Pivotal Financial Corporation. innovation in healthcare payments

Company Overview – Spring 2011

Privileged And Confidential Information

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Presentation Contents

Executive Summary Industry Overview Competition Corporate Strategy & Goals Solution Development Management Team Financial Projections Capital Raise

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Pivotal Summary

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Healthcare Industry Challenge

Healthcare is $2.2 trillion dollar market that is expected to grow to $4 trillion by 2016 (22% of US Gross Domestic Product)

– Highly paper based and lack of automation– 70% of tractions are still manually processed in 2011– Mean payment processing time is 55-63 days in 2010

Healthcare payments (dollar volume) are growing at 13% CAGR thru 2013 – Four times higher than expected wage and GDP growth– Estimates of overhead cost range from $21-35 per transaction– Lack of transparency in pricing and cost is significant issue

Healthcare stakeholders have identified healthcare payments as one of the industry’s top challenges in recent Aite Survey

Significant disconnect between payments providers and market approach – Fragmented payments industry with significant room for new value propositions– Interoperability issues are significant and lack of industry practices

The move to increase payments processing taking hold but still nescient– Growth of healthcare payments expected to grow 35% by 2016 as automation

increases

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Growth in Consumer Directed Healthcare Spend

U.S. Benefit Card Spend 2008-2013

($ in billions)

2008 2009 2010 2011 2012 2013

Source: Aite Group

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$0.7$2.1

$4.5

$8.6

$14.9

$31.5

114% CAGR

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Growth in Consumer Directed Healthcare Revenue

Forecasted HSA Premium Revenue 2007-2014($ in billions)

HS

A P

rem

ium

$300

$250

$200

$150

$100

$50

Source: Frost & Sullivan, January 2010

56% CAGR

10.8 16.3

29.1

53.2

95.0

144.4

183.0

243.5

2009 2010 2011 2012 2013 201420082007Source: Aite Group

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Healthcare Payments Are Expensive and Inefficient

Member Receives Services

Provider Service

Claims

Provider Bank

Private Insurer

Or

Government

Remittance Advice

Healthcare’s Challenge

Mean Processing Time – 53 days

Mean Cost to Process Per Claim $21.45

Exceptions – 13% of all claimsSource: Aite Group and Pivotal

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Detailed Healthcare Payment Process Shows Enormous Complexity

Member receives services Provider Service

Practice Management

Claims

Private Insurer and government

membership, billing managed care, medical

mgmt and claims adjudication

systems

UB92 HCFA 1500

837 i/p/d

Explanation of benefit (EOB) / check for manually submitted claims

27x/ 835 ERA

Paid By Mail

National Council For Prescription Drug Program

HIPPA EDI Clearinghouse

Paper RA and Check

Lockbox

Real time Point Of Service (POS) Transaction

Eligibility Claims Status

Customer Service

Source: Aite Group/ Pivotal Financial

Paper

Member Service

HIPPA EDI Clearinghouse ACH

Makes co-payments only

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Top Payment Pain Points Across Stakeholders

Payment Pain Point Providers Financial/Banks

Suppliers

Inconsistent pricing X X

Lack of knowledge on payment options X

Longer payment collection cycle X

Rising bad debt

Delay in payment and cash flow issue X X

Inconsistency in electronic payments acceptance X X

Lack of automation X X

Lack of standards X X

Resistance from lobbyist to create improvements X X

Lack of best practices X X X

Increase in complexity due to sensitivity of HIPPA req. X X X

Source: Aite Group 2010 Survey – Healthcare Industry Executives

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Types of Transactions In A Healthcare Payments Process

Healthcare payment – electronic funds transfer (EFT), ACH or paper check

Explanation of Benefit (EOB) to participant

Remittance advice or Explanation of Payment (EOP) to provider (HIPPA)

Third Party payment (COB and Subrogation)

Eligibility for benefits (HIPPA) Health care claim submission Claim re-pricing according to network

contacts Coordination of benefits Referral certification and

authorization Health care claim status (HIPPA

format 276/7)

