BOWIE, Md., Feb. 03, 2021 (GLOBE NEWSWIRE) -- Inovalon (Nasdaq: INOV), a leading provider of cloud-based platforms empowering data-driven healthcare, today announced financial results for the fourth quarter and full year of 2020, reaffirmed guidance ranges for the full year 2021, and issued guidance for the first quarter of 2021.

“We are very pleased with the Company’s execution in the fourth quarter as our teams brought previously announced new platform sales online. Simultaneously, we saw continued acceleration in demand for our expanding portfolio of cloud-based capabilities. Revenue came in at the very high end of our October 28, 2020 guidance, climbing 18% sequentially, while new sales ACV hit an all-time record of $93.5 million, continuing the layering progression of subscription-based growth,” said Keith Dunleavy, M.D., Inovalon’s chief executive officer and chairman of the board. “These dynamics, combined with strong contract renewals, client retention rates, underlying membership expansions, and product pricing strength brought by generating high value impact for our clients, are driving our continued very positive outlook for 2021 and beyond.”

Fourth Quarter 2020 Financial Results

• Revenue for the fourth quarter of 2020 was $189.7 million, a year-over-year increase of 9%, compared with $173.5 million for the fourth quarter of 2019, and a sequential increase of 18%.
• Subscription-based platform revenue for the fourth quarter of 2020 was 163.5 million, or 86% of fourth quarter 2020 total revenue and a year-over-year increase of 14%, compared with $143.5 million for the fourth quarter of 2019, or 83% of fourth quarter 2019 total revenue.
• Cost of revenue for the fourth quarter of 2020 was $50.5 million, or 27% of revenue, compared with $46.6 million, or 27% of revenue, for the fourth quarter of 2019.
• Net income for the fourth quarter of 2020 was $21.4 million, resulting in diluted net income of $0.14 per share, compared with $4.7 million and diluted net income of $0.03 per share, for the fourth quarter of 2019.
• Adjusted EBITDA for the fourth quarter of 2020 was $68.1 million, a year-over-year increase of 18% compared with $57.6 million for the fourth quarter of 2019. Adjusted EBITDA margin for the fourth quarter of 2020 was 35.9%, a year-over-year increase of 270 basis points, compared with 33.2% for the fourth quarter of 2019.
• Non-GAAP net income for the fourth quarter of 2020 was $30.8 million, resulting in Non-GAAP diluted net income of $0.21 per share, compared with $21.9 million and $0.15 per share, respectively, for the fourth quarter of 2019.
• Net cash provided by operating activities for the fourth quarter of 2020 was $37.3 million, compared with $34.2 million for the fourth quarter of 2019.

Full Year 2020 Financial Results

• Revenue for 2020 was $667.5 million, a year-over-year increase of 4% compared with $642.4 million for 2019.
• Subscription-based platform revenue for 2020 was $585.1 million, or 88% of 2020 total revenue and a year-over-year increase of 10%, compared with $531.6 million for 2019, or 83% of 2019 total revenue.
• Cost of revenue for 2020 was $167.8 million, or 25% of revenue, compared with $167.8 million, or 26% of revenue, for 2019.
• Net income for 2020 was $22.6 million resulting in diluted net income of $0.15 per share, compared with $7.8 million and diluted net income of $0.05 per share, respectively, for 2019.
• Adjusted EBITDA for 2020 was $230.9 million, a year-over-year increase of 10% compared with $210.7 million for 2019. Adjusted EBITDA margin for 2020 was 34.6%, an increase of 180 basis points, compared with 32.8% for 2019.
• Non-GAAP net income for 2020 was $92.7 million, resulting in Non-GAAP diluted net income of $0.62 per share, compared with $77.5 million and $0.52 per share, respectively, for 2019.
• Net cash provided by operating activities was $146.4 million for 2020, a year-over-year increase of 37% compared with $106.5 million for 2019, representing 22% of revenue.

