Model N Signs Definitive Agreement to Acquire Revitas

REDWOOD CITY, CA --(Marketwired - December 12, 2016) - Model N, Inc. ( NYSE : MODN ), a provider of cloud-based revenue management solutions to life sciences, technology and manufacturing companies, today announced it has signed a definitive agreement to acquire Revitas, Inc., a provider of life sciences revenue management software. The transaction is expected to close in January 2017. The combination of Model N and Revitas provides life sciences companies with a broader portfolio of best-in-class solutions and expanded options to leverage cloud computing to transform the management of revenue into a strategic end-to-end process that drives growth and maximizes revenues.

"The acquisition of Revitas by Model N brings together two innovators in life sciences revenue management and is an exciting development for pharmaceutical companies worldwide," said Michael Townsend, research manager, life sciences, IDC. "With Model N's successful Revenue Management as a Service strategy and proven cloud platform, this combination should accelerate the migration of revenue management to the cloud, which will benefit the industry. The stability of a publicly traded company with more than 900 employees coupled with cloud technology should increase the pace of innovation and improve customer satisfaction."

For more than 40 years combined, the two companies have delivered solutions to transform the revenue lifecycle from a series of disparate activities into a synchronized, strategic end-to-end process to maximize revenue. The acquisition of Revitas comes at an inflection point as Revenue Management is crystalizing as a strategic imperative for the life sciences industry.

Life sciences companies are seeking a global partner to leverage technologies such as cloud, SaaS, mobile, social and big data to drive the business transformation necessary to manage current industry dynamics. These dynamics include unprecedented and evolving global regulation, increasing price transparency, a transition from traditional consumption-based pricing to new models such as outcome-based and the need to fluidly acquire and divest in an M&A-centric industry.

The acquisition of Revitas will enable Model N to accelerate innovation across a broad set of applications to the benefit of the life sciences industry at this critical moment. The combined company will have more than 80 life sciences customers and a presence in 10 major locations across the globe.

"We are excited to welcome Revitas customers, employees and partners to the Model N family," said Zack Rinat, founder, executive chairman and CEO of Model N. "Model N is committed to the success of our combined customers, starting with ensuring continuity and fulfillment of commitments. Furthermore, by leveraging our combined workforce, decades of experience, and the combined portfolio of Revenue Management cloud solutions, we will deliver significantly better value for our customers."

The integration strategy will focus on customer satisfaction, ensuring continuity and fulfilling all commitments to customers. Key Revitas life sciences executives across all functions will join the Model N executive leadership team, and will serve as Vice Presidents of Life Sciences Engineering, Life Sciences Americas Sales, Life Sciences Professional Services and Life Sciences Customer Support. Furthermore, all key life sciences employees in engineering, product management, professional services, technical support, sales and solutions also will be retained.

In addition to these executive additions from Revitas, Model N announced that Russ Mellott will be joining Model N on Jan. 3, 2017, as a Senior Vice President and Chief Revenue Officer reporting directly to Zack Rinat. Mellott has extensive enterprise software sales experience in both large companies such as Epicor and Intelligrated, a division of Honeywell, as well as smaller, high growth companies such as Activant and Prophet 21. In his past experience with Epicor, he was responsible for sales and revenue of $250 million, while managing an organization of sales and business development teams made up of over 300 professionals. Russ will replace Chris Larsen, whose employment with the company will end on Dec. 31, 2016, after the completion of the first quarter of fiscal year 2017.

The acquisition will leverage the best of both companies, expanding the Revenue Management solution set for all customers, and leveraging Model N's proven Revenue Management as a Service to enable Revitas customers to realize the benefits of cloud computing at their own pace. Finally, the integration strategy will enable increased innovation as the combined strengths of the companies expand the reach of Revenue Management, by delivering new applications and services.

"The acquisition of Revitas by Model N creates a strong global company with financial strength and staying power. The combination of Model N and Revitas -- products, services, and an incredibly experienced and talented team of people -- is the best possible outcome for the life sciences industry, Revitas customers and our employees," said Brian Madocks, president and CEO of Revitas. "I am committed to work with Zack and the Model N executive team to ensure a smooth transition."