Payment Transactions Non- Payment Transactions

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Healthcare Payment Models Focus On Either Settlement or Information

Consumer Directed – Debit cards with auto substation capabilities and eligibility information– Recurring payments and partial payment via check– Significant growth but adoption is critical issue

Patient to Provider– Payment guarantee for providers through bill payment options or line of credit– Retail approach by partnering with card networks payment processors and bank

Payer to Provider– Building an integrated solution that would cater to both payment and non-

payment– Attempting transaction automation for all transaction types

Pay for Performance– Do not use pay based on resource usage but instead aim to improve quality of

care and reduce over treatments– Model payment models but holes need to filled for them to be effective

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Competition

Healthcare System Integrators – GE Healthcare and 3M Healthcare Solutions

Specialized Point Players– Payformance, Medavant, Availity

Banks Subsidiaries– US Bank

Larger Integrated Payment Providers– Fidelity National, First Data

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Healthcare Account Payment Processing Value Chain

Plan Provider Third-PartyAdministration

HSA/FSASolutions Vendor

Card Processor Issuer/Custodian

FIS

United Health Group

WageWorks / DST U.S. Bank

BofA, WellsFargo,BNYMellon, JPMorgan

Chase, etc.

Exante Bank(United Health Group)

Evolution Benefits,Montivano

BofA, Wells Fargo,Mellon, JPMorgan

Chase, etc.

Uniprise (TPAOwned by United)

ADP, CompuLink,Benefit Concepts, CBSA

Exante Bank (United Health Group)

FDR, Tsys, Wildcard(eFunds), Fiserv

Blue CrossBlue Shield

CIGNA, AETNAOthers…

BLUE BANK

BLUE BANK)

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Pivotal Overview

Founded in Fall 2010 Founder has direct healthcare payments experience at industry leader

Metavante where he developed the growth and M&A strategy Primary segment is focus on healthcare providers Payment platform and pricing algorithm in development with beta

expected in Spring Services include payment integration and advisory services Several strategic partnership discussion underway Current A Raise of $500k for 22% interest in common

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Pivotal Strategy

VisionTo significantly improve collection time and reduce cost per transaction by providing payment solutions with enhanced integration of settlement and information models. To reach this goal Pivotal is creating a payment data repository and payment platform which will drive improved collection time, reduce cost and improve transparency to medical associations and hospitals.

Pivotal Strategy

Improve

Transparency

Superior Integration and Functionality

Enhance Efficiency Reduce Cost, Errors &

Time To Process

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Pivotal Corporate Goals

The company’s are based on a focus of innovation and integration. Pivotal will build a successful company by:

Helping drive innovation and efficiency thru new healthcare solutions models;

Delivering high value solutions to our customers; Creating values based organization that is “payment partner of choice”

for healthcare/financial organization, employer of choice for professionals;

Creating sustained value for investors and employees; Embodying values based and ethical business culture.

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Pivotal Exploits The Emerging Healthcare Value Chain Opportunity

Integrate Health Plan

and FI

Provide H/W Planning and

Decision Support

Administer Plans

Hold Funds and Manage

Investments

Process Transactions

Provide Payment

Vehicle

Provide Access to Healthcare

Plan andNetwork

•Product Definition•Customer Acquisition (Sales & Marketing)•Enrollment

Eligibility & Coverage Verification

Billing & Collections

Diagnostic & Treatment

Care Management

Planning & Decision Support

Health Plan Admin.

Service & Support

Claims Mgmt &

Reimbursement

Investment Management

Payment Processing

Payment Vehicles & Financing

Service & Support

Access and Acct.Mgmt

Tools

Account Admin.

Cu

rren

t S

tate

P

rovi

der

sF

inan

cial

Ser

v

Fu

ture

Sta

te

Hea

lth

Mee

ts W

ealt

h

HEALTH FINANCING TOOLS & INTEGRATION PAYMENT & WEALTH MANAGEMENT

Pivotal Financial Solutions, Inc.