“Our fourth quarter and full year results reflect the continued growth and adoption of our Inovalon ONE^® Platform,” said Jonathan R. Boldt, chief financial officer of Inovalon. “We are pleased to be seeing the very positive operating efficiencies of our business model demonstrate themselves not only in value achievement for our clients, but also in strong profitability and significant operating leverage for the Company. As we have prudently invested in our platform capabilities, execution capacity, and the scaling of our sales capabilities, we are very pleased to be seeing both strong organic growth acceleration and continued expansion of profitability. While we are excited for 2021 and the growth we have already conveyed, we are also very pleased in what we are continuing to see beyond 2021 as well.”

Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP net income, and free cash flow are Non-GAAP measures. Net income is the GAAP financial measure most directly comparable to Adjusted EBITDA and Non-GAAP net income. Net cash provided by operating activities is the GAAP financial measure most directly comparable to free cash flow. Reconciliations of net income to Adjusted EBITDA and Non-GAAP net income and reconciliations of net cash provided by operating activities to free cash flow, identifying the differences between net income and net cash provided by operating activities and each of these Non-GAAP financial measures, are included in this press release after the consolidated financial statements.

Key Highlights

• Record Sales: Inovalon achieved an all-time quarterly record in new sales Annual Contract Value (ACV) with $93.5 million in the fourth quarter, up 27% YoY and 60% sequentially. Platform new sales ACV (excluding services) totaled $68.2 million, up 30% YoY and 60% sequentially. Full year 2020 new sales ACV totaled $273.1 million, up 24% year-over-year. Full year 2020 Platform new sales ACV totaled $197.3 million, up 34% year-over-year. The strong sales performance during 2020 secured substantive additions to the Company’s new logo list, with sales from new logos contributing 39.7% of the Company’s sales-driven expansion, while positive client experience, and value recognition by existing clients contributed 60.3% of the Company’s sales-driven expansion.
• Substantive Implementations Coming Online as Scheduled: Multiple previously reported large-scale platform sales began coming online as scheduled during Q4 2020, marking a leading edge of historical sales acceleration now converting into compounding subscription-based platform revenue. With the broadening adoption of Inovalon’s cloud-based SaaS solutions throughout 2020, multiple large-scale implementations are coming online and Inovalon is increasingly empowering marquee industry-leading new clients across multiple segments of the marketplace.
• Acceleration of Life Sciences Demand: Life sciences revenue growth accelerated during Q4 2020 in excess of 25% year-over-year, driven by, amongst other factors, substantive engagements for the Company’s recently announced vaccine adherence program and data support for the leading U.S. COVID-19 vaccine programs. As previously announced on November 9, 2020, the Company launched an Inovalon ONE^® Platform configuration supporting multiple national vaccine adherence initiatives. The program involves organizations from across the healthcare ecosystem, including global pharmaceutical organizations, patient engagement services companies, and health plans, with the Inovalon ONE^® Platform serving as the program’s overall national technology enablement platform.
• Extensive Strength in Payer Demand: The Company won significant new Inovalon ONE^® Platform sales, renewals, and awards with five of the top-ten national health plans and multiple leading Blue Cross Blue Shield organizations during Q4 2020, including national-scale implementations and renewals of Inovalon’s ePASS^® encounter decision-support toolset across physician offices, retail clinic sites, in-home visits, and virtual telehealth implementations across the country. Additionally, on November 2, 2020, Inovalon announced that clients utilizing Inovalon’s quality improvement solution suite outperformed the entire Medicare Advantage market for the seventh year in a row, realizing a positive increase of nearly 4% on a year-over-year basis in their Centers for Medicare & Medicaid Services 2021 Star Ratings.
• Record Profitability and Operating Leverage: A combination of product mix shift, connectivity, automation, cloud-platform efficiency, and increasing contract renewal and retention metrics supported a continued expansion of profitability, with Q4 Adjusted EBITDA margin and trailing twelve month operating leverage² of 35.9% and 81%, respectively.
• Improved Debt Interest Rates: Cash and cash equivalents increased to $123.9 million during Q4 2020 and the Company’s net-debt-ratio improved to 3.37x (down from 3.83x as of December 31, 2019), resulting in the automatic 25 basis point decrease of the interest rate margin paid by the Company. The 25 basis point decrease will be reflected in the interest rate margin paid by the Company during the first quarter 2021.
• COVID-19 Non-Subscription Legacy and Services Business Update: Impact from COVID-19 remained stable during Q4 2020 with revenue contributed from legacy business equating to approximately 2% of total revenue for the quarter, reflecting a stable environment consistent with the Company’s internal expectations. Revenue contributed from services during the fourth quarter equated to approximately 12% of total revenue for the quarter, ahead of the Company’s internal expectations on October 28th by approximately $2 million to $3 million and in line with expectations provided on January 11, 2021.

