD

($ in thousands)

2012A 2013A 2014A 2015A 2Q16 Adjusted EBITDA $79,362 $88,292 $102,559 $117,485 $70,071 Capital Expenditures (18,191) (17,230) (19,414) (26,197) (12,231) Adjusted EBITDA Less Capital Expenditures $61,171 $71,062 $83,145 $91,288 $57,840 Adjusted EBITDA Less CapEx as Percentage of Adjusted EBITDA 77% 80% 81% 78% 83%

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Capitalization

As Reported

($ in thousands)

12/31/12 12/31/13 12/31/14 12/31/15 6/30/16 Cash $7,845 $32,635 $6,962 $35,235 $46,383 Total Debt $431,851 $434,423 $418,319 $189,267 $182,575 Net Debt $424,006 $401,788 $411,357 $154,032 $136,192 LTM Adjusted EBITDA $79,362 $88,292 $102,559 $117,485 $131,085 Total Net Leverage 5.3x 4.6x 4.0x 1.3x 1.0x

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