Hea

lth

Pla

ns

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Pivotal Strategy Is To Create More Compelling Solution Capability

Capability Business Benefit

A single process and platform approach to integrate information and settlement approaches to payments

Drives more effective and less costly payments process

Product builder and flexible product management tools

Facilitates product innovation and rapid speed to market with new products

Creation of PivotBase pricing tool to provide additional transparency to customers

Provides consistent pricing information and improved transperency

A component-based, service-oriented architecture that supports best-of-breed solutions

Enables any-to-any integration and investment preservation

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Pivotal Team Has Experience And Credentials To Execute

Christopher Bell – CEO Joseph Brown – CTO Identified – Chief Admin Officer/Counsel Programmers – 2 part time Sales - indentified Board of Directors under development - 7 seats

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Healthcare Payment Solutions: Target Markets

Health PlansMedical

AssociationsThird Party

Administrators

Banks and Financial Institutions

Hospitals

Pivotal Financial Corporation.

1,634 4,211

Source: Frost & Sullivan, January 2010

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Solution Development

Development of payment engine underway and beta in fall 2011

Developed in Java Multi-sourcing development with offshore firm Product Pivot HealthData and Pivot Pay under development Development team for integration service identified Partnership discussion to co-fund development

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Pivotal Financials

Revenue model based upon per transaction model– High recurring revenue base once established– Services model for integration to start earlier

Product development cost is $500-750K for v1 Revenue expected in 2012

– Assumed beta completed in 2011– Very low overhead model

Sales and Marketing – Direct and indirect sales model

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Business Development OpportunitiesExist To Build Scale

Consumer Directed Healthcare (partial list)– Acclaris– RePayMe– Sanare– Health Equity– Light House 1– HealthX– MHM– Finity Communications– Health AXIS– CapMed

Healthcare & Financial Payment Processing (partial list)– Secure EDI– Medavant– Availity– Egistics– Emdeon – subsidiaries– Ventanex– Payformance– ENS– Passport– Multiple Clearinghouses

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Pivotal Is Raising Seed Capital

CEO invested of own funds to date Delaware C Corp Raising $500k in seed capital to fund operations thru beta

testing Current offering is priced estimated $5.00 per share with $25K

minimum investment Pre-money valuation of $1.7MM PPM available upon request Proceeds expected to be used for development and launch

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January March May July September November

Further define plan and solution

Complete legal requirements

Product development

Hire senior positions

Complete US case studies

Launch sales campaign

Identify target industry publications forPR outreach and monitor calendars

Pivotal Implementation Timeline

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Christopher Bell – Bio

Mr. Bell currently serves as CEO of Pivotal Financial. Mr. Bell has a strong 20 year track record developing strategy for improved performance and improved shareholder value.

As SVP for Metavante, he had responsibility for directing the enterprise-wide development of Metavante industry leading healthcare payments business which grew from $30M to $200MM in revenue in 3 years.

Mr. Bell served as SVP of Corporate Strategy for FIS and reported directly to CEO. On the executive team (as Senior Vice President/Director of Strategy) his team took Metavante Corporation public in 2007 (MV: revenue $2B). In this role, he helped the executive team craft the strategy that drove industry leading performance (revenue growth and profitability) in an extremely difficult economic environment and subsequent $4.4B merger with Fidelity Information Systems in 2009 (that created the world largest Fintech provider - FIS: revenue $5B). Metavante’s enterprise value more than tripled during Mr. Bell’s tenor as head of corporate strategy and business development.

Prior to joining Metavante, Mr. Bell served as Managing Partner for Gartner Group’s consulting practice where he was one of the leaders for technology vendors, financial services, payments and software (with over 600 consultants). His clients included Oracle, IBM, Amex, GE, Metavante, Microsoft HP, Mastercard, Oracle, Citicorp as well numerous private equity funds with a focus on technology and go-to-market /growth strategy.

Mr. Bell received his B.S. in Economics and IT Management from the University of Illinois and M.B.A. in Corporate Finance and Marketing from the University of Chicago, Graduate School of Business. Mr. Bell currently serves on several civic and corporate boards. He founded TEACH (Technology Education and Access Helping Children) which is designed to help disadvantaged youth gain access and use of technology.