Other Financial Data and Key Metrics

The following constitute other financial data and key metrics which are presented quarterly.

• Growth of Datasets: At December 31, 2020, the MORE² Registry^® dataset contained more than 332 million unique patient counts and 61 billion medical event counts, increases of 6% and 16%, respectively, compared with December 31, 2019.
• Investment in Innovation: For the quarter ended December 31, 2020, Inovalon’s ongoing investment supporting innovations in advanced, cloud-based platforms empowering data-driven healthcare was $24.2 million, or 13% of revenue. For the full year 2020, Inovalon’s investment in innovation was $82.3 million, or 12% of revenue.
• Analytical Process Count Growth: Inovalon’s trailing twelve-month Patient Analytics Months (“PAM”) count, which the Company believes is indicative of the Company’s overall level of analytical activity, grew to 71 billion as of December 31, 2020, an increase of 9% compared with December 31, 2019.

Please see the Company’s filings with the Securities and Exchange Commission (“SEC”) for further detail regarding the preceding other financial data and key metrics.

Shares Outstanding

As of December 31, 2020, the Company had 77.0 million shares of Class A common stock outstanding and 78.3 million shares of Class B common stock outstanding.

Financial Guidance

In the setting of record ACV growth in 2020, multiple substantive implementations coming online, an expanding subscription base, continued strong sales pipeline, solid contract renewals, and increasing operating efficiencies, Inovalon is reiterating the following guidance for 2021 as outlined within the table below, indicating 11% to 15% year-over-year organic revenue growth, and 15% to 19% year-over-year organic Adjusted EBITDA growth, and raising its net cash provided by operating activities.

About the Inovalon ONE^® Platform

The Inovalon ONE^® Platform is an integrated cloud-based platform of nearly 100 individual proprietary technology toolsets and deep data assets able to be rapidly configured to empower the operationalization of large-scale, data-driven healthcare initiatives. Each proprietary technology toolset, referred to as a Module, is informed by the data of billions of medical events within Inovalon’s proprietary datasets. Combinations of Modules are configured to empower highly differentiated solutions for client needs quickly and in a highly scalable fashion. The flexibility of the modular design of the Platform enables clients to integrate the capabilities of the Platform with their own internal capabilities or other third-party solutions. The Platform brings to the marketplace a highly extensible, national-scale capability to interconnect with the healthcare ecosystem on a massive scale, aggregate and analyze data in petabyte volumes, arrive at sophisticated insights in real time, and drive meaningful impact wherever it is analytically identified best to intervene and intuitively visualize data and information to inform business strategy and execution.

About Inovalon

Inovalon is a leading provider of cloud-based platforms empowering data-driven healthcare. Through the Inovalon ONE^® Platform, Inovalon brings to the marketplace a national-scale capability to interconnect with the healthcare ecosystem, aggregate and analyze data in real time, and empower the application of resulting insights to drive meaningful impact at the point of care. Leveraging its Platform, unparalleled proprietary datasets, and industry-leading subject matter expertise, Inovalon enables better care, efficiency, and financial performance across the healthcare ecosystem. From health plans and provider organizations, to pharmaceutical, medical device, and diagnostics companies, Inovalon’s unique achievement of value is delivered through the effective progression of “Turning Data into Insight, and Insight into Action^®.” Supporting thousands of clients, including all 25 of the top 25 U.S. health plans, 22 of the top 25 global pharma companies, 19 of the top 25 U.S. healthcare provider systems, and many of the leading pharmacy organizations, device manufacturers, and other healthcare industry constituents, Inovalon’s technology platforms and analytics are informed by data pertaining to more than one million physicians, 574,000 clinical facilities, 332 million Americans, and 61 billion medical events. For more information, visit www.inovalon.com.