From the December 2016 issue of HealthCare Business News magazine

For example, how many companies exhibiting at HIMSS use the term “population health” to describe their offering? How does your particular set of capabilities stack up relative to the rest of the landscape? Are you the market leader and first mover? If so, why is that a good thing? If your company is a second or third mover, how do you stand to grow relative to stronger, better capitalized competitors? What percentage of the market do you need to gain in order to generate at least a three or four times return for your shareholders?

Pillar four: ‘Best of breed’ Perception
“Best of Breed” perception conveys how you stand out relative to other competitors. Simply put — is the company perceived as a leader in the market? The most common differentiator that companies use is scale, asserting that they are the biggest, or the fastest growing, or the most profitable. It is logical to select whatever metric is higher than the rest and trumpet that. That may be great, and certainly being “No. 1” is helpful. But can that be banked on as the longstanding, or only, strategy? What happens when all of a sudden a company is No. 2? That pitch just won’t work anymore. So leaning on scale is really a shortsighted tactic.
Best of breed perception has to be based on more than just immediate metrics. There needs to be a deeper capability differentiator. Why is this product better? It might not just be a matter of functionality. It may be delivery. It may be user experience. It may just be that sales model is simpler. While it is great to have the best product, ultimately the winning player is the one that sells the most.

The key here is perception. Above all it is about how the market perceives a company and its product. Best of breed perception is ultimately driven by your customers, how sophisticated they are, how they perceive you and how they communicate that opinion through the health care market. Real value is based on market sector reputation, no matter which features are the underlying bases for that.

Pillar five: Financial performance
The fifth pillar is financial performance. This goes much deeper than just scale, but pertains to how quickly your company is growing and how profitable is that growth. Fundamentally, a company is worth the cash flow that it generates, not in the past, but what is expected in the future. The greater the visibility a company has into future growth, the higher the value that outside investors/buyers will ascribe.

One key element to valuation is how much of your revenue is truly recurring. At the beginning of every year, are you out on the road needing to literally sell everything to get back to where you were last year, and then sell even more to exceed last year? Or are you in a recurring, subscription model such that you already have contracted revenue at the beginning of the year, that means you’re going to exceed last year’s performance unless something goes horribly wrong?

December 2016 Magazine

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