For fiscal year 2017, Model N currently expects revenue for the combined company of $128.0 million to $133.0 million. This represents GAAP revenue prior to the deferred revenue impact from the purchase accounting adjustment. The acquisition is also expected to be accretive and for the combined company to generate a non-GAAP operating loss in the range of ($17.0) million to ($16.0) million, and non-GAAP net loss per share in the range of ($0.73) to ($0.70), for fiscal year 2017. Ending cash balance at September 30, 2017 is expected to be between $50.0 million and $52.0 million. We have not provided a reconciliation of non-GAAP to GAAP due to certain GAAP elements not being determinable at this time, including, but not limited to stock-based compensation, interest expense, transaction expense and adjustments related to purchase price accounting.

"This is truly an acquisition where the sum is greater than the value of the individual parts, which we believe will unlock shareholder value," said Rinat. "We expect this acquisition will drive top line growth, complete the transition of our business model to 100 percent recurring revenues, and accelerate our path toward profitability and cash flow generation."

JMP Securities served as exclusive financial advisor to Model N and Robert W. Baird & Co. served as financial advisor to Revitas on the transaction.

Model N will host a conference call today at 3 p.m. Pacific Standard Time (6 p.m. Eastern Standard Time) to further discuss this acquisition and the expected financial impact. To access the call, please dial (877) 407-4018 in the U.S. or +1 (201) 689-8471 internationally. A live webcast of the conference will be accessible from Model N's website at: http://investor.modeln.com . Following the completion of the call, a recording will be available for one year for replay at: http://investor.modeln.com and a telephone replay will be available through 11:59 p.m. ET on December 19, 2016, by dialing (877) 870-5176 in the U.S. or +1 (858) 384-5517 internationally with recording access code 13651330.

About Model N Model N is the leader in Revenue Management solutions. Driving mission critical business processes such as configure, price and quote (CPQ), contract and rebate management, business intelligence, and regulatory compliance, Model N solutions transform the revenue lifecycle from a series of disjointed operations into a strategic end-to-end process. With deep industry expertise, Model N supports the complex business needs of the world's leading brands in life sciences, technology and manufacturing across more than 100 countries, including Johnson & Johnson, AstraZeneca, Boston Scientific, Novartis, Microchip Technology and ON Semiconductor. For more information, visit www.modeln.com .

Model N® is the registered trademark of Model N, Inc. Any other company names mentioned are the property of their respective owners and are mentioned for identification purposes only.

About Revitas Revitas is the leading provider of enterprise-class solutions for channel and contract management, on premise and in the cloud. Revitas solutions enable organizations to accelerate revenue through diverse, multi-level sales channels and attain maximum value from contracts. For over 25 years, Revitas has empowered companies in channel-intensive industries to achieve best-in-class performance and sustainable competitive advantage. For more information, please visit www.revitasinc.com .

Forward-Looking Statements This press release contains forward-looking statements including, among other things, statements regarding the benefits of Model N's acquisition of Revitas, and Model N's full year fiscal year 2017. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) successful integration of Revitas, its product, technologies and employees; (ii) delays in closing customer contracts; (iii) our ability to improve and sustain our sales execution; (iv) the timing of new orders and the associated revenue recognition; (v) adverse changes in general economic or market conditions; (vi) delays or reductions in information technology spending and resulting variability in customer orders from quarter to quarter; (vii) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by our competitors; (viii) our ability to manage our growth effectively; and (ix) acceptance of our applications and services by customers; (x) success of new products; (xi) the risk that the strategic initiatives that we may pursue will not result in significant future revenues; and (xii) our ability to retain customers of Model N and Revitas. Further information on risks that could affect Model N's results is included in our filings with the Securities and Exchange Commission ("SEC"), including our most recent quarterly report on Form 10-Q and our annual report on Form 10-K for the fiscal year ended September 30, 2016, and any current reports on Form 8-K that we may file from time to time. Should any of these risks or uncertainties materialize, actual results could differ materially from expectations. Model N